ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, WORKS CONTRACT & LEASING, KOTAversusM/S. SHUKLA & BROTHERS

                    (2010] 4 S.C.R. 627


   ASSISTANT
     .
     ~~-
             COMMISSIONER, COMMERCIAL TAX                       A
 Q§PA~TMENT, W()RKS CONTRACT & LEASING, KOTA
                              v.
               MIS. SHUKLA & BROTHERS
              (Civil Appeal No. 3289 of 2010)
                                                                B
                      APRIL 15, 2010

    [S.H. KAPADIA AND SWATANTER KUMAR, JJ.]

      Judgment - Re9soned order/judgment - Need for -
Held: Reasonf!d judgment is indispensable part of basic rule C
of law - R~c.ording pf rey{l$On~ is an essential feature of
dispensation of justice - Courts shodld record reasons for its
conclusions to enable the appellate or higher courts to
understand the q9ntroversy in its correct perspective and to
exercise their jurisdiction in· accordance with law - A judgment o
without reasons causes prejudice to the affected party and/ .
hampers proper administration of justice - Litigant has a
legitimate expectation of knowing reasons for rejection of his
Off3im - Requirement of recording reasons is applicable with
greater rigor to the judicial proceedings - Reasons for an order E
ensure:;; and enhances public confidence - Reasoned orders
are required both passed at admission stage or at the final
hearing - On facts impugned judgment was not reasoned,
hence remitted to High Court - Principle of Natural justice -
Administration of Justice - Principle of legitimate expectation F
- Code of Civil Procedure, 1908 - 0. 14 r. 2 rlw 0. 20 r. 1 -
Rajasthan Sales Tax Act, 1994.

    An assessment order was set aside by appellate
authority as well as Tax Board. Revision petition against
the same was dismissed by High Court.                     G

    In appeal to this Court, appellant-Revenue
contended that High Court dismissed the Revision in a
cryptic order without giving any reasons.
                           627                                  H
    628     SUPREME COURT REPORTS             [2010) 4 S.C.R.

A       Partly allowing the appeal and remitting the matter to
    High Court, the Court

       HELD: 1. It would have been desirable if the High
  Court would have recorded some reasons for rejecting
8 the Revision Petition preferred by the Department.
  Despite heavy quantum of cases in Courts, it would
  neither be permissible nor possible to state as a principle
  of law, that while exercising power of judicial review on
  administrative action and more particularly judgment of
C courts in appeal before the higher court, providing of
  reasons can never be dispensed with. [Paras 8 and 9]
  [636-D; 636-E·G]

         S.N. Mukherjee v. Union of India (1990) 4 SCC 594,
    relied on.
D
       2. In exercise of the power of judicial review, the
  concept of reasoned orders/actions has been enforced
  equally by the foreign courts as by the courts in India.
  The administrative authority and tribunals are obliged to
E give reasons, absence whereof could render the order
  liable to judicial chastise. Thus, it will not be far from
  alisolute principle of law that the courts should record
  reasons for its conclusions to enable the appellate or
  higher courts to exercise their jurisdiction appropriately
F and in accordance with law. It is the reasoning alone, that
  can enable a higher or an appellate court to appreciate
  the controversy in issue in its correct perspective and to
  hold whether the reasoning recorded by the Court whose
  order is impugned, is sustainable in law and whether it
  has adopted the correct legal approach. To sub-serve the
G purpose of justice delivery system, therefore, it is
  essential that the Courts should record reasons for its
  conclusions, whether disposing of the case at admission
  stage or after regular hearing. [Para 11] [637-D-G]
H         3. Recording of reasons is an essential feature of
 ASSTT. COMMNR., COMMR. TAX DEPTI. WORKS CONTRACT &      629
          LEASING, KOTA v. SHUKLA & BROTHERS

dispensation of justice. A litigant who approaches the          A
court with any grievance in accordance with law is
entitled to know the reasons for grant or rejection of his
prayer. Reasons are the soul of orders. Non-recording of
reasons could lead to dual infirmities; firstly, it may cause
prejudice to the affected party and secondly, more              B
particularly, hamper the proper administration of justice.
These principles are not only applicable to administrative
or executive actions, but they apply with equal force and:
in fact, with ~ greater degree of precision to judicial
pronouncements. A judgment without reasons causes               c
prejudice to the person against whom it is pronounced,
as that litigant is unable to know the ground which
weighed with the court in rejecting his claim and also
causes impediments in his taking adequate and
appropriate grounds before the higher Court in the event        0
of challenge to that judgment. [Para 12] [637-H; 638-A-C]

      Mc Dermott International ~nc. v. Bum Standard Co. Ltd.
and Ors. (2006) SLT 345; Gurdial Singh Fijji v. State of
Punjab (1979) 2 SCC 368; State of Maharashtra v. Vithal Rao
Pritirao Chawan (1981) 4 SCC 129, relied on.                    E
     4. The principle of natural justice has twin
ingredients; firstly, the person who is likely to be
adversely affected by the action of the authorities should
be given notice to show cause thereof and granted an            F
opportunity of hearing and secondly, the orders so
passed by the authorities should give reason for arriving
at any conclusion showing proper application of mind.
Violation of either of them could in the given facts and
circumstances of the case, vitiate the order itself. Such       G
rule being applicable to the administrative authorities
certainly requires that the judgment of the court should
meet with this requirement with higher degree of
satisfaction. The order of an administrative authority may
not provide reasons like a judgment but the order must          H
be supported by the reasons of rationality. The
    630     SUPREME COURT REPORTS               [2010] 4 S.C.R.

A distinction between passing of an order by an
  administrative or quasi-judicial authority has practically
  extinguished and both are required to pass reasoned
  orders. [Para 13] [638-D-G]

8        Siemens Engineering and Manufacturing Co. of India
    Ltd. v. Union of India and Anr. AIR 1976 SC 1785, relied on.

         5. The requirement of recording reasons is applicable
    with greater rigor to the judicial proceedings. The orders
    of the court must reflect what weighed with the court in
C · granting or declining the relief claimed by the applicant.
    [Para 17] [640-H; 641-A]

         Mis. Pipe Arts India Pvt. Ltd. v. Gangadhar Nathuji
    Golamare 2008 (6) Maharashtra Law Journal 280; State of
o   Uttaranchal v. Sunil Kumar Singh Negi (2008) 11 SCC 205,
    relied on.

         "Administrative Law" by H.W.R. Wade 7th Edition,
    referred to.

E      6. A litigant has a legitimate expectation of knowing
  reasons for rejection of his claim/prayer. It is then alone,
  that a party would be in a position to challenge the order
  on appropriate grounds. Besides, this would be for the
  benefit of the higher or the appellate court. As arguments
F bring things hidden and obscure to the light of reasons,
  reasoned judgment where the law and factual matrix of
  the case is discussed, provides lucidity and foundation
  for conclusions or exercise of judicial discretion by the
  courts. Reason is the very life of law. When the reason
G of a law once ceases the law itself generally ceases. Such
  is the significance of reasoning in any rule of law. Giving
  reasons furthers the cause of justice as well as avoids
  uncertainty. As a matter of fact it helps in the observance
  of law of precedent. Absence of reasons on the contrary
H essentially introduces an element of uncertainty, dis-
 ASSTT. COMMNR., COMMR. TAX DEPTT. WORKS CONTRACT & 631
          LEASING, KOTA v. SHUKLA & BROTHERS

satisfaction and give entirely different dimensions to the A
questions of law raised before the higher/appellate
courts. The court should provide its own grounds and
reasons for rejecting claim/prayer of a party whether at
the very threshold i.e. at admission stage or after regular
hearing, howsoever precise they may be. [Para 20) [650- B
F-H; 651-A-C]

    Wharton's Law Lexicon, referred to.

     7. When reasons are announced and can be
weighed, the public can have assurance that process of C
correction is in place and working. It is the requirement
of law that correction process of judgments should not
only appear to be implemented but also seem to have
been properly implemented. Reasons for an order would
ensure and enhance public confidence and would D
provide due satisfaction to the consumer of justice under
justice dispensation system. [Para 21) [651-C-E]

     8. It may not be very correct in law to say, that there
is a qualified duty imposed upon the courts to record E
reasons. Procedural law and the established practice, in
fact, imposes unqualified obligation upon the courts to
record reasons. There is hardly any statutory provision
under the Income Tax Act or under the Constitution itself
requiring recording of reasons in the judgments but it is F
unequivocally settled that the courts and tribunals are
required to pass reasoned judgments/orders. In fact,
Order XIV Rule 2 r/w Order XX Rule 1 CPC requires that,
the court should record findings on each issue and such
findings which obviously should be reasoned would form
part of the judgment, which in turn would be the basis G
for writing a decree of the Court. [Para 21] [651-E-G]

    9. By practice adopted in all courts and by virtue of
judge made law, the concept of reasoned judgment has
become an indispensable part of basic rule of law and, H
    632     SUPREME COURT REPORTS               [2010] 4 S.C.R.

A   in fact, is a mandatory requirement of the procedural law.
    Clarity of thoughts leads to clarity of vision and proper
    reasoning is the foundation of a just and fair decision.
    [Para 22) [651-H; 652-A-B]

       10. There is a rationale, logic and purpose behind a
8
  reasoned judgment. A reasoned judgment is primarily
  written to clarify own thoughts; communicate the
  reasons for the decision to the concerned and to provide
  and ensure that such reasons can be appropriately
C considered by the appellate/higher court. Absence of
  reasons thus would lead to frustrate the very object
  stated hereinabove. [Para 22) [652-C-D]

        11. In the instant case, it cannot be doubted that
   challenge was raised to the order of the Rajasthan Tax
D Board before the High Court on alleged questions of law
   as well as mixed question of law and fact. The plea that
   the respondent had not manufactured the shutters from
   the tax paid raw material and also that the contract in
   question was not impartible but a consequential item for
E completion of the contract required examination by the
 · High Court. It is true that requirement of stating reasons
   for judicial orders necessarily does not mean a very
   detailed or lengthy order, but there should be some
   reasoning recorded by the Court for declining or granting
F relief to the petitioner. The purpose, is to make the litigant
   aware of the reasons for which the relief is declined as
   well as to help the higher Court in assessing the
   correctness of the view taken by the High Court while
   disposing off a matter. May be, while dealing with the
   matter at the admission stage even recording of short
G listening dealing with the merit of the contentions raised
   before the High Court may suffice, in contrast, a detailed
   judgment while matter is being disposed off after final
   hearing, but in both events, it is imperative for the High

H
 ASSTT COMMNR., COMMR. TAX DEPTI. WORKS CONTRACT & 633
         LEASING, KOTA v. SHUKLA & BROTHERS

Court to record its own reasoning however short it might A
be. [Para 23] [652-E-H; 653-A-B]

                     Case Law Reference:

    (1990) 4 sec 594          relied on.            Para 10
                                                                  B
    AIR 1976 SC 1785          relied on.            Para 13

    (2006) SLT 345            relied on.            Para 14

    (1979) 2 sec 368          relied on.            Para 15

    (1981) 4 sec 129          relied on.            Para 16       c
    2008 (6) Maharashtra      relied on.            Para 18

    Law Journal 280
    (2008) 11 sec 205         relied on.            Para 19       D
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3289 of 2010.

      From the Judgment & Order dated 29.2.2008 of the High
Court for Rajasthan, Bench at Jaipur in S.B. Sales Tax Revision   E
Petition No. 92 of 2007.

    Abhishek Gupta, Milind Kumar, Jatinder Kumar Bhatia
(NP) for the Appellant.

    The Judgment of the Court was delivered by                    F

    SWATANTER KUMAR, J. 1. Delay condoned.

    2. Leave granted.

     3. The present appeal under Article 136 of the Constitution G
of India is directed against the Judgment dated 29th February,
2008 passed by the High Court of Judicature for Rajasthan
Bench at Jaipur in S.B. Sales Tax Revision Petition No.92 of
2007, and in exercise of its power under Section 86 of
Rajasthan Sales Tax Act 1994 (for short 'the Act'). The H
    634       SUPREME COURT REPORTS                  [2010) 4 S.C.R.


A   impugned Order reads as under:-

                "After having carefully gone through the material on
          record, since after due consideration proper discretion has
          already been used by the Deputy Commissioner
          (Appeals) as also Rajasthan Tax Board, in the facts and
8
          circumstances, no further interference is called fer by this
          Court.

               The revision petition is dismissed accordingly as
          having no merits."
c
         4. The Learned Counsel appearing for the appellant,
    Assistant Commissioner of Income Tax has argued that Order
    passed by the High Court does not record any reasons for
    dismissing the Revision Petition preferred by the Department.
D   According to the Learned Counsel, various contentions raised
    as grounds in the Revision Petition and two questions of law
    formulated by the Department for consideration in the High
    Court while impugning the judgment of the Rajasthan Tax
    Board, Ajmer have not been reverted to by the High Court,
E   resulting in serious prejudice caused to the present petitioner,
    On merits as well, challenge has been raised to the Order of
    the Tax Board as well as that of the Order of the High Court.

          5. It may be necessary for that to refer to the basic facts
    giving rise to the present appeal. The respondent claimed to
F   be a contractor who has obtained impartible contract of
    constructing 400 shops in JP Market, Chhota Talab, Kota. As
    per the contract the shops were to be handed over to Cloth
    Merchant Association, Kota. The respondent had received
    Rs.95, 26, 276.00 in the year 1997-98 and Rs.22, 38, 026.00
G   in the year 1998-99. The assessing authority formed an opinion
    and recorded a finding that the shutters and doors were not
    manufactured from tax paid raw material in impartible contract
    and as such shutter was excluded from labour charges in the
    above years, and levied tax, interest, penalty and surcharge
H   upon the respondent. The order of the assessing authority
ASSTT COMMNR., COMMR. TAX DEPTI. WORKS CONTRACT & 635
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

dated 19th July, 2000 and 22nd February, 2001 respectively A
were challenged by the respondent before the Deputy
Commissioner (Appeals), Kota and intended that if the shutters
were not installed in the shops, then as per the contract the
shops would not have deemed to be complete. Relying upon
the judgments of the Supreme Court in Gannon Dunkerley & B
Co. (Madras) Ltd. - State of Madras [AIR 1958 SC 560) as well
as State of Rajasthan vs. Man Industrial Corporation [(2003)
7 SCC 522) it was contended that in an impartible work contract
as per the terms of that contract, the material has been used
in work contract and there was no contract for manufacturing c
shutters. Thus on account of execution of impartible work
contract, the property was immovable and tax could not be
levied thereon.

     6. The appeal preferred by the respondent was accepted
by the Deputy Commissioner vide his Order dated 23rd                D
February, 2002. This Order was assailed in appeal by the
Department before the Rajasthan Tax Board which also came
to be rejected vide Order dated 18th October, 2003. The Board
accepted the plea of the respondent that the shutters and doors
were manufactured from tax paid raw material in a work              E
contract, therefore, could not be the goods transferred for the
purposes of levy of tax, holding the same not justifiable to set
aside the levy of tax, penalty, interest or surcharge. Aggrieved
from the Order of the Board dated 23rd February, 2002, the
appellant filed Tax Revision before the High Court and inter alia   F
and raised the following questions of law:-

    A. Whether the Rajasthan Tax Board Ajmer was justified
     in dismissing the appeal of the petitioner in the facts and
     as mentioned above?
                                                                    G
     B. Whether the iron rolling shutters & doors were fixed by
     the assessee on the shops are taxable or not, when no tax
     was paid by the assessee on the construction of iron rolling
     shutters and doors?
                                                                    H
    636     SUPREME COURT REPORTS                    (2010] 4 S.C.R.


A        7. As is evident from the facts narrated in the Revision
    Petition and the grounds raised besides raising the question
    of law, a factual controversy was also raised going to the very
    root of the case, that the rolling shutters & doors fixed by the
    respondent on the shops were not manufactured of tax paid
B   material. Thus, question of law, mixed questions of law and
    facts were not examined by the High Court in some detail, but
    as already noticed, by one line order the Revision Petition was
    dismissed. During the course of hearing, we were informed that
    arguments were also addressed with reference to judgments
c   of this Court which were also cited before the Board. However
    we find no mention thereof in the impugned Order. It was also
    contended that similar questions do arise in number of other
    cases, thus it was expected of the High Court to deal with the
    contentions rather than pass a cryptic order.

D         8. We do find that there is substance in the contention
    raised on behalf of the petitioner before us. It would have been
    desirable if the High Court would have recorded some reasons
    for rejecting the Revision Petition preferred by the Department.

E         9. The increasing institution of cases in all Courts in India
    and its resultant burden upon the Courts has invited attention
    of all concerned in the justice administration system. Despite
    heavy quantum of cases in Courts, in our view, it would neither
    be permissible nor possible to state as a principle of law. that
F   while exercising power of judicial review on administrative
    action and more particularly judgment of courts in appeal before
    the higher Court, providing of reasons can never be dispensed
    with. The doctrine of audi alteram partem has three basic
    essentials. Firstly, a person against whom an order is required
G   to be passed or whose rights are likely to be affected adversely
    must be granted an opportunity of being heard. Secondly, the
    concerned authority should provide a fair and transparent
    procedure and lastly, the authority concerned must apply its
    mind and dispose of the matter by a reasoned or speaking
    order. This has been uniformly applied by courts in India and
H   abroad.
ASSTT COMMNR., COMMR. TAX DEPTT. WORKS CONTRACT & 637
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.)

     10. The Supreme Court in the case of S.N. Mukherjee v.           A
Union of India [(1990) 4 SCC 594], while referring to the
practice adopted and insistence placed by the Courts in United
States, emphasized the importance of recording of reasons for
decisions by the administrative authorities and tribunals. It said
"administrative process will best be vindicated by clarity in its     B
exercise". To enable the Courts to exercise the power of review
in consonance with settled principles, the authorities are
advised of the considerations underlining the action under
review. This Court with approval stated:-
                                                                      C
     "the orderly functioning of the process of review requires
     that the grounds upon which the administrative agency
     acted be clearly disclosed and adequately sustained."

       11. In exercise of the power of judicial review, the concept
of reasoned orders/actions has been enforced equally by the           D
foreign courts as by the courts in India. The administrative
authority and tribunals are obliged to give. reasons, absence
whereof could render the order liable to judicial chastise. Thus,
it will not be far from absolute principle of law that the Courts
should record reasons for its conclusions to enable the               E
appellate or higher Courts to exercise their jurisdiction
appropriately and in accordance with law. It is the reasoning
alone, that can enable a higher or an appellate court to
appreciate the controversy in issue in its correct perspective
and to hold whether the reasoning recorded by the Court whose         F
order is impugned, is sustainable in law and whether it has
adopted the correct legal approach. To sub-serve the purpose
of justice delivery system, therefore, it is essential that the
Courts should record reasons for its conclusions, whether
disposing of the case at admission stage or after regular             G
hearing.

    12. At the cost of repetition, we may notice, that this Court
has consistently taken the view that recording of reasons is an
essential feature of dispensation of justice. A litigant who
approaches the Court with any grievance in accordance with            H
    638       SUPREME COURT REPORTS                     (2010] 4 S.C.R.


A law is entitled to know the reasons for grant or rejection of his
  prayer. Reasons are the soul of orders. Non-recording of
  reasons could lead to dual infirmities; firstly, it may cause
  prejudice to the affected party and secondly, more particularly,
  hamper the proper administration of justice. These principles
B are not only applicable to administrative or executive actions.
  but they apply with equal force and, in fact, with a greater
  degree of precision to judicial pronouncements. A judgment
  without reasons causes prejudice to the person against whom
  it is pronounced, as that litigant is unable to know the ground
c which weighed with the Court in rejecting his claim and also
  causes impediments in his taking adequate and appropriate
  grounds before the higher Court in the event of challenge to that
  judgment. Now, we may refer to certain judgments of this Court
  as well as of the High Courts which have taken this view.
D         13. The principle of natural justice has twin ingredients;
  firstly, the person who is likely to be adversely affected by the
  action of the authorities should be given notice to show cause
  thereof and granted an opportunity of hearing and secondly, the
  orders so passed by the authorities should give reason for
E arriving at any conclusion showing proper application of mind.
  Violation of either of them could in the given facts and
  circumstances of the case, vitiate the order itself. Such rule
  being applicable to the administrative authorities certainly
  requires that the judgment of the Court should meet with this
F requirement with higher degree of satisfaction. The order of an
  administrative authority may not provide reasons like a judgment
  but the order must be supported by the reasons of rationality.
  The distinction between passing of an order by an
  administrative or quasi-judicial authority has practically
G extinguished and both are required to pass reasoned orders.
  In the case of Siemens Engineering and Manufacturing Co.
  of India Ltd. v. Union of India and Anr. [AIR 1976 SC 1785],
  the Supreme Court held as under:-

          "6 ....... If courts of law are to be replaced by administrative
H
ASSTT COMMNR., COMMR. TAX DEPTT WORKS CONTRACT &639
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

    authorities and tribunals, as indeed, in some kinds of A
    cases, with the proliferation of Administrative Law, they
    may have to be so replaced, it is essential that
    administrative authorities and tribunals should accord fair
    and proper hearing to the persons sought to be affected
    by their orders and give sufficiently clear and explicit B
    reasons in support of the orders made by them. Then
    alone administrative authorities and tribunals exercising i
    quasi-judicial function will be able to justify their existence
    and carry credibility with the people by inspiring confidence
    in the adjudicatory process. The rule requiring reasons to        c
    be given in support of an order is, like the principle of audi
    alteram partem, a basic principle of natural justice which
    must inform every quasi-judicial process and this rule must
    be observed in its proper spirit and mere pretence of
    compliance with it would not satisfy the requirement of law.
                                                                    0
       "

     14. In the case o( Mc Dermott International Inc. v. Burn
Standard Co. Ltd. and Ors. (2006) SLT 345, the Supreme
Court clarified the rationality behind providing of reasons and
stated the principle as follows:-                                     E

    "... Reason is a ground or motive for a belief or a course
    of action, a statement in justification or explanation of
    belief or action. It is in this sense that the award must state
    reasons for the amount awarded.                                   F
          The rationale of the requirement of reasons is that
    reasons assure that the arbitrator has not acted
    capriciously. Reasons reveal the grounds on which the
    Arbitrator reached the conclusion which adversely affects
    the interests of a party. The contractual stipulation of G
    reasons means, as held in Poyser and Mills' Arbitration in
    Re, 'proper adequate reasons'. Such reasons shall not only
    be intelligible but shall be a reason connected with the
    case which the Court can see is proper. Contradictory
    reasons are equal to lack of reasons .... "                H
    640       SUPREME COURT REPORTS                    [2010] 4 S.C.R.


A        15. In Gurdial Singh Fijji v. State of Punjab [(1979) 2 SCC
    368], while dealing with the matter of selection of candidates
    who could be under review, if not found suitable otherwise, the
    Court explained the reasons being a link between the materials
    on which certain conclusions are based and the actual
B   conclusions and held, that where providing reasons for
    proposed supersession were essential, then it could not be held
    to be a valid reason that the concerned officer'slrecord was
    not such as to justify his selection was not contemplated and
    thus was not legal. In this context, the Cou~. held -
c         "... "Reasons" are the links between the materials on which
          certain conclusions are based and the actual conclusions.
          The Court accordingly held that the mandatory provisions
          of Regulation 5(5) were not complied with by the Selection
          Committee. That an officer was "not found suitable" is the
D         conclusion and not a reason in support of the decision to
          supersede him. True, that it is not expected that the
          Selection Committee should give anything approaching
          the judgment of a Court, but it must at least state, as briefly
          as it may, why it came to the conclusion that the officer
E         concerned was found to be not suitable for inclusion in the
          Select List."

          16. This principle has been extended to administrative
    actions on the premise that it applies with greater rigor to the
F   judgments of the Courts. In State of Maharashtra v. Vithal Rao
    Pritirao Chawan [(1981) 4 SCC 129], while remanding the
    matter to the High Court for examination of certain issues raised,
    this Court observed:

          "... It would be for the benefit of this Court that a speaking
G         judgment is given".

       17. In the cases where the Courts have not recorded
  reasons in the judgment, legality, propriety and correctness of
  the orders by the Court of competent jurisdiction are challenged
H in absence of proper discussion. The requirement of recording
ASSTT. COMMNR., COMMR. TAX DEPTT WORKS CONTRACT & 641
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

reasons is applicable with greater rigor to the judicial A
proceedings. The orders of the Court must reflect what weighed
with the Court in granting or declining the relief claimed by the
applicant. In this regard we may refer to certain judgments of
this Court.
                                                                  B
     18. A Bench of Bombay High Court in the case of Mis.
Pipe Arts India Pvt. Ltd. V. Gangadhar Nathuji Golamare
[2008 (6) Maharashtra Law Journal 280], wherein the Bench
was concerned with an appeal against an order, where prayer
for an interim relief was rejected without stating any reasons in C
a writ petition challenging the order of the Labour Court noticed,
that legality, propriety and correctness of the order was
challenged on the ground that no reason was recorded by the
learned Single Judge while rejecting the prayer and this has
seriously prejudiced the interest of justice. After a detailed
discussion on the subject, the Court held:-                        D

    "The Supreme Court and different High Courts have taken
    the view that it is always desirable to record reasons in
    support of the Government actions whether administrative
    or quasi judicial. Even if the statutory rules do not impose E
    an obligation upon the authorities still it is expected of the
    authorities concerned to act fairly and in consonance with
    basic rule of law. These concepts would require that any
    order, particularly, the order which can be subject matter
    of judicial review, is reasoned one. Even in the case of F
    Chabungbambohal Singh v. Union of India and Ors. 1995
    (Suppl) 2 SCC 83, the Court held as under:

            "His assessment was, however, recorded as "very
            good" whereas qua the appellant it had been stated
            unfit. As the appellant was being superseded by G
            one of his juniors, we do not think if it was enough
            on the part of the Selection Committee to have
            merely stated unfit, and then to recommend the
            name of one of his juniors. No reason for unfitness,
            is reflected in the proceedings, as against what H
    642       SUPREME COURT REPORTS                   [2010] 4 S.C.R.


A                earlier Selection Committees had done to which
                 reference has already been made."

          In the case of Jawahar Lal Singh v. Naresh Singh and
          Ors. (1987) 2 SCC 222, accepting the plea that absence
          of examination of reasons by the High Court on the basis
B
          of which the trial Court discarded prosecution evidence
          and recorded the finding of an acquittal in favour of all the
          accused was not appropriate, the Supreme Court held that
          the order should record reasons. Recording of proper
          reasons would be essential, so that the Appellate Court
c         would have advantage of considering the considered
          opinion of the High Court on the reasons which had
          weighed with the trial Court.

          In the case of State of Punjab and Ors. v. Surinder Kumar
D         and Ors. [(1992) 1 sec 489], while noticing the
          jurisdictional distinction between Article 142 and Article
          226 of the Constitution of India, the Supreme Court stated
          that powers of the Supreme Court under Article 142 are
          much wider and the Supreme Court would pass orders to
E         do complete justice. The Supreme Court further reiterated
          the principle with approval that the High Court has the
          jurisdiction to dismiss petitions or criminal revisions in
           limini or grant leave asked for by the petitioner but for
          adequate reasons which should be recorded in the order.
F         The High Court may not pass cryptic order in relation to
          regularisation of service of the respondents in view of
          certain directions passed by the Supreme Court under
          Article 142 of the Constitution of India. Absence of
           reasoning did not find favour with the Supreme Court. The
          Supreme Court also stated the principle that powers of the
G
           High Court were circumscribed by limitations discussed
          and declared by judicial decision and it cannot transgress
          the limits on the basis of whims or subjective opinion
          varying from Judge to Judge.

H         In the case of Hindustan Times Ltd. v. Union of India and
ASSTI. COMMNR., COMMR. TAX DEPTT WORKS CONTRACT & 643
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

    Ors. [(1998) 2 SCC 242], the Supreme Court while dealing A
    with the cases under the Labour Laws and Employees'
    Provident Funds and Miscellaneous Provisions Act, 1952
    observed that even when the petition under Article 226 is
    dismissed in limini, it is expected of the High Court to pass
    a speaking order, may be briefly.                             B

    Consistent with the view expressed by the Supreme Court
    in the afore-referred cases, in the case of State of U.P. v.
    Battan and Ors. [(2001) 10 SCC 607], the Supreme Court
    held as under:
                                                                   c
           "The High Court has not given any reasons for
           refusing to grant leave to file appeal against
           acquittal. The manner in which appeal against
           acquittal has been dealt with by the High Court
           leaves much to be desired. Reasons introduce D
           clarity in an order. On plainest consideration of
           justice, the High Court ought to have set forth its
           reasons, howsoever brief, in its order. The absence
           of reasons has rendered the High Court order not
           sustainable."                                       E

    Similar view was also taken by the Supreme Court in the
    case of Raj Kishore Jha v. State of Bihar and Ors. JT
    2003 (Supp.2) SC 354.

    In a very recent judgment, the Supreme Court in the case F
    of State of Orissa v. Dhaniram Luhar (2004) 5 SCC 568
    while dealing with the criminal appeal, insisted that the
    reasons in support of the decision was a cardinal principle
    and the High Court should record its reasons while
    disposing of the matter. The Court held as under:           G

           "8. Even in respect of administrative orders Lord
           Denning, M.R. In Breen v. Amalgamated Engg.
           Union observed:

           ''The giving of reasons is one of the fundamentals      H
    644      SUPREME COURT REPORTS                     [2010] 4 S.C.R.


A                of good administration." In Alexander Machinery
                 (Dudley) Ltd. v. Crabtree it was observed: "Failure
                 to give reasons amounts to denial of justice."
                 "Reasons are live links between the mind of the
                 decision-taker to the controversy in question and
B                the decision or conclusion arrived at." Reasons
                 substitute subjectivity by objectivity. The emphasis
                 on recording reasons is that if the decision reveals
                 the "inscrutable face of the sphinx'', it can, by its
                 silence, render it virtually impossible for the Courts
c                to perform their appellate function or exercise the
                 power of judicial review in adjudging the validity of
                 the decision. Right to reason is an indispensable
                 part of a sound judicial system; reasons at least
                 sufficient to indicate an application of mind to the
D                matter before Court. Another rationale is that the
                 affected party can know why the decision has gone
                 against him. One of the salutary requirements of
                 natural justice is spelling out reasons for the order
                 made; in other words, a speaking-out. The
                 "inscrutable face of the sphinx" is ordinarily
E
                 incongruous with a judicial or quasi-judicial
                 performance."

          Following this very view, the Supreme Court in another very
          recent judgment delivered on 22nd February, 2008, in the
F         case of State of Rajasthan v. Rajendra Prasad Jain
          Criminal Appeal No. 36012008 (Arising out of SLP (Crl.)
          No. 904/2007) stated that "reason is the heartbeat of every
          conclusion, and without the same it becomes lifeless."

          Providing of reasons in orders is of essence in judicial
G
          proceedings. Every litigant who approaches the Court with
          a prayer is entitled to know the reasons for acceptance or
          rejection of such request. Either of the parties to the lis has
          a right of appeal and, therefore, it is essential for them to
          know the considered opi:1ion of the Court to make the
H
ASSTI COMMNR., COMMR. TAX DEPTT. WORKS CONTRACT &645
LEASING, KOTA v. SHUKLA & BROTHERS (SWATANTER KUMAR, J.]

   remedy of appeal meaningful. It is the reasoning which            A
   ultimately culminates into final decision which may be
   subject to examination of the appellate or other higher
   Courts. It is not only desirable but, in view of the consistent
   position of law, mandatory for the Court to pass orders
   while recording reasons in support thereof, however, brief        B
   they may be. Brevity in reasoning cannot be understood
   in legal parlance as absence of reasons. While no
    reasoning in support of judicial orders is impermissible,
   the brief reasoning would suffice to meet the ends of justice
   at least at the interlocutory stages and would render the         c
   remedy of appeal purposeful and meaningful. It is a settled
   canon of legal jurisprudence that the Courts are vested with
   discretionary powers but such powers are to be exercised
   judiciously, equitably and in consonance with the settled
   principles of law. Whether or not, such judicial discretion       D
   has been exercised in accordance with the accepted
   norms, can only be reflected by the reasons recorded in
   the order impugned before the higher Court. Often it is said
   that absence of reasoning may ipso facto indicate
   whimsical exercise of judicial discretion. Patricia Wald,
   Chief Justice of the D.C. Circuit Court of Appeals in the         E
   Article, Blackrobed Bureaucracy Or Collegiality Under
   Challenge, (42 MD.L. REV. 766, 782 (1983), observed as
   under:-

         "My own guiding principle is that virtually every           F
   appellate decision requires some statement of reasons.
   The discipline of writing even a few sentences or
   paragraphs explaining the basis for the judgment insures
   a level of thought and scrutiny by the Court that a bare
   signal of affirmance, dismissal, or reversal does not."           G

   The Court cannot lose sight of the fact that a losing litigant
   has a cause to plead and a right to challenge the order if
   it is adverse to him. Opinion of the Court alone can explain
   ttie cause which led to passing of the final order. Whether       H
    646       SUPREME COURT REPORTS                    [2010] 4 S.C.R.


A         an argument was rejected validly or otherwise, reasoning
          of the order alone can show. To evaluate the submissions
          is obligation of the Court and to know the reasons for
          rejection of its contention is a legitimate expectation on the
          part of the litigant. Another facet of providing reasoning is
B         to give it a value of precedent which can help in reduction
          of frivolous litigation. Paul D. Carrington, Daniel J Meador
          and Maurice Rosenburg, Justice on Appeal 10 (West
          1976), observed as under:-

                "When reasons are announced and can be weighed,
c         the public can have assurance that the correcting process
          is working. Announcing reasons can also provide public
          understanding of how the numerous decisions of the
          system are integrated. In a busy Court, the reasons are an
          essential demonstration that the Court did in fact fix its mind
D         on the case at hand. An unreasoned decision has very little
          claim to acceptance by the defeated party, and is difficult
          or impossible to accept as an act reflecting systematic
          application of legal principles. Moreover, the necessity of
          stating reasons not infrequently changes the results by
E         forcing the judges to come to grips with nettlesome facts
          or issues which their normal instincts would otherwise
          cause them to avoid."

          The reasoning in the opinion of the Court, thus, can
          effectively be analysed or scrutinized by the Appellate
F
          Court. The reasons indicated by the Court could be
          accepted by the Appellate Court without presuming what
          w~ighed with the Court while coming to the impugned
          decision. The cause of expeditious and effective disposal
          would be furthered by such an approach. A right of appeal
G
          could be created by a special statute or under the
          provisions of the Code governing the procedure. In either
          of them, absence of reasoning may have the effect of
          negating the purpose or right of appeal and, thus, may not
          achieve the ends of justice.
H
ASSTT. COMMNR., COMMR. TAX DEPTI. WORKS CONTRACT &647
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

    It will be useful to refer words of Justice Roslyn Atkinson, A
    Supreme Court of Queensland, at AIJA Conference at
    Brisbane on September 13, 2002 in relation to Judgment
    Writing. Describing that some judgment could be complex,
    in distinction to routine judgments, where one requires
    deeper thoughts, and the other could be disposed of easily B
    but in either cases, reasons they must have. While speaking
    about purpose of the judgment, he said,

         "The first matter to consider is the purpose of the
    judgment. To my mind there are four purposes for any
    judgment that is written: -                              C

    (1) to clarify your own thoughts;

    (2) to explain your decision to the parties;

    (3) to communicate the reasons for the decision to the      D
    public; and

    (4) to provide reasons for an appeal Court to consider."

    Clarity of thought leads to proper reasoning and proper E
    reasoning is the foundation of a just and fair decision. In
    Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR
    120, the Court went to the extent of observing that "Failure
    to give reasons amounts to denial of justice". Reasons are
    really linchpin to administration of justice. They are link F
    between the mind of the decision taker and the controversy
    in question. To justify our conclusion, reasons are
    essential. Absence of reasoning would render the judicial
    order liable to interference by the higher Court. Reasons
    are the soul of the decision and its absence would render
    the order open to judicial chastism. The consistent judicial G
    opinion is that every order determining rights of the parties
    in a Court of law ought not to be recorded without
    supportive reasons. Issuing reasoned order is not only
    beneficial to the higher Courts but is even of great utility
    for providing public understanding of law and imposing self- H
    648      SUPREME COURT REPORTS                    [2010] 4 S.C.R.

A         discipline in the Judge as their discretion is controlled by
          well established norms. The contention raised before us
          that absence of reasoning in the impugned order would
          render the order liable to be set aside, particularly, in face
          of the fact that the learned Judge found merit in the writ
B         petition and issued rule, therefore, needs to be accepted.
          We have already noticed that orders even at interlocutory
          stages may not be as detailed as judgments but should
          be supported by reason howsoever briefly stated.
          Absence of reasoning is impermissible in judicial
c         pronouncement. It cannot be disputed that the order in
          question substantially affect the rights of the parties. There
          is an award in favour of the workmen and the management
          had prayed for stay of the operation of the award.

          The Court has to consider such a plea keeping in view the
D         provisions of Section 17-B of the Industrial Disputes Act,
          where such a prayer is neither impermissible nor improper.
          The contentions raised by the parties in support of their
          respective claims are expected to be dealt with by
          reasoned orders. We are not intentionally expressing any
E         opinion on the merits of the contentions alleged to have
          been raised by respective parties before the learned single
          Judge. Suffice it to note that the impugned order is silent
          in this regard. According to the learned Counsel appearing
          for the appellant, various contentions were raised in support
F         of the reliefs claimed but all apparently, have found no
          favour with the learned Judge and that too for no reasons,
          as is demonstrated from the order impugned in the present
          appeals."
       19. The principles stated by this Court, as noticed supra,
G have been reiterated with approval by a Bench of this Court in
  a very recent judgment, in State of Uttaranchal v. Sunil Kumar
  Singh Negi ((2008) 11 SCC 205], where the Court noticed the
  order of the High Court which is reproduced hereunder:-
H         "I have perused the order dated 27.5.2005 passed by
  ASSTT. COMMNR., COMMR. TAX DEPTI. WORKS CONTRACT & 649
· LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

       Respondent 2 and I do not find any illegality in the order            A
       so as to interfere under Article 226/227 of the Constitution
       of India. The writ petition lacks merit and is liable to be
       dismissed."

       and the Court concluded as under:-                                    B
       "In view of the specific stand taken by the Department in
       the affidavit which we have referred to above, the cryptic
       order passed by the High Court cannot be sustained. The
       absence of reasons has rendered the High Court order not
       sustainable. Similar view was expressed in State of U.P.              c
       v. Battan 1 • About two decades back in State of
       Maharashtra v. Vitha/ Rao Pritirao Chawan 2 the
       desirability of a speaking order was highlighted. The
       requirement of indicating reasons has been judicially
       recognised as imperative. The view was reiterated in                  D
       Jawahar Lal Singh v. Naresh Singh3 .

       In Raj Kishore Jha v. State of Bihar4 this Court has held
       that reason is the heartbeat of every conclusion and without
       the same, it becomes lifeless.                                        E
       "8 .... Right to reason is an indispensable part of a sound
       judicial system; reasons at least sufficient to indicate an
       application of mind to the matter before court. Another
       rationale is that the affected party can know why the
       decision has gone against him. One of the salutary                    F
       requirements of natural justice is spelling out reasons for
                            ,,.
       the order made; ....

       In the light of the factual details particularly with reference
       to the stand taken by the Horticulture Department at length           G
 1.   c2001) 10 sec 607.
 2.   (1981) 4 sec 129.
 3.   (1987) 2 sec 222.

 . (2003) 11 sec 519.
 4.
      As observed in State of Orissa vs. Dhaniram Lunar (2004) 5 SCC 568 .   H
    650       SUPREME COURT REPORTS                   [2010) 4 S.C.R.


A         in the writ petition and in the light of the principles
          enunciated by this Court, namely, right to reason is an
          indispensable part of sound judicial system and reflect the
          application of mind on the part of the court, we are satisfied
          that the impugned order of the High Court cannot be
B         sustained."

       19. Besides referring to the above well-established
  principles, it will also be useful to refer to some text on the
  subject. H.W.R. Wade in the book "Administrative Law, 7th
C Edition, stated that the flavour of said reasons is violative of a
  statutory duty to waive reasons which are normally mandatory.
  Supporting a view that reasons ·for decision are essential, it
  was stated:-

          ".....A right to reasons is, therefore, an indispensable part
D         of a sound system of judicial review. Natural justice may
          provide the best rubric for it, since the giving of reasons
          is required by the ordinary man's sense of justice ...

          ... .. Reasoned decisions are not only vital for the purposes
          of showing the citizen that he is receiving justice: they are
E
          also a valuable discipline for the tribunal itself..... "

        20. We are not venturing to comment upon the correctness
  or otherwise of the contentions of law raised before the High
  Court in the present petition, but it was certainly expected of
F the High Court to record some kind of reasons for rejecting the
  revision petition filed by the Department at the very threshold.
  A litigant has a legitimate expectation of knowing reasons for
  rejection of his claim/prayer. It is then alone, that a party would
  be in a position to challenge the order on appropriate grounds.
G Besides, this would be for the benefit of the higher or the
  appellate court. As arguments bring things hidden and obscure
  to the light of reasons, reasoned judgment where the law and
  factual matrix of the case is discussed, provides lucidity and
  foundation for conclusions or exercise of judicial discretion by
H the courts. Reason is the very life of law. When the reason of a
ASSTT COMMNR., COMMR. TAX DEPTT. WORKS CONTRACT & ss1 ·
LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

law once ceases, the law itself generally ceases (Wharton's Law      A
Lexicon). Such is the significance of reasoning in any rule of
law. Giving reasons furthers the cause of justice as well as
avoids uncertainty. As a matter of fact it helps in the observance
of law of precedent. Absence of reasons on the contrary
essentially introduces an element of uncertainty, dis-satisfaction   B
and give entirely different dimensions to the questions of law
raised before the higher/appellate courts. In our view, the court
should provide its own grounds and reasons for rejecting claim/
prayer of a party whether at the very threshold i.e. at'admission
stage or after regular hearing, howsoever concise they may be.       c
     21. We would reiterate the principle that when reasons are
announced and can be weighed, the public can have assurance
that process of correction is in place and working. It is the
requirement of law that correction process of judgments should
not only appear to be implemented but also seem to have been D
properly implemented. Reasons for an order would ensure and
enhance public confidence and would provide due satisfaction
to the consumer of justice under our justice dispensation·
system. It may not be very correct in law to say, that there is a
qualified duty imposed upon the Courts to record reasons. Our E
procedural law and the established practice, in fact, imposes ·
unqualified obligation upon the Courts to record reasons. There
is hardly any statutory provision under the Income Tax Act or
under the Constitution itself requiring recording of reasons in
the judgments but it is no more res integra and stands F
unequivocally settled by different judgments of this Court holding
that, the courts and tribunals are required to pass reasoned
judgments/orders. In fact, Order XIV Rule 2 read with Order XX
Rule 1 of the Code of Civil Procedure requires that, the Court
should record findings on .each issue and such findings which G
obviously should be reasoned would form part of the judgment,
which in turn would be the basis for writing a decree of the
Court.
                                      •
     22. By practice adopted in all Courts and by virtue of judge    H
    652     SUPREME CO~RT REPORTS                  [2010] 4 S.C.R.


A made law, the concept of reasoned judgment has become an
  indispensable part of basic rule of law and, in fact, is a
  mandatory requirement of the procedural law. Clarity of thoughts
  leads to clarity of vision and proper reasoning is the foundation
  of a just and fair decision. In the case of Alexander Machinery
B (Dudley) Ltd. (supra), there are apt observations in this regard
  to say "failure to give reasons amounts to denial of justice".
  Reasons are the real live links to the administration of justice.
  With respect we will contribute to this view. There is a rationale,
  logic and purpose behind a reasoned judgment. A reasoned
c judgment is primarily written to clarify own thoughts;
  communicate the reasons for the decision to the concerned and
  to provide and ensure that such reasons can be appropriately
  considered by the appellate/higher Court. Absence of reasons
  thus would lead to frustrate the very object stated hereinabove.
  The order in the present case is as cryptic as it was in the case
0
  of Sunil Kumar Singh Negi (supra). Being a cryptic order and
  for the reasons recorded in that case by this Court which we
  also adopt, the impugned order in the present appeal should
  meet the same fate.

E      23. In light of the above principles, now we will revert back
  to the facts of the present appeal. It cannot be doubted that
  challenge was raised to the order of the Board before the High
  Court on alleged questions of law as well as mixed question
  of law and fact. The contention that the respondent had not
F manufactured the shutters from the tax paid raw material and
  also that the contract in question was not impartible but a
  consequential item for completion of the contract required
  examination by the High Court. In light of the judgments referred
  to and relied upon by the parties including the judgment of this
G Court, it is true that requirement of stating reasons for judicial
  orders necessarily does not mean a very detailed or lengthy
  order, but there should be some reasoning recorded by the
  Court for declining or granting relief to the petitioner. The
  purpose, as already noticed, is to make the litigant aware of
H the reasons for which the relief is declined as well as to help
 ASSTT. COMMNR., COMMR. TAX DEPTT. WORKS CONTRACT & 653
 LEASING, KOTA v. SHUKLA & BROTHERS [SWATANTER KUMAR, J.]

 the higher Court in assessing the correctness of the view taken        A
 by the High Court while disposing off a matter. May be, while
 dealing with the matter at the admission stage even recording
 of short reasoning dealing with the merit of the contentions
 raised before the High Court may suffice, in contrast, a detailed
 judgment while matter is being disposed off after final hearing,       B
 but in both events, in our view, it is imperative for the High Court
 to record its own reasoning however short it might be.

       24. We are unable to find any infirmity in the arguments
 advanced on behalf of the Department, that no reasons have             C
 been recorded for rejecting the contentions raised, this legal
 infirmity has, in fact, prejudicially affected the case of the
 appellant before us. The judgment of the High Court must speak
 for itself to enable the higher Court to do complete and effective
 justice between the parties.
                                                                        D
       25. For the reasons afore-recorded we set aside the order
. dated 29th February, 2008 and remit the case to the High Court
  with a request to hear the case de novo and pass appropriate
  order in accordance with law. To that extent the appeal is
  allowed.                                                              E

      26. There shall be no order as to costs.

 K.K.t.                                     Appeal partly allowed.