Supreme Court of India
M/S. KRANTI ASSOCIATES PVT. LTD. & ANR.versusSH. MASOOD AHMED KHAN & OTHERS
- Citation
- 2010 INSC 582
- Decided
- 8 September 2010
- Disposal
- Appeal(s) allowed
- Bench
- G S SINGHVI
Holding
A quasi‑judicial authority must record cogent reasons for its decisions, and non‑reasoned orders are void; each appeal must be heard independently.
Summary
The Supreme Court heard two separate appeals filed by a builder (Kranti Associates) and Corporation Bank against orders of the National Consumer Disputes Redressal Commission (National Commission) that dismissed their revision petitions without providing adequate reasons. The Court examined whether a quasi‑judicial body like the National Commission must record reasons for its decisions and whether each appeal must be heard independently. Relying on Sections 13 and 22 of the Consumer Protection Act, 1986 and a long line of Indian and foreign precedents, the Court held that reasons are an indispensable component of any quasi‑judicial decision and that non‑reasoned orders are liable to be set aside. Consequently, the builder’s appeal was allowed and the National Commission’s order was set aside and remanded for a reasoned decision; the bank’s appeal was also allowed, the State Commission’s order was quashed, and the matter was remanded to the State Commission for an independent hearing with reasons. No costs were awarded.
Issues considered
- The National Commission, as a quasi‑judicial authority, is required to give reasons for its decisions.
- Whether a non‑reasoned order of the National Commission can be set aside.
- Whether separate appeals filed by different parties must be heard independently.
- The right of a party to be heard independently before the State Commission.
Legislation cited
- Code of Criminal Procedure, 1973s. 195
- Consumer Protection Act, 1986s. 12, s. 13, s. 14, s. 20, s. 21, s. 22, s. 23
- Indian Penal Code, 1860s. 193, s. 228
Subjects
Consumer Protection ActQuasi‑judicial authorityReasoned orderNatural justiceNon‑speaking orderRevision petitionAppealNational Consumer Disputes Redressal CommissionAdministrative law
Judgment
{2010) 10 S.C.R. 1070
A MIS. KRANTI ASSOCIATES PVT. LTD. & ANR.
V.
SH. MASOOD AHMED KHAN & OTHERS
(Civil Appeal No. 7472 of 2010)
SEPTEMBER 08, 2010
B
(G..S. SINGHVI AND ASOK KUMAR GANGULY, J.J.]
Judgment/Order: Necessity of reasons - Held: Reasons
are indispensablacomponent of a decision making process
C - Even in administrative decisions, reasons should be
recorded, if such decisions affect anyone prejudicially- Thus,
a quasi-judicial authority must record reasons in support of
its conclusions - National Commission has the trappings of
a civil court and is a high-powered quasi-judicial forum for
D deciding /is between the parties - A non-reasoned order
passed by National Commission is thus liable to be set aside
- Consumer Protection Act, 1986 - ss. 13, 22 - Penal Code,
1860 - ss.193, 228 - Code of Criminal Procedure, 1973 -
s. 195 - Natural justice - Administrative law - Quasi-judicial
E authority.
Appeal: Separate appeals - Held: Each appeal should
.
be heard independently - Natural justice - Right of hearing.
·Two separate appeals were filed by the builder and
F the Corporation Bank challenging the orders of the
National Consumer Disputes Redressal Commission
(National Commission). The case of the appellants was
that the National Commission dismissed their revision
petitions by non-speaking orders.
G
Allowing the appeals, the Court
HELD: 1.1. The power and procedure applicable to
the National Consumer Disputes Redressal Commission
H 1070
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1071
AHMED KHAN
(National Commission) has been provided in Section 22 A
of the Consumer Protection Act. A perusal of Section
22(1) would show that the Sections 12, 13, 14 of the CP
Act with necessary modifications are applicable to the
decision making process by the National Commission.
Under Section 13 of the CP Act, the District Forum has s
been vested, in certain matters, with the powers of the
civil court while trying a suit. Section 13(4) of CP Act is
applicable to the National Commission in view of Section
22(1) thereof. Similarly, Sections 13(5), (6) and (7) will .also
apply to the National Commission in view of Section c
22(1). On a perusal of Sections 13(4), (5), (6) and (7) of the
Consumer 'Protection Act, 1986, it is clear th.at the
National Commission has been vested with some of the
powers of a civil court. [Paras 11-12] [1078-G-H;
1079-A-C]
D
1.2. Under Section 13(5) of the Act, every proceeding
of the National Commission will be deemed to be a
judicial proceeding within the meaning of Sections 193
and 228, IPC, and the said Commission shall be deemed
to be a civil court for the purpose of Section 195 and E
Chapter XXVI of the Code of Criminal Procedure. These
provisions make it clear that the said Commission ·has the
trappings of a civil court and is a high-powered quasi-
judicial forum for deciding /is between the parties. [Paras
13-14] [1079-H; 1080-A-B] F
'
2.1. As regards the necessity of giving reasons by a
body or authority in support of its decision, the
discussion in various judgments is summarized as
follows: In India, the judicial trend has always been to
record reasons, even in administrative decisions, if such G
decisions affect anyone prejudicially. A quasi-judicial
authority must also record reasons in support of its
conclusions. Insistence on recording of reasons is meant
to serve the wider principle of justice that justice must not H
1072 SUPREME COURT REPORTS [2010] 10 S.C.R.
A only be done it must also appear to be done as well.
Recording of reasons also operates as a valid restraint
on any possible arbitrary exercise of judicial and quasi-
judicial or even administrative power. Reasons reassure
that discretion has been exercised by the decision maker
B on relevant grounds and by disregarding extraneous
considerations. Reasons have virtually become as
indispensable a component of a decision making process
as observing principles of natural justice by judicial,
quasi-judicial and even by administrative bodies.
C Reasons facilitate the process of judicial review by
superior courts. The ongoing judicial trend in all countries
committed to rule of law and constitutional governance
is in favour of reasoned decisions based on relevant
facts. This is virtually the life blood of judicial decision
making justifying the principle that reason is the soul of
0
justice. Insistence on reason is a requirement for both
judicial accountability and transparency. If a Judge or a
quasi-judicial authority is not candid enough about his/
her decision making process then it is impossible to
know whether the person deciding is faithful to the
E doctrine of precedent or to principles of incrementalism.
Reasons in support of decisions must be cogent, clear
and succinct. A pretence of reasons or 'rubber-stamp
reasons' is not to be equated with a valid decision making
process. It cannot be doubted that transparency is the
F sine qua non of restraint on abuse of judicial powers.
Transparency in decision making not only makes the
judges and decision makers less prone to errors but also
makes them subject to broader scrutiny. Since the
requirement to record reasons emanates from the broad
G doctrine of fairness in decision making, the said
requirement is now virtually a component of human rights
and was considered part of Strasbourg Jurisprudence.
[Para 51) [1090-G-H; 1091-A-C; 1092-B-H; 1093-A]
H
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1073
AHMED KHAN
A.K. Kraipak and others v. Union of India and others AIR A
1970 SC 150; Kesava Mills Co. Ltd. and another v. Union of
India and others AIR 1973 SC 389; Harinagar Sugar Mills
Ltd. v. Shyam Sunder Jhunjhunwala and others AIR 1961 SC
1669; Bhagat Raja v. Union of India and others AIR 1967 SC
1606; Mis. Mahabir Prasad Santosh Kumar vs. State of U. P B
and others AIR 1970 SC 1302; Mis. Travancore Rayons Ltd.
v.· The Union of India and others AIR 1971 SC 862; Mis.
Woo/combers of India Ltd. v. Woo/combers Workers Union
and another AIR 1973 SC 2758; Union of India v. Mohan Lal
Capoor and others AIR 1974 SC 87; Siemens Engineering c
and Manufacturing Co. of India Ltd. v. The Union of India and
another AIR 1976 SC 1785; Smt. Maneka Gandhi v. Union
of India and Anr. AIR 1978 SC 597; Rama Varma Bharathan
Thampuran v. State of Kera/a and Ors. AIR 1979 SC 1918;
Gurdial Singh Fijji v. State of Punjab and Ors. (1979) 2 SCC D
368; Shri Swamiji of Shri Admar Mutt etc. etc. v. The
Commissioner, Hindu Religious and Charitable Endowments
Dept. and Ors. AIR 1980 SC 1; Mis. Bombay Oil Industries
Pvt. Ltd. v. Union of India and Others AIR 1984 SC 160; Ram
Chander v. Union of India and others AIR 1986 SC 1173; Ml E
s. Star Enterprises and others v. City and Industrial
Development Corporation of Maharashtra Ltd. and others
(1990) 3 SCC 280; Maharasl 'ra State Board of Secondary
and Higher Secondary Education vs. K. S. Gandhi and others
(1991) 2 SCC 716; M.L. Jaggi v. Mahanagar Telephones
Nigam Limited and others (1996) 3 SCC 119; Charan Singh F
v. Healing Touch Hospital and others AIR 2000 SC 3138;
Som Datt Datta v. Union of India and others AIR 1969 SC
414; S.N. Mukherjee v. Union of India AIR 1990 SC 1984 -
relied on.
G
Rigina vs. Gaming Board Ex parte Benaim (1970) 2
WLR 1009; Marta Stefan v. General Medical Council (1999)
1 WLR 1293; R v. Civil Service Appeal Board, ex parte
Cunningham (1991) 4 All ER 310; North Range Shipping
H
1074 SUPREME COURT REPORTS [2010) 10 S.C.R.
A Limited v. Seatrans Shipping Corporation (2002) 1 WLR
2397; English v. Emery Reimbold and Strick Limited (2002)
1 WLR 2409; Cullen v. Chief Constable of the Royal Ulster
Constabulary (2003) 1 WLR 1763; Securities and Exchange
Commission v. Chenery Corporation (1942) 87 Law Ed 626;
B John T. Dunlop· v. Walter Bachowski (1975) 44 Law Ed 377;
Anya v. University of Oxford 2001 EWCA Civ 405 - referred
to.
Strasbourg Jurisprudence (1994) 19 EHRR 553 -
C referred .to.
2.2. In the case of the builder, the National
Commission did not give any reason and dismissed the
revision petition by passing a cryptic order. The said
Commission cannot considering the way it is structured,
D dismiss the revision petition by refusing to give any
reasons and by just affirming the order of the State
Commission. The order of the National Commission is set
aside and the matter is remanded to it for deciding the
matter by passing a reasoned order. [Paras 3, 4, 52]
E [1077-C-D; 1093-D]
Defence of Judicial Candor (1987) 100 Harward Law
Review 731-737 by David Shapiro - referred to.
2.3. In so far as the appeal filed by the Bank is
F concerned, the National Commission gave some reasons
in its finding. The perusal of the order of the State
Commission dated 26.7.07 in connection with the appeal
filed by the Bank shows that the State Commission did
not independently consider Bank's appeal. The State
G Commission dismissed the Bank's appeal for the
reasons given in its order in connection with the appeal
of the builders. Since the Bank had filed a separate
appeal, it had a right to be heard independently in
support of its appeal. That right was denied by the State
H Commission. In that view of the matter, the order dated
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1075
AHMED KHAN
2S.7.07 passed by the State Commission as also the A
order of the National Commission dated 4th April 2008
which had affirmed the order of the State Commission are
set aside and the case is remanded tO' the State
Commission for hearing on merits. [Paras 54--57) [1094-
A-E] B
Case Law Reference:
AIR. 1970 SC 150 relied on Para 15
Al~ 1973 SC 389 relied on Para 16
c
(1970) 2 WLR 1009 referred to Para 16
AIR 1961 SC 1669 relied on Para 19
AIR 1967 SC 1606 relied on Para 22
AIR 1970 SC 1302 relied on
D
Para,,,23
AIR 1971 SC 862 relied on Para 24
AIR 1973 SC 2758 relied on Para 25
AIR 1974 SC 87 relied on Para 26 E
AIR 1976 SC 1785 relied on Para 27
AIR 1978 SC 597 relied on P.ara 28
AIR 1979 SC 1918 relied on Para 31
F
(1979) 2 sec 368 relied on Para 32
AIR 1980 SC 1 relied on Para 33
AIR 1984 SC 160 relied on Para 35
G
AIR 1986 SC 1173 relied on Para 36
(1990) 3 sec 200 relied on Para 37
(1991) 2 sec 716 relied on Para 38
(1996) 3 sec 119 relied on Para 39 H
•
1076 SUPREME COURT REPORTS [2010] 10 S.C.R.
A AIR 2000 SC 3138 relied on Para 40
AIR 1969 SC 414 relied on Para 41
AIR 1990 SC 1984 relied on Para 42
(1999) 1 WLR 1293 referred to Para 45
B
(1991) 4 All ER 310 referred to Para 46
(2002) 1 WLR 2397 referred to Para 48
(2002) 1 WLR 2409 referred to Para 49
c (2003) 1 WLR 1763 referred to Para 49
(1942) 87 Law Ed 626 referred to Para 50
(1975) 44 Law Ed 377 referred to Para 50
D 2001 EWCA Civ 405 referred to Para 51
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7472 of 2010.
From the Judgment & Order dated 31.08.2007 of the
E National Consumer Disputes Redressal Commission, New
Delhi in Revision Petition No. 2889 of 2007.
WITH
C.A. No. 7474 of 2010.
F
Krishnan Venugopal, Dr. Sarabjit Sharma, Seema
Agarwal, Sumit Sharma, Dr. S.K. Verma, Anshu Mahajan,
Gaurav Kejriwal, Anilendra Pandey, Priya Kashyap, M.P.
Shorawala for the appearing parties.
G
The Judgment of the Court was delivered by
GANGULY, J. 1. Leave granted.
2. These two appeals, one at the instance of the builder
H
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1077
AHMED KHAN [ASOK KUMAR GANGULY, J.]
and the other at the instance of the Corporation Bank, have A
been filed impugning the Order of National Consumer Disputes
Redressal Commission (hereinafter, the said Commission).
3. In the case of the builder, the said Commission has not
given any reason and dismissed the revision petition by
8
passing a cryptic order dated 31.8.2007 which reads as under:
"Heard.
In view of the concurrent findings of the State Commission,
we do not find any force in this revision petition. c
The revision Petition is dismissed."
4. In so far as the case of the builder is concerned, this
Court is of the opinion that the said Commission cannot,
considering the way it is structured, dismiss the revision petition D
by refusing to give any reasons and by just affirming the order
of the State Commission.
5. The said Commission has been defined under Section
2(k) of the Consumer Protection Act, 1986 (hereinafter CP Act) E
as follows:
"2(k) "National Commission" means the National
Consumer Disputes Redressal Commission established
under clause (c) of Section 9;"
F
6. Under section 9(c) of CP Act, the said Commission has
been established by the Central Goverriment by a notification.
7. The composition of the said Commission has been
provided under Section 20 of the CP Act and wherefrom it is G
clear that the said Commission is a high-powered adjudicating
forum headed by a sitting or a retired judge of the Supreme
Court.
8. Section 21 of the CP Act provides for the jurisdiction of
the said Commission. H
1078 SUPREME COURT REPORTS [2010] 10 S.C.R.
A 9. In order to appreciate the questions involved in this
case, the provision relating to jurisdiction of the said
Commission is set out hereunder:
"21. Jurisdiction of the National Commission.- Subject to
B the other provisions of this Act, the National Commission
shall have jurisdiction-
(a) to entertain-
(i) complaints where the value of the goods or
c services and compensation, if any, claimed
exceeds [rupees one crore]; and
'(ii) appeals against the orders of any State
Commission; and
D (b) to call for the records and pass appropriate orders in
any consumer dispute which is pending before or has
been decided by any State Commission where it appears
to the National Commission that such State Commission
has exercised a jurisdiction not vested in it by law, or has
E failed to exercise a jurisdiction so vested, or has acted in
the exercise of its jurisdiction illegally or with material
irregularity."
10. Under Section 23 of the CP Act, an appeal would lie
F against the order of the said Commission passed in exercise
of its powers under Section 21(1)(a), to this Court, within 30
days, subject to extension of time by this Court on sufficient
cause being shown. Under Section 21(1)(b), the said
Commission exercises revisional power over orders of State
Commission.
G
11. The power and procedure applicable to the said·
Commission has been provided under Section 22 of the CP
Act. A perusal of Section 22(1) would show that Sections 12,
13 and 14 of CP Act, with necessary modification, are
H applicable to the decision making process by the said
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1079
AHMED KHAN [ASOK KUMAR GANGULY, J.]
Commission. Under Section 13 of the CP Act, the District A
Forum has been vested, in certain matters, with the powers of
a Civil Court while trying a suit. Section 13(4) of CP Act is
applicable to the said Commission in view of Section 22(1)
thereof. Similarly, Sections 13(5), (6) and (7) will also apply to
the said Commission in view of Section 22(1 ). s
12. On a perusal of Sections 13(4), (5), (6) and (7) of the
CP Act, it is clear that the said Commission has been vested
with some of the powers of a Civil Court. The following pow_ers
have been vested on the said Commission:
c
"13(4) For the purposes of this section, the District Forum
shall have the same powers as are vested in a civil court
under Code of Civil Procedure, 1908 (5 of 1908) while
trying a suit in respect of the following matters, namely:-
D
(i) the summoning and enforcing the attendance
of any defendant or witness and examining
the witness on oath,
(ii) the discovery and production of any
document or other material object producible E
as evidence,
(iii) the reception of evidence on affidavits,
(iv) the requisitioning of the report of the
F
concerned analysis or test from the
appropriate laboratory or from any other
relevant source,
(v) issuing of any commission for the
examination of any witness, and G
-~
(vi) any other matter which may be prescribed.
13. Under Section 13(5) of CP Act, every proceeding of
the said Commission will be deemed to be a judicial
H
1080 SUPREME COURT REPORTS (2010) 10 S.C.R.
A proceeding within the meaning of Sections 193 and 228 of the
Indian Penal Code, and the said Commission shall be deemed
to be a Civil Court for the purpose of Section 195 and Chapter
XXVI of the Code of Criminal Procedure.
14. The above provisions make it clear that the said
8
Commission has the trappings of a Civil Court and is a high-
powered quasi-judicial forum for deciding lis between the
parties.
15. The necessity of giving reason by a body or authority
C in support of its decision came up for consideration before this
C~urt in several cases. Initially this Court recognized a sort of
demarcation between administrative orders and quasi-judicial
orders but with the passage of time the distinction between the
two got blurred and thinned out and virtually reached a vanishing
D point in the judgment of this Court in AK. Kraipak and others
vs. Union of India and others reported in AIR 1970 SC 150.
16. In Kesava Mills Co. Ltd. and another vs. Union of
India and others reported in AIR 1973 SC 389, this Court
E approvingly referred to the opinion of Lord Denning in Rigina
vs. Gaming Board Ex parte Benaim ((1970) 2 WLR 1009) and
quoted him as saying "that heresy was scotched in Ridge and
Baldwin, 1964 AC 40".
17. The expression 'speaking order' was first coined by
F Lord Chancellor Earl Cairns in a rather strange context. The
Lord Chancellor, while explaining the ambit of Writ of Certiorari,
referred to orders with errors on the face of the record and
pointed out that an order with errors on its face, is a speaking
order. (See 1878-97 Vol. 4 Appeal Cases 30 at 40 of the
G report)
18. This Court always opined that the face of an order
passed by a quasi-judicial authority or even an administrative
authority affecting the rights of parties, must speak. It must not
H be like the 'inscrutable face of a Sphinx'.
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1081
AHMED KHAN [ASOK KUMAR GANGULY, J.]
19. In the case of Harinagar Sugar Mills Ltd. vs. Shyam A
Sunder Jhunjhunwala and others, AIR 1961 SC 1669, the
question of recording reasons came up for consideration in the
context of a refusal by Harinagar to transfer, without giving
reasons, shares held by Shyam Sunder. Challenging such
refusal, the transferee moved the High Court contending, inter B
alia, that the refusal is mala fide, arbitrary and capricious. The
· High Court rejected such pleas and the transferee was asked
to file a suit. The transferee filed an appeal to the Central
Government under Section 111 Clause (3) of Indian Companies
Act, 1956 which was dismissed. Thereafter, the son of the c
original transferee filed another application for transfer of his
shares which was similarly refused by the Company. On
appeal, the Central Government quashed the resolution passed
by the Company and directed the Company to register the
transfer. However, in passing the said order, Government did D
not give any reason. The company challenged the said decision
before this Court.
20. The other question which arose in Harinagar (supra)
was whether the Central Government, in passing the appellate
order acted as a tribunal and is amenable to Article 136 E
jurisdiction of this Court.
21. Even though in Harinagar (supra) the decision was
administrative, this Court insisted on the requirement of
recording reason and further held that in exercising appellate F
powers, the Central Government acted as a tribunal in
exercising judicial powers of the State and such exercise is
subject to Article 136 jurisdiction of this Court. Such powers,
this Court held, cannot be effectively exercised if reasons are
not given by the Central Government in support of the order G
(Para 23, page 1678-79).
22. Again in the case of Bhagat Raja vs. Union of India
and others, AIR 1967 SC 1606, the Constitution Bench of this
Court examined the question whether the Central Government
was bound to pass a speaking order while dismissing a H
1082 SUPREME COURT REPORTS [2010] 10 S.C.R.
A revision and confirming the order of the State Government in
the context of Mines and Minerals (Regulation and
Development) Act, 1957, and having regard to the provision of
Rule 55 of Mineral and Concessions Rules. The Constitution
Bench held that in exercising its power of revision under the
B aforesaid Rule the Central Government acts in a quasi-judicial
capacity (See para 8 page 1610). Where the State Government
gives a number of reasons some of which are good and some
are not, and the Central Government merely endorses the order
of the State Government without specifying any reason, this
c Court, exercising its jurisdiction under Article 136, may find it
difficult to ascertain which are tbe grounds on which Central
Government upheld the order of the State Government (See
para 9 page 1610). Therefore, this Court insisted on reasons
being given for the ord.er.
D 23. In Mis. Mahabir Prasad Santosh Kumar vs. State of
UP and others, AIR 1970 SC 1302, while dealing with U.P.
Sugar Dealers License Order under which the license was
cancelled, this Court held that such an order of cancellation is
quasi-judicial and must be a speaking one. This Court further
E held that merely giving an opportunity of hearing is not enough
and further pointed out where the order is subject to appeal,
the necessity to record reason is even greater. The learned
Judges held that the recording of reasons in support of a
decision on a disputed claim ensures that the decision is not
F a result of caprice, whim or fancy but was arrived at after
considering the relevant law and that the decision was just.
(See para 7 page 1304).
24. In the case of Mis. Travancore Rayons Ltd. vs. The
G Union of India and others, AIR 1971 SC 862, the Court, dealing
with the revisional jurisdiction of the Central Government under
the then Section 36 of the Central Excise and Salt Act, 1944,
held that the Central Government was actually exercising judicial
power of the State and in exercising judicial power reasons in
support of the order must be disclosed on two grounds. The
H
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1083
AHMED KHAN [ASOK KUMAR GANGULY, J.]
first is that the person aggrieved gets an opportunity to A
demonstrate that the reasons are erroneous and secondly, the
obligation to record reasons operates as a deterrent against
possible arbitrary action by the executive authority invested with
the judicial power (See para 11 page 865-866).
8
25. In Mis. Woo/combers of India Ltd. vs. Woo/combers
Workers Union and another, AIR 1973 SC 2758, this Court
while considering an award under Section 11 of Industrial
Disputes Act insisted on the need of giving reasons in support
of conclusions in the Award. The Court held that the very
requirement of giving reason is to prevent unfairness or C
arbitrariness in reaching conclusions. The second principle is
based on the jurisprudential doctrine that justice should not only
be done, it should also appear to be done as well. The learn_ed
Judges said that a just but unreasoned conclusion does not
appear to be just to those who read the same. Reasoned and D
just conclusion on the other hand will also have the appearance
of justice. The third ground is that such awards are subject to
Article 136 jurisdiction of this Court and in the absence of
reasons, it is difficult for this Court to ascertain whether the
decision is right or wrong (See para 5 page 2761). E
26. In Union of India vs. Mohan Lal Capoor and others,
AIR 1974 SC 87, this Court while dealing with the question of
selection under Indian Administrative Service/Indian Police
Service (Appointment by Promotion Regulation) held that the F
expression "reasons for the proposed supersession" should not
be mere rubber stamp reasons. Such reasons must disclose
how mind was applied to the subject matter for a decision
regardless of the fact whether such a decision is purely
administrative or quasi-judicial. This Court held that the reasons G
in such context would mean the link between materials which
are considered and the conclusions which are reached.
Reasons must reveal a rational nexus between the two (See
para 28 page 98).
27. In Siemens Engineering and Manufacturing Co. of H
1084 SUPREME COURT REPORTS [2010] 10 S.C.R.
A India Ltd. vs. The Union of India and another, AIR 1976 SC
1785, this Court held that it is far too well settled that an authority
in making an order in exercise of its quasi-judicial function,
must record reasons in support of the order it makes. The
learned Judges emphatically said that every quasi-judicial order
B must be supported by reasons. The rule requiring reasons in
support of a quasi-judicial order is, this Court held, as basic
as following the principles of natural justice. And the rule must
be observed in its proper spirit. A mere pretence of compliance
would not satisfy the requirement of law (See para 6 page
c 1789).
28. In Smt. Maneka Gandhi vs. Union of India and Anr.,
AIR 1978 SC 597, which is a decision of great jurisprudence
significance in our Constitutional law, Chief Justice Beg, in a
concurring but different opinion held that an order impounding
D a passport is a quasi-judicial decision (Para 34, page 612).
The learned Chief Justice also held when an administrative
action involving any deprivation of or restriction on fundamental
rights is taken, the authorities must see that justice is not only
done but manifestly appears to be done as well. This principle
E would obviously demand disclosure of reasons for the decision.
29. Justice Y.V. Chandrachud (as His Lordship then was)
in a concurring but a separate opinion also held that refusal to
disclose reasons for impounding a passport is an exercise of
F an exceptional nature and is to be done very sparingly and only
when it is fully justified by the exigencies of an uncommon
situation.
30. The learned Judge further held that law cannot permit
any exercise of power by an executive to keep the reasons
G undisclosed if the only motive for doing so is to keep the
reasons away from judicial scrutiny. (See para 39 page 613).
31. In Rama Varma Bharathan Thampuran vs. State of
Kera/a and Ors., AIR 1979 SC 1918, Justice V.R. Krishna Iyer
H speaking for a three-Judge Bench held that the functioning of
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1085
AHMED KHAN [ASOK KUMAR GANGULY, J.]
the Board was quasi-judicial in character. One of the attributes A
of quasi-judicial functioning is- the recording of reasons in
support of decisions taken and the other requirement is
following the principles of natural justice. Learned Judge held
that natural justice requires reasons to be written for the
conclusions made (See para 14 page 1922). B
32. In Gurdial Singh Fijji vs. State of Punjab and Ors.,
(1979) 2 sec 368, this Court, dealing with a service matter,
relying on the ratio in Capoor (supra), held that "rubber-stamp
reason" is not enough and virtually quoted the observation in C
Capoor (supra) to the extent that reasons "are the links between
the materials on which certain conclusions are based and the
actual conclusions." (See para 18 page 377).
33. In a Constitution Bench decision of this Court in Shri
Swamiji of Shri Admar Mutt etc. etc. vs. The Commissioner, D
Hindu Religious and Charitable Endowments Dept. and Ors.,
AIR 1980 SC 1, while giving the majority judgment Chief Justice
Y.V. Chandrachud referred to Broom's Legal Maxims (1939
Edition, page 97) where the principle in Latin runs as follows:
E
"Ces-sante Ratione Legis Cessat lpsa Lex"
34. The English version of the said principle given by the
Chief Justice is that:
"Reason is the soul of the law, and when the reason of any F
particular law ceases, so does the law itself." (See para
29 page 11)
35. In Mis. Bombay Oil Industries Pvt. Ltd. vs. Union of
India and Others, AIR 1984 SC 160, this Court held that while
disposing of applications under Monopolies and Restrictive G
Trade Practices Act the duty of the Government is to give
reasons for its order. This court made it very clear that the faith
of the people in administrative tribunals can be sustained only
if the tribunals act fairly and dispose of the matters before them
by well considered orders. In saying so, this Court relied on its H
1086 SUPREME COURT REPORTS [2010] 10 S.C.R.
A previous decisions in Capoor (supra) and Siemens
Engineering (supra), discussed above.
36. In Ram Chander vs. Union of India and others, AIR
1986 SC 1173, this Court was dealing with the appellate
provisions under the Railway Servants (Discipline and Appeal)
8
Rules, 1968 condemned the mechanical way of dismissal of
appeal in the context of requirement of Rule 22(2) of the
aforesaid Rule. This Court held that the word "consider"
occurring to the Rule 22(2) must mean the Railway Board shall
duly apply its mind and give reasons for its decision. The
C learned Judges held that the duty to give reason is an incident
of the judicial process and emphasized that in discharging
quasi-judicial functions the appellate authority must act in
accordance with natural justice and give reasons for its decision
(Para 4, page 1176). ·
D
37. In Mis. Star Enterprises and others vs. City and
Industrial Development .Corporation of Maharashtra Ltd. and
others, (1990) 3 SCC 280, a three-Judge Bench of this Court
held that in the present day set up judicial review of
E administrative action has become expansive and is becoming
wider day by day and the State has to justify its action in various
field of public law. All these necessitate recording of reason for
executive actions including the rejection of the highest offer. This
Court held that disclosure of reasons in matters of such
F rejection provides an opportunity for an objective review both
by superior administrative heads and for judicial process and
opined that such reasons should be communicated unless there
are specific justification for not doing so (see Para 10, page
284-285).
G 38. In Maharashtra State Board of Secondary and Higher
Secondary Education vs. K.S. Gandhi and others, (1991) 2
SCC 716, this Court held that even in domestic enquiry if the
facts are not in dispute non-recording of reason may not be
violative of the principles of natural justice but where facts are
H disputed necessarily the authority or the enquiry officer, on
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1087
AHMED KHAN [ASOK KUMAR GANGULY, J.]
consideration of the materials on record, should record reasons A
in support of the conclusion reached (see para 22, pages 738-
739)
39. In the case_of M.L Jaggi vs. Mahanagar Telephones
Nigam Limited andcothers, (1996) 3 SCC 119, this Court dealt
B
with an award under Section 7 of the Telegraph Act and held
that since the said award affects public interest, reasons must
be recorded in the award. It was also held that such reasons
are to be recorded so that it enables the High Court to exercise
its power of judicial review on the validity of the award. (see C
para 8, page 123).
40. In Charan Singh vs. Healing Touch Hospital and
others, AIR 2000 SC 3138, a three-Judge Bench of this Court,
dealing with a grievance under CP Act, held that the authorities
undl;!r the Act exercise quasi-judicial powers for redressal of D
cons.umer disputes and it is, therefore, imperative that such a
body should arrive at conclusions based on reasons. This Court
held that the said Act, being one of the benevolent pieces of
legislation, is intended to protect a large body of consumers
from exploitation as the said Act provides for an alternative E
mode for consumer justice by the process of a summary trial.
The powers which are exercised are definitely quasi-judicial in
nature and in such a situation the conclusions must be based
on reasons and held that requirement of recording reasons is
"too obvious to be reiterated and needs no emphasizing". (See F
Para 11, page 3141 of the report)
41. Only in cases of Court Martial, this Court struck a
different note in two of its Constitution Bench decisions, the first
of which was rendered in the case of Som Datt Datta vs. Union
of India and others, AIR 1969 SC 414, Mr. Justice G
Ramaswami delivering the judgment for the unanimous
Constitution Bench held that provisions of Sections 164 and
165 of the Army Act do not require an order confirming
proceedings of Court Martial to be supported by reasons. The
Court held that an order confirming such proceedings does not H
1088 SUPREME COURT REPORTS [2010] 10 S.C.R.
A become illegal if it does not record reasons. (Para 10, page
421-422 of the report).
42. About two decades thereafter, a similar question
cropped up before this Court in the case of S.N. Mukherjee
vs. Union of India, AIR 1990 SC 1984. A unanimous
8
Constitution Bench speaking through Justice S.C. Agrawal
confirmed its earlier d~cision in Som Datt (supra) in para 47
at page 2000 of the report and held reasons are not required
to be recorded for an order confirming the finding and sentence
recorded by the Court Martial.
c
43. It must be remembered in this connection that the Court
Martial as a proceeding is sui generis in nature and the Court
of Court Martial is different, being called a Court of Honour and
the proceeding therein are slightly different from other
D proceedings. About the nature of Court Martial and its
proceedings the observations of Winthrop in Military Law and
Precedents are very pertinent and are extracted herein below:
"Not belonging to the judicial branch of the Government, it
follows that courts-martial must pertain to the executive
E
department; and they are in fact simply instrumentalities
of the executive power, provided by Congress for the
President as Commander-in-Chief, to aid him in properly
commanding the Army and Navy and enforcing discipline
therein, and utilized under his orders or those of his
F authorized military representatives."
44. Our Constitution also deals with Court Martial
proceedings differently as is clear from Articles 33, 136(2) and
227(4) of the Constitution.
G
45. In England there was no common law duty of recording
of reasons. In Marta Stefan vs. General Medical Council,
(1999) 1 WLR 1293, it has been held, "the established position
of the common law is that there is no general duty imposed on
our decision makers to record reasons". It has been
H
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1089
AHMED KHAN [ASOK KUMAR GANGULY, J.]
acknowledged in the Justice Report, Administration Under Law A
(1971) at page 23 that "No single factor has inhibited the
development of English administrative law as seriously as the
absence of any general obligation upon public authorities to
give reasons for their decisions".
B
46. Even then in the case of R vs. Civil Service Appeal
Board, ex parte Cunningham reported in (1991) 4 All ER 310,
Lord Donaldson, Master of Rolls, opined very strongly in favour
of disclosing of reasons in a case where the Court is acting in
its discretion. The learned Master of Rolls said:
c
" .. It is a corollary of the discretion conferred upon the board
that it is their duty to set out their reasoning in sufficient
form to show the principles on which they have proceeded.
Adopting Lord Lane CJ's observations (in R vs.
Immigration Appeal Tribunal, ex p Khan (Mahmud) D
[1983] 2 All ER 420 at 423, (1983) QB 790 at 794-795),
the reasons for the lower amount is not obvious. Mr.
Cunningham is entitled to know, either expressly or
inferentially stated, what it was to which· the board were
addressing their mind in arriving at their conclusion. It must E
be obvious to the board that Mr. Cunningham is left with a
burning sense of grievance. They should be sensitive to
the fact that he is left with a real feeling of injustice, that
having been found to have been unfairly dismissed, he has
been deprived of his just desserts (as he sees them)". F
47. The learned Master of Rolls further clarified by saying:
".. thus, in the particular circumstances of this case, and
without wishing to establish any precedent whatsoever, I
am prepared to spell out an obligation on this board to G
give succinct reasons, if only to put the mind of Mr.
Cunningham at rest. I would therefore allow this
application."
48. But, however, the present trend of the law has been
H
1090 SUPREME COURT REPORTS [2010] 10 S.C.R.
A towards an increasing recognition of the duty of Court to give
reasons (See North Range Shipping Limited vs. Seatrans
Shipping Corporation, (2002) 1 WLR 2397). It has been
acknowledged that this trend is consistent with the
development towards openness in Government and judicial
B administration.
49. In English vs. Emery Reimbold and Strick Limited,
(2002) 1 WLR 2409, it has been held that justice will not be
done if it is not apparent to the parties why one has won and
the other has lost. The House of Lords in Cullen vs. Chief
C Constable of the Royal Ulster Constabulary, (2003) 1 WLR
1763, Lord Bingham of Cornhill and Lord Steyn, on the
requirement of reason held, "First, they impose a discipline ...
which may contribute to such decisions being considered with
care. Secondly, reasons encourage transparency ... Thirdly,
0 they assist the Courts in performing their supervisory function
if judicial review proceedings are launched." (Para 7, page
1769 of the report)
50. The position in the United States has been indicated
E by this Court in S.N. Mukherjee (supra) in paragraph 11 at
page 1988 of the judgment. This Court held that in the United
States the Courts have always insisted on the recording of
reasons by administrative authorities in exercise of their
powers. It was further held that such recording of reasons is
F required as "the Court cannot exercise their duty of review
unless they are advised of the considerations underlying the
action under review". In S.N. Mukherjee (supra) this court relied
on the decisions of the U.S. Court in Securities and Exchange
Commission vs. Chenery Corporation, (1942) 87 Law Ed 626
G and John T Dunlop vs. Walter Bachowski, (1975) 44 Law Ed
377 in support of its opinion discussed above.
51. Summarizing the above discussion, this Court holds:
a. In India the judicial trend has always been to
H record reasons, even in administrative
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1091
AHMED KHAN [ASOK KUMAR GANGULY, J.]
decisions, if such decisions affect anyone A
prejudicially.
b. A quasi-judicial authority must record
reasons in support of its conclusions.
c. Insistence on recording of reasons is meant B
to serve the wider principle of justice that
justice must not only be done it must also
appear to be done as well.
d. Recording of reasons also operates as a c
valid restraint on any possible arbitrary
exercise of judicial and quasi-judicial or even
administrative power.
e. Reasons reassure that discretion has been
exercised by the decision maker on relevant D
grounds and by disregarding extraneous
considerations.
-----.
f. Reasons have virtually become as
indispensable a component of a decision E
making process as observing principles of
natural justice by judicial, quasi-judicial and
even by administrative bodies.
g. Reasons facilitate the process of judicial
F
review by superior Courts.
h. The ongoing judicial trend in all countries
committed to rule of law and constitutional
governance is in favour of reasoned
decisions based on relevant facts. This is G
virtually the life blood of judicial decision
making justifying the principle that reason is
the soul of justice.
i. Judicial or even quasi-judicial opinions these H
•
1092 SUPREME COURT REPORTS [2010] 10 S.C.R.
A days can be as different as the judges and
authorities who deliver them. All these
decisions serve one common purpose which
is to demonstrate by reason that the relevant
factors have been objectively considered.
B This is important for sustaining the litigants'
faith in the justice delivery system.
j. Insistence on reason is a requirement for
both judicial accountability and transparency.
c k. If a Judge or a quasi-judicial authority is not
candid enough about his/her decision
making process then it is impossible to know
whether the person deciding is faithful to the
doctrine of precedent or to principles of
D incrementalism.
I. Reasons in support of decisions must be
cogent, clear and succinct. A pretence of
reasons or 'rubber-stamp reasons' is not to
be equated with a valid decision making
E
process.
m. It cannot be doubted that transparency is the
sine qua non of restraint on abuse of judicial
powers. Transparency in decision making
F not only makes the judges and decision
makers less prone to errors but also makes
them subject to broader scrutiny. (See David
Shapiro in Defence of Judicial Candor
(1987) 100 Harward Law Review 731-737).
G
n. Since the requirement to record reasons
emanates from the broad doctrine of fairness
in decision making, the said requirement is
now virtually a component of human rights
and was considered part of Strasbourg
H
'
KRANTI ASSOCIATES PVT. LTD. v. MASOOD 1093
AHMED KHAN [ASOK KUMA-R GANGULY, J.]
Jurisprudence. See (1994) 19 EHRR 553, at A
562 para 29 and Anya vs. University of
Oxford, 2001 EWCA Civ 405, wherein the
Court referred to Article 6 of European
Convention of Human Rights which requires,
"adequate and intelligent reasons must be B
given for judicial decisions".
o. In all common law jurisdictions judgments
play a vital role in setting up precedents for
the future. Therefore, for development of law, C
requirement of giving reasons for the
decision is of the essence and is virtually a
part of "Due Process".
52. For the reasons aforesaid, we set aside the order of
the National Consumer Disputes Redressal Commission and D
remand the matter to the said forum for deciding the matter by
passing a rE;lasoned order in the light of the observations made
above. Since some time has elapsed, this Court requests the
forum to decide the matter as early as possible, preferably
within a period of six weeks from the date of service of this E
order upon it.
53. In so far as the appeal filed by the Bank is concerned,
this Court finds that the National Consumer Disputes Redressal
Commission in its order dated 4th April 2008 has given some
F
reasons in its finding. The reasons, inter alia, are as under:
"We have gone through the orders of the District Forum
and the State Commission, perused the record placed
before us and heard the parties at length. The State
Commission has rightly confirmed the order of the District F
Forum after coming to the conclusion that the Petitioner
and the Builder - Respondents No.3 and 4 have colluded
with each other and hence, directed them to compensate
the complainant for the harassment caused to them."
H
1094 SUPREME COURT REPORTS [2010] 10 S.C.R.
A 54. From the order of the State Commission dated 26.7.07
in connection with the appeal filed by the Bank, we do not find
that the State Commission has independently considered
Bank's appeal. The State Commission dismissed the Bank's
appeal for the reasons given in its order dated 6. 7.07 in
B connection with the appeal of the builders.
55. This Court is of the view that since the Bank has filed
a separate appeal, it has a right to be heard independently in
support of its appeal. That right hcis been denied by the State
C Commission. In that view of the matter, this Court quashes the
order dated 26.7.07 passed by the State Commission as also
the order of the National Commission dated 4th April 2008
which has affirmed the order of the State Commission.
56. This case is remanded to the State Commission for
D hearing on merits as early as possible, preferably within a
period of six weeks from the date of service of this order to
the State Commission.
57. It is expected that the State Commission will hear out
E the matter independently and give adequate reasons for its
conclusions. We, however, do not make any observations on
the merits of the case.
58. Both these appeals are allowed. No order as to costs.
D.G. Appeals allowed.
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