Supreme Court of India
ORYX FISHERIES PRIVATE LIMITEDversusUNION OF INDIA AND OTHERS
- Citation
- 2010 INSC 755
- Decided
- 29 October 2010
- Disposal
- Appeal(s) allowed
- Bench
- G S SINGHVI
Holding
A show‑cause notice that predetermines guilt and a cancellation order issued without reasons constitute bias and procedural unfairness, rendering the proceedings void.
Summary
Oryx Fisheries Private Limited exported frozen shrimp to a UAE buyer who later claimed the consignment was of poor quality. The buyer lodged a complaint with the Marine Products Export Development Authority (MPEDA), which issued a show‑cause notice alleging the exporter had supplied sub‑standard goods and subsequently cancelled Oryx's registration certificate without giving a personal hearing or reasons. The appellant contended that the show‑cause notice was biased, as it pre‑judged guilt and the cancellation order was a non‑speaking order violating natural justice. The Supreme Court held that a quasi‑judicial authority must act with an open mind, give a reasonable opportunity to be heard, and record reasons; a show‑cause notice that predetermines guilt vitiates the proceeding. Consequently, the show‑cause notice and the cancellation order were quashed, the registration reinstated, and the appeal allowed.
Issues considered
- The validity of the show‑cause notice issued by MPEDA under Rule 43 of the MPEDA Rules, 1972.
- Whether the cancellation of the registration certificate complied with principles of natural justice and the requirement of an unbiased, open‑minded procedure.
- Whether a quasi‑judicial authority must record reasons in its original order and whether reasons in an appellate order can cure the absence of reasons in the original order.
Legislation cited
Subjects
administrative lawbiasnatural justicequasi‑judicial authorityshow cause noticereasoned orderprocedural fairnessmarine products exportregistration cancellation
Judgment
[2010] 13 (ADDL.) S.C.R. 234
A ORYX FISHERIES PRIVATE LIMITED
v.
UNION OF INDIA AND OTHERS
(Civil Appeal No. 9489 of 2010)
OCTOBER 29, 2010
B
(G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Administrative law:
c Bias - Quasi judicial authority - Show cause notice -
Quality complaint filed before the Development Authority
alleging export of poor quality sea food by exporter - Issue
of show cause notice and thereafter cancellation of registration
certificate by authority in exercise of his statutory power under
D r. 43 - Show cause notice indicating that the authority had
completely made up his mind and reached definite
conclusion about the alleged guilt of exporter - Held: A quasi
judicial authority must act fairly and with an open mind while
initiating show cause proceedings - If at the stage of show
E cause notice, the authority completely makes up his mind and
reaches a definite conclusion about the alleged guilt of the
noticee, the entire proceedings initiated by show cause notice
gets vitiated by unfairness and bias and the subsequent
proceedings are rendered idle formality - Bias of the authority
which was latent in show cause notice was apparent in order
F of cancellation of registration certificate - The order cancelling
the registration certificate was non-speaking and was virtually
no order in the eyes of law - Show cause notice as also the
order of cancellation of the registration certificate quashed -
/ Marine Products Export Development Authority Rules, 1972
8 - r. 43, 44 - Principle of natural justice.
Quasi judicial authority - Order of - Requirement of
reasons - Held: Reasons are indispensable component of a
decision making process - A non-speaking order is virtually
H 234
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 235
INDIA AND ORS.
no order in the eyes of law - A quasi-judicial authority must A
record reasons in support of its conclusions - Absence of
reasons in the original order cannot be compensated by
disclosure of reasons in the appellate order.
The appellant-exporter agreed to supply sea food to
8
a company incorporated in UAE. Prior to the dispatch of
the consignment, inspection was carried out and the
quality of the consignment was found to be satisfactory.
The consignment was dispatched. On 12.11.2006, the
buyer took possession of the consignment. After 10 days, C
the buyer alleged that the consignment was of very poor
quality. Thereafter, the buyer informed the appellant that
it had rejected the entire consignment and it sent a debit
note which represented the material cost and destruction
charges and requested the appellant to settle the same
at the earliest. D
On 3.9.2007, the buyer made a quality complaint to
the Marine Products Export Development Authority
(MPEDA) and a claim of total loss arising from intentional
cheating by way of delivery of decomposed sea foods, E
unfit for human consumption. The Deputy Director (third
respondent) sought clarification from the appellant
regarding the same. The appellant replied that the entire
consignment exported by it was of standard quality. The
third respondent convened a meeting with the buyer and F
the appellant for amicable settlement between them. The
appellant in order to amicably settle the dispute offered
to the buyer 25% of the value of the goods exported.
However, the buyer refused to accept the same. The third
respondent issued a notice calling upon the appellant to G
show cause why their certificate of registration should
not be cancelled. The appellant refuted the allegations.
The third respondent wjthout giving any reason and
without giving personal hearing to the appellant cancelled
the registration certificate. Aggrieved, the appellant filed
an appeal under Rule 44 of the Marine Products Export H
236 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A Development Authority Rules, 1972. The appellate
authority upheld the decision of the third respondent.
The appellant filed a writ petition before the High Court,
which was dismissed. The instant appeal was filed
challenging the order of the High Court.
B
Allowing the appeal, the Court
HELD: 1. A quasi-judicial authority, while acting in
exercise of its statutory power must act fairly and with an
open mind while initiating a show cause proceeding. A
C show cause proceeding is meant to give the person
proceeded against, a reasonable opportunity, of making
his objection, against the proposed charges/allegations
indicated in the notice. It is no doubt true that at the stage
of show cause, the person proceeded against must be
D told the charges/allegations against him so that he can
take his defence and prove his innocence. It is obvious
that at that stage the authority issuing the charge-sheet,
cannot, instead of telling him the charges, confront him
with definite conclusions of his alleged guilt. If that is
E done, the entire proceeding initiated by the show cause
notice gets vitiated by unfairness and bias and the
subsequent proceeding become an idle ceremony.
Justice is rooted in confidence and justice is the goal of
a quasi-judicial proceeding also. If the functioning of a
F quasi-judicial authority has to inspire confidence in the
minds of those subjected to its jurisdiction, such
authority must act with utmost fairness. Its fairness is
obviously to be manifested by the language in which
charges are couched and conveyed to the person
G proceeded against. The principle that justice must not
only be done but it must eminently appear to be done as
well is equally applicable to quasi judicial proceeding if
such a proceeding has to inspire confidence in the mind
of those who are subject to it. In the instant case, the third
respondent while issuing the show cause notice and
H cancelling the registration certificate was acting in a
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 237
INDIA AND ORS.
quasi-judicial capacity and in exercise of his statutory A
power under Rule 43 of the MPEDA Rules. A perusal of
the impugned show cause notice showed that the third
re_§.pondent had completely made up his mind and
reached definite conclusion about the alleged guilt of the
appellant. This rendered the subsequent proceedings an 8
empty ritual and an idle formality. Such a close mind was
inconsistent with the scheme of Rule 43. The alleged guilt
of the appellant was prejudged at the stage of show
cause notice itself. The appellant gave a reply to the
show cause notice but in the order of the third c
respondent by which registration certificate of the
appellant was cancelled, no reference was made to the
reply of the appellant, except saying that it was not
satisfactory. The bias of the third respondent which was
latent in the show cause notice became patent in the D
order of cancellation of the registration certificate. The
cancellation orcter was a non-speaking one and was
virtually no order 11\ the eyes of law. Since the order was
appealable it was incumbent on the third respondent to
give adequate reasons. The procedure of cancellation E
registration was not fair. Although the appellate order
contained reasons, however, absence of reasons in the
original order cannot be compensated by disclosure of
reason in the appellate order. The show cause notice as
also the order of cancellation of the registration certificate
passed by the third respondent are quashed. The F
registration would be valid, if it is not vitiated for any other
reason. (Paras 19, 20, 22, 24, 28, 29, 35- 39, 42, 45] (244-
D-E; 245-G-H; 246-8, G-H; 247-A-D; 249-E-F-G; 251-C;
253-E-F; 254-B-DJ
G
Kumaon Manda/ Vikas Nigam Limited v. Girja Shankar
Pant & others, (2001) 1 SCC 182; Institute of Chartered
Accountants of India v. L.K. Ratna and others (1986) 4 SCC
537; Kranti Associates Pvt. Ltd. & Anr. v. Sh. Masood Ahmed
Khan & Others 2010(10) SCR 1070 - relied on. H
238 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A Khem Chand v. Union of India and others AIR 1958 SC
300 - referred to.
Ridge v. Baldwin and others (1964 A.C. 40) - referred
to.
B Case Law Reference:
AIR 1958 SC 300 referred to .. Para 26
(2001) 1 sec 182 relied on Para 34
c (1964 A.C. 40) referred to Para 3
2010(10) SCR 1070 relied on Para 40
(1986) 4 sec 537 relied on Para 43
D CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9489 of 2010.
From the Judgment & Order dated 16.10.2008 of the High
Court of Judicature at Bombay in Writ Petition No. 2251 of
2008.
E
S. Ganesh, Pratap Venugopal, Surekha Raman, Pratap
Venygopal, Puroshattam Jha, Varun Singh, K.J. John & Co. for
fue~~lla~. ·
Joseph Markose, Subhash Pandey, Ajay K. Jain, M.P.
F Vinod, Harish Chander, Shweta Verma, A.K. Sharma for the
Respondents.
The Judgment of the Court was delivered by
GANGULY, J. 1. Leave granted.
G
2. The appellant, a Private Limited Company engaged in
the production, procurement and processing and export of sea-
foods, and other related products, agreed to supply MT of
pealed and undeveined (PUD) shrimps to one Cascade Marine
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 239
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
Foods LLC (hereinafter referred to as, "Cascade"}, a company A
incorporated under the relevant laws of UAE at Sharjah. The
Purchase Contract dated 26.09.2006, was signed by Pristine
Food Inc., a local agent of Cascade, and as per the details of
the contract, the PUD Shrimps were to be Block frozen-with
mandatory labels on both individual block and master carton B
and the destination was Sharjah, UAE. By a subsequent
amendment dated 19.10.2006 to the purchase contract, the
PUD quantity was increased to a total of 24 MT without
changing other terms of the purchase contract. Prior to the
' dispatch of the consignment, inspection was carried out by c
Sakson Fisheries Consultants, local agents of Cascade, on
18.10.2006, whereby it was found that there was no bad odour.
Rather there was a fairly fresh smell and the quality of the
consignment was found to be satisfactory.
3. On 25.10.2006, the consignment was dispatched from D
Mumbai, which· arrived at Sharjah Port on 02.11.2006 via
Delivery Order, dated 06.11.2006. The Director of Customs,
Sharjah, was requested to authorize the release of the PUD
Shrimps to Cascade. Following this, on 07.11.2006 Sharjah
Customs, vide its Customs Declaration Form, stated that the E
consignment was not to be released before Health Inspection.
It appears from the facts that the customs and health authorities
of UAE, had inspected the PUD Shrimps' quality and quantity
and they were satisfied that it was fit for human consumption.
The health authorities resealed the consignment and numbered F
it as MSLA 18 J 550015, as against the original seal no. YME
166813. It appears from the Store Receipt voucher No. 9232
dated 12.11.2006 of Cascade, the buyer, that they had taken
possession of the consignment. After a lapse of more than 1O
days, Cascacfe alleged that the PUD Shrimp was of very poor G
quality as it transpired from their analysis report dated
21.11.06.
4. As per the minutes of the meeting held on 17.12.2006
in the office of Cascade at Sharjah which was attended by Mr.
H
240 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A S.D. Puranik and Mr. P.R. Sakthivel, respectively Managing
Director and Director Marketing of the appellant and Mr. Vijay
Paranjape, Group QA Manager Al-Kabeer and Ajit Pillai,
General Manager, Cascade Marine Foods LLC, the appellant
agreed to compensate Cascade to the extent of the value of
B the defective goods and the minutes of the meeting were signed
by all the aforementioned individuals.
5. It has been mentioned in the note attached to the letter
dated 03.09.2007 sent by Cascade to the Secretary, Ministry
of Commerce, Government of India that Cascade was asked
C by the appellant on 21.12.2006 to issue necessary samples to
Mr. Celestine of Mis Starfish Trading FZE and several samples
were handed over to him. The fact that the samples were
handed over to Mis Starfish Trading FZE has been disputed
because the appellant's stand before this Court was that
D Cascade failed to hand-over the necessary samples to the
said M/s Starfish Trading FZE.
6. The appellant called upon Cascade to hand over the
consignment to one Freshly Frozen Foods LLC and as a result
E of that 1081 cartons of goods were delivered to the cold store
designated by Freshly Frozen Foods on 14.04.2007 vide
Cascade Store Issue Voucher 0390. Freshly Frozen Foods
could retrieve only 25 kgs from 4 MT of product they had
thawed out and they had directed Cascade to take back the
F material. When the Municipality Audit found out that the validity
of PUD shrimp packages had expired they compulsorily
destroyed the entire consignment of shrimps and the
destruction cost was debited to Cascade. As a result, Cascade
by its facsimile transmission dated 13.08.2007 informed the
G appellant that they rejected the entire consignment and they
enclosed a Debit Note No.CMF/DN/108/07 for US$ 86,104.00
which represented the material cost and destruction charges
and requested the appellant to settle the same at the earliest.
7. On 3.09.2007 Cascade by its letter addressed to'
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 241
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
Chairman, Marine Products Export Development Authority (for A
short, MPEDA), made a quality complaint on the shipment
effected by the appellant for a value of US$ 83000 and a claim
of total loss arising from intentional cheating by way of delivery
of decomposed shrimp, unfit for human consumption.
B
8. The Deputy Director, MPEDA, the third respondent by
its letter dated 12.09.2007 forwarded the quality complaint
made by Cascade and sought clarification from the appellant
regarding the same. To that the appellant vide its letter dated
18.09.2007 stated that the consignment that they had sent was C
of standard quality and also pointed out that they were very
doubtful whether the sample shown to the appellant's officers
during their visit to Cascade's factory and the analysis report
dated 21.11.2006 pertained to the consignment sent by them.
9. In addition to this, Cascade, through its advocates, D
served a legal notice on the appellant on 23.09.2007 asking it
to pay US$ 83104 plus destruction costs within 7 days of
receipt of the notice and on failing to do so, appropriate legal
proceedings would be filed in India and UAE to recover the said
amount. The appellant, through its Advocate, replied on E
17.10.2007 denying that the entire consignment of shrimps
exported by the appellant had deteriorated in quality. In
furtherance they also denied any liability to compensate
Cascade for the value of the goods along with storage charges,
distribution costs of USD 83104 plus destruction costs as F
alleged.
10. The third respondent vide its letter dated 25.10.2007,
addressed to the appellant, directed it to settle the dispute with
Cascade urgently by 10.11.2007, which was duly replied to by
the appellant in the negative by its letter dated 11.11.2007. After G
a series of correspondence between the appellant and the third
respondent, finally the third respondent decided on 20.11.2007
to convene a joint meeting on 5.12.2007 between the appellant
and Cascade to find out an amicable settlement of the issue
H
242 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A in the presence of the officers of MPEDA. The appellant in
order to amicably settle the dispute offered Cascade 25% of
the value of the goods exported, by way of deferred payment
against adjustments, from future supplies, in the presence of
officers of MPEDA, Cochin.
B
11. However, Cascade refused to accept the same. Then
the third respondent issued a show cause notice dated
23.01.2008. As per the show cause notice the MPEDA called
upon the appellant to show cause why their certificate of
C registration should not be cancelled.
12. The appellant replied to the show cause notice vide
its letter dated 4.2.2008 seeking to refute the allegations levied
upon it and further stated that MPEDA would not be justified in
canceling its certificate of registration on the above-mentioned
D grounds.
13. Third respondent without giving any reason and without
giving the appellant any personal hearing held, vide its order
dated 19.3.2008, that the registration certificate of the appellant
E stood cancelled.
14: Being aggrieved by the said order, the appellant
appealed before the second respondent under Rule 44 of the
Marine Products Export Development Authority Rules, 1972
(hereinafter referred to as, "the MPEDA Rules"). The appellate
F body fixed a personal hearing on 28.04.2008. The appellant
vide letter dated 26.05.2008 addressed to the appellate body
stated that despite several attempts made by the appellant to
resolve the dispute with Cascade as advised by the MPEDA,
the attempts proved futile and once again requested appellate
G body to adjudicate the dispute on merits as well as to revoke
the order of cancellation.
15. The second respondent vide its letter dated
20.06.2008 informed the appellant that no more personat
H hearing was required and directed them to send any further
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 243
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
evidence of proof of settlement with Cascade, if any. On 19- A
08-2008, the second respondent passed an order holding, inter
alia, that:
" ...... The appellant in a very unethical way, had reneged
on the promises made earlier. It is also clear that the B
appellant company has made every attempt to disown its
responsibility for supplying poor quality seafood to Mis.
Cascade Marine Foods LLC, Sharjah. Even during the
personal hearing before the undersigned on the 28th April,
the appellant was given ample time to settle the matter.
Time was also given beyond the deadline fixed. However, C
the appellant seems to have taken a decision not to settle
the complaint.
The appellant's contention that they were pressured
to sign the documents is quite illogical and unjustifiable D
because if they had any difference of opinion they could
have recorded then and there. Hence there is ample
evidence that this is definitely a case of cheating of M/s.
Orxy Fisheries by shipping "substandard material to M/s.
Cascade Marine that brought heavy loss to one of the E
leading buyers in UAE. Such erring and unrepentant
exporters if they continue to export seafood from li:ldia
could easily damage the reputation of India among buyers
abroad.
In view of the facts and circumstances as mentioned F
above, this appellate authority finds no lapse on the part
of the Deputy Director in canceling the registration of the
appellant as an exporter.
I, therefore disallow the appeal and uphold the order G
of cancellation issued by the Peputy Director, RO,
Mumbai." ·
16. Being aggrieved, by the order dated 19.03.2008 and
19.Cl8:2008, the appellant preferred a Writ Petition No.2251 of H
244 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 2008, before the High Court of Bombay. The High Court found
no error of law on the face of record, and upheld the findings
of the appellate authority and dismissed the writ petition by an
order dated 16.10.2008.
17. Assailing the High Court's order, this Court was moved
8
on a Special Leave Petition whereupon this Court on
28.11.2008 issued notice and continued the stay granted by
the High Court on 16.10.2008.
18. In the backdrop of these facts the first question which
C falls for consideration of this Court is whether the respondents
in cancelling the registration certificate of the appellant acted
fairly and in compliance with principles of natural justice and
also whether the respondents acted with an open mind.
0 19. It is obvious that in passing the impugned order of
cancellation, the respondents were acting in a quasi-judicial
capacity and also they were acting in exercise of their statutory
powers. Indisputably, the third respondent while purporting to
cancel the registration certificate was acting in exercise of his
E power under Rule 43 of the MPEDA Rules.
20. The show cause notice dated 23.01.2008 was issued
by the third respondent in exercise of this power.
21. For a proper appreciation of the points involved, the
F show cause notice is set out in etenso:
"Sub: SHOW CAUSE NOTICE
Your attention is invited to our HQ's letter No.IV/53/
06-MS/HO dated 25.10.2007 and subsequent joint
G meeting with the buyer held at our Head office on 5th
September, 2007 on the trade complaint received from M/
s Cascade Marine Foods LLC, Sharjah.
At the meeting it was convincingly proved that the
cargo shipped by you to the above mentioned buyer was
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 245
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
defective and you have not so far settled the complaint. A
Therefore, in exercise of the powers vested in me vide
Office Order Part-II No.184012005 dated 25.11.2005 read
with Rule 43 of the MPEDA Rules, I hereby call upon you
to show cause why the Certificate of Registration as an
Exporter granted to you should not be cancelled for B
reasons given below:
1. It has been proved beyond doubt that you have
sent substandard material to Mis Cascade Marine
Foods, LLC, Sharjah.
c
2. You have dishonoured your written agreement with
M/s Cascade Marine Foods, LLC, Sharjah to settle
the complaint made by the buyer as you had agreed
to compensate to the extent of the value of defective
cargo sent by you and have now evaded from the D
responsibility.
3. This irresponsible action have brought irreparable
damage to India's trade relation with UAE.
Your reply should reach the undersigned within 10 E
days from the date of receipt of this letter failing which it
will be presumed that you have no explanation to offer and
we will proceed with action for cancellation of your
registration certificate without further notice to you. If
ultimately a decision is reached to deregister you under F
the provisions of the MPEDA Rules, it will automatically
entail de-registration under Registration Exporters' policy
also."
22. Relying on the underlined portions in the show cause G
notice, learned counsel for the appellant urged that even at the
stage of the show cause notice the third respondent has
completely made up his mind and reached definite conclusion
about the alleged guilt of the appellant. This has rendered the
subsequent proceedings an empty ritual and an idle formality.
H
246 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 23. This Court finds that there is a lot of substance in the
aforesaid contention.
24. It is well settled that a quasi-judicial authority, while
acting in exercise of its statutory power must act fairly and must
B act with an open mind while initiating a show cause proceeding.
A show cause proceeding is meant to give the person·
proceeded against a reasonable opportunity of making his
objection against the proposed charges indicated in the notice.
25. Expressions like "a reasonable opportunity of making
C objection" or "a reasonable opportunity of defence" have come
up for consideration before this Court in the context of several
statutes.
26. A Constitution Bench of this Court in Khem Chand v.
0 Union of India and others, reported in AIR 1958 SC 300, of
course in the context of service jurisprudence, reiterated certain
principles which are applicable in the present case also.
27. Chief Justice S.R. Das speaking for the unanimous
Constitution Bench in Khem Chand (supra) held that the
E concept of 'reasonable opportunity' includes various
safeguards and one of them, in the words of the learned Chief
Justice, is:
"(a) An opportunity to deny his guilt and establish his
j= innocence, which he can only do if h~ is told what the
charges leveled against him are and the allegations on
which such charges are based;"
28. It is no doubt true that at the stage of show cause, the
person proceeded against must be told the charges against
G him so that he can take his defence and prove his innocence.
It is obvious that at that stage the authority issuing the charge-
sheet, cannot, instead of telling him the charges, confront him
with definite conclusions of his alleged guilt. If that is done, as
has been done in this instant case, the entire proceeding
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 247
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
initiated by the show cause notice gets vitiated by unfairness A
and bias and the subsequent proceeding become an idle
ceremony.
29. Justice is rooted in confidence and justice is the goal
of a quasi-judicial proceeding also. If the functioning of a quasi-
B
judicial authority has to inspire confidence in the minds of those
subjected to its jurisdiction, such authority must act with utmost
fairness. Its fairness is obviously to be manifested by the
language in which charges are couched and conveyed to the
person proceeded against. In the instant case from the
underlined portion of the show cause notice it is clear that the C
third respondent has demonstrated a totally close mind at the
stage of show cause notice itself. Such a close mind is
inconsistent with the scheme of Rule 43 which is set out below.
The aforesaid rule has been framed in exercise of the power
conferred under Section 33 of The Marine Products Export D
Development Authority Act, 1972 and as such that Rule is
statutory in nature.
30. Rule 43 of the MPEDA Rules provides as follows:
E
"43. Cancellation of registration
Where the Secretary or other officer is satisfied that any
person has obtained a certificate of registration by
furnishing incorrect information or that he has contravened
any of the provisions of this rule or of the conditions F
mentioned in the certificate of registration, or any person
who has been registered as an exporter fails during the
period of twelve consecutive months to export any of th·e
marine products in respect of which he is registered, or if
the secretary or other officer is satisfied that such person G
has become disqualified to continue as an exporter, the
Secretary or such officer may, after giving the person who
holds a certificate a reasonable opportunity of making his
objections, by order, cancel the registration and
communicate to him a copy of such order." H
248 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 31. It is of course true that the show cause notice cannot
be read hyper-technically and it is well settled that it is to be
read reasonably. But one thing is clear that while reading a
show-cause notice the person who is subject to it must get an
impression that he will get an effective opportunity to rebut the
B allegations contained in the show cause notice and prove his
innocence. If on a reasonable reading of a show-cause notice
a person of ordinary prudence gets the feeling that his reply to
the show cause notice will be an empty ceremony and he will
merely knock his head against the impenetrable wall of
C prejudged opinion, such a show cause notice does not
commence a fair procedure especially when it is issued in a
quasi-judicial proceeding under a statutory regulation which
promises to give the person proceeded against a reasonable
opportunity of defence.
D 32. Therefore, while issuing a show-cause notice, the
authorities must take care to manifestly keep an open mind as
they are to act fairly in adjudging the guilt or otherwise of the
person proceeded against and specially when he has the power
to take a punitive step against the person after giving him a
E show cause notice.
33. The principle that justice must not only be done but it
must eminently appear to be done as well is equally applicable
to quasi judicial proceeding if such a proceeding has to inspire
F confidence in the mind of those who are subject to it.
34. A somewhat similar observation was made by this
Court in the case of Kumaon Manda/ Vikas Nigam Limited v.
Girja Shankar Pant & others, (2001) 1 SCC 182. In that case,
this court was dealing with a show cause notice cum charge-
G sheet issued to an employee. While dealing with the same, this
Court in paragraph 25 (page 198 of the report) by referring to
the language in the show cause notice observed as follows:
"25. Upon consideration of the language in the show-cause
H notice-cum-charge-sheet, it has been very strongly
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 249
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
contended that it is clear that the Officer concerned has a A
mindset even at the stage of framing of charges and we
also do find some justification in such a submission since
the chain is otherwise complete."
35. After paragraph 25, this Court discussed in detail the 8
emerging law of bias in different jurisdictions and ultimately held
in paragraph 35 (page 201 of the report), the true test of bias
is:
"35. The test, therefore, is as to whether a mere
apprehension of bias or there being a real danger of bias C
and it is on this score that the surrounding circumstances
must and ought to be collated and necessary conclusion
drawn therefrom - in the event however the conclusion is
otherwise inescapable that there is existing a real danger
of bias, the administrative action cannot be sustained:" D
36. Going by the aforesaid test any man of ord}flary
prudence would come to a conclusion that in the instant case
the alleged guilt of the appellant has been prejudged at the
stage of show cause notice itself. E
37. The appellant gave a reply to the show cause notice
but in the order of the third respondent by which registration
certificate of the appellant was cancelled, no reference was
made to the reply of the appellant, except saying that it is not
satisfactory. The cancellation order is totally a non-speaking F
one. The relevant portion of the cancellation order is set out:-
"Sub: Registration as an Exporter of Marine Products under
MPEDA Rules 1972.
Please refer to the Show Cause Notice No.10/3/MS/2006/ G
MS/3634 d,ated 23.01.2008 acknowledged by you on 28/
01/2008 directing you to show cause why the certificate
of registration as an exporter No.MAl/ME/119/06 dated 03/
03/2006 granted to you as Merchant Exporter should not
be ca.ncelled for the following reasons:- H
250 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 1. It has been proved beyond doubt that you have
sent sub-standard material to Mis. Cascade
Marine Foods, L.L. C., Sharjah.
2. You have dishonoured your written agreement with
B
M/s. Cascade Marine Foods, L.L.C, Sharjah to
settle the complaint made by the buyer as you had
agreed to compensate to the extent of the value of
the defective cargo sent by you and have now
evaded from the responsibility.
c 3. This irresponsible action has brought irreparable
damage to India's trade relation with UAE.
Your reply dated 04/02/2008 to the Show Cause Notice
is not satisfactory because the quality complaint raised by
D M/s. Cascade Marine Foods, L.L.C, Sharjah have not
been resolved amicably. Therefore, in exercise of the
power conferred on me vide Rule 43 of the MPEDA Rules,
read with office order Part 11 No.1840/2005 dated 25/111
2006, I hereby cancel the Registration Certificate No.MAI/
ME/119/06 dated 03/03/2006 issued to you. The original
E
Certificate of Registration issued should be returned to this
office for cancellation immediately.
In case you are aggrieved by this order of cancellation, you
may prefer an appeal to the Chairman within 30 days of
F the date of receipt of this order vide Rule 44 of the MPEDA
Rules.
38. Therefore, the bias of the third respondent which was
latent in the show cause notice became patent in the order of
G cancellation of the registration certificate. The cancellation
order quotes the show cause notice and is a non-speaking one
and is virtually no order in the eye of law. Since the same order
is an appealable one it is incumbent on the third respondent
to give adequate reasons.
H 39. On the question whether the entire proceeding for
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 251
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
cancellation of registration initiated by the show cause notice A
and culminating in the order of cancellation is vitiated by bias
we can appropriately refer to the succinct formulation of the
principle by Lord Reid in Ridge v. Baldwin and others (1964
A.C. 40). The Learned Law Lord, while dealing with several
concepts, which are not susceptible of exact definition, held that B
by fair procedure one would mean that what a reasonable man
would regard as fair in the particular circumstances (see page
65 of the Report). If we follow the aforesaid test, we are bound
to hold that the procedure of cancellation registration in this
case was not a fair one. c
40. On the requirement of disclosing reasons by a quasi-
judicial authority in support of its order, this Court has recently
delivered a judgment in the case of Kranti Associates Pvt. Ltd.
& Anr. v. Sh. Masood Ahmed Khan & Others on 8th
September 2010. D
41. In Mis Kranti Associates (supra), this Court after
considering various judgments formulated certain principles in
para 51 of the judgment which are set out below
E
a. In India the judicial trend has always been to record
reasons, even in administrative decisions, if such
decisions affect anyone prejudicially.
b. A quasi-judicial authority must record reasons in support
of its conclusions. F
c. Insistence on recording of reasons is meant 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 valid restraint G
on any possible arbitrary exercise of judicial and quasi-
judicial or even administrative power.
e. Reasons reassure that discretion has been exercised
H
252 SUPREME1 COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A by the decision maker on relevant grounds and by
disregarding extraneous considerations.
f. Reasons have virtually become as indispensable a
component of a decision making process as observing
principles of natural justice by judicial, quasi-judicial and
B
even by administrative bodies.
g. Reasons facilitate the process of judicial review by
superior Courts.
c 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 virtually
the life blood of judicial decision making justifying the
principle that reason is the soul of justice.
D i. Judicial or even quasi-judicial opinions these 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. This is important for
E sustaining the litigants' faith in the justice delivery system.
j. Insistence on reason is a requirement for both judicial
accountability and transparency.
k. If a Judge or a quasi-judicial authority is not candid
F
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
incrementalism.
G 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
process.
H m. It cannot be doubted that transparency is the sine qua
ORYX FISHERIES PRIVATE LIMITED v. UNION OF 253
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
non of restraint on abuse of judicial powers. Transparency A
in decision making 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). B
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 Jurisprudence. C
See (1994) 19 EHRR 553, at 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 given for judicial decisions".
D
o. In all common law jurisdictions judgments play a vital
role in setting up precedents for the future. Therefore, for
development of law, requirement of giving reasons for the
decision is of the essence and is virtually a part of "Due
Process". E
42. In the instant case the appellate order contains reasons.
However, absence of reasons in the original order cannot be
compensated by disclosure of reason in the appellate order.
43. In Institute of Chartered Accountants of India v. L.K. F
Ratna and others,(1986) 4 SCC 537, it has been held:
" ...... after the blow suffered by the initial decision, it is
difficult to contemplate complete restitution through an
appellate decision. Such a case is unlike an action for G
money or recovery of property, where the execution of the
trial decree may be stayed pending appeal, or a
successful appeal may result in refund of the money or
restitution of the property, with appropriate compensation
by way of interest or mesne profits tor the period of H
254 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A deprivation. And, therefore, it seems to us, there is
manifest need to ensure that there is no breach of
fundamental procedure in the original proceeding, and to
avoid treating an appeal as an overall substitute for the
original proceeding." (See para 18, pages 553-554 of the
B report)
44. For the reasons aforesaid, this Court quashes the show
cause notice as also the order dated 19.03.2008 passed by
the third respondent. In view of that, the appellate order has no
C legs to stand and accordingly is quashed.
45. We are constrained to observe that unfortunately this
aspect of the matter was not considered by the High Court. We
cannot, therefore, approve the order of the High Court and the
same is accordingly quashed. The cancellation of the
D registration certificate of the appellant is set aside and we
declare the registration to be valid if it is not vitiated for any
other reason.
46. We, however, make it clear that if the authorities are
E so inclined, they can proceed from the stage of show cause
notice afresh but strictly in accordance with law and following
the fair procedure indicated in this judgment.
47. The appeal is allowed. Parties are left to bear their own
costs.
F
D.G. Appeal allowed.
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