BHAGAT RAJA versus THE UNION OF INDIA & ORS.

BHAGAT RAJA

THE UNION OF INDIA & ORS.

March 29, 1967

[K. SUBBA RAO, C.J., J. C. SHAH, J. M. SHELAT, V. BHARGAVA AND G. K. MITTER, JJ.J

Mines & Minerals (Regulation and Dev.elapme11t) Act, 1957, s. 30 and Rules 54 & 55 1nade under the Act--State Governnient's order refusing mining lease to one party and granting it 'to another-Central Governnient whether in deciding revision under r. 55 should pass 'speak-ing order.

The appellant was one of several applicants for mmmg lease in Andhra Pradesh. The State Government however granted it to respon-dent No. 3. The appellant then filed an application in revision, under s. 30 of the Mines & Minerals (Regulation and Development) Act, 1957, read with r. 54, to the Union of India. Respondent No. 3 filed counter statement and the State Government filed its comments. The appellant filed rejoinder. · The Union Government without hearing the appellant rejected his revision application, An appeal was filed before this Court. The question that fell for consideration was whether it was necessary for the Government of India to give reasons for its decision in view of the provisions of the Act and the Rules or aliunde because the decision was liable to be questioned in appeal to this Court.

HELD: (i) In exercising its powers ·of revision under r. SS the Central Government discharges fuiictioas which are quasi-judicial, The decisions of tribunals in India are subject to the supervisory powers of the High Court under Art. 227 of the Constitution and of appellate powers of this court under Art. 136. Both the High Court and this Court are placed under great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word 'rejected' or 'dismissed'. In such case this Court can probably only exercise its appellate jurisdiction ..,,atisfactorily by examining the entire records of the case and after giving hearing come to its conclusion on the merits of the case. This would certainly be very unsatisfactory method of dealing with the appCal. [308E-F; 309B-C]

If the State Government gives sufficient reasons for accepting the application of one party and rejecting that of others, as it must, and the Central Government adopts the ·reasoning of the State Government, this Court may proceed to examine whether the reasons given are sufficient for the purpose of upholding the decision. But when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court. in appeal may have to examine the case de novo, without anybody being the wiser for the review by the Central Govern-ment. The same difficulty would arise where the State Government gives number of reasons some of which are good and some are not and the Central Government gives its decision without specifying those reasons which according to it are sufficient to uphold the ord~r of the State Govemn1ent. That is why in such circumstances, what 1s known as 'speaking order' is called for. [309C-FJ

'speaking order' is all the more necessary in the case of decision under r. 55 because there is provision for new material being placed before the Central Government which was not there before the State Government, and further, because the decision, affecting important rights of parties, is given in sui:imary manner without hearing. ~eing allowed to the parties. party IS entitled to know why the dec1S1on has gone against him. [320G-321B]

The absence in r. 55 of any provision for giving such reasons is not decisive of the matter in view of the above considerations. [315H]

Shivji Nathub/Jai v. The Union of India, [1960] 2 S.C.R. 775, M.P. Industries v. Union, [1966] 1 S.C.R. 466, Harinagar Sugar Mills Ltd. v. Shyam Sundar lhunjhunwala, (1962] 2 S.C.R. 339 and Sardar Govindrao v. State, [1965] I S.C.R. 678, followed.

Nandram Hunatram, Calcutta v. Union of India, A.i.R. 1966 S.C. 1922 and Commissioner of Income-tax v. K. V. Pi//iah, 43 I.T.R. 411, distinguished.

Rex v. Northumberland Compensation Appeal Tribunal Ex flprte Shaw, [1951] 1 K.B. 711, Vedachala Mudaliar v. State of Madras, AO.R. 1952 Madras 276, Ramayya v. State of Andhra, I.L.R. 1956 Andhra 712, Annamalai v. State of Madras, A.I.R. 1957 Andhra Pradesh 738 and Joseph v. Superintendent of Post Officts, Kottayam, J.L.R. 1961 II Kerala 245, referred to.

CIVIL APPELLATE JURISDICTION ; Civil Appeals Nos. 2596 and 2597 of 1966.

Appeals by special leave from the Orders dated May 2, 1966

and June 22, 1966 of the Government of India, Ministry of Mines and Metals, New Delhi on application is filed by the appellant under Rule 54 of the Mineral Concession Rules, 1960.

S. J. Sorabji, A. J. Rana, J. R. Gagrat and B. R. Agarwal for the appellant (in both the appeals). ' G. N. Dikshit, R. N. Sachthey for S. P. Nayyar for respon-dent No. 1 (in both the ap~als). '

P. Ram Reddy and B. Parthasarathy, for respondent No. 2 (in both the appeals) .

M. C. Setalvad, B. Dutta, and 0. C. Mathur for respondent No. 3 (in both the appeals). '

The Judgment of the Court was delivered by

Milter, J. These two appeals by special leave, are limited to the question as to whether in dismissin_g revision and confir-H ming the order of the State of Andhra Pradesh the Union of India was bound to make speaking order. The text of the order is the same in both the cases, the only difference being in

[1967] 3 S.C.R.

the situs and the area in respect of wh,ich tho lease was applied for. One of the orders runs as follows :

"New Delhi, the 22nd June, 1966".

I am directed to refer to your revision applica-tion dated 14-12-1964 and letter dated 28-1-1966 on the above subject and to say that after careful consi-deration of the grounds stated therein, the Central Government have come to the conclusion that there is no valid ground for interfering with the decision of the Government of Andhra Pradesh rejecting your applica-tion for grant of mining lease for asbestos over an area of Ac.113-50 in Brahmanapalli village, Cuddapah District, Andhra Pradesh. Your application for revi-sion is, therefore, rejected."

The facts leading to the two appeals are as follows : In response to notification dated January 8, 1964 published in the State Gazette by the Andhra Pradesh Government inviting applications under r. 5 8 of the rules framed under the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as the Rules and the Act) the appellant submitted two applica-tions in the prescribed form viz., Form "I" for areas aggregating Ac. 113-50 in village Brahmanapalli and Ac. 13-10 in village lppatta both in the district of Cuddapah for mining asbestos. Res· pondent No. 3 also made similar applications on the same date. According to the appellant. his applications complied with all the requirements of Form "I" while those of respondent No. 3 were defective in some respects. Besides the appellant and the respon-dent No. 3, there was only one other person who applied for prospecting licence which was rejected off-hand. As between the appellant and the respondent No. 3, the Government of Andhra Pradesh preferred the latter. The relevant portion of the order dated 19th October 1964 in respect of the village Brahmanapalli under s. 10(3) of the Act was as follows:

"As between the other applicants Sri Bhagat Raja and M/s. Tiffin's Barytes, Asbestos and Paints Ltd., the Government prefer M/s. Tiffin's Barytes, ..... as they are having adequate general experience and tech-nical knowledge, and are old lessees in the district, without any arrears of mineral dues to the Government. The mining lease application of Sri Bhagat Raja for the areas covered by the mining lea1e application of M/s. Tiffin's Barytes, Asbestos and Paints Ltd. is rejected."

The text of the order with regard to village Ippatta is practically the 5ame.

The appellant filed application in revision in the prescribed fonn i.e. Fonn 'N' under s. 30 of the Act read with r. 54 to the Union of India on December 14, 1964. The appellant tried to. bring out in his revision applications that the financial condition of the 3rd respondent was extremely precarious as would be evi-denced by documents, copies whereof were annexed to his peti-tion. The 3rd respondent filed counter statement to the revmon application in April 1965. In March 1966 the appel-lant received the comments of the Andhra. Pradesh Government on his revision applications. The appellant filed rejoinder to the counter statements of the 3rd respondent in May 1965 and to the comments of the Andhra Pradesh Government in April 1966. He also asked for the grant of personal hearing before the decision of the case which was not given. Ultimately, his applications were rejected by· ord.ers quoted hereinabove.

Various grounds of appeal were taken in the application for special leave to appeal preferred by the appellant. An attempt has been made therein to show that respondent No. 3 had no experience in asbestos mining, that its financial position was very unsatisfactory and that its application for mining lease was not in proper form. complamt was also made that in rejecting the applicant's revision applications the Union of India was bound to give reasons for its decision as it was exer-cising quasi .iudicial powers under s. 30 of the Act read with tT. 54 and 55, that principles of natural justice and £airplay requiring the divulgence of the grounds were violated and that personal hearing should have been given to the appellant before the disposal of the revision applications.

' the We case are but not only called to examine upon in the this question case to go as to into the whether it merits was of necessary for the Government of India to give reasons for its decision in view of the provisions of the Act and the Rules or aliunde because the decision was liable to be questioned in appeal to this Court. It is necessary to take note of few provisions of the Act and the relevant rules framed thereunder to ascertain the scope of party's right to apply for lease and the powers and duties of the Government in accepting or rejecting the some. The preamble to the Act shows that its object was to provide for the regulation of mines and the development of minerals under the control of the Union of India. Under s. 4( 1) no person can undertake any prospecting or mining operations in any area, except under and in accordance with the tenns and conditions of prospecting licence or mining lease granted under the Act and the Rules. Under sub-s. (2) of the section

[1967] 3 s.c.R.

"No prospecting licence or mining lease shall be granted otherwise than in accordance with the provi-sions of this Act and the rules made thereunder."

.S. 5 Jays dowp, certain conditions which person desiring to have mining lease must fulfil. S. 8 provides for the period for which mining lease may be granted. Under s. 10( 1) an application for mining lease has to be made to the State Government concerned in the prescribed form. Sub-s. (3) of s. 10 runs as follows :

S. 8 provides for the period be granted. Under s. 10( 1) an to be made to the State form. Sub-s. (3) of

"On receipt of an application under this section, the State Government may, having regard to the pro-visions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease."

Under sub-s. (2) of s. 11 person whose application for licence is received earlier than those of others shall have pre-ferential right for the grant thereof over the others. The proviso to this sub-section enacts that where applications are received on the same day, the State Government, after taking into consi-deration the matters specified in sub-s. ( 3), may grant the mining lease to such one of the applicants as it may deem fit. Sub-s. ( 3) specifies 4he matters referred to in sub-s. (2) and they are as follows:-

have pre-proviso into consi-D

(a) any special knowledge or experience in, pros-pecting operations or mining operations, as the case may be, possessed by the applicant;

as the case

(b) the financial resources of the applicant; ( c) the nature and quality of the technical staff employed or to be employed by the applicant; and

( d) such other matters as may be prescribed.

·s. 13(1) enables the Central Government to make rules for regulating the grant of prospecting licences and mining leases. Under s.19 any mining lease granted, riinewed or acquired in contravention of the provisions of the Act' is to be void and of no effect. Power of revision of the order of the State Govern-ment is given to the Central Government in the following terms : "The Central Government may, of its own motion or on application made within the prescribed time by the aggrieved party, revise any order made by State Government or other authority in exeip~se of the powers conferred on it by or under this Act."

Rules were made by the Central Government under s.13 of the Act known as the Mineral Concession Rules, 19~0. R.22 pres--cribes that an application for the grant of mining lease must be made to the State Government in Form "I" accompanied by

fee of Rs. 200/-, deposit of Rs. 500/- and an income-~ clearance certificate. Under r. 26 the State Government IS obliged to give reasons for refusal to grant mining lease. Any person aggrieved by an order made by the State Government may prefer an application for revision under r. 54 in Form 'N'. In every such application against the order of the State Govern-B ment refusing to grant mining lease, person to whom .a. lease has been granted must be impleaded as party. R. 55 onginally framed in 1960 was amended in July 1965. Under the amended

r. 55 the position is as follows :-

" ( 1 ) On receipt of an application for revision under r. 54, copies thereof shall be sent to the State Government and to all the impleaded parties calling upon them to make such comments as they may like to make within three months of the date of issue of the communication and if no comments are received within that period, it is to be presumed that the party omit.ting to make such comments has none to make.

( 2) On receipt of the comments 'from any party under sub-rule ( 1), copies thereof have to be sent to the other parties c,alling -upon them to niake further comments as they may like to make within one month from the date of the issue of the communication.

( 3) The revision application, the communications containing comments and counter-comments referred to in sub-rules (1) and (2) shall constitute the record of the case. .

( 4) After considering the records referred to in sub-rule ( 3), the Central Government may confinn, modify or set aside the order or pass such other order in relation thereto as it may deem just and proper."

From t)le above, it will be amply clear that in exercising its powers of revision under r. 55 the Central Government mu5t take into i;:onsideration not only the material which was before the State .Government but comments and counter-comments, if any, which the parties may make rejlarding the order of the State Government. In other words, it is open to th.e pa1 ties to show how and where the State Government had gone wrong, or, why the order of the State Government should be confinned. party whose application for mining lease is turned down by the State Government is therefore given an opportunhy of showing that the State Government had taken into consideration irrelevant matters or based its decision on grounds which were not justified. At the time when applications for licence are made by different parties to the State Government, they are not LSSup/67-7

SUPREME COURT. REPORTS

giYen a~ opportunity of showing any defects or demelits in the applications of the others or why their applications shuuld be preferred to others. The State Government has to make up its ~ind by considering the applicatlo115 before it as to which party 1s to be preferred to the other or others. S.11 ( 3), as already noted, prescribes the matters which the State Government must consider before selecting one out of the numerc;ius applicants. But the po3sibility of the State Government being misled in its consideration of the matters cannot be ruled out. It may be that p~rty to whom lease is directed to be granted has in fact no spl?C1al kn~wledge or experi~nce requisite for the mining operations or 1t may be that hts financial resources have not been properly disclosed. It may also be that the nature and quality of the technical staff employed or to be employed by him is not of the requisite standard. En an application for revision under r. SS it will be open to an aggrieved party to contend that :the matters covered by sub-s. (3) of s. 11 were not properly examined by the State Government, or that the State Govern-ment had not before it all the available material fo make up its mind with respect thereto before granting licence. In case where complaints of this nature are made, of necessity, the Central Government has to scrutinise matters which were not canvassed before the State Government. question may arise in such cases as to whether the order of the Central Government in the form in which it was made in this case would be sufficient, specially in view of the fact that the correctness thereof may be tested in appeal to this Court.

It is now well-settled that in exercising its powers of revision under r. S5 the Central Government discharges functions which are quasi judicial : see Shivji Nathubhai v. The Union of India & Ors.(') and M. P. Industries v. Union('). In the latter case one of us (our present Chief Justice) said (at p. 471):

"The entire scheme of the rules posits judicial procedure and the Central Government is constituted as tribunal to dispose of the said revision. Indeed this Court in Shivji Nathubhai v. The Union of I.n~ia (supra) rules that the Central Government cxerc1s1ng its power of review under r. 54 of the Mineral Conces-sion Rules, 1949, was acting judicially as tribunal. The new rule, if at all, is clearer in that regard and emphasises the judicial character of the proceeding. If it was tribunal, this Court under Art. 136 of the Constitution can entertain an appeal against the order of the Central Government made in exercise of its revisional powers under r. 55 of tbe Rules."

(2) [1966] 2 S. C.R. 466,

Let us now examine the question as to whether it was incum-bent on the Central Government to give any ·reasons for its decision on review. It was argued that the very exercise of judicial or quasi judicial powers in the case of tribunal entailed upon it an obligation to give reasons for arriving at d~ision for or against party. The decisions of tribunals in Indta are subject to the supervisory powers of the High Courts under Art. 227 of the Constitution and of appellate powers of this Court under Art. 136. It goes without saying that both the High Court and this Court are placed under great disadvan-tage if no reasons are given and the revision is dismissed curtly by the use of the single word "rejected", or, "dismissed" In such case, this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving hearing come to its conclusion on the merits of the appeal. This will certainly be very unsatisfactory method of dealmg with the appeal. Ordinarily, in case like this, if the State Government gives sufficient reasons for accepting the application of one party and rejecting that of the others, as it must, and the Central Government adopts the reasoning of the State Government, this Court may proceed to examine whether the reaspns given are sufficient for the purpose of upholding the decision. But, when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court, in appeal may have to examine the case de novo without anybody being the wiser for the review by the Central Govern-ment. If the State Government gives number of reasons some of which are good and some are not, and the Central Govern-ment merely endorses the order of the State Government without specifying those reasons which according to it are sufficient to -uphold the order of the State Government, this Court, in al?peal, may find it difficult to ascertain which are the grounds which weighed with the Central Government in uphold-ing the order of the State Government. In such circumstances, what is known as "speaking order" is called for.

The order of the Central Government of June :2, 1966 is so wo~ded as to be open to the construction that the reviewing authority was primarily concerned with finding out whether any grounds had been made out for interfering with the decision of the State Government. In other words, the Central Govern-ment was not so much concerned to examine the grounds or the reasons for the decision of the State Government but to find ff out whether here was any cause for disturbing the same. Prima facie the order does not show that the reviewing authority had anv thought of expressing its own reasons for m:uutaining the decision arrived at. If detailed reasons had been given by the

State Government and the Central Government had indicated clearly that it was accepting the reasons for the decision of the State Government, One would be in position to say that the reasons for the grant of lease to person other than the appellant were· obvious. But, where as here, the State Govern-ment does not find any fault or defect in the application of the unsuccessfully applicant and merely prefers another on the ground that "he had adequate general experience and technical know-ledge and was an old lessee without any arrears of mineral dues" it is difficult to say what turned the scale in favour of the successful applicant excepting the fact that he was known to the State Government from before. We do not want to express any views on this but if this be proper test, then no new entrant in the field can have any chance of success where there is an old lessee competing with him. The order of the Central Government .does not bring out any reason for its own decision except that no ground for interference with the decision arrived at was established. Now we propose to examine some decisions of this Court where the question as to whether the reviewing authority should give reasons for its decisions was gone into. In Harinagar Sugar Mills v. Shyam Sundar Jhunjhunwala(") this Court had to consider whether the Central Government exercising appelVate powers under s.111 of the Companies Act, 1956 before its amendment in 1960 was tribUI)al exercising judicial functions and as such, subject to the appellate jurisdiction of this Court under Art. 136 of the Constitution and whether the Central Government had acted in excess of its jurisdiction, or acted illegally otherwise in directing the company to register the trans-fer or transfers in favour of the respondents. There, the articles of association of the company concerned gave the directors the right in their absolute discretion and without assigning any reason to refuse to register any transfer of shares. The directors declined to register some shares in the name of the transferees who applied to the High Court at Bombay for orders under s. 38 of the Indian Companies Act, 1913 for rectification of the share register on the ground that the board of directors had exercised their right ma/a fide, arbitrarily and capriciously. The High Court rejected tbese petitions on the ground that contro-versial questions of law and fact could not be tried .in summary proceedings under s. 38. The transferees request.ed the directors once more to register the shares. On their refusal to do so, appeals were preferred to the Central Government under s.111 (3) of the Indian Companies Act, 1956 which had since come into operation. The Joint Secretary, Ministry of Finance, who heard the appeals declined ·to order registration of transfers

(I) [1962] 2 S.C.R. 339 @<' 357.

practically on grounds similar to those put forward by the High Court of Bombay. Thereafter, the original holder of the shares transferred some shares to his son and some to his daughter-in-iaw and the transferees requested the company to register the transfers. The directors once more refused. Against the reso-lution of the directors, separate appeals were preferred by the son and daughter-in-law of the original holder of the shares. The Deputy Secretary to the Government of India set aside the reso-lution passed by the board of directors and directed the company to register the transfers. No reasons were however given for such order. The company came up in appeal to this Court under Art. 136 of the Constitution. According to the judgment of the majorit)' of Judges, the exercise of authority by the Central Gov-e.rnment was judicial as it had to adjudicate upon the rights of contesting parties when there was !is between them. It was observed in that case that "If the Central Government acts as tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this court under Art. 136 of the Constitution, we fail to s~e how the power of this court can · be effectively exercised if reasons are not given by the Central Government in support of its . order." This Court further held that there had been no proper trial of the appeals, no reasons having been given in support of the orders of the Deputy Secretary who heard them and in the result, the orders were quashed with direction that the appeals be re-heard and disposed of according to law. In Sardar Govindrao v. State ( [1 ]) the appellants who claimed to be descendants of fonner ruling chiefs in some districts of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Lan;:i Revenue Exemptions. Act, 1948 for grant of money or pension as suitable maintenance for themselves. They held estates in two districts on favourable terms as Ja!zgirdars Maufidars and Ubaridars and enjoyed an exemption from payment of land revenue aggregating Rs. 27,828-5-0 per year. On the passing of the Act, the exemption was lost and they claimed to be entitled to grant of money or pension under the pr<;>visions of the Act. They applied to the Deputy Commissioner who forwarded their applications to the State Government. These were rejected without any reasons being given therefor. The appellants file.ct petition in the High Court of Madhya Pradesh under Art. 226 of the Constitutfon for writ of certiorari to quash the order of the State Govern-ment. l'he High· Court held that the State Government "was (1) [1965] 1 S.C.R. 678.

(1967) 3 S.C.R.

not compelled to grant either money or pension because the exercise of the power under s. S was discretionary and the peti· tion, therefore was incompetent." S. S (3) of the C.P. and Berar Act provided as follows :-

"The Provincial Government may make grant

of money or pension-

( i) for the maintenance or upkeep of any religi-ous, charitable or public institution or service of like nature, or

(ii) for suitable maintenance of any family of descendant from former ruling chief."

S. 6 barred the jurisdiction of civil courts. It was observed b} this Court:

"The Act lays down upon the Government duty which obviously must be performed in judicial manner. The appellants did not seem to have been heard at all. The Act bars suit and there is all the more reason that Government must deal with such case in quasi-judicial manner giving an opportunity to the claimants to state their case in the light of the report of the Deputy Commissioner. The appellants were also entitl~ to know the reason why their claim for the grant of money or pensipn was rejected by Government and how they were considered as not falling within the class of persons who it was clearly intended by the Act to be compensated in this manner. . . . . . . . As the order of Government does not fulfil the elementary requirements of quasi-judicial process YI!: do not consider it necessary to order remit to the High Court."

In the result this Court set aside the order of the Government and directed the disposal of the case in the light of the remarks made.

In M. P. Industries v. Union(') the order of the Central Government rej~cting the revision application under r. 55 of the Mineral Concession Rules was couched in exactly the samo language as the order in appeal before us (see at p. 475 of the report). One cannot help feeling that the Ministry concerned have special form which is to be used whenever review application is to be rejected. This may easily lead anyone to believe that the review is sham and nothing but the formal observance of the power granted to the Cen !):al Government. In that case, all the three learned Judges of this Court who heard the appeal were unanimous in dismissing it : sorne of the obser·

(I) [196] I S.C.R. 466.

vations made bear repetition. It was there 11rgued that if tho Central Government had to give reasons when it functioned u tribunal, it would obstruct the work of the Govenunent and lead' to unnecessary delays. As to this it said by our present Chief Justice :

"The Central Government functions only through different officers and in this case it functioned through an Under Secretary. The condition of giving reasons is only attached to an order made by the Govern-ment when it functions judicially as tribunal in comparatively small number of matters and not in regard to other administrative orders it passes . . ... .

Our Constitution posits welfare State ..... . In the context of welfare State, administrative tribunals have come to stay. Indeed, they are the nece~sary con-comitants of welfare State. But arbitrariness in their functioning destroys the concept of welfare State it-self. Self-discipline and supervision exclude or at any rate minimise arbitrnriness. The least tribunal can do is to disclose its mind. The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity and excludes or at any rate mini-mises arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellate or supervisory court to keep the tribunals within bounds. reasoned order is desirable con-dition of judicial disposal.. . . . If tribunals can make orders with-out giving reasons, the said power in the hands of un-scrupulous or dishonest officers may turn out to be potent weapon for abuse of power. But, if reasons for an order are given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrel~vant considerations, will be subject to judicial scrutmy and correction. speaking order will at its best be reasonable and at its worst be at least plausible one. The public should not be deprived of this only safeguard."

It was further obseryed in that case that the position of ordinary courts of law was different from that of tribunals exercising judi-cial functions and it was said :

. "A Judge is trai~ed t~ look at t~ings objectively, uninfluenced by cons1derallons of pohcy or expediency; but, an execul!ve officer generally looks at things from the standpoint of policy and expediency. The habit of

3U . SUPREME COURT REPORTS

mind of an executive .offi6er so formed cannot be ex-pected to change from function to function or from act to act. · So it is essential that some restrictions shall be imposed on tribunals in the matter of passing orders affecting the rights of parties; and the least they should do is to give reasons for their orders. Even in the case of appellate courts invariably reasons are given, except when they dismiss an appeal or revision in limine and that is because the appellate or rcvisional court agrees with the reasoned judgment of the subordinate court or there are no legally permissible grounds to interfere with it. But the same reasoning cannot apply to an appellate tribunal, for as often as not the order of the first tribunal is lacoruc and does not give any reasons. That apart, when we insist upon reasons; we do. not prescribe any particular form or scale of the reasons. The extent and the nature of the reasons depend upon case of aflirmance where the original tribunal gives hunal shall give its own reasons succinctly; but in case of affirmance where the original tribunal gives adequate reasons, the appellate tribunal may dismiss the appeal or the revision, as the case may be, agreeing with those reasons. What is essential is that reasons shall be given by an appellate or revisional tribunal expressly or by reference to those given by the original tribunal. The nature and the elaboration of the reasons necessarily depend upon the facts of each case."

It must be noted however that the above view was not shared by the two other Judges of the Bench constituting this Court. It was said by them :

"For the purpose of an appeal under Art. 136, orders of Courts and tribunals stand on the same foot-ing. An order of court dismissing revision applica-tion often gives no reason, but this is not sufficient ground for quashing it. Likewise, an order of an ad-minstrative tribunal rejecting revision application cannot be pronounced to be invalid on the sole ground !hat it do.es not give reasons for the rejection."

They distinguished the case of Harinagar Sugar Mills Ltd.(') on the ground that the Central Government had reversed the. deci· siOL appealed without giving any. reasons and the latter did not disclose any apparent grounds for reversal and added :

"There is vital · difference between the order of reversal by the appellate authority in that case for no (1) [19621 2 S.C.R. 339.

reason whatsoever and the order of affinnance by the revising authority in the present case."

As has already been :noted, the board of directors in that case did not give any reasons for the refusal to register and th~ ~entral Government adopting the same course reversed the decmon of the directors without giving any reasons. Clearly, the act of the Central Government there savoured of arbitrariness.· Under the articles of association of the company, the directors were not obliged to give any reasons. Their power of refusal was un-restricted if they acted bona fide or in the interest of the company. The reversal of their discretion clearly amounted to finding that they had acted arbitrarily or ma/a fide and one was, left to guess the reasons of the Central Government for coming to this con-clusion. As has already been said, when the authority whose decision is to be reviewed gives reasons for its conclusion and the reviewing authority affinns the decision for the reasons given by the lower authority, one can assume that the reviewing authority found the reasons given by the lower authority as acceptable to it; but where the lower authority itself fails to give any reason other than that the successful applicant was an old lessee and the reViewing authority does not even refer to that ground, this Coun has to grope in the dark for finding out reasons for up-holding or rejecting the decision of the reviewing authority. After an tribunal which exercises judicial or quasi-judicial powers can certainly indicate its mind as to why it acts in particular way and when important rights of parties of far-reaching consequence to them are adjudicated upon in summary fashion, without giving personal hearing where proposals and counter-proposals are made and examined, the least that can be expected is that the tribunal should tell the party why the decision is going against him in all cases where the law gives further right of appeal.

On behalf of the res{Xlndents, it was contended that r. 55 whic~ provided for revision did not envisage the filing of fresh pleadmgs and fresh material but only invited comments of the pllrties with regard to the matter before the Central Government. It was argued that if after going through the comments and co'!nter-comments t_he C~ntral Government found no reason to arnve .at conclusion different from that of the State Govern-ll}Cnt: 1t W'.15 not called upon to disclose any grounds for its deci-s10n 1~ review. Our. attention was drawn in particular tor. 26 of the Ml!leral Concession Rules which enjoined upon the State Gov~rnment to communicate in .writing the reasons for any .order tefus.1~g ~ grant or re~e~ mining lease. The absence of any P.?OV1S1on Ill r. 55 for glVlng such reasons was said to be decisive 911, the.matter ~s·indiCl\tiye of.the view of the legislature that there was no necessity f~r giving reasons for the order on review. We find ounel\"e8 unable to ·accept this contention. Take the case

31S SUPREME COURT REPORTS

where the Central Government sets aside the order of the State Government without giving any reasons as in Harinagar Sugar Mills' case('). The party who loses before the Central Government cannot know why he had lost it and would be in great difficulty in pressing his appeal to the Supreme Court and this Court would have to do the best it could in circumstances which are not con· ducive to the proper disposal of the appeal. Equally, in case where the Central Government merely affirms the order of the State Government, it should make it clear in the order itself as to why it is affirming the same. It is not suggested that the Cen· trnl Government should write out judgment as courts of law are wont to do. But we find no merit in the contention that an authortiy which is called upon to determine and adjudicate upon the rights of parties subject only to right of appeal to this Court should not be expected to give an outline of the process of reason-ing by which they find themselves in agreement with the decision of the State Government. As matter of fact, r. 26 considerably lightens the burden of the Central Government in this respect. As the State Government has to give reasons, the Central Govern· ment after considering the comments and counter-comments on the reasons given by the State Government should have no diffi· culty in making up its mind as to whether the reasoning of the State Government is acceptable and to state as briefly as possible the reasons for its own conclusion.

Our attention was drawn to judgment of this Court in Nand· ram Hunatram, Calcutta v. Union of India('). There, one of the points made by the appellant in the appeal to this Court was that the order of the Central Government, in review, upholding the action of the State Government cancelling the mining lease grant· ed to the appellant was bad inasmuch as no reasons were given. It was pointed out in the judgment in that case that the facts there were so notorious that the reasons for the action of the State Gov· ernment and the confirmation of its order by the Central Govern-ment were too obvious and could not possibly be questioned by anybody. The1·e the partners of the appellant firm had fallen out among themselves and none of them was willing to spend money on the colliery with the result that the work came to stand-still and the colliery began to get flood~. At this junc~re, Govern· mcnt stepped in and made ~ pronus~ to the essentt~l workmen that their wa&es would be paid and this saved the colhery. There· ;1fter, the Chief Inspector of Mines was infom1ed by one of the partners of the appellant firm that the othe~ partners were pre· venting him from making payment ~o.r runmng expelll!es of. the colliery and that he was. not in position to perfom1 his duties .as an occupier. He accordingly resigned his office. Tre Manager also

(2) A.1.R.. \966 S.C.R. l9l2

·---- .. .. S.C.R. ,39, .. .. -~-···--·--

(I) (196212 ·---- .. .. S.C.R. ,39, ..

resigned and the Sub-Divisional Officer of the district informed Government that the situation had become so alam1ing that some action on the pa1t of the Government was absolutelr nec~ary. In spite of notice, the partners refused to take any action with the result that the Government took over the colliery and terminated the lease. The revision application filed before the Central Government under r. 54 of the rules was turned down without giving any reasons. Negativing the contention of the appellant that the order of the Central Government was bad in law because no reasons were given, it was said by this Court that 'The documents on the record quite clearly estab-lish that the colliery was being flooded as the essential services had stopped functioning and but for the timely intervention of the State Gover~ment the co~­liery would have been lost. In these circumstances, it is quite clear that the action of the State Government was not only right but proper and this is hardly case in which any action other than rejecting the application for revision was called for and detailed order was really not required because after all the Central Gov-ernment was merely approving of the action taken in the case by the State Government, which stood com-pletely vindicated . . . . . The action of the State Government far from being arbitrary or cap-E ricious was perhaps the only one to take and all that the Central Government has done is to approve of it." The last portion of the passage was relied upon by the counsel for the respondents in support of his argument that as the order in review is merely in confirmation of the action of the State Government reasons need not be 'given. But the above dictum cannot be considered dissociated from the setting of the circum· '1ances in which it was made. There it was plain as pike-staff lhat the State Government had no alternative but to cancel the lea>e : t~i: absence of any reasons in the order on review could not possibly !~ave a~ybody in doubt as to whether reasons were. As ~ matter ?f fact In the setting of facts, the reasons were so ~1bv1?us t~at It .11'.as not necC'.ssary to set them out. There is noth·· mg. in t1h1s dem1on which is contrair to M.P. Industries v. Un!on( ). What the decision says is that the reasons for the acuo? of the State were so obvious th.at it was not necessary, on the fact~ of the case, to repeat them m the order of the Central Government.

Ou~ attention was also drawn to another judgment of this Court in Cornmi,V;rioner of Income-tax v. K. V. Pilliah (a). One o! th~ -~~-e~~J~~s .. m that case before the High Court of Mysore (I) (1966] I, S. C. R. 466. (2) 43 1. T· R. 411.

.under s. 66(2) of the Indian Income-tax Act was, whether, on 1he facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in sustaining both the addition .of Rs. 41,142/- as income from business and Rs. 7,000/- as cash credits, nnd whether such addition did not result in double taxa-.tion. It was held by this Court that the question whether Rs. 41,142/- was liable to be taxed fell to be detennined under the first question. In respect of the other amount of Rs. 7,000/-the Income-tax Officer had held that the explanation of the assessec was untrue and the Appellate Assistant Commissioner and the Tribunal had agreed with that view. In this setting of facts, it •was said by this Couri:

''The Income-tax Appellate Tribunal is the final fact-finding authority and normally it should record its conclu-sion on every disputed queftion raised before it, setting out its reasons in support of its conclusion. But, in failing to record reasons, when the Appellate Tribunal fully agrees with the view expressed by ihe Appellate Assistant Commissioner and has no other ground to record in sup-port of its conclusion, it does not act illegally or irregu-larly, merely because it does not repeat the grounds of the Appellate Assistant .Commissioner on which the deci-sion was given against the assessee or the department. The criticism made by the High Court that the Tribunal had "failed to perfonn its duty in merely affirming the conclusion of the Appellate Assistant Commissioner" is apparently unmeri!PA. On the merits of the claim for exclusion of the umount of Rs. 7,000/-, there is no ques-tion of law which could be said to arise out of the order of the Tribunal."

The above observations were sought to be pressed i·nto service 'by the counsel for the respondents but there is good deal of ·difference between that case and the one with which we have · to ·deal. The High Court there was merely called upon to give its ·opinion on the statement of facts set out by ihe Appellate Tribunal. It was for the Income-tax Officer in the first instance to accept or reject the explanation with regard to the cash credit. It the Income-• tax Officer found the assessee's explanation unacceptable, he had ·to say why he did not accept it. Unless the assessee in appeal was able to point out to the Appellate aut~o~ities some flaw in the reasoning of the Income-tax Officer, 1t is not necessary for the appellate authorities to give their reasons independently. The explanation of the assessee is either accepted or rejected; but in the case which we have before .us, the State Government has to con-H sider the merits and demerits of the applications and to give its reasons why it prefers one to the ?ther or .others. There is dis-pute between two or more contestmg parties and the reasons for

·preferring one to the other or others may be more than one. It i& not question of accepting or rejecting an explanation. In our opinion, what was said in the above Income-tax case will not apply .in the case of review by the Central Government of decision of the State Government under the Act and the Rules.

It may be of interest to note that in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw(') an application was mi.de in the King's Bench Division in England for an order of certiorari for the quashing of decision reached by the Compen-sation Appeal Tribunal dismissing an appeal by Shaw against an award to him of compensation for loss of employment as clerk to Hospital Board payable under the National Health Service (Transfer of Officers and Compensation) Regulations, 1948. There the question of the practice and procedure with regard to the issue of writ of certiorari was gone into at some length. The tribunal in that case had made speaking order, It was contended by the co•msel for the tribunal that the King's Bench Division had no power to examine the order in the case before it on certiorari on the ground that certiorari went only to defect of jurisdiction, This was turned down and the Divisional Court held that it had jurisdic-tion to quash by certiorari the decision of an inferior tribunal when the latter had embodied the reasons for its decision in its order and those reasons are bad in law. For our purpose, we need only refer to the observations of Lord Goddard. C.J. at p. 724 of the report where he said :"I think it is beneficial in this case that we should do so, not merely having regard to the facts of this case, but because so many tribunals have now been set up, all of whom, I am certain, desire to do their duty in the best way, and are often given very difficult sets of regulations and statutes to construe. It certainly must be for their benefit., and I have no doubt but that they will welcome, !ha.t this e;ourt s~ould be able to give guidance to them if, m makmg their or~er~, they make their orders speak-mg orders, so that th.is court can then consider them if they are brought before the court on certiorari."

The case for giving reasons or for making speaking order becomes much stronger when the decision can be challenged not only by the issue of writ of certiorari but an appeal to this court. Counsel for the respondents referred us to the comment on this c.ase made by Sir C. K. Allen in his Law and Orders (Second Edi-tlOn) at p. 259 to p. 261. According to the learned author the Northumberland Compensation case might be great dete~rent than encouragement to speaking orders inasmuch as "the prospect (I} (1951] 1 K.B. 71 I. ·-,

of having their mental process set forth in literary form, might be extremely disagreeable to them" and up to the year 1956 did not seem to have assisted iireatly the means of recourse against deci-sions of inferior jurisdictions. Speaking for ourselves, with great respect to the learned author, we do not think that the position of the Central Government as reviewing authority under the Mineral Concession Rules can be equated with an appellaie tri-bunal of the type whose decision was before the King's Bench Division in England. If the State Government is enjoined by law to give its reasons, there is no reason why it should be difficult for the appellate authority to do so. The necessity and the desirabi-lity of tribunals making speaking orders has been adverted upon by different High Courts in India. Thus in Vedachala M udaliar v. State of Madras(') where the State Government of Madras set aside the order of the Central Road Traffic Board without giving any reasons, it was observed that

"When the policy of the Legislature is to confer powers on administrative tribunals with duty to dis-charge their functions judicialJy I do not see any reason why they should be .exempted from all those safeguards inherent in its exercise of that jurisdiction. . . . From the standpoint of fair name of the tribunals and also in the interests of the public, they should be expected to give reasons when they set aside an order of an inferior tribunal. . . . . . Further, if reasons for an order are given, there wilJ be less scope for arbitrary or partial exercise of powers and the order 'ex facie' will indicate whether extraneous circumstances were taken into consideration by the tribunal in passing the order.'.'

Refrence may also be made to Ramayya v. State of Andhra(') and Annamalai v. State of Madras(•). To the same effect is the judgment of the Kerala High Court in Joseph v. Superintendent of Post Offices, Kottayam (').

We have already commented that the order of the Central Gov-ernment in this case is couched in the same language as was used in the case before this court in M.P. Industries v. Union(') in August J 965. The old rule 55 was replaced by new rule which ·came into force on 19th July 1965. Whereas the old rule directed the Central Government to consider comments on the petition of review by the State ~overnment or other. aut~ority ~nly, the new rule is aimed at calling upon all the parties mcludmg the State Government to make their commenw m the matter and the parties are given the right to make further comments on those made by

(I} A.l:R. 1952 Modras 276. (3) A.l.R. 1957 Andhra Pradesh 739,

(2) 1,L.R. 1956 Andhro 712 (4) l.L.R. 1961·11Kerala245.

(5) [1966] l S.C.R. 466.

BHAGAT llAJA v. UNION (Mitter, J.)

.A the other or others. In effect, the parties are given right to bring forth material which was not before the State Government. It is easy to see that an unsuccessful party may challenge the grant of lease in favour, of another by ·pointing out defects or demerits which did not eome to the knowledge of the State Government. The order in this case does not even purport to show that the comments and counter-comments, which were before the Central Governme.nt in this case, had been considered. It would certainly have been better if the order of 22nd June 1966 had shown that the Central Government had taken into consideration all the fresh material adduced before it and for the reasons formulated they thought that the order of the State Government should not be disturbed.

In the result, the appeals are allowed and the orders of the Central Government passed on 22nd June, 1966 are set aside. The Central Government is directed to decide the review applications afresh in the light of the observations made. The appellant will get his costs throughout from the 3rd respondent. G.C. Appeals allowed.

Appeals allowed.