Case Law Details
SUMMARY OF THE CASE LAWS
The expanding horizon of the principles of natural justice provides for requirement to record reasons as it is now regarded as one of the principles of natural justice, and it was held in the above case that except in cases where the requirement to record reasons is expressly or by necessary implication dispensed with, the authority must record reasons for its decision.
CASE LAWS DETAILS
DECIDED BY: COMPETITION APPELLATE TRIBUNAL NEW DELHI,
IN THE CASE OF: Steel Authority of India Ltd. Vs Jindal Steel & Power Ltd., APPEAL NO: Appeal No. 1 of 2009, DECIDED ON February 15, 2010
RELEVANT PARAGRAPH
34. Coming to the merits of the case, the first question that needs to be decided is whether the appellant had a reasonable opportunity to present its case. It is rightly contended by learned counsel for the respondent that there is no requirement of the Commission to invite parties to present their point of view before forming a prima-facie opinion. But the Commission may for the purpose of satisfying itself on any aspect permit the parties to present their point of view. This is clear from sub-regulation 5(c) of Regulation 3 of the Regulations. In fact, in the present case, the respondent was granted opportunity to place materials and to make detailed submission. Further, the Commission felt that before forming prima-facie opinion it was necessary to obtain the views of the appellant, who was the defendant in the case before the Commission. It is certainly open to the Commission to adopt a particular procedure because ultimately in view of the Section 36 of the Act it has powers to regulate its own procedure and is to be guided by the principles of natural justice. Commission after elaborate deliberation decided to ask appellant to indicate its view and give its comments. After having done that, it is not open to the Commission to abandon the opportunity granted midway. Therefore, the moot question is whether as noted above adequate opportunity was granted. This has to be considered in the background of the principles of natural justice. The rules of natural justice intend to invest law with fairness and secure justice. Negatively put it prevents miscarriage of justice. They aim at preventing not only bias against any person, but also prevent the possibility of such bias. The opportunity granted should be fair and real and not illusory. Where there is violation of natural justice, no resultant or independent prejudice need to be shown, as denial of justice is, in itself sufficient prejudice and it is no answer that even with observance of natural justice the same conclusion would have been reached. In brief, the essential requirement of natural justice is reasonable opportunity to the person charged with which in turn, means (a) a reasonable notice; (b) an adequate notice; (c) a fair consideration of the explanation; and (d) passing of a speaking order. [see : Grindlays Bank Ltd. v. Central Government Industrial Tribunal And Other (AIR 1981 SC 606) and Union of India v. Mohan Lal Capoor and Ors. (AIR 1974 SC 87).
35. The rules of natural justice operate only in areas not covered by any law validly. In other words they do not supplant the law of the land but supplement it. The rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body or persons appointed for that purpose. In paragraph-52 of Mohinder Singh Gill’s case (supra), it was observed as follows :-
“52. Once we understand the soul of the rule as fair play in action-and it is so-we must hold that it extends to both the fields. After all, administrative power in a democratic set-up is not allergic to fairness in action and discretionary executive justice cannot degenerate into unilateral injustice. Nor is there ground to be frightened of delay, inconvenience and expense, if natural justice gains access. For fairness itself is a flexible, pragmatic and relative concept, not a rigid, ritualistic or sophisticated abstraction. It is not a bull in a china shop, nor a bee in one’s bonnet. Its essence is good conscience in a given situation; nothing more– but nothing less. The ‘exceptions’ to the rules of natural justice are a misnomer or rather are but a shorthand form of expressing the idea that in those exclusionary cases nothing unfair can be inferred by not affording an opportunity to present or meet a case. Text-book excerpts and ratios from rulings can be heaped, but they all converge to the same point that audi alteram partem is the justice of the law without, of course, making law lifeless, absurd, stultifying, self-defeating or plainly contrary to the commonsense of the situation.”
36. As rightly contended by the learned counsel for the appellant, the materials required to be placed for consideration by the Commission along with the views, the comments were voluminous and large number of documents were needed to be filed. The reason indicated for seeking extension of time was certainly plausible and it cannot be said to be an endeavour for wasting of valuable time. Though the Commission in its application for impleadment has tried to justify the rejection of the prayer for extension of time. That is not borne out from the impugned order itself. As observed in the Mohinder Singh Gill’s case (supra), the Commission cannot be permitted to supplement whatever has been specifically stated in the order, which merely states that the prayer for extension was considered and rejected. As noted above, no reason was indicated. The appellant is granted time till 22nd February, 2010 to file its further reply, if any, in addition to what has been filed on 16.12.2009. The Commission shall consider that along with other materials on record and take a fresh decision. We make it clear that we have not expressed any opinion on the merits of the case.
37. The second question is whether it would be necessary to indicate reasons while forming opinion that a prima-facie case exists. The Commission has to indicate reasons which need not be elaborate but should be sufficient to show application of mind. But sufficiency of foundational material for the recording of reasons cannot be questioned.
38. Reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same it becomes lifeless. [see : Raj Kishore Jha Vs. State of Bihar 2003 (11) SCC 519]
39.Even in respect of administrative orders Lord Denning, M.R. in Breen Vs. Amalgamated Engg. Union (1971) 1 All ER 1148, observed: “The giving of reasons is one of the fundamentals of good administration. ” In Alexander Machinery (Dudley) Ltd. Vs. Crab tree 1974 ICR 120 (NIRC) it was observed: “Failure to give reasons amounts to denial of justice.” “Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at.” Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the “inscrutable face of the sphinx”, it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can
know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The “inscrutable face of the sphinx” is ordinarily incongruous with a judicial or quasi- judicial performance. [See : Steel Authority of India Ltd. Vs. Sales Tax officer, Rourkela- I, Circle and Others, 2008 (9) SCC 407]
40. In Krishna Swami Vs. Union of India AIR 1993 SC 1407, the Supreme Court observed that the rule of law requires any action, decision of a statutory or public authority must be founded on the reasons stated in the order or borne out from the record. The Court further observed that reasons are the links between the material, the foundation for their erection and the actual conclusions. They would also demonstrate how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusions reached. Lest it would be arbitrary, unfair and unjust, violating Article 14 or unfair procedure offending Article 21.
41. Similar view has been taken by the Supreme Court in Institute of Chartered Accountants of India Vs. L.K. Ratna [1987] 164 ITR1 (SC) : [1987] 61 Co. Case 266 (SC) : [1986] 4 SCC 537, Board of Trustees of the Port of Bombay Vs. Dilipkumar Raghavendranath Nadkarni AIR 1983 SC 109. In Vasant D. Bhavsar Vs. Bar Council of India [1999] 1 SCC 45, the Supreme Court held that an authority must pass a speaking and reasoned order indicating the material on which its conclusions are based. Similar view has been reiterated in Indian Charge Chrome Ltd. Vs. Union of India AIR 2003 SCW 440, Secretary, Ministry of Chemicals & Fertilisers, Government of India Vs. CIPLA Ltd. [2003] 7 SCC 1 and Union of India Vs. International Trading Co. [2003] 5 SCC 437.
42. It is settled proposition of law that even in administrative matters, the reasons should be recorded as it is incumbent upon the authorities to pass a speaking and reasoned order. In Kumari Shrilekha Vidyarthi v. State of U.P. AIR 1991 SC 537 it was observed as under :-
“Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that ‘be you ever so high, the laws are above you’. This is what men in power must remember, always.”
43. In Life Insurance Corporation of India Vs. Consumer Education and Research Centre [1995] 5 SCC 482 the Supreme Court observed that the State or its instrumentality must not take any irrelevant or irrational factors into consideration or appears arbitrary in its decision. “Duty to act fairly” is part of fair procedure envisaged under Articles 14 and 21. Every activity of the public authority or those under public duty must be received and guided by the public interest. Same was the view of the Supreme Court in Mahesh Chandra Vs. Regional manager, U.P. Financial Corporation AIR 1993 SC 935 and Union of India Vs. M.L. Capoor AIR 1974 SC 87.
44. In State of West Bangal Vs. Atul Krishna Shaw [1991] Suppl. 1 SCC 414, the Supreme Court observed that “giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review”.
45. In S.N. Mukherjee v. Union of India AIR 1990 SC 1984, it has been held that the object underlying the rules of natural justice is to prevent miscarriage of justice and secure fair play in action. The expanding horizon of the principles of natural justice provides for requirement to record reasons as it is now regarded as one of the principles of natural justice, and it was held in the above case that except in cases where the requirement to record reasons is expressly or by necessary implication dispensed with, the authority must record reasons for its decision.
