Reasons in support of decisions making

In England the position at common law is that there is no requirement that reasons should be given for its decision by the administrative authority1. There are, however, observations in some of the Judgments wherein the importance of reasons has been emphasized. In a case, Lord Denning observed that:

“The giving of reasons is one of the fundamentals of good administration.”

Sir John Donaldson observed that failure to give reasons amounts to denial of justice. And Lord Lane4 Chief Justice while expressing his reservation on the proposition that any failure to give reasons means a denial of justice, observed that:

“A party appearing before a tribunal is entitled to know either expressly stated by the tribunal or inferentially stated, what it is to which the tribunal is addressing its mind.”

The Committee on Minister’s powers in its report submitted in 1932, recommended that “Any party affected by a decision should be informed of the reasons on which the decision is based” and that “such a decision should be in the form of a reasoned document available to the parities affected.”

The Committee on Administrative Tribunals and Inquiries (Franks Committee) has observed that:

“Almost all witnesses have advocated the giving of reasoned decisions by tribunals. We are convinced that if tribunal proceedings are to be fair to the citizen reasons should be given to the fullest practicable extent. A decision is apt to be better if the reasons for it have to be set out in waiting because the reasons are then more likely to have been properly thought out. Further, a reasoned decision is essential in order that, where there is a right of appeal, the applicant can assess whether he has good grounds of appeal and know the case he will have to meet if he decides to appeal.”

The recommendations of the Donoughmore Committee and the Franks Committee led to the enactment of the Tribunals and Inquiries Act, 1958 in the United Kingdom. Section 12 of that Act prescribed that it shall be the duty of the tribunal or Minister to furnish a statement, either written or oral, of the reasons for the decision if requested, on or before the giving of notification of the decision to support the decision. The said Act has been replaced by the Tribunals and Inquiries Act, 1971 which contains a similar provision in section 12. This requirement is, however, confined, in its applications to tribunals and statutory authorities specialized in Schedule I to the said enactment. In respect of the Tribunals and authorities that are not covered by the aforesaid enactment, the position, as prevails at common law, applies. The Committee of Justice in its report, administration under Law, submitted in 1971, expressed the view that:

“No single factor has inhibited the development of English administrative law as seriously as the absence of any general obligation upon public authorities to give reasons for their decisions.”

In United States the Courts have insisted upon recording reasons form the viewpoint of fairness in administrative decisions and in fact the administrative authorities are obliged to do so. The Law in Canada appears to be the same as in England. Lord Denning in Breen’s case (supra) said that the administrative law is now firmly developed in England and thereafter observed that giving of reasons is fundamental of good administration. In England there is no general rule, however, that reasons are always necessary in administrative decision making, and not treated as part of the principles of natural justice. (Position appears to have been changed after reform and report)

Position in India is on stronger footing in view of charter of fairness encrypted under Article 14 of the Constitution. India has accepted that giving of reasons represents the substance and essence of principles of natural justice and is thus treated as part of principles of natural justice. It can definitely argued that the reasons is the link between the material on record and the actual mental process of the adjudicating authority that can establish the rationale as to how the adjudicating authority has applied his mind in given set of facts and circumstances of the case.

It would be very profitable to quote the Judgement of the Supreme Court6 at this stage where it was stated that:

“The absence of arbitrary power is the first essential rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion when conferred upon executive authorities must be confined within clearly defined limits.. the decision should be predictable one.”

The person has a right to know the reasons when he is adversely affected in terms of purse, property or liberty. If the basis for reasoned decisions are not formulated, then it is more a case of judiciary being deprived to screen the mental eventualities of executives who might have otherwise acted arbitrarily.

Gujarat High Court in Pirbhai Janubhai observed that: (Scrapped decision)

“... neither principle nor authority requires that a quasi judicial body giving its decision must give reasons in support of the decision (!). The only qualification to this rule is where an appeal is provided against the decision of the quasi-judicial body. In such a case the necessity of giving reasons in support of the decision is imposed because unless reasons are given, it would not be possible for the appellate authority to examine the correctness of the decision. But apart from such case, there is no obligation on a quasi judicial body to give reasons in support of the decision arrived at by it so long as the decision is reached after observing the principles of natural justice.”

While the aforesaid decision was given by the Division Bench of the Gujarat High Court, the case of Bhagat Raja that shall be referred to hereafter was pending for judicial determination before the Supreme Court of India and in the meanwhile a reference was made to the larger Bench of the Gujarat High Court in view of the aforesaid decision rendered by his Lordship Justice P. N. Bhagwati and the decision in Special Civil Application No. 638 of 1965 decided on 7th of September, 1965 (Gujarat High Court) as to whether a conciliation officer, who is exercising quasi judicial functions is as such amenable to the jurisdiction of the High Court under Article 226 and is bound to make a speaking order or, in other words, he must give reasons in the order.

Correcting earlier judgment9 in view of the Supreme Court Judgements Chief Justice P. N. Bhagwati observed on behalf of larger Bench that:

“Both on principle and on authority every administrative officer exercising quasi judicial functions is bound to give reasons in support of the order he makes. A conciliation Officer exercises quasi judicial function while hearing and disposing of an application by the employer under the proviso to section 33 (2) (b) of the Industrial Disputes Act by which he seeks the approval of the Conciliation Officer for discharging its employee during the dependency of an Industrial Dispute before the said authority...”

Two factors were considered as to why quasi-judicial authority must state the reasons. It was held that:

“The necessity of giving reasons flows as a necessary corollary form the rule of law which constitutes one of the basic principles of the Indian Constitutional set-up. The administrative authorities having a duty to act judicially cannot therefore decide on considerations of policy or expediency. They must decide the matter solely on the facts of the particular case, solely on the material before them an apart from any extraneous considerations by applying pre existing legal norms to factual situations. Now necessity of giving reasons is one of the important safeguards to ensure observance of the duty to act judicially. It introduces or, at any rate, minimizes arbitrariness in the decision making process.”

Another reason was that:

“Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under Article 226 and the Supreme Court under 32 of the Constitution.”

The specified authority under the Act is obliged to consider the facts for giving or refusing to give the approval in connection with discharge of Industrial worker during the pendency of reference. Quasi-judicial authority, in the facts and circumstances of the case, was bound by law to render his decision supported by reasons.

The Law Commission in the 14th Report relating to form in judicial administration suggested that:

“In the case of administrative decisions provisions should be made that they should be accompanied by reasons. The reasons will make it possible to test the validity of these decisions by the machinery of appropriate writs.”

The Law Commission suggested remedying the loopholes, but unfortunately no general duty so far has been created to furnish the reasons in support of administrative decision making. In some of the Judgements, the question as to whether the adjudicating authority is expected to support his decision by reasons was not very effectively answered, but the dividing line between the quasi judicial action and administrative action was considered by the Supreme Court. Ridge V/s Baldwin rendered valuable assistance that the Supreme Court respectfully accepted.

In case of Harinagar Sugar Mills Case10 the Court observed that:

“If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this Court under Article 136 of the Constitution we fail to see how the power of this court can be effectively exercised if reasons are not given by the Central Government in support of its order.”

Safeguarding the interest of the Citizens in a Welfare State, the Supreme Court in Madhya Pradesh Industries11 observed that:

“In the context of a welfare State, administrative tribunals have come to stay. Indeed they are the necessary concomitants of a welfare State. But arbitrariness in their functioning destroys the concept of a Welfare State itself. Self-discipline and supervision exclude or at any rate minimize arbitrariness. The least a tribunal can do is to disclose its mind. The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity an excludes or at any rate minimizes arbitrariness, it gives satisfaction to the party against whom the order is made, and it also enables and appellate or supervisory court to keep the tribunals within bounds. A reasoned order is a desirable condition of judicial disposal.”

It was further observed that:

“If tribunals can make orders without giving reasons, the said powers in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuse of power. But, if reasons for an order are to be given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrelevant considerations will be subject to judicial scrutiny and correction. A speaking order will at its best be a reasonable and at its worst be atleast plausible one. The public should not be deprived of this only safeguard.”

Sometimes, the adjudicating authority passes an order in the proceedings that would be subject to appeal and the question would be whether the appellate or revisional authority affirming the order in appeal or revision without a speaking order is sustainable in law. The appellate or revisional authority in many cases disposes of the proceedings in one word “dismissed” or rejected, but this practice would be unreasonable. The Supreme Court in Bhagat Raja held such practice to be completely unsatisfactory.

In Mahavir Prasad Santoshkumar13 the Supreme Court observed that:

“The practice of the executive authority dismissing statutory appeal against orders which prima facie seriously prejudice the rights of the aggrieved party without giving reasons is a negation of the rule of law.”

The Supreme Court further observed that:

“Recording of reasons in support of a decision on a disputed claim by a quasi judicial authority ensures that the decision is reached according to law and is not the result of a caprice, whim or fancy or reached on gourds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just.”

In this case the District Magistrate had cancelled the license granted under the Licensing Order, without giving any reasons and the State Government also dismissed the appeal without recording the reasons in support thereof. The Court in this case tresses the need of passing a speaking order by the original adjudicating authority and insisted that the recording of reasons assumes great importance especially when the order is made subject to appeal. Since the giving of reasons in support of decision is accepted to be part of principles of natural justice, even original administrative authority owes a duty to pass a speaking order. In woolcombers of India Limited the Supreme Court observed that:

“The giving of reasons in support of their conclusions by judicial and quasi judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious, unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimize the chances of unconscious infiltration of personal biased or unfairness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Second it is a well known principle that justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. Third, it should be remembered that an appeal generally lies from the decision of judicial and quasi-judicial authorities to this Court by Special leave granted under Article 136. A Judgement which does not disclose the reasons will be of little assistance to the Court.”

Siemens Engineering & Manufacturing Company of India Ltd15completely voids the administrative attitude of the Central Government. Justice Bhagwati observed:

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

After having pronounced this Judgement, the Central Government transferred its business to the Tribunal.