(1) On 6th May, 1954, Ramlal Amritalal Parekh and Amritalal Lalbhai Parekh were intercepted by the Customs Officers near the Marine Lines Station, Bombay and their search resulted in recovery of 90 bars of gold weighing 10 tolas each. On further enquiry the Customs Officers found that one Pal Dhungal was the agent in Bombay of the petitioner, a resident of Goa, for receiving and disposing of gold sent to him. As result of the enquiries proceedings were initiated against various persons, including the petitioner and show cause ntoices issued to them. By order dated 9th April, 1957, the Additional Collector of Customs, Bombay directed confiscation of 1400 tolas of gold, which had been disowned by all the persons concerned under Section 167 (8) of the Sea Customs Act, 1878. A personal penalty of Rs.1,89,000/- was also imposed on the petitioner under the aforesaid provision. The petitioner aggrieved by the order of the Additional Collector of Customs, preferred an appeal to the Central Board of Revenue, which was dismissed on 15th August, 1958. The Central Board of Revenue passed a non-speaking order which reads:-
'All the arguments put forth in the appeal and at the time of the personal hearing have been carefully considered, but the Board sees no reason to interfere with the order (Original) passed by the Additional Collector of Customs, Bombay.'
A revision petition filed by the petitioner before the Central Government was also rejected by a very brief order reading:-
'The Government of India have carefully considered the revision application but see no reason to interfere with the order in appeal passed by the Central Board of Revenue, New Delhi'.
The petitioner thereafter filed the present writ petition challenging the aforesaid three orders.
(2) Although the point that the Central Board of Revenue and the Central Government ought to have given reasons while disposing of the appeal and the revision respectively was nto clearly taken in the petition, the learned counsel for the petitioner having failed in his attempt to cover the said point by one or toher of the grounds mentioned in the petition, sought permission to raise their point. Since the point arises on the face of the orders and no further materials are required for disposing of this contention, I permitted the learned counsel to argue it. Since I am in agreement with the arguments of the learned counsel that the orders of the Central Board of Revenue and the Central Government deserve to be quashed, because of the absence of reasons, it is nto necessary to pronounce on the toher points urged by the learned counsel for the petitioner as he agrees that all those points will be available to him in appeal before the Central Board of Revenue when the same is taken up for hearing again. The question, thereforee, arises whether the Central Board of Revenue and the Central Government were required to pass speaking orders giving reasons for the rejection of the appeal and the revision. In B.K. D. Akiteselskab v Secretary of State : AIR1940Bom294 , the Bombay High Court expressed the view that an order could nto be set aside merely because it gave no reasons. The matter has been considered several times by their Lordships of the Supreme Court as well as by this Court. The latest decision of the Supreme Court, is Bhagat Raja v. Union of India, Civil Appeals Nos. 2596 and 2597 of 1966, D/-29-3-1967 (SC). In this case the Supreme Court was dealing with a revision before the Central Government under the Mines and Minerals (Regulation and Development) Act, 1957. In revision the Central Government affirmed the order of the State Government by a brief order.
(3) For the proper appreciation of the decision, it is necessary to read the order in that case:-
the 22nd June, 1966.
I am directed to refer to your revision application dated 14-12-1964 and letter dated 28-1-1966 on the above subject and to say that after careful consideration 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 application for grant of mining lease for asbestos over an area of Ac. 113-50 in Brahmanapalli village, Cuddapah District, Andhra Pradesh. Your application for revision is, thereforee, rejected'.
It would, thereforee, be seen that the order of the Central Government affirmed the order of the State Government. The provision of law conferring the right of revision on the Central Government is more or less to the same effect as the power of the Central Government under the Sea Customs Act, 1878, at least for the purposes of the present controversy. Their Lordships in this observed:-
'It was argued that the very exercise of judicial or quasi-judicial powers in the case of a tribunal entailed upon it an obligation to give reasons for arriving at a decision for or against a party. The decisions of tribunals in India are subject to the supervisory powers of the High Court, under Article 227 of the Constitution and of appellate powers of this Court under Article 136. It goes without saying that buth the High Court and this Court are placed under a 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 a case, this Court can probably only exercise its appellate jurisdiction, satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the appeal. This will certainly be very unsatisfactory method of dealing with the appeal. Ordinarily, in a case like this, if the State Government gives a sufficient reasons for accepting the application of one party and rejecting that of the tohers, 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 denovo without anybody being the wiser for the review by the Central Government. If the State Government gives a number of reasons some of which are good and some are nto, and the Central Government 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 appeal, may find it difficult to ascertain which are the grounds which weighed with the Central Government in upholding the order of the State Government. In such circumstances, what is known as a `speaking order' is called for'.
Again, after discussing the earlier decision of the Supreme Court it was said:-
'Take the case where the Central Government sets aside the order of the State Government without giving any reasons as in Harinagar Sugar Mills' case AIR 1967 SC 1969. The party who also loses before the Central Government cannto 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 nto conducive to the proper disposal of the appeal. Equally, in a 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 nto suggested that the Central Government should write out a judgment as Courts of law' are wont to do. But we find no merit in the contention that an authority which is called upon to determine and adjudicate upon the rights of parties subject only to a right of appeal to this Court should nto be expected to give an outline of the process of reasoning by which they find themselves in agreement with the decision of the State Government'.
In Harinagar Sugar Mills Ltd. V. Shyam Sundar Jhunjhunwala : 2SCR339 the Supreme Court expressed the view that since the powers of the Central Government under Section 111 of the Companies Act, 1956 (before its amendment in 1960) were subject to review by the Supreme Court under Article 136 of the Constitution, it was incumbent on the Central Government to reasons in support of its order. This view was affirmed in Sardar Govindrao v. State of Madhya Pradesh : 1SCR678 . Then came the decision in M.P. Industries Ltd. V. Union of India 0044/1965 : 1SCR466 , K. Subba Rao, J. (As his Lordship then was) drew a distinction between a Court and an administrative tribunal and expressed his view in the following words:-
'Ordinarily, the appellate or revisional tribunal 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. In the present case, neither the Stage Government's nor the Central Government's order discloses the reasons for rejecting the application of the appellant. In the circumstances the Central Government's order is vitiated, as it does nto disclose any reasons for rejecting the revision application of the appellant'.
His Lordship felt that reasons were necessary as the power to decide without giving reasons may result in an abuse and the requirement as to the statement of reasons will prove an effective restraint on such an abuse. Two of their Lordships Bachawat and Mudholkar Jj, came to the conclusion that the revising authority having found no valid grounds for interference was nto bound to give fuller reasons. Their Lordships said -
'There is a vital difference between the order of reversal by the appellate authority in that case Harinagar Sugar Mills' case : 2SCR339 , for no reason whatsoever and the order of affirmance by the revising authority in the present case'. Again, in Nandram Hunatram Calcutta v. Union of India : AIR1966SC1922 , their Lordships of the Supreme Court did nto, in the circumstances of that case, set aside the order of the revisional authority even though no reasons had been given. It was observed - 'In these circumstances, it is quite clear that the action of the State Government was nto only right but proper and this is hardly a case in which any action toher than rejecting the application for revision was called for and a detailed order was really nto required because after all the Central Government was merely approving of the action taken in the case by the State Government, which stood completely vindicated. The order of the Central Government, is clearly sustainable on the material and it is nto said that anything has been withheld from us. The action of the State Government far from being arbitrary or capricious was perhaps the only one to take and all that the Central Government has done is to approve of it'.
This case was distinguished in Bhagat Raja's case on the ground that reasons for the action taken were so obvious that it was unnecessary to set them out. The matter was considered by K.S. Hegde , C.J., in Prem Nath Mayor v. S. Venkatesan (Civil Writ No. 180-D of 1959), D/-27-1-1967 (Delhi). The opinion expressed in that decision is also in favor of the necessity for reasons. The learned Chief Justice observed,
'The revising authority as well as the superintending authority must get sufficient material from the order of the Board to satisfy themselves that the Board has in fact applied its mind to the questions of law and fact taken before it. That is absolutely necessary to compel the Board to discharge its legal duties. toherwise, the revisional power conferred on the Government and the superintending power of this Court would become meaningless'.
This case dealt with the provisions of the very same Act with which I am concerned. The necessity to give reasons has been variously put, as requirement of natural justice, or to ensure that the concerned authority applies its mind to the matter or to prevent the provisions as to appeals and revisions being rendered nugatory by the authorities making out orders. It has also been suggested that in a case like this where a right has been given to the petitioner to appeal to the Central Board of Revenue and then file a revision before the Central Government, the obvious intention of the Legislature is to require the subordinate authorities to making a speaking order. Moreover when an authority is required to decide some matter and the decision depends upon the existence or non-existence of certain facts, that authority must in its order show as to whether or nto those facts exist. In the absence of reasons it is impossible by the Courts exercising appellate powers, or the powers of superintendence, to see whether or nto the authority was influenced by any extraneous considerations. The practice of making summary orders will, in effect, reduce the provisions as to appeal and revision to silence. When the order of an authority is made subject to scrutiny by an appellate or revisional authority, the Legislature obviously intends to make that right effective. If the authority does nto give reasons it amounts, in substance, to depriving the party of the right of appeal or revision. The requirement that quasi-judicial tribunals should give findings is the requirement for guarantee that the decision shall be rendered by such tribunals according to the evidence and the law rather than arbitrarily or on extra-legal considerations.
Such speaking decisions serve the additional purpose, where provisions for appeal or revision are made, of apprising the parties and the reviewing tribunal of the factual basis of the action of such tribunal so that the parties concerned and the reviewing tribunal may determine whether or nto the case has been decided upon the evidence and the law or on the contrary, upon arbitrary or extra-legal considerations. When a decision is nto accompanied by findings that speak, the reviewing tribunals are deprived of their powers of deciding whether the order under review follows, as a matter of law, from the facts stated as its basis, and also, whether the facts so stated have any substantial support in the evidence. It is for this reasons that the necessity of giving reasons, is termed as something far from technicality. Insistence upon reasons effectively ensures against Star Chamber methods, to make certain that justice shall be administered according to the facts and law. It will nto be very far-fetched to say that the right of a party to know the reasons, for the decision, be it judicial or quasi-judicial, is one of the principles of natural justice.
(4) The order of the Collector is made subject to appeal before the Central Board of Revenue. Such appeal is open buth on facts and law. The order under Section 188 of the Sea Customs Act passed in appeal is further subject to revision by the Central Government under Section 191 thereof. If the Central Board of Revenue while hearing an appeal under Section 188 of the said Act does nto give any reasons it is impossible for the Central Government to effectively exercise the powers of revision. Again it is impossible to know what reasons weighed with the Central Board of Revenue in dismissing the appeal. The purpose of the Legislature in conferring a right of revision against the order made under Section 188 of the said Act cannto be rendered nugatory by the appellate authority's resorting to the method of short cut to justice. The Central Board of Revenue in this case does nto even say whether it agreed with each and every finding of the Additional Collector and with the appreciation of evidence by him or it agreed only with the conclusions reached by the Additional Collector. It is nto impossible that the Board of Revenue may have agreed only with the conclusion of the Additional Collector and that agreement my itself be based on some extrinsic circumstances. All the reasons have remained in the mind of the Central Board of Revenue and the Courts exercising powers of superintendence are thus driven only into the realm of conjectures.
It is also nto impossible that the Board may have agreed with some findings and nto with the tohers arrived at by the Additional Collector and yet reached the same conclusion as the Additional Collector. If the Central Board of Revenue had disclosed those reasons, the Central Government nto have agreed with the same. This is the circumstances of the present case, has resulted in no hearing of the appeal at all and also shows lack of application of mind by the Central Board of Revenue. For these reasons, I must hold that the order of the Central Board of Revenue deserves to be quashed. Then arises the question of necessity on the part of the Central Government to give reasons. So far as the present case is concerned it may nto be necessary to consider that question, because the Central Government has also by a non-speaking order merely affirmed the order of the Central Board of Revenue which, as, I have discussed above, has been arrived at without any proper hearing of the appeal.
Whether or nto the Central Government while exercising revisional powers under Section 191 of the said Act should give reasons will depend on facts and circumstances of each case. The Central Government is the final authority under the said Act and its decisions are subject to scrutiny by the Supreme Court under Article 136 and by this Court under Article 227 of the Constitution. It is, thereforee, proper that the Central Government should invariably, indicate, even though briefly, the reasons for coming to its conclusion. But where the appellate authority exercising powers under Section 188 of the said Act give reasons for its decision and the revisional authority approves of the reasons, the powers of appeals by the Supreme Court and of superintendent by this Court can be effectively exercised by checking the reasons adduced by the Central Board of Revenue and testing whether each one of them is correct or nto. If those reasons given by the appellate authority are upheld and the revisional authority has approved of those reasons, or, in toher words, incorporated those reasons into its own order by reference, the order of the Central Government may nto be said to suffer from any infirmity.
There may however, be cases where the appellate authority gives four or five reasons and some of them may nto be sound or are extraneous to the cause dealt with. In that case, if the Central Government passes a non-speaking order it will become difficult to find out as to whether the Central Government affirmed the order of the appellate authority in agreement with the sound reasons or with the unsound ones. It is in such cases that the difficulty of the higher Courts in exercising appellate or supervisory powers may arise for it may then be said that the party concerned has nto had the real benefit of the right of revision. Since the order of the Central Board of Revenue suffers from the infirmity indicated above, this petition must be allowed and the orders dated 15th August, 1958, of the Central Board of Revenue, and dated 29th March, 1960, of the Central Government quashed. The appeal will now be heard and disposed of by the Central Board of Revenue in accordance with law. Having regard to the circumstances of the case there will, however be no order as to costs.
(5) Petition dismissed