Rajasthan Art Emporium vs Bank Of India And Ors.

S.N.H. Zaidi, J

Mr. Malhotra submits that the appellant has deposited a cheque of Rs. 2.14 crores with the Bank on 6.6.2012, as such the order dated 28.5.2012 of this Tribunal has been complied with. He further submits that since the requirement of the pre-deposit envisaged under the second proviso to Section 18(1) of the SARFAESI Act has been fulfilled the appeal be entertained. Ms. Gandhi admits that the amount has been so deposited and the same has been kept in an interest-bearing no-lien account. In view of this, the appeal is entertained. Let it be registered. Heard parties Counsel on admission. The instant appeal has been directed against the order dated 25.4.2012 whereby the learned DRT, Jaipur has dismissed the S. A. 4/2011 with the observation that there was no infirmity in the action of the respondent-Bank in enforcing its security interest under the SARFAESI Act.

The submission of Mr. Malhotra is that though the actions of the Bank were challenged on several grounds in the S.A., yet the Tribunal below has neither considered them properly nor given any reasoning in the impugned order for not accepting any of the grounds. He further submits that the Tribunal below did cite the precedents relied upon by the appellant in support of its contentions, but it has neither considered any of those judicial authorities nor made any observation as to why those precedents have not been followed and no reason in this regard has also given by the Tribunal below.

Relying upon the following observation of the Supreme Court made in S.N. Mukherjee v. Union of India, : (1990) 4 SCC 594. which has been quoted with approval by it in the case of M/s. Kranti Associates Private Limited and Another v. Masood Ahmed Khan and Others, : IV (2010) CPJ 61 (SC) : (2010) 9 SCC 496. Mr. Malhotra has contended that impugned order of the Tribunal cannot be sustained in the absence of reasons in support of its findings. The Apex Court has observed in para 47 that:

Summarising the above discussion this Court holds-

(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

(b) A quasi-judicial authority must record reasons in support of its conclusions.

(c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

(d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.

(e) Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.

(f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

(g) Reasons facilitate the process of judicial review by superior Courts.

(h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant fuels. This is virtually the life blood of judicial decision-making justifying the principle that reason is the soul of justice.

(i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system.

(j) Insistence on reason is a requirement for both judicial accountability and transparency.

(k) If a Judge or a quasi-judicial authority is not candid enough about his/ her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

(1) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process.

(m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.)

(n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain EHRR, at p. 562 para 29 and Anya v. University of Oxford, wherein the Court referred to Article 6 of the European Convention of Human Rights which requires--

adequate and intelligent reasons must be given for judicial decisions'.

(o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of 'due process'.

Ms. Gandhi, the learned Counsel for the respondent-Bank, however, submits that without prejudice to the Bank's rights, the appeal may be allowed and the matter be remanded to the Tribunal below for deciding the S.A. afresh with a reasoned order within a given time-frame.

With the consent of both the parties, this appeal is being finally disposed of at this stage.

A perusal of the impugned order shows that the learned Tribunal below has arrived at the conclusion that there was no infirmity in the Bank's action and has dismissed the application, but has not given reasons for its conclusion. The Tribunal below has also not discussed the case law cited at the bar on behalf of the appellant and has not given finding on whether or not any of the case law is applicable to the facts of the case.

Recording of reasons is an integral part of the judgment. It is considered to be a part of natural justice and every judicial authority or quasi-judicial authority is bound to record reasons in support of the orders passed by it. The Hon'ble Supreme Court, in the case of Union of India v. M.L. Kapoor, : AIR 1974 SC 87, has observed that:

If the statute requires recording of reasons, then it is the statutory requirement and then there is no scope for further inquiry. But, even when the statute does not impose such an obligation, it is necessary for the quasi-judicial authorities to record reasons as it is only visible safeguard against possible injustice and arbitrariness, and affords protection to the person adversely affected. Reasons are the links between the material on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject matter for a decision, whether it is purely administrative or quasi judicial. They should reveal rational nexus between the facts considered and the conclusion reached. Only this way can opinions or decisions recorded be shown to be manifestly just and reasonable.

Since the order impugned is devoid of sufficient reasons for the conclusions arrived at by the Tribunal below, the order impugned cannot be allowed to sustain and the appeal is entitled to be allowed The appeal is, accordingly, allowed and the impugned order is set aside. Without prejudice to the rights of the parties, the matter is remitted back to the Tribunal below for deciding the S.A. afresh with reasoned order The Tribunal below is directed to make endeavour to dispose of the O.A. expeditiously, if possible, within three months from the date a copy of this order is placed before it.

The amount deposited by the appellant with the Bank shall, subject to the final decision of the S.A., continue to be deposited with it in the interest-bearing no-lien account.

It has been pointed by Mr. Malhotra that the property in question is scheduled to be put on sale by auction on 11.6.2012. The auction proceeding shall go on as scheduled, but the sale shall not be confirmed until the disposal of the S.A and one month thereafter. The appellant shall be at liberty to bring a buyer in the auction of the property. Parties are directed to appear before the Tribunal on 12.7.2012.

Copy of this order be furnished to the parties as per law and be also sent to the DRT concerned forthwith.