Third Limb of Natural Justice: Reasoned Decision

"The giving of reasons is one of the fundamentals of good administration"

Lord Denning, M.R.

Introduction

Natural justice is a concept of common law which has its origin in “jus natural” which
means law of nature. In its layman language, natural justice means a natural sense of what is
right or wrong. ‘Natural’ justice is not justice found in nature; it is a compendium of concepts
that must be naturally associated with justice, whether these concepts are incorporated in law
or not. Justice is a great civilizing force. It ensures that the rule of law rather than the rules of
nature prevail in regulating human conduct. Natural justice has a very wide application in
administrative discretion. It aims to prevent arbitrariness and injustice towards the citizens
with an act of administrative authorities.

English law recognises two principles of natural justice, the first -a man may not be a judge in
his own cause; and Second- a man should not be condemned unheard and the Romans placed
the two principles in two maxims (1) Nemo judex in causa sua; and (2) Audi alteram partem.
Besides, there is a third principle of natural justice, i.e., a party is entitled to know the reasons
for the decision. The giving of reasons is one of the fundamentals of good administration.
This is also known as speaking orders. A speaking order means an order speaking for itself.
To put it simply, every order must contain reason in support of it.

Need to Give Reasons

There are many reasons for the acceptance of this rule. When reasons are given, it not only
facilitates the work of the authority, it also develops the mental capacity of the reasoning
process of the adjudicator and inculcates in him a sense of fairness. Without these, neither can
we get a coherent body of law nor can the judicial functions be efficiently discharged in the
progressive and complex society of the present day. Another advantage of a reasoned
decision is that it inspires in the mind of the person affected by it a confidence that the
decision is a correct one. Absence of reasons gives rise to lack of conviction and the decision
smacks of arbitrariness. But the view expressed by Lord Denning, that in giving reasons "lies
the whole difference between a judicial decision and an arbitrary one.

Object
The legal maxim "cessante ratione legis cessat ipsa lex", which means reason is the soul of
law and when reason of any particular law ceases, so does the law. Every judicial order
should contain sound reasons. If valid reasons are not found in any order, such order becomes
erroneous. Recording of reasons in support of a decision on a disputed claim ensures that the
decision is not a result of caprice, whim or fancy but was arrived at after considering the
relevant law and that the decision was just. According to Lord Denning, “the giving of
reasons is one of the fundamentals of good administration.” The need to record reasons adds
clarity, eliminates arbitrariness, and satisfies the party against whom the order is issued. As
already mentioned above, the old ‘police State' has given way to a ‘welfare State.'
Governmental responsibilities have expanded, administrative tribunals and other executive
authorities have arrived, and they are equipped with broad discretionary powers, with all the
potential for abuse of power. The need to record reasons is placed on these agencies as a
protection against the arbitrary use of authority. Indeed, even common law courts do not
usually provide explanations in support of their decisions when dismissing appeals and
revisions summarily. But regular courts of law and administrative tribunals cannot be put at
par.

Background

Earlier, the requirement by adjudicatory bodies to give reasons for their decisions was not a
part of natural justice and accordingly, they were not obligated to do so. But the present trend
of the law has been towards increasing recognition of the duty of the court to give reasons.

Position of Reasoned Decision in USA

American courts have insisted upon the recording of reasons for its decision by an
administrative authority on the premise that it should give a clear indication that it has
exercised the discretion with which it has been empowered. The said requirement of
recording reasons has also been justified on the basis that such a decision is subject to judicial
review and "the courts cannot exercise their duty of review unless they are advised of the
considerations underlying the action under review" and that "the orderly functioning of the
process of review requires that the grounds upon which the administrative agency acted be
clearly disclosed and adequately sustained.

Section 8(b) of the Administrative Procedure Act, 1946 requires administrative agencies in
clear terms to give reasons for their decisions. The right to reasoned decisions also arises
from the due process clause to the Constitution. A decision unaccompanied by reasons may
not be considered a 'due' decision. Furthermore, due process also includes a right to have a
written record which must consist of evidence, arguments, reasons and all papers filed in the
case.

Position of Reasoned Decision in UK

In Britain, the position at common law is that there is no specific requirement that reasons
should be given for its decision by the administrative authority. However, in some judgment’s
courts have emphasised the importance of reasons. In Alexander Machinery (Dudley) Ltd. v.
Crabtree, Sir John Donaldson, stated that "failure to give reasons amounts to a denial of
justice.

In England, Report of the Committee on Ministers' Powers recommended that,

(i) "Any party affected by a decision should be informed of the reasons on which the
decision is based; and
(ii) "Such a decision should be in the form of a reasoned document available to the
parties affected.

Position of Reasoned Decision in India

In India, administrative decisions to be accompanied by reasons were considered by the Law

Commission in its Fourteenth Report on Reform in Judicial Administration. It recommended:
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.

No law has, however, been enacted in pursuance of these recommendations, imposing a

general duty to record the reasons for its decision by an administrative authority though the
requirement to give reasons is found in some statutes.

In Union of India v. Mohan Lal Kapoor, it was held that, in the absence of any particular
statutory requirement, there is no general requirement for the administrative agencies to give
reasons for their decisions. However, if the statute under which the agency is functioning
requires reasoned decisions, courts consider it mandatory for the agency to give reasons
which should not be merely 'rubber-stamp' reasons but a brief, clear statement providing the
link between the material on which certain conclusions are based.

General Principles of Speaking Order

In general, adjudicating authorities were not required to provide explanations for their
judgments in the past. However, providing explanations is today regarded to be one of the
foundations of effective administration. The need to provide reasons promotes clarity and
openness in administration while minimizing arbitrariness for compulsion of disclosure.
Reasoned judgments by adjudicatory bodies increase public trust in the administrative
process. The recording of reasons guarantees that the authority applies its thought to the issue
and that the reasons that compelled the authority to make the judgment in question are
relevant to the substance and extent of the authority's power. If the reasons recorded are
completely irrelevant, the exercise of authority is null and void. In Maneka Gandhi v Union
of India, the court held that when a law imposes the obligation of providing reasons for a
decision, the provision is regarded as obligatory, and failing to provide reasons is therefore
fatal to the action taken.

Statutes, on the other hand, seldom impose such a requirement. To address such a scenario,
Indian courts have established a broad duty for adjudicatory bodies to provide reasons for
their judgments, partly to meet natural justice principles and partly to comply with
constitutional provisions governing judicial review. In general, courts do not exercise their
supervisory role over adjudicatory organizations if they do not provide explanations for their
rulings. Furthermore, under certain laws, decisions of one adjudicatory body may be
appealed to or amended by a higher authority. If the lower authority does not issue a speaking
order, the affected person does not have the right to approach the higher authority. Failure to
give explanations essentially revokes the party's right to appeal or revision. As a
consequence, the idea that an adjudicatory body must give reasons for its decision is now
widely accepted.

In State of West Bengal v Atul Krishna Shaw, the court held that “a fundamental tenet of
natural justice that must guide the quasi-judicial process is the rule requiring grounds to be
provided in support of an adjudicatory ruling. It must be followed in its proper spirit, and
simply pretending to comply will not satisfy the legal requirements”.

In Ram Chander v Union of India, the court has also said in cases of disciplinary action
against professionals such as lawyers and chartered accountants, reasoned rulings are
required. Due to a failure to provide reasons, orders may be deemed bad, and they may not be
restored by demonstrating that the reasons existed on file.

Effects of Non-speaking Orders

The approach of the courts has been changing with regard to interpretation of effects of a
non-speaking order. According to S. N. Jain, ' 'the Courts' approach is ordinarily to quash an
administrative order for failure to give reasons but this has not always happened." In case of
Basant v. Advocate General, it has been observed that in the pre-Independence era Indian
courts were of the view that a statutory requirement to record reasons was for the information
of superior officers of the government. as not bound to do so. In Harinagar Sugar Mills
Ltd. v. Shyam Sunder Jhunjhunwala, the Supreme Court held that where the decision of an
administrative authority is subject to its appellate jurisdiction under article 136 of the
Constitution, such authority must give reasons for its decisions.

In Mahabir Prasad Santosh Kumar v. State of U.P., the Supreme Court stated 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 caprice, whim or
fancy or reached on grounds of policy or expediency.

There are many cases where courts have held that the giving of reasons in support of their
conclusions by administrative authorities when exercising initial jurisdiction is essential for
various reasons. In Dwarkadas Marfatia and Sons v. Board of Trustees, Bombay Port, it
was held that every action of the executive authority must be, (i) subject to the rule of law;
and informed by reason.

In S. N. Mukherjee v. Union of India, concluded that the need for recording of reasons is
greater in a case where the order is passed at the original stage. In this case the requirement to
give reasons has been elaborately discussed by the Supreme Court which clarified that while
in USA courts insist on recording of reasons by administrative authorities, English common
law has no such requirement. In India, the approach of courts is more in line with American
Courts.

Conclusion

V. G. Ramachandran in his book Law of writs have summed up the law relating to
Reasoned decision or Speaking order as: -

1. Where a statute requires recording of reasons in support of the order, it imposes an

obligation on the adjudicating authority and the reasons must be recorded by the authority.

2. Even when the statute does not lay down expressly the requirement of recording reasons,
the same can be inferred from the facts and circumstances of the case.
3. Mere fact that the proceedings were treated as confidential does not dispense with the
requirement of recording reasons.

4. If the order is subject to appeal or revision (including Special Leave Petition under Article
136 of the Constitution), the necessity of recording reasons is greater as without reasons the
appellate or revisional authority cannot exercise its power effectively since it has no material
on which it may determine whether the facts were correctly ascertained, the law was properly
applied and the decision was just and based on legal, relevant and existent grounds. Failure to
disclose reasons amounts to depriving the party of the right of appeal or revision.

5. Even ‘fair play in action’ requires that an adjudicating authority should record reasons in
support of an order passed by it.

6. There is no prescribed form and the reasons recorded by the adjudicating authority need
not be detailed or elaborate and the requirement of recording reasons will be satisfied if only
relevant reasons are recorded.

7. A writ court cannot interfere with an order passed by an adjudicating authority only on the
ground that the reasons recorded by such authority are inadequate or insufficient.

8. If, however, the reasons recorded by such authority are factually incorrect, legally
untenable, or foreign or irrelevant to the issue involved, the power of judicial review can be
exercised.

9. The appellate authority doesn't need to record reasons when it affirms the order passed by
the lower authority.

10. Where the lower authority does not record reasons for making an order and the appellate
authority merely affirms the order without recording reasons, the order passed by the
appellate authority is bad.

11. Where the appellate authority reverses the order passed by the lower authority, reasons
must be recorded, as there is a vital difference between an order of reversal and order of
affirmation.

12. The validity of the order passed by the statutory authority must be judged by the reasons
recorded therein and cannot be construed in the light of subsequent the explanation given by
the authority concerned or by filing an affidavit.
13. If the reasons are not recorded in support of the order, it does not always vitiate the
action.

14. The duty to record reasons is a responsibility and cannot be discharged by the use of
vague general words.

15. If the reasons are not recorded, the court cannot probe into the reasoning of the order.

16. The doctrine of recording reasons should be restricted to public law only and should not
be applied to private law e.g., arbitration proceedings.

17. The rule requiring reasons to be recorded in support of the order is one of the principles
of natural justice.

18. Normally, the reasons recorded by the authority should be communicated to the aggrieved
party.

19. Even when the reasons are not communicated to the aggrieved party in public interest,
they must be in existence.

20. The reasons recorded by the statutory authority are always subject to judicial scrutiny.

In this way, we have understood the concept of reasoned decision or speaking order; how it is
relevant and why it has been considered the third principle of natural justice. With this, I
close my presentation. Thank you very much.