TMI Blog2015 (9) TMI 1700X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The impugned order passed by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi cannot sustain, for the only consideration that it does not contain reasons and does not deal with the various contentions of the parties and findings after considering all those contentions including the aspect of limitation raised by the petitioner. On the said ground alone, the same is deserved to be set aside and it is hereby set aside - The proceedings of appeal are remanded to the appellate authority for rendering a fresh decision by it in accordance with law. While undertaking the exercise of deciding the appeal anew, and passing a reasoned order thereupon, the AAIFR shall give due opportunity of hearing to both the sides - Petition allowed by way of remand. - SPECIAL CIVIL APPLICATION NO. 17055 of 2014 - - - Dated:- 11-9-2015 - MR.JUSTICE N.V.ANJARIA, JJ. for the Petitioner: MR AS VAKIL, ADVOCATE for the Respondent: MR BHARAT JANI, MR DIPEN C SHAH, ADVOCATE JUDGMENT This petition under Article 226 of the Constitution is directed against the order dated 17th September, 2014 passed by Appellate Authority for Industrial and Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 22(1) of the SICA to approach civil court for adjudication of its dues and further observed that decree, if any, passed by the civil court would not be executed without prior approval of the BIFR. Accordingly, Miscellaneous Application No. 603 of 2010 of the Respondent No.1 came to be disposed of. 3.4 It is further stated that before BIFR, the Mazda Agencies respondent No.1 objected that the petitioner company had proposed only 20% of the outstanding dues, which was not acceptable. As against that the submission of the petitioner company was that the BIFR had already permitted the Mazda by order dated 20th November, 2012 to approach the appropriate civil court for adjudication of the claim for dues providing further that any decree if passed, shall not be executed without prior approval of the Board. 3.5 The BIFR by its order dated 17th July, 2013 sanctioned the Scheme for Rehabilitation in exercise of powers conferred under Section 19(3) and 18(4) of the SICA Act. The sanctioned Scheme came into force with immediate effect. On 27th January, 2014, respondent No.1 Mazda Agencies preferred an appeal under Section 25 of the SICA Act before the Appellate Authority for In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly empowered by the secretary in this behalf.obviously the order be issued by the board and the manner in which it is to be authenticated is laid down in clause (2) of Regulation 15. Scheme of the statute makes it clear that issuance of the order is an act to be undertaken by BIFR. For the purpose of computation of period of limitation, date of service has to be the effective date, otherwise a person would be rendered remediless if the order is served after forty-five or sixty days as the case may be from the date of issue. The Bifr had not communicated and issued the impugned order on the ground that it was not a party to the proceeding before it. But when the certified copy was obtained on 04- 03-2014 as stated in our appeal submissions to AAIFR. 4.3 Learned advocate for respondent No.1 relied on Supreme Court decision in Commissioner of Wealth Tax, U.P. and anr. vs Kundan Lal Behari Lal [(1975) 4 SCC 844] to submit as to what the expressions issued and served mean. He next relied on decision in State Bank of India and ors. vs. Sree Rayalaseema Paper Mills Ltd. and ors. [(2004) 13 SCC 769]. 4.4 Even as the above issue regarding limitation was argued at forefront, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for serious violations and clandestinely selling the precious machinery and head office/factory buildings and assets without prior approval of BIFR. It was submitted that the petitioner had practiced illegally and at the same time, suppressed those facts in the valuation report given to the BIFR. Learned advocate for respondent No.1 by showing those averments from his affidavit-in-reply wanted to show the conduct of the petitioner company. Learned advocate further relied on decision of Supreme Court in Deputy Commercial Tax Officer and ors. vs. Corromandal Pharmaceuticals and ors. [(1997) 10 SCC 649], in particular paragraphs 10 and 13 thereof. It was submitted that bar or embargo envisaged in Section 22(1) of the SICA Act can apply only to such of those dues reckoned or included in the sanctioned Scheme. 4.7 It was next submitted by learned advocate for respondent No.1 that though the reasons in the order are necessary, the same cannot be viewed with wooden approach and if application of mind by the authority passing the order is reflected, it would meet with the requirement. In this regard, learned advocate for respondent No.1 relied on decision of Delhi High Court in Ashok K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions which they raised as above, in the end, it was considered not necessary to deal with in detail various contentions, more particularly when the impugned order was looked into, it was found to be suffering from vice of being a nonspeaking order. The order does not contain reasons for the order it reflects. 6.1 The impugned order may be extracted in its full text, We have heard ld. Counsel Mr. Krishan Kumar appearing on behalf of the appellant and Mr. Sunil Vakil the authorised representative appearing on behalf of the respondent and also Mr. Shailender appearing for the Operating Agency, namely, Bank of India. The appellant has filed Civil Suit No. 315/09 before the Civil Judge, Civil Division, Vadodara, seeking a decree for ₹ 1,45,57,874/-. However, he is unable to proceed with the suit in view of the embargo imposed by sec.22 of SICA. After considering the submissions of the parties and the relevant facts of the case, we are minded to permit the appellant to proceed with its Civil Suit notwithstanding the provisions of SICA. In other words, we hereby give our consent as provided under sec. 22(1) of SICA to the appellant to proceed with its pending Civ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons whatsoever. In fact, the said decision in Prabhu Dayal Grover case [1995 (6) SCC 279] has itself stated that the appellate order should disclose application of mind. Whether there was an application of mind or not can only be disclosed by some reasons, at least in brief, mentioned in the order of the appellate authority. Hence, we cannot accept the proposition that an order of affirmation need not contain any reasons at all. That order must contain some reasons, at least in brief, so that one can know whether the appellate authority has applied its mind while affirming the order of the disciplinary authority. (para 5) 7.3 Supporting the order by appropriate reasons is conceived as an ingredient of natural justice. In Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota vs. Shukla Bros., [(2010) 4 SCC 785], the Apex Court observed as under, The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the court and also as an essential requisite of the principles of natural justice. (para 27) 7.6 The decision of the Delhi High Court in Unit Trust of India vs. AAIFR and ors. [93(2001), DLT86, 2001(59)DRJ723] relied on by learned advocate for the petitioner asserted the requirement in the context of the order to be passed by the very authority namely the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The court did not accept the stand of respondent that though reasons were not indicated, they were inherent. 7.6.1 The importance of reasons were highlighted in these words, Duty to give reasons entails a duty to rationalize the decision. Reasons therefore help to structure the exercise of discretion, and the necessity of explaining why a decision is reached. It requires one to address one's mind to be relevant factors, which ought to be taken into account. Further, furnishing reasons affords the affected party to know why a decision was reached. In C.B. Gautam v. Union of India, it was observed that the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can by its silence render it virtually impossible for the Court to perform their appellate function or exercise of power of judicial review in agitating the validity of the decision. Whereas the statute or regulation provides a right of appeal from a decision, reasons are necessary to enable the effected person to exercise that right effectively. A right to reason in this situation is inferred by necessary implication from the provisions of appeal. (para 5) 7.7 The proposition needs no reiteration that an order passed by the quasi judicial and even by the authority discharging administrative power taking a decision on consideration of rival materials, has to cloth its order with appropriate reasons. Supplying of reasons for its decision by the quasi judicial and administrative authority is sine quo none to make the order legal and sustainable. 8. In Punjab State Electricity Board v. Jit Singh, [(2009) 13 SCC 118], the Apex Court having found that the order under consideration was bereft of cogent reasons, stated and directed thus, Now, we come to the order passed by the Board dated 5-10-2004. In our view, it is suffice to state, that, the order is a non-speaking order in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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