w w w . L a w y e r S e r v i c e s . i n

Rajasthan State Industrial Development & Investment Corporation Ltd. (RIICO LTD.) & Another v/s Ram Kumar Aggarwal & Others



Company & Directors' Information:- RAJASTHAN INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65993RJ1946PTC000378

Company & Directors' Information:- N M AGGARWAL AND COMPANY PRIVATE LIMITED [Active] CIN = U51909DL1986PTC023967

Company & Directors' Information:- P V T INVESTMENT LIMITED [Amalgamated] CIN = U74899DL1988PLC121600

Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- V. K. INDUSTRIAL CORPORATION LIMITED [Active] CIN = U27100MH2004PLC149538

Company & Directors' Information:- R K INDUSTRIAL CORPORATION LIMITED [Strike Off] CIN = U29300PB1996PLC017836

Company & Directors' Information:- V T INDUSTRIAL CORPORATION LIMITED [Active] CIN = U74990TN2010PLC078041

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- H. L. INVESTMENT COMPANY LIMITED [Amalgamated] CIN = U65990WB1975PLC128186

Company & Directors' Information:- M M INVESTMENT PRIVATE LIMITED [Converted to LLP] CIN = U65921CT2008PTC020533

Company & Directors' Information:- G. N. G. INVESTMENT LIMITED [Active] CIN = U65910GJ1981PLC004128

Company & Directors' Information:- A S G S INVESTMENT PRIVATE LIMITED [Active] CIN = U74120DL2008PTC173938

Company & Directors' Information:- G L INVESTMENT PVT LTD [Active] CIN = U65993WB1991PTC051072

Company & Directors' Information:- C & C INVESTMENT LTD [Active] CIN = U67120AS1976PLC001654

Company & Directors' Information:- S M S INVESTMENT CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1963PTC003988

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- B P INDUSTRIAL CORPN. PVT LTD [Active] CIN = U15312UP1973PTC087037

Company & Directors' Information:- R H INVESTMENT PRIVATE LIMITED [Active] CIN = U99999MH1978PTC020633

Company & Directors' Information:- T N B INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1986PTC025590

Company & Directors' Information:- A R S INVESTMENT PVT LTD [Active] CIN = U65993WB1990PTC048513

Company & Directors' Information:- V P INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015714

Company & Directors' Information:- INDUSTRIAL DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65990MH1941PTC003300

Company & Directors' Information:- V. K. AGGARWAL & COMPANY PRIVATE LIMITED [Strike Off] CIN = U45206DL2012PTC237993

Company & Directors' Information:- A V A INDUSTRIAL CORPN PRIVATE LIMITED [Strike Off] CIN = U29191TZ1956PTC000261

Company & Directors' Information:- S M D INVESTMENT LIMITED [Strike Off] CIN = U65993TN1995PLC033139

Company & Directors' Information:- RAM INDUSTRIAL CORPORATION LIMITED [Strike Off] CIN = U74900DL1946PTC001081

Company & Directors' Information:- G R D INVESTMENT PVT LTD [Amalgamated] CIN = U67120WB1980PTC032727

Company & Directors' Information:- K V DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65922MH1979PTC021155

Company & Directors' Information:- C AND N INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015710

Company & Directors' Information:- R INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993TZ1988PTC002181

Company & Directors' Information:- H N G L INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066774

Company & Directors' Information:- K M S INVESTMENT PRIVATE LIMITED [Active] CIN = U67120UP1993PTC015287

Company & Directors' Information:- U M INVESTMENT PVT LTD [Active] CIN = U70101WB1979PTC032160

Company & Directors' Information:- A S T INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC082812

Company & Directors' Information:- B N E INVESTMENT LTD [Not available for efiling] CIN = U67120WB1974PLC029360

Company & Directors' Information:- K S J INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL1994PTC061335

Company & Directors' Information:- M G INVESTMENT AND INDUSTRIAL CO LTD [Not available for efiling] CIN = U99999MH1947PTC007551

Company & Directors' Information:- P T INVESTMENT PVT LTD [Strike Off] CIN = U65999WB1995PTC067065

Company & Directors' Information:- R. S. AGGARWAL AND COMPANY PRIVATE LIMITED [Strike Off] CIN = U45203DL1982PTC013965

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- THE INDUSTRIAL CORPORATION PRIVATE LIMITED [Active] CIN = U15420MH1921PTC000947

Company & Directors' Information:- R N B J INVESTMENT AND DEVELOPMENT PVT LTD [Strike Off] CIN = U65990MH1982PTC028451

Company & Directors' Information:- J T INVESTMENT PVT LTD [Strike Off] CIN = U65923WB1979PTC032344

Company & Directors' Information:- RAJASTHAN INDUSTRIAL CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999RJ1949PTC000737

Company & Directors' Information:- S P INVESTMENT AND DEVELOPMENT COMPANY PVT LTD [Strike Off] CIN = U67121ML1988PTC003133

Company & Directors' Information:- R K INVESTMENT LTD [Strike Off] CIN = U65993WB1969PLC027398

Company & Directors' Information:- N M G C INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U74899DL1982PTC014603

Company & Directors' Information:- R R AGGARWAL PRIVATE LIMITED [Strike Off] CIN = U16000MH1957PTC010934

Company & Directors' Information:- RAJASTHAN INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1942PTC011099

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- S. A. F. INVESTMENT LIMITED [Active] CIN = U67120DL1997PLC088611

Company & Directors' Information:- D D INDUSTRIAL PRIVATE LIMITED [Active] CIN = U34102DL2006PTC156978

Company & Directors' Information:- H K (INVESTMENT) COMPANY PRIVATE LIMITED [Active] CIN = U65990GJ1950PTC000511

Company & Directors' Information:- P N INVESTMENT PRIVATE LIMITED [Under Liquidation] CIN = U65910GJ1988PTC010715

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Under Liquidation] CIN = U65993KL1942PLC000449

Company & Directors' Information:- B K AGGARWAL AND COMPANY PVT LTD [Active] CIN = U16003PB1988PTC008247

Company & Directors' Information:- S R M INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC031888

Company & Directors' Information:- A TO Z INVESTMENT PVT LTD [Dissolved] CIN = U67120WB1988PTC044464

Company & Directors' Information:- R J INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1976PTC018954

Company & Directors' Information:- B N K INVESTMENT CO PVT LTD [Active] CIN = U65993WB1971PTC028169

Company & Directors' Information:- A D INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028170

Company & Directors' Information:- T D INVESTMENT CO PVT LTD [Strike Off] CIN = U65921CH1987PTC007637

Company & Directors' Information:- C G K INVESTMENT P LTD [Strike Off] CIN = U65910AP1986PTC006088

Company & Directors' Information:- L D INVESTMENT COMPANY PVT LTD [Strike Off] CIN = U65921HP1988PTC008425

Company & Directors' Information:- G K INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001919

Company & Directors' Information:- G V INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001920

Company & Directors' Information:- A K INDUSTRIAL CORPORATION (INDIA) PRIVATE LIMITED [Active] CIN = U29130PN2014PTC151053

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- H V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1997PTC107686

Company & Directors' Information:- M L INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC032180

Company & Directors' Information:- S & G INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65100DL2012PTC244271

Company & Directors' Information:- S B INVESTMENT PVT LTD [Liquidated] CIN = U99999RJ1959PTC001090

Company & Directors' Information:- R AND P INVESTMENT PVT LTD [Strike Off] CIN = U67120PB1995PTC016124

Company & Directors' Information:- M M B INVESTMENT PRIVATE LIMITED [Active] CIN = U65993RJ1996PTC012698

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- D S N INVESTMENT PVT LTD [Strike Off] CIN = U65993TG1988PTC008554

Company & Directors' Information:- V. I INVESTMENT PVT LTD [Strike Off] CIN = U67120HR1988PTC030206

Company & Directors' Information:- R J P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993GJ1981PTC004678

Company & Directors' Information:- D D P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910GJ1981PTC004695

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

Company & Directors' Information:- INDUSTRIAL DEVELOPMENT COMPANY LIMITED [Strike Off] CIN = U99999KA1938PLC000231

Company & Directors' Information:- M P INVESTMENT CO PRIVATE LIMITED [Under Process of Striking Off] CIN = U65993KA1974PTC002646

Company & Directors' Information:- THE INDUSTRIAL CORPORATION LIMITED [Strike Off] CIN = U00804KA1948PLC000529

Company & Directors' Information:- INDUSTRIAL DEVELOPMENT CORPORATION PRIVATE LIMITED [Dissolved] CIN = U74900KL1946PTC000457

Company & Directors' Information:- INVESTMENT COMPANY PRIVATE LIMITED [Dissolved] CIN = U65990KL1946PTC000461

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1943PLC007730

Company & Directors' Information:- S B INDUSTRIAL DEVELOPMENT CO. PVT LTD [Strike Off] CIN = U45208WB1945PTC012688

    Misc. Appeal No. 109 of 2021

    Decided On, 28 June 2021

    At, Debts Recovery Appellate Tribunal at Delhi


    For the Appellant: Ankit Totuka, Counsel. For the Respondents: R1, R.K Salecha, R4, SuruchiKasliwal, Uddhav Khanna, Counsels.

Judgment Text

1. The appellants have challenged the order dated 10.03.2021 passed by the DRT, Jaipur in the Securitisation Application(S.A.) filed by respondent no.1 herein under Section 17(1) of SARFAESI Act, whereby application filed by the appellant herein for rejection of the S.A. as not maintainable at the instance of respondent no.1 herein, who was one time director and main shareholder in the respondent no. 3 Company, which is now under liquidation,(hereinafter referred to as ‘the borrower Company’) and was trying to protect the assets of the borrower Company, which are in the custody of the appellant having been delivered to it by the Official Liquidator appointed by Hon’ble Delhi High Court, from being publicly auctioned by the appellants in order to recover its dues, which undisputedly is public money and is to the tune of over twenty crores of rupees.

2. The respondent no.1 had filed the S.A. when the auction of the borrower Company’s mortgaged property was going to be conducted and sale notices were published and showing the respondent no.1/S.A. applicant as a guarantor.

3. The appellants had resisted the S.A. by way of filing an application no. 937/2020, instead of filing a formal reply to the S.A., taking preliminary objection against the very maintainability of the S.A. at the instance of former director of the borrower Company in liquidation and then by moving another application(being I.A.NO. 1010/2020) wherein a prayer was made for deciding the preliminary objection of maintainability of the S.A. before proceeding further in the matter. The objection raised by the appellants was that respondent no.1/S.A. applicant Ram Kumar Aggarwal, former director of the borrower Company and its shareholder, had no locus standi after the appointment of the Official Liquidator to file the S.A. to challenge the measures initiated by the appellant under SARFAESI Act to recover public money and which measures in any case were in accordance with law and could not be quashed by the DRT. Only the official liquidator was supposed to be taking care of the assets of the borrower company in liquidation.

4. The learned DRT took up the said preliminary objection of the appellants herein for consideration and rejected the application filed by the appellants and upheld the locus standi of Mr. Ram Kumar Aggarwal to maintain the S,A, which he had filed, vide its order dated 10.03.21 which has now been assailed by the appellants in the present appeal which has been resisted seriously by the sole contesting party, respondent no.1 Ram Kumar Aggarwal.

5. Before proceeding further to examine whether this severe criticism of the impugned order of DRT made by the appellants’ counsel is justified or not the impugned order of the learned DRT is being first noticed below. It reads as under:-

“This S.A was filed on 26.08.2020 and I.A No. 1010/20 was filed by the respondent bank on 07.09.2020 with a prayer to decide the issue on maintainability.

It is the main ground mentioned in the I.A the conduct of S.A. applicant being promoter/director has always been doubtful, suspicion and mala fide and is dragging the recovery proceedings for almost 28 years by filing one or the other applications before the BIFR, Hon’ble High Court of Delhi and Office of Liquidator with sole intention to delay the things.

Ld. Counsels of both the parties argued at length but I am of the view that the grounds taken in this I.A. is simply alleging the S.A applicant’s locus standi.

The grounds of locus standi are taken in the brief written submission. Ld. Counsel for the applicant argues that they have mentioned their locus at Para 5.1(page no. 6) and also argued that as per Annexure R/3, which is a sale notice issued by the respondent FI in his name is issued in individual capacity so, he being a director/promoter of the applicant firm as well as having a right through the auction notice as Annexure R/3, do have right to file this Securitization Application. Moreover, it is also argued on behalf of the applicant that the applicant is also a shareholder and ex-director, so he has every right to file this S.A.

During the course of arguments Ld. Counsel for the applicant challenged the authority of the Authorized Officer and pointed out that an affidavit filed by the respondent FI in respect of reply to the S.A. is signed by Sh. Atul Sharma, who is a officer in charge of the respondent financial institution and claims himself to be a authorized officer but no such documents is enclosed which shows his authority to act as Authorized Officer in the light of definition prescribed in section 2 sub clause A of Security Enforcement Rule, 2002.

Heard arguments and perused the record, I am of the view that in the light of public notice at Annexure R/3 which was issued in individual capacity of the applicant, he is authorized to file this Securitization Application.

Accordingly, I.A No. 1010/2020 filed by the respondent FI is dismissed being devoid of any merit.

Both the parties are directed to maintain status quo with regard to the mortgaged property.

File be put up before Registrar for completion of pleadings on 05.04.2021.” (highlighting is mine)

6. Feeling aggrieved by the rejection of their application for rejection of the S.A. at the threshold as well as passing of an order of status quo in respect of the mortgaged property of the borrower Company in liquidation the appellants have filed this appeal. Their counsel has placed on record brief written submissions also through email which were not different from the oral arguments advanced at the Bar by their counsel.

7. From the side of respondent no.1 Mr. R.K.Salecha, advocate argued in opposition to the appeal while counsel for official liquidator and other respondents have supported the appellants’ case in appeal.

8. From a reading of the application moved by the appellants it becomes clear that though not described as an application under Order VII Rule 11 CPC but actually it is on the same lines. It is well settled that for rejection of some petition or plaint at the threshold pleas raised by a defendant, like the appellants herein, in the written statement are not to be considered and whatever is pleaded by the plaintiff, like the respondent no.1 herein, is to be accepted as true by the defendant seeking rejection of the plaint without going to trial. Here in the present case the S.A. applicant had claimed in his S.A. that he was one of the two guarantors and the other one had already died. Thus, a guarantor was claiming violation of the law by the secured creditor while enforcing its security interest in the property mortgaged in its favour by its borrower. The appellants have not claimed that they had not issued sale notice in the name of respondent no.1 as a guarantor. In these circumstances it cannot be said that the S.A. duked by respondent no.1 /guarantor did nit disclose any cause of action or that the same was barred under any law. Now, whether or not the S.A. applicant will finally be able to establish any violation of any of the provisions of SARFAESI Act will be seen at the end of trial. So, I do not find any infirmity in the rejection of appellants’ application no.1010/2020 for rejection of the S.A. of respondent no.1 herein.

9. Now I come to the other grievance of the appellants which is regarding passing of an order(highlighted by me in the impugned order) of status quo in respect of the mortgaged property and which direction according to the learned counsel for the appellants istotally perverse, unreasoned, cryptic, laconic and without any legal support and clearly had been granted for the asking. Counsel also argued that the way order of status quo has been passed many decisions of the Hon’ble Supreme Court which had earlier also been noticed by this Tribunal in other appeals against similar kind of cryptic orders of injunctions and which this Tribunal has been circulating also amongst the DRTs under its jurisdiction, have been flouted ignoring the views of the Apex Court that not following the legal position settled by it which has to be kept in mind by subordinate courts/tribunals while dealing with prayers for grant of interim injunctions against recoveries of public monies, amounts to judicial misconduct.

10. The impugned direction of DRT directing status quo in respect of property in question has already been highlighted by me in the impugned order. After rejecting the objection of the appellants that Mr. Ram Kumar Aggarwal has no locus standi to maintain the S.A. the learned Presiding abruptly went on to pass a direction that status quoshall be maintained in respect of the property in question which direction meant that the mortgaged property will not be auctioned till further orders. That way the appellants-secured creditors stood restrained from recovering over twenty crores of ‘public money’ and the beneficiaries were defaulters in repayment of public money. Learned counsel for the appellants was right in his submission that this way the respondent no.1 got the relief of stay against recovery of public money of over twenty crores. The learned counsel submitted, such a huge relief was simply thrown into the lap of the respondent no.1 by the DRT as a bare reading of the impugned order shows that arguments were heard on the application no. 1010/2020 of the appellants for rejection of the S.A straightaway. Counsel further submitted that the learned Presiding Officer has granted huge relief to the guarantor by one sentence order. That one sentence order is being noticed here again:-

“Both the parties are directed to maintain status quo with regard to the mortgaged property.”

11. This one line stay order which has stalled the efforts of the appellants to recover over twenty crores of public money does justify the severe criticism made by the learned counsel Mr.Ankit Totuka. It gets full support from one judgment of the Hon’ble Supreme Court in the case of “Asst. Commissioner vs M/S.Shukla& Brothers”, SLP (C) NO. 16466 of 2009, rendered on 15 April, 2010. In this judgment Hon’ble Supreme Court had emphasised the significance of passing of reasoned judgments/orders by Courts/tribunals.

12. In order to bring to the notice of the learned DRT detailed paras from this judgment are being re-produced below so that in future such like cryptic orders are not passed. The relevant paras from this judgment are re-produced below:-

“The impugned Order reads as under

"After having carefully gone through the material on record, since after due consideration proper discretion has already been used by the Deputy Commissioner (Appeals) as also Rajasthan Tax Board, in the facts and circumstances, no further interference is called for by this Court.

The revision petition is dismissed accordingly as having no merits."

4. The Learned Counsel appearing for the appellant, Assistant Commissioner of Income Tax has argued that Order passed by the High Court does not record any reasons for dismissing the Revision Petition preferred by the Department. According to the Learned Counsel, various contentions raised as grounds in the Revision Petition and two questions of law formulated by the Department for consideration in the High Court while impugning the judgment of the Rajasthan Tax Board, Ajmer have not been reverted to by the High Court, resulting in serious prejudice caused to the present petitioner. On merits as well, challenge has been raised to the Order of the Tax Board as well as that of the Order of the High Court.


6. The appeal preferred by the respondent was accepted by the Deputy Commissioner vide his Order dated 23rd February, 2002. This Order was assailed in appeal by the Department before the Rajasthan Tax Board which also came to be rejected vide Order dated 18th October, 2003. The Board accepted the plea of the respondent that the shutters and doors were manufactured from tax paid raw material in a work contract, therefore, could not be the goods transferred for the purposes of levy of tax, holding the same not justifiable to set aside the levy of tax, penalty, interest or surcharge. Aggrieved from the Order of the Board dated 23rd February, 2002, the appellant filed Tax Revision before the High Court and inter alia and raised the following questions of law:-

A. Whether the Rajasthan Tax Board Ajmer was justified in dismissing the appeal of the petitioner in the facts and as mentioned above?

B. Whether the iron rolling shutters & doors were fixed by the assessee on the shops are taxable or not, when no tax was paid by the assessee on the construction of iron rolling shutters and doors?

7. As is evident from the facts narrated in the Revision Petition and the grounds raised besides raising the question of law, a factual controversy was also raised going to the very root of the case, that the rolling shutters & doors fixed by the respondent on the shops were not manufactured of tax paid material. Thus, question of law, mixed questions of law and facts were not examined by the High Court in some detail, but as already noticed, by one line order the Revision Petition was dismissed. During the course of hearing, we were informed that arguments were also addressed with reference to judgments of this Court which were also cited before the Board. However we find no mention thereof in the impugned Order. It was also contended that similar questions do arise in number of other cases, thus it was expected of the High Court to deal with the contentions rather than pass a cryptic order.

8. We do find that there is substance in the contention raised on behalf of the petitioner before us. It would have been desirable if the High Court would have recorded some reasons for rejecting the Revision Petition preferred by the Department.

9. The increasing institution of cases in all Courts in India and its resultant burden upon the Courts has invited attention of all concerned in the justice administration system. Despite heavy quantum of cases in Courts, in our view, it would neither be permissible nor possible to state as a principle of law, that while exercising power of judicial review on administrative action and more particularly judgment of courts in appeal before the higher Court, providing of reasons can never be dispensed with. The doctrine of audi alteram partem has three basic essentials. Firstly, a person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard. Secondly, the concerned authority should provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose of the matter by a reasoned or speaking order. This has been uniformly applied by courts in India and abroad.

10. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

11. In exercise of the power of judicial review, the concept of reasoned orders/actions has been enforced equally by the foreign courts as by the courts in India. The administrative authority and tribunals are obliged to give reasons, absence whereof could render the order liable to judicial chastise. Thus, it will not be far from absolute principle of law that the Courts should record reasons for its conclusions to enable the appellate or higher Courts to exercise their jurisdiction appropriately and in accordance with law. It is the reasoning alone, that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach. To sub-serve the purpose of justice delivery system, therefore, it is essential that the Courts should record reasons for its conclusions, whether disposing of the case at admission stage or after regular hearing.

12. At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may refer to certain judgments of this Court as well as of the High Courts which have taken this view.

13. 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 reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the Court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality. The distinction between passing of an order by an administrative or quasi-judicial authority has practically extinguished and both are required to pass reasoned orders………………………………….

14. In the case of Mc Dermott International Inc. v. Burn Standard Co. Ltd. and Ors. (2006) SLT 345, the Supreme Court clarified the rationality behind providing of reasons and stated the principle as follows:-

". . . Reason is a ground or motive for a belief or a course of action, a statement in justification or explanation of belief or action. It is in this sense that the award must state reasons for the amount awarded.

The rationale of the requirement of reasons is that reasons assure that the arbitrator has not acted capriciously. Reasons reveal the grounds on which the Arbitrator reached the conclusion which adversely affects the interests of a party. The contractual stipulation of reasons means, as held in Poyser and Mills' Arbitration in Re, ‘proper adequate reasons'. Such reasons shall not only be intelligible but shall be a reason connected with the case which the Court can see is proper. Contradictory reasons are equal to lack of reasons. . . ."

15. In Gurdial Singh Fijji v. State of Punjab [(1979) 2 SCC 368], while dealing with the matter of selection of candidates who could be under review, if not found suitable otherwise, the Court explained the reasons being a link between the materials on which certain conclusions are based and the actual conclusions and held, that where providing reasons for proposed supersession were essential, then it could not be held to be a valid reason that the concerned officer's record was not such as to justify his selection was not contemplated and thus was not legal. In this context, the Court held -

"... "Reasons" are the links between the materials on which certain conclusions are based and the actual conclusions. The Court accordingly held that the mandatory provisions of Regulation 5(5) were not complied with by the Selection Committee. That an officer was "not found suitable" is the conclusion and not a reason in support of the decision to supersede him. True, that it is not expected that the Selection Committee should give anything approaching the judgment of a Court, but it must at least state, as briefly as it may, why it came to the conclusion that the officer concerned was found to be not suitable for inclusion in the Select List."

16. This principle has been extended to administrative actions on the premise that it applies with greater rigor to the judgments of the Courts. In State of Maharashtra v. Vithal Rao PritiraoChawan [(1981) 4 SCC 129], while remanding the matter to the High Court for examination of certain issues raised, this Court observed:

". . . It would be for the benefit of this Court that a speaking judgment is given".

17. In the cases where the Courts have not recorded reasons in the judgment, legality, propriety and correctness of the orders by the Court of competent jurisdiction are challenged in absence of proper discussion. The requirement of recording reasons is applicable with greater rigor to the judicial proceedings. The orders of the Court must reflect what weighed with the Court in granting or declining the relief claimed by the applicant. In this regard we may refer to certain judgments of this Court.

18. A Bench of Bombay High Court in the case of M/s. Pipe Arts India Pvt. Ltd. V. Gangadhar NathujiGolamare [2008 (6) Maharashtra Law Journal 280], wherein the Bench was concerned with an appeal against an order, where prayer for an interim relief was rejected without stating any reasons in a writ petition challenging the order of the Labour Court noticed, that legality, propriety and correctness of the order was challenged on the ground that no reason was recorded by the learned Single Judge while rejecting the prayer and this has seriously prejudiced the interest of justice. After a detailed discussion on the subject, the Court held:-

"The Supreme Court and different High Courts have taken the view that it is always desirable to record reasons in support of the Government actions whether administrative or quasi judicial. Even if the statutory rules do not impose an obligation upon the authorities still it is expected of the authorities concerned to act fairly and in consonance with basic rule of law. These concepts would require that any order, particularly, the order which can be subject matter of judicial review, is reasoned one………………………………………

In the case of Hindustan Times Ltd. v. Union of India and Ors. [(1998) 2 SCC 242], the Supreme Court while dealing with the cases under the Labour Laws and Employees' Provident Funds and Miscellaneous Provisions Act, 1952 observed that even when the petition under Article 226 is dismissed in limini, it is expected of the High Court to pass a speaking order, may be briefly.

Consistent with the view expressed by the Supreme Court in the afore-referred cases, in the case of State of U.P. v. Battan and Ors. [(2001) 10 SCC 607], the Supreme Court held as under:

"The High Court has not given any reasons for refusing to grant leave to file appeal against acquittal. The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired.

Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order. The absence of reasons has rendered the High Court order not sustainable."

Similar view was also taken by the Supreme Court in the case of Raj Kishore Jha v. State of Bihar and Ors. JT 2003 (Supp.2) SC 354.

In a very recent judgment, the Supreme Court in the case of State of Orissa v. Dhaniram Luhar (2004) 5 SCC 568 while dealing with the criminal appeal, insisted that the reasons in support of the decision was a cardinal principle and the High Court should record its reasons while disposing of the matter.

Following this very view, the Supreme Court in another very recent judgment delivered on 22nd February, 2008, in the case of State of Rajasthan v. Rajendra Prasad Jain Criminal Appeal No. 360/2008 (Arising out of SLP (Crl.) No. 904/2007) stated that "reason is the heartbeat of every conclusion, and without the same it becomes lifeless."

Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is not only desirable but, in view of the consistent position of law, mandatory for the Court to pass orders while recording reasons in support thereof, however, brief they may be. Brevity in reasoning cannot be understood in legal parlance as absence of reasons. While no reasoning in support of judicial orders is impermissible, the brief reasoning would suffice to meet the ends of justice at least at the interlocutory stages and would render the remedy of appeal purposeful and meaningful. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. Patricia Wald, Chief Justice of the D.C. Circuit Court of Appeals in the Article, Blackrobed Bureaucracy Or Collegiality Under Challenge, (42 MD.L. REV. 766, 782 (1983), observed as under:-

"My own guiding principle is that virtually every appellate decision requires some statement of reasons. The discipline of writing even a few sentences or paragraphs explaining the basis for the judgment insures a level of thought and scrutiny by the Court that a bare signal of affirmance, dismissal, or reversal does not."

The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order. Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. Another facet of providing reasoning is to give it a value of precedent which can help in reduction of frivolous litigation. Paul D. Carrington, Daniel J Meador and Maurice Rosenburg, Justice on Appeal 10 (West 1976), observed as under:-

"When reasons are announced and can be weighed, the public can have assurance that the correcting process is working. Announcing reasons can also provide public understanding of how the numerous decisions of the system are integrated. In a busy Court, the reasons are an essential demonstration that the Court did in fact fix its mind on the case at hand. An unreasoned decision has very little claim to acceptance by the defeated party, and is difficult or impossible to accept as an act reflecting systematic application of legal principles. Moreover, the necessity of stating reasons not infrequently changes the results by forcing the judges to come to grips with nettlesome facts or issues which their normal instincts would otherwise cause them to avoid."

The reasoning in the opinion of the Court, thus, can effectively be analysed or scrutinized by the Appellate Court. The reasons indicated by the Court could be accepted by the Appellate Court without presuming what weighed with the Court while coming to the impugned decision. The cause of expeditious and effective disposal would be furthered by such an approach. A right of appeal could be created by a special statute or under the provisions of the Code governing the procedure. In either of them, absence of reasoning may have the effect of negating the purpose or right of appeal and, thus, may not achieve the ends of justice.

19. The principles stated by this Court, as noticed supra, have been reiterated with approval by a Bench of this Court in a very recent judgment, in State of Uttaranchal v. Sunil Kumar Singh Negi [(2008) 11 SCC 205], where the Court noticed the order of the High Court which is reproduced hereunder:-

"I have perused the order dated 27.5.2005 passed by Respondent 2 and I do not find any illegality in the order so as to interfere under Article 226/227 of the Constitution of India. The writ petition lacks merit and is liable to be dismissed."

and the Court concluded as under:-

"In view of the specific stand taken by the Department in the affidavit which we have referred to above, the cryptic order passed by the High Court cannot be sustained. The absence of reasons has rendered the High Court order not sustainable. Similar view was expressed in State of U.P. v. Battan1. About two decades back in State of Maharashtra v. Vithal Rao Pritirao Chawan2 the desirability of a speaking order was highlighted. The requirement of indicating reasons has been judicially recognised as imperative. The view was reiterated in Jawahar Lal Singh v. Naresh Singh3. In Raj Kishore Jha v. State of Bihar4 this Court has held that reason is the heartbeat of every conclusion and without the same, it becomes lifeless.

"8. ... Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made;...."*

20. We are not venturing to comment upon the correctness or otherwise of the contentions of law raised before the High Court in the present petition, but it was certainly expected of the High Court to record some kind of reasons for rejecting the revision petition filed by the Department at the very threshold. A litigant has a legitimate expectation of knowing reasons for rejection of his claim/prayer. It is then alone, that a party would be in a position to challenge the order on appropriate grounds. Besides, this would be for the benefit of the higher or the appellate court. As arguments bring things hidden and obscure to the light of reasons, reasoned judgment where the law and factual matrix of the case is discussed, provides lucidity and foundation for conclusions or exercise of judicial discretion by the courts. Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dis- satisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever precise they may be.

21. We would reiterate the principle that when reasons are announced and can be weighed, the public can have assurance that process of correction is in place and working. It is the requirement of law that correction process of judgments should not only appear to be implemented but also seem to have been properly implemented. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice under our justice dispensation system. It may not be very correct in law to say, that there is a qualified duty imposed upon the Courts to record reasons. Our procedural law and the established practice, in fact, imposes unqualified obligation upon the Courts to record reasons. There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res integra and stands unequivocally settled by different judgments of this Court holding that, the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the Court.

22. By practice adopted in all Courts and by virtue of judge made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and proper reasoning is the foundation of a just and fair decision. In the case of Alexander Machinery (Dudley) Ltd. (supra), there are apt observations in this regard to say "failure to give reasons amounts to denial of justice". Reasons are the real live links to the administration of justice. With respect we will contribute to this view. There is a rationale, logic and purpose behind a reasoned judgment. A reasoned judgment is primarily written to clarify own thoughts; communicate the reasons for the decision to the concerned and to provide and ensure that such reasons can be appropriately considered by the appellate/higher Court. Absence of reasons thus would lead to frustrate the very object stated hereinabove. The order in the present case is as cryptic as it was in the case of Sunil Kumar Singh Negi (supra). Being a cryptic order and for the reasons recorded in that case by this Court which we also adopt, the impugned order in the present appeal should meet the same fate.”

13. Thus, the impugned one line order suffers from the vice of being an unreasoned order.

14. Now I come to the submission of the learned counsel for the appellants that the impugned one line direction for maintaining status quo is even otherwise in the teeth of various judgments of the Apex Court which have laud down the guidelines to be kept in mind by Courts/tribunals while considering the applicati0ns for stay of recoveries of public monies. I am now re-producing below couple of those judgments in extenso.

15. In “Assistant Collector Of Central ... vs Dunlop India Ltd. And Ors.”, 1985 AIR 330 the question of grant and rejection of interim injunctions in cases involving public monies was examined and in the following paras:-

“ ……………The Company claimed the benefit of the exemption to the tune of Rs. 6.05 crores and filed a writ petition in the Calcutta High Court and sought an interim order restraining the central excise authorities from the levy and collection of excise duty. The learned single judge took the view that a prima facie case had been made out in favour of the Company and by an interim order allowed the benefit of the exemption to the tune of Rs. two crores ninety three lakhs and eighty five thousand for which amount the company was directed to furnish a Bank Guarantee, that is to say, the goods were directed to be released on the Bank Guarantee being furnished. An appeal was preferred by the Assistant Collector of Central Excise under clause 10 of the Letters Patent and a Division Bench of the Calcutta High Court confirmed the order of the learned single Judge, but made a slight modification in that the Collector of Central Excise was given the liberty to encash 30% of the Bank Guarantee. The Assistant Collector of Central Excise has preferred this appeal by special leave. By our interim order dated November 15, 1984, we vacated the orders granted by the learned single Judge as well as by the Division Bench. We gave two weeks' time to the A respondent Company to file a counter No. counter has, however been filed. Shri F.S. Nariman, learned counsel, however appeared for the respondent. We do not have the slightest doubt that the orders of the learned single judge as well as Division Bench are wholly unsustainable and should never been made. Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by High Court. There was no question of any balance of convenience being in favour of the responden

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t-Company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere Bank Guarantees. We notice that very often some courts act as if furnishing a Bank Guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere Bank Guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and interim order of this magnitude had been granted for the mere asking.” 16. Relevant paras from the judgment in “Dwarikesh Sugar Industries Ltd vs Prem Heavy Engineering Work” decided” decided on 7 May, 1997 by Hon’ble Supreme Court are now re-produced below:- “We are constrained to make these observation with regard to the manner in which the High Court had dealt with this case because this is not an isolated case where the courts, while disobeying or not complying with the law laid down by this Court, have at time been liberal in granting injunction restraining encashment of bank guarantees. It is unfortunate, that notwithstanding the authoritative the pronouncements of this Court, the High Courts and the courts subordinate thereto, still seem intent on affording to this Court innumerable opportunities for dealing with this area of law, thought by this Court to be well settled. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settelled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.” 17. Learned counsel for respondent no,1 had submitted that in caser this Tribunal is not satisfied with the grant of interim relief to respondent no.1 by an unreasoned order the DRT can be asked decide afresh the interim relief prayer of the S.A. applicant within a fixed period and the interim relief already granted by DRT can be continued till then. 18. Considering the fact that the interim relief granted by the learned DRT cannot be sustained in view of the legal position settled by the Hon’ble Supreme Court in its above referred judgments and which settled position has been ignored by the learned DRT and also in view of the submission of the learned counsel for the appellants and which submission remained unrefuted from the side of respondent no.1 that only application no. 1010/2020 of the appellants was heard and decided question of interim relief was not even before the DRT this submission of Mr. Salecha cannot accepted. The impugned direction of status quo has to go and there is no question of matter being remanded back. The respondent no.1 cannot get ay further benefit now from this Tribunal and it was also rightly submitted by the counsel for the appellants that the respondent no.1 is only interested that the asset of the borrower Company are not sold. He cannot succeed anymore in that attempt. 19. This appeal is accordingly disposed of by affirming the decision of the DRT accepting the locus standi of respondent no.1 herein while the direction given for maintaining status quo is set aside. The appellants will now be at liberty to proceed ahead with the auction of secured assets.