Union of India and Others Vs. E.G. Nambudiri - Court Judgment

Excerpt:
constitution - natural justice - article 309 of constitution of india - whether principles of natural justice requires administrative authority to record reasons - except in cases where statutory instruction requiring competent authority to record reasons for rejecting a representation competent authority is not bound to record reason - but that does not allow administrative authority to act arbitrarily - administrative authority is bound to give reason before court which may have led him to rejection of representation. - [j.c. shah,; k. subba rao,; k.n. wanchoo,; s.m. sikri and; v. ramaswami, jj] the appellant-company was carrying on the business of building contractors. during the years 1948-49 to, 1952-53, the appellant was assessed to sales-tax on the basis that the contracts executed by them were "works contracts". on 5th april 1954, the high court held that the relevant provision of the madras general sales tax act, 1939, empowering the state to assess indivisible building contracts was ultra vires the powers of the state legislature. on 23rd march 1955, the appellant filed a suit for the recovery of the amount of taxes illegally levied and collected from it. the trial court and the high court following the decision in raleigh investment co. ltd. v. the governor general in council, [1947] l.r. 74 i.a. 50, held that the suit was not maintainable because of s. 18a of the act, and that the remedy of the appellant was only to pursue the machinery provided under the act. in appeal to this court, it was contended by the appellants that : (i) the provisions of the act and rules relevant to, indivisible works contracts were held by this court also to be without legislative competence and void, and therefore, s. 18a did not bar a suit for the recovery of tax assessed under ultra vires provisions; and (ii) the suit was within time. held: (i) (per subba rao, wanchoo and sikri, jj.) the assessments in the present case were made in respect of indivisible works contracts. this court in the appeal from the judgment of the high court agreed with the high court and held that the provisions which enabled the levy of sales-tax in respect of such contracts were ultra vires the powers of the provincial legislature, in the state of madras v. gannon dunkerley,[1959] s.c.r.379. therefore, the sales- tax authorities have. acted outside the actand not under it in making an assessment on the basis of the relevant part of the charging section which was declared to, be ultra vires by this court, and hence s. 18a was not a bar to the maintainability of the suit. [237 f-g; 252 d-e; 253a] if a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability, it may, by necessary implication, bar the maintainability of a civil suit in respect of the said liability. a statute may also, confer exclusive jurisdiction on the authorities constituting the said machinery to, decide finally a jurisdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard. but an authority created by a statute cannot question the vires of that statute: or any of the provisions thereof, where under it functions. it must act under the act and not outside it. if it acts on the basis of a provision of that statute which is ultra vires, to that extent it would beating outside the act. in that event, a suit to question the validity of such an order made outside the act would certainly lie in a civil court, the foundation laid by the judicial committee in raleigh investment co. case for construing the expression "under the act" has no legal basis. the entire reasoning of the judicial committee was based upon the assumption that the question of ultra vires can be canvassed and finally decided through the 'machinery provided under the income-tax act. but the income-tax officer, the appellate assistant commissioner and the appellate tribunal are all. creatures of that act and whether the provisions of the act are good or bad is not their concern. as the tribunal is a creature of the statute it can only decide the dispute between the assessee and the commissioner in terms of the: provisions 'of the act and the question of ultra vires is foreign to the scope of its jurisdiction. if an assessee raises such a question, the tribunal can only reject it on the ground that it has no jurisdiction to entertain the objection or decide on it. as no such question can be raised or can arise on the tribunal's order, the high court cannot possibly give any decision on the question of ultra vires, because its jurisdiction under s. 66 is a special advisory jurisdiction and its scope is strictly limited. it can, only decide questions of law that arise out of the order of the tribunal and those that are referred to it. 'me appeal to this court under s. 66a(2) does not enlarge the scope of the jurisdiction, for this court can only do what the high court can. any assessment made on the basis of a provision which is ultra vires cannot be a decision under the provisions of the act. if the charging section is ultra vires the assessment made thereunder is really one outside the act. [240h; 247h; 248 b, d-h; 252 b-d, g-h] there is no justification for confining the expression "under the act" in s. 18a, only to the power of the officer to make an assessment and the procedure to be adopted by him and not to the content of the assessment. the expression refers both to the procedural and substantive provisions of the act, and the procedural machinery under the act can be utilized only to decide disputes that arise under the substantive provisions of the act, which are not ultra vires. [252 f, h] case law reviewed. per shah, and ramaswami, jj (dissenting) : the suit was barred by the scheme of the act and by s. 18a which was later incorporated by act 6 of 1951. [278 d] in substance this court held in the gannon dankerley case that the definition of "sale" in s. 2(h) must be read in the light of and restricted by the legislative power of the provinces as contained in entry 48 in list 11, schedule vii of the government of india act, 1935; and on that view, if a works contract is one, entire and indivisible., there will be no sale of goods and no part of the consideration received for executing such a contract could be included in the turnover. this court declared that the taxing authority may not, in computing the turnover of a dealer, include any part of the receipts under a works contract which is one, entire and indivisible, because the state legislature had no power to levy tax on transactions which are not transactions of sale of goods. but this court did not declare the clause ultra vires: the court merely directed that the power to levy tax in respect of a works, contract is not wholly denied to the provinces or states; in each case it has to be considered whether the transaction involves sale of goods strictly so called, or if it is a transaction which is a works contract "one, entire and indivisible." if it is the latter, it would not be taxable, because there is no element of sale of goods within that transaction, if it is the former, the clement of sale of goods would be taxable. the approach conforms to a recognised rule. of interpretation that it is always presumed that the legislature did not intend to,-transgress restrictions upon its legislative powers, and it would be legitimate to read words used in a statute as- subject to the restrictions imposed by the constitution upon legislative power, so that the statute may harmonise with the constitutional restrictions. this rule applies unless the restricted meaning of words makes the, legislation in- complete, unintelligible or unmeaning. apparently wide words of the definition clause and the charging section will not, on account of such restrictions, be rendered ultra vires or invalid ; the words will be construed so as to confer power upon the taxing authorities to assess tax only within limited field. [259 f-g; 260 e-g-h; 261 a-c 263 g] re : the hindu women's rights to property act, 1937, [1941] f.c.r. 12, applied. ordinarily a taxing authority has power to ascertain whether the transaction before him is taxable, and for that purpose he may determine facts which have a bearing on the taxability of the transaction. he has also power to interpret the provisions of the taxing statute as well as of any other statute which has a bearing on the question. within his jurisdiction is included power to decide finally whether the transaction submitted to his scrutiny is taxable. his decision is open to challenge by appropriate proceedings in the hierarchy of tribunals set up for that purpose, but not outside the act. [263 h; 264 b] kamala mills ltd. v. state of bombay, [1966] 1 s.c.r. 64 followed. the madras general sales tax act is a complete code setting up machinery for the levy, assessment, collection and refund of tax : by the clearest implication it excludes the jurisdiction of the civil courts to modify or set aside assessments under the act by authorities invested with power in that behalf. by enacting s. 18a the legislature did no more than enact what was clearly implicit in the scheme of the act. absence of the section from the statute book for the first two years of assessment is therefore of no materiality. [268 g-h; 269 a] even on the assumption that the portion added by act 25 of 1947 into the definition of 'sale' was subsequently declared ultra vires by this court in the gannon dunkerley case, the suit to set aside or modify an assessment on the assumption that the definition was wholly invalid, was not maintainable. the. taxing officer in exercising his power may err; but he has authority to err in exercise of. his jurisdiction. it matters little that the error he commits is in the interpretation of a constitutional prohibition, and not a statutory prohibition applying to the transaction submitted to his scrutiny. there is nothing in the act which prohibits the taxing authority from entertaining the plea that a transaction is not taxable because it is in respect of an exempted commodity or is an exempted sale, or because it is not a transaction of ale, and there are ample indications of an implication to, the contrary. if by an erroneous decision, he, can clothe himself with jurisdiction, which on a true view of the facts or law he does not possess, it is difficult to appreciate the ground on which it can be asserted that he must decline to adjudicate when the vires of a part of the statute which he has to administer fall to be determined. in a large number of cases in which proceedings relating to taxation have- reached the high court by way of reference, appeal or revision and this court in appeal from the high court, the question of the vires of the statute under which the authority functioned was raised, entertained and decided. [269 b-c, g-h; 270 b, d-e; 271 c-d] raleigh investment co. ltd. case, applied. under the act, therefore, the deputy commercial tax officer had jurisdiction to determine whether the appellant's transactions were assessable under the. act. he may have committed a mistake, even a grevious mistak. but he had jurisdiction to decide the question. exercise of that jurisdiction was not conditioned by the correctness of his conclusion. [265 b-c] (ii) (by full court) : the suit was governed by art. 96 of the limitation act, 1908, and that article prescribes a period of limitation of three years for relief, on the ground of mistake, from the date when the mistake becomes known to the plaintiff. since the appellants came to know of their mistake when the high court gave its decision on 5th april 1954, the suit filed on 23rd march 1955 was well within time. [253 f-h; 255d] state of kerala v. aluminium industries ltd. c.a. no. 720 of 1963. decided on april 21, 1965 (unreported) followed. - 2. that the quality of performance and application of knowledge, delegated authority and conceptual and professional skills on the jobs is very poor. that subordinates used to complain that they could not work under you, as you could not give proper guidance. arriving at a just decision is the aim of both quasi-judicial as well as administrative enquiries, an unjust decision in an administrative enquiry may have more far reaching effect than in a quasi-judicial enquiry, therefore, it was necessary that in rejecting the representation against an adverse entry, reasons must be stated and in the absence of reasons the order would be arbitrary and liable to be quashed. servant which may include comments about his good work, drive, initiative, devotion to duty and integrity. arriving at the just decision is the aim of both quasi-judicial as well as administrative enquiry, an unjust decision in an administrative enquiry may have more far reaching effect than decision in a quasi-judicial enquiry. if the superior authority was not satisfied with the explanation of the respondent as contained in his representation, what reasons could be stated, except that the authority was not satisfied with the explanation. if the order as communicated to the government servant rejecting the representation does not contain any reasons, the order cannot be held to be bad in law. the central administrative tribunal committed error in quashing the order of the president as well as the order of the ministry of commerce dated 6.1.1986. assuming that there was some defect in the order rejecting the respondent's representation, the tribunal was not justified in holding that the adverse entries awarded to the respondent should be treated as having been expunged.orderk.n. singh, j.1. leave granted.2. this appeal is directed against the order of the central administrative tribunal, principal bench, delhi, quashing the order of the ministry of commerce dated 6.1.1986 rejecting the respondent's representation against the adverse remarks awarded to him.3. e.g. nambudiri respondent is a section officer in the office of chief controller of import and exports, ministry of commerce. by a memorandum dated 7th may, 1985, the director communicated adverse remarks awarded to the respondent for the year ending 1984. these remarks were as under:1. that you were not associated with the important work of the section such as the open house discussions, monthly analysis of the returns received from regional offices, complaints and port officers meetings. 2. that the quality of performance and application of knowledge, delegated authority and conceptual and professional skills on the jobs is very poor.3. that you had a casual attitude to the work assigned. your devotion to duty was insufficient. that subordinates used to complain that they could not work under you, as you could not give proper guidance.4. that your job did not involve contact with the public indications and your intellectual honesty and innovative opaity are average.5. that nothing adverse has come to notice regarding your integrity.6. that you were given advice/warning at various levels both orally and in writing but you did not react to these.the respondent made representation against the adverse remarks but the same was rejected by the order dated 6.1.1986. the respondent, thereafter, made a memorial to the president of india against the adverse remarks, as a result of which the adverse remarks as contained in item nos. 1 to 4 as quoted above were expunged, whereas the remaining adverse entries were maintained. the govt.'s decision was communicated by a memorandum dated 14.8.1986. but before the aforesaid decision of the government partially expunging the adverse remarks could be communicated to the respondent, he filed a petition before the central administrative tribunal challenging the order of the ministry of commerce dated 6.1.1986 rejecting his representation made against the adverse entries. the respondent challenged the order dated 6.1.1986 rejecting his representation on the ground that it did not contain any reasons. plea of mala fide was also raised against the joint director, ministry of commerce, who had awarded the adverse remarks to the respondent. the tribunal by its order dated 27.7.1987 quashed the government order as contained in the communication letter dated 6.1.1986 and also subsequent order dated 14.8.1986 on the ground that those orders were vitiated in law in the absence of reasons.4. the tribunal held that it was a basic principle of natural justice of every quasi-judicial process, that order should contain reasons. arriving at a just decision is the aim of both quasi-judicial as well as administrative enquiries, an unjust decision in an administrative enquiry may have more far reaching effect than in a quasi-judicial enquiry, therefore, it was necessary that in rejecting the representation against an adverse entry, reasons must be stated and in the absence of reasons the order would be arbitrary and liable to be quashed. placing reliance on a number of decisions of high courts, the tribunal held that a bald communication rejecting the representation made against the adverse entries does not meet the requirement of law. the tribunal further held that in the absence of reasons it would follow that the competent authority rejected the representation without applying its mind to the grounds raised in the representation.5. learned counsel for the parties conceded that there are no statutory rules framed under article 309 of the constitution regulating the award of entries in the character roll of a central government employee or providing for filing of representation against the adverse entries, or its disposal. the entire field in this regard is regulated by administrative directions issued from time to time. under these directions the character roll of government servants is required to be maintained wherein the entries are made every year by superior competent authority regarding the work, conduct and character of the government servant. these entries are confidential in nature, which contain the assessment of the work and conduct of the government servant, reflecting his efficiency or defect in his work and conduct. the confidential reports, contain general assessment of character, conduct and qualities of a govt. servant which may include comments about his good work, drive, initiative, devotion to duty and integrity. these entries also reflect the inefficiency, delay, lack of initiative, carelessness in handling the problems, or any defect in character and integrity. these entries contain reference to any penalty which may have been awarded to a government servant in departmental proceedings. these entries are important in nature as on the basis of these entries, a government servant's suitability to the office is assessed for the purposes of his confirmation, promotion and even for retention in service. any adverse remark awarded against a government servant is communicated to him to afford him opportunity of explaining the correct position by means of a representation. the competent authority is required to examine the adverse remarks in consultation, if necessary, with the reporting officer and counter signing authority. if the competent authority finds that the remarks are justified and there are no sufficient grounds for interference, he may reject the representation and the government servant is informed accordingly. if, however, the competent authority finds that the adverse remarks are incorrect, unfounded or unjustified, he would expunge the same and inform the government servant. the competent authority may having regard to the facts and circumstances of the case modify, or tone down the remarks. the administrative instructions issued by the government do not require the competent authority to record reasons either in accepting or rejecting the representation of a government servant, made against adverse entries.6. entries made in the character roll and confidential record of a government servant are confidential and those do not by themselves affect any right of the government servant, but those entries assume importance and play vital role in the matter relating to confirmation, crossing of efficiency bar, promotion and retention in service. once an adverse report is recorded, the principles of natural justice require the reporting authority to communicate the same to the government servant to enable him to improve his work and conduct and also to explain the circumstances leading to the report. such an opportunity is not an empty formality, its object, partially, being to enable the superior authorities to decide on a consideration of the explanation offered by the person concerned, whether the adverse report is justified. the superior authority competent to decide the representation is required to consider the explanation offered by the government servant before taking a decision in the matter. any adverse report which is not communicated to the government servant, or if he is denied the opportunity of making representation to the superior authority, cannot be considered against him. see: gurdial singh fijji v. state of punjab and ors. : [1979]3scr518 . in the circumstances it is necessary that the authority must consider the explanation offered by the government servant and to decide the same in a fair and just manner. the question then arises whether in considering and deciding the representation against adverse report, the authorities are duty bound to record reasons, or to communicate the same to the person concerned. ordinarily, courts and tribunals, adjudicating rights of parties, are required to act judicially and to record reasons. where an administrative authority is required to act judicially it is also under an obligation to record reasons. but every administrative authority is not under any legal obligation to record reasons for its decision, although, it is always desirable to record reasons to avoid any suspicion. where a statute requires an authority though acting administratively to record reasons, it is mandatory for the authority to pass speaking orders and in the absence of reasons the order would be rendered illegal. but in the absence of any statutory or administrative requirement to record reasons, the order of the administrative authority is not rendered illegal for absence of reasons. if any challenge is made to the validity of an order on the ground of it being arbitrary or mala fide it is always open to the authority concerned to place reasons before the court which may have persuaded it to pass the orders. such reasons must already exist on records as it is not permissible to the authority to support the order by reasons not contained in the records. reasons are not necessary to be communicated to the government servant. if the statutory rules require communication of reasons, the same must be communicated but in the absence of any such provision absence of communication of reasons do not affect the validity of the order.7. on behalf of the respondent it was contended that principles of natural justice require the superior authority to record reasons in rejecting the government servant's representation made against the adverse remarks as the order of rejection affected the respondent's right. it is true that the old distinction between judicial act and administrative act has withered away and the principles of natural justice are now applied even to administrative orders which involve civil consequences, as held by this court in state of orissa v. dr. (miss) binapani dei and ors. : (1967)iillj266sc . what is a civil consequence has been answered by this court in mohinder singh gill and ors. v. the chief election commissioner, new delhi and ors. : [1978]2scr272 . krishna iyer, j. speaking for the constitution bench observed:but what is a civil consequence, let us ask ourselves, by passing verbal booby-traps? 'civil consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. in its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence.the purpose of the rules of natural justice is to prevent miscarriage of justice and it is no more in doubt that the principles of natural justice are applicable to administrative orders if such orders affect the right of a citizen. arriving at the just decision is the aim of both quasi-judicial as well as administrative enquiry, an unjust decision in an administrative enquiry may have more far reaching effect than decision in a quasi-judicial enquiry. now, there is no doubt that the principles of natural justice are applicable even to administrative enquiries. see: a.k. kraipak and ors. v. union of india and ors. : [1970]1scr457 .8. the question is whether principles of natural justice require an administrative authority to record reasons. generally, principles of natural justice require that opportunity of hearing should be given to the person against whom an administrative order is passed. the application of principles of natural justice, and its sweep depend upon the nature of the rights involved, having regard to the setting and context of the statutory provisions. where a vested right is adversely affected by an administrative order, or where civil consequences ensue, principles of natural justice apply even if the statutory provisions do not make any express provision for the same, and the person concerned must be afforded opportunity of hearing before the order is passed. but principles of natural justice do not require the administrative authority to record reasons for its decision as there is no general rule that reasons must be given for administrative decision. order of an administrative authority which has no statutory or implied duty to state reasons or the grounds of its decision is not rendered illegal merely on account of absence of reasons. it has never been a principle of natural justice that reasons should be given for decisions. see: regina v. gaming board for great britain ex p. benaim and khaida [1970] 2 qb 417. though the principles of natural justice do not require reasons for decision, there is necessity for giving reasons in view of the expanding law of judicial review to enable the citizens to discover the reasoning behind the decision. right to reasons is an indispensable part of a sound system of judicial review. under our constitution an administrative decision is subject to judicial review if it affects the right of a citizen, it is therefore desirable that reasons should be stated.9. there are however, many areas of administrative activity where no reasons are recorded or communicated, if such a decision is challenged before the court for judicial review, the reasons for the decision may be placed before the court. the superior authority while considering the representation of a government servant against adverse remarks, is not required by law to act judicially, it is under no legal obligation to record or communicate reasons for its decision to the government servant. the decision, rejecting the representation does not adversely affect any vested right of the government servant nor does it visit him with any civil consequences. in many cases having regard to infinite variations of circumstances, it may not be possible to disclose reasons for the opinion formed about the work and conduct or character of the government servant. in the instant case adverse remarks as contained in item nos. 1 to 4 were expunged but those at serial numbers 5 and 6 were not expunged and the respondent's representation to that extent was rejected. on a careful scrutiny of the two remarks, it would appear that observation contained in item no. 5 'that nothing adverse has come to notice regarding your integrity' is not adverse to the respondent's work and conduct. these remarks are neutral in nature, and they do not adversely comment upon the respondent's work, conduct or character, though they are not commendatory in nature. as regards the remarks at serial no. 6, they are self-explanatory, which show that inspite of oral and written warnings the respondent did not improve. if the superior authority was not satisfied with the explanation of the respondent as contained in his representation, what reasons could be stated, except that the authority was not satisfied with the explanation. the superior authority was not obliged to write detail judgment or order giving details of the warnings or the material on which he formed opinion.10. there is no dispute that there is no rule or administrative order for recording reasons in rejecting a representation. in the absence of any statutory rule or statutory instructions requiring the competent authority to record reasons in rejecting a representation made by a government servant against the adverse entries the competent authority is not under any obligation to record reason. but the competent authority has no licence to act arbitrarily, he must act in a fair and just manner. he is required to consider the questions raised by the government servant and examine the same, in the light of the comments made by the officer awarding the adverse entries and the officer counter-signing the same. if the representation is rejected after its consideration in a fair and just manner, the order of rejection would not be rendered illegal merely on the ground of absence of reasons. in the absence of any statutory or administrative provision requiring the competent authority to record reasons or to communicate reasons, no exception can be taken to the order rejecting representation merely on the ground of absence of reasons. no order of an administrative authority communicating its decision is rendered illegal on the ground of absence of reasons ex facie and it is not open to the court to interfere with such orders merely on the ground of absence of any reasons. however, it does not mean that the administrative authority is at liberty to pass orders without there being any reasons for the same. in governmental functioning before any order is issued the matter is generally considered at various levels and the reasons and opinions are contained in the notes on the file. the reasons contained in the file enable the competent authority to formulate its opinion. if the order as communicated to the government servant rejecting the representation does not contain any reasons, the order cannot be held to be bad in law. if such an order is challenged in a court of law it is always open to the competent authority to place the reasons before the court which may have led to the rejection of the representation. it is always open to an administrative authority to produce evidence aliunde before the court to justify its action.11. the president was under no legal obligation to record reasons in rejecting the respondent's representation against the adverse remarks. consequently, the order of the president was not vitiated in law. the central administrative tribunal committed error in quashing the order of the president as well as the order of the ministry of commerce dated 6.1.1986. assuming that there was some defect in the order rejecting the respondent's representation, the tribunal was not justified in holding that the adverse entries awarded to the respondent should be treated as having been expunged.12. we accordingly allow the appeal, set aside the order of the tribunal dated 27.7.1987. there will be no order as to costs.

Judgment:
ORDER

K.N. Singh, J.

1. Leave granted.

2. This appeal is directed against the order of the Central Administrative Tribunal, Principal Bench, Delhi, quashing the order of the Ministry of Commerce dated 6.1.1986 rejecting the respondent's representation against the adverse remarks awarded to him.

3. E.G. Nambudiri respondent is a Section Officer in the office of Chief Controller of Import and Exports, Ministry of Commerce. By a memorandum dated 7th May, 1985, the Director communicated adverse remarks awarded to the respondent for the year ending 1984. These remarks were as under:

1. That you were not associated with the important work of the Section such as the open house discussions, monthly analysis of the returns received from regional offices, complaints and Port Officers meetings.

2. That the quality of performance and application of knowledge, delegated authority and conceptual and professional skills on the jobs is very poor.

3. That you had a casual attitude to the work assigned. Your devotion to duty was insufficient. That subordinates used to complain that they could not work under you, as you could not give proper guidance.

4. That your job did not involve contact with the public indications and your intellectual honesty and innovative opaity are average.

5. That nothing adverse has come to notice regarding your integrity.

6. That you were given advice/warning at various levels both orally and in writing but you did not react to these.

The respondent made representation against the adverse remarks but the same was rejected by the order dated 6.1.1986. The respondent, thereafter, made a memorial to the President of India against the adverse remarks, as a result of which the adverse remarks as contained in Item Nos. 1 to 4 as quoted above were expunged, whereas the remaining adverse entries were maintained. The Govt.'s decision was communicated by a memorandum dated 14.8.1986. But before the aforesaid decision of the Government partially expunging the adverse remarks could be communicated to the respondent, he filed a petition before the Central Administrative Tribunal challenging the order of the Ministry of Commerce dated 6.1.1986 rejecting his representation made against the adverse entries. The respondent challenged the order dated 6.1.1986 rejecting his representation on the ground that it did not contain any reasons. Plea of mala fide was also raised against the Joint Director, Ministry of Commerce, who had awarded the adverse remarks to the respondent. The Tribunal by its order dated 27.7.1987 quashed the Government Order as contained in the communication letter dated 6.1.1986 and also subsequent order dated 14.8.1986 on the ground that those orders were vitiated in law in the absence of reasons.

4. The Tribunal held that it was a basic principle of natural justice of every quasi-judicial process, that order should contain reasons. Arriving at a just decision is the aim of both quasi-judicial as well as administrative enquiries, an unjust decision in an administrative enquiry may have more far reaching effect than in a quasi-judicial enquiry, therefore, it was necessary that in rejecting the representation against an adverse entry, reasons must be stated and in the absence of reasons the order would be arbitrary and liable to be quashed. Placing reliance on a number of decisions of High Courts, the Tribunal held that a bald communication rejecting the representation made against the adverse entries does not meet the requirement of law. The Tribunal further held that in the absence of reasons it would follow that the competent authority rejected the representation without applying its mind to the grounds raised in the representation.

5. Learned Counsel for the parties conceded that there are no statutory rules framed under Article 309 of the Constitution regulating the award of entries in the character roll of a Central Government employee or providing for filing of representation against the adverse entries, or its disposal. The entire field in this regard is regulated by administrative directions issued from time to time. Under these directions the character roll of Government servants is required to be maintained wherein the entries are made every year by superior competent authority regarding the work, conduct and character of the Government servant. These entries are confidential in nature, which contain the assessment of the work and conduct of the Government servant, reflecting his efficiency or defect in his work and conduct. The confidential reports, contain general assessment of character, conduct and qualities of a Govt. servant which may include comments about his good work, drive, initiative, devotion to duty and integrity. These entries also reflect the inefficiency, delay, lack of initiative, carelessness in handling the problems, or any defect in character and integrity. These entries contain reference to any penalty which may have been awarded to a Government servant in departmental proceedings. These entries are important in nature as on the basis of these entries, a Government servant's suitability to the office is assessed for the purposes of his confirmation, promotion and even for retention in service. Any adverse remark awarded against a Government servant is communicated to him to afford him opportunity of explaining the correct position by means of a representation. The competent authority is required to examine the adverse remarks in consultation, if necessary, with the reporting officer and counter signing authority. If the competent authority finds that the remarks are justified and there are no sufficient grounds for interference, he may reject the representation and the Government servant is informed accordingly. If, however, the competent authority finds that the adverse remarks are incorrect, unfounded or unjustified, he would expunge the same and inform the Government servant. The competent authority may having regard to the facts and circumstances of the case modify, or tone down the remarks. The administrative instructions issued by the Government do not require the competent authority to record reasons either in accepting or rejecting the representation of a Government servant, made against adverse entries.

6. Entries made in the character roll and confidential record of a Government servant are confidential and those do not by themselves affect any right of the Government servant, but those entries assume importance and play vital role in the matter relating to confirmation, crossing of efficiency bar, promotion and retention in service. Once an adverse report is recorded, the principles of natural justice require the reporting authority to communicate the same to the Government servant to enable him to improve his work and conduct and also to explain the circumstances leading to the report. Such an opportunity is not an empty formality, its object, partially, being to enable the superior authorities to decide on a consideration of the explanation offered by the person concerned, whether the adverse report is justified. The superior authority competent to decide the representation is required to consider the explanation offered by the Government servant before taking a decision in the matter. Any adverse report which is not communicated to the Government servant, or if he is denied the opportunity of making representation to the superior authority, cannot be considered against him. See: Gurdial Singh Fijji v. State of Punjab and Ors. : [1979]3SCR518 . In the circumstances it is necessary that the authority must consider the explanation offered by the Government servant and to decide the same in a fair and just manner. The question then arises whether in considering and deciding the representation against adverse report, the authorities are duty bound to record reasons, or to communicate the same to the person concerned. Ordinarily, Courts and Tribunals, adjudicating rights of parties, are required to act judicially and to record reasons. Where an administrative authority is required to act judicially it is also under an obligation to record reasons. But every administrative authority is not under any legal obligation to record reasons for its decision, although, it is always desirable to record reasons to avoid any suspicion. Where a statute requires an authority though acting administratively to record reasons, it is mandatory for the authority to pass speaking orders and in the absence of reasons the order would be rendered illegal. But in the absence of any statutory or administrative requirement to record reasons, the order of the administrative authority is not rendered illegal for absence of reasons. If any challenge is made to the validity of an order on the ground of it being arbitrary or mala fide it is always open to the authority concerned to place reasons before the Court which may have persuaded it to pass the orders. Such reasons must already exist on records as it is not permissible to the authority to support the order by reasons not contained in the records. Reasons are not necessary to be communicated to the Government servant. If the statutory rules require communication of reasons, the same must be communicated but in the absence of any such provision absence of communication of reasons do not affect the validity of the order.

7. On behalf of the respondent it was contended that principles of natural justice require the superior authority to record reasons in rejecting the Government servant's representation made against the adverse remarks as the order of rejection affected the respondent's right. It is true that the old distinction between judicial act and administrative act has withered away and the principles of natural justice are now applied even to administrative orders which involve civil consequences, as held by this Court in State of Orissa v. Dr. (Miss) Binapani Dei and Ors. : (1967)IILLJ266SC . What is a civil consequence has been answered by this Court in Mohinder Singh Gill and Ors. v. The Chief Election Commissioner, New Delhi and Ors. : [1978]2SCR272 . Krishna Iyer, J. speaking for the Constitution Bench observed:

But what is a civil consequence, let us ask ourselves, by passing verbal booby-traps? 'Civil consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence.

The purpose of the rules of natural justice is to prevent miscarriage of justice and it is no more in doubt that the principles of natural justice are applicable to administrative orders if such orders affect the right of a citizen. Arriving at the just decision is the aim of both quasi-judicial as well as administrative enquiry, an unjust decision in an administrative enquiry may have more far reaching effect than decision in a quasi-judicial enquiry. Now, there is no doubt that the principles of natural justice are applicable even to administrative enquiries. See: A.K. Kraipak and Ors. v. Union of India and Ors. : [1970]1SCR457 .

8. The question is whether principles of natural justice require an administrative authority to record reasons. Generally, principles of natural justice require that opportunity of hearing should be given to the person against whom an administrative order is passed. The application of principles of natural justice, and its sweep depend upon the nature of the rights involved, having regard to the setting and context of the statutory provisions. Where a vested right is adversely affected by an administrative order, or where civil consequences ensue, principles of natural justice apply even if the statutory provisions do not make any express provision for the same, and the person concerned must be afforded opportunity of hearing before the order is passed. But principles of natural justice do not require the administrative authority to record reasons for its decision as there is no general rule that reasons must be given for administrative decision. Order of an administrative authority which has no statutory or implied duty to state reasons or the grounds of its decision is not rendered illegal merely on account of absence of reasons. It has never been a principle of natural justice that reasons should be given for decisions. See: Regina v. Gaming Board for Great Britain ex p. Benaim and Khaida [1970] 2 QB 417. Though the principles of natural justice do not require reasons for decision, there is necessity for giving reasons in view of the expanding law of judicial review to enable the citizens to discover the reasoning behind the decision. Right to reasons is an indispensable part of a sound system of judicial review. Under our Constitution an administrative decision is subject to judicial review if it affects the right of a citizen, it is therefore desirable that reasons should be stated.

9. There are however, many areas of administrative activity where no reasons are recorded or communicated, if such a decision is challenged before the Court for judicial review, the reasons for the decision may be placed before the court. The superior authority while considering the representation of a Government servant against adverse remarks, is not required by law to act judicially, it is under no legal obligation to record or communicate reasons for its decision to the Government servant. The decision, rejecting the representation does not adversely affect any vested right of the Government servant nor does it visit him with any civil consequences. In many cases having regard to infinite variations of circumstances, it may not be possible to disclose reasons for the opinion formed about the work and conduct or character of the Government servant. In the instant case adverse remarks as contained in item Nos. 1 to 4 were expunged but those at serial numbers 5 and 6 were not expunged and the respondent's representation to that extent was rejected. On a careful scrutiny of the two remarks, it would appear that observation contained in Item No. 5 'that nothing adverse has come to notice regarding your integrity' is not adverse to the respondent's work and conduct. These remarks are neutral in nature, and they do not adversely comment upon the respondent's work, conduct or character, though they are not commendatory in nature. As regards the remarks at Serial No. 6, they are self-explanatory, which show that inspite of oral and written warnings the respondent did not improve. If the superior authority was not satisfied with the explanation of the respondent as contained in his representation, what reasons could be stated, except that the authority was not satisfied with the explanation. The superior authority was not obliged to write detail judgment or order giving details of the warnings or the material on which he formed opinion.

10. There is no dispute that there is no rule or administrative order for recording reasons in rejecting a representation. In the absence of any statutory rule or statutory instructions requiring the competent authority to record reasons in rejecting a representation made by a Government servant against the adverse entries the competent authority is not under any obligation to record reason. But the competent authority has no licence to act arbitrarily, he must act in a fair and just manner. He is required to consider the questions raised by the Government servant and examine the same, in the light of the comments made by the officer awarding the adverse entries and the officer counter-signing the same. If the representation is rejected after its consideration in a fair and just manner, the order of rejection would not be rendered illegal merely on the ground of absence of reasons. In the absence of any statutory or administrative provision requiring the competent authority to record reasons or to communicate reasons, no exception can be taken to the order rejecting representation merely on the ground of absence of reasons. No order of an administrative authority communicating its decision is rendered illegal on the ground of absence of reasons ex facie and it is not open to the court to interfere with such orders merely on the ground of absence of any reasons. However, it does not mean that the administrative authority is at liberty to pass orders without there being any reasons for the same. In governmental functioning before any order is issued the matter is generally considered at various levels and the reasons and opinions are contained in the notes on the file. The reasons contained in the file enable the competent authority to formulate its opinion. If the order as communicated to the Government servant rejecting the representation does not contain any reasons, the order cannot be held to be bad in law. If such an order is challenged in a court of law it is always open to the competent authority to place the reasons before the Court which may have led to the rejection of the representation. It is always open to an administrative authority to produce evidence aliunde before the court to justify its action.

11. The President was under no legal obligation to record reasons in rejecting the respondent's representation against the adverse remarks. Consequently, the order of the President was not vitiated in law. The Central Administrative Tribunal committed error in quashing the order of the President as well as the order of the Ministry of Commerce dated 6.1.1986. Assuming that there was some defect in the order rejecting the respondent's representation, the Tribunal was not justified in holding that the adverse entries awarded to the respondent should be treated as having been expunged.

12. We accordingly allow the appeal, set aside the order of the Tribunal dated 27.7.1987. There will be no order as to costs.