SPEAKING ORDERS - SPEAK LOUD ENOUGH?

By Vijay Kumar

The main principles of natural justice are

++ No man shall be a judge in his own case

++ Hear the other side

++ The party must be made known the reasons for the decision.

It is for this requirement of the party being told the reasons for the decision, that speaking orders are required to be passed by adjudicating authorities.

In simple terms a speaking order is an order that speaks for itself. The order should stand the test of legality, fairness and reason at all the higher appellate fora. That is, the order should contain all the details of the issue, clear findings and a reasoned order. Such an order that speaks for itself is called a speaking order. Even the courts are required to give speaking orders except perhaps when the appeal is quashed as the court agrees with the lower court.

Quasi-judicial authorities are bound to give speaking orders. Now the courts have no hesitation in striking down an order, if it is not a speaking order. In the criminal courts, evidence plays a major role whereas, in fiscal civil cases, an interpretation of law often plays a dominant role. Further, the higher courts have only the opinion of the lower adjudicating authority to go by.

The Administrative authorities having a duty to act judicially can not decide on consideration of policy or expediency and so a speaking order will bring out the factors that weighed in favour or against a particular decision. One of the principles of natural justice is that a party ought to know the result of the enquiry and the reasons for the decision.

Speaking orders are necessary if judicial review is to be effective. One basis of this requirement is to exclude or minimise arbitrariness.

If reason is absent, the appellant forum is in the dark.

Speaking orders are orders, which tell their own story.

In the words of Chief Justice Koka Subba Rao, in MP Industries v UOI (AIR 1966 SC 671) "The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity and excludes or at any rate minimises arbitrariness. It gives satisfaction to the party against whom the order is made. Even in the case of appellate courts, invariably reasons are given, except when they agree with the reasoned judgement of the subordinate court".

Speaking Orders as a concept was not given much importance in India, in the early years of our independence, when the officialdom was not often questioned. (Perhaps then their actions were not much questionable also as they are now). It was justice NH Bhagavathi, in Express Newspapers v UOI (AIR 1958 SC 578) who first expressed the need for Speaking Orders. In Siemens Engg & manufacturing Company V UOI, ( 1976, SC 1785) the Supreme Court held that "where an authority in exercise of a quasi judicial function, makes an order, it must record its reasons". In the same case the court observed,

"In fact it would be desirable that in cases arising under Customs and Excise laws, an independent quasi judicial tribunal.. is set up which would finally dispose of appeals and Revision applications under these laws, instead of leaving those appeals to the Government of India. An independent quasi-judicial tribunal would definitely inspire greater confidence in the public mind".

And perhaps that is how the CEGAT/CESTAT was born.

Today we report for you a Madras High Court order which remands a case to the Commissioner of Income Tax after 16 years as the original order passed by the Commissioner was not a speaking order. Please see 2004-TIOL-38-HC-MAD-IT.

It's time the CBEC and CBDT, train their adjudicating officers on how to write speaking orders.

Truth is stranger than fiction!

While on speaking orders, today we bring you a real story on a farce in an appellate office. Nothing in the story is imagination. Every word is true - only names have been changed to protect the guilty. Tax humour? No! Tax reality. Please see 'Tax Humour' in 'News Channel'.