# • TRAVANCORE RA YON LTD v. UNION OF INDIA

- **Citation:** [1970] 3 S.C.R. 40
- **Court:** Supreme Court of India
- **Decided:** 1969-10-28
- **Case number:** special leave from the order No. 543 of 1966
- **Bench:** J. C. Shah, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/travancore-ra-yon-ltd-v-union-of-india-5024
- **Pages:** 7

## Headnote

Speaking Order-Central Excise and Salt Act, 1944, s. 36---Revisional
jurisdiction of Central Government-Necessit,v of speaking order while
rejecting application-Oral 'hearing-When advisable.
The appellant company was assessed to excise duty on the consumption of "nitro-cellulose lacquer" produced by it.
The company denied
that the chemical compound produced and utilised by
it was "nitrocellulose lacquer" within the meaning of the Central Excise and Salt Act,
1944. The Assistant Collector of Customs confirmed the assessment The
Collector of Customs, in appeal, gave the company a personal hea·ting
and rejected the company's claim by a detailed Order.
Against this
order the company invoked the revisional iurisdiction of the
Central
Government under s. 36 of the Act. The petition was entertained but no
personal hearing was given to. the company.
The Government rejected
the petition by an order which read :
· "The Government of India have carefully considered the
points
made by the applicant(s), but see no justification for interfering with
the order in appeal.
The revision application is accordingly rejected."
The Company appealed to this Court.
HELD : The case must be remanded to the Central Government to
be disposed of according to law.
(i) The Central Government is by s. 36 invested with the judicial
power of the State.
A party who approaches the Government in exercise
of a statutory right for adjudication of a dispute is entitled I!>· know at
least the official designation of the person who has considered the matter,
\Vhat was considered by him, and the reasons for recording a decision
against him.
To enable the High Court or this Court to exercise its constiutional po~·ers, not only the decision, but an adequate disclosure of
materials justifying an inference that there has been a judicial consideration of the dispute by an authority competent in that behalf in the light
of the claim made by the aggrieved party, is necessary. The Court insists
upon disclosure of 'reasons in support of the order on two grounds : one,
that the party aggrieved in a proceeding before the High Court or this
Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous, the other, that the
obligation to record reasons operates as a deterrent against possible arbi~
trary action by the executive authority
invested with the judicial power.
[43 E-H; 46 DJ
Madhja Pradesh Industries Ltd. v. Union of India, [1966] 1 S.C.R.
466 held overruled by Bhagat. Raja v. Union of India,
[1967] 3 S.C.R.
302.
Stale of Madhya Pradesh & Anr. v. Seth Narsinghdas fankidas Mehta,
C.A. No. 621 dated 29-4-69, State of Gujarat v. Patel Raghav Natha &
A
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F
G
Ors. [1970] I S.C.R. 335 and Prag Das Umar Vaishva v. Union of India,
H
C.A. No. 723 of 1965 decided on 21-4-69 referred to.
In this case the communication from the Central Government gave no
k"easons in support of the order; it did not disclose the "points'' which
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TRAVANCORE RAYON I', UNION (Shah, J.)
41
\\ere considered, who considered the points, and the reasons for rejecting
them [46 BJ
(ii) Where complex and difficult questions requiring familiarity \Vi th
teC'hnical problems, as in the present case, are raised, it would conduce
to better administration and rndre satisfactory disposal of the grievances
of the citizens if personal hearing is given, [43 B-D]

## Text

•
TRAVANCORE RA YON LTD.
v.
UNION OF INDIA
October 28, 1969
{J. C. SHAH AND K. S. HEGDE, JJ.]
Speaking Order-Central Excise and Salt Act, 1944, s. 36---Revisional
jurisdiction of Central Government-Necessit,v of speaking order while
rejecting application-Oral 'hearing-When advisable.
The appellant company was assessed to excise duty on the consumption of "nitro-cellulose lacquer" produced by it.
The company denied
that the chemical compound produced and utilised by
it was "nitrocellulose lacquer" within the meaning of the Central Excise and Salt Act,
1944. The Assistant Collector of Customs confirmed the assessment The
Collector of Customs, in appeal, gave the company a personal hea·ting
and rejected the company's claim by a detailed Order.
Against this
order the company invoked the revisional iurisdiction of the
Central
Government under s. 36 of the Act. The petition was entertained but no
personal hearing was given to. the company.
The Government rejected
the petition by an order which read :
· "The Government of India have carefully considered the
points
made by the applicant(s), but see no justification for interfering with
the order in appeal.
The revision application is accordingly rejected."
The Company appealed to this Court.
HELD : The case must be remanded to the Central Government to
be disposed of according to law.
(i) The Central Government is by s. 36 invested with the judicial
power of the State.
A party who approaches the Government in exercise
of a statutory right for adjudication of a dispute is entitled I!>· know at
least the official designation of the person who has considered the matter,
\Vhat was considered by him, and the reasons for recording a decision
against him.
To enable the High Court or this Court to exercise its constiutional po~·ers, not only the decision, but an adequate disclosure of
materials justifying an inference that there has been a judicial consideration of the dispute by an authority competent in that behalf in the light
of the claim made by the aggrieved party, is necessary. The Court insists
upon disclosure of 'reasons in support of the order on two grounds : one,
that the party aggrieved in a proceeding before the High Court or this
Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous, the other, that the
obligation to record reasons operates as a deterrent against possible arbi~
trary action by the executive authority
invested with the judicial power.
[43 E-H; 46 DJ
Madhja Pradesh Industries Ltd. v. Union of India, [1966] 1 S.C.R.
466 held overruled by Bhagat. Raja v. Union of India,
[1967] 3 S.C.R.
302.
Stale of Madhya Pradesh & Anr. v. Seth Narsinghdas fankidas Mehta,
C.A. No. 621 dated 29-4-69, State of Gujarat v. Patel Raghav Natha &
A
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G
Ors. [1970] I S.C.R. 335 and Prag Das Umar Vaishva v. Union of India,
H
C.A. No. 723 of 1965 decided on 21-4-69 referred to.
In this case the communication from the Central Government gave no
k"easons in support of the order; it did not disclose the "points'' which
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TRAVANCORE RAYON I', UNION (Shah, J.)
41
\\ere considered, who considered the points, and the reasons for rejecting
them [46 BJ
(ii) Where complex and difficult questions requiring familiarity \Vi th
teC'hnical problems, as in the present case, are raised, it would conduce
to better administration and rndre satisfactory disposal of the grievances
of the citizens if personal hearing is given, [43 B-D]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2252 o.f
1966.
Appeal by special leave from the order No. 543 of 1966 dated
July 16, 1966 of the Government of India, Ministry of Finance.
New Delhi in Central Excise Revision Application.
S. Mohan Kwnarafnangalam, Soli J. Sorabji, A. K. Varma,
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Ravinder Narain, J. B. Dadachanji, and 0. C. Mathur, for the
D
appellant.
V. A. Seyid Muhammad and S. P. Nayar, for the resp0ndents.
B. R. Agarwala, for intervener No. 1.
So/i J. Sorabji, Ravinder Narain and J. B. Dadachanji, for
intervener No. 2.
The Judgment of the Court was delivered by
Shah, J.
The appellant Company is engaged in the production o.f cellulose film. The Central Excise Inspector reported that
the appellant Company was producing in its factory nitro-cellulose
lacquer [falling under tariff Item No. 22(iii)(i) No. 14(iii)(i) of
E
the First Schedule to the Central Excise & Salt Act, 1944, read
with the Finance Act, 1955], without obtaining a central excise
licence as required by the rules and was also removing nitrocellulose lacquer for "internal use" without payment of duty.
The
appellant Company denied that the chemical compound utilised by
it to render plain film moisture-proof was. "nitro-cellulose lacquer"
within the meaning of the Central Excise & Salt Act, 1944.
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The Deputy Superintendent of Central Excise, determined that
the appellant Company was liable to pay, for the period between
March 1, 1955 and September 19, 1962, Rs. 4,88,797-34 as
excise duty on the consumption of nitro-cellulose lacquer produced by the Company.
The Deputy Superintendent issued a
demand notice, but the appellant Company failed to pay the duty.
The Assistant Collector of Customs required the appellant
Company to show cause why pena1ty should not be imposed on it
for failing to obtain a licence for production of nitro-cellulosc
lacquer. !he appella~t Company contended that what was produced by 1t was not mtro-cellulose lacquer.
The Assistant Collector rejected the contention 11nd confirmed the order of asses<-
H
ment and imposed a penalty of Rs. 25 / •.
In appeal to die Collector, the appellant Company raised a
large num~r of contentions-including the following :
6Sup. Cl/70--4
42
(1)
(2)
(3)
SUPREME COURT REPORTS
(1970] 3 S.C.R.
that nitro-cellulose lacquer which is clear as
well as pigmented falls within the purview of
Item 14 of the First Schedule to the Central
Excise & Salt Act, 1944, and that clear and .
• white, or murky and pigmented lacquer is not
subject to duty;
that a certificate of test issued by the Silk Mills
Research Association, Bombay showed that the
nitro-cellulose lacquer content of a sample of
surface-coating compound produced by the
appellant Company was only 4. 7 % and it could
not be considered nitro-cellulose lacquer within
the meaning of the Act; and
that the failure to levy duty on the product
from 1955 to 1962 was proof of the fact that the
Excise Department was itself of the view that the
product was not excisable.
The Collector of Customs consulted the Chemical Examiner
and was of the view that the opinion expressed by the Silk Mills
Research Association, Bombay, was not correct.
In considering
the question about the reason for not levying duty for nearly seven
years, the Collector thought it necessary to give a fresh hearing to
the appellant Company. Additional arguments were advanced
at the second hearing. After considering the arguments advanced
by the appellant Company the Collector wrote a detailed judgment setting out.the "points" on which he held against the claim of
the appellant Company, and expressed the view that the appellant
Company was not right in contending that only that chemical
which is "clear and pigmented" falls within the purview of Item
14 of the First Schedule.
Against the order dismissing the appeal, the appellant Company moved a petition invoking the revisional jurisdiction of the
Central Government under s. 36 of the Central Excise & Salt Act,
1944.
The pe\ition was entertained, but no personal hearing
was given to the appellant Company.
By order oated July 16,
1966, communicated by the Joint Secretary to the Government of
India. Ministry of Finance, the petition was rejected.
The order
read:
"The Government of India have carefully considered
the points made by the applicant ( s), but see no justification for interfering with the order in appeal.
The
revision application is accordingly rejected."
Against the order passed by the Central Government this appeal is
preferred with special leave.
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TRAVANCORE RAYON V, UNION (Shah, /,)
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The question raised before the Collector of Customs was of a
complicated nature and for its proper appreciation required. familiarity with the chemical composition am~ physical properties of
nitro-cellulose lacquer and of the substance produced by the appellant Company.
The Collector in deciding the appeal wrote an
order running into 18 typed pages.
There were before the Collector conflicting opinions of the Chemical Examiner and the $ilk
Mills Research Association, Bombay. The Collector gave . two
personal hearings to the appellant Company.
No personal hearing was given by the Government of India to the appellant Company even though the matter raised complex questions. It is true
that the rules do not require that personal hearing shall be given,
but if in appropriate cases where complex and difficult questions
requiring familiarity with technical problems are raised, personal
hearing is given, it would conduce to better administration and
more satisfactory disposal of the grievances of citizens. The order
does not disclose the name or designation of the authority of the
Government of India who considered "the points made by the
applicants'', and it is impossible to say whether the officer was
familiar with the subject-matter so that he could decide the dispute
without elucidation and merely ori a perusal of the papers.
The
form in which the order was communicated is apparently a printed form.
There is a bare assertion by the Joint Secretary to the
Government of India in his communication that the Government
of India had "carefully considered the points made by the applicant ( s) ".
There is no evidence as to who considered the "points"
and what was considered.
The Central Government is by s.36
invested with the judicial power of the State.
Orders involving
important disputes are brought before the Government.
The
orders made by the Central Government are subject to appeal to
this Court under Art. 136 of the Constitution.
It would be impossible for this Court. exercising jurisdiction under Art. 136, to
decide the dispute without a speaking order of the authority, setting out the nature of the dispute the arguments in support thereof raised by the aggrieved party and reasonably disclosing that the
matter received due consideration by the authority competent to
decide the dispute.
Exercise of the right to appeal to this Conrt
would be futile, if the authority chooses not be disclose the reasons in support of the decision reached by it.
A party who approaches the Government in exercise of a statutory right for adjudication of a dispute is entitled to know at least the official designation of the person who has considered the matt~r, what was considered by him, and the reasons for recording a decision against
him.
To enable the High Court or this Court to exercise its
constitutional powers, not only the decision, but an adequate disclosure of materials justifying an inference that there has been a
judicial consideration of the dispute, by an authority competent in
44
SUPREME COURT REPORTS
[1970) 3 S.C.R.
that behalf in the light of the claim made by the aggrieved party,
is necessary. If the Officer acting on behalf of the Government
chooses to give no reasons, the right of appeal will be devoid of
any substance.
Dr. Seyid Muhammad appearing for the Union of India contended that where the Central Government dismisses the petition,
it is not obliged to give any reasons, for, it must be assumed that
the Government had acceI,>ted every reason given by the Collector,
and by dismissing the petition the Officer acting on behalf of the
Government must be deemed to have incorporated the reasons
given by the Collector in the judgment.
Counsel relies in support of this contention on the decision of this Court in Madhya
Pradesh Industries Ltd. v. Union of India and Others('). In that
case, Bachawat, J., on behalf of himself and Mudholkar, J ., refused to accept the contention that the order passed by the Government of India rejecting a revision application under the Mineral
Concession Rules was liable to be quashed, because it did not give
any reasons. Bachawat, J., observed at p. 477 :
''There is a vi ta! difference between the order of
reversal by the appellate authority in that case for no
reason whatsoever and the order of affirmance by the
revising authority iii the present case.
Having stated
that there was no valid ground for interference, the
revising authority was not bound to give fuller reasons.
It is impossible to say that the impugned order was
arbitrary, or that there was no proper trial of the revision application."
On the other hand, Subba Rao, J., observed at p. 472:
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''The least a tribunal can do is to disclose its mind.
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The compulsion of disclosure guarantees consideration.
The condition to give reasons introduces clarity and
excludes or at any rate minimizes arbitrariness; it gives
satisfaction to the party against whom the order is made:
and it also enables an appellate or supervisory court to
keep the tribunals within bounds.
A reasoned order is
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a desirable condition of judicial dispos·a1.
"The conception of exercise of revisional jurisdiction and the manner of disposal provided in r. 55 of the
Rules are indicative of the scope and nature. of the
Government's jurisdiction., If tribunals can make orders
without giving reasons, the said power in the nands of
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unscrupulous or dishonest officers may tum out to be a
(I) [1966] 1 S.C.R. 466.
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TRAVANCORE RAYON V, UNION (Shah, J,)
weapon for abuse of power.
But if reasons for an order
are given, it will be an effective restraint ?n such abuse,
as the orders, if it discloses extraneous or melevant considerations, will be subject to judicial scrutiny and correction. A speaking order will at its best be a reasonable and at its worst be at least a plausible one.
The
public should not be deprived of this only safeguard.
...... The habit of mind of an executive officer so
formed cannot be expected to change from function to
function or from act to act. So it is essential that some
restrictions shall be imposed on tribunals in the matter of
passing orders affecting the rights of parties; and the
least they should do is to give reasons for their orders .
. . . . . . Ordinarily, the appellate or revisional tribunal
shall give its own reasons succinctly, but in a case of
affirmance where the original tribunal gives adequate
reasons, the appellate tribunal may dismiss the appeal or
the revision, as the case may be, agreeing with those
reasons.
What is essential is_ that reasons shall be given
by an appellate or revisional tribunal expressly or by
reference to those given by the original tribunal.
The
nature and the elaboration of the reasons necessarily
depend upon the facts of each case."
45
In a later judg!14lnt Bhagat Raja v. The Union of India an.d
Others('), the Constitution Bench of this Court in effect ovetruled the judgment of the majority in Madhya Pradesh Industries
Ltd's case(').
The Court held that the decisions of tribunals in
India are subject to the supervisory powers of the High Court
under Art. 227 of the Constitution and of appel!ate powers of this
Court under Art. 136. The High Court and this Court would be
placed under a great disadvantage if no reasons are given and the
revision is dismissed by the _use of the single word 'rejected' or
'dismissed'.
The Court in that case held that the order of the
Central Government in appeal, did not set out any reasons of its
own and on that account set aside that order.
In our view, the·
majority judgment of this Court in Madhya Pradesh Industries
Ltd's case(') has been overruled by this Court in Bhagat Raja's
case(').
In later decisions of this Court it was held that where the Central Government exercising power in revision gives no reasons, the
order will be regarded as void : see State of Madhya Pradesh and
Another v. Seth Narsinghdas· Jankldas Mehta;('); The State of
(I) (1967] 3. S.C.R. 302.
(2) [1966] I S.C.R. 46
(J) C.A. No. 621 of 1966 decided on April 29, 1969.
46
SUPREME COURT REPORTS
[1970] 3 s.c.R.
Gujarat v. Patel Raghav Natha and Others('); and Prag Das
Umar Vaishya v. The Union of India and Others(').
In this case the communication from the Central Government
gave no reasons in support of the order : the appellant Company
is merely intimated thereby that the Government of India did not see
any reasons to interfere "with the order in appeal". The commun:cation does not disclose the "points" which were considered, and the
reasons for rejecting them.
This is a totally unsatisfactory method
of disposal of a case in exercise of the judicial power vested in the
Central Government Necessity to give sufficient tfasons which
disclose proper appreciation of the problem to be solved, and the
mental process by which the conclusion is reached, in cases where
a non-judicial authority exercises judicial functiol)S, is obvious.
When judicial power is exercised by an authority normally performing executive or administrative functions, this Court would
require to be satisfied that the decision has been reached after due
consideration of the merits of the dispute, uninfluenced by
extraneous considerations of policy or expediency.
The Court
insists upon disclosure of reasons in support of the order on two
grounds : one, that the party aggrieved in a proceeding before· the
High Court or this Court has the opportunity to demonstrate that
the reasons which persuaded the authority to reject his case were
erroneous : the other, that the obligation to record reasons
operates as a deterrent against possible arbitrary action by the
executive authority invested with the judicial power.
The appeal is allowed ·and the order passed by the Central
Government is set aside.
The case is remanded to the Central
Government with the direction that it be disposed of according
to law.
In this case, we are of the view, having regard to ·the
complicated and technical questions involved, that the Central
Government may be well-advised to give an oral hearing to the
appellant Company. The Union of India will pay the costs of
this appeal to the appellant Company.
Y.P.
Appeal allowed.
(1) C.A. No, 723of1965 decided on Aprll 21; 1969.
(2) C.A. No. 687 of 1965 decided on A"·""'' 17, 1967,
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