ARBITRATION BY PRINCIPAL AGAINST AGENT: Where an “Agent” misconducts or neglects in his duties towards the “Principal”, and where there exist any Arbitration Agreement between the Principal and the Agent, Arbitration proceedings may be filed for the rendition of Accounts, within 3 years (unless otherwise agreed) from the date, when the principal becomes aware of the alleged misconduct or neglect of the “Agent”, having regard to Article 4 of the Indian Limitation Act, 1963
1. The legal process in the Court of law is initiated by the presentation / institution of a Case, whether in the form of a Arbitration proceedings, Petition, Application etc, in the competent court of jurisdiction.
2. Every litigation presupposes the accrual of “cause of action”, that is to say, reason for initiating legal action in the Court of law.
3. Accrual of cause of action implies and presupposes infringement of litigant’s some statutory right / fundamental right / equitable right / contractual right / or any other right recognized under the statutes or customs.
4. In order to commence a legal action, the person must have some real grievance, which is the foundation of any legal action. For having right to move the court of law, the right sought to be enforced should have already come into existence, and there should be an infringement of it, or at least a serious and imminent threat exist of its infringement.
5. We are living in times where our Courts are over-burdened & over-stretched with pending cases; and ordinarily, the cases filed in the Court of law may take years to be finally adjudicated. In this scenario, the resolution of legal disputes by the means of Arbitration may play a significant role.
6. Arbitration is an adjudicatory process wherein the parties agree to present their dispute to a neutral third party for a decision, instead of litigating in the court of law; and Orders passed by the Arbitrator are enforceable like a decree of the Court. However, for certain reliefs, during the course of Arbitration proceedings, the Claimant may be required to move the competent Court of law, like for example, so as to obtain any Interim relief of injunction etc. against the Respondent, or, for the appointment of Arbitrators, etc.
7. Arbitration Agreement: A valid Arbitration proceeding must be precede by a written Arbitration Agreement. In today’s time, almost every commercial contract, Sale, Purchase, Service transactions contain Arbitration Clause in their contracts, Invoices. The Clause such as “The dispute, if any arises in respect of this transaction shall be resolved through the medium of Arbitration only; and shall be referred to (Full Name and address of the Arbitrator / Arbitral Institution); and Parties would be bound by the decision of the said Arbitrator / Arbitral Institution” in the Contracts / Invoices may be sufficient to bind parties to Arbitration proceedings. Communication through electronic means is also regarded as “Arbitration agreement in writing”. The Arbitration Clause may extensively provide for number of Arbitrators, determination of rules of procedure, place of arbitration, Language, Rules for filing Statements of claim and defence, Rules for Hearings and written proceedings, etc.
8. All Arbitration proceedings are governed and regulated by Arbitration & Conciliation Act, 1996. However, at the same time, Section 2(4) of the said Act gives sanctity to any other enactment / laws which provides for compulsory Arbitration, and prescribe rules for such Arbitration proceedings.
9. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by the means of Arbitration.
10. The well recognized examples of non-arbitrable disputes are : (i) disputes relating to rights and liabilities which gives rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes; and (vii) Immovable property disputes in which title to the property is in dispute.
11. It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals.
12. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions, such as determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property.
13. Generally and traditionally all disputes relating to rights in personam are considered to be amenable to Arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and tribunals.
14. The relief of Specific performance of contracts can be granted in Arbitration proceedings.
15. Accrual of “cause of action” to invoke Arbitration Proceedings: The cause of action arises on the date on which the aggrieved has a right to move the court of law or to adopt any other legal proceeding, for redressal of his grievance, although the aggrieved person may choose not to move the court of law or to adopt any legal proceeding, immediately, and he may prefer to redress his grievance by resorting to any other legal means.
16. Limitation period: The Arbitration must be invoked within the period prescribed under the Arbitration Agreement, or if it is not provided, then within such time as applicable article contained in Schedule appended to Limitation Act, 1963. In contractual disputes, the limitation is generally three years from the date of accrual of cause of action. If we examine Section 2(4) of the Act, we will find that whereas Section 43 of the Act expressly provides that Limitation Act is applicable with reference to adopting of Arbitration proceedings, nevertheless S.43 is subject to the provisions of Section 2(4), wherein Section 2(4) recognizes the sanctity of the provisions of any other enactment and restricts the application of Section 43 to that enactment.
17. Commencement of Arbitration proceedings: Arbitration proceeding commence when a Notice is given by the aggrieved party (u/s 21 of the Act), to the other party (Respondent), informing that whereas “disputes” have arisen, Arbitration Clause is invoked.
18. Parties to the Arbitration: The Parties to the Arbitration Agreement would be the parties to the Arbitration proceedings. The Parties would also include those parties who are assignee of main contract (under which Arbitration agreement was entered into).
19. Settlement of dispute by way of Mediation Conciliation: Arbitrator / Arbitral Tribunal, during the course of Arbitration proceedings are empowered to persuade and encourage parties before it, to settle their dispute by way of Mediation / Conciliation etc. [Section.30]
20. Powers of Arbitral Tribunal to grant Interim Reliefs: Section 17 of the Arbitration Act empowers the Arbitrators to grant Interim reliefs; and the Interim Orders passed by the Arbitrators are regarded as Orders of the Court and are enforceable in the same manner as if it were an Order of the Court.
21. Application to Appoint Arbitrators: Where the Parties to the Arbitration Agreement fails to reach any consensus as to the appointment of the Sole Arbitrator or more than one Arbitrators, any one of the Party may approach the concerned High Court by making Application u/s 11 of the Act, for the appointment of Arbitrator.
22. Statement of Claim and Defense by rival parties (S.23): The Parties to the Proceedings are obliged to file their Statement of Claim and Defense, within such time as directed by the Arbitrator. The claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defense in respect of these particulars. The parties are also required to submit all documents they consider to be relevant or may add a reference to the documents.
23. Hearing and Written Proceedings (S.24): Depending upon the Arbitration Agreement between the parties providing Rules for hearing of the Arbitration proceedings , or the Arbitral Tribunal Rules, the Arbitrator would conduct the hearing. Experts may be appointed by Arbitrators / Arbitral Tribunal during Arbitration proceedings (S.26). The Arbitrators may take the assistance of the Court in taking evidence of the witnesses and parties before it (S.27). The Arbitrators should secure equal treatment of parties before it. (S.18). Section 24 of the Act provides for expeditious hearing; and Section 25 provides for discretion of the Arbitrator to disallow the defense of the Respondent if the defense is not filed in time provided for.
24. Challenge to the Award / decision (S.34). The decision of the Arbitrator may be challenged in the Court of law. After the Amendments in the law in the year 2015, now unless the Court by its Order stays the operation of Award, the Award can be executed like a decree of the Court. The main grounds to challenge the Award are – (a) the arbitration agreement is not valid under the law; (b) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; (c) the arbitral award deals with a dispute not provided under the Arbitration Agreement; (d) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or was not in accordance with Part I of the Act; (e) the arbitral procedure was not in accordance with the agreement of the parties, or was not in accordance with Part I of the Act; (f) the Award is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract; (g) the Award is against the public policy of India, that is to say, if it is contrary to: (i) fundamental policy of Indian law; or (ii) the interest of India; or (iii) justice or morality; or (iv) if it is patently illegal. An Award would be said to be in conflict with the public policy of India, only if, (i) the making of the award was induced or affected by fraud or corruption; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
25. Arbitration may be commenced in Suit proceedings: By the mandate of Section 89 of CPC, 1908, in the first hearing of the Suit, if it appears to the Court that there exist elements of settlement which may be acceptable to the parties, the Court should formulate the terms of settlement and give them to the parties for their observations. After receiving the observations of the parties, the Court may, if necessary, reformulate the terms of a possible settlement and having regard to the nature of dispute between the parties, shall refer the same for (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat; or (d) mediation. In Suits involving family disputes, the O.32 R.3 of CPC, 1908, casts an express responsibility upon the Court to see that parties come for amicable settlement of their dispute.
26. One of the main advantages of resorting to Arbitration, is to have speedy and inexpensive judicial redressal of dispute between the parties. The procedure prescribed is simple unlike the Code of Civil procedure, 1908. The provisions of Evidence Act are not applicable although the principles employed therein may be invoked in desired circumstances. Intervention of Civil Courts may be obtained in appropriate circumstances
27. The Award passed by the Arbitrators are enforceable like a decree of the Court.
28. Major Amendments in Arbitration Act: Since the passing of the Arbitration & Conciliation Act of 1996, many difficulties and shortcomings came to be noticed in the said Act; and with a view to overcome those shortcomings and difficulties, and with a view to facilitate quick enforcement of contracts, easy recovery of monetary claims, and award of just compensation for damages suffered, and reduce the pendency of cases in Courts and hasten the process of dispute resolution through Arbitration, and to encourage and strengthen the alternate medium of dispute resolution, and to encourage investment and economic activities, extensive Amendments have been made in the present Arbitration & Conciliation ACT, 1996.
29. The amended provisions would be applicable to Arbitration proceedings which have commenced, in accordance with the provisions of section 21 of the Act, on or after 23.10.2015, unless the parties otherwise agree to application of amended provisions.
The important Amendments are –
1. The definition of “Court” contained in Section 2(1)(e) is amended whereby High Courts would have the jurisdiction to entertain Application arising from International Commercial Arbitration, even if the place of Arbitration is outside India.
2. Section 7 of the Act which provides for written Arbitration Agreement, now states that communication through electronic means would be regarded as “arbitration agreement in writing”.
3. Section 8 of the Act is amended whereby if an application is made by any party or by any person claiming through or under him, to judicial authority to refer parties to arbitration, the judicial authority is obliged to refer the parties to arbitration, unless the judicial authority prima facie finds that no valid arbitration agreement exists. Section 8 is further amended whereby the party applying for reference to Arbitration is not obliged to produce the original arbitration agreement or duly certified copy of the same if the same is in the possession of the adversary; and the party applying for reference to Arbitration may seek direction from the Court to direct the adversary to produce the original arbitration agreement or duly certified copy of it.
4. Section 9 of the Act is amended whereby if any Order of Interim measure of protection has been passed by the Court prior to the commencement of the arbitration proceedings, then, the arbitration proceedings must commence within a period of 90 days from the date of such order or at such further time as the court may direct. Section 9 now places the position of Arbitrator on the same pedestal as that of the Court in so far granting Interim measure of protection is concerned. Section 9 says that once the arbitral tribunal has been constituted, court would not entertain any Application for interim measure, unless the court finds that having regard to circumstances, the remedy provided u/s 17 of the Act (Powers of the Arbitral Tribunal to grant Interim Reliefs) may not be efficacious; and accordingly Section 17 is amended whereby it is deemed that Interim Orders passed by the Arbitral tribunal are regarded as Orders of the Court for all purposes and are enforceable in the same manner as if it were an Order of the Court.
5. Section 11 is substantially amended whereby the authority to appoint Arbitrator is now vested in the Supreme Court, and in the High Courts, instead of respective Chief Justices, as it was before the amendments. Further, in this jurisdiction, the scope of inquiry for the Supreme Court and High Courts is confined to the examination of the existence of an arbitration agreement between the parties therein. Now it is also provided that Application for appointment of Arbitrator must be disposed of as expeditiously as possible and effort should be made by Supreme Court and High Courts to dispose of the said Application within a period of 60 days from the date of service of notice to the opposite party. It is also provided that no appeal, including Letters Patent Appeal, would lie against the decision of the Supreme Court and High Courts.
6. Section 12 of the Act is amended whereby it is provided that when an Arbitrator is approached for his possible appointment as an Arbitrator, he must disclose in writing (a) the circumstances, if any, which are likely to give rise to justifiable doubts regarding his independence or impartiality; or (b) grounds which may affect his ability to complete the arbitration within 12 months. The amendments have specified an elaborate list of grounds in Fifth Schedule which would guide in determining whether circumstances exist which gives rise to justifiable doubts as to the independence or impartiality of the arbitrator, and if any of these grounds apply, the arbitrator is required to make disclosure in writing, in a format specified in Sixth schedule. Section 12 further provides that a person would be ineligible to be appointed as an Arbitrator if he happens to have relationship with the parties or the Counsel therein or with the subject matter of the dispute and he falling in any of the categories specified in the Seventh Schedule. Parties can however waive such “ineligibility” by express agreement in writing after the disputes have arisen.
7. Section 17 of the Act is substantially amended whereby it is deemed that Interim Orders passed by the Arbitral tribunal are regarded as Orders of the Court for all purposes and are enforceable in the same manner as if it were an Order of the Court. Further, Section 17 lists the nature of Interim Reliefs which can be granted by the Arbitral Tribunal.
8. Section 23 of the Act is amended whereby now it is possible for the Respondent adversary to put up a Counter Claim or may plead set off, if the same falls within the scope of Arbitration Agreement.
9. Section 24 of the Act is amended whereby now it s further provided that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and would not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.
10. Section 25 of the Act is amended whereby now it is provided that in case if there was a default on the part of Respondent to file his statement of defense within the time agreed upon or within the time granted by the Arbitral Tribunal, the Arbitral Tribunal would have the discretion to treat the right of the Respondent to file such statement of defense as being forfeited.
11. Section 28 of the Act is amended whereby now it is further provided that the arbitral tribunal whilst deciding and making an award, must take into consideration the terms of the contract and trade usages applicable to the transaction.
12. Section 29A is added wherein now it is provided that Arbitral tribunal must make an Award within 12 months from the date the arbitral tribunal was duly constituted. However, the parties may by consent extend the aforesaid period by 6 months. And if the award is not made within such period of 18 months, then unless, the court extends the period, prior to or after expiry of the aforesaid period on an application by a party, the mandate of arbitrator would stands terminated. Further, as provided in amended section 24, the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.
13. Section 29B is further added wherein a concept of Fast track procedure is contemplated. It provides that the parties may, prior to or at the time of appointment of the arbitral tribunal, agree to a fast track procedure, preferably a sole arbitrator chosen by the parties therein, who shall decide the dispute on basis of written pleadings, documents and submissions filed by the parties without any oral hearing. However, oral hearing may be held if all parties request or if the Arbitral tribunal considers it necessary. The award should be made in this procedure within a period of 6 months from the date the arbitral tribunal was duly constituted.
14. Section 31 of the Act is amended whereby now it is provided that the amount awarded by the arbitral tribunal would carry higher interest by 2% p.a. more than the current rate of interest, from the date of the award to the date of payment, unless otherwise specified by the arbitral tribunal. The expression “current rate of interest” shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978.
15. Section 31A is inserted wherein comprehensive provisions are made touching upon every attribute of the costs.
16. Section 34 of the Act is amended whereby now it is clarified that an Award would be said to be in conflict with the public policy of India, only if, (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. It is further clarified that, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. It is further provided that an arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence. It is further provided that an application u/s 34 shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the Applicant endorsing compliance with the said requirement. It is further provided that Application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
17. Section 36 of the Act is amended whereby now it is provided that where an Application u/s 34 is filed challenging the Award, the filing of such an application by itself shall not render that award unenforceable. The party has to make a separate Application in that behalf; and upon filing of such Application, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award and for reasons to be recorded in writing.
18. In the backdrop of the provision of new section, that is section 11(14), a Fourth Schedule is inserted which prescribes a Model Fee which may be charged by Arbitral Tribunal, subject to Rules framed by the respective High Courts in that behalf.
19. Further, whereas a new legislation has come into force, that is, THE COMMERCIAL COURTS ACT, 2015; wherein Commercial Courts / Divisions are to be constituted in the existing district Courts and in High Courts; and wherein disputes arising from specified commercial dealings involving claim of Rs.3.00 lakhs or above would be adjudicated by these newly constituted commercial Courts / Divisions.
20. The broad framework of this newly constituted jurisdiction is where certain disputes of commercial nature, involving claim of Rs.3.00 Lakhs or above, would be adjudicated under this jurisdiction. The commercial disputes with the State Govts / Central Govts / any other instrumentality of the State are also included in this regime.
21. Among other things, the outstanding feature of adjudication by these newly constituted Commercial Courts / Division is that, the powers of these Courts to adjudicate commercial disputes before them in a Summary fashion, without formal leading of evidences, and also provides for the time bound disposal of these cases.
22. And these newly constituted Commercial Courts / Division would also have the jurisdiction to adjudicate upon Arbitration Applications which arises in the backdrop of Arbitration proceedings, but of course the Arbitration proceedings must be relating to commercial dispute and involves a claim of Rs.3.00 Lakhs or above.
23. Coming to deliverance and dispensation of justice, the Courts / Tribunals / Arbitrators, in the exercise of adjudicating and declaring rights and obligation of respective parties which are before it, formulate its decision by employing laws of the land, the principle of equity, and customs & usages.
24. The principles of natural justice form the corner stone of every judicial procedure and decision and it postulate that both the litigating parties must have equal and sufficient opportunity to deal with the allegations made against them.
25. A Judicial decision must be a self contained document from which it should appear as to what the facts of the case were and what was the controversy, which was tried to be settled by the Court / Tribunal.
26. The process of reasoning by which Court came to a particular conclusion and decreed or dismissed the case, should clearly be reflected in the decision. 27. The decision should be on the basis of evidence on record and in accordance with law.
28. The fate of Justice is tied to the thread of reason: Reasoned decisions are inescapable in the entire scheme of administration of Justice, as explained decision breathes life into court order. Reasons disclose how the mind was applied to the subject matter and reveals a rational nexus between the facts considered and conclusions reached.
Recording of reasons is also an assurance that the judicial authority has applied its mind to the facts on record. The reasons employed not only be logical / conceivable but which will also deal with the substantial points which have been raised.
An unreasoned Order presupposes the non consideration of evidences and submissions on record made by the Party therein and the opportunity of affording due hearing would be rendered meaningless and empty formality and thus in essence occasion the frustration of principles of natural justice for the prejudiced party.
The giving of satisfactory reasons is required by the ordinary man’s sense of justice. Reasoned decisions are vital for the purpose of showing that one is receiving justice.
29. Having said all this, and to say that reasons must be given for decisions, what we really expect from the judicial authority.
Reasons are appreciation of such facts and evidences which are on record, and from which the judicial authorities are entitled to draw inferences and results.
Then comes the question, what is appreciation of facts and evidences.
Appreciation of facts and evidences is, drawing natural and logical inferences, drawing natural and logical results, which necessarily flow from those facts and evidences [the facts would mean those facts which are self evident or are admitted, or facts which are reasonably proved, disproved or not proved].
Appreciation of facts and evidence is an exercise wherein the proved existence of certain facts, provokes or persuades the decision maker to reach a certain conclusion.
And to put it further straight, Reasons are those statements, whereby the decision maker will tell you, WHY your submissions to claim certain reliefs, or WHY your submissions to deny reliefs claimed, are meritorious or if are meritless; or to say, the decision maker will tell you, WHY you are entitled to the reliefs or WHY you are not entitled to the reliefs, claimed or prayed for.
30. I am hasten to add here the notable observations of the Apex court in the case of State Of Uttaranchal Versus Sunil Kumar Vaish .
Para 18: Judicial determination has to be seen as an outcome of a reasoned process of adjudication initiated and documented by a party based, on mainly events which happened in the past. Courts' clear reasoning and analysis are basic requirements in a judicial determination when parties demand it so that they can administer justice justly and correctly, in relation to the findings on law and facts. Judicial decision must be perceived by the parties and by the society at large, as being the result of a correct and proper application of legal rules, proper evaluation of the evidence adduced and application of legal procedure. The parties should be convinced that their case has been properly considered and decided.
Para 19: Judicial decisions must in principle be reasoned and the quality of a judicial decision depends principally on the quality of its reasoning. Proper reasoning is an imperative necessity which should not be sacrificed for expediency. The statement of reasons not only makes the decision easier for the parties to understand and many a times such decisions would be accepted with respect. The requirement of providing reasons obliges the judge to respond to the parties’ submissions and to specify the points that justify the decision and make it lawful and it enables the society to understand the functioning of the judicial system and it also enhances the faith and confidence of the people in the judicial system.
No adverse Order if No adverse findings
1. It is typical for Courts and Judges, whilst passing Orders and decisions, (to commit basic and elementary mistakes, and most of the times consciously) outright overlooking some of the very material facts and evidences / submissions / Judgments cited, by the losing Party; and drive themselves to irrelevant consideration of facts.
2. Before discussing the aforesaid expression “No adverse Order if No adverse findings”, let us first broadly look at the decision making process.
3. Broadly, the decision making is a process wherein, having regard to the Reliefs claimed, the presiding Judge – (a) examine the (legality) of facts alleged, (b) examine the (legality) of stand of the adversary, (c) examine the materials and the evidences which are placed before him in support of the facts alleged by both the sides; (d) would record his reasoned finding (prima facie or conclusive) as to the existence or the non existence of the facts alleged.
4. The process of recording finding of facts is, having regard to the applicable laws and precedents, testing of facts and evidences, and drawing natural, logical and legal inferences and outcomes, which necessarily flows from those facts and evidences [the facts would mean those facts which are self evident or are admitted, or facts which are reasonably proved, disproved or not proved]. Appreciation of facts and evidence is also an exercise wherein the existence of certain facts and evidence, provokes or persuades the decision maker to reach a certain conclusion.
5. Once findings as to facts are arrived at, the decision follows, either granting the reliefs claimed for, or the denial of.
6. However, what is witnessed in many Orders of the Courts is – either (a) In the process of finding of facts, findings on significant material fact are not recorded at all, by overlooking all the materials and evidences and submissions of the losing party, which are placed on record; the evidences and submissions, which had a direct bearing on the decision of the Court; or (b) whilst recording finding as to material fact, some of the material facts agitated / evidences / submissions / Judgments cited are not dealt with. The situation (a) mainly occurs in discretionary jurisdiction Orders/ Interim /Ad-Interim Orders / and Orders passed at Appellate stage; and situation (b) occurs in Orders passed in original proceedings. [Material facts would mean such facts which naturally arises in the nature of legal proceeding and nature of reliefs claimed]
7. In wealth of judgments, the Apex Court and High Courts have insisted upon recording of reasons whilst arriving at findings of facts and law. In a case (AIR 2011 SCW 5486) before it, the Apex Court have observed to say that Judicial decisions must in principle be reasoned and the quality of a judicial decision depends principally on the quality of its reasoning, on law and facts.
8. Therefore, IF it is contempt of the Court, if reasoned findings are not recorded, then it is regressive and aggravated contempt, to not to record findings at all.
9. Can we really compel the Courts to record finding of fact in their decisions? At least the Apex Court in a case before it [(2006) 9 SCC 222], have said Yes. The Apex Court have held that before subjecting a party to the adverse decision, adverse findings must be recorded against it.
The Apex Court in the aforesaid case, have set aside the Order of the High Court on the grounds that, the High Court, before directing the Defendants to “clear the encroachment”, should have recorded the findings that “Defendants had entered upon the suit land and put up construction subsequent to the undertaking given to the trial court”.
It was a case where the Defendant in a Suit gave undertaking to the trial Court that Defendants will not interfere with the possession of the Plaintiff’s land. The Suit was disposed of on the basis of above undertaking. Thereafter, the Plaintiff moved Execution Application under O.21 R.32 before the trial Court alleging that Defendants have constructed some structure on the Suit land. The trial Court dismissed said Execution Application. The Plaintiff challenged trial Court’s Order before High Court. The High Court directed the Defendants to clear the encroachment effected by them on the suit land. In this backdrop, the Apex Court set aside the Order of the High Court on the grounds that, the High Court, before directing the Defendants to “clear the encroachment”, should have recorded the findings that “Defendants had entered upon the suit land and put up construction subsequent to the undertaking given to the trial court”.
10. The Illustration: To illustrate the proposition of “Findings”, agitated hereinabove, therefore, in a Writ Petition, the High Court, before refusing to exercise its writ jurisdiction on the grounds of availability of alternate remedy, and depending upon the nature of facts alleged, must record a prima facie finding that, having regard to the facts on record, (a) fundamental rights of the Petitioners are not infringed; and / or (b) principles of natural justice have not been infringed; or (c) the Authority / Subordinate court / Tribunals have acted within their respective jurisdiction. This is because, there are ample judgments of Apex Court, wherein it is held that, on the existence of any of the aforesaid grounds in the case, notwithstanding availability of alternative remedy, the High Courts must exercise their Writ Jurisdiction under Article 226 of the Constitution of India. [AIR 1970 SC 645; AIR 2010 SCW 7184; AIR 1999 SC 22; AIR 2012 SCW 616; AIR 2003 SC 2120; AIR 2005 SC 3936; AIR 1958 SC 86 (Constitution Bench Judg); (2011) 5 SCC 697; AIR 1969 SC 556; (2015) 6 All MR 35 (BHC)]
Similarly, in an Application for Anticipatory Bail, the Session Judge / High Court, before rejecting Anticipatory Bail must record a prima facie finding that, having regard to the facts on record, (a) the Applicant is not cooperating in the investigation; (b) custodial interrogation of the Accused is essential; or (c) There is a apprehension of tampering of the witness by the Applicant; or (d) There is a possibility of the Applicant to flee from justice; or that there is a possibility of the Accused's likelihood to repeat similar or the other offences.
11. The necessity of recording of finding on material facts, would take away the arbitrary and whimsical discretion of the Courts, for, they have to record findings, based on facts and evidences which are explicitly placed on record. And when the facts / evidence are seen large, the Courts may abstain from recording illogical findings, which are contrary to facts / evidence placed on record, and seen large.
This is how the captioned proposition should come into play, that is, “No adverse Order if No adverse findings”.
The concentrated view which emerges runs to the effect that every decision / Order of the court, be interim or final, must be based on findings of facts recorded by it, whether prima facie or conclusive, on such facts which naturally arises in the nature of legal proceeding and nature of reliefs claimed.
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