242, this Court made pertinent observation in the context:
“In an article on Writing Judgments, Justice Michael Kirby
(1990) 64 Austr L.J p.691) of Australia, has approached the
problem from the point of the litigant, the legal profession, the
subordinate Courts/tribunals, the brother Judges and the Judge’s
own conscience. To the litigant, the duty of the Judge is to
uphold his own integrity and let the losing party know why he
lost the case. The legal profession is entitled to have it
demonstrated that the Judge had the correct principles in mind,
had properly applied them and is entitled to examine the body
of the judgment for the learning and precedent that they provide
and for the reassurance of the quality of the judiciary which is
still the centre-piece of our administration of justice. It does not
take long for the profession to come to know, including through
-
the written pages of published judgments, the lazy Judge, the
Judge prone to errors of fact, etc. The reputational
considerations are important for the exercise of appellate rights,
for the Judge’s own self discipline, for attempts at improvement
and the maintenance of the integrity and quality of our
judiciary. From the point of view of other Judges, the benefit
that accrues to the lower hierarchy of Judges and tribunals is of
utmost importance. Justice Asprey of Australia has even said in
Petit v. Dankley (1971) (1) NSWLR 376 (CA) that the failure of
a Court to give reasons is an encroachment upon the right of
appeal given to a litigant.
It was finally stated:
“In our view, the satisfaction which a reasoned judgment
gives to the losing party or his lawyer is the test of a good
judgment. Disposal of cases is no doubt important but quality of
the judgment is equally, if not more, important. There is no
point in shifting the burden to the higher Court either to support
the judgment by reasons or to consider the evidence or law for
the first time to see if the judgment needs a reversal.
In that case, the order of dismissal of the writ petition by
the High Court was affirmed by us but the task fell on the
Supreme Court, to inform the appellant why it had lost the case
in the High Court.”
11. In the present case, we have avoided to do this exercise and have not
gone into the merits of the case to find out whether the conclusion of the
High Court is correct or not, as the counsel for both the parties have agreed
for remand of the matter.
12. It is no where suggested by us that the judgment should be too
lengthy or prolix and disproportionate to the issue involved. However, it is
to be borne in mind that the principal objective in giving judgment is to
make an effective, practical and workable decision. The court resolves
conflict by determining the merits of conflicting cases, and by choosing
between notions of justice, convenience, public policy, morality, analogy,
and takes into account the opinions of other courts or writers (Precedents).
Since the Court is to come to a workable decision, its reasoning and
conclusion must be practical, suit the facts as found and provide and
effective, workable remedy to the winner.
13. We are of the opinion that while recording the decision with clarity,
the Court is also supposed to record sufficient reasons in taking a particular
decision or arriving at a particular conclusion. The reasons should be such
that they demonstrate that the decision has been arrived at on a objective
consideration.
14. When we talk of giving “reasons” in support of a judgment, what is
meant by “reasons”? In the context of legal decision making, the focus is to
what makes something a legal valid reason. Thus, “reason would mean a
justifying reason, or more simply a justification for a decision is a
consideration, in a non-arbitrary ways in favour of making or accepting that
-
decision. If there is no justification in support of a decision, such a decision
is without any reason or justifying reason.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1875/2013
(Arising out of Special Leave Petition (Crl.) No. 2509/2012)
M/s. Shree Mahavir Carbon Ltd.
Versus
Om Prakash Jalan (Financer) & Anr.
Dated:October 28, 2013
Citation:(2016) 1 SCC(Cri); (2016) 1 SCC
2. The appellant-company has filed a complaint registered as ICC
No.62/2008 under Sections 420/406/468/471, Indian Penal Code against the
respondent herein and two others. After recording preliminary evidence, the
learned Judicial Magistrate First Class (JMFC), Salipur, Orissa took
cognizance of the aforesaid offence and issued summons to the accused
persons including the respondents. On receiving the summons, the
respondents filed applications under Section 482 of the Code of Criminal -
Procedure with a prayer that orders dated 9.6.2008 by the learned JMFC
taking cognizance of the complaint be quashed. It was pleaded that the
complaint was with regard to rendition of accounts maintained by the
accused persons in respect of business between the complainant and the
accused persons and therefore the dispute was of civil nature. The High
Court has allowed the said application thereby setting aside orders taking
cognizance of the offence. It is this order which is challenged by the
appellant-complainant in these proceedings.
3. The impugned order is two page order. After taking note of facts in
one paragraph, the High Court has allowed the application and quashed the
order taking cognizance of the offence and the discussion leading to this
judgment is contained in the following paragraph:
“On perusal of the nature of allegations made in the complaint
petition and the statements given by the complainant and the
witnesses, it is clearly disclosed that the dispute is civil in
nature relating to settlement of the accounts between the parties
and no offence is made out.”
4. Questioning the rationality of the aforesaid order, Mr. Ganguli, the
learned senior counsel appearing for the appellant, took us through the
various paragraphs of the complaint on the basis of which he made an
attempt to demonstrate that it was not simply a civil dispute pertaining to -
settlement of accounts between the parties. He also argued that the High
Court had allowed petition filed by the respondent under Section 482,Cr.P.C.
without giving any reason inasmuch as the impugned judgment hardly
contained any discussion for arriving at the conclusion that the dispute in
question was civil in nature. Learned senior counsel, who appeared for the
respondent, though tried to argue that conclusion of the High Court that
dispute was of civil nature, he candidly concededly that the impugned
judgment does not disclose as to how this finding was arrived at and that it
was a non-speaking order. He, thus, submitted that instead of this Court
examining the issue, the matter be relegated back to the High Court for
hearing afresh. Mr. Ganguly also accepted this suggestion of Mr. Giri.
Accordingly, we set aside the impugned judgment and remand the case back
to the High Court to decide the same with direction to hear afresh the
petition filed by the respondent under Section 482 of the Cr.P.C. and decide
it on merits without being influenced by the earlier view taken in the
impugned order dated 16.1.2012.
5. Before we part with, we would like to observe that this case
necessitates making certain comments on the importance of rationale legal
reasoning in support of judicial orders. From the extracted portion, which is
the only discussion on the merits of the matter, it can clearly be discerned -
that what is stated is the conclusion and no reasons are given by the High
Court for holding that dispute between the parties is civil in nature. The
complainant in its complaint had made various specific allegations of
cheating, siphoning of funds and falsification of accounts etc. In the
complaint filed by the appellant, the appellant averred that it is engaged in
the business of manufacturing and sale of low ash phos metallurgical coke.
The appellant entered into a tripartite agreement dated 08.04.2003 with Om
Prakash Jalan respondent No.1 herein and Mr. Rajeev MaheshwariRespondent
No.3 herein. In this agreement Respondent Nos.1 and 3 agreed
to provide sufficient funds for expansion of the coke oven plant owned by
the appellant and in consideration thereof the respondents were to be allotted
70% of the existing shares of the appellant company while 30% of its shares
were to be retained by the existing shareholders. It was also agreed that the
Board of Directors of the appellant Company would be reconstituted with
three directors consisting of one nominee of the appellant company, and one
nominee each from the respondent companies. Respondent No.1 was to
become the Managing Director of the Company. It was further agreed
between the parties that while the respondent would bring in the additional
working capital for operation and expansion of the plant but one of the -
contracting parties shall be entitled to withdraw any profits till such time
there is enough working capital in the company.
6. It was further agreed that the profit and loss as earned for the new
expansion would be shared in the same ratio till 31st March 2004 and
thereafter on the total plant would also be shared in the same ratio. Pursuant
to the said agreement the control and management of the appellant company
and its Coke Oven Plant was virtually taken over by the respondents while
they remained responsible to both the Company and its existing shareholders
who have been running the business since the inception of the company till
the execution of the tripartite agreement.
7. As per the allegation in the complaint, no sooner the respondents
assumed control over the business of the appellant company, the respondents
started indulging in large scale fraudulent transactions for and on behalf of
the company, subjecting the appellant company to great loss and
consequences and also foisted civil and criminal liabilities on the company
as well as its Directors and shareholders. Large amount of money from the
appellant company’s account was allegedly siphoned out in favour of third
parties without the appellant company having any transaction with them.
Large amounts were also allegedly deposited in the appellant company’s
account in cash purportedly received by them from third parties, thus -
making the appellant company, its directors and shareholders liable for
violation of laws and commission of crime. It was also alleged that large
sums of money was also siphoned out from bank accounts of the appellant
company and paid to third parties without the company entering into any
transaction with them.
8. In the complaint instances of siphoning of the funds by the accused
persons to its own company have been given. On this basis, the
appellant/complainant sought to make a complaint that the aforesaid acts of
the accused persons amounted to offence since punishable under Sections
419,420,406,486,471 of the IPC.
9. The JMFC after going through the preliminary evidence recorded by
him had chosen to take cognizance of the matter. Challenge against this
order has been accepted by the High Court it becomes the bounden duty of
the High Court to give appropriate and sufficient reasons on the basis of
which it arrived at a conclusion, the dispute was merely that of accounts
with no elements of criminality. We are conscious of the legal position that
Ingredients of each of the provisions of IPC, which is sought to be foisted
upon the respondents are to be prima facie established before cognizance of
the complaint is taken by the Judicial Magistrate. However, when the
summoning order is quashed holding that it is a civil dispute, various -
allegations and averments made in the complaint and preliminary evidence
led in support thereof has to be appropriately dealt with by the High Court.
We are not commenting upon the merits of these allegations. However, there
is no discussion worth the name, in the impugned judgment, as to how and
on what basis the High Court accepted such a plea of the respondents herein,
in recording its conclusion that it was a case of rendition of accounts
simplicitor.
10. After all the High Court was setting aside the order of the Subordinate
Court by which Subordinate Court had taken cognizance in the matter. This
could be done after appropriately dealing with the contentions of both the
parties, more specially when it was first judicial review of the orders of the
Court below. In Hindustan Times Ltd. Vs. Union of India; (1998) 2 SCC
242, this Court made pertinent observation in the context:
“In an article on Writing Judgments, Justice Michael Kirby
(1990) 64 Austr L.J p.691) of Australia, has approached the
problem from the point of the litigant, the legal profession, the
subordinate Courts/tribunals, the brother Judges and the Judge’s
own conscience. To the litigant, the duty of the Judge is to
uphold his own integrity and let the losing party know why he
lost the case. The legal profession is entitled to have it
demonstrated that the Judge had the correct principles in mind,
had properly applied them and is entitled to examine the body
of the judgment for the learning and precedent that they provide
and for the reassurance of the quality of the judiciary which is
still the centre-piece of our administration of justice. It does not
take long for the profession to come to know, including through
-
the written pages of published judgments, the lazy Judge, the
Judge prone to errors of fact, etc. The reputational
considerations are important for the exercise of appellate rights,
for the Judge’s own self discipline, for attempts at improvement
and the maintenance of the integrity and quality of our
judiciary. From the point of view of other Judges, the benefit
that accrues to the lower hierarchy of Judges and tribunals is of
utmost importance. Justice Asprey of Australia has even said in
Petit v. Dankley (1971) (1) NSWLR 376 (CA) that the failure of
a Court to give reasons is an encroachment upon the right of
appeal given to a litigant.
It was finally stated:
“In our view, the satisfaction which a reasoned judgment
gives to the losing party or his lawyer is the test of a good
judgment. Disposal of cases is no doubt important but quality of
the judgment is equally, if not more, important. There is no
point in shifting the burden to the higher Court either to support
the judgment by reasons or to consider the evidence or law for
the first time to see if the judgment needs a reversal.
In that case, the order of dismissal of the writ petition by
the High Court was affirmed by us but the task fell on the
Supreme Court, to inform the appellant why it had lost the case
in the High Court.”
11. In the present case, we have avoided to do this exercise and have not
gone into the merits of the case to find out whether the conclusion of the
High Court is correct or not, as the counsel for both the parties have agreed
for remand of the matter.
12. It is no where suggested by us that the judgment should be too
lengthy or prolix and disproportionate to the issue involved. However, it is
to be borne in mind that the principal objective in giving judgment is to
make an effective, practical and workable decision. The court resolves
conflict by determining the merits of conflicting cases, and by choosing
between notions of justice, convenience, public policy, morality, analogy,
and takes into account the opinions of other courts or writers (Precedents).
Since the Court is to come to a workable decision, its reasoning and
conclusion must be practical, suit the facts as found and provide and
effective, workable remedy to the winner.
13. We are of the opinion that while recording the decision with clarity,
the Court is also supposed to record sufficient reasons in taking a particular
decision or arriving at a particular conclusion. The reasons should be such
that they demonstrate that the decision has been arrived at on a objective
consideration.
14. When we talk of giving “reasons” in support of a judgment, what is
meant by “reasons”? In the context of legal decision making, the focus is to
what makes something a legal valid reason. Thus, “reason would mean a
justifying reason, or more simply a justification for a decision is a
consideration, in a non-arbitrary ways in favour of making or accepting that
-
decision. If there is no justification in support of a decision, such a decision
is without any reason or justifying reason.
15. We are not entering into a jurisprudential debate on the appropriate
theory of legal reasoning. It is not even a discourse on how to write
judgments. Our intention is to simply demonstrate the importance of legal
reasoning in support of a particular decision. What we have highlighted is
that instant is a case or arriving at a conclusion, in complete absence of
reasons, what to talk of adequate or good reasons that justifying that
conclusion.
16. In the given case, it was required by the High Court to take note of
the arguments of the complainant on the basis of which complainant insist
that ingredients of the particular offences alleged are prime facie established
justifying the cognizance of the complaint and the arguments of the
respondents herein on the basis of which respondents made an endeavour to
demonstrate that it was a pure civil dispute with no elements of criminality
attached. Thereafter, the conclusion should have been backed by reasons as
to why the arguments of the complainant are merit less and what is the
rationale basis for accepting the case of accused persons. We hope that this
aspect would be kept in mind by the High Court while deciding the case
afresh.
17. Accordingly, this appeal is allowed and the impugned order is set
aside with direction as aforesaid. No costs.
.…………………………..J.
[K.S.Radhakrishnan]
…………………………..J.
[A.K.Sikri]
New Delhi,
October 28, 2013
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