The Apex Court in the case of Sant Lal Gupta v. Modern Coop. Housing Group Society Ltd. focused on the issue of a reasoned order stating that, “27. … While deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation of the court to record reasons while disposing of the case. … The reason is the heartbeat of every conclusion. It introduces clarity in order, and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable, particularly when the order is subject to further challenge before a higher forum. Recording of reasons is the principle of natural justice, and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected.”
The Supreme Court in the case of Vidya Drolia v. Durga Trading Corp. opined that when a party has to take part in the arbitration proceedings without having an opportunity to appeal, then there is no need to give a ‘reasoned order.’ Therefore, the ‘judicial authorities’ are not needed to provide a ‘reasoned order’ at a preliminary stage.
There are situations when the parties do not have to appear for arbitral proceedings. Then there is a need on the part of the ‘judicial authorities’ to give a ‘reasoned order’. Like in the case of Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., the Supreme Court opined that if there is no prima facie finding as to the validity of an arbitration agreement, then the ‘judicial authorities’ needs to give a ‘reasoned order.’ The judges also discussed the scope of the ‘judicial authorities’ when to give a ‘reasoned order’ and when not to give a ‘reasoned order’.
The Court said that “111. … if on a prima facie examination of the documents and material on record, including the arbitration agreement on which request for reference is made by one of the parties, the judicial authority or the court decides to refer, it may merely mention the submissions and contentions of the parties and summarily decide the objection if any raised on the alleged nullity, voidness, inoperativeness or incapability of the arbitration agreement. In case, however, on a prima facie view of the matter, which is required to be objectively taken based on material and evidence produced by the parties on the record of the case, the judicial authority, including a regular civil court, is inclined to reject the request for reference on the ground that the agreement is “null and void” or “inoperative” or “incapable of being performed” within the meaning of Section 45 of the Act, the judicial authority or the court must afford full opportunities to the parties to lead whatever documentary or oral evidence they want to lead and then decide the question like a trial of a preliminary issue on jurisdiction or limitation in a regular civil suit and pass an elaborate reasoned order. Where a judicial authority or the court refuses to make a reference on the grounds available under Section 45 of the Act, it is necessary for the judicial authority or the court which is seized of the matter to pass a reasoned order as the same is subject to appeal to the appellate court under Section 50(1)(a) of the Act and further appeal to this Court (Supreme Court) under sub-section (2) of the said section.”
 (2010) 13 SCC 336.
 (2021) 2 SCC 1.
 92005) 7 SCC 234.
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