Administrative bodies are obliged by concept of Natural justice to act fairly. Natural justice plays an important role to control the exercise of quasi judicial and administrative power. Basically it is a concept of common law. It is the common law world counterpart of the American due process.

Concept of fair trail/procedural due process is very important in entire field of judicial control of administrative process. English law recognize two principle of natural justice.
No one can be judge in his own case.
No one should be condemned unheard.
And Roman law placed them in two parts.
Nemo judex in causa sua .
Audi altrem partem.

Besides, there is a third principle of natural justice ie. A party is entitled to know  the reasons for decision.

The area of natural justice, like many other legal concepts, has been widening to meet the necessity of preventing abuse of power by administrative authorities and in this regard a noteworthy development has been the requirement of recording of reason for an adverse order.

Initially requirement of giving reason for the decision by the administrative bodies was not treated as a part of Natural justice so they were not obligated to do so. But since then some change has come about this situation.

Position in USA:
In US court through various judgments insisted that administrative authorities should give reason behind its decision because from reason only we can point out that there is a proper and fair exercise of discretionary power.

The requirement of giving reason is also justify on the basis that in process of judicial review court would not exercise its power unless there is presence of considerations taken by administrative authorities.  Section 8(b) of Federal administrative procedure act 1946 of US clearly requires administrative agencies to give reasons for their decisions. The right to reasoned decision also arises from the due process clause of the US constitution and due process also includes right to have a written record which must me consist of evidence, arguments, reasons and all papers filed in the case.

Position in UK
In UK common law never demands that reason should be given by administrative bodies for its decisions. However there are some judgments which emphasize the importance of reasoned decision. In his dissenting opinion in Breen v. amalgamated engineering union Lord Denning observed that:
the giving of reasons is one of the fundamental of good administration.

The committee on minister�s powers (Donoughmore committee) in 1932 recommended that:
Any party affected by any decision should be informed of the reasons on which the decision is based and
Such decision should be in the form of a reasoned document available to the parties affected.

The committee on Administrative tribunal and enquiries (frank committee) in its report submitted in 1957 recommended that decision of tribunals should be reasoned and as full as possible.
Recommendations of both the committees were incorporated in Tribunals and inquiries act 1958. Section 12 of this act states that:
it shall be duty of tribunal or minister to provide a statement either written or oral, of reasons for the decision if required, on or before the giving of notification of the decision to support the decision.

The said act has been replaced by the Tribunals and inquires act 1971 which contains similar provisions in section 12. This requirement is however confined, in its application to tribunals and statutory authorities specified in schedule 1 of the said enactment. In respect of the tribunals and authorities not covered by enactment, position prevailing in common law will apply. Court decline to make bound the administrative authorities to give reason in that area which are not covered by the act.

In India
Law commission of India in its 14th report recommended that:
in case of administrative decisions, provision should be made that they should be accompanied by reason. The reason will make it possible to test the validity of these decisions by machinery of appropriate writs.

In case of Guru dayal singh fijji v. state of punjab SC observe that in the absence of any statutory requirement, there is no general requirement for the administrative agencies to give reasons for their decisions. However if the statute under which the agency is functioning requires reasoned decision court consider it mandatory for the agencies to give reasons which should not e only rubber stamp reasons but a brief, clear statement providing the link between the material on which certain conclusions are based and the actual conclusions.

Therefore the duty to give reason may be statutory or non statutory. Where statute or law requires in express term to give reasons, agencies are bound to give reasons. If authority violates the statues, the decision may e quashed by the superior court. In case where the statute does not expressly demands the reason behind every decision, courts in India are still busy in the process of developing workable parameters between claims of individual justice and administrative flexibility.

In India also till very recently it was not accepted that the requirement to pass speaking orders is one of the principle of natural justice but the condition to record reasons introduce clarity and exclude arbitrariness and satisfies the party concerned against whom the order is passed. Courts are little bit hesitant to declare expressly that the duty to give reasons is one of principle of natural justice but there can e no doubt that they have treated such duty at par with obligation of tribunals to observe the fundamental of fair play.

In S N Mukharjee v. UOI, where appellant was captain. Appellant after completing the training returned on duty. There are some irregularities in official bills and amounts. But during that irregularity he was not in charge. Appellant was charge sheeted and tried by court martial and punishment of dismissal was awarded. Findings were also confirmed by the army chief though the reasons were not recorded for such confirmations. After that post confirmation petition was also dismissed by central government and HC also dismissed his writ petition. Ultimately he approaches to apex court.

There are two main issues:

1. Is there any principle of law which requires the administrative authorities to record reason?
2. If yes, then does that law applies to the appellate authorities also which confirms the decisions of lower authority?

Court observes the 14th report of law commission of India which says that administrative decisions should be accompanied by reasons. In Harinagar suger mills v. shyam sundar SC observed that in cases where central government exercise judicial powers then that power is subject to the jurisdiction of this court under Art 136 of constitution and it become impossible to exercise power under Art 136 if government did not give reason in support of decisions.

Again in Tarachand v. delhi municipality SC observed that  in disciplinary matters where full scale hearing is given to parties and detailed report giving full facts and reasons is prepared by the inquiry officer, the writing of reasons by the disciplinary authority when it fully agrees with report will be a mere duplication of entire process..

Again in Travancore rayons ltd. V. UOI SC held that higher authorities should also give its own reason in support of its decisions in those cases also in which they are only affirming the decision of lower authorities which has given a reasoned decision. Court observed that higher body may agree with the decision of the lower body but it is always not necessary that higher authority will always agree with the reasons given by the lower authority. So court held that an administrative authority exercising judicial or quasi judicial power should record reason in support of their decisions. The consideration behind recording reasons is.

Decisions taken by lower authority are subject to appellate jurisdiction of higher authorities.
It introduces clarity and excludes arbitrariness.
It ensures fairness in decision making process.

Conclusion
In this way we can say that the requirement of recording reason is one of the principles of Natural justice. It is most valuable safeguards against any arbitrary exercise of power by the adjudicatory authority.  The reason given in support of decisions may e judicially scrutinized and if court found that those reasons are irrelevant or incorrect or no existent then order passed by the authority may be set aside.

Thus, where the statute does not lay down any express term for recoding reasons, Primary or original authority must pass a speaking order with reason.
Even appellate authority should also pass reasoned decision even in case where they confirm the lower body�s decision.