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T. Venkatasubbiah Setty Vs. Commissioner, Corporation of the City of Bangalore and ors. - Court Judgment

LegalCrystal Citation
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. No. 1251 of 1965
Reported inAIR1968Kant251; AIR1968Mys251
ActsCity of Bangalore Municipal Corporation Act, 1949 - Sections 4, 197, 295, 297, 297(1), 358(3), 369, 385(3), 386 and 389; Constitution of India - Articles 14 and 19(1)
AppellantT. Venkatasubbiah Setty
RespondentCommissioner, Corporation of the City of Bangalore and ors.
.....that section 197 is violative of fundamental rights and that power conferred on commissioner f granting licence is unconstitutional on ground of its being arbitrary, uncontrolled and unguided - petitioner himself living in main house and manufacturing process carried on in shed put up in same compound - licence refused as proposed place was purely residential area - petition to be dismissed on sole ground that his place of manufacture was within 200 yards from residential houses - impugned order justified. - motor vehicles act, 1988 [c.a. no. 59/1988]section 149; [ram mohan reddy, j] accident-claim - liability of the insurer of the offending vehicle to pay the compensation passenger in a goods carriage liability of the insurance company - statement made by the claimant/injured..........fundamental rights are in question.(14) the petitioner's contention that the orders refusing to grant licence were made by the health officer and not by the commissioner, appears to be based on the mere circumstances that the endorsements issued to him were signed by the health officer and not by the commissioner and were issued from the office of the health officer and not from the office of the commissioner. in the counter-affidavit filed on behalf of the respondents it has been stated that the refusal of licences in both the years 1964 and 1965, had been done by the commissioner. mr. gopalakrishna, learned counsel for the corporation, produced before us the original records relating to refusal of licences during these two years viz., 1964 and 1965 and we have perused those records......

(1) The petitioner is a manufacturer of soaps. In this petition under Article 226 of the Constitution, he has challenged the orders of the authorities of the Bangalore City Municipal Corporation (hereinafter referred to as the 'Corporation') refusing him licence to carry on manufacture of soaps in the premises in which he has been so doing.

(2) Most of the material facts are not in dispute. The petitioner has been carrying on the manufacture of soaps in a shed in the compound of premises No. 20. III Block, Jayanagar in Bangalore, Jayanagar Extention was formed by the Bangalore City Improvement Trust Board and was outside limits of the Corporation. The petitioner has been residing in the main premises which has been taken on lease. He has obtained the consent of the landlord to carry on manufacture of soaps in that land.

(3) For the first time the petitioner made an application to the Commissioner of the Corporation, respondent-1 on 29-1-1964 for the grant of a licence for manufacture of soaps. On 16-4-1964 on endorsement signed by the Health Officer of the Corporation for the Commissioner was issued to him intimating that licence had been refused. He sent another petition to the Commissioner on 4-5-1964 contending that his application for licence had not been considered by the Commissioner and the same might be disposed of on merits. As no reply was received from the Commissioner, he filed an appeal to the Standing Committee (Health) on the Corporation against the Order refusing licence. The Standing Committee rejected his appeal on 27-4-1965 and an endorsement was issued to him on 18-6-1965 intimating such rejection.

(4) For running the Soap Factory without a licence the petitioner was prosecuted before the Second City Magistrate, Bangalore, in C. C. 482/65 and was sentenced to pay a fine of Rs. 100/-. He filed a revision petition-Cr. R. P. 294/65 before this Court against his conviction and sentence passed on him. On 17-1-1966 this Court dismissed the revision petition.

(5) Again on 27-1-1965 the petitioner applied to the Commissioner for grant of a licence for manufacture of soaps in the same premises. On 16-2-1965 an endorsement signed by the Health Officer for the Commissioner was sent to him intimating refusal of the licence. Against that refusal he filed an appeal to the Standing Committee which dismissed his appeal in April 1965. An endorsement intimating the dismissal of the appeal was sent to him.

(6) The refusal of the Corporation authorities to grant the licence has been assailed by Mr. N. Seshadri, learned counsel for the petitioner, on following grounds:

i. Section 297 of the Corporation Act which forbids carrying on manufacture of soaps without a licence issued by the Corporation authorities, offends Article 19(1)(g) of the Constitution;

ii. Conferment of power by Section 297 of the Corporation Act on the Commissioner to grant or refuse licence, is arbitrary, unguided and uncontrolled and hence unconstitutional;

iii. The order refusing licence is invalid as it was made by the Health Officer who has neither been empowered by the Corporation Act to exercise that power nor has been delegated that power by the Commissioner;

iv. The orders of the Commissioner and of the Standing Committee are violative of the principles of natural justice as the petitioner was not given an oral hearing by the Commissioner or by the Standing Committee:

v. Refusal of licence to the Petitioner while granting licence to other soap manufacturers in crowded localities in Bangalore City, is discriminatory and offends Article 14 of the Constitution.

vi. The Orders of the Commissioner and of the Standing Committee are invalid as they do not set out the grounds for refusing the licence, and rejecting the appeal.

(7) Sub-section (1) of Section 297 of the City of Bangalore Municipal Corporation Act, 1949 (hereinafter referred to as the 'Corporation Act') provides that no place within the limits of the City shall be used for any of the purposes mentioned in Schedule V without a licence obtained from the Commissioner and except in accordance with the conditions specified therein. Sub-section (5) of that Section provides that the Commissioner may grant such licence subject to such restrictions and regulations as may be specified by him or he may refuse to grant such licence. Manufacture of soaps is one of the items specified in Schedule V to the Corporation Act.

(8) Section 358 (3) of the Corporation Act provides that every order of the Commissioner or other Municipal Authority refusing, suspending, canceling or modifying a licence or permission, shall be in writing and shall state the grounds on which it proceeds. Standing Committee are among the Municipal Authorities enumerated in Section 4 of the Corporation Act.

(9) Section 386 of the Corporation Act provides that an appeal shall lie to the Standing Committee from any refusal by the Commissioner to grant a licence under Section 297.

(10) Clause 1 Bye-law No. 16 made under Section 367 (16)(34) read with section 369 of the Corporation Act reads:

1. No person shall use any premises within 200 yards of any human habitation for....


ii) Packing, pressing, cleansing, preparing manufacturing by any process habitation for.......

(11) The contention that Section 197 of the Corporation Act which forbids carrying on manufacture of soaps within the limits of the City without obtaining a licence from the Corporation authorities, is violative of Art. 29(1)(g) of the Constitution, had been urged by this very petitioner before this Court in Cr. R. P. No. 294 of 1965, the decision in which has been reported in (1966) 1 Mys LJ 130: (AIR 1966 Mys 296). The contention was rejected by this Court. Santhosh, J. held that restrictions on such manufacture are necessary to carry on industry, business or trade within the City limits indiscriminately, as it is bound to cause great inconvenience and nuisance to persons residing in the locality of the City.

(12) The second contention, namely, that the power conferred on the Commissioner of granting licence, is unconstitutional on the ground of its being arbitrary, uncontrolled and unguided, had also been urged by the petitioner in Cr. R. P. No. 294 of 1965 : (Air 1966 Mys 296). Rejecting that contention, Santhosh J. held that the power conferred on the Commissioner of granting licence, cannot be said to be arbitrary, uncontrolled or unregulated by the Act. His Lordship pointed out that every Order of the Commissioner granting or refusing a licence should be in writing, should be published on the notice board, and should state the grounds on which it is refused, the order of appeal is provided against the order of the Commissioner, and that the policy underlying the ground of refusal of a licence, is clearly indicated in the Corporation Act.

(13) We are in respectful agreement with the conclusions reached by Santosh, J. on the first two contentions of the petitioner. Moreover, those findings having been given in an earlier proceedings between the same parties, viz., the petitioner and the Corporation of Bangalore, the petitioner cannot be permitted to agitate again the very same questions in the present petition. As laid down by the Supreme Court in Daryao v. State of U. P. : [1962]1SCR574 the rule of res judicata, embodies a principle of public policy and there can be no objection to invoking that rule even where fundamental rights are in question.

(14) The petitioner's contention that the orders refusing to grant licence were made by the Health Officer and not by the Commissioner, appears to be based on the mere circumstances that the endorsements issued to him were signed by the Health Officer and not by the Commissioner and were issued from the office of the Health Officer and not from the office of the Commissioner. In the counter-affidavit filed on behalf of the respondents it has been stated that the refusal of licences in both the years 1964 and 1965, had been done by the Commissioner. Mr. Gopalakrishna, learned counsel for the Corporation, produced before us the original records relating to refusal of licences during these two years viz., 1964 and 1965 and we have perused those records. It is seen from those records that the Health Officer had merely recommended that the licences might not be granted and that after considering such recommendation the Commissioner himself had passed orders in both years refusing licence. Only the endorsements communicating the decision of the Commissioner have been signed by the Health Officer for the Commissioner. Thus it is not correct to say that the Commissioner had failed to exercise his jurisdiction under Section 297 of the Corporation Act or that the Health Officer who had no power to grant or refuse licence had assumed jurisdiction and refused licence.

(15) We may incidentally observe that the form in which endorsements are issued to applicants for licences does not indicate whether the decisions referred to in endorsements have been taken by the Commissioner himself or by any other officer of the Corporation. It is desirable that the Corporation should adopt a suitable form of endorsements so as to show ex facie who is the authority who has taken the decision communicated by the endorsement. Even if it is found necessary for convenient despatch of work that such endorsements are signed by some Officer other than the Commissioner who decides the matters adverted to in such endorsements, it is only proper that such endorsements should clearly state whether the commissioner has decided those matters.

(16) The next contention of Mr. Seshadri was that before rejecting the petitioner's application, the Commissioner was bound to give a hearing to the petitioner, so that he (the petitioner) might meet the grounds on which the licence was sought to be refused. Likewise Mr. Seshadri contended that the Standing Committee was bound to give a hearing to the petitioner or his counsel before rejecting the appeal.

(17) In support of his contention Mr. Seshadri relied on the unreported decision of this Court in W. P. No. 2030 of 1964; since reported in (AIR 19565 Mys 281). The Petitioner in that case had been granted on 13-1-1964 a licence to slaughter cattle and to trade in beef. That licence was renewed for a period of one year from 1-4-1964 to 31-3-1965. On 22-9-1964 the President Chitradurga Municipal Council, issued a memo to the licensee intimating that the licence had been withdrawn with immediate effect as there was complaints from citizens that slaughter and sale of beef created much nuisance to the public and as such activity was causing insanitary conditions in the surrounding area. This Court held that the cancellation of a licence once granted, should be made on some reasonable ground and that no ground could be considered reasonable, unless the licensee was given an opportunity to show cause against charges levelled against him and that an arbitrary power to cancel the licence cannot be considered reasonable restrictions on the right to trade.

(18) The above decision of this Court relates to cancellation of an existing licence and not to grant a licence for the first time. The distinction between the initial grant of a licence and cancellation of an existing licence, is well recognised. On the grant of a licence a person gets right to carry on the activity for which such licence is granted, and if that right is sought to be taken away by cancellation of the licence, it is clear that principles of natural justice come into play and he should be heard before canceling the licence already granted. But in the case of initial grant of a licence an applicant for such licence will not have acquired any such right to carry on such activity unless the licence is granted and no hearing is required for granting or refusing licence unless the Statute requires it. Neither Section 295 of the Corporation Act nor any Bye-laws framed thereunder provide that an applicant for a licence should be heard before his licence is rejected.

(19) The distinction between initial grant of refusal of a licence and a subsequent cancellation thereof, under the American Constitution, has been stated succinctly in Basu's commentary on the Constitution of India (5th Edition) in Volume I at page 776. Granting of an initial licence is regarded as an administrative rather than quasi-judicial function and the view taken is that there is no vested right to property unless the licence is granted. Hence no hearing is required for the granting or refusal of a licence unless the Statute requires it, and the courts can interfere only where the refusal is discriminatory or arbitrary. Some what different considerations come into play in this case of revocation or cancellation of, or refusal to renew an existing licence which amounts to taking away vested property rights and thus comes directly under the Constitutional requirement of 'due process' with regard to the taking of property, which involves-adequate notice, fair hearing and judicial review.

(20) Mr. Seshadri relied on certain observations of Subba Rao, J. (as he then was) in Narasimha Reddy v. District Magistrate : AIR1953Mad476 to the effect that the discretion vested in a licensing authority is a judicial discretion. Mr. Seshadri argued that granting or refusing a licence being a judicial act, the principles of natural justice will come into play and hence the licensing authority is bound to give a hearing to the applicant for licence before refusing licence, even if the licensing statute is silent or in the alternative the licensing statute which does not provide for such hearing must be held to place an unreasonable restriction on the fundamental right under Article 19(1)(g) and hence unconstitutional.

(21) The question whether an applicant for licence should be heard before it is refused came up for consideration before the Supreme Court in Kishanchand v. Commr. of Police, : [1961]3SCR135 , Section 39 of the Calcutta Police Act, 1866, provides that the Commissioner of Police, may, in his discretion grant licence to keeper of eating houses or places of public resort or entertainment, upon certain conditions. The Section made no provision for giving a hearing to a person applying for a licence. There was no requirement under the Section that the Commissioner should give reasons while refusing licence. Nor was there any provision for appeal against his order.

(22) Wanchoo. J. (as he then was) who delivered the majority Judgment, stated:

'...... But it cannot be laid down as a general proposition that where in the case of a licensing statute no provision is made for hearing and there is no provision for giving reasons for refusal, the statute must be struck down as necessarily an unreasonable restriction on a fundamental right.'

(23) While recognising that the order made one way or the other by the Commissioner, affects the fundamental right to carry on trade. His Lordship held that in the circumstances it cannot be an administrative order and though the Commissioner is expected to act, reasonably, there is no duty cast on him to act judicially. His Lordship added;

'The compulsion of hearing before passing the Order implied in the maxim 'Audialteram partem' applies only to judicial or quasi-judicial proceedings (See Express Newspaper (P) Ltd. v. Union of India, : (1961)ILLJ339SC ). Therefore, the fact that no hearing is required to be given by the Commissioner before he decided to grant or refuse a licence would not make the provision as to licensing in the circumstances of this case unreasonable restriction on fundamental right of carrying on a trade.....'

(24) From the circumstances that the Commissioner is required by Section 385(3) of the Corporation Act to give reasons for rejecting a licence and that an appeal lies against his decision to the Standing Committee, Mr. Seshadri wanted to draw an inference that consideration of application for licence acquires a quasi-judicial character. But these circumstances by themselves are not sufficient to make it quasi-judicial unless there is a duty to decide judicially. Appeals to higher authorities are provided even in respect of administrative orders. The requirement that reasons should be given for an order, may be intended to ensure that the authority making that order acts reasonably and to enable the appellate authority to judge the reasonableness of such order.

(25) Mr. Seshadri referred to S. 389 of the Corporation Act which reads:

'389. The Commissioner may summon any person to attend before him, and to give evidence or produce documents, as the case may be in respect of any question relating to taxation, or inspection or registration, or to grant any licence, or permission under the provisions of this Act.'

(26) Mr. Seshadri argued that the word 'may occurring in this Section should be read as 'shall' as the power conferred on the Commissioner under that Section is coupled with a duty to act for advancement of justice, and hence the Commissioner is bound to give a hearing to the applicant for licence. In support of this contention Mr. Seshadri referred to the following passage in Maxwell's Interpretation of Statutes (7th Edition) at page 231.

'Statutes which authorise a person to do acts for the public good or advancement of justice, have often given rise to controversy when conferring authority in terms simply enabling and not mandatory. In enacting that they 'may' or 'shall if they think fit', or 'shall have power' or that it shall be lawful' for them to do such acts, a statute appears to use the language of mere permission, but it has so often been decided as to have become an axiom that in such cases such expression may have-to say the least-a compulsory force and so would seem to be modified by judicial exposition.'

(27) As stated by the Supreme Court in Govinda Rao v. State of M. P. : [1965]1SCR678 the word 'may' is often read as 'shall' or 'must' when there is something in the nature of the thing to be done which makes it the duty of the person on whom the power is conferred to exercise that power.

(28) But, as stated in Crawford's Construction of Statutes, in para 262, the construction of mandatory words as directory and directory words as mandatory, should not be lightly adopted and it will always be presumed by the Court that the legislature intended to use the words in their usual and natural meaning. It is only here a meaning leads to absurdity or great inconvenience or for some other reason is clearly contrary to the obvious intention of the legislature, words which are ordinarily mandatory in their nature will be construed directory or vice versa.

(29) On a fair reading of Section 389 of the Corporation Act we think that it is only an enabling provision and gives a discretion to the Commissioner to summon a person to attend before him and to give evidence, where he considers such evidence is necessary. The Section cannot be read as mandatory and requiring the Commissioner to summon persons in every case where a question of grant of licence arises. If the section were to be construed as mandatory, even in cases where the Commissioner grants a licence he is bound to summon persons to give evidence and a construction which leads to such strange results does not commend itself to us. We think the word 'may' in Section 389 of the Corporation Act should only be read as 'may' and not as 'shall' or 'must'.

(30) Even in regard to an appeal, it is not correct to say an appellant has invariably a right to an oral hearing unless the statute conferring such right of appeal so provides. An oral hearing is not an essential ingredient of the principles of natural justice. In A. K. Gopalan v. State of Madras, : 1950CriLJ1383 , Kania C. J., said at page 44:

'Again, I am not prepared to accept the contention that a right to be heard orally is an essential right of procedure even according to the rule of natural justice.

(31) Dealing with the question whether a party making a revision petition to the Board of Revenue is entitled to be heard orally, Rajamannar, C. J. who spoke for the Bench in re Shanmuga Mudaliar : AIR1951Mad276 said thus:

'All that quasi-judicial Tribunals like the Board of Revenue have to do is to give sufficient opportunity for the persons who approach them for exercise of their jurisdiction to state their case: Local Govt. Board v. Arlidge, 1915 A. C. 120. This opportunity has been given tot he petitioner, because presumably be has stated all his grounds of objection to the order of the Revenue Divisional Officer in his revision petition.'

(32) Section 386 (1) which confers the right of appeal from the order of the Commissioner rejecting licence, does not provide for oral hearing of the appellant by the Standing Committee. The petitioner could not claim as of right that he should be heard orally by the Standing Committee. All that was necessary for the Standing Committee was to consider what he had stated in his memorandum of appeal.

(33) It was next contended by Mr. Seshadri that the petitioner was denied equality before law as a number of soap manufacturers carrying on manufacturing in crowded localities of the City had been granted licences by the Corporation while he was denied such licence. In para 7 of his affidavit the petitioner had given instances where licences have been granted to soap factories in localities like Wilson Garden Extension, Narsimharaja Colony, Chamarajapet, Cleveland Town, Civil Station, Silver jubilee Park Road and Ranasinghpet, which are more thickly populated with more residential houses than his place of manufacture.

(34) In the counter-affidavit filed on behalf of the Corporation, it was denied that any licence had been granted to run a soap factory in Narasimharaja Colony. In regard to other localities it has been contended by the Corporation that these are not purely residential areas as Jayanagar Extension, that there are no residential houses adjoining the places of manufacture by those licensees and that there are no complaints received from the neighbouring residents in those localities.

(35) The petitioner has not impleaded the licensees in whose favour he has alleged there has been discrimination. In the absence of those licensees as parties to the present petition and without giving an opportunity to those persons to meet the allegation of discrimination if their favour, we cannot go into the allegation of discrimination. Assuming that the Corporation has issued to those persons licences improperly and against the provisions of the Corporation Act and Bye-laws thereunder, the petitioner cannot ask the Court to direct the Corporation to issue a licence in his favour contrary to the provisions of the Corporation Act and the Bye-laws thereunder. Article 14 of the Constitution cannot be understood as requiring the authorities to act illegally in one case because they have acted illegally in other cases.

(36) In the circumstances we are unable to accept the petitioner's contention that the impugned orders are violative of Article 14 of the Constitution.

(37) The petitioner's contention that the Commissioner has not given reasons for refusing licence as required by S. 385(3) is not correct. In the endorsement dated 16-2-1965 (Exhibit A-1), it is clearly stated that the licence was refused as the proposed place was purely a residential area.

(38) It was argued by Mr. Seshadri that the Standing Committee (Health) which rejected the appeal of the petitioner was also bound to give reasons for rejecting the appeals, but had not done so. We have pursued proceedings of the Standing Committee, which were made available to us by Mr. Gopalakrishna. A copy of the proceedings of the Standing Committee held on 27-4-1965, has also been produced and marked as Exhibit VII. The decision of the Standing Committee is expressed in the form of a resolution which reads:

'Appeal petition of Sri. T. Venkatasubbiah Setty be rejected.'

(39) But just above this resolution the subject before Standing Committee is described thus:

'Appeal petition from Sri. T. Venkatasubbiah Setty, against the refusal order of the Commissioner, for running the Soap manufacturing works in premises No. 20, III Block, Jayanagar, Bangalore, and Commissioner's note dated 22-3-1965 stating that the appeal is time barred and also that the prosecution filed against the party is pending in the Court'.

(40) Reading the proceedings as a whole, it is clear that the Standing Committee had before it the recommendations of the Commissioner including the grounds on which he had suggested that the appeal might be rejected. Reading the resolution in this background, it is reasonable to infer that the Standing Committee rejected the appeal on the grounds stated in the Commissioner's recommendations. Though it would have been more satisfactory if the resolution of the Standing Committee had itself stated the grounds on which it had rejected the appeal, reading the resolution along with the preamble, it cannot be stated that no grounds have been stated for rejection of the appeal.

(41) Even if we were to hold that the resolution of the Standing Committee suffers from the defect of not stating expressly grounds for rejecting the appeal, we do not think that it would be necessary to interfere with the resolution of the Standing Committee, and to grant the prayer of the petitioner, because the petitioner's application for licence was liable to be rejected on the sole ground that his place of manufacture was within 200 yards from residential houses. As stated earlier, the petitioner himself is living in the main house and the manufacturing process is carried on in a shed put up in the same compound. The letters of protest from the neighbouring residents which have been marked as Exhibits II, III and IV, also show that the place where the petitioner has been manufacturing soaps is within 200 yards from the residential houses.

(42) In the result this petition falls and is dismissed. However, in the circumstances we make no order as to costs.

(43) Petition dismissed

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