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Ram Autar Santosh Kumar Ltd. and ors. Vs. B.B. Saxena, District Magistrate, Moradabad and anr. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 5123 of 1973
Judge
Reported inAIR1974All467
ActsConstitution of India - Article 19(1); Uttar Pradesh Food Grains (Control, Requisition and Distribution) Order, 1966
AppellantRam Autar Santosh Kumar Ltd. and ors.
RespondentB.B. Saxena, District Magistrate, Moradabad and anr.
Appellant AdvocateS.K. Tiwari and ;S.N. Mishra, Advs.
Respondent AdvocateStanding Counsel
DispositionPetition dismissed
Excerpt:
.....justice - article 19 of constitution of india - appointment as handling agent to sell foodgrains - district magistrate terminated appointment - order challenged on principle of natural justice - order has effect of cancellation of license - termination has no effect on cancellation of license - where mode of termination stated earlier - no infringement of principle of natural justice. - - when the petitioners agreed to their appointment as handling agents on the specific condition that the agreement may be unilaterally terminated by the district magistrate at any time without assigning any reason, they cannot turn round and complain that a sudden termination of the agreement was beyond the powers of the district magistrate. by his sudden dismissal, the individual loses the right to..........the agreement at any time without assigning any reason therefor. clause 19 of the agreement was a penal clause. it provided that if and whenever there shall be a breach or non-observance of any of the terms and conditions by the handling agent hereinbefore contained then the district magistrate may forfeit the security deposited by the handling agent and in addition terminate the agreement. thus the agreement contemplated penal action by way of forfeiture of security deposit. the agreement could be terminated only in addition to the forfeiture. clause 19 did not contemplate termination of the agreement simpliciter as penal action for breach or non-observance of the terms or conditions of the agreement. in the present case the impugned order merely terminates the agreement. ex facie the.....
Judgment:

Satish Chandra, J.

1. The petitioners were appointed handling agents for the sale of foodgrains supplied 'to them by the Government. By an order dated 2nd August, 1973, the District Magistrate, Moradabad terminated the petitioners' appointment. This order has been challenged in the present writ petition on the ground that the principles of natural justice were violated as also on the ground that the order has been passed mala fide. In the supplementary affidavit, the petitioners have further taken the plea that the impugned order cancelled the licence granted to them under the U.P. Foodgrains Dealers Licensing Order, 1964, and thus violated their right to carry on trade guaranteed by Article 19(1)(g) of the Constitution.

2. It is admitted that the petitioners held a licence under the U.P. Foodgrains Dealers Licensing Order, 1964. This licence authorised them to carry on business as a dealer or commission agentin foodgrains. The respondents' case is that the impugned order does not cancel or affect the petitioners' licence. A perusal of the impugned order also shows that the retailer's agreement alone has been terminated. The petitioners' apprehension that their licence has been cancelled is misconceived.

3. Clause 3 of the U.P. Foodgrains (Control, Requisition and Distribution) Order, 1966, provides that no person, other than an authorised retail distributor shall sell or offer for sale any of the Government foodgrains. Clause 2(a) of the Order defines authorised distributor to mean a person appointed as 'Agent' (Retail) by the District Magistrate for the sale of Government foodgrains. In virtue of these provisions the District Magistrate appointed the petitioners as authorised retail distributor. This appointment was made through an agreement executed by the petitioners with the District Magistrate. Clause 16 of the agreement provides that the District Magistrate shall have the right to terminate the agreement at any time without assigning any reason therefor. Clause 19 of the agreement was a penal clause. It provided that if and whenever there shall be a breach or non-observance of any of the terms and conditions by the handling agent hereinbefore contained then the District Magistrate may forfeit the security deposited by the handling agent and in addition terminate the agreement. Thus the agreement contemplated penal action by way of forfeiture of security deposit. The agreement could be terminated only in addition to the forfeiture. Clause 19 did not contemplate termination of the agreement simpliciter as penal action for breach or non-observance of the terms or conditions of the agreement. In the present case the impugned order merely terminates the agreement. Ex facie the impugned order is within the purview of Clause 16 and not Clause 19 of the agreement. It cannot, hence be said that the District Magistrate took penal action against the petitioners so that the principles of natural justice may get attracted.

4. Clause 16 of this agreement authorises 'the District Magistrate to terminate an agreement at any time without assigning any reason therefor. When the petitioners agreed to their appointment as handling agents on the specific condition that the agreement may be unilaterally terminated by the District Magistrate at any time without assigning any reason, they cannot turn round and complain that a sudden termination of the agreement was beyond the powers of the District Magistrate. When by an agreement the parties agreed to such a termination an action taken accordingly cannot be held to be violative of the fundamental right to carry on business. In view of the agreement the petitioners became entitled to sell Government foodgrains. Termination of the agreement means that they can no longer sell Government foodgrains; but the termination of the agreement does not disentitle the petitioners from carrying on the business of selling foodgrains acquired or procured by them from elsewhere. Their licence as dealers in foodgrains is still operative and they are free to carry on their trade.

5. In Pahari Sahu v. The District Magistrate, Varanasi, (Civil MLsc. Writ No. 5057 of 1973 decided on 30-8-1973). (All) a Division Bench of this Court held that in view of Clause 16 of the agreement the petitioner has not legally enforceable right to continue to obtain foodgrains from the Government godowns as a handling agent. We are in respectful agreement with this view.

6. For the petitioners reliance was placed upon the decision of the Division Bench in The State of U.P. v. Om Prakash. (Special Appeal No. 2 of 1973, decided on 13-2-1973) (All). In that case the District Magistrate cancelled an agreement relating to the distribution of sugar. On the facts of that case the Bench found that the cancellation was by way of penal action and was covered by Clause 19 of the agreement. The Bench held that the penal action under that clause can be taken only for breach or non-observance of any terms or conditions stipulated in the agreement. It therefore followed that the breach should be proved as a fact and this could be done only after an enquiry in which an opportunity had been given to the handling agent to explain the charges. The rules of natural justice apply to such an enquiry. This decision is distinguishable on facts because in the present case the agreement was terminated under Clause 16 and not, under Clause 19 of the agreement. The District Magistrate has himself filed an affidavit stating that the agreements of the petitioners have been terminated in exercise of Power under Clause 16 of the agreement. Since no penal action was taken the principles of natural justice are not attracted to the present case.

7. For the petitioners reliance was placed upon Chaman Lal v. The District Magistrate, Aligarh, (Civil Misc. Writ No. 1967 of 1967, decided on 19-4-1968) (All). In that case the District Magistrate had cancelled the fair price shop on the oral instructions of a minister concerned, who was in turn motivated by irrelevant considerations. It was held that the order was arbitrary and based on whimsical orders passed by the minister. No such finding can be recorded in the present case. In that case it was observed that an authorised retail distributor appointed under the U.P. Foodgrains Distribution Order, becomes entitled to carry on business of the sale of Government food-grains. By his sudden dismissal, the individual loses the right to carry on the business as well as the property. The order has serious civil consequence on the person. Such an order can be passed consistently with the principles of natural justice. These observations are inapplicable to a case where the termination is authorised by a bilateral agreement. If the parties previously agreed that the appointment can be terminated by the District Magistrate at any time without giving any reasons therefor, then no adverse civil consequence can accrue on such termination. In such an event the principles of natural justice are not attracted.

8. The plea that the agreement was terminated on account of mala fide and for ulterior motive has not been substantiated. The writ petition made vague allegations in this regard which have been denied by the District Magistrate in his affidavit.

9. In the result the writ petition fails and is accordingly dismissed with costs.


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