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Phoolchand Narendra Kumar and ors. Vs. State of Madhya Pradesh Through Secretary, Govt. of M.P. and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 87 of 1969
Judge
Reported inAIR1970MP70; 1969MPLJ5
ActsEssential Commodities Act, 1955 - Sections 3; Madhya Pradesh Foodgrains Dealers Licensing Order, 1965; Constitution of India - Article 19(1) and 19(6)
AppellantPhoolchand Narendra Kumar and ors.
RespondentState of Madhya Pradesh Through Secretary, Govt. of M.P. and ors.
Appellant AdvocateP.C. Pathak, Adv.
Respondent AdvocateRama Gupta, Govt. Adv.
DispositionPetition allowed
Cases ReferredSukhlal v. Collector. Satna
Excerpt:
- - the minor lalchand is a beneficiary in that firm as well. 6. having heard the counsel, we are satisfied that the reliefs asked for by the petitioners must be granted. it is now well settled that, while considering the question of breach of the principles of natural justice, courts should not proceed as if there are any inflexible rules of natural justice of universal application. bose, air 1967 sc 361. in the instant case, the language of clause 7 of the order, however, clearly enjoins that, in making an order of refusal of a grant of a licence or its renewal, the collector is obliged to act quasi-judicially......december 1968 passed by the collector of jabalpur under clause 7 of the madhya pradesh foodgrains dealers licensing order 1965 (hereinafter referred to as the 'order'), refusing to renew their foodgrains dealer's licence no. 30/ 65 for the year 1969 and also for a consequential writ of mandamus for directing its renewal. 2. the facts leading to this petition, shortly stated, are these. the petitioners are a partnership firm trading in food-grains under the name and style 'phoolchand narendrakumar' in the city of jabalpur, under foodgrains dealer's licence no. 30/65 issued by the collector of jabalpur under clause 3 of the order. the firm is constituted of 3 partners, namely, narendra kumar, devendra kumar and nirmal kumar (petitioners nos. 2, 3 and 4 herein), with the minor lalchand.....
Judgment:

A.P. Sen, J.

1. By this application under Articles 226 and 227 of the Constitution, the petitioners seek a writ of Certiorari for quashing an order dated 13th December 1968 passed by the Collector of Jabalpur under Clause 7 of the Madhya Pradesh Foodgrains Dealers Licensing Order 1965 (hereinafter referred to as the 'Order'), refusing to renew their Foodgrains Dealer's Licence No. 30/ 65 for the year 1969 and also for a consequential writ of Mandamus for directing its renewal.

2. The facts leading to this petition, shortly stated, are these. The petitioners are a partnership firm trading in food-grains under the name and style 'Phoolchand Narendrakumar' in the city of Jabalpur, under Foodgrains Dealer's Licence No. 30/65 issued by the Collector of Jabalpur under Clause 3 of the Order. The firm is constituted of 3 partners, namely, Narendra Kumar, Devendra Kumar and Nirmal Kumar (Petitioners Nos. 2, 3 and 4 herein), with the minor Lalchand (Petitioner No. 4) admitted to its benefits, and is registered as a partnership firm with the Registrar of Firms, Madhya Pradesh. There is another firm in the City, carrying on business in food-grains styled as 'Ramprasad Gokul-prasad', Jabalpur. That firm consists of 9 partners, including the three partners of the petitioners' firm, Phoolchand Narendrakumar, The remaining 6 partners are Gokulprasad, Navalkishore, Sunderlal, Surkhichand, Chhotelal and Mst. Jhunkari Bahu, who are all related to them. The minor Lalchand is a beneficiary in that firm as well. That firm is also registered as a partnership farm with the Registrar of Firms, Madhya Pradesh. Both the aforesaid firms are licenced as 'dealers' under the Madhya Pradesh Foodgrains Dealers' Licensing Order, 1965 holding Foodgrains Licences Nos. 30/65 and 31/65 respectively from the year 1965 itself when the Order was brought into force, and since then these licences have admittedly been renewed by the authorities from year to year.

3. The Order in question was issued by the State Government of Madhya Pradesh, in exercise of the powers conferred under Section 3 of the Essential Commodities Act (Act No. X of 1955), and it provides, inter alia, by Clause 3 that no person shall carry on business as a dealer in foodgrains except in accordance with the terms and conditions of a licence issued in that behalf, by the Collector who is constituted to be the licensing authority for the purpose. The expression 'dealer' has been defined in Clause 2 (a) of the Order, thus:

'2 (a) 'dealer' means a person who is engaged or intends to engage in the business of purchase, sale or storage for sale of paddy in quantity of 10 quintals or more at any one time or in quantity of 4 quintals or more at any time in respect of any one foodgrain other than paddy or in quantity of 25 quintals or more at any time in respect of all foodgrains taken together, whether on one's own account or in partnership or in association with any other person or as a commission agent or arhatiya (excludes Kachha Adatia) and whether or not in conjunction with any other business, but does not include a person--

(i) who stores any foodgrains produced by him by personal cultivation, and

(ii) who does not engage in the business of purchase or sale of foodgrains.'

4. For the present year 1969, the petitioners' firm, Phoolchand Narendrakumar, had made a usual application for renewal of their Foodgrains Dealer's Licence No. 30/65, as in the earlier years. Admittedly, that application was made on 19th October 1968 before the Collector, Jabalpur through the Food Officer, more than 30 days before the expiry of the pre-existing licence held by the petitioners, and the authorities issued an acknowledgment on that date in token of having received that application together with a treasury-challan showing payment of the renewal fee along with the licence in original for renewal. It appears that a similar application for renewal of the Foodgrains Dealer's Licence No. 31/65 was also made by the other firm, Ramprasad Gokulprasad. The Collector, Jabalpur, by his impugned order dated 13th December 1968, has refused to renew the licence of the petitioners' firm for the year 1969, on the ground that the 3 partners constituting their firm, Phoolchand Narendra Kumar, are also the partners in the other firm, Ramprasad Gokulprasad, which holds a separate Foodgrains Dealers Licence No. 31/65 in its name.

5. Since the validity of that order is in question in these proceedings, we think it convenient to set it out below:

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It would be obvious from the terms of this order that the Collector has not only refused the renewal of the Foodgrains Dealer's Licence No. 30/65 held by the petitioners' firm but also has cancelled it presumably on the hypothesis that separate licences under the Order cannot be had in the names of different partnership firm when some of the partners are common to them.

6. Having heard the counsel, we are satisfied that the reliefs asked for by the petitioners must be granted. The scheme of the relevant Order as embodied in Clause 3 is that no person shall carry on any business as a dealer in foodgrains except under or in accordance with the terms and conditions of the licence issued in that behalf by the licensing authority. Under Clause 4, every application for a licence or renewal thereof shall be made to the licensing authority in Form A, and every licence issued or renewed on such application has to be in Form B, prescribed thereunder. The provisions of the Order nowhere furnish the grounds upon which the licensing authority can refuse to grant a licence or its renewal. They must, however, be interpreted in the light of the considerations arising from Article 19(l)(g), read with Article 19(6) of the Constitution of India, as otherwise, Clause 3 which provides for the licensing of dealers would confer unguided discretion to the Collector in the matter of grant or refusal of licences and their renewal. The grant of a licence or its renewal under the Order should be the normal rule as it is undoubtedly a restraint on the freedom of trade which is guaranteed to any citizen under Article 19(l)(g) of the Constitution. We are, therefore, of the view that Clause 3 of the Order does not confer an absolute discretion on the Collector to grant or revoke a licence just as he pleases. The power has to be exercised in a reasonable manner, keeping in view all the considerations that are relevant.

A fortiori, the renewal of an existing licence of a dealer from year to year, provided the other conditions are fulfilled, has to be granted in the very nature of things, as without such renewal, he cannot deal in foodgrains at all. We understand that the petitioners' firm Phoolchand Narendrakumar, has a subsisting contract with the State Government of Madhya Pradesh for the supply of foodgrains to the Central Jail, Jabal-pur under the agreement dated 25th April 1968 (Annexure H) till the expiry of the financial year 1968-69, and due to the refusal of the authorities to renew their Foodgrains Dealer's Licence No. 30/65 for the year 1969, it has become impossible for them to perform their part of the contract.

7. The learned Government Advocate tried to support the impugned order on the basis that the State Government of Madhya Pradesh has by their Food Department Memo No. 5520/3077/XXX/68 dated 27th July 1968, issued certain executive instructions for the guidance of all Collectors in the State of Madhya Pradesh in the matter of grant or refusal of food-grains dealers licences under the Order, and the instructions are against the grant of separate licences in favour of different firms where some of the partners are common, as the object in securing such separate licences may be actuated with a mala fide intention. We are not called upon him to pronounce in this case on the effect of these instructions for a variety of reasons. In the first place, the refusal to renew the petitioners' licence by the impugned order, does not rest on the ground that one of the two partnership firms was a fictitious one, or, that the Foodgrains Dealer's Licence No. 30/65 had been procured with any ulterior object. Secondly, the State Government of Madhya Pradesh have not filed any return supporting the impugned action of the Collector on the basis of the aforesaid instructions. Thirdly, such executive instructions cannot in the nature of things, be so framed or utilized in a manner as to override the provisions of the law. Their Lordships of the Supreme Court have stated in Mannalal Jain v. State of Assam, AIR 1962 SC 386, that such a method will destroy the very basis of the rule of law. In their Lordships' words, 'it would be the duty of the licensing authority to ignore all instructions which are not in consonance with the provisions of law by which it is to be guided.'

8. Now, the provisions of Clause 7 of the Order by which the licensing authority was to be guided nowhere provides that separate licences cannot be issued in the names of different firms where some of the partners are common. It reads:

'The licensing authority may, after giving the dealer concerned an opportunity of stating his case and for reasons to be recorded in writing, refuse to grant or renew a licence.'

Thus, it is manifest that the impugned order suffers from a serious infirmity in so far as the refusal of renewal of the licence of the petitioners' firm proceeds upon a ground which is wholly extraneous to the requirements of Clause 7 of the Order, and is, therefore, liable to be struck down on that ground. It is true that Clause 7 does not indicate the nature of reasons on which the grant or refusal of a licence or its renewal may proceed. That provision must, however, be read in the context of the other provisions of the Order. Normally, when a holder of a licence contravenes any of the terms or conditions of the licence, the licensing authority may, without prejudice to any other action that may be taken against him, cancel or suspend a licence by an order in writing under Clause 8. In this case it is not necessary, for us to catalogue the different reasons on which the licensing authority may refuse to grant or renew a licence. Suffice it to say that the reasons for such grant or refusal must be such as would be in the interest of the general public. A licence to Foodgrain Dealers is issued with the object of preventing them from engaging in any nefarious trade or activities which would defeat any of the objects for which the Essential Commodities Act (Act. No. X of 1955) had been enacted or the Madhya Pradesh Foodgrains Dealers' Licensing Order, 1965 had been made. It must necessarily have nexus to the main object and purpose of the legislation, i.e., control of production, supply and distribution of trade and commerce in certain commodities which are essential to the life of the community in general.

9. The learned counsel for the petitioners rightly draws our attention to Clause 5(4) of the Order for his submission that the scheme of the legislation envisages the grant of separate licences to a dealer for each place of his business. That provision reads:--

'A separate licence shall be obtained by a dealer for each place of business'. By parity of reasoning, we would unhesitatingly hold that there is no justification for the attitude adopted by the State Government in this case, namely that separate licence cannot be granted in the names of different firms when some of the partners are common.

10. Apart from this, there is also another lacuna which entirely vitiates the impugned order. On a plain reading of Clause 7 ibid, it is manifest that the licensing authority has no power to refuse to grant or renew a licence unless he has (i) given the dealer concerned 'an opportunity of stating his case'; and (ii) recorded his reasons in writing for his refusal to grant or renew a licence. These are the conditions precedent to the exercise of his jurisdiction. There are clear averments in the petition that the order in question was passed without giving any opportunity of hearing to the petitioners and that the impugned action is, therefore, violative of the mandatory provisions contained in Clause 7 of the Order, besides being in breach of the rules of natural justice. These allegations have not been controverted. Neither the State Government nor the Collector, Jabalpur or the Food Officer have cared to file any return or a counter-affidavit denying the facts alleged in the petition. It is now well settled that, while considering the question of breach of the principles of natural justice, Courts should not proceed as if there are any inflexible rules of natural justice of universal application. Rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act. See, New Prakash Transport Co. Ltd. v. New Suwarna Transport Co. Ltd., AIR 1957 SC 232 and Bharat Barrel and Drum Mfg. Co. v. L.K. Bose, AIR 1967 SC 361. In the instant case, the language of Clause 7 of the Order, however, clearly enjoins that, in making an order of refusal of a grant of a licence or its renewal, the Collector is obliged to act quasi-judicially. That the matter does not rest on the subjective satisfaction of the Collector is clear from the consideration that Clause 10 provides for an appeal to the State Government against such refusal of grant of a licence or its renewal. See, Sukhlal v. Collector. Satna, AIR 1969 Madh. Pra. 176.

11. The result is that the petition succeeds and is allowed. The impugned order dated 13th December 1968 made by the Collector, Jabalpur, under Section 7 of the Madhya Pradesh Foodgrains Dealers Licensing Order, 1965 is quashed, and he is directed to renew the Foodgrains Licence No. 30/65 held by the petitioners' firm for the year 1969 on the usual terms, as before. The respondents shall bear their own costs and pay those incurred by the petitioners, to whom the security deposit shall be refunded. Hearing fee Rs. 100/-, if certified.


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