1. The petitioner, who is a Liquor Contractor, by this petition under Articles 226 and 227 of the Constitution calls into question the order of the Collector, Satna passed on July 1, 1968 cancelling his licence to sell country liquor by retail at village Babupur.
2. The petitioner's licence was for a period of one year from 1st April, 1968 to 31st March, 1969. He was to keep his shop in village Babupur, but its exact location was not mentioned in the licence. From, form of the license prescribed under the Excise Rules, it appears that ordinarily every licence in a schedule appended to it contains a description of the site and the boundaries where the licensee has to keep his shop, but in the case of the petitioner the schedule was left blank. This omission in the case of the petitioner gave rise to disputes regarding the location of the shop. According to the petitioner, he all along kept his shop in village Babupur, but according to the Excise Inspector, the shop was outside the limits of Babupur and was kept in a neighbouring village Nimmi. On 24th May, 1968 the Excise Inspector seized the petitioner's licence and the stock of liquor present in the shop. The licence was however, restored by the District Excise Officer on 27tb May, 1968. The petitioner wrote to the Collector and other excise authorities request ing them to specify the site whore he should keep bis shop, but no reply was given to him. Then on 1st July, 1968 the Collector passed the impugned order under Section 31(1)(b) of the Excise Act 1915 cancelling the petitioner's licence. The order is based on the report of the Excise Inspector, Satna that the petitioner located his shop in village Nimmi, although the licence required him to keep tbe shop in village Babupur, and that he committed other breaches of the conditions of the licence mentioned in the report.
3. It is not disputed that the Collector before cancelling tbe petitioner's licence did neither issue him any notice requiring him to explain the charges reported by the Excise Inspector nor did he give him any opportunity in any other manner to meet tbe charges. On this admitted position, it is contended by the learned counsel for the petitioner, that the order of cancellation of the licence contravenes the principles of natural justice, and is invalid and void. The learned counsel argues that tbe power conferred by Section 31 of the Excise Act to cancel a licence is a quasi-judicial power, and that the very nature of this power contains an implied limitation that it shall not be exercised without hearing the licensee.
4. Before considering the argument addressed by the learned counsel for the petitioner, we must first notice the relevant statutory provisions. Section 17 of the Central Provinces Excise Act, 1915 provides that no intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf. Section 18 enacts that the State Government may lease to any person, on such conditions and for such period as it may think fit, the right of manufacturing or supplying or selling, by wholesale or retail, any country liquor within any specified area. It also enacts that the licensing authority may grant to a lessee a licence in the terms of his lease. Section 62 of the Act confers rule-making power on the State Government for the purpose of carrying out the provisions of the Act and without prejudice to the generality of this power specifies a number of items in respect of which the rule making power may be exercised. Thus, rules may be made under Section 62 (2) (h) prescribing the authority by, the form in which and the terms and conditions on and subject to which any licence, permit or pass shall be granted. The State Government, in the exercise of its power under this provision, has framed country spirit rules. Rule V (c) (i) of these rules provides that in a distillery area country spirit may be sold by retail in bulk including sealed bottles of flavoured liquor, if any, under a licence issued by the Collector in Form C. S. 2. It may here be mentioned that the petitioner's licence was issued under this provision. Power to cancel or suspend licence, permit or pass under the Act is conferred on the Authority granting the same by Section 31 and this power can be exercised on the grounds mentioned in Sub-section (1) of that section.
Section 31 reads as follows:
'Power to cancel or suspend licence, etc.--
(1) Subject to such restrictions as the State Government may prescribe, the authority granting any licence, permit or pass under this Act may cancel or suspend it.--
(a) if any duty or fee payable by the holder thereof be not duly paid; or
(b) in the event of any breach by the holder thereof or by any of his servants, or by any one acting on his behalf with his express or implied permission, of any of the terms or conditions thereof;
(c) if the holder thereof, or any of his servants, or any one acting on his behalf with his express or implied permission, is convicted of any offence under this Act or any other law for the time being in force relating to revenue, or of any offence (under the Dangerous Drugs Act, 1930 (II of 1930)), or under the Indian Merchandise Marks Act, 1889 (IV of 1889), or under any section which has been introduced into the Indian Penal Code (XLV of 1860), by Section 3 of that Act; or
(d) if the holder thereof is convicted of any cognizable and non-bailable offence; or
(e) if the holder thereof is punished for any offence referred to in Clause (8) of Section 167 of the Sea Customs Act, 1878 (VII of 1878): or
(f) where a licence, permit or pass has been granted on the application of the holder of any lease granted under Section 18, on the requisition in writing of such leases; or
(g) if the conditions of the licence, permit or pass provide for such cancellation or suspension at will.'
5. The question as to the nature of function of a licensing authority in granting and cancelling occupational and trading licences has been considered in a number of cases, but the decisions are not quite uniform on the point. Under the English law, granting or refusal of a licence has generally been held to be a judicial act. It has thus been held that the licensing justices in granting, refusing or renewing liquor licences act judicially; Sharp v. Wakefield, 1891 AC 173; Rex v. Wood-house, 1906-2 KB 501; Rex v. Brighton Justices, Ex parte Jarvis 1954-1 All ER 197. Similar view has been taken of the function of London County Council in disposing of applications for music and dancing licences, Rex v. London County Council, Ex parte Akkersdy 1892-1 QB 190 as also applications for cinematograph licences; Rex v. London County Council; Ex parte Entertainment Protection Association Ltd., 1931-2 KB 215. As the granting or refusal of a licence on the authodity of these cases is a judicial act, it could be expected that revocation or cancellation of a licence would also be held to be judicial act English cases have, however, taken a different view of the act of cancellation or revocation of a licence which has been held to be a purely administrative act; Nakkuda All v. Jayaratne, 1951 AC 66; Rex v. Metropolitan Police Commissioner: Ex parte Parker, 1953-2 All ER 717. In Nakkuda Ali's case, 1951 AC 66 the question related to the construction of Regulation 62 of the Defence (Control of Textiles) Regulations, 1945, which empowered the Controller of Textiles in Ceylon to cancel a textile dealer's licence 'where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer.' After recalling the classic words of Atkin, L. J.:
'Wherever any body of persons having legal authority to determine questions affecting the rights of subjects and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs;' Rex v. Electricity Commissioners, 1924-1 KB 171 at p. 205.'
Lord Radcliffe, who delivered the judgment of the Privy Council in Nakkuda Airs case, 1951 AC 66 quoted the following observations of Hewart, C. J., on this passage:
'In order that a body may satisfy the required test it is not enough that it should have legal authority to determine questions affecting the rights of subjects; there must be superadded to that characteristic that the body has the duty to act judicially; Bex v. Legislative Committee of the Church Assembly (1928) 1928-1 KB 411 at p. 415.'
and then said:
'It is that characteristic that the Con' troller lacks in acting under reg. 62. In truth, when he cancels a licence he is not determining a question: he is taking executive action to withdraw a privilege because he believes, and has reasonable grounds to believe, that the holder is unfit to retain it. But, that apart, no procedure is laid down by the regulation for securing that the licence holder is to have notice of the Controller's intention to revoke the licence, or that there must be any inquiry, public or private, before the Controller acts.'
It will thus be seen that there were three factors, which influenced the Privy Council in coming to the conclusion that the function of the Controller in cancelling a dealer's licence was purely administrative. Firstly, a licence to carry on busines of a textile dealer was held to be privilege; secondly it was said that there was no provision in the Regulation requiring the Controller to issue notice to the dealer before cancellation of licence and thirdly, the view expressed by Hewart, C. J., on the classic passage of Atkin, L. J., was accepted as the guiding principle that before a body may be held to discharge quasi-judicial function, it was not enough that it had legal authority to determine questions affecting the rights of subjects, but there must further exist a duty imposed on that body to act judicially. In 1953-2 All ER 717 (supra), the question before the Court was regard-lag the construction of para 30 (1) of London Cab Order, 1934 which provides :
'A cab-driver's licence shall be liable to revocation or suspension by the Commissioner of Police if he is satisfied, by reason of any circumstances arising or coming to his knowledge after the licence was granted, that the licensee is not a fit person to hold such a licence.'
It was held that the Commissioner of Police in revoking the licence did not exercise any quasi-judicial function. Lord Goddard, C. J., in the course of his judgment referred to licences in private law which unless irrevocable can always be withdrawn without assigning any reason. Both these cases viz. 1951 AC 66 (supra) (1953) 2 All ER 717 (supra) have been adversely criticised in extra judicial writings; (See: Wade, The Twilight of Natural Justice, 67 Law Quarterly Review 103 regarding Nakkuda Ali's case, 1951 AC 66 Gordon, The Cab Driver's Licence case, 70 Law Quarterly Review 203; S. A. De Smith, Administrative Hearings in English Law 68, Harvard Law Review 569 PP. 594, 595; Judicial Review of Administrative Action, P. 280; Marshall, Natural Justice, PP. 159, 157; Schwartz, American Administrative Law, PP. 116. 120.) Prof. De Smith has to say the following in the context of these cases:
'If the granting of a licence is held to be a judicial act, the revocation of such a licence should also be held to be a judicial act. Indeed, there may be situations in which it will be justifiable to classify the revocation of a licence as a judicial act, imposing upon the competent authority an implied obligation to give the licensee prior notice and opportunity to be heard, even though no corresponding implied obligation is imposed in relation to the initial application for licence; for the practical effect of the revocation of a licence is likely to be far more serious for the licensee than is the effect of a refusal to grant him a licence in the first instance. In any event, it is manifestly unsatisfactory to hold that the revocation of a licence is not the determination of a question affecting 'rights' and is therefore not a judicial act, merely because it consists analytically in the withdrawal of a privilege. Nevertheless, this brand of sterile conceptualism has commended itself to the courts in some recent cases'. (S. A. De Smith, Judicial Review of Administrative Action, p. 280)
Judicial disapproval of Nakkuda Ali's case, 1951 AC 66 came in Ridge v. Baldwin, 1963-2 All ER 66 (HL). After a thorough review of cases Lord Reid in his speech demonstrated that the gloss put by Lord Hewart. C. J., on the classic passage of Atkin, L. J., (which we have already quoted) and relied upon in Nakkuda Ali's case, 1951 AC 66 could not be reconciled with earlier authorities and that Atkin, L. J. never meant to say that before a body can be found to exercise quasi-judicial function requiring it to observe the principles of natural justice it is not enough that it has a duty to determine the rights of individuals but there must always be something more to impose on it a duty to act judicially. 1963-2 All ER 66 (supra) re-establishes that judicial character of a duty may be inferred from the nature of the duty itself and there need not be any express language used by the Legislature requiring the body on which the duty is impose to act judicially; duty to act judicially will be implicit in the duty to determine what the rights of an individual should be.
6. In American Administrative Law when an administrative agency exercises adjudicatory functions, the assumption is that parties affected will have notice and opportunity of being heard. This requirement follows from the Due Process Clause of the Fifth Amendment of the Constitution. The meaning of 'due process' is, however, not precise and definite and differs according to the rights that are to be adjudicated. A distinction is drawn between the procedure required for denial of a licence and the procedure required for revocation of an existing licence. The distinction is stated by Parker as follows;
'The procedure leading to the denial of a license needs to be less 'due' than the revocation of an outstanding license. The former gives the agency a wide discretion, whereas the latter amounts to the taking away of a vested right, as it were, which comes more directly under the constitutional protection.' (Reginald Parker, Administrative Law, PP. 39, 40) In contrast to the English case, of 1953-2 All ER 717 (supra) it is interesting to notice a New York Case (Hecht v. Mona-ghan 307 NY 461 where also a cab-driver's licence was revoked without following the requirements of natural justice. The Court of Appeals of New York in holding that the act of revocation of the licence was of a judicial nature observed:
'Where, as in the present case, the statute empowers the agency to revoke a license because of a failure to comply with or because of wilful or knowing violation of the regulations of that agency then the administrative act is of a judicial nature since it depends upon the ascertainment of the existence of certain past or present facts upon which a decision is to be made and rights and liabilities determined. It is clearly not a merely administrative act concerned with the internal functioning of the agency itself, but it is a judicial or quasi-judicial function of the administrative body.' (quoted from Schwartz, American Administrative Law, P. 116).
As regards the federal administrative agencies in America, the matter is governed by the Administrative Procedure Act which was enacted by the Congress in 1946, In regard to revocation or cancellation of licences. Section 9 (b) of that Act provides as follows:
'Except in cases wilfulness or those in which public health, interest or safety requires otherwise, no withdrawal, suspension, revocation, or annulment of any license shall be lawful unless, prior to the institution of agency proceedings therefor, facts or conduct which may warrant such action shall have been called to the attention of the licensee by the agency in writing and the licensee shall have been accorded opportunity to demonstrate or achieve compliance with all lawful requirements. In any case in which the licensee has, in accordance with agency rules, made timely and sufficient application for a renewal or a new license, no license with reference to any activity of a continuing nature shall expire until such application shall have been finally determined by the agency.' (Administrative Law by Parker PP. 302, 303).
7. The question relating to the nature of the act in the granting or refusal of liquor licences in the context of East Bengal and Assam Excise Act, 1910 was considered by the Supreme Court in Nagendra Nath v. Commissioner of Hills Division, AIR 1958 SC 398 where it was held that the grant or refusal of a licence by the original authority is an administrative act but the appellate and revi-sional authorities in that matter exercise quasi-judicial functions. Again, in Kisban Chand v. Commissioner of Police AIR 1961 SC 705 the function of Commissioner of Police under Section 39 of the Calcutta Police Act in the matter of granting or refusal of a licence for opening an eating house was held to be administrative involving no judicial or quasi-judicial process. To quote their Lordships:
'There is no lis as between the person applying for a licence and the Commissioner; the exercise of the discretion depends upon the subjective satisfaction of the Commissioner as to whether the person applying for a licence satisfies the three conditions mentioned above. It is true that the order when made one way or the other affects the fundamental right of carrying on trade, but in the circumstances it cannot but be an administrative order (see, AIR 1958 SC 398) and though the Commissioner is expected to act reasonably there is no duty cast on him to act judicially. In 1951 AC 66 the Privy Council pointed out that it was quite possible to act reasonably without necessarily acting judicially and that it was a long step in the argument to say that because a man is expected to act reasonably he cannot do so without a course of conduct analogous to the judicial process. The compulsion of hearing before passing the order implied in the maxim 'audi alteram partem' applies only to judicial or quasi-judicial proceedings: (see, Express Newspapers (P) Ltd. v. Union of India, 1959 SCR 12 at p. 106 =AIR 1958 SC 578 at p. 610.)
It will be seen that Nakkuda Ali's case, 1951 AC 66 was here relied upon by the Court in reaching the conclusion that the function of licensing under Section 39 of the Calcutta Police Act was administrative. Following these decisions of the Supreme Court, a Division Bench of our High Court held that the Excise Commissioner in confirming or refusing to confirm an auction-sale of liquor shops under the Central Provinces Excise Act does not perform any judicial or quasi-judicial function (see, State of Madhya Pradesh v. Board of Revenue, 1964 MPLJ 237). If the matter rested with these cases it would have been difficult for us to hold, in face of the approval of Nakkuda Ali's case, 1951 AC G6 in AIR 1961 SC 705 (supra), that the act of the Collector in cancelling a licence under Section 31 of the Central Provinces Excise Act is quasi-judicial in nature. But in two later, cases the Supreme Court has accepted as correct Lord Reid's disapproval of Nakkuda Ali's case, 1951 AC 66 in 1963-2 All ER 66 (supra); (see Associated Cement Companies v. P. N. Sharma, AIR 1965 SC 1595 at p. 1601 and Shri Bhagwan v. Ramchand, AIR 1965 SC 1767 at p. 1770). In Ramchand's case, AIR 1965 SC 1767 their Lordships observed:
'But it is not necessary that the obligation to follow the principles of natural justice must be expressly imposed on such an authority or body. If it appears that the authority or body has been given power to determine questions affecting the rights of citizens, the very nature of the power would inevitably impose the limitation that the power should be exercised in conformity with the principles of natural justice. Whether or not such an authority or body is a tribunal, would depend upon the nature of the power conferred on the authority or body, the nature of the rights of citizens, the decision of which falls within the jurisdiction of the said authority or body, and other relevant circumstances. This question has been considered by this Court on several occasions. In Civil Appeal No. 44 of 1964 D/- 9-12-1964=AIR 1965 SC 1595 both aspects of this matter have been elaborately examined, and it has been held adopting the view expressed by the House of Lords in Ridge v. Baldwin, 1964 AC 40 that the extent of the area where the principles of natural justice have to be followed and judicial approach has to be adopted, must depend primarily on the nature of the jurisdiction and the power conferred on any authority or body by statutory provisions to deal with the questions affecting the rights of citizens. In other words, in that decision this Court has held that the test prescribed by Lord Reid in his judgment in the case of 1964 AC 40 (supra) affords valuable assistance in dealing with the vexed question with which we. are concerned in the present appeal.'
Subsequent decisions have reaffirmed the rule that the judicial character of the duty may be inferred from the nature of the duty itself; see, State of Orissa v. (Miss) Binapani Devi AIR 1967 SC 1269 and Gopalkrishna v. State of Madhya Pradesh AIR 1968 SC 240 at p. 243. It must also be noticed that under our system of law professional, occupational or trading licences are not in the nature of privileges. Article 19(1) of the Con stitution guaranteed to all citizens the fundamental right to practise any profession, or to carry on any occupation, trade or business. Regulation of any profession, occupation, trade or business by a system of licensing can only exist if it imposes reasonable restrictions on the exercise or the right conferred by Article 19(1)(g) in the interest of the general public. In the matter of liquor business some doubt was created by the decision in Cooverjee B. Bharucha v. Excise Commissioner, AIR 1954 SC 220 whether there is any fundamental right in a citizen to carry on liquor business. That doubt has now been cleared by the decision in Krishna Kumar v. J and K. State, AIR 1967 SC 1368 where it has been held that dealing in liquor is busiress and a citizen has a right to do business in that commodity but the State can make a law imposing reasonable restrictions on the said right in public interests.
8. With this background we now come back to the question raised in this case regarding the nature of the duty imposed on the licensing authority by Section 31 (1) of the Central Provinces Excise Act in the matter of cancellation or suspension of a licence. We are here essentially concerned with Clause (b) of Section 31 (1) as the petitioner's licence was cancelled under that clause. That provision enables the licensing authority to cancel a licence 'in the event of any breach by the holder thereof or by any of his servants, or by any one acting on his behalf with his express or implied permission, or any of the terms or conditions thereof'. It must be noticed that the charge of breach of terms or conditions of a licence is one which will require investigation before it is found as a fact and if the licensee against whom such a charge is levelled is given an opportunity to meet it, it may be possible for him to disprove the same. Cancellation of a licence is a serious matter as it deprives the licencee of his right to carry on business. In our opinion, the nature of the duty to determine whether the licensee has committed any breach of terms or conditions of his licence and whether for that reason the licence should be cancelled, imposes upon the authority the duty to act judicially. It necessarily follows that the authority must follow the requirements of natural justice and must give an opportunity to the licensee to meet the allegations of breaches of terms and conditions of the licence report-ed against him before cancelling the licence. As in the instant case, this jopportunity was not given to the peti-jtioner, it has to be held that the cancellation of his licence was invalid and void.
9. Before concluding, we must notice the argument advanced by the learned Government Advocate that the petitioner should not be granted any relief, as he did not avail of the alternative remedy of going up in appeal against the order of the Collector. The existence of an alternative remedy is not always a bar for issuance of a writ of certiorari. It is no doubt true that the High Court may refuse to exercise its jurisdiction under Article 226, if the petitioner did not avail of alternative remedies, but the rule requiring the exhaustion of alternative remedies before the writ will be issued is not a rule of law but is a rule of policy, convenience and discretion. The High Court will readily issue a writ of certiorari in a case where there has been a denial of natural justice; State of U. P. v. Mohd. Nooh, AIR 1958 SC 86. In the instant case, we have already held that the Collector in cancelling the petitioner's licence, did not follow the requirements !of natural justice. This defect is funda-imental and it would not be a sound exercise of discretion to refuse to interfere simply on the ground that the petitioner could have gone up in appeal.
10. The petition is allowed. The orderof the Collector cancelling the petitioner'slicence is quashed. There will be noorder as to costs of this petition. Theamount of security deposit shall berefunded to the petitioner.