1. By tin's application under articles 226 and 227 of the Constitution, the petitioner prays for the issue of a writ of certiorari for quashing an order of the State Government, communicated to her by a letter addressed in her by the Collector of Balaghat on 22nd May 1964, rejecting her application for the grant of a permit under the Rice Milling Industry (Regulation) Act, 1958, thereinafter referred to as the Act), for establishing a new rice-mill. She has also made the prayer that a direction in the nature of mandamus be issued to the State Government for granting a permit to her under the Act.
2. The petitioner applied on 2nd January 1961, in the form prescribed by the Rice Milling Industry. (Regulation and Licensing) Rules, 1959, (hereafter called 'Rules') for the grant of a permit in establish a shelter type new rice-mill at Katangi in Balaghat District. On receipt of the application, the State Government asked her in supply information on certain points, obtain a clearance certificate andfurnish a corrected plan of the proposed rice-mill which, as originally submitted by her, was found to be defective. Ultimately on 22nd May 1964, the Collector, Balaghat, informed the petitioner that the Government had rejected her application for the grant of a permit for selling up a shelter type rice mill at Katangi. The petitioner contends that the rejection of her application was arbitrary; that there was a pressing need for the establishment of a new rice-mill at Katangi; and that some persons, who had applied for the grant of permit for setting up rice-mills in Katangi after her, were actually granted permits by the State Government, whereas she was denied the permit and thus she was discriminated against.
3. It was argued by Shri Dharmadhikari, learned counsel appearing for the petitioner, that in the matter of the grant of permit under Section 5 of the Act the competent authority exercised a quasi-judicial function under Sections 5(4) and 5(5) of the Act; that, therefore, the State Government was bound to give an opportunity of hearing to the petitioner before rejecting her application and was also required to give its reasons for the rejection; and that as the order of rejection communicated to the applicant by the Collector's letter dated 22nd May 1964 did not contain any reasons for the refusal of the permit and was passed behind the back of the applicant, it was illegal. In reply, Shri Bhave, learned Government Advocate, contended that in considering the question whether a permit should or should not be granted under Section 5 of the Act, the State Government was not under any obligation to act judicially or quasi-judicially at any stage; that the question of the grant or refusal of a permit was an administrative matter; and being so, the State Government was not bound to give a hearing to the petitioner before rejecting her application. It was said that the State Government actually intimated to the Collector, Balaghat, that there was no scope for the establishment of any more rice-mill al Katangi and hence the petitioner's application for a permit was rejected by the State Government; that no person who had applied subsequently to the applicant was granted a permit for the establishment of a new rice-mill; and that the persons, to whom the petitioner had made a reference in paragraph-7 of her petition, were granted permission for expansion of their mills and not permits for setting up new rice-mills.
4. In our judgment, this application must be rejected. The main question that arises for determination in this case is whether the order of the Government under Section 5 of the Act granting or refusing a permit is quasi-judicial or administrative in its scope. The first two sub-sections of Section 5 deal with the making of an application for the grant of a permit for the establishment of a new rice-mill or for the recommencement of a defunct rice-mill and the particulars that such an application should contain. The next three sub-sections of Section 5 are as follows:--
'5. (1) ****(2) **** (3) If, on receipt of any such application for the grant of a permit, the Central Government is of opinion that it is necessary so to do for ensuring adequate supply of rice, it may, subject to the provisions of Sub-section (4) and Sub-section (5), grant the permit specifying therein the period within which the mill is to he established or, as the case may be, the mill is to recommence rice-milling operation and such other conditions as it may think fit to impose, in accordance with the rules, if any, made in this behalf.
(4) Before granting any permit under Sub-section (3), the Central Government shall cause a full and complete investigation to be made in the prescribed manner in respect of the application and shall have due regard to-
(a) the number of rice-mills operating in the locality;
(b) the availability of paddy in the locality;
(c) the availability of power and water supply for the rice mill in respect of which a permit is applied for;
(d) whether the rice mill in respect of which a permit is applied for will be of the huller type, shelter type or combined shelter-bullet type;
(e) whether the functioning of the rice mill in respect of which a permit is applied for would cause substantial unemployment in the locality;
(f) such other particulars as may be prescribed.
(5) In granting a permit under this see lion, the Central Government shall give preference to a defunct rice mill over a new rice mill. 6. ** ** **'
Section 6 is concerned with the grant of a licence for carrying on rice-milling operations in a rice-mill to a person who is the owner of an existing rice-mill or who has obtained a permit under Section 5. Section 7 provides for revocation, suspension and amendment of licences granted under Section 6. Orders passed under Section 6 or 7 are made appealable under Section 12. But there is no provision in the Act for any appeal against orders passed under Section 5.
5. It will he seen that under Section 5(3) a permit can be granted only if the Government is of opinion that it is necessary so to do for ensuring adequate supply of rice, and the Government is required to form this opinion subject to the provisions of Sub-sections (4) and (5) of Section 5 of the Act. The grant or refusal of a permit is thus based on the subjective opinion of the Government, formed after taking into consideration the matters enumerated in Sub-section (4). That Sub-section no doubt says that the Government 'shall cause a full and complete investigation In be made in the prescribed manner in respect of the, application But the Rules framed under the Act do not prescribe any procedure for investigation. Sub-rule (2) of Rule 3 of the Hides, which is the material rulehere, only lays down that the investigation referred to in Section 5(4) of the Act shall be made with a view to ascertaining whether the grant of a permit is necessary for ensuring an adequate supply of rice and shall, in addition to the mailers specified in Clauses (a) to (e) of Section 5(4) relate to the ascertainment of information regarding the various matters enumerated in the sub-rule. Thus the Act or the Rules made thereunder nowhere provide that the 'opinion', on the basis of which the Government is to act in the exercise of its discretion in the matter of the grant or refusal of a permit, must be formed on certain facts ascertained in a certain manner by means of evidence or after considering the representations and objections of the parties affected. The Government is free to base its opinion on whatsoever material it thinks fit and howsoever obtained in the course of its executive functions or derived from the evidence at an enquiry, it any, held, relating to the matters' it is required to 'have due regard' under Sub-section (4) of Section 5, and Sub-rule (2) of Rule 3. It is important to note that the Government is not required to decide the matters enumerated in Sub-section (4) of Section 5 or Sub-rule (2) of Rule 3 objectively. That being so, if cannot be urged with any degree of force that the Government discharges a quasi judicial function under Section 5 in the matter of grant or refusal of a permit, and its order granting or refusing a permit is a quasi-judicial order.
6. That the function discharged by the Government under Section 5 is administrative in its nature becomes very clear on the application of the tests laid down by the Supreme Court in Province of Bombay v. Khushaldas, S. Advani, AIR 1950 SC 222, Board of High School v. Ghanshyam, AIR 1962 SC 1110, and Board of Revenue v. Vidyawati, AIR 1962 SC 1217. On a consideration of these cases, and of the case of Moti Miyan v. Commr., Indore Division, 1960 MPLJ 100: (AIR 1960 Madh. Pra. 157), it has been held by this Court in State of Madhya Pradesh v. Board of Revenue, 1964 MPLJ 237, that the question whether the authority concerned is required to act judicially or quasi judicially must in the first instance be determined from the express provisions of the Act under which it functions; that if the provisions of the Act are, silent, then the question whether the authority is required to act quasi-judicially must be determined on a consideration of the provisions of the Act and the cumulative effect of the nature of the rights affected, manner of disposal provided, and the objective criterion to be adopted; and that the final determination of the authority cannot be regarded as a quasi-judicial act unless the authority is required by the statute to act judicially or quasi judicially, and if the authority is not required to decide the matter before it objectively on the basis of the material before it, but subjectively, then it cannot he held to he a quasi judicial authority. In Moti Miyan's case, 1960 MPLJ 100 : (AIR 1960 Madh Pra 157), it was pointed out by this Court that--
'.. .. .. a quasi-judicial decision Is nothing but an administrative decision, some stage or some element of which possesses judicial characteristics. The decision, whether quasi judicial or administrative, is taken by the competent authority in the exercise of its discretion. But the distinguishing feature of the two kinds of acts is the mode or manner in which the opinion on the basis of which the act is done by the authority in the exercise of its discretion is formed. The decision would be quasi judicial if in reaching that decision the authority is required first to ascertain facts by means of evidence and is then free to take such action as it may think tit on the facts so ascertained. In such a case the authority must consider the representations and objections of the parties affected and give them an opportunity to adduce and examine the evidence On the other hand, the decision would he purely administrative if in taking that decision the authority is free to base its opinion on whatever material it thinks fit and howsoever obtained in the course of its executive functions or derived from the evidence at an enquiry, if there is any. One must, therefore, look to the particular provisions of the statute in order to determine the question whether the authority acting under those provisions acts in an administrative or a quasi judicial capacity.'
Applying these tests here, it is evident that the decision of the Government about the grant of refusal of a permit under Section 5 is purely an administrative decision. If the Government acts in an administrative capacity under Section 5 and its decision is an administrative decision, then there was no obligation on the Government to hear the applicant before rejecting her application. It is well settled that the rule of natural justice that a person whose rights are sought to be affected by any action is entitled to a notice and a hearing is attracted only when the authority making the order acts judicially or quasi judicially. The rule about hearing does not apply where the power to make an order is exercised subjectively. In Kishan Chand v. Commissioner of Police, Calcutta, AIR 1961l SC 705, and Express Newspaper Ltd. v. Union of India, AIR 1958 SC 578, the Supreme Court pointed out that the compulsion of hearing before passing an order implied in the maxim 'audi alteram partem applied only to judicial or quasi judicial proceedings The order of the State Government rejecting the petitioner's application cannot, therefore, be assailed on the ground that it was passed by the Government without giving any hearing to the petitioner
7. The contention that the order of rejection of the petitioner's application was bad inasmuch as in the communication addressed to her no reasons for the rejection were stated is altogether unsubstantial It is true that in that communication no reasons had been given But in the letter, which the Government addressed to the Collector and which has been exhibited along with the opponents' return, it was mentioned that there was no scope for establishment of any more rice millat Katangi and it was because of this reason that the petitioner's application was rejected. The statements made in paragraph 1(d), of the opponents' return, are supported by the record sent up to this Court. That record shows that an investigation was made in the specified matters and the Government was satisfied that there was not enough paddy in the neighbourhood to justify the issue of a permit to the petitioner for the setting up of a new rice-mill. It is true that subsequent to the making of the application for a permit by the petitioner, three persons mentioned in paragraph 7 of the petition were allowed to expand their existing rice-mills. But from this it does not follow that here was scope for the establishment of a new rice-mill. There is a material difference between the setting up of a new rice-mill and the expansion of one already going, and this difference has been recognised in the Act itself, which contains separate provisions for the grant of a permit for establishment of a new rice-mill and for permission to expand a rice-mill already existing. The petitioner's complaint that by refusing a permit to her the Government has treated her differently from others thus lacks substance.
8. Learned counsel for the applicant sought to support his arguments by the decision of the Madras High Court in Abdul Mazid v. State of Madras, 1957-2 Mad LJ 1: ((S) AIR 1957 Mad 551) In that case, Rajgopalan J. held that an order made by the Government granting a licence under the Madras Rice Mills Licensing Order, 1955, was a quasi judicial order The learned Judge based his conclusion on the reasoning that where statutory rules prescribe the taking out of a licence as a condition precedent to a person engaging himself in a business of his choice, the grant or refusal of the licence by the competent authority cannot be viewed merely as an administrative order. In coming to this conclusion, he relied on certain decisions dealing with the nature of functions discharged, by transport authorities under Motor Vehicles Act, 1939, and other statutes. With all due deference to the learned Judge, we do not find ourselves in agreement with the view expressed by him. It may be noted that the decision of Rajgopalan J. in the above case was not followed by Veeraswami J. in Ramanathan Chettier v. Board of Revenue. (1963) 2 Mad LJ 320, where the learned Judge was inclined to take the view that the jurisdiction of the authority issuing or refusing permits under Section 5 of the Act was not quasi judicial. Veeraswami J. referred to a Division Bench decision of the Madras High Court in Lakshmi Ammal v. P.V. Vaidyalingam, WA No 195 of 1962 (Mad), and said that in that case the Division Bench took a view different from that expressed by Rajgopalan J. in Abdul Mazid's case. 1957-2 Mad LJ 1: ( (S) AIR 1957 Mad 551).
9. For the foregoing reasons, we are of the opinion that the order passed by the Government rejecting the petitioner's application for the grant of a permit under Section 6 ofthe Act is not quasi judicial, but only an administrative order, and that it was passed inconformity with the provisions of Section 5(4)of the Act and Sub-rule (2) of Rule 3 of theRules. The result is that this petition is dismissed with costs. Counsel's fee is fixed atRs. 100/-. The outstanding amount of security deposit, if any, after deduction of costs,shall be refunded to the petitioner.