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Sagarmall Agarwalla Vs. State of Orissa and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtOrissa High Court
Decided On
Case NumberOriginal Jurisdiction Case No. 668 of 1983
Judge
Reported inAIR1984Ori11; 56(1983)CLT267
ActsRice-Milling Industry (Regulation) Act, 1958 - Sections 6, 6(4) and 8(3); Constitution of India - Article 19(1)
AppellantSagarmall Agarwalla
RespondentState of Orissa and ors.
Appellant AdvocateL. Rathi, ;B.S. Misra, ;P.M. Das, ;S.K. Das, ;S.B. Jena, ;N.K. Behera and ;K.P. Mishra, Advs.
Respondent AdvocateD.P. Mohapatra, Addl. Govt. Adv.
DispositionPetition allowed
Cases ReferredRaj Restaurant v. Municipal Corporation of Delhi.
Excerpt:
.....glt 246, are not good law]. - he contends that the spirit of the statute and the rules made thereunder would clearly indicate that although the expression 'may''has been used while providing that the licensing-officer may renew the licence, this expression would mean, in the context, that other conditions including the deposit of renewal fee being fulfilled, renewal of the licence is obligatory. various factors enter the verdict and the local authorities are the best judges and not the court. now it is true that no specific order is made setting out the reasons for refusal to renew the licence, but the action taken to sealing the premises for carrying on the business without a licence clearly implies that there was refusal to renew the licence and the reasons are not disclosed......heard (see air i960 sc 415 m/s. fedco (p) ltd. v. s. n. bilgrami). dealing with the question of renewal of licence for a meat shop by the municipality, the supreme court, in the case of khatki ahmad mushabhai v. limdi municipality, air 1979 sc 418 has observed that when the law vests a discretion, it has to be reasonably exercised in the context of the citizen's fundamental right. various factors enter the verdict and the local authorities are the best judges and not the court. if the totality of circumstances present in a case would indicate that there has been no abuse of discretion or a perverse use of power no interference is called for. in the instant case however for the reasons aforesaid, it must be held that discretion has improperly been exercised without following the.....
Judgment:

Behera, J.

1. If we hold and we must that the executive or any other authority has a duty to act fairly and that the right of a citizen of India to trade enshrined in Article 19(1)(g) of the Constitution is not to be subjected merely to the disadvantage or inconvenience of another individual, the writ application before the us under Article 226 of the Constitution challenging the orders passed in Annexures 11 and 12, directing the petitioner to shift the rice huller and refusing to renew his milling licence shall, for the reasons to follow succeed.

2. The petitioner was granted a licence (Annexure-1) under the Rice Milling Industry (Regulation) Act, 1958 (for short, the Act) in 1974 for milling of rice locating it at Ran-pur (Banpur?) in the district of Puri. The licence was renewed from time to time. After giving prior intimation, to the Sub-divisional Officer, Nayagarh and the Collector. Puri. the petitioner shifted the huller from plot No. 401/2129 to plot No. 414 at a distance of only 14 feet as plot No. 401 was allotted to his brother in a family partition. This shifting was in accordance with the terms of the licence for locating the huller at Banpur arid no material has been placed before us that licence had been granted to instal the huller only on plot No. 401. For this shifting, a proposal had been made for prosecution of the petitioner under Sec-tion 8 (3) of the Act, but was dropped. The Sub-divisional Officer had suspended the licence of the petitioner, as per Annexure-,7 for contravention of the provision made under Section 8(3) (e) of the Act. The petitioner appealed to the Collector, Puri, against the order of suspension and brought to his notice the fact that the licence had been renewed for the years 1976 and 1977 inspite of the shifting to the knowledge of the appropriate authorities. The petitioner had also made a representation to the State Government. These facts are disclosed in Annexures 8 and 9. During the pendency of the petitioner's appeal his licence was renewed till the end of the year 1980. The Civil Supplies Officer, Puri. advised the Sub-divisional Officer, Nayagarh that since the licence was renewed up to the year 1980 on the existing location of the huller for which opinion had been expressed by the Gov-ernment Pleader not to institute any prosecution and the State Government had been liberal in regularising unlicensed mills would be desirable to issue heence to the petitioner who had been running the mill from the year 1976 on plot No. 414 to which it had been shifted and he intimated to him about the order of the Collector allowing renewal of the licence in favour of the petitioner imposing a penalty of Rs. 100/- on him. It has been submitted before us fey Mr. Rath for the petitioner that the petitioner paid the penalty although not liable in law in order to avoid further litigation. The Collector wrote to the Sub-divisional Officer (vide Annexure 10-A) that the mill of the petitioner was not newly established but was an old one functioning since 1076 and as such, the matter could be regularised according to the Government instructions conveyed in Order No. 361976 dt. September 14, 1981. The Sub-divisional Officer lifted the order of cancellation of licence and directed 'its renewal. The licence was renewed up to Dec. 31, 1981 and thereafter up to Dec. 35, 1982, even after the shifting of the huller to plot No. 414.

3. The Sub-divisioal Officer (opposite party No. 3) visited the mill with-out any notice to the petitioner on the complaint of Shri Durga Madhab Meha-patra, a co-villager of the petitioner and communicated to the petitioner as per Annexure-11 that the complainant was facing difficulties due to the running of the holler and directed that it should be shifted from the spot within fifteen days, failing which the licences-would be can-celled. In Annexure-11 even the name of the complainant had not been disclosed and what were his difficulties had not been expressed. Thus a 'vague notice had been given to the petitioner. The petitioner appealed to the Collector and was intimated as per Annexure-12. that the Collector had ordered that the licence of the petitioner would not be rpnewed in view of the local objection; Thereafter, the Inspector of Supplies as per An-nexure-14, has directed the petitioner to stop the mill as his licence has not been renewed for this year, failing which action will be taken against him.

4. Mr. Rath has submitted before us that the impugned orders had been pass-ed deviating from the principles of natural justice and without making any enquiry into the complaint and without giving the petitioner an opportunity of feeing heard. He contends that the spirit of the statute and the Rules made thereunder would clearly indicate that although the expression 'may'', has been used while providing that the Licensing-Officer may renew the licence, this expression would mean, in the context, that other conditions including the deposit of renewal fee being fulfilled, renewal of the licence is obligatory. The Learned Additional Government Advocate has.' however contended that In view of the objection raised and the inconvenience caused to the complainant and as the running of the huller at the place to which it had been shifted would be detrimental to the public interest and would be hazardous to the community, the appropriate authority had the right to cancel the licence or to renew or not to renew a licence of this nature;

5. Section 6 of the Act reads;

'6; Grant of licences.--(1) Any owner of an existing rice mill or oi a rice mill in respect of which a permit granted under Section 5 is effective may make an application to the Licensing officer for the grant of a licence for carrying on rice-miffing operation in that rice mill.

2. Every application under Sub-section (1) shall be made in the prescribed form and shall contain the particulars regarding the location of the rice mill, the size and type thereof and such other particulars as may be prescribed.

3. On receipt of any such application for the grant of a licence the Licensing Officer shall grant the licence on such conditions (including such conditions as to improvements to existing machinery, replacement of existing machinery arid use of improved methods of rice-milling as may be necessary to eliminate waste, obtain maximum production and improve quality and conditions relating to the polishing of rice) on payment of such fees and on the de-posit of such sum if any as security for the due performance of the conditions as may be prescribed.

4. A licence granted under this section shall be valid for the period specified therein and may be renewed from time to time for such period and on payment of such fees and on such conditions (including such conditions as to improvements to existing machinery, replacement, of existing machinery and use of improved methods of rice-milling, as may be necessary to eliminate wastes obtain maximum production and improve quality) as may be prescribed: Provided that if in a mill in respect of which a licence has been granted under Sub-section (3) rice-milling operations are not carried on for a continuous period of one year at any time after the commencement of the Rice-Milling Industry (Regulation) Amendment Act, 1968. then, such licence shall cease to be valid upon the expiry of the said period of one year and a fresh licence shall be necessary for carrying on rice-milling operations in that mill.'

As provided in Section 6, the licence shall be valid for the specified period and may be renewed from time to time for such period and on payment of such fees and on such conditions as may be prescribed. No material has been placed before us that any condition of the licence or any statutory provision has been infringed,

6. In p. p. Enterprises v. Union of India, AIR 1982 SC 1016. the Supreme Court has laid down, (at p. 1019):

'A person has a right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of the State to make a taw imposing reasonable restrictions under Clause (6). The expression 'reasonable restrictions' signifies that the limitation imposed on a person in enjoyment of that right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. No cut and dry test can be applied to each individual statute impugned, nor an abstract standard or general pattern of reasonableness can be laid down as applicable in all cases. The Court in each case has to strike a proper balance between the freedom guaranteed by Article 19(1)(g) and the social control permitted by Clause (6) of Article 19.........'

7. It is not and could not be the intention of the Legislature that a citizen, having a right to trade under Article 19(1)(g) of the Constitution and having been granted a licence under the Act and having been allowed to run the huller from year to year after renewal of the licence, could be stopped from running the huller by refusing renewal of his licence not on any real or germane ground, but owing to the supposed inconvenience of another person.

8. If a law confers powers on an administrative authority absolute discretion to grant or withdraw or revoke a Permit for the carrying on of a business, the restriction imposed by such law may be unreasonable except in the case of trade or business which is inherently dangerous to the community and which the State is entitled either to prohibit entirely or to permit only under such conditions as will limit to the utmost its evils. The discretion vested by a statute cannot be said to be absolute and unregulated if the statute lays down the policy according to which the discretions is to be exercised. If the authority exercises the discretion otherwise than in accordance with the statutory policy, its order would be vitiated because of abuse of power and would be liable to set aside. In the interest of the general public, the State has the right to impose reasonable conditions subject to which a business may be carried or and if power is conferred by the Legislature upon an administrative authority to proceed to grant or renew licence not in an arbitrary but in a quas-judicial manner, having regard to the conditions laid down by the Legislature and in accordance with the principle of natural justice, the restrictions can not be said to be unreasonable.

9. Sub-section (3) of Section 6 of the Act provides that on the receipt of an application for the grant of a licence, the Licensing Officer shall grant the licence on such conditions as may be necessary and as provided therein and on the deposit of such sum if any as security for the due performance of the conditions as may be prescribed.

10. In AIR 1966 SC 1318 Punjab Sikh Regular Motor Service, Moudhapara, Raipur v. Regional Transport Authority, Raipur. their Lordships of the Supreme Court dealing with a case of renewal of a stage carriage permit have observed that in the context and the language of the rule, the word 'may', though permissive in form, is to be held to be obligatory. Reference has been made therein to the following passage from Julius v. Bishop of Oxford (1880) 5 AC 214:

'Enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right.'

Judged in the light of the pronouncement of the Supreme Court referred to above and in the context of the provisions made in the Act with regard to the renewal of a licence, we are not at one with the learned Additional Government Advocate who has submitted before us that the expression 'may' occurring in Section 6 (4) of the act clothes the Licensing Officer with an unfettered discretion to refuse to renew a licence on any ground. An order refining to renew a licence should be a fait and reasonable one.

11. In the case before us the licence in favour of the petitioner had been renewed from time to time even after the shifting of the huller to the knowledge of the appropriate authorities. Complaint had been made against the runn-ing of the huller by only one person, namely, Shri Durga Madhab Mohapatra. It would, however. appear from An-nexure-13 that some of the co-villagers of the petitioner had addressed a letter to the Collector, Puri, .stating that the running of the huller by the petitioner was convenient to them. It had been stated in the petition of complaint dated Nov. 4, 1982 by Shri Durga Madhab Mohapatra that the running of the huller at the present place had been causing damage to his house and would endanger the Hyes of the inmates and cause loss to his properties. As we notice from the files produced before us, no proper enquiry had been made by the Sub-divisional Officer into the complaint. The petitioner had not been asked to show cause nor was he even heard on this complaint. All that the Sub-divisional Officer had recorded in the file when he enquired into the matter on Nov.. 19, 1982. was that the complainant had been facing a lot of difficulties. No finding had been recorded that the running of the huller would endanger the lives of the inmates of the house of the complainant or cause damage to his nro-perties.

12. The petitioner appealed to the Collector who stayed the operation of the impugned order passed by the Sub-divisional Officer. The Collector did not give notice to the petitioner for hearing him in connection with his appeal. A note was submitted to him on Feb.. 2. 1983, that the Sub-divisional Officer might be advised to obtain the opinion of the Inspector of Factories at the area and take action. The Collector, however, passed the following order:

'The licence should net be renewed in view of the local objection.'

This order was communicated to the petitioner as per Amnexure-12.

13. Relying on the principles laid down by the Madras High Court in (1977) 2 Mad LJ 221 Thangathathammal, Proprietrix Krishna Vilas Rice Mill v, Secy., Food Department, Fort St. George, Madras-9. which was a case under the same Act challenging a licence, it has been submitted before us that the paramount consideration of the licensing system under the Act is the interest of the public at large and the authorities are not precluded from taking note of representations of individual or private interests. The learned Additional Government Advocate has also submitted before us that no individual has a right, strictly so called, to obtain for himself a permit or licence, any more than he has, as such, to prevent its being granted in favour of another and the grant of a permit or a licence under the Act is essentially an act of administrative discretion, although in taking a decision, the concerned authority might perforce have to take note of relevant factual considerations bearing on public interest and might choose to hear representations from private interests also.

14. While we would respectfully agree with the observations made by the Madras High Court in this regard, we notice that in the instant case the orders Annexures-11 and 12 have been passed on the basis of a complaint made by a private individual that the running of the huller would endanger his life and property which had not been substantiated and the Subdivisional Officer had merely stated that the complainant had been facing difficulties. The orders in question had been passed without affording the petitioner an opportunity even to show cause or even directing him to be present on the spot at the time of the enquiry by the Subdivisional Officer. The Subdivisional Officer arbitrarily made an order directing the petitioner to shift his huller within fifteen days and the Collector, Puri, instead of finding out as to whether the impugned order passed by the Subdivisional Officer which was under appeal had legally and properly been made, passed an order that the licence would not be renewed as there was local objection.

15. In the matter of cancellation of licence, the licensee has to be given a reasonable opportunity of being heard (See AIR I960 SC 415 M/s. Fedco (P) Ltd. v. S. N. Bilgrami). Dealing with the question of renewal of licence for a meat shop by the Municipality, the Supreme Court, in the case of Khatki Ahmad Mushabhai v. Limdi Municipality, AIR 1979 SC 418 has observed that when the law vests a discretion, it has to be reasonably exercised in the context of the citizen's fundamental right. Various factors enter the verdict and the local authorities are the best judges and not the court. If the totality of circumstances present in a case would indicate that there has been no abuse of discretion or a perverse use of power no interference is called for. In the instant case however for the reasons aforesaid, it must be held that discretion has improperly been exercised without following the principles of natural justice and without even hearing the petitioner.

16. In AIR 1982 SC 1550. M/s. Raj Restaurant v. Municipal Corporation of Delhi. it has been laid down (At p. 1552):

'Where, in order to carry on business a licence is required, obviously refusal to give licence or cancellation or revocation of licence would be visited with both civil and pecuniary consequences and as the business cannot be carried on without the licence it would also affect the livelihood of the person. In such a situation before either refusing to renew the licence or cancelling or revoking, the same, the minimum principle of natural justice of notice and opportunity to represent one's case is a must. It is not disputed that no such opportunity was given before taking the decision not to renew the licence though it is admitted that for the reasons hereinbefore set out the licence was not renewed. Such a decision in violation of the minimum principle of natural justice would be void. Now it is true that no specific order is made setting out the reasons for refusal to renew the licence, But the action taken to sealing the premises for carrying on the business without a licence clearly implies that there was refusal to renew the licence and the reasons are not disclosed. And the action disclosing the decision being in violation of the principle, of natural justice deserves to be quashed,'

17. For the reasons aforesaid, we are of the view that there had been complete non-application of mind both by the Subdivisional Officer and the Collector and the orders: as per Annexures 11 and 12 had been passed arbitrarily causing serious prejudice to the petitioner without: proper enquiry and without fallowing the principles of natural justice. It is therefore, necessary and proper in the interests of justice to quash Annexures 11 and 12 directing the authorities to dispose of the matter relating to the renewal of the licence of the petitioner in accordance with law within a specified period.

18. We would accordingly allow the writ application, quash Annexures 11 and 12 and direct the Collector. Puri (opposite party No. 2) and the Sub-divisional Officer, Nayagarh (opposite party No. 3) to dispose of the matter with regard to renewal of the licence of the petitioner within a period of two months from the date of communication of this order after due and proper enquiry and giving the petitioner an opportunity of being heard. We make no order as to the costs of this proceeding.

R.C. Patnaik, J.

I agree.


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