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Jamnadas Jethanand Vs. Shri Ram Aiyar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Case NumberSpl. Civil Appln. No. 47 of 1963
Judge
Reported inAIR1964Guj102; (1963)GLR897
ActsConstitution of India - Article 226; Bombay Police Act, 1961 - Sections 33
AppellantJamnadas Jethanand
RespondentShri Ram Aiyar
Appellant Advocate S.M. Shah, Adv.
Respondent Advocate B.R. Sompura, Asst. Govt. Pleader
Cases ReferredBoard of Revenue U. P. v. Sardarni Vidyawati
Excerpt:
civil - administrative function - article 226 of constitution of india and section 33 of bombay police act, 1961 - petition filed for quashing order refusing to renew petitioner's licence and ordering him to close down restaurant - petitioner found in possession of illicit liquor - petitioner committed breach of rules made by commissioner under section 33 - enquiry made by licensing authority whether license given to person is suitable person or not - order is administrative one - principles of natural justice not applicable - petition dismissed. - - the petitioner's case, therefore, was that the reasons given by the commissioner in his order for refusing to renew his licence were non-existent and consequently, the order passed by him was without any basis and bad in law. rule 9 of.....shelat, c.j.1. this is an application for a writ in the nature of mandamus or other appropriate writ, for quashing the order passed by the commissioner of police, ahmadabad, dated january 7, 1963, refusing to renew the petitioner's licence and ordering him to close down the restaurant which he is at present conducting. 2. the facts leading to the present application are few and simple. on november 30, 1963, the police raided the petitioner's restaurant and in the course of that raid, found a large quantity of illicit liquor kept in the terrace of the hotel building where the petitioner was conducting his restaurant. during the course of the raid, the police discovered two facts -- (1) that one girdharilal maganlal was found in the terrace and the police arrested him, presumably on the.....
Judgment:

Shelat, C.J.

1. This is an application for a writ in the nature of mandamus or other appropriate writ, for quashing the order passed by the Commissioner of Police, Ahmadabad, dated January 7, 1963, refusing to renew the petitioner's licence and ordering him to close down the restaurant which he is at present conducting.

2. The facts leading to the present application are few and simple. On November 30, 1963, the police raided the petitioner's restaurant and in the course of that raid, found a large quantity of illicit liquor kept in the terrace of the hotel building where the petitioner was conducting his restaurant. During the course of the raid, the police discovered two facts -- (1) that one Girdharilal Maganlal was found in the terrace and the police arrested him, presumably on the ground of being in the possession of illicit liquor, and (2) that one Chaithram Hiranand, the nephew of the petitioner, was found at the counter and in charge of the restaurant, the petitioner being then absent.

3. The petitioner had been granted a licence under the Bombay Police Act, XXII of 1951, but as that licence was to expire on December 31, 1962, he had applied for its renewal. He had paid the licence fees for such renewal on November 30, 1962 and had, along with those fees, sent a further sum of Rs. 2I- for having Chaithrani recognised as his agent. By his letter dated November 20 1962, the Commissioner of Police had informed the petitioner that his application for having his nephew Choithrsrn recognised as his agent, was granted and that he should get the aforesaid sum of Rs. 2/-credited in the Stale Bank under the heading '19-Police' and to forward the challan and the licence for endorsement by the authorities. By his order dated January 7, 1963, the Commissioner of Police refused to renew the licence and called upon the petitioner to close his business. The ground given for the refusal to renew the licence was that the petitioner had committed breach of rules 9 and 14 of the rules made by the Commissioner of Police by virtue of the power reserved to him under Section 33 of the aforesaid Act. The petitioner protested against the refusal and pointed out that he had not committed any breach of the said rules. On January 14, 1963, he received a communication to the effect that the decision, regarding the refusal to renew his licence could not be altered.

4. The petitioner's case was that his application for having Choithram recognised as his agent was already granted by the police and that therefore/ there was no question of his having committed any breach of Rule 9 and therefore, he was entitled to leave the restaurant in charge of Choithram as Choithram was not then an unauthorised agent. As regards the alleged breach of Rule 14, his case was that though illicit liquor was found from the terrace of the building where he conducted his restaurant and the said Girdharlal was found there at the time of the raid, the petitioner had nothing to do with the said Girdharlal who was a total stranger to him. His case further was that there was no ladder or staircase in the licensed premises by which one could go into the terrace and therefore, though the terrace could be said to be part of the licensed premises, it was not exclusively accessible to him. That being so, he could not be connected with the find of the illicit liquor from the terrace nor could he be said to be in conscious possession of that illicit liquor. The petitioner's case, therefore, was that the reasons given by the Commissioner in his order for refusing to renew his licence were non-existent and consequently, the order passed by him was without any basis and bad in law.

5. Section 33 of the Act empowers the Commissioner to make, alter or rescind rules not inconsistent with the Act, inter alia in respect of licensing or controlling places of public amusement or entertainment. Rule 9 of the, rules made under the Act provides that unless a person perm tiled to act under Sub-rule (2) and referred to as 'the agent', is present, no person keeping a place of public entertainment shall absent himself there from during the time it is open without obtaining the previous permission of the licensing authority, to be endorsed on the licence. Sub-rule (2) of this rule is pertinent and may, therefore, be quoted.

'(2)-- No person keeping a place of public entertainment shall at any time permit an agent to act for him in the management of such place without the like permission similarly endorsed.'

It is clear from the language of Rule 9 that the licence-holder is not entitled to allow an agent to act for him in the management of his restaurant unless 'the like permission' has been endorsed upon the licence. In order that a licence-holder may permit such an agent to act, two things are clearly necessary; (1) payment of the fees, and (2) to have the fees credited in the State Bank and to send the requisite challan and the licence to the licensing authority for endorsement. Until, therefore, that endorsement is made, the person who Is proposed to be nominated as an agent cannot be said to have been recognised as such agent, and by virtue of the provisions of Sub-rule (2) of Rule 9, the licence-holder cannot permit such an agent to act for Mm In the management of the restaurant unless that permission has been granted and endorsed upon the licence. Mr. Shah, however, relied upon the Commissioner's letter dated November 20, 1962, wherein it has been stated that the petitioner's application for having Choithram as his agent was granted' and that therefore, the failure to have his name endorsed upon the licence was merely a technical breach of the rule which the Commissioner ought not to have taken into consideration while considering his application for renewal. It is true that the Commissioner's letter does state that the petitioner's application was granted but that letter also expressly stales that the challan and the licence should be sent to the licensing authority. This was necessary because the licensing authority must be satisfied thst the fees were paid and then only an endorsement that Choitram was permitted to act as the agent of the petitioner in the management of his restaurant, could be made in compliance with Sub-rule (2) of Rule 9. The licence produced by Mr. Shah before us shows that on the 30th of November 1962 when the raid took place, Choithram's name was not endorsed upon that licence and, in fact the current agent was one Naranlal Popatlal. That being the position, it is clear that the petitioner was not entitled to permit Choithram to act as his agent for him in the management of the restaurant during his absence from the restaurant. There can be no doubt, therefore, that the petitioner had committed breach of the provisions of Rule 9(2). Mr. Shah argued that this was at fast a technical breach of the rule and that the penalty Of refusal to renew the licence was not in proportion to the technical nature of the breach. Mr. Shah forgets that the licensing rules are made in the interest of the public and public hygine. Besides, the rules give power to refuse to renew a licence to the Commissioner of Police and it would not be possible for this Court to interfere with the decision of the competent authority if the order is made with jurisdiction.

6. As regards the breach of ft. 14, prima facia, It is for the licensing authority to decide if there was any breach of the rule, in other words, whether the petitioner bad permitted illicit liquor being kept in the licensed premises. It is not in dispute that the quantity found from the terrace was a fairly large quantify and that the terrace where it was found was part of the licensed premises. It is true that there was no direct access to the terrace from the licensed premises in the sense of there being no ladder or stair-case leading one from the place where the restaurant was being conducted into the terrace. It is also true that it might have been possible for a person like Girdharlal to have taken that illicit liquor in that terrace, without the knowledge or consent of the petitioner. At the same time, it is not possible to say that the conclusion of the licensing authority that the petitioner knew or must have known of the liquor being thereof his having connived at the illicit liquor having been kept there, was altogether unreasonable or perverse. No such plea has in fact been taken in the petition. Mere insufficiency of evidence or the absence of direct evidence as to that fact would not be a proper reason for Interfering with the decision of the licensing authority to whom the legislature has chosen to give the power to decide. Therefore, the ground of the petitioner that the two reasons given by the authority were non-existent, cannot be accepted.

7. But then, it was argued that the function of the licensing authority in granting or refusing renewal of the licence affects the fundamental rights of occupation and business of a subject and that it is therefore a quasi-judicial function and the authority in not having held an enquiry and not having given a reasonable opportunity to the petitioner to be heard, the order of refusal was invalid. The question, therefore, is whether the function of the licensing authority Is an administrative function or a quasi-judicial one. If it is the latter, there can be no doubt that the petitioner has to be given a reasonable opportunity to be heard and for that reason alone, the order would be bad.

8. It may be stated, however, at the very outset that in this petition the validity of the aforesaid rules is not challenged and therefore, we must proceed upon the assumption that the rules are valid and made with jurisdiction upon a power validly conferred on the licencing authority by the legislature.

9. Rule 1 provides that no person shall open or keep a place of public entertainment, unless he holds a valid licence granted under these rules. Rule 2 Inter alia provides that no licence to open or keep a place of public entertainment shall be granted to any person applying for such licence unless he satisfies the officer competent to grant the licence under Rule 4 hereinafter referred to as 'the licensing authority' that he is a suitable person for holding the licence. Rule 4 then provides that the Commissioner of Police, Ahmedabad City, or Superintendents of Divisions may, if satisfied In respect of the matters specified in Rule 2, grant the applicant a licence In the form appended to these rules for opening or keeping a place of public entertainment. Lastly, Rule 5 provides as follows;

'(1) Subject to Sub-rule (2), a licence granted under these rules may be renewed annually for a period which does not extend beyond the 31st December next following the date of such renewal. An application for renewal accompanied by the licence fee shall be made not later than one month after the expiry of the period of the license. It application is not made within such period the licensing authority may refuse to renew the licence.

(2) The licensing authority may refuse to renew a licence if it is satisfied, after such inquiry as it thinks fit, that the licences Is not a suitable person for continuing to hold the licence.

XX XX XX XX XX.'

It is clear from this rule that it is for the licencing authority to decide whether a person, who applies for the licence, or its renewal, is a suitable person. Prima facie, It, Is his personal) satisfaction whether the applicant is a suitable person or not upon which his order to grant or to refuse a renewal, has to be founded. It is therefore not a case where the authority has first to come to an objective finding on facts produced before him and then arrive from his finding at a decision. Neither the Bombay Police Act nor the rules provide for any enquiry or a right to be heard before the decision is arrived at by the licensing authority. On the contrary, the rules Indicate that it is the subjective satisfaction of the authority as to whether the person Is suitable or not upon which his order is to depend. Prima facie, therefore, it seems that the function Is an administrative one rather than a quasi-judicial one, though it may be that the rights of a subject might be, and perhaps would be, affected. But the fact that such rights may be affected Is not by itself a criterion which would distinguish the two functions because even a purely administrative act or determination affects or is likely to affect the rights of others.

10. On the other hand, the obligation to act Judicially is not confined to judicial Courts. Any body of persons having the legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially is subject to the controlling Jurisdiction of the High Court under Article 226 of the Constitution. In Halsbury's Laws of England, Third Edition, Volume 11, page 55, it is stated:

'It Is not necessary that It should be a court; an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not In accordance with the practice of, a court of law. It Is enough if it is exercising, after hearing evidence. Judicial functions In the sense that it has to decide on evidence between a proposal and an opposition.'

But the existence of lis Inter partes is not always necessary for, a body, apart from the existence of a lis or not, may be under the duty to act judicially. It is enough that it should have to determine a question solely on the facts of the particular ease, solely on the evidence before it, apart from questions of policy or any other extraneous considerations. On the other hand. If an administrative body, in arriving at its decision, has before It at no stage any form of Ms and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially, and the function In that's event would be purely administrative. The duty to act judicially may arise in widely differing circumstances and as has often been said, it would be impossible to attempt to define then exhaustively. The question whether or not there is a duty to act judicially must, therefore, be decided in each case in the light of the circumstance of the particular case and the consideration of the particular statute.

11. That this is a proper and a correct criteriori is seen from the trend of the Supreme Court decision ever since the decision in Province of Bombay v. Khushaldas S. Advani : [1950]1SCR621 . In that case, Kania C. J. observed that a proceeding is a judicial or a quasi-judicial one only If the authority is required by the statute to act judicially or quasi-Judicially. But in Radeshyam Khare v. State of Madhya Pradesh : [1959]1SCR1440 , the Supreme Court engrafted two exceptions to this rule, viz. (1) where a statute is silent, a quasi-judicial duty must he implied if there is a lis, and (2) that even if there is no such lis and the dispute is one between a private party and the statutory authority, the determination of the authority would be quasi-judicial if it is required by the statute to act judicially. This extension of the principle rested on the condition that the determination by the authority affects the existing right of the subject. This is clear from the fact that Das C. J. relied on two English eases -- Errington v. Minister of Health, (1939} 2 KB 149 and Rex v. Electricity Commissioners, (1924) 1 KB 171. In the latter case, it was held that if the framing of the statutory scheme resulted in the withdrawal of the existing rights and imposed new obligations, the act of the airthority would be clothed with a quasi-judicial character. In Ramnath Prasad v. Collector of Darbhanga : AIR1955Pat345 , the High Court of Patna held that the authority was bound to give a fair opportunity to the licence-holder before canceling of suspending his licence for the question at issue before him would be a matter of proprietary or professional right of an individual. This decision, however, does not discuss the distinction between an administrative as against a judicial or a quasi-judicial function and the principle there laid down in somewhat general terms, that the act is always quasi-judicial whenever it affects the proprietary or professional right of an individual, is open to doubt. The principle laid down in Radeshyam's case : [1959]1SCR1440 was reiterated by the Supreme Court In Shivji Nathubhai v. Union of India : [1960]2SCR775 , though in somewhat modified form. The Supreme Court there held on the consideration of Rules 52 and 54 of the Mineral Concession Rules, 1949, that In view of Rule 5Z providing for a review of an order passed by a State Government and there being also prima facie a lis the Central Government was acting, while deciding an application under Rule 54, in a quasi-judicial capacity and was, therefore, hound to give a reasonable opportunity to be heard to the other party. The Supreme Court relied in this case on the observations made by Das J. (as he than was) in Kusaldas's case, 1950 SCR 621 : (AIR 1950 80 222) and in the case of Radeshyam : [1959]1SCR1440 namely (1) that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by any party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary, it is the duty of the authority to act judicially, and (2) that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority is requited by the statute to act judicially. This decision therefore made it clear that in the absence of a lis, an act of an authority would not be quasi-judicial unless the statute requires the authority to act Judicially. Therefore, the mere fact that the rights of a subject are adversely affected would not be sufficient, unless there is something in the statute requiring the authority to act judicially. It follows that though no exact rule can be laid down and each case must depend upon its own facts and circumstances, it would seem from the authorities cited above that an act would be quasi-judicial (1) where the statute, from which the authority is derived, directs by express words or by implication that the determination should be made judicially, (2) where there is a lis, and (3) even if there is no lis and the parties are only the authority and the subject, and where the existing rights of a subject are affected provided that the statute requires the authority to decide judicially. In a recent decision of this Court in Gandalal Semnath v. State of Gujarat : AIR1963Guj50 , Bhagwati J., delivering the judgment of the Division Bench, has clearly brought out the distinction between the two types of functions. The nature of the enquiry, he observed, must receive colour from the nature of the ultimate flower for the exercise of which the enquiry is provided. If the purpose of the enquiry is only to enable the Government to make up its mind to do what is purely an administrative act, the enquiry would, in the absence of any other factors, be prima facie an administrative enquiry rather than a quasi-judicial enquiry. But if the act to be done by the Government is a quasi-judicial act, the enquiry preceding the act would necessarily be a quasi-judicial enquiry. There are three elements involved in a judicial or a quasi-judicial act, namely (1) duty to determine questions of fact affecting rights of subjects, (2) duty to act in good faith, and (3) duty to act judicially. The first two of these three elements may also be present in an administrative act as well. Therefore, the real test which distinguishes a quasi-judicial act from an administrative act is the third element, namely, the duty to act judicially. If the condition precedent to the exercise of the power by the statutory authority is net the actual existence of some facts but the satisfaction or opinion of the statutory authority that such fads exist, then such a condition would be a purely subjective condition and the existence of the condition would be incapable of being determined by a third party as an objective fact and the exercise of the power in that case cannot be a quasi-judicial act but must be regarded as an administrative act. The principle therefore is that where the statute indicates that the personal satisfaction of the competent authority on certain matters, about which he has to form an opinion, is the basis of the jurisdiction to act or make a certain order, the function is administrative as opposed to a quasi-judicial function, This view is supported by the Supreme Court decision in Kishan Chand v. Commissioner of Police, Calcutta 0043/1960 : [1961]3SCR135 , where the validity of the provisions of Section 59 of the Calcutta Police Act were challenged. The challenge was two-fold: (1) that they amounted to unreasonable restrictions affecting the fundamental rights of the petitioner under Article 19(1)(g), and (2) that even if the restrictions were held to be reasonable, they conferred upon the Commissioner unrestricted and arbitrary discretion. The Supreme Court rejected the first contention and as regards the second contention, held that the power was neither an arbitrary nor a naked discretion inasmuch as Section 39 itself laid dawn a criteria to act to the Commissioner while exercising this power. Dealing with the question whether the function entrusted to the Commissioner of Police was an administrative or a quasi-judicial one, Their Lordships stated--

'It is undoubtedly correct that no provisions has been made for giving a hearing to a person applying for a licence and the Commissioner has not to give reasons when refusing the licence; but it cannot be laid down as a general proposition that where in the case of licensing statute no provision is made for hearing and there is no provision for giving reasons for refusal the statute must be struck down as necessarily an unreasonable restriction on a fundamental right.'

Examining the section in its setting to decide whether the absence of a provision for hearing and for requiring the Commissioner to give reasons for refusal, would make the section unconstitutional, they stated that the section appeared in the Police Act which dealt generally with matters of law and order. The two objects specified in the section were also for the same- purpose. The discretion was vested in a high police officer who, one would expect, would use it reasonably. There was no provision for appeal and there was no Iis as between the person applying for a licence and the Commissioner. The exercise of the discretion depended upon the subjective satisfaction of the Commissioner as to whether the person applying for a licence satisfied the three conditions mentioned in the section. They further observed that it was true that the order, when made one way or the other, affected the fundamental right of carrying on trade but in the circumstances it could not but be an administrative order. Their Lordships, for their aforesaid conclusion, relied upon their earlier decision in Kagendra Nath v. Commr. of Hills Division : [1958]1SCR1240 and cited with approval the decision of the Privy Council in Nakhuda AN v. M. F. De S, Jayaratne, 1951 AC 6G. Their Lordships in express terms approved the dictum of the Privy Council in that case, namely, that it was quite possible to act reasonably without necessarily acting judicially and that it was a long stretch of argument to say that because a man was expected to act reasonably, he could not do so without a course of conduct analogous to a judicial process.

12. We have therefore to consider the question in the light of these principles whether the act of the Commissioner in refusing the renewal of the licence is art administrative or a quasi-judicial act. As we have said, the validity of these rules has not been challenged in this petition. Therefore, the competence of the licensing authority in passing the impugned order on the ground of want of jurisdiction, cannot be disputed. It is also clear that there is no lis Inter partes in this case and therefore, the test that has to be applied is whether there is anything in the statute or the rules which requires the licensing authority to act judicially. It is admitted by Mr. Shah that neither the Act nor the rules expressly lay down that the authority has to act judicially and that the rules do not provide for a hearing. It is also not as if the competent authority has to have two parties before him or that it is as a third party that he has to act on the evidence and materials placed before him upon which he has to arrive at his determination. The rules are made by the Commissioner of Police under the powers reserved to him by Section 33 of the Act. As we have already pointed out, rule No. 1 provides in clear terms that a licence is to be given to a person who, on the subjective satisfaction of the Commissioner, is a suitable person to hold the licence. The act or the determination of the licensing authority has thus clearly to be founded on his satisfaction and is not dependant upon materials or the facts placed before him. The nature of the function entrusted to him by the Act and the method of its disposal would also appear to 'be sure guides that the act is administrative rather than judicial, or quasi-judicial. The nature of the function entrusted to the licensing authority is to see that a licence is given to a suitable person and not to an unsuitable person. The question whether a person is suitable or not is left to the satisfaction of the licensing authority and the method of disposal of that function is again made dependent on his satisfaction as contrasted with an objective process of sifting and analysing evidence and a conclusion based on findings arrived at as a result of such sifting, analysing and assessing evidence. The act or the determination in these circumstances cannot be anything else than an administrative act and therefore, the doctrine of natural justice cannot apply to such a case.

13. Reliance, however, was placed ty Mr. Shah on the decision in Board of High School and Intermediate Education U. P. v. Ghanshyam Das : AIR1962SC1110 . This decision in our view cannot help the petitioner for it does, not lay down anything contrary to what has been stated above. The decision lays down two propositions -- (1) that even if there is no lis and the contest is between the authority proposing to do an act and the subject opposing it, the determination by the authority will yet be a quasi-judicial one provided that the authority is required by the statute to act judicially; and (2) that though the statute is not likely to provide in so many words that the authority is required to act judicially, such a thing can be inferred from the express provisions of the statute in the first instance in each case and no one circumstance alone will be determinative of the question. The inference where the statute is silent will depend upon the express provisions of the statute read along with the nature of the rights affected, the manner of disposal provided, the objective criterion, if any, to be adopted, the effect of the decision on the person affected and other indicia afforded by the statute. The Supreme Court held in this ease that the determination by the Committee was a quasi-judicial one on the ground that though the statute was silent

'the manner of the disposal, based as it must be on materials placed before it, and the serious effects of the derision of the Committee on the examinee concerned, must lead to the conclusion that a duty Is cast on the Committee to act judicially in that matter particularly as it has to decide objectively certain facts which may seriously affect the rights and careers of examinees, before it can take any action.'

These observations themselves clearly indicate that the Supreme Court held the act to be a quasi-judicial one not merely because the rights of the examinees were thereby affected but because the Committee had under the statute to act on materials placed before it, i.e., to come to its conclusion by an objective process and not on subjective or personal satisfaction. This principle was reiterated by the Supreme Court in Board of Revenue U. P. v. Sardarni Vidyawati : AIR1962SC1217 . Therefore, the nature of the rights affected or likely to be affected, the manner of disposal provided, the effect of the decision on the person affected, etc., are not by themselves tests but are indicia for the purpose of ascertaining where the statute is silent one way or the other whether that statute requires impliedly the authority to act judicially.

14. We do not however wish to be understood that where an act is an administrative one, the competent authority can come to its determination either arbitrarily or as a matter or whim. Even if the act in question is an administrative act, as laid down in Radeshyam's case : [1959]1SCR1440 that fact does not absolve the authority from observing the ordinary rules of fair-play. According to that decision, even where an administrative action is taken, it may be necessary to give an opportunity to a party to have his say before an order is passed. That, however, is quite different from the well-ordered procedure involving notice and an opportunity of hearing before an order is made. What is fair-play must, of course, depend upon the facts of each case. In the instant case, it is not necessary for us to go into this question because the impugned order is disputed, not upon the ground of absence of fair-play, but only upon the ground that no enquiry was held and consequently, no opportunity of hearing was given to the petitioner before passing the impugned order. The order itself shows that an enquiry was made by the licensing authority, though no opportunity to give an explanation was furnished to the petitioner. But as held by us, since the order is an administrative one, no question of natural justice can arise in such a case, and that being the only ground taken in the petition, the petition must fail.

15. The petition is therefore dismissed. Rule discharged with costs.


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