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Nawal Kishore Vs. State of Rajasthan - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 700 of 1978
Judge
Reported in1979WLN(UC)93
AppellantNawal Kishore
RespondentState of Rajasthan
DispositionPetition allowed
Cases ReferredVenkataraman v. Union of India
Excerpt:
.....held, suspension order being illegal licensee is entitled to claim benefit of proviso to rule 63;the suspension postulated in rule 63 is a avlid order of suspension and if the order of suspension has no legal validity then the proviso to rule 63 will come into play. if a licensee is able so establish that the order of suspension was illegal and void, he would be entitled to claim the benefit of the proviso to rule 63 if he has otherwise fulfilled the requirements of the said proviso. in the present case, the petitioner has complied with the requirements of the proviso to rule 63 and if he is able to establish that the impugned order of suspension is illegal and void, he will be entitled to claim that his licences continue to be in force.;(b) constitution of india - article..........for sale or distribute by retail, drugs other than those specified in schedules c and c (1) to the rules. licence no. 102r-cc (1) authorises the petitioner to sell, stock or exhibit for sale, or distribute by retail, drugs specified in schedules c & c (1) to the rules. both the licences were valid up to 31st december, 1977 but before the expiry of the period of the said licences, the chief medical and health officer, barmer, passed an order dated 11th may, 1976 whereby he directed the petitioner not to carry on any business in pursuance of the licences which had been issued in his favour. being aggrieved by the said order, the petitioner has filed this writ petition for the issue of an appropriate writ or order to quash the said order dated 11th may, 1976 and to direct the respondents.....
Judgment:

S.C. Agrawal, J.

1. Nawal Kishore jaju, the petitioner in this writ petition, filed under Article 226 of the Constitution, is the proprietor of M/s Jajoo Brothers Medical Stores, and carries on business in purchase and sale of drugs and medicines at Barmer. He obtained two licences (Nos. 102R and 102 R-CC (1) on 5th March, 1976 from the Chief Medical and Health Officer, Barmer, who is the Drug Licensing Authority under the Drug and Cosmetics Acts 1950 (hereinafter referred so as the 'Act) and the Drugs and Come-tics Rules, 1954 (hereinafter referred to as the Rules). Licence No. 102 R. authorises the petitioner to sell, stock or exhibit for sale or distribute by retail, drugs other than those specified in schedules C and C (1) to the Rules. Licence No. 102R-CC (1) authorises the petitioner to sell, stock or exhibit for sale, or distribute by retail, drugs specified in Schedules C & C (1) to the Rules. Both the licences were valid up to 31st December, 1977 but before the expiry of the period of the said licences, the Chief Medical and Health Officer, Barmer, passed an order dated 11th May, 1976 whereby he directed the petitioner not to carry on any business in pursuance of the licences which had been issued in his favour. Being aggrieved by the said order, the petitioner has filed this writ petition for the issue of an appropriate writ or order to quash the said order dated 11th May, 1976 and to direct the respondents not to interfere with the right of the petitioner to conduct his business. It may be mentioned that before the date of the expiry of the aforesaid licences, the petitioner had submitted applications for renewal of the licences in accordance with the Rules and the said applications are still pending for consideration before the Licensing Authority.

2. In the writ petition, the petitioner has submitted that in the town of Barmer, there is a Samiti known as Dongra Vishram Grah Samiti and that the Collector, Barmer, is the Chairman of the said Samiti and the Chief Medical & Health Officer, Barmer, is the Secretary of the said Samiti. The said Samiti has got building constructed near the General Hospital, Barmer, and there are two shops in the said building. The petitioner has taken one of the aforesaid two shops on rent by making a bid in an open auction and a rent note was executed by the petitioner in respect of the said shop in favour of the Samiti on 8th March 1976. The petitioner had obtained the licences referred to above for the purpose of starting a medical store in the shop, that has been taken on lease from the Samiti. The case of the petitioner is that the impugned order had been passed with a view to prevent him from carrying on his business in drugs in the said shop. In the writ petition, the validity of the order dated 11th May, 1976 is challenged on the ground that the said order is violative of the right of the petitioner to carry on trade and business in drugs under the licences, which is guaranteed under Article 19(1)(g) of the Constitution The petitioner has alleged that the impugned order amounts to cancellation of the licences of the petitioner and that it was passed in violation of the principles of natural justice without affording any opportunity to the petitioner to show cause why such an order should not be made.

3. It may observed that after the filing of the writ petition in this Court, a communication dated 24th October, '78 was addressed to the petitioner by the Chief Medical and Health Officer wherein the petitioner had been asked to give his explanation in respect of certain matters, some of which relate to the circumstances in which the shop was taken on rent by the petitioner from the Samiti.

4. In reply to the writ petition, filed on behalf of respondents, certain preliminary objections have been raised with regard to the maintainability of the writ petition on the ground of delay and latches and also on the ground that an alternative remedy by way of appeal, was available to the petitioner. As to the merits, the respondents have pleaded that the premises in which the petitioner wants to set up a drug shop are a part of the Maheshwari Dongra Vishram Grah and that 'he said premises were constructed by a charitable trust known as Dongra Vishrana-Grah Trust & that it was resolved at the inception that none of the shops should be given to any person for running a drug shop and that shop was never let out to the petitioner for running a drug shop and that inspite of the clear understanding between the trustees of the said Trust, the petitioner had some how managed to obtain a licence to start a drug shop on the said premises In the said reply, reliance has been placed on the resolution dated 24th December, 1974 passed by the Dongra Vishram Grah Trust which clearly forbids all persons to start any drug shop within any of the shops constructed by the trust and the impugned order suspending the licences is sought to be justified on the ground that the petitioner had tried to by pass the spirit of the said resolution In the aforesaid reply there is no denial of the averment contained in the writ petition that no opportunity to show cause was afforded to the petitioner before the passing of the impugned order.

5. Shri M. Mridul, the learned Counsel for the petitioner has submitted that under the Rules, the Licensing Authority has no power to restrain a licensee from carrying on his business in pursuance of a licence and the only power which has been conferred on the Licensing Authority under the Rules is to cancel or suspend a licence which has already been issued under Rule 66, which postulates the affording of an opportunity to show cause, before an order of cancellation or suspension of the licence is passed. The submission of the learned Counsel for the petitioner is that no such opportunity to show cause was afforded to the petitioner before the issue of the order dated 11th May, 1976 and, therefore, the said order is clearly null and void. The submission of the learned Counsel for the petitioner further is that the impugned order has been passed by the Licensing Authority for the purpose of enforcing the resolution of the Dogra Vishramgarh Samiti, of which he is the Secretary, and that the said purpose is alien to the grounds on the basis of which the power to cancel or suspend a licence conferred under Rules 66 of the Rules, could be exercised.

6. The learned Deputy Government Advocate has raised certain preliminary objections as to the maintainability of the writ petition.

7. The first submission of the learned Deputy Govt. Advocate is that the petitioner has no locus-standi to maintain this writ petition in as much as the licences which were originally granted in favour of the petitioner were operative till 31st December, 1977 only and that the petitioner had not challenged the impugned order suspending the said licences before the date of expiry of the said licences. The second submission of the learned Deputy Government Advocate is that an appeal lay to the State Government under Sub-Rule (2) of Rule 66 against the impugned order and the said alternative remedy is a bar to the maintainability of the writ petition. Lastly the learned Deputy Government Advocate has submitted that there was undue delay, in the filing of the writ petition by the petitioner.

8. In reply to the aforesaid preliminary objections raised by the Deputy Government Advocate, the learned Counsel for the petitioner, has submitted that in view of the proviso to Rule 63 of the Risks, the licences in favour of the petitioner continue to be in force in as much as the petitioner had filed application for renewal of the said licences on 27th December, 1977, i, e., before the date of the expiry of the licences on 31st December, 1977, and that no order had been passed by the Licensing Authority on the said applications for renewal as yet. The learned Counsel for the petitioner has submitted that by the impugned order, an illegal restriction has been placed on the fundamental right of the petitioner guaranteed under Articles 19(1)(g) of Constitution and in view of the provisions contained in Article 226 of the Constitution, as amended by the Constitution (Forty Second Amendment) Act, 1976, the bar of alternative remedy to the maintainability of a writ Petition is rot applicable in a case where the petitioner seeks the enforcement of a fundamental right. The learned Counsel for the petitioner has further submitted that the delay in filing of the writ petition cannot operate as bar to the maintainability of the writ petition in the present case in as much as the petitioner has a continuing cause of action against the impugned order which puts an illegal restriction on the exercise of right of the petitioner to carry on his trade and business guaranteed under Article 19(1)(g) of the Constitution and that the mere fact that the petitioner did not approach this Court immediately after the passing of the impugned order cannot be a bar to his obtaining belief against the operation of the said order in the future,

9. The Act was enacted to regulate the import, manufacture, distribution and sale of drugs and cosmetic?, Chapter IV of the Act (Sections 16 to 33A) contains provisions relating to manufacture, sale and distribution of drugs and cosmetics. Section 18 (c) of the Act lays down that no person shall himself, or by any other person on his behalf, manufacture for sale, or sell, or stock or exhibit for sale or distribute any drug or cosmetic except under and in accordance with the conditions of a licence issued for such purpose under Chapter IV of the Act. Section 33 (1) of the Act empowers the Central Government to make rules for the purpose of giving effect to the provisions of Chapter IV of the Act and Section 33(2)(a) of the Act lays down that the rules framed by the Central Government may prescribe the forms of licences for the manufacture for the sale, and for the distribution of drugs or any specified drug or class of drugs or of cosmetics or any specified cosmetics or class of cosmetics; the form of application for such licences, the conditions subject to which such licences may be issued, the authority empowered to issue the same and the fees payable therefor In exercise of the powers conferred on it under Section 33 of the Act, the Central Government has framed the. Rules. Part VI of the Rules (Rules 59 to 67) contain the rules regulating the sale of drugs other than Homeopathic medicines. Rule 63, relating to duration of licences, provides as under:

63. Duration of Licence : An original licence or a renewal licence to sell drugs, unless sooner suspended or cancelled shall be valid up to the 31st December, of the last following the year in which it is granted or renewed:

Provided that if the application for renewal of licence in force is made before its expiry or if the, application is made within six months of its expiry, after payment of additional fee, the licence shall continue to be it; force until orders are passed on the application. The licence shall be deemed to have expired if application for its renewal is not made within six months after the expiry.

The power of cancellation or suspension of a licence is contained in Rule 66, which reads as under -

66. Cancellation and suspension of licences. (1) The licensing authority may, after giving the licensee an opportunity to show cause why such an order should not be passed by an order in writing stating the reasons therefor, cancel a licence issued under this part or suspend it for such period as he thinks, fit, either wholly or in respect of some of the substances to which it relates, if in his opinion the licensee has failed to comply with any of the conditions of the licence or with any provisions of the Act or Rules thereunder :

Provided that, where such failure or contravention is the consequence of an act or omission on the part of an agent or employee the licence shall not be cancelled or suspended if the licensee proves to the satisfaction of the licensing authority:

(a) that the act or omission was not instigated or connived at by him or, if the licensee is a from or company, by a partner of the firm or a director of the company, or

(b) that he or his agent or employee had not been guilty of any similar act or omission within twelve months before the date on which she act or omission in question took place, or where his agent or employee had been guilty of any such act or omission, the licensee had not or could not reasonably have had, knowledge of that previous act or omission, or

(c) if the act or omission was a continuous act or omission, he had not or Could not reasonably have had knowledge of that previous act or omission, or

(d) that he had used due diligence to ensure that the conditions of the lit licence or the provisions of the Act or the rules thereunder were observed:

(2) A licensee whose licence has been suspended or cancelled may appeal to the State Government within three months of the date of the order.

10. A perusal of the Rule 63 referred to above, shows that the licences which were issued in favour of the petitioner on 5th March, 1976 were valid up to 31st December, 1977 and the effect of the proviso to Rule 63 is that the licences of the petitioner continue to be in force in as much as he has submitted applications for renewal of the licences before the date of expiry of the said licences and no orders have so far been passed on those applications for renewal. It is not possible to accept the submission of the learned Deputy Government Advocate that the proviso to Rule 63 cannot have any application to the present case in as much the licences of the petitioner had already been suspended before the date of expiry of the said licences. In my opinion, the suspension postulated in Rule 63 is a valid order of suspension and if the order of suspension has no legal validity then the proviso to Rule 63 will come into play If a licensee is able to establish that the order of suspension was illegal and void, he would be entitled to claim the benefit of the proviso to Rule 63 if he has otherwise fulfilled the requirements of the said proviso. In the present case, the petitioner has complied with the requirements of the proviso to Rule 63 and if he is able to establish that the impugned order of suspension is illegal and void, he will be entitled to claim that his licences continue to be in force the submission of the learned Deputy Government Advocate that the petitioner has no locus standi to maintain his petition after the expiry of the licences on 31st December, 1977 cannot, therefore, be sustained

11. So also it is not possible to accept the contention urged by the learned Deputy Govt. Advocate that the petitioner should have invoked the alternative remedy of filing an appeal against the impugned order under Rule 66(2) of the Rules and that the existence of the said alternative remedy of appeal operates as a bar to the maintainability of the writ petition. The petitioner, in his writ petition, is seeking the enforcement of his fundamental right guaranteed under Article 19(1)(g) of the Constitution on the ground that he has got a right to carry on trade and business in the sale of drugs in accordance with the licences issued to him and that an unreasonable restriction, without the authority of law, has been placed on the said right of the petitioner by the impugned order. The bar of an alternative remedy has not been applied by the courts in the past to a case where the petitioner seeks the enforcement of a fundamental right guaranteed under Part III of the Constitution. This legal position has been given legislative recognition by the recent amendment in Article 226 of the Constitution (Forty Second Amendment) Act, 1976, which places a writ petition for the enforcement of any of the rights conferred by the provisions of Part III of the Constitution in a category different from writs for enforcement of other rights and lays down that the bar of an alternative remedy to the maintainability of a writ petition is applicable only to writ petitions covered by Sub-clauses (b)(c) of Clause (1) of Article 226 of the Constitution and does not apply to writ petitions falling in Sub-clause (a) relating to the enforcement of any of the lights conferred by the provisions of Part II of the Constitution. In view of the aforesaid amendment, it must be held that the existence of the alternative remedy of appeal under Rule 66(2) does not bar the maintainability of the present writ petition in which the petitioner is seeking the enforcement of his fundamental right guaranteed under Article 19(1)(g) of the Constitution.

12. I am also unable to accept the contention urged by the learned Deputy Government Advocate that the petitioner is not entitled to claim any relief from this Court in view of undue delay and latches in filing; the writ petition It is true that the impugned order was passed on 1lth May, 1976 and the writ petition was filed by the petitioner after the lapse of more than 2 years in October, 1973 But it may be noticed that the grievance of the petitioner is that as a result of the impugned order, the petitioner is being deprived on his right to carry on trade and business in sale of drugs in the future. The petitioner is claiming relief in respect of a continuing cause of action. The mere fact that the petitioner continued to make representations and did not choose to approach this Court earlier cannot be a ground for denying relief to the petitioner for the future, if the petitioner is able to establish that the impugned order is violative of his fundamental rights guaranteed under Article 19(1)(g) of the Constitution.

13. Now coming to the merits of the case, I find that there is no denial by the respondents, in their reply, of the averments contained in the writ petition that no opportunity whatsoever was afforded to the petitioner before the passing of the impugned order. Thus the impugned order has been passed in clear disregard of the principles of natural justice as well as the express provisions contained in Rule 66 (1) of the Rules.

14. The learned Deputy Government Advocate has submitted that it was open to the Licensing Authority to pass an interim order of suspension of the licences pending an enquiry into a notice 'requiring the petitioner to show cause why his licences should not be cancelled. The submission of the learned Deputy Government Advocate is that the communication dated 24th October, 1978 addressed to the petitioner was in the nature of show cause notice for taking action for cancelling the licences of the petitioner and that the impugned order suspending the licences of the petitioner can be sustained as an order of interim suspension pending such enquiry I am unable to accept the aforesaid contention urged by the learned Deputy Government Advocate for the reason that the communication dated 24th October, 1978 cannot be construed as a show cause notice under Rule 66(I) of the Rules in as much as there is nothing in the said communication to show that any proceedings for cancellation of the licences of the petitioner were being initiated against the petitioner under Rule 66 of the Rules. Moreover there is no provision in the Rules which enables the licensing Authority to pass an order of interim suspension of a licence during the pendency of an inquiry, under Rule 66(1) of the Rules A similar question arose before this Court in Mangilal v. District Excise Officer AIR 1971 Raj 46 where a licence under the Rajasthan Excise Act was suspended and the said order of suspension was sought to be defended on the ground that it was an interim order of suspension pending an inquiry on the basis of a show cause notice which had been issued 20 days after the issue of the impugned order of suspension of the licence. The court, rejecting the aforesaid contention urged on behalf of the State, has observed.

From the perusal of Section 34 of the Act and Rule 76 of the Rules, it is difficult to infer that the Department has been empowered by the Legislature to suspend the licence pending the enquiry. The power of suspension of a licence under Section 34 of the Act and Rule 76 of the Rules has not been conferred to facilitate the Department to carry on the enquiry for the cancellation of the licence, but it has been given to the Department to inflict punishment and the order of suspension if passed under these provisions shall be dealt with as if the penalty has been imposed by the Department. It may be noted that the licences are generally granted for a period of one year and this power of suspension of a licence is taken as a power to afford facility to the Department pending the enquiry for cancellation of the licensee, then in the event after the enquiry if the licensee is found innocent then the suspension during the course of enquiry for the cancellation of licence would automatically act as a punishment because during the period of suspension the entire business of the licencee shall be stopped.

15. In the aforesaid case, this Court has distinguished the case of suspension of a Government Servant pending an enquiry against his conduce from an order of suspension of a licence and this Court has pointed out that the Government Servant, if exonerated from the charge, gets the entire reimbursements even for the period of suspension but a licensee cannot be reimbursed for the loss suffered by him during the suspension period if he is found innocent after the enquiry instituted for the cancellation of his licence The principles lays down in Mangilal v. District Excise Officer AIR 1971 Raj 46 are equally applicable to the present case in as much as here also there is no provision in the Rules which empowers the Licensing Authority to suspend a licence pending an inquiry In the present case, we find that the order suspending the licences was issued on 11th May, 1976 and the so called inquiry for cancellation of the licences has been sought to be instituted after the lapse of nearly two and half years on 24th October, 1978 I am, therefore, of the opinion that the order dated 11th May, 1976 passed by the Chief Medical & Health Officer is clearly without the authority of law and cannot be sustained.

16. The impugned order dated 11th May, 1976 is open to challenge also on the ground that in pissing the said order the Chief Medical & Health Officer has abused the powers vested in him under the Act and the Rules. The Supreme Court in its recent decision in SR Venkataraman v. Union of India AIR 1970 SC 49 has pointed out the distinction between malice in fact 'and malice in Law' & has laid down that it would amount to malice in law if a discretionary power has been exercised for an unauthorised purpose From the reply to the writ petition, it appears that the impugned order was passed for the reason that the petitioner wanted to start a drug shop in the premises let out to him by the Dongra Vishramgrah Trust and thus by pass the resolution dated 20th August, 1974- passed by the Trust. In other words by passing the impugned order, the Chief Medical & Health Officer was seeking to enforce the resolution of the Trust of the Samiti of which he happens to be the Secretary. The said purpose is, however, completely alien to the provisions of the Act. and the Rules. The statutory powers which are conferred by the Act and the Rules on the Chief Medical and Health Officer cannot be invoked for achieving the aforesaid object. In passing the impugned order the Chief Medical and Health Officer has obliterated the legal frontiers of the statutory powers conferred on him under the Act and the Rules and has assumed that the said powers can be invoked for a proper discharge of other duties official or unofficial, entrusted to him. It is a matter of regret that the Chief Medical & Health Officer has persisted in adopting such a course for the past two and a half years and the State Government has placed its seal of approval over the same by defending it in these proceedings.

17. As a result this writ petition is allowed and the order dated 11th May, 1976 passed by the Chief Medical and Health Officer, Barmer is quashed. The petitioner will be entitled to receive a sum of Rs, 250/- as costs from the respondents in this writ petition.


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