1. The petitioner, who applied for a license to warehouse excisable commodities and goods aggrieved by the order of refusal made by the Collector of Central Excise who is the licensing authority, has come up to this Court for the issue of a writ of certiorari to quash his order dated 21-12-1972. On 19-4-1972, the petitioner applied for the grant of what is known as A. L. S. license for keeping a private warehouse for the storage of excisable goods on which duty has not been paid. On 1-11-1972, the petitioner was confronted with a show cause notice by the respondent as to why his application for the grant of a license should not be rejected on various grounds which I shall presently advert to. The petitioner replied on 7-11-1972, characterizing many of the objections raised as not directionable and sought, again for the grant of the license. By the impugned order the respondent rejected the application for the grant of the license.
2. The petitioner's case is that he has complied with all the formalities which are to be observed in connection with an application for the erection of a private warehouse and the reasons given by the Collector in the challenged order are extraneous and irrelevant and in that context, he complains that the order poses an error apparent or an apparent error of law. The respondent on the other hand, would state that having regard to the irregular keeping of such a warehouse by the petitioner's father at one time and his mother at another time, the Collector felt that in public interest the license should not be granted to the petitioner, for it was expected that the actual licensee would be the father of the petitioner and not the petitioner who has not even appeared at the time of the hearing of the application by the Collector.
3. It is no doubt, true that the primary considerations, which weighed with the Collector in rejecting the application for the grant of a license to have a private warehouse did not reflect upon the character or integrity of the petitioner. What is stated in the order challenged is that the petitioner's father, when he was a private licensee, irregularly kept the warehouse resulting in loss of revenue to the State Such irregularities resulted in the cancellation of the license granted to the petitioner's father. Later, when a similar license was granted in the name of the plaintiff's mother, such irregularities repeated themselves. On account of the previous conduct of the ancestors of the petitioner the license was refused to the petitioner. It is stated that the respondent has a discretion in the matter, and as the petitioner's parents who sought for such a license did not behave properly the apprehension in the mind of the Collector was that the son also would follow suit.
4. The only question to be considered is whether the grant of a license under Rule 140 of the Central Excise Rules is vested in the Collector without any guidelines therefor and if there is an arbitrary or capricious exercise of such power, the Court's hands could not reach such actions and correct them if it is necessary. Under Rule 140, no doubt, the Collector has the discretion to grant licenses for the creation of private warehouses for the storage of excisable goods. But while considering such applications, he could direct the applicant to furnish a bond in the proper form with such surety or sufficient security in such amounts and under such conditions as the Collector approves, binding himself to pay the duty on the goods deposited therein or for the due and safe removal of such goods from one part or division of the warehouse to any other part or division of the same warehouse or to any other warehouse and for the due observance of the terms, conditions and requirements of the Act and the Rules made thereunder. Prima facie it does not appear to me that the Collector considered this application in the light of the prescriptions laid down in Rule 140. He was concerned at all times, with the irregularities committed by the parents of the petitioner and ultimately he concluded that, in public interest the petitioner should not be vested with the grant. He speculated when the stated that the business might actually be carried on by the father of the petitioner. There is no basis for this contention. In any event, the discretion vested in the Collector in the matter of the grant of such license should be exercised judiciously and discretely too, but not capriciously and on a hypothesis which may not always prove to be true. Merely because the father and the mother did act against law or committed acts which were prima facie irregular, there is no presumption either in the personal law of the parties or the law of the land that such irregularities would be repeated by the children of such parents. This assumption that the child also would be as bad as the parents, if the parents were at all bad is not of general import. The Collector could have tested the integrity of the petitioner by directing the petitioner to comply with the conditions internally prescribed by the rule itself to ensure good behavior on the part of the licensee. No such attempt has been made. The respondent rejected the application on capricious considerations and, I do not think that the application made by the petitioner was considered in a manner known to law. Whilst, therefore, removing the order as prayed for, I direct the respondent to restore the application made by the petitioner to file and deal with it in accordance with law and in the light of the judgment as above and particularly, bearing in mind the various limbs of Rule 140 which by themselves, ensure good behavior on the part of the licensees. The writ petition is allowed accordingly. There will be no order as to costs. The Collector of Central Excise shall dispose of the application within six weeks from the date of receipt of this order.
5. Petition allowed.