Skip to content


Thangathammal, Proprietrix, Krishna Vilas Rice Mill Vs. Secretary, Food Department and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Reported in(1977)2MLJ221
AppellantThangathammal, Proprietrix, Krishna Vilas Rice Mill
RespondentSecretary, Food Department and ors.
Cases ReferredLakshminarayanan v. Maruthappa Nainar
Excerpt:
- - ) as a direct authority for the position that a person like the petitioner does have locus standi to move the high court for the issue of a writ of certiorari to quash the licence issued to a new mill owner. he further submitted that the decision of the full bench of this court, although directly in point, must be treated as being no longer good law, in view of the two later decisions of the supreme court. 13. for effectively dealing with the question of locus standi in the way it was argued before us, by the learned counsel on both sides, we think it would be necessary to clear the ground first of certain factual controversies bearing on that question. 15. the provisions outlined above clearly show that the paramount consideration of the licensing system under the act is the.....orderkoshal, j.1. this petition article 226 of the constitution of india has arisen in the following circumstances. the petitioner runs a rice-mill in sirugamani village in tiruchirapalli taluk under a licence issued by the district supply officer, tiruchirapalli (hereinafter referred to as the d. s. o.). n. v. krishnan, respondent no. 3, who is a resident of the same village, also applied to the d.s.o. for the grant of a licence for carrying on rice-milling operations therein. the grant was objected to by the petitioner on the following three grounds:(i) her rice-mill is already surrounded by three rice-mills in the same village.(ii) the paddy production in the village was insufficient even for the existing rice-mills.(iii) the setting up of a new rice-mill would cause her great loss.the.....
Judgment:
ORDER

Koshal, J.

1. This petition Article 226 of the Constitution of India has arisen in the following circumstances. The petitioner runs a rice-mill in Sirugamani village in Tiruchirapalli Taluk under a licence issued by the District Supply Officer, Tiruchirapalli (hereinafter referred to as the D. S. O.). N. V. Krishnan, respondent No. 3, who is a resident of the same village, also applied to the D.S.O. for the grant of a licence for carrying on rice-milling operations therein. The grant was objected to by the petitioner on the following three grounds:

(i) Her rice-mill is already surrounded by three rice-mills in the same village.

(ii) The paddy production in the village was insufficient even for the existing rice-mills.

(iii) The setting up of a new rice-mill would cause her great loss.

The D.S.O. rejected these objections solely on the basis of the observation that 'as per Government Orders (Ms. No. 868, Food Department, dated 6th August, 1970 and Government Memo. No. 26354-A-11/70-4, dated 26th October, 1970), the particulars of paddy production and of hulling capacity need not be considered for the issue of a new licence under R.M.I. (R.) Act, 1958' and granted the licence asked for to the respondent No. 3 through his order, dated 22nd April, 1975 which the petitioner seeks to have quashed by a writ of certiorari.

2. The main contention raised on behalf of the petitioner is that the grant of licence to respondent No. 3 is void because of the provisions of Sub-section (4) of Section 5 of the Rice Milling Industry (Regulation) Act, 1958 (hereinafter referred to as the Act). That Sub-section states:

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-huller 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.

The case propounded on behalf of the petitioner is that the order is a nullity for the reason that it was made without taking into account any of the matters enumerated in Clauses (a) to (f) of Sub-section (4).

3. A preliminary objection has been raised on behalf of respondent No. 3, and the same is to the effect that the petition is not maintainable inasmuch as the petitioner cannot be considered to be a person aggrieved by the impugned order. Reliance in this connection is placed on The Nagar Rice and Flour Mills v. N. Teekappa Gowda and Bros : [1970]3SCR846 , Jasbhai Motibhai Desai v. Roshan Kumar Naji Bashir Ahmed and Ors. : [1976]3SCR58 and a decision, dated 7th July, 1976, of Mohan, J. in Writ Petition No. 2109 of 1976. In the first of these cases, permission was granted by the concerned authority to an applicant, who was already running a rice-mill in a particular locality, to change the location of the mill to a site in the vicinity of which another person was already running a similar type of mill. The permission was granted under the provisions of clause (e) of Sub-section (3) of Section 8 of the Act according to which

No owner of a rice-mill-

(a) ...

(b) ...

(c) shall, without the previous permission of the Central Government, change the location of the whole or any part of the rice-mill in respect of which a licence has been granted under Section 6.

The person last mentioned sought to have the permission quashed in writ proceedings, and his prayer was granted by the High Court. But on appeal, the judgment of the High Court was reversed by their Lordships of the Supreme Court who held on a consideration of the provisions of Clause (c) above extracted that the writ petitioner in that case was not a person aggrieved by the permission. In coming to that conclusion, however, they made it clear that competition in the trade or business would be subject to such restrictions as are permissible and are imposed by a law enacted in the interests of the general public under Article 19(6) of the Constitution, but as a per-son could not claim independently of such restriction that another person shall not carry on business or trade so as to affect his trade or business adversely. Furthermore, they stated categorically that different considerations would arise in the case of the grant of a permission in respect of a new rice-mill under the provisions of Sub-section (4) of Section 5 of the Act. Their observations in this connection are worth quoting:

According to counsel, since the Act was intended to regulate the carrying on of business by rice-mills in the country it was implicit in Section 8(3)(c) that the authority sanctioning the change of location of a rice-mill, shall consider whether another person was by the shifting likely to be prejudiced thereby. This, counsel says, the Director did not consider, and on that account the order is liable to be set aside because the right of the respondents is infringed. This argument was not advanced before the High Court, and in our judgment, has no substance. The considerations which are prescribed by Sub-section (4) of Section 5 only apply to the grant of a permit in respect of a new rice-mill or a defunct rice-mill. They have no application in considering the) shifting of the location of an existing rice-mill. In respect of a new or a defunct rice-mill a permit and a licence are both required; in respect of an existing rice-mill only a licence is required. The conditions prescribed by Sub-section (4) of Section 5 only apply to the grant of a permit and not to a licence. By Section 8(3)(c) it is made one of the conditions of the licence that the location of the rice-mill shall not be shifted without the previous permission of the Central Government. It is true that the appropriate authority clothed with the power must consider the expediency of permitting a change of location. But there is no statutory obligation imposed upon him to take into consideration the matters prescribed by Sub-section (4) of Section 5 in granting the permission to change the location.

4. This decision, instead of helping the case of the respondent No. 3 goes against it, inasmuch as according to it a person who comes into Court seeking a writ of certiorari quashing a permission granted under Clause (c) of Sub-section (3) of Section 8, is not a person aggrieved by that order, but that this would not be so in the case of a person who seeks to get rid of an order passed under Sub-section (4) of Section 5 of the Act granting a permit for the setting up of a new rice-mill. The reason for the distinction is obvious. Under Clause (c) of Sub-section (3) of Section 8, as pointed out by their Lordships there is no obligation on the licensing authority to take into consideration any of the factors enumerated in Sub-section (4) of Section 5, under which one of the criteria for the grant of a permit to establish a new mill is the number of rice-mills operating in the locality, which is obviously a factor designed to protect undue competition amongst rice-millers. If that be so, such rice-millers as are already running their mills in the locality get statutory protection against the setting up of more mills of the same type and become clothed with a legal right to challenge the grant of a permission which does not take into consideration the factor detailed in clause (a) aforesaid. This, in my opinion, obviously follows from the language of Sub-section (4) of Section 5 read with the dictum of their Lordships in the Nagar Rice Case : [1970]3SCR846 .

5. Some difficulty has however arisen from the observations of Sarkaria, J., in J.M. Desai's Case : [1976]3SCR58 . While referring to the Nagar Rice Case, Sarkaria, J. observed that it was held therein that a rice-mill owner has no locus standi to challenge under Article 226, the setting up a new rice-mill by another - even if such setting up be in contravention of Section 8(3)(c) of the Rice Milling Industry (Regulation) Act - because, no right vested in such an applicant is infringed. Learned Counsel for the respondent No. 3 lays emphasis on the words 'new rice-mills' forming part of Sarkaria, J's observation. But, I do not think that he can derive any advantage out of them if they are read in the context in which they have been used. By using the expression 'new rice-mill', what Sarkaria, J. obviously meant was a mill sought to be set up as a result of the change of location of an already existing mill. If this were not so, the reference to Section 8(3)(c) of the Act would be redundant and in effect would render the observation self-contradictory, which it certainly is not especially when it is viewed in the light of the observations of their Lordships in the Nagar Rice Case : [1970]3SCR846 quoted above.

6. The conclusion reached by me just above, however, runs counter to the judgment of Mohan, J. in W.P. No. 2109 of 1976 (supra) wherein the learned Judge thought that because Sarkaria, J., had used the words 'new rice-mill' the owner of an already existing rice-mill could not be deemed to be a person aggrieved by an order granting permission to another to erect a new mill in pursuance of the provisions of Sub-section (4) of Section 5. With very great respect, I find myself unable to agree with Mohan, J.'s interpretation of the observation made by Sarkaria, J. and referred to by me above, and in this view of the matter I feel that the preliminary objection raised on behalf of respondent No. 3 should be decided by a larger Bench, preferably a Full Bench. The records of the case may therefore be laid before my lord the Chief Justice for the constitution of such a Bench.

This Writ Petition coming on for hearing before the Hon'ble the Chief Justice and the Hon'ble Mr. Balasubrahmanyan, J., the Court made the following order:

The order of the Court was made by

Balasubrahmanyan, J.

Has an existing rice-mill owner locus standi to file a writ petition under Article 226 of the Constitution and challenge the grant of a new licence to any other person for running another rice-mill in the same locality? This is the question which has been pertinently raised by the respondents to this writ petition which comes before this Bench on a reference by Koshal, J., of that preliminary issue.

8. The petitioner Thangathammal is the owner of a rice-mill in Sirugamani Village, Tiruchirapalli Taluk. She has been working this mill for a long time as holder of a licence, issued under Section 6 of the Rice Milling Industry (Regulation) Act, 1958 (Central Act XXI of 1958). While so, on 22nd April, 1975, the District Supply Officer, Tiruchirapalli, as the concerned licensing authority granted a new rice-milling licence to the third respondent, N. V. Krishnan, for running a rice-mill in the same village very near the petitioner's own rice-mill. While granting the licence as aforesaid, the licensing authority rejected the protests and objections raised by the petitioner before him. The petitioner accordingly filed the present writ petition for the issue of a writ of certiorari to quash the licence issued by the District Supply Officer to the third respondent.

9. Before Koshal, J., the third respondent raised a preliminary objection to the maintainability of the writ petition, contending that the petitioner has no locus standi to question the issue of the rice-milling licence in his favour. According to the third respondent, she is not an aggrieved person merely because she is an existing rice-mill owner and the Licensing Authority had granted a new licence to the third respondent.

10. Koshal, J., heard the parties on this preliminary issue. Two decisions of the Supreme Court were cited before the learned Judge on behalf of the third respondent (i) The Nagar Rice and Flour Mills v. N. Teekappa Gowda and Bros : [1970]3SCR846 and (ii) J. M. Dasai v. Roshan Kumar : [1976]3SCR58 . It was urged, on the authority of these two decisions, that the petitioner, as an existing rice-mill licencee, has no locus standi to move the High Court under Article 226 of the Constitution to quash the licence which the District Supply Officer had granted to the third respondent under Section 6 of the Act. Koshal, J., however, was not persuaded to regard either of the decisions of of the Supreme Court as clear authority for the position contended for by the third respondent. The learned Judge, has, however, referred to a contrary view expressed by Mohan, J., in Writ Petition No. 2109 of 1976. Expressing this agreement with Mohan, J.'s views, Koshal, J., has referred the question of locus standi raised in this writ petition for decision by a Bench. This is how the writ petition conies before us.

11. Mr. Sekkizhar, learned Counsel for the petitioner, urged before us that the writ petitioner, as owner of an existing rice-mill, was vitally affected and prejudiced by the grant of a new licence to the third respondent for carrying on rice-milling business in the same village in close proximity to the petitioner's existing rice-mill. He pointed out that already there were three other rice-mills owned by different persons in the same village, and there was hardly enough paddy produced in the village adequate to meet the needs even of the existing mills. It was urged that the sole means of the petitioner's livelihood was the rice-mill. Learned Counsel submitted that in such circumstances the grant of a new licence to the third respondent would hit the petitioner financially and ruin her. Learned Counsel accordingly contended that his client was an aggrieved person in every sense of that expression. He referred to Section 12 of the Act which gave a right of appeal to 'any person aggrieved' by a decision of a licensing authority under Section 6. His complaint was that although the petitioner had filed an appeal against the decision of the licensing authority nothing was heard about that memorandum of appeal till the moment of filing the writ petition. That, according to learned Counsel, was the reason why she had to approach this Court for redress as a person aggrieved. Learned Counsel cited before us a decision of a Full Bench of this Court reported as Lakshminarayanan v. Maruthappa Nainar : (1969)2MLJ79 . (F.B.) as a direct authority for the position that a person like the petitioner does have locus standi to move the High Court for the issue of a writ of certiorari to quash the licence issued to a new mill owner.

12. The learned Advocate-General, appearing for the licensing authority and the State Government, who have been made party respondents to the writ petition urged that the petitioner has no locus standi to maintain her writ petition. He strongly relied on the two decisions of the Supreme Court which we have cited earlier in this judgment. He further submitted that the decision of the Full Bench of this Court, although directly in point, must be treated as being no longer good law, in view of the two later decisions of the Supreme Court. Mr. Vedantham Srinivasan, appearing for the third respondent, adopted the arguments of the learned Advocate-General.

13. For effectively dealing with the question of locus standi in the way it was argued before us, by the learned Counsel on both sides, we think it would be necessary to clear the ground first of certain factual controversies bearing on that question. The petitioner's main grievance in the writ petition, as we noticed earlier, was that her business would be adversely affected by the operation of the third respondent's new rice-mill, in the same locality. This allegation, however, has been denied by the third respondent by pointing out, in his counter-affidavit, that not one of the other rice-millers operating in the village had thought fit to raise objections on any such ground. The petitioner's allegation that the paddy out-put in the village is not enough to go round even the existing rice-mills is countered by facts and figures supplied by the Deputy Secretary of the Food Department, Madras in the counter-affidavit filed by him on behalf of the first and second respondents. We do not, however, propose to go into these factual considerations. For the purpose of deciding the question of locus standi we would assume that the petitioner's existing rice-mill business would receive a financial set-back by the appearance of the third respondent's mill as yet another competitor in the trade. The question would then fall to be decided by considering whether the Full Bench decision of this Court still holds the field or whether the subsequent rulings of the Supreme Court compel us to reach a different conclusion. This would involve a close examination of the three decisions cited above with a view to find out the appropriate answer. But, before we address ourselves to those decisions, it would not be out of place to briefly notice the relevant provisions in the Rice Milling Industry (Regulation) Act, 1958.

14. The Act, as its preamble avows, is a legislative measure intended to regulate the rice-milling industry in the country in the interests of the general public. This object is sought to be achieved by a statutory system of permits and licences. Permits are for construction of rice-mills. Licences are for running the rice-mills already constructed. Section 8 enacts that no person shall establish any new rice-mill or recommence any dormant or defunct rice-mill excepting under a permit granted to him by the Central Government. The same provision enacts that no owner of a rice-mill, whether new or pre-existing, can carry on rice-milling operations in his mill except in accordance with a licence granted to him by the appropriate Licensing Authority appointed for the purpose. Even a change in the location of an existing rice-mill or expansion in its productive capacity can only be undertaken after getting prior permission of the Licensing Officer. The procedure for granting permit for construction of a new rice-mill is governed by Section 5 of the Act. This section provides that before granting permit to any one for constructing a rice-mill, the Central Government has to direct on investigation to be made into a number of relevant considerations such as, for instance, the number of rice-mills already operating in the vicinity, the availability of power and water supply for the rice-mill, type of machinery and plant to be installed in the rice-mill, the economic side effects of establishing a rice-mill in the village in the matter of employment opportunities etc. While Section 5 governs the grant of permit for constructing a new rice-mill or for recommencing a defunct rice-mill, Section 6 provides for the issue of a licence to the owner of every rice-mill whether existing or new, for carrying on rice-milling operations. The Licensing Officer is empowered to scrutinise the application of the rice-mill owner and grant licence on such terms and conditions is he may think fit. The Licensing Officer has power under Section 7 to revoke, suspend, or amend the licence. Any person aggrieved by a decision of the Licensing Officer under Section 6 or Section 7 may prefer an appeal under Section 12 to the Appellate Officer within 30 days from the date on which the decision of the licensing authority is communicated to him. Section 12 confers power on the Central Government to exempt rice-mills or any class of them in any area from the operation of all or any of the provisions of the Act, if, in the opinion of that Government, such exemption is necessary in public interest. Under Section 19, the Central Government may delegate any of its powers under the Act either to its subordinates or to the State Government or its subordinates.

15. The provisions outlined above clearly show that the paramount consideration of the licensing system under the Act is the interest of the public at large. Even exemptions from the provisions of the Act must be conceived and granted only from the view-point of public interest. This does not mean that the authorities administering the Act are prevented from taking note of representations of individual, or private interests. On the contrary, some of the matters which Section 5 enjoins the Central Government to take note of while granting permits for construction of rice mills, do have a bearing on competing private interests. But, even under Section 5, the overwhelming consideration for decision-making must be the interest of the general public, and a permit may not be granted, or refused, merely on the basis of an adjudication between conflicting or competing private interests who happen to get a hearing. The Act does not, in so many words, lay down what the relevant considerations are that must govern, or guide, the Licensing Authority in the matter of the issue of licences to work rice-mills. The process of issue of licence under Section 6 might seem to be almost a matter of course, once the applicant is possessed of a valid permit for construction of a new rice-mill or re-starting of a dormant one. But even under this provision the requirement of public interest is paramount, for that is the very plank on which the entire statute rests. It is to be noticed, however, that neither Section 5 nor Section 6 contemplates a judicial or quasi-judicial, inquiry by the authority concerned. In actual practice, the concerned authority might receive and consider representations from existing rice-mill owners or other private interests that might consider themselves affected by the grant of a permit to a new rice-mill or the grant of a licence to a rice-mill already permitted to be constructed. But, when it does so, that authority could by no means be regarded as entertaining or deciding a lis between rival parties, considering that, none of them could be said to have any claim of right, as such, which calls for adjudication. In the context of the proceedings under the Act, no individual has a right, strictly so-called, to obtain for himself a permit or licence, any more than he has a right, as such, to prevent its being granted in favour of another. 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.

16. In the present case, it is further relevant to note that the Central Government issued a notification, dated 23rd April, 1959 under Section 19 of the Act delegating to the State Governments the powers exercisable by the Central Government under Sections 4, 5, 8, 9, 10, 12, 15 and 18 of the Act. Acting under its delegated powers, the Tamil Nadu Government issued the following order by Gazette notification on 6th August, 1970;

In exercise of the powers conferred by Sub-section (1) of Section 18 of the Rice-Milling Industry (Regulation) Act, 1958 (Central Act XXI of 1958) read with the notification G.S.R. No. 512, dated the 22nd April, 1959 of the Government of India, Ministry of Food and Agriculture - (Department of Food). The Governor of Tamil Nadu hereby exempts the rice-mills in the State of Tamil Nadu except in a belt of fifteen miles within the State borders, from the provisions of Section 5, Sub-section (1) of Section 6 (in so far as the said sub-section relates to the requirement) of a permit granted under Section 5 and Sub-section (1) of section of the said Act, and of Rule 3 or Rice Milling Industry (Regulation) Act, 1958 and of Rule 3 of the Rice Milling Industry (Regulation) and Licensing Rules, 1959.

17. The effect of the above order of exemption would seem to be that with respect to those parts of Tamil Nadu to which the exemption applied there was no statutory compulsion for any one to apply for and obtain a permit as a pre-condition for the construction of a new rice-mill or for the re-starting of a defunct rice-mill. The considerations which, but for the order of exemption, would normally govern the issue of permits for the construction of a new rice-mill or the issue of licences for the running of the rice-mill also had no application in the matter of grant of licences subsequent to the corning into force of the notification for exemption.

18. When the third respondent built a new rice-mill in the village of Sirugumani, the order of exemption had already come into force. Hence, he did not have to apply for and obtain a permit under Section 5 of the Act before he launched upon the constructions of his rice-mill. All he had to do was to apply for a licence to work the rice-mill the moment he got ready the rice-mill building and plant. He did so, and his application; was granted. He is now running the mill under the licence. The stand taken by him as well as the other respondents is that in the context of the present case there was no compelling necessity for the Licensing Officer to have gone into the question of the number of rice-mills operating in the locality, the availability of paddy in the locality and similar considerations before he issued the licence to the third respondent on his application. The respondents rely not only on the provisions of Section 6 of the Act but also on the effect of the State Government's order of exemption, dated 6th August, 1970.

19. Mr. Sekkizhar, learned Counsel for the petitioner, urged that whatever might be the precise operation of the order of exemption, the petitioner was, in fact, allowed to make representations before the Licensing Officer, objecting to the grant of licence to the third respondent, and what is more, while deciding to grant the licence to the third respondent, the Licensing Officer had actually entertained and dealt with the petitioner's objections, in a speaking order. Learned Counsel further pointed out that a copy of the order of the Licensing Officer overruling the petitioner's objection and granting the licence to the third respondent was also duly served on the petitioner, and it was within 30 days of the receipt of that order that the petitioner had preferred an appeal to the concerned Appellate Authority in terms of Section 12 of the Act. This appeal, learned Counsel pointed out, had been put in cold storage by the Appellate Authority, leaving the petitioner no avenue of redress excepting that afforded by Article 226 of the Constitution. Learned Counsel accordingly urged that' the petitioner, as a party aggrieved, had locus standi to file the present petition. He placed strong reliance on the Full Bench ruling of this Court in Lakshminarayanan v. Maruthappa Nainar : AIR1970Mad136 . The matter arose before the Full Bench in a batch of writ appeals, and the question for decision was whether the licensee of an existing rice-mill had locus standi to apply for a writ of certiorari to quash the grant of permit for the establishment of a new rice-mill in the locality, under the Rice Milling Industry (Regulation) Act, 1958.

The question was raised by the existing rice-mill owners who were carrying on rice milling operations in their rice mills tinder licences already issued to them by the Licensing Authority. They had raised objections before the authorities concerned against the grant of permits for the construction of new rice-mills. Their grievance before the Court was that despite their representations, permits for construction of new rice-mills had been granted in violation of the relevant provisions of the Act and the Rules made thereunder. It was contended that the non-observance of the statutory requirements had the effect of prejudicially affecting the existing licensees.

20. While examining the above contentions, the learned Judges of the Full Bench considered the aims and objects of the Act as well as the relevant provisions therein relating to the grant of permits and licences. They observed that, with the passing of the Act, the rice-milling industry became a controlled occupation. They further observed that such restrictions as were imposed by the Act on the rice-milling industry and trade were reasonable restrictions imposed by the legislature in the interests of the general public. Adverting to the provisions of Section 5, they observed that there was nothing to preclude the existing rice-mill owners placing before the authorities the various considerations set out in Section 5(4), although the Act might or might not provide specifically for the appearance and representation before the competent authority by existing rice-mill owners in the locality. It was further observed that quite apart from the provisions of the Act a duty was cast upon the authorities to take into account all considerations that might be relevant in the matter of grant of permits for construction of new rice-mills. Before the Full Bench the existing licensees did not claim that they had acquired a monopoly for carrying on rice-milling business in their respective localities. Nor did they claim a right to question in certiorari proceedings, the installation of a fresh rice-mill in their area merely on the score that their own trade or business might thereby be adversely affected, They put their case before the Court this way: When the law was wrongly administered by the authorities concerned in so far as permits had been granted for the construction of new rice-mills in disregard of the considerations prescribed in the statute, then the existing rice-mill owners had a right to complain before the Court that in consequence of the non-observance of the law their rights were affected and the injury to their rights was sufficiently substantial to enable them to maintain their petitions for the issue of writs of certiorari under Section 226 of the Constitution to quash the permits. The Full Bench accepted this contention, as appearing from the following passage in the judgments:

As existing rice-mill owner who has objected to the installation of a fresh rice-mill in the locality and contends that he had been prejudicially affected by the grant of permit for installation of a fresh rice-mill, has sufficient interest to give him locus standi to make an application for certiorari under Article 226.

21. It is necessary to point out that the Full Bench did not hold that an existing rice-mill owner would have locus standi to question the grant of a permit for construction of a new rice-mill solely on the score that his own business would thereby, be prejudicially affected. On the contrary, the view of the Full Bench would seem to be that apart from complaining that his interests were affected, the existing licensees must, in addition, show that the grant of the new permit was in violation of any relevant provision in the Act or in the Rules. The following passage from the judgment of the Full Bench would make their reasoning clear:

It is not contended for the existing rice-mill owners that they have monopoly in their area. Nor do they claim a right to question in certiorari proceedings the installation of a fresh rice-mill in their area, if there is no violation or infringement of the Rules and Regulations governing the grant of fresh permits, merely on the ground that their own trade or business may go down. Clearly if the law is wrongly administered and an existing rice-mill owner is prejudicially affected in consequence, his interest in due observance of the law is personal and sufficiently substantial.

22. The learned Advocate-General contends that the decision of the Full Bench does not reflect the correct position in law, in the light of the subsequent ruling of the Supreme Court in The Nagar Rice and Flour Mills v. Teekappa Gowda : [1970]3SCR846 and J.M. Desai v. Roshan Kumar : [1976]3SCR58 . The effect of these later decisions, according to him, is that no existing or rival rice-mill owner can be allowed to question before a Court of law the grant of a rice-mill permit or rice-milling licence, even pro bono publico.

23. In the earlier of the two decisions of the Supreme Court, The Rice Milling Industry (Regulation) Act, 1958 directly figured in the discussion. A rice-mill owner was running his mill under a licence. The State Government of Mysore compulsorily acquired the rice-mill premises under the Land Acquisition Act, but left him free to remove the plant and machinery elsewhere. In consequence, he applied for permission to the Special Officer for Rehabilitation to allot him an alternative site for shifting the plant and machinery of his mill. The Tahsildar allotted a place for the purpose. After installing the machinery in the new place, but before commencing operations, the rice-mill owner obtained permission from the Director of Food and Civil Supplies, who was the authority, competent under the Rice Milling Industry (Regulation) Act, to sanction the shifting of the rice-mill. Very near the new site of the mill there was a pre-existing rice-mill belonging to another person. He filed a writ petition before the Mysore High Court challenging the validity of the order of the Director of Food and Civil Supplies permitting the other mill to shift to a place near his own, contending that the order was in violation of Section 8(3)(c) of the Act. The point raised by him before the Court was that the shifting of the mill had already taken place as a fact, and the Director of Food and Civil Supplies merely sanctioned a fait accompli. It was pointed out that under Section 8(3)(c) no licensed rice-mill owner could shift the location of his rice mill without previous permission of the Central Government. It would appear that the Director of Food and Civil Supplies gave a hearing to this objector, but overruled the objections. The learned Judges of the Mysore High Court held on the above facts that the petitioner before them was prejudicially affected by the order of the Director sanctioning the change in location of the other mill and, that being so, he had a right to challenge the legality of the order. On the merits, the learned Judge held that the order was in violation of Section 8(3)(c) of the Act, and quashed the same by the issue of a writ of certiorari. In appeal by special leave before the Supreme Court, two questions were raised: (i) Whether the Competent Authority dealing with an application under Section 8(3) (c) for shifting of the location of an existing rice-mill was bound to take note of considerations that were relevant to the grant of permit for construction of a mill in the first instance; and (ii) Whether an existing rice-miller functioning in the locality to which another mill is permitted to shift its plant and machinery had locus standi to challenge the order granting such permission in a Court of law. On the first question, the Supreme Court held that the conditions prescribed in Section 5(4) in the matter of grant of a permit for construction of a new rice-mill or the re-commencement of a dormant mill cannot be imported into the proceedings held under Section 8(3)(c) for shifting the location of an existing rice-mill. The Court further held that while the authority concerned must consider the expediency of permitting the change in the location asked for, he is not under an obligation to take note of matters set out in Section 5(4) of the Act for quite a different purpose. On the facts of the particular case before them, the Supreme Court held that the impugned order was not bad in law. The learned Judges then proceeded to deal with the other question raised before them as respects the locus standi of a rival rice-miller to challenge the validity of an order under Section 8(3)(c) in favour of another. For considering this latter question, their Lord ships were prepared to assume that the order of the authority concerned was illegal, accepting, for the moment, the contention that the order sanctioning the change in location was made after the mill had actually shifted to the new place. Their conclusion may be best stated by reproducing the following observations:

Even if it be assumed that the previous sanction has to be obtained from the authorities before the machinery is moved from its existing site we fail to appreciate what grievance the respondents may raise against the grant of permission by the authority permitting the installation of the machinery on a new site. Even assuming that no previous permission was obtained the respondents would have no locus standi for challenging the grant of the permission, because no right vested in the respondents was infringed.

24. The above passage in the judgment of the Supreme Court-applies with equal force to the present case as well. Mr. Sekkizhar sought to make a distinction out of the fact that the Supreme Court was concerned with an order under Section 8(3)(c) of the Act, while the matter before us arises out of the issue of licence under Section 6. But this distinction on facts, in our opinion, does not make for a difference in principle. The argument urged in the case before the Supreme Court was that the Director of Food and Civil Supplies, while sanctioning a change in the location of the rice-mill, did not take note of such considerations as the number of rice-mills in the locality, the availability of power, the prospect of rural unemployment etc. This argument was repelled by the Supreme Court on the ground that these considerations would be relevant only for grant of a permit under Section 5(4) of the Act for construction of a new mill and not for permission to shift the location of an existing mill under Section 8(3)(c). While on that subject, the Supreme Court also had occasion to observe at page 350 that 'the conditions prescribed by Sub-section (4) of Section 5 only apply to the grant of a permit and not to a licence.' With respect, we have expressed the same view earlier in this judgment. It follows, therefore, that by merely putting forward the considerations that are germane to a proceeding under Section 5(4), an existing rice-mill owner cannot hope to gain locus standi to challenge the validity of a grant to another person of a licence under Section 6. We hold that the ruling in, The Nagar Rice and Flour Mills v. Teekappa : [1970]3SCR846 , directly applies to the present case.

25. The later decision of the Supreme Court in J. M. Desai v. Roshan Kumar : [1976]3SCR58 makes the position clearer still. Sarkaria, J. speaking for the Court, has dealt with the entire Law relating to locus standi in certiorari proceedings, drawing parallels from the legal position that obtains in certain other countries. The matter which was the subject of controversy in this case was the grant of a 'no objection' certificate by the District Magistrate of Kaira in the State of Maharashtra for the location of a new cinema theatre in the town, under Rule 6 of the Bombay Cinema Rules, 1954, framed under the Bombay Cinemas Regulation Act, 1953. Rule 4 of the said Rules provided for a public notice inviting objections to the grant of a certificate. Section 8-A of the Act-conferred a right of appeal from a decision of the Licensing Authority to the State Government and this right could be availed of by any 'person aggrieved' by an order of the Licensing Authority. Section 8-B of the Act gave the State Government a revisional jurisdiction which might be exercised either suo motu or on the application by 'an aggrieved person'. It would appear from the facts on record that the person who subsequently canvassed the propriety of the 'no objection certificate' had not chosen to avail of the opportunity of filing objections under Rule 4 pursuant to the public notice issued by the Licensing Authority. Nevertheless, he sought to question the validity of the certificate by filing a writ petition in the Bombay High Court, asking for a certiorari to quash the certificate. The High Court, however, dismissed the writ petition on the ground that no right vested in the petitioner which could be held to have been infringed by the impugned certificate and that he was not an aggrieved person having locus standi on the matter. On appeal before the Supreme Court, it was argued for the writ petitioner that apart from the right which he, in common with the rest of the general public, had to object to the grant of the certificate, he himself was a competitor or rival in the trade, and hence had a particular interest to see that permission was not granted for a new cinema theatre which was likely to affect his own commercial interests adversely. This contention was examined by the Supreme Court from two different angles: (i) Did the existing theatre-owners have any right under the statute which was subjected to, or threatened with injury by the grant of the certificate for the opening of a; new theatre? (ii) Did he have any such right under the general law, quite apart from the provisions of the statute? Both questions were answered in the negative. Sarkaria, J., speaking for the Court observed that 'the Act and the Rules do not confer any substantive justiciable right on a rival in a cinema trade, apart from the option in common with the rest of the public, to lodge an objection in response to the notice published under Rule 4'. Proceeding, the learned Judge observed that competition in business is a lawful activity and a business loss incidental to such competition cannot be said to injure any legally protected right. The learned Judge concluded that the writ petitioner had not been deprived of a legal right nor subjected to a legal grievance. Nor did the impugned certificate wrongfully affect his title to anything. In this view, it was held that he was not a person aggrieved and had no locus standi to challenge the grant of the 'no objection certificate' for the start of a new cinema theatre in his locality.

26. We hold that the above reasonings and conclusions apply to the present case with equal force. We may go further and say that the case before us is an a fortiori case. In the Bombay' Cinema Rules, with which the Supreme Court was concerned, there was a provision under Rule 4 to give public notice of the application for licence for a new cinema theatre and invite objections. Under Section 5 of the Rice Milling Industry (Regulation) Act, 1958, as we saw earlier, there is no similar provision for any such public notice calling for objections against the issue of licences under Section 6. No inquiry is contemplated even for the issue of a permit for construction of a new rice-mill, the procedure contemplated by Section 5(4) being merely a fact-finding investigation by the competent authority. As for the Licensing Authority functioning under Section 6, it had no duty to convene the existing rice-millers in the locality or hear their objections, since as we saw earlier, they had no right as such, to object to the grant of the licence.

27. Mr. Sekkizhar's point before us was that his client was, in point of fact, heard by the Licensing Authority, and while her objections were overruled a copy of the order containing the grounds of the decision was marked to her and also served on her. But these factual aspects would not, in our opinion clothe the petitioner with any locus standi when, in point of law, she could not claim that any legally enforceable rights of hers are affected by the grant of the licence to the third respondent. In the case of Nagar Rice and Flour Mills v. Teekappa Gowda : [1970]3SCR846 also the writ petitioner was, in fact heard by the Commissioner of Food and Civil Supplies before he granted the change in the location of the rice-mill.

Notwithstanding this fact, the Supreme Court held that he had no locus standi to move a Court of law for challenging that grant.

28. In the later Supreme Court decision of J.M. Desai v. Rhoshan Kumar : [1976]3SCR58 , Sarkaria, J., observed that the case before them 'falls well nigh within the ratio of this Court's decision in Nagar Rice and Flour Mills v. Teekappa Gowda : [1970]3SCR846 . While summarising the point that arose in the earlier decision, Sarkaria, J., observed that in that case 'it was held that a rice-mill owner has no locus standi to challenge under Article 226 the setting up of a new rice-mill by another even if such setting up be in contravention of Section 8(3 (c) of the Rice Milling Industry (Regulation) Act, 1958, because, no right vested in such an applicant is infringed'. Mr. Sekkizhar pointed to the last observation and submitted that Sarkaria, J.'s reference to the case in the Nagar Rice and Flour Mills v. Teekappa Gowda : [1970]3SCR846 , as one of setting up of a new rice-mill is incorrect. We must however, point out, with respect, that Sarkaria, J. has pointedly referred to Section 8(3)(c) of the Act as the relevant statutory provision that came up for consideration in the earlier case. There can, therefore, be no warrant for the suggestion that the correct ratio from the earlier decision had not been extracted in the subsequent judgment.

29. For the reasons stated above, and on the basis of the ratio of the two decisions of the Supreme Court which we have considered at length, we have no doubt whatever in expressing our view that the earlier decision of the Full Bench of our Court in Lakshminarayanan v. Maruthappa Nainar : (1969)2MLJ79 , is no longer good law. The Full Bench decision is not specifically referred to in either ruling of the Supreme Court, but that would only mean that the Full Bench stands impliedly overruled.

30. It follows that the present writ petition must be dismissed in limine as not entertainable, on the ground that the petitioner has no locus standi to question the order dated 22nd April, 1975 granting a licence to the third respondent for running a rice-mill in the village of Sirugamani.

31. Mr. Sekkizhar raised one other legal contention, based on a recent notification dated 13th September, 1973 issued by the Central Government under Section 19 of the Rice Milling Industry (Regulation) Act, 1958. Referring to the terms of that notification, he argued that the State Government could exercise its power of exemption only after obtaining prior concurrence of the Central Government. On this basis he argued that the State Government's earlier order of exemption dated 6th August, 1970 passed by the State Government without obtaining such prior concurrence of the Central Government can no longer survive. This argument of the learned Counsel does not bear on the question of locus standi of the petitioner to maintain the writ petition, but goes into the validity of the impugned order itself. Since we have non-suited the petitioner on the issue of locus standi, this last submission of learned Counsel does not fall to be considered by us at all. We may, however, observe that this contention is devoid of merit. The order of, exemption was notified by the State Government pursuant to the powers delegated by the Central Government in its notification dated 22nd April, 1959. Under that earlier delegation no condition was attached for the exercise of the delegated powers. The State Government could grant exemptions from the Act without obtaining prior concurrence of the Central Government. Learned Counsel accepts this position and does not contend otherwise. This being so, he cannot contend that the subsequent amendment or alteration in the terms of the delegation would have the effect of nullifying the previous effect of the earlier notification or abrogating the prior orders of exemption validly made by the State Government under the earlier delegation. It is, however, not necessary to labour the point, as the petitioner has failed at the very threshold to establish her locus standi to question the validity of the proceedings.

32. We accordingly dismiss the writ petition as not maintainable. There will, however, be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //