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Allahabad High Court · body

1968 DIGILAW 98 (ALL)

S. Srivastava v. Excise Commissioner, Uttar Pradesh, Allahabad

1968-02-21

SATISH CHANDRA

body1968
ORDER Satish Chandra, J. - Thirty eight persons, including the Petitioners and Respondents 4 and 5, applied for the grant of licence for sale of Indian made foreign liquor in Hari Parbat area of Agra city. After necessary enquiries, the Collector granted a licence to the two Petitioners jointly. The applications of others ware rejected. The Respondents 4 and 3 filed appeals against the grant of the licence to the Petitioners before the Excise Commissioner. The Excise Commissioner did not either serve a copy of the appeals or otherwise intimate the Petitioners about the institution of the appeals. The Petitioners having come to know of it, applied to the Excise Commissioner for an opportunity to represent their case before the appeals were disposed of. In reply, the Excise Commissioner on 6-11-1967, intimated that the Petitioners might submit a written note or narrative of their case. It was also intimated that they would be given a chance to represent their case "on the date if it is fixed for hearing the appeals". On 14-11-1967, the Petitioner applied to the Excise Commissioner foil copies of the appeals preferred by the Respondents, so that they might furnish a narrative of their case. A reminder was sent on 7-12-1967, but the Excise Commissioner did not accede to the request of the Petitioners. The Petitioners' case is that they never knew of the grounds, upon which the Respondents had challenged the grant of the licence in their favour and consequently they could not explain them. On 5-1-1968, the Excise Commissioner passed the impugned order, setting aside the grant of the licence in favour of the Petitioners and directing the Collector to settle the licence afresh with some ether suitable party in accordance with the guiding principles given in the Excise Manual. 2. This order has been challenged principally on the ground that principles of natural justice were attracted to the proceedings for the decision of the appeals filed by the Respondents. The Petitioners were entitled to be apprised of the grounds and materials, upon which the licence in their favour was sought to be challenged. No such opportunity was given. The impugned order violated the principles of natural justice and was void. 3. Section 21 of the UP Excise Act, 1910, authorises the Collector to grant a licence for selling liquors. The Petitioners were entitled to be apprised of the grounds and materials, upon which the licence in their favour was sought to be challenged. No such opportunity was given. The impugned order violated the principles of natural justice and was void. 3. Section 21 of the UP Excise Act, 1910, authorises the Collector to grant a licence for selling liquors. u/s 11 of the Act, an appeal lies to the Commissioner from an order of the Collector. Rule 359 of the Rules framed under the Act prescribes the general principles for selection of licensees. It states: 359. The following general principles are laid down for the selection of licensees: (i) Honesty and ability to supervise the shop personally are the principal qualifications of a licensee. Preference should generally be given to local residents. Education alone is not sufficient nor does the possession of a large capital make a man a suitable vendor. Capitalists who leave the work to managers and salesmen should be excluded as far as possible. (ii) As far as possible no licensee should be given more than one shop. (iii) Settlements shall be made by individual shops and licences granted for one year. Rule 339 also prescribes conditions for the grant of a licence. It is thus clear that the selection of a person for the grant of a licence is based upon various objective considerations. 4. Section XIII of the Excise. Manual deals with appeals and revisions. Rules 134 onward provide the manner of presentation of the appeal and the procedure therefor. An appeal can be filed within 30 days of the order appealed against. It has to be properly stamped and accompanied by a copy of the impugned decision. Rules, however, do not prescribe the procedure, which has to be followed in deciding the appeal. There is no provision for impleading the person, in whose favour a licence was granted, as a party, or for issuing notice to him. But it is apparent that an appeal against the grant of licence can be decided on the principles prescribed by the rules for the grant of the licence by the Collector. The Excise Commissioner in disposing of the appeal will have to follow the principle set out in the rules for the grant of licence. 5. Many people may apply for the grant of a licence. The Excise Commissioner in disposing of the appeal will have to follow the principle set out in the rules for the grant of licence. 5. Many people may apply for the grant of a licence. The rules do not make any provision for the various Applicants to file objections against each other. The Collector has to make a selection in accordance with the principles laid down in the rules. But after a licence has been granted to an individual, the other Applicants are entitled to file an appeal and in that appeal, the principal question liable to be determined will relate to the suitability of the person, to whom the licence has been granted, in comparison to the persons who have preferred the appeal. It is at the appellate stage that, in reality and in substance, adversary proceedings commence for the first time. The person, in whose favour the licence has been granted, may be totally unaware of the merits and demerits of the person, who has filed the appeal, till the stage of appeal. He may be equally unaware of the grounds, upon which the grant of licence in his favour is challenged. All these matters are liable to be adjudicated and decided by the Excise Commissioner while disposing of the appeal. The decision of the appeal has not been made dependent upon the subjective satisfaction of the appellate authority. He has to apply the objective standards laid down in the rules for deciding whether the right person was selected by the Collector. Under these circumstances, it is apparent that the person, in whose favour the licence has been granted, would be in a position to meet or explain the objections raised by the aggrieved party to the grant of licence to him. The objections being capable of being explained and the proceedings being such as involve civil consequences incase the order of grant is set aside or modified, the proceedings would, in my opinion, be quasi-judicial in nature, so as to attract the principles of natural justice. In such proceedings the person, to whom the licence was granted, would be entitled to know the grounds, upon which the grant has been challenged and the materials upon which the appeal proceeds and which the appellate Court would take into consideration in deciding the appeal and to be an opportunity to meet them. 6. In such proceedings the person, to whom the licence was granted, would be entitled to know the grounds, upon which the grant has been challenged and the materials upon which the appeal proceeds and which the appellate Court would take into consideration in deciding the appeal and to be an opportunity to meet them. 6. Eyen assuming that the proceedings are not, strictly speaking, quasi-judicial, yet the principles of natural justice would be attracted on the authority of the Supreme Court in State of Orissa Vs. Dr. (Miss) Binapani Dei and Others, AIR 1967 SC 1269 . In that case, Shah, J., speaking for the Court, observed: ...but even an administrative order which involves civil consequences,...must be made consistently with the rules of natural justice after informing the first Respondent of the case of the State, the evidence in support thereof and after giving opportunity to the first Respondent of being heard and meeting or explaining the evidence. The setting aside of the order granting licence to the Petitioners means depriving them of the business that they could carry on, on its basis. Such a proceeding would be covered by the dictum of the Supreme Court and an order setting aside the grant of a licence, under which a business could be carried on, could not be validly passed without complying with the rules of natural justice. 7. The Petitioners were not informed of the grounds, upon which the grant in their favour was challenged, nor were they given an opportunity of meeting or explaining those grounds. A perusal of the order of the Excise Commissioner shows that the grant of the licence was set aside after considering several matters which were held against the Petitioners. All these matters were capable of being explained. The impugned order of the Commissioner violated the principles of natural justice. As held by this Court in Abdul Latif Nomani v. The Commissioner, Gorakhpur 1967 ALJ 431 437, the order was void ab initio. 8. For the Respondents, it was urged that the Petitioners had an alternative remedy by way of a revision to the State Government. It has been held that if the impugned order is void, the existence of an alternative remedy is no ground for refusing relief Under Article 226 of the Constitution See A.V. Venkateswaran, Collector of Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another, AIR 1961 SC 1506 . It has been held that if the impugned order is void, the existence of an alternative remedy is no ground for refusing relief Under Article 226 of the Constitution See A.V. Venkateswaran, Collector of Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another, AIR 1961 SC 1506 . I am, therefore, not inclined to throw out the petition on this ground. 9. The petition, therefore, succeeds and is allowed. The impugned order of the Excise Commissioner is quashed. The Petitioners would be entitled to their costs. This order will not debar the Excise Commissioner from deciding the appeal afresh in accordance with law.