Jugal Kanta Pramanik v. State of West Bengal — 1990 DIGILAW 273 (CAL)

JUDGMENT Ray, J.: This Appeal is directed against judgment and Order dated August 13, 1975, passed by the learned trial Judge in C. R. No. 6255(W) of 1974. It is really unfortunate that this Appeal has come up for hearing, before us after a lapse of about 15 years. It appears that the Appellant Jugal Kania Pramanik was appointed a modified Ration Dealer in respect of Ward No.1 of Santipur in District of Nadia and he had been carrying on the said M. R. Dealership. It appears that Santipur P. S. Case No. 21 dated August 22, 1974 under section 7(1) (a) (ii) of Essential Commodities Act, 1955 (Act X of 1955) was instituted against the said M. R. dealer on certain charges of irregularity in the discharge of his duties as an M. R. Dealer. On September 22, 1974, the Sub-divisional Controller, Food & Supply Ranaghat suspended the M. R. Dealership of Shri Pramanik in view of the fact that such Santipur Police Case under the Essential Commodities Act had been pending. Being aggrieved by such action of suspension a Writ petition was moved by Shri Pramanik whereupon C. R. No. 6255(W) of 1974 arose. The learned trial Judge by the Order appealed against dismissed the Writ petition on the ground that the order of suspension of M. R. Dealership could not be a agitated in a proceeding under Article 226 of the Constitution since such suspension is based on an agreement entered into between the parties. The Rule was, therefore, discharged by the learned trial Judge. As aforesaid, instant appeal has been preferred by the Writ petitioner Shri Pramanik. 2. Mr. Moitra, the learned Counsel for the appellant bas contended that the dealer was placed under suspension only because a criminal case was instituted against him under the Essential Commodities Act. Toe authorities of the Food Department and/or the authorities under the agreement of M. R. Dealership have not taken into consideration any objective fact independently and had not come to any decision that in terms of the agreement the suspension was warranted. He has also submitted that although under Clause 17 of the agreement, power of suspension has been given but such power cannot be exercised arbitrarily or capriciously and the governmental action must be backed by reason. He has also submitted that although under Clause 17 of the agreement, power of suspension has been given but such power cannot be exercised arbitrarily or capriciously and the governmental action must be backed by reason. He has also submitted that indiscriminate order of suspension bas been allowed to continue indefinitely thereby causing serious loss and prejudice to the M. R. Dealer. Mr. Moitra has contended that the very exercise of power of suspension was not in conformity with the agreement between the parties and such governmental action was also arbitrary and capricious thereby offending Article 14 of the Constitution. The learned trial Judge bad gone wrong in discharging he Rule on an erroneous view that the power of suspension being a matter of contract, no action by the Writ Court was called for. 3. Mr. Moitra in this connection has referred to a very recent decision of the Supreme Court made in the case of (1) Mahabir Auto Stores V. Indian Oil Corporation reported in AIR 1990 SC at page 1031. The Chief Justice of India presiding over the Bench has held in the said decision that action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14 of the Constitution. If a governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. Rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural Justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to Judicial review on the touchstone or relevance and reasonableness, fair-play, natural Justice, equality and non-discrimination. Relying on the said decision, Mr. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to Judicial review on the touchstone or relevance and reasonableness, fair-play, natural Justice, equality and non-discrimination. Relying on the said decision, Mr. Moitra has submitted that the concerned authority failed to take into consideration the relevant facts and circumstances objectively and did not arrive into any conclusion on such objective consideration of facts that suspension was warranted, but mechanically passed the order of suspension simply because a police case was instituted case was instituted against the M. R. Dealer. Such authority bas also not made any further exercise in considering as to whether or not such order of suspension should continue and as a matter of fact the order has been allowed to continue for about 16 years to serious loss and prejudice of the M. R. Dealer. Such Government action on the face of it, must be held to capricious and devoid of any reasonableness and on that ground alone should be struck down. 4 Mr. Dutta, the learned Counsel appearing for the State Respondents has submitted that contractual obligations are not the matters to be gone into in the writ proceeding. If there had been any breach of contract, the party alleging breach of contract may take proper legal step in other appropriate forum. He has further submitted that an order of suspension can be made in exercise of power under Clause 17 of the agreement entered into between the parties. But he has, in his fairness, did not object to the contention of Mr. Moitra that such suspension normally should not be allowed to continue for an indefinite period and the concerned authorities have an obligation to consider whether such continuance is necessary. He bas however submitted that in the instant case, on an allegation of not properly discharging the duties as modified ration dealer, a police case was instituted. Such police case has not been concluded. As such, the authorities were not inclined to consider the merits of the allegation before the conclusion of the criminal proceeding and precisely for the said reason the order of suspension was also not taken into consideration during the pendency of the criminal case. 5. Mr. Such police case has not been concluded. As such, the authorities were not inclined to consider the merits of the allegation before the conclusion of the criminal proceeding and precisely for the said reason the order of suspension was also not taken into consideration during the pendency of the criminal case. 5. Mr. Dutta has, therefore, submitted that the continuance of suspension order has continued because of the pendency of the criminal proceeding and the impugned action of the concerned authority should not be held as irresponsible and/or arbitrary as alleged. 6. After considering the respective contentions of the learned Counsel appearing for the parties, we respectfully follow the decision made in the case of Mahabir Auto Stores (AIR 1990 SC at page 1031). It appears that the law is well-sattled by the Supreme Court that even in the matter of contractual obligation, the governmental action must be backed by reason and not by any arbitrary and capricious action which would offend Article 14 of the Constitution and on that score such governmental action is liable to be struck down. It appears to us that power of suspension has been given in Clause 17 of the agreement which has got two parts. The first part deals with the power of suspension and the Second part of Clause 17 deals with the power to cancel the agreement of dealership. Such cancellation of the agreement of dealership can be made in exercise of the power under Clause 17 of the agreement only if in the opinion of the Controller, the retailer has failed to observe, fulfil or perform any of the terms and conditions on the part of the retailer or to carry out or observe any direction given to the retailer under the provisions of the agreement. The agreement can also be cancelled under Clause 18 can be made by giving one month's notice without assigning any reason and it has been indicated that such power of termination of contract is uncontrolled decision of the competent authority. It therefore appears that power of suspension under Clause 17 envisages that the agreement of dealership may be terminated under Clause 17 for alleged lapses on the part of the retailer in carrying out the duties of the retailer under the terms of the agreement. It therefore appears that power of suspension under Clause 17 envisages that the agreement of dealership may be terminated under Clause 17 for alleged lapses on the part of the retailer in carrying out the duties of the retailer under the terms of the agreement. As objective consideration of the relevant facts for taking action in the matter of termination of agreement is likely to take time, order of suspension as provided in Clause 17 as an urgent intermediate step may be warranted. It is quite apparent that if suspension is effected in exercise of power under Clause 17 of the agreement, the concerned authority cannot sit idle by passing an order of suspension only as an intermediate step but such authority has an obligation to consider the allegation received against the retailer for considering as to whether or not cancellation of the agreement is warranted. In the instant case, it does not appear that any such exercise has been made by the concerned authority and it appears that the order of suspension has been passed mechanically and the same has been allowed to continue for an indefinite period. Such governmental action, to say the least, is highly arbitrary and unreasonable and therefore, is liable to be struck down under Article 14 of the Constitution. We, therefore, allow this appeal and set aside the order passed by the learned trial Judge and cancel the order of suspension. There will be no order as to costs. Let the certified copy of this order be issued expeditiously if applied for. Hazari, J.: I agree.