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2010 DIGILAW 1115 (ALL)

Puran Singh v. State of U. P. and Others

2010-04-05

ASHOK BHUSHAN, RAM AUTAR SINGH, S.K.SINGH

body2010
Hon. R. A. Singh, J.: - Heard Sri Arvind Kumar Singh II, learned Advocate who appeared in support of the writ petition, Sri Gajendra Pratap, learned Senior Advocate who appeared to assist the court and similarly Sri S. D. Dubey, learned Advocate. Sri M. C. Chaturvedi, learned Chief Standing Counsel assisted by Dr. Y. K. Srivastava, appeared and argued from the State side. This Full Bench has been constituted to resolve a issue, in view of the conflicting opinion in certain cases by Division Benches of our court. The point happens to be very small but it has an effect on the powers of the authority exercising the powers which will be just noticed and that has a wide range of effect on the rights of a claimant/beneficiary challenging the exercise on one hand and the public at large on the other hand. Instead of taking time in noticing the facts and the details in the context in which question arose, to understand the controversy so involved we are to hurriedly notice, needed details in short. To ensure the proper distribution of essential commodities which are bare need of the public they are to be distributed through the public distribution system for which Essential Commodities Act, 1955 (hereinafter referred to as the Act of 1955) was enacted. Certain powers so exercised by the Central Government were permitted to be exercised by the State Government. Pursuant to the powers conferred by the Public Distribution System (Control) Order, 2001 the State Government for maintaining the supplies of the food grains and other essential commodities and to secure equitable distribution and availability at fair price vide notification dated 20.12.2004 notified U. P. Scheduled Commodities Distribution Order, 2004. This distribution order was notified by the State Government in exercise of the powers conferred under Section 3 of the Act of 1955 read with provisions contained in Public Distribution System (Control) Order, 2001. Apart from the U. P. Scheduled Commodities Distribution Order, 2004 (hereinafter referred to as the Distribution Order of 2004) which is w.e.f. 30.12.2004 the State Government issued a Government Order dated 29.7.2004 (annexure no. 1 to the writ petition) (hereinafter referred to as Government Order, 2004 on the subject of monitoring/regulating various kind of procedures. Apart from the U. P. Scheduled Commodities Distribution Order, 2004 (hereinafter referred to as the Distribution Order of 2004) which is w.e.f. 30.12.2004 the State Government issued a Government Order dated 29.7.2004 (annexure no. 1 to the writ petition) (hereinafter referred to as Government Order, 2004 on the subject of monitoring/regulating various kind of procedures. Petitioner claims to be the allottee of the fair price shop, which was suspended by the order of the Sub Divisional Officer/Licensing Authority dated 20.6.2009, pending proceedings of cancellation of the license. It is this exercise of the licensing authority which is under challenge. When the matter was first heard, precise ground so taken and argued is that fair price shop agreement/license of the petitioner could not have been suspended without giving any opportunity to him. As no opportunity was given it being in violation of principles of natural justice is liable to be set aside on this ground alone. A further submission was made that the Government Order dated 29.7.2004 (annexure no. 1 to the writ petition) provides the procedure of suspension/cancellation and thus that having not been taken care, the impugned order of suspension is to be set aside. In support of the submission that for lack of opportunity the impugned exercise is to be quashed, decision given by the Bench of this Court in the case of Pramod Kumar Vs. State of U.P. and others reported in 2007 (1) ALJ 407 and Harpal Vs. State of U.P. and another reported in 2008 (4) ALJ 10 were referred. Learned Chief Standing Counsel opposed the aforesaid and submitted that no opportunity is required to be given at this stage. He placed reliance on the decision given by the Division Bench of this Court in the case of Gopi Vs. State reported in 2007 (5) ALJ 367 and Kallu Khan Vs. State 2008 (6) ADJ 453 . As the Division Bench hearing the present matter found difference of opinion in the judgment noted above, by order dated 14.7.2009 referred following questions for consideration by a Larger Bench. The question posed by the Bench for being considered is to be quoted here : "1. Whether before suspension of fair price agreement an opportunity of hearing is mandatory to be given to the fair price shop agent in violation of which the suspension order is liable to be set aside. 2. The question posed by the Bench for being considered is to be quoted here : "1. Whether before suspension of fair price agreement an opportunity of hearing is mandatory to be given to the fair price shop agent in violation of which the suspension order is liable to be set aside. 2. Whether the Division Bench judgments in 2007 (1) ALJ 407 Pramod Kumar Vs. State of U. P. and others and 2008 (4) ALJ 10 Harpal Vs. State of U. P. and another, lay down the correct law that opportunity is must; or Whether the Division Bench in Gopi's case lays down the correct law ?" To elaborate the submission about grant of opportunity before passing the order of suspension, the argument is that the Government Order dated 29.7.2004 (annexure no. 1 to the writ petition) provides a procedure by which on receiving the complaint a preliminary enquiry is to be held and the suspension order is to be passed only when prima facie charges are found to be proved on the basis of which fair price shop agreement can be cancelled. Non providing of the opportunity is clearly in violation of the Government Order referred above. Besides aforesaid, argument is that as the order of suspension has a civil consequence and as that affects the rights of the petitioner, opportunity is must. It was then submitted that the order of suspension has to be a speaking order and details of the irregularities found in the enquiry is required to be mentioned in the order. If this is not done then also the exercise is to be held as faulty and against the of principles of natural justice. To support the aforesaid, paragraphs 2, 4 and 5 of the Government Order dated 29.7.2004 noted above which will be reproduced at a later stage was referred. Two decisions given in the case of Pramod Kumar (Supra) and Kallu Khan (Supra), which will be also dealt later on, were referred. On the other hand submission of State side is that the argument about providing of opportunity before suspending the fair price shop, based on Government order dated 29.7.2004 is totally misconceived. If the opportunity is given/extended as being claimed then the entire purpose of grant of powers will be frustrated besides grant of opportunity at the interlocutory stage may be prejudicial to the interest of public at large. If the opportunity is given/extended as being claimed then the entire purpose of grant of powers will be frustrated besides grant of opportunity at the interlocutory stage may be prejudicial to the interest of public at large. About mention of the irregularities and the grounds/charges on which the order of suspension is based it is fairly submitted that the order certainly has to contain the minimum details as that will eliminate the chances of arbitrary use of powers. Learned Chief Standing Counsel referred to the Distribution Order of 2004 and at the same time the decision given in the case of Gopi Vs. State (Supra) and Kallu Khan (Supra) besides other decisions. Let the Bench first to deal with the cases on which reliance has been placed by the learned counsel for the petitioner. First case on which reliance was placed by the learned counsel for the petitioner is of Pramod Kumar (Supra). In this case the Division Bench emphasised on certain paragraphs of the Government Order, 2004 for taking the view that the preliminary enquiry has to be held before the authority proceeds to suspend or cancel the fair price shop licence/agreement. Observation made in para 10 of the aforesaid judgment is hereby quoted below : "10. From a perusal of para 2 of the Government letter dated 29-7-2004 it is clear that preliminary inquiry has to be held before the authority proceeds to suspend or cancel the fair price shop licence/agreement. In our view such preliminary inquiry in the nature of fact finding inquiry is to assist the concerned competent authority to take action against erring licensee, and if he is prima facie found guilty during inquiry his licence can be suspended. In order to have all the facts and versions of the concerned parties it is always advisable that person holding inquiry should as far as possible (it means if not otherwise impossible give notice and also endeavour to collect fact against the person to whom licence has been issued. This will ensure fair and free preliminary inquiry giving balanced view of the entire situation. This will ensure fair and free preliminary inquiry giving balanced view of the entire situation. The aforesaid para 2 of the Government letter dated July 29, 2004 further shows that while passing an order of suspension the authority has to record categorical speaking order in respect of the specific charges which are, prima facie, found established against the licensee on the basis of the preliminary inquiry in order to facilitate and enable the licensee to submit his explanation and supporting documents." We are to take note of the fact that the Division Bench while deciding the case of Pramod Kumar (Supra) has not taken care of clause 31 of the Distribution Order, 2004 which clearly states that this order shall have the over riding effect to any earlier order made by that order. Clause 31 of the Distribution Order, 2004 is hereby quoted below: "31. Provisions of the order to prevail over previous orders of State Government - The provisions of this order shall have effect notwithstanding anything to the contrary contained in any order made by the State Government before the commencement of this order except as respects anything done, or omitted to be done thereunder before such commencement. In this Distribution Order, Clause 4 provides that a person granted fair price shop is to sign an agreement under sub clause (3) for running the fair price shop before the competent authority prior to the coming with effect of the said appointment. Clause 25 provides observance of the conditions as the State Government provides. Clause 28 (3) of the Order provides filing of appeal against the order of suspension or cancellation of the agreement. The provisions contained in 4, 25 and 28 of the Distribution Order, 2004 are quoted below : "4. Running of fair price - (1) A fair price shop shall be run through such person and in such manner as the Collector, subject to the directions of the State Government may decide. (2) A person appointed to run a fair price shop under sub-clause (1) shall act as the agent of the State Government. (3) A person appointed to run a fair price shop under sub-clause (1) shall sign an agreement, as directed by the State Government regarding running of the fair price shop as per the draft appended to this order before the competent authority prior to the coming with effect of the said appointment. (3) A person appointed to run a fair price shop under sub-clause (1) shall sign an agreement, as directed by the State Government regarding running of the fair price shop as per the draft appended to this order before the competent authority prior to the coming with effect of the said appointment. 25. Conditions to be observed by the agent - The agent shall observe such conditions as the State Government or the Collector may by an order in writing direct from time to time, in respect of opening of shop maintenance of stocks, supply and distribution of Scheduled Commodities, maintenance of accounts, keeping of the registers filing returns and issue of receipt of Identity Card holder and other matters. 28. Appeal - (1) All appeals shall lie before the Concerned Divisional Commissioner who shall hear and dispose of the same may by order delegate his/her powers to the Assistant Commissioner Food for hearing and disposing of the appeal. (2) Any person aggrieved by an order of the Food Officer or the designated authority refusing the issue or renewal of a ration card or cancellation of the ration card may appeal to the Appellate Authority within thirty days from the date of receipt of the order. (3) Any agent aggrieved by an order of the competent authority suspending or cancelling agreement of the fair price shop may appeal to the Appellate Authority within thirty days from the date of receipt of the order. (4) No such appeal shall be disposed of unless the aggrieved person or agent has been given a reasonable opportunity of being heard. (5) Pending the disposal of an appeal the Appellate Authority may direct that the order under appeal shall not take effect until the appeal is disposed of." In view of various provisions of the Distribution Order, 2004 a fair price shop license owner is to sign fresh agreement. Clause 22 (1) of the draft agreement is to be quoted here : @Hindi@ It is thus clear that agreement duly signed by the fair price shop license/petitioner permits the authority to suspend the license/agreement before proceeding in the matter. This was not placed before the Bench and at the same time the provisions of the Government Order dated 29.7.2004 was also not placed in its correct perspective which will be discussed immediately. This was not placed before the Bench and at the same time the provisions of the Government Order dated 29.7.2004 was also not placed in its correct perspective which will be discussed immediately. Thus it is clear that the decision in the case of Pramod Kumar (Supra) has not taken correct view in the matter. Similar is the position in respect to the decision given by the Division Bench in the case of Harpal where also the same Government Order dated 29.7.2004 was taken into consideration and without referring to various clauses of the control order, 2004 noted above and on a incorrect interpretation of Government Order of 2004 the decision was given. We are to quote at this place the observation made in Harpal's case (Supra) : "10.The next question is whether the impugned suspension order has been passed in violation of principles of natural justice? From the perusal of the suspension order it is clear that no opportunity of hearing was afforded to the petitioner either at the time of enquiry or before passing of the order suspending the fair price shop license/agreement of the petitioner. In the counter affidavit it had not been stated that the opportunity of hearing was given at any stage. The enquiry was conducted behind the back of the petitioner. The entire proceedings were in violation of the principles of natural justice. The argument of learned Additional Chief Standing Counsel that principles of natural justice do not apply to the cases where fair price shop licence had been granted in view of the decision in Gopi's case, cannot be accepted. The Government order. dated 29-7-2004 clearly mandates and directs the authorities to comply with the principles of natural justice before suspending/cancelling fair price shop licenses/agreements. It appears that this G.O. dated 29-7-2004 was not placed before the Division Bench which decided Gopi's case and in ignorance of this Government Order the decision has been rendered and the decision has been passed in sub silentio in view of the law declared by the Apex Court in State of U.P. and another v. Synthetics and Chemicals and another (1991) 4 SCC 139 . Since the G.O. dated 29-7-2004 was not considered by this Court the decision in Gopi's case cannot be said to be a good law or a precedent." Let us now talk about Government Order dated 29.7.2004 which has Paragraph no. Since the G.O. dated 29-7-2004 was not considered by this Court the decision in Gopi's case cannot be said to be a good law or a precedent." Let us now talk about Government Order dated 29.7.2004 which has Paragraph no. 2, 4 and 5, which are relevant paragraphs to cover the issue are quoted hereunder : @HIndi@ While deciding those cases the Division Bench noted para 2 sub clause (1) which mentions that preliminary enquiry is to be conducted and if in the enquiry serious irregularities are found and the licensee is found to be indulged in malpractices then steps for cancellation/suspension of the shop of the petitioner can be taken. While taking into account certain procedure as provided in para 2 (i) of the Government Order the Bench has omitted to take into account para 2 (ii) Ka and (Kha) and at the same time paragraph 4 and 5 of this order. The court is not to read only one clause if other clauses are also on the same issue and covers the procedure so provided for the purpose of monitoring the entire distribution system. Para 2 (II) (Ka) clearly states that if official at the time of inspection finds any serious irregularity then it is at the discretion of the authority, the license/agreement can be suspended. Similarly para 2 (ii) (Kha) also permits the licensing authority to suspend the license if certain irregularities are found. The proviso to the aforesaid para 2 (ii) (Ka) and (Kha) at the same time provides that in the case of suspension a speaking order will have to be passed pointing out the irregularities and notice will be issued calling upon him to state that as to why his shop may not be cancelled. From the aforesaid, it is clear that certain procedural aspect as mentioned is for the purposes of taking care of arbitrary exercise of the discretion of the authority. On the surprise inspection and at the same if something serious or otherwise is found then para 2 (ii) (Ka) and para 2 (ii) (Kha) of the Government Order clearly provides that the license can be suspended. Thus power of suspension is available all the time. If this interpretation is not taken then the powers given in para 2 (ii) (Ka) and (Kha) will be meaningless and very purpose of giving this power will stand frustrated. Thus power of suspension is available all the time. If this interpretation is not taken then the powers given in para 2 (ii) (Ka) and (Kha) will be meaningless and very purpose of giving this power will stand frustrated. Powers of suspension is centrally there but while exercising care is to be taken to the mandate of the proviso which states that the order is to be speaking one. Thus so far the power of suspension while proceeding to call upon the licencee about cancellation of the shop is concerned it is always there. It will be incorrect to hold that without preliminary enquiry in respect to a fact finding and without any opportunity the shop is not to be suspended. Para 4 and 5 of the Government Order clearly permits fulfledged enquiry pursuant to the show cause notice for cancellation and then final decision in the matter. So far the order of suspension is concerned Government Order do not provide any appeal and at the same time there was no contemplation of signing an agreement as was made obligatory pursuant to Distribution Order of 2004. Thus on an overall view in the matter it is clear that apart from the powers so conferred even in the Government Order dated 29.7.2004 for suspension of the license, now in terms of the agreement between the parties (para 22 of the draft agreement) and on the basis of the provisions as contained in Clause 22 of the Distribution Order, 2004, the safe interpretation is that authority can exercise the powers of suspension of the license, pending proceedings for cancellation which is subject to the result of the appellate authority i.e. Commissioner of the Division. Besides taking the aforesaid view, this can also be added that if the grievance is about the exercise of powers on some wrong fact/premises then apart from the procedure of approaching the appellate authority as the proceedings pursuant to the action of suspension remains pending before the licensing authority, aggrieved can straightaway approach to that authority also for redressal of his grievance. It is not to be emphasised that in all kind of exercise/orders on the pretext of civil consequence and effect on the rights of a claimant, affording of the opportunity is not a matter of rule, but can be a matter of need and fairness in given set of facts if the facts so warrant. It is not to be emphasised that in all kind of exercise/orders on the pretext of civil consequence and effect on the rights of a claimant, affording of the opportunity is not a matter of rule, but can be a matter of need and fairness in given set of facts if the facts so warrant. Although courts are not to work on the basis of some personal knowledge about various factors but at the same time we are not to keep our eyes closed to what is happening in the society and thus to accept or to promote the technical aspect/submission unless the court is satisfied about the serious prejudice, indulgence is not required as that is to result into more injustice to the society and that too a particular class in context of which we are considering the issue. These are not those kind of cases where the applicant is to claim violation of any of his rights and the exercise not permitted under the relevant provisions. Here is the case where applicant himself has signed draft agreement permitting the authority to exercise power of suspension. The suspension of license is just as interim measure, subject to final satisfaction of the licensing authority. Petitioner if is aggrieved of wrong facts/grounds on which order is passed and on that basis if he can come to this Court then why he can not approach the same authority apprising him about the mistake committed by him or immediately to the appellate authority. This Court cannot be expected and cannot be requested by the petitioner to be the fact finding enquiry/court and thus if the order of suspension is founded on incorrect facts then it is all the more reason for the applicant to apprise the concerned authority to have a fresh look into the matter in the light of the facts and details so supplied by him who can be in a better position to analyse the details so as to take the correct decision. Certainly the order of the licensing authority has to be reasoned, and speaking and the charges/ground on which the order of suspension is to be passed are to be mentioned. A non speaking order, sometimes may speak of arbitrary exercise. Certainly the order of the licensing authority has to be reasoned, and speaking and the charges/ground on which the order of suspension is to be passed are to be mentioned. A non speaking order, sometimes may speak of arbitrary exercise. Unless the facts/grounds and the irregularities/charges on which the order of suspension is based is mentioned in the order one may not be in a position to form any opinion and that may be argued to be unjust exercise. It is to rule out this element even the Government Order dated 29.7.2004 which has been referred in decisions relied upon by the petitioner side there is requirement as noted in proviso to clause 2 (Kha). If the argument of learned counsel for the petitioner of providing an opportunity before passing order of suspension is accepted to be mandatory then the very purpose for which the authorities have been given power i.e. to ensure the fair and smooth distribution of commodities will stand diluted and immediate public interest will suffer. If a serious charge of malpractice, non supply, overcharging of the price, closer of the shop or the complaint of like nature having an adverse effect on the smooth and fair distribution is received and at the surprise inspection serious kind of charges are prima facie found then it will give an immediate cause/need to the authority to take action as temporary measure, with a simultaneous arrangement of distribution through another fair price shop dealer. If for a small duration applicant claim discomfort then as the interest of an individual qua public at large is to be weighed, the court will ask the applicant to wait and meet the charges with promptness. Certainly the authority can be expected to deal with the issue within shortest possible time so that on acceptance/non acceptance of the charges the result may take a final shape. At this place we are to hurriedly refer to the cases on which reliance has been placed by the learned Government side. So far the decision given by the Bench of this Court in the case of Gopi (Supra) we are to observe that the Bench has taken note of the provisions of the Distribution Order of 2004. At this place we are to hurriedly refer to the cases on which reliance has been placed by the learned Government side. So far the decision given by the Bench of this Court in the case of Gopi (Supra) we are to observe that the Bench has taken note of the provisions of the Distribution Order of 2004. By referring to various clauses of this order, Court noted the need of setting fair price shop, its running, monitoring, the condition to be observed by an agent, penalty and the provisions of the appeal. It is by referring to various provisions, this Court took the view that it will be wrong to add or read the principles of natural justice by implication at the stage of suspension of the fair price shop. It has been further held by the Bench that power of suspension if exercised in public interest does not by itself cause prejudice to the licensee. These kind of licenses does not fall within a category of fundamental right to carry on their business as provided in Article 19(1)(g) of the Constitution of India. Observation made by the Bench in the case of Gopi (Supra) in para 25 and 26 of the judgment is quoted below : "25. Realising the importance of the Public Distribution System, Parliament while bringing about the 73rd constitutional amendment included the Public Distribution System as one of the primary functions of the Gram Panchayat and it has been incorporated in Article 243-G of Part 9 of the Constitution. The Public Distribution System is obviously a avowed function of the State in order to ensure the distribution of essential commodities fairly. The object is clearly to provide benefit to the public at large in order to ensure supply of essential commodities which is necessary for the sustenance of daily life. The aforesaid object, therefore, has to be fulfilled keeping in view the intention of the legislature which is to promote public awareness and ensure distribution of essential commodities. In essence, the object is to provide benefit to the public at large. As a necessary corollary to the same, the object is not to set up any trade for the benefit of any individual. It may be that by virtue of this licensing system, an individual also gets the opportunity to benefit himself by setting up a fair price distribution unit. As a necessary corollary to the same, the object is not to set up any trade for the benefit of any individual. It may be that by virtue of this licensing system, an individual also gets the opportunity to benefit himself by setting up a fair price distribution unit. However, such a licence does not fall within the category of a fundamental right to carry on trade and business as understood under Article 19 (1)(g) of the Constitution of India. The Government Order which has been issued under the provisions of the Essential Commodities Act, is to regulate the supply and distribution of essential essential commodities Act, is to regulate the supply and distribution of essential commodities fairly. The suspension of such a license, pending inquiry is a step in the process of eliminating any such discrepancy which affects the public at large. The authorities while proceeding to suspend a licence, have the authority to attach a fair price shop to another Agency, in order to ensure that the public at large does not suffer on account of such suspension. Thus, viewed from any dimension, the power of suspension if exercised bonafidely in public interest does not by itself cause prejudice to a licencee in as much as he has a remedy by filing an appeal against such an order and even otherwise upon the satisfaction of the authority after hearing the objections, the authority can still restore the licence subject to a satisfactory reply being submitted by the licensee. 26. In this view of the matter, the contention raised on behalf of the petitioner that suspension order without providing opportunity curtails the right of a licensee cannot be accepted. Even otherwise, since there is a remedy by way of appeal and the petitioner has a right to object to the charges on which the licence has been suspended, it is not necessary to read the principles of natural justice by implication at the stage of suspension. The order of suspension is not a final order of termination and therefore, there is no permanent cessation of the licence. The petitioner has an opportunity to contest the matter and get his licence restored in the event he is able to establish that the grounds of suspension cannot be sustained in law." Similar is the position of the decision given by this Court in the case of Kallu Khan (Supra). The petitioner has an opportunity to contest the matter and get his licence restored in the event he is able to establish that the grounds of suspension cannot be sustained in law." Similar is the position of the decision given by this Court in the case of Kallu Khan (Supra). In the aforesaid decision the Bench took into account the public distribution system and its importance for which the arrangement was brought in. It was finally held that respondents cannot be held to be under an obligation to provide opportunity of hearing before passing the order of suspension. In view of the aforesaid it is clear that in the Government Order dated 29.7.2004 there is no contemplation of any notice and opportunity before suspending the fair price shop, rather there is a clear stipulation that the authority can pass the order of suspension at the time of surprise inspection and otherwise also if complaint of serious irregularity is received. Opportunity will be required only before order of cancellation. This is also clearly provided in the Distribution Order, 2004, the provisions of which has an overriding effect on the Government Order dated 29.7.2004. In terms of the Distribution Order of 2004 parties are to sign draft/agreement with a clear stipulation of the poewr of the authority to pass the order of suspension. On the basis of the above analysis we answer both the questions so referred as below : (i) Before suspension of fair price agreement it is not mandatory to give an opportunity of hearing and thus on the plea of its violation, the order of suspension is not liable to be set aside. (ii) Division Bench judgments in Pramod Kumar Vs. State of U.P. and others reported in 2007 (1) ALJ 407 and Harpal Vs. State of U.P. and another reported in 2008 (4) ALJ 10 holding that opportunity is must does not lay down the correct law. Division Bench judgment in the case of Gopi Vs. State reported in 2007 (5) ALJ 367 lays down the correct law that grant of opportunity is not necessary. After the answer of the questions so posed, let writ petitions be listed before the Division Bench for appropriate orders. Office is to list writ petitions before the appropriate court/Bench on 15.4.2010. 5-4-2010 Sachdeva