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2018 DIGILAW 742 (ORI)

GUMUDU CHITTIBABU v. KOTNI NARASIMHA MURTY

2018-08-20

A.K.RATH

body2018
JUDGMENT : A.K. RATH, J. 1. This is plaintiff no.1's appeal against a confirming judgment. 2. The appellant and respondent no.3 as plaintiffs instituted the suit for permanent injunction. The case of the plaintiffs is that plaintiff no.1 and defendant no.1 are villagers of village-Hadubhangi in Parlakhemundi Sub-Division. Plaintiff no.1 is the owner of a rice mill and flour mill. Plaintiff no.2 is also the owner of a rice mill. There are two rice mills at village Hadubhangi and other two at village Vistala and Kinigam. The four rice mills situated in Hadubhangi Gram Panchayat. The licenses have been granted by the Sub-Collector, Parlakhemundi under the Rice Milling Industry (Regulation) Act, 1958 (in short, "the Act"). There is business rivalry between the plaintiff no.2 and defendant no.1. To wreck the personal vengeance, the defendant no.1 applied to the Government of Orissa in its Food and Civil Supplies Department for granting permission to establish a rice mill at Hadubhangi in March, 1985. Defendant no.1 in order to obtain permission assured that he will prepare Chuda (Flattened rice) in the rice mill and there is no such rice mill in the vicinity. The Government of Orissa in its Food and Civil Supplies Department granted permission to the defendant no.1 to establish a rice mill at Hadubhangi. Instead of constructing mill to prepare flattened rice, the defendant no.1 constructed a rice mill. The permission granted by the authorities expired in February, 1989. The license has not been renewed. Hadubhangi village is adjacent to the boundary line of Andhra Pradesh State. The quantity of paddy produced annually is not sufficient for the existing four mills to cover a quarter of a year. The village is thickly populated by economically backward classes. The guideline for establishing of a rice mill is under consideration of the Government. The Government of Orissa have decided that Panchayat should be considered as a unit for the purpose of considering the productivity so that the same may be taken as primary consideration. In utter disregard to the Government order and without renewal of permission, the defendant no.1 has been proceeding with construction of the rice mill. In the event the defendant no.1 establishes a rice mill, the same will cause irreparable injury to the plaintiffs. With this factual scenario, the plaintiffs instituted the suit seeking the reliefs mentioned supra. 3. In utter disregard to the Government order and without renewal of permission, the defendant no.1 has been proceeding with construction of the rice mill. In the event the defendant no.1 establishes a rice mill, the same will cause irreparable injury to the plaintiffs. With this factual scenario, the plaintiffs instituted the suit seeking the reliefs mentioned supra. 3. The defendant no.1 filed written statement denying the assertions made in the plaint. The case of the defendant no.1 is that he has obtained permission under Sec.5 of the Act. He has completed the construction prior to filing of the suit. The defendant no.2-Sub-Collector, Parlakhemundi, the licensing authority has also supported his case. According to the defendant no.2, after complying the provision made under Sec.5 of the Act, the permit has been issued to the defendant no.1 in the year 1987. The same has been renewed for the year 1988-89. The last date of renewal was on 1.9.88. The permit was valid till 3.2.89. On 23.1.89, he had submitted the completion report. 4. Stemming on the pleadings of the parties, learned trial court struck fifteen issues. The defendant no.1 filed an application under Order 14 Rule 2(2) C.P.C. to decide issue nos.9, 10 and 14 as preliminary issue. Those are as follows: "9. Whether the suit is barred u/s.21 of the Rice Milling Industry Act ? 10. Whether the suit is barred under the provisions of sec.41 of the Specific Relief Act ? 14. Whether the suit is maintainable in law ?" 5. Plaintiffs filed counter stating inter alia that the issues are mixed question of law and fact. None of the issues pertains to jurisdiction of the court or the bar created under any statute. The same can be adjudicated after adduction of the oral and documentary evidence. 6. Learned trial court allowed the application. The plaintiffs filed T.A. No.25 of 90 before the learned Additional District Judge, Parlakhemundi. Placing reliance on the oft quoted decision of the apex Court in the case of The Nagar Rice and Flour Mills and others vs. N. Teekappa Gowda & Bros. and others, (1971) AIR SC 246, learned lower appellate court came to hold that one competitor in same business cannot approach the civil court against any mill owner. No notice under Sec.80 C.P.C. was issued to the defendant no.2 before institution of the suit. and others, (1971) AIR SC 246, learned lower appellate court came to hold that one competitor in same business cannot approach the civil court against any mill owner. No notice under Sec.80 C.P.C. was issued to the defendant no.2 before institution of the suit. For contravention of any order passed by the licensing authority, appeal lies. The Specific Relief Act does not envisage to injunct an individual not to act on the regulatory order of the Act. The suit is barred under Sec.41 of the Specific Relief Act. Held so, it dismissed the appeal. 7. The second appeal was admitted on the following substantial question of law. "Whether the suit itself is barred under Sections 21 and 22 of the Rice Milling Industry Regulation Act ?" 8. Heard Mr. S.S. Rao, learned Advocate along with Mr. B.K. Mohanty, learned Advocate for the appellant, Mr. C.A. Rao, learned Senior Advocate along with Mr. S.K. Behera, learned Advocate for the respondent no.1 and learned Additional Government Advocate for respondent no.2. 9. Learned Advocate for the appellant submitted that issue nos.9, 10 and 14 are mixed question of law and fact. The issues can be decided by adduction of evidence. Only jurisdictional issue or a bar to the suit created by any law can be decided under Order 14 Rule 2 C.P.C. Sec.5(4) of the Act postulates that 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, sheller type or combined sheller-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. Thus permission is a sine qua none for establishment of a rice mill. The license granted to the defendant no.1 had expired on February, 1989. The same was not renewed. Notwithstanding the expiry of license, the defendant no.1 had established a rice mill. Thus permission is a sine qua none for establishment of a rice mill. The license granted to the defendant no.1 had expired on February, 1989. The same was not renewed. Notwithstanding the expiry of license, the defendant no.1 had established a rice mill. The suit is not barred under Secs.21 and 22 of the Act. The courts below fell into patent error of law in deciding the issue which are mixed question of law and fact. Since the defendant no.1 had not established the rice mill, the ratio in the case of The Nagar Rice and Flour Mills and others shall not apply. To buttress the submission, he placed reliance to the decisions of this Court in the case of Shyama Sundar Mohapatra vs. Janaki Ballav Patnaik and others, (1990) 69 CutLT 18 and Kar Clinic and Hospital Pvt. Ltd. and another vs. Swarna Prava Mishra, (2014) 2 OrissaLR 1101. 10. Per contra, learned Senior Advocate for the respondent no.1 submitted that the rice mill was constructed on 3.3.1989. The Bank had sanctioned loan for construction of the mill. Electric connection was made to the mill. The plaintiffs are rival businessmen. The suit is not maintainable. Grant of permission is a matter between the licensee and the State. If there is any violation of the conditions of license, there is penal provision in the statute. 11. It is apt to state here that during pendency of the appeal, the defendant no.1 filed an affidavit that his rice mill had been defunct and stopped functioning for more than 17 years. The plaintiffs filed objection to the same. This Court called for a report from the Tahasildar, Kashinagar. The Tahasildar, Kashinagar submitted the report on 28.4.2018 stating therein that the defendant no.1 established the mill in the year 2002. The mill is operationalised till date. The same has been leased out to one P. Ramu since 25.10.2017 by means of an unregistered lease deed. 12. Before adverting to the contentions raised by the counsel for both parties, it will necessary to set out some of the provisions of the Act. Secs.21 and 22 of the Act are quoted hereunder. The mill is operationalised till date. The same has been leased out to one P. Ramu since 25.10.2017 by means of an unregistered lease deed. 12. Before adverting to the contentions raised by the counsel for both parties, it will necessary to set out some of the provisions of the Act. Secs.21 and 22 of the Act are quoted hereunder. "21.Protection of action taken under the Act.- (1) No suit, prosecution or other legal proceeding shall lie against any officer or authority for anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made thereunder. (2) No suit or other legal proceeding shall lie against the Government for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made thereunder. 22. Power to make rules.- (1) The Central Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act. 22. Power to make rules.- (1) The Central Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-- (a) the form of application for the grant of a permit under section 5 and the particulars it may contain; (b) the manner in which an investigation is to be made in respect of an application for a permit and the matters to be taken into account in granting or refusing a permit; [(bb) the form of a permit under section 5 and the conditions (including conditions relating to improvements to existing machinery, replacement of existing machinery and use of improved methods of rice-milling) subject to which a permit may be granted and the time within which such conditions shall be complied with;] (c) the form of application for the grant or renewal of a licence in respect of a rice mill and the particulars it may contain; (d) the form of a licence which may be granted or renewed under section 6 and the conditions subject to which the licence may be granted or renewed, including conditions relating to improvements to existing machinery, replacement of existing machinery, use of improved methods of rice-milling and polishing of rice, the time within which such conditions shall be complied with, the fees to be levied for the grant or renewal of a licence and the deposit of any sum as security for the performance of such conditions; (e) the circumstances under which licences may be varied or amended under sub-section (2) of section 7; (f) the submission of returns relating to a rice mill by the owner and the forms in which, and the authorities to which, such returns may be submitted; and the collection of any information or statistics in relation to rice mills; (g) the form and manner in which appeals may be filed under section 12 and the procedure to be followed by appellate officers in disposing of the appeals; (h) any other matter which has to be, or may be, prescribed under this Act. (3) Any rule made under this section may provide that a contravention thereof shall be punishable under sub-section (2) of section 13. (3) Any rule made under this section may provide that a contravention thereof shall be punishable under sub-section (2) of section 13. (4) Every rule made by the Central Government under this section shall be laid as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule." The Act was repealed by the Rice Milling Industrial (Regulation) Repeal Act, 1997 (Repeal Act 21 of 1997) on 28.5.1997. Since the suit was instituted prior to the Act was repealed, the same is governed under the Act. 13. Order 14 Rule 2(2) C.P.C. is quoted hereunder. "2. Court to pronounce judgment on all issues- xxx xxx xxx (2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue." 14. In Shyama Sundar Mohapatra , a Division Bench of this Court held that in a civil suit piecemeal trial of the issues should be avoided and attempt should be made to consider all the issues together as far as possible. In Shyama Sundar Mohapatra , a Division Bench of this Court held that in a civil suit piecemeal trial of the issues should be avoided and attempt should be made to consider all the issues together as far as possible. This principle is embodied in subrule (1) of Rule 2 of Order 14 of C.P.C. Sub-rule (2) of the said Rule contains an exception where issues both of law and of fact arise in the same suit and the court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the court, or (b) a bar to the suit created by any law for the time being in force. If the court is satisfied that a particular issue passes the tests laid down in sub-rule(2) and if the court thinks it fit it may postpone the settlement of the other issues until after that issues have been determined, and may deal with the suit in accordance with the decision on that issue. It further held that on reading the provisions of sub-rule (2) it is clear that the tests laid down are stringent and their compliance is to be strictly enforced. This is because, as noticed earlier, the provisions of sub-rule(2) is in the nature of exception to the general procedure provided in sub-rule (1) of Rule 2 of Order 14. The courts have therefore viewed with reluctance any request to take up an issue as a preliminary issue. From the provisions in sub-rule (2) it is manifest that whether an issue is to be tried as a preliminary issue or not is at the discretion of the trial court and while exercising its discretion the court must be satisfied that the suit or any part thereof may be disposed of an issue of law only and that issue relates to jurisdiction of the court or a bar to the suit created by any law for the time being in force. The same view was reiterated in the case of Kar Clinic and Hospital Pvt. Ltd. and another . 15. The same view was reiterated in the case of Kar Clinic and Hospital Pvt. Ltd. and another . 15. On a conspectus of sub-sec.(1) of Sec.21 of the Act, it is evident that no suit, prosecution or other legal proceeding shall lie against any officer or authority for anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made thereunder. Sub-sec.(2) provides that no suit or other legal proceeding shall lie against the Government for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any rule or order made thereunder. The plaintiffs do not claim any relief against the State. The bar contained in Sec.21 of the Act shall not apply. 16. The question does arise as to whether a competitor in the business can seek to prevent another competitor from exercising his right to carry on business. The subject matter of dispute is no more res integra. An identical question came up for consideration in the case of The Nagar Rice and Flour Mills and others . The apex Court in paragraphs 9 and 10 of the report held thus: "9. The Parliament has by the Rice Milling Industry (Regulation) Act, 1958, prescribed limitations that an existing rice mill shall carry on business only after obtaining a licence and if the rice mill is to be shifted from its existing location, previous permission of the Central Government shall be obtained. Permission for shifting their rice mill was obtained by the appellants from the Director of Food & Civil Supplies. The appellants had not started rice milling operations before the sanction of the Director of Food & Civil Supplies was obtained. 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 machinery on a new site. The right to carry on business being a fundamental right under Article 19(1)(g) of the Constitution, its exercise is subject only to the restrictions imposed by law in the interests of the general public under Article 19(6)(i). 10. The right to carry on business being a fundamental right under Article 19(1)(g) of the Constitution, its exercise is subject only to the restrictions imposed by law in the interests of the general public under Article 19(6)(i). 10. Section 8(3)(c) is merely regulatory : if it is not complied with the appellants may probably be exposed to a penalty, but a competitor in the business cannot seek to prevent the appellants from exercising their right to carry on business, because of the default, nor can the rice mill of the appellants be regard as a new rice mill. Competition in the trade or business may be subject to such restrictions as are permissible and are imposed by the State by a law enacted in the interests of the general public under Article 19(6), but a person cannot claim independently of such restriction that another person shall not carry on business or trade so as to affect his trade or business adversely. The appellants complied with the statutory requirements for carrying on rice milling operations in the building on the 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." 17. The ratio in the case of The Nagar Rice and Flour Mills and others applies proprio vigore to the facts of the case. The issue being a pure question of law, both the courts are perfectly justified in deciding the same as preliminary issue. The substantial question of law is answered accordingly. 18. A priori, the appeal fails and is dismissed. There shall be no order as to costs.