Faeem Ahmad vs State of Uttarakhand and Others

Alok Singh, J.—In both the writ petitions, identical questions of fact and law are involved, therefore, both the writ petitions are heard together and are being disposed by this common judgment. In both the cases, petitioners were holding valid stamp vending licences; stamp vending licences issued earlier in favour of the petitioners were cancelled by the Additional Collector, Nainital pursuant to the reports submitted by the Deputy Collector, Nainital. Feeling aggrieved, petitioners have approached this Court by way of present writ petitions by invoking Article 226 of the Constitution of India.

I have heard Ms. Prabha Naithani and Mr. Chandramauli Sah, Advocates for the petitioners and Mr. R.C. Arya, learned Standing Counsel for the State/respondents and have carefully perused the record.

Stamp vending licences are granted under Rule 151 of the U.P. Stamp Rules, 1942 and can be revoked/cancelled by invoking Rule 154 of the Rules.

Learned counsel appearing for the petitioners have vehemently argued that before passing the impugned orders, cancelling the stamp vending licence neither any show-cause notice was issued to the petitioners nor opportunity of being heard was granted to the petitioners, therefore, impugned orders are in violation of principles of natural justice and are hit by Article 14 of the Constitution of India.

On the other hand, Mr. R.C. Arya, learned Standing Counsel appearing for the respondents, submits that power under Rule 154 of the Rules is always exercised in an administrative capacity and Rule 154 of the Rules does not provide under what condition stamp vending licences can be cancelled/revoked. Therefore, stamp vendor can enjoy the stamp vending licence as long as learned Collector is pleased to continue the stamp vending licence and learned Collector, for the reasons, which are not supposed to be disclosed in the impugned orders, may cancel the stamp vending licence.

In the case of Abdul Salam Vs. The Dy. Commr., Pratapgarh and Another, , Division Bench of Allahabad High Court held as under:

"Licences for stamp vending are granted under Rule 151(b) of the Stamp Rules which are of statutory nature. It is under Rule 154 of the aforesaid rules that a licence granted under Rule 151(b) can be cancelled. While cancelling it, the licensing authority acts administratively, all the same he acts in due discharge of statutory duties which require that he should act fairly. Indeed, when a statutory authority passes an order against any person without giving him an opportunity to show-cause, it cannot be said that he acted fairly. While Rule 154 confers on the licensing authority a power to cancel the licence, it does not say that the licensing authority can do so without assigning any reason or without calling upon the licensee to show-cause. To interpret Rule 154 as conferring cancellation of a licence without complying with the principles of natural justices tantamounts to saying that the rule confers a power on the licensing authority to act arbitrarily."

Another Division Bench of Allahabad High Court in the case of Ram Chandra Gupta Vs. State of U.P. and others, in paragraph Nos. 11 and 12 held as under:

"11. It is well-settled in law that the orders affecting the civil rights of any person may be passed by the competent authority after affording opportunity of hearing to the persons concerned, whose civil rights are likely to be affected by the order to be passed unless affording of opportunity is specifically excluded by the Statute, itself. Reference in this regard may be made to the decisions of Apex Court in A.K. Kraipak and Others Vs. Union of India (UOI) and Others, ; North Bihar Agency and Others Vs. State of Bihar and Others, ; Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress and Others, .

In view of the aforesaid decisions, submission made by learned Standing Counsel that it was legally not necessary to afford opportunity of hearing to the petitioners cannot be accepted. An order passed in violation of principle of natural justice is a nullity. The impugned orders as stated above have been passed without affording opportunity of hearing or to explain their case to the petitioners. Therefore, the same are invalid and illegal and the same are liable to be quashed. For the said reason, it is not necessary to go into the question of validity of Rule 154 of the Stamp Rules."

In view of the dictum of two Division Benches of the Allahabad High Court, it can very well be said that although power under Rule 154 of the Stamp Rules is an administrative power, however, orders affecting the civil rights of any person may be passed by the competent authority after affording the opportunity of being heard to the person concerned, whose civil rights are likely to be affected by the order to be passed and an order passed in violation of principle of natural justice is a nullity. Therefore, before passing the order of cancelling the stamp vending licence, a show cause notice must be issued to the vendor calling explanation as to why his licence be not cancelled/revoked. Since, a show-cause notice and an opportunity of being heard is not granted, therefore, orders passed are hit by the principles of natural justice and are in violation of Article 14 of the Constitution of India.

Consequently, both the writ petitions succeed and are hereby allowed. Impugned orders are hereby quashed. However, it is clarified that it would be open to the learned Collector/Additional Collector to issue show-cause notice to the petitioners indicating therein grounds of proposed cancellation calling their explanation giving sufficient time to reply and to pass orders afresh after hearing the petitioners. CLMA Nos. 5573 of 2015 and 8710 of 2015 also stand disposed of accordingly.