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Judgment
Rajagopalan, J.—The petitioner is a resident of Ayyapadi within the jurisdiction of Tirukalachari Panchayat. On 5th August 1954 the
petitioner applied to the Panchayat Board for a licence under S. 92 of Madras Act X of 1950 for constructing a rice and flour mill in R.S. No.
108/17. On 14th November 1954 the District Health Officer informed the Panchayat Board that the site was a suitable one from the public health
point of view for the installation of the electric motor for a rice mill and flour hullers. Representations were made to the President of the Panchayat
by the residents of the locality objecting to the grant of the licence asked for by the petitioner. On 23rd January 1955 the District Panchayat
Officer, who was consulted by the Panchayat Board pointed out the objections to be considered before the grant of the licence asked for by the
petitioner, and he left it to the Panchayat Board to decide the question. On 18th February 1955 the Panchayat by its resolution rejected the
application preferred to it by the petitioner. The petitioner applied under Art. 226 of the Constitution for the issue of a writ of certiorari to set aside
the resolution of the Panchayat dated 18th February 1955. After the presentation of this application, the petitioner moved the Government to
exercise its revisional powers under Madras Act X of 1950. It was subsequently reported that the Government declined to interfere, thereby
confirming the resolution of the Panchayat rejecting the petitioner''s request for a licence.
The learned Counsel for the petitioner attacked the validity of the resolution of the Panchayat Board dated 18th February 1955 on two grounds:
(1) S. 92 of Madras Act X of 1950 was invalid and unenforceable, and (2) even if S. 92 was valid and conferred a jurisdiction on the Panchayat
Board to refuse the licence, exercise of that jurisdiction in this case was mala fide.
Since the validity of the statutory provision, S. 92 of Madras Act X of 1950 was challenged, I directed issue of notice to the Advocate General
The State subsequently obtained permission to be impleaded as a party respondent to these proceedings.
The reasons given by the Panchayat Board in its resolution dated 18th February 1955 for the refusal to grant the licence asked for by the
petitioner were: (1) as there is a Posts and Telegraph Office within 30 feet distance, it will be a disturbance to run the rice mill; (2) as under the
National Extension Scheme it is settled to construct a hospital near the site, running of a rice mill will greatly affect the health of the patients; and (3)
it is not desirable to run a rice mill, as it is settled to construct the Panchayat Office about 75 ft. distance east, near the rice mill.
As the learned Advocate General pointed out none of these could be said to be an irrelevant consideration, when the Panchayat Board was
called upon to decide whether the licence prescribed by S. 92 of the Act could be granted to the petitioner or not. S. 92 is in Chapter V of Act X
of 1950, which deals with measures for ensuring public safety, convenience and health. The reasons set out by the Panchayat Board were certainly
reasons correlated to public convenience and public health of the locality in which the petitioner wanted to install the factory.
It is easier to dispose of the contention of the petitioner that the exercise of the statutory power vested by S. 92 in the Panchayat Boar was mala
fide. The petitioner alleged that it was in consultation with the President of the Panchayat Board that the petitioner applied for the licence, and he
had the assurance of the President that the licence would be granted. The petitioner further contended that the District Health Officer, who
informed the Panchayat Board that in his opinion there could be no objection from the point of view of public health to the installation of a factory
as proposed by the petitioner, also informed the petitioner of what the District Health Officer had communicated to the Panchayat Board. The
petitioner alleged further that acting on the assurance of the President of the Panchayat Board and the District Health Officer, the petitioner
completed construction of the building at a considerable cost. The further allegation of the petitioner was that subsequent to that differences arose
between him and the President of the Panchayat, and the ultimate refusal of the licence was due to that enmity. The licensing authority was not the
President but the Panchayat. There was certainly no allegation that the panchayat as a whole was actuated by any enmity towards the petitioner.
Neither the allegation that the President approved of the idea nor this fact that the District Health Officer approved of the site is proof that the
rejection of the petitioner''s application by the Panchayat was mala fide.
Yet another contention of the learned Counsel for the petitioner was that the Panchayat Board did not wait for the further views of the District
Health Officer before it refused the licence. Refusal of the licence was on 18th February 1955. It was subsequent to that, on 22nd February 1955
that the District Health Officer informed the president of the Panchayat Board that he would arrange for a further inspection of the site, and
forward a further report. It should be remembered that the earlier report of the District Health Officer, as well as the report of the District
Panchayat Officer, were both before the Panchayat Board when it resolved to refuse the licence asked for by the petitioner.
On the material placed before me I am unable to hold that there was anything mala fide in the exercise of the statutory power vested in the
Panchayat by S. 92 of the Act.
The next question is, is the petitioner well founded in his contention, that S. 92 offends Art. 19 (1) (g) of the Constitution, and is therefore void
and unenforceable ?
Sees. 91, 92 and 93 of Madras Act X of 1950 are under the sub-head ''Industries and Factories'' in Chap. V of the Act, which contains the
statutory provisions relating to public safety, convenience and health in Panchayat areas.
Section 91 :
The Panchayat may, with the previous approval of the prescribed authority notify that no. place within the limits of the village shall be used for any
of the purposes specified in the rules made in this behalf, being purposes, which, in the opinion of the Government, are likely to be offensive or
dangerous to human life or health or property, without a licence issued by the executive authority and except in accordance with the conditions
specified in such licence: provided that no such notification shall take effect until sixty days from the date of its publication.
Section 92 :
No person shall, without the permission of the Panchayat and except in accordance with the conditions specified in such permission :
(a) construct or establish any factory, workshop, or workplace in which it proposed to employ steam power, water power, or other mechanical
power, or electrical power, or
(b) install in any premises any machinery or manufacturing plant driven by any power as aforesaid, not being machinery or manufacturing plant
exempted by the rules.
Section 93 :
(1) The Government may make rules : (a) prohibiting, or regulating the grant or renewal of licences under S. 91 and the period for which such
licences shall be valid;
(b) as to the time within which applications for such licences, or renewals thereof shall be made, and
(c) prohibiting or regulating the grant of permission under S. 92.
(2) Rules made under Cl. (c) of Sub-S. (1) may empower the Panchayat to set apart specified areas in the village for industrial purposes and
provide for the refusal of permission under S. 92 in respect of any factory, workshop workplace or premises outside such areas, and also, subject
to the sanction of the prescribed authority, for the removal to such areas, of any factory, workshop or workplace which has been already
established at any place or any machinery which has already been installed in any premises, situated outside such areas. (Proviso omitted.)
(3) The Government may, either generally or in any particular case, make such order or give such directions as they may deem fit in respect of any
action taken or omitted to be taken under S. 91 or S. 92.
It was not under S. 91, but only under S. 92 that the petitioner could ask for and did ask for a licence. It was conceded by the Government
that no rules had been framed by the Government under S. 93 (1) (c) of the Act to prohibit or regulate the grant of permission under S. 92.
Though S. 92 does not in express terms provide for the refusal of the licence by the Panchayat Board, the power of refusal was in my opinion
conferred upon the Panchayat by necessary intendment. In Form. S. 92 prescribes that no factory shall be constructed and no machinery installed
without the permission, i.e., the licence, granted by the Panchayat. That, in my opinion, conferred on the Panchayat a power to grant permission or
refuse permission. S. 93 (1) (c) authorised the Government to frame rules to regulate refusal of licences under S. 62. Unless S. 92 itself conferred
jurisdiction to refuse the licence a rule made under S. 93 (1) (c) cannot by itself confer to jurisdiction. S. 93 (1) (c) makes clear what was implied
by S. 92 the Panchayat had jurisdiction to grant or to refuse a licence.
The learned Counsel for the petitioner contended that if the power of refusal was unrestricted and uncontrolled by any provision in the statute
itself, that would fall outside the scope of Art. 19 (6) of the Constitution and would therefore offend the provisions of Art. 19 (1) (g). In Messrs
Dwarka Prasad L. Narayan v. State of U.P. (supra). Mukherjea j. observed at page 243.
The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any
licence under this Order (U.P. Coal Control Order, 1958) and the only thing he has to do is to record reasons for the action be takes. Not only
so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made
in favour of any and every person. It seems to as that such provision cannot be held to be reasonable. No rules have been framed and no
directions given on these matters to regulate or guide the discretion of the licensing officer. Practically, the order Commits to the unrestrained will of
a single individual the power to grant, withhold or cancel licences in any way he chooses, and there is nothing in the order which could ensure a
proper execution of the power or operate as a check upon injustice that might result from improper execution of the same.
The Supreme Court held that the impugned clause of the U.P. Coal Control Order was void, as imposing an unreasonable restriction upon the
freedom of trade and business guaranteed under Art. 19 (1) (g) of the Constitution and not coming within the protection afforded by Cl. 6 of the
Article.
The learned Counsel for the petitioner also relied on the unreported judgment of Rajagopala Ayyangar J. in W.P. No. 674 of 1954 Since
reported In 68 L.W. 823, where the learned Judge held that S. 249 (3) of the District Municipalities Act was void. S. 249 (3) can:
The executive authority may, by an order, and under such restrictions and regulations as he thinks fit grant, or refuse to grant such licence.
Commenting upon this statutory provision, Rojagopala Ayyangar J. observed:
It will be seen that under Sub-S. (3), the executive authority is given an absolute power of refusing to grant the licence as also the power of
imposing such restrictions and conditions as be might think fit. As the petitioners have under the Constitution a fundamental right to carry on their
business subject to such reasonable restrictions, as might be imposed, the question is whether the vesting of such an absolute power as would be
involved in Sub-S. 3 in an executive authority without any guidance by the legislature as to the relevant conditions and restrictions would be a
reasonable restriction within Art. 19 (6) of the Constitution. In my opinion, the Sub-Section in its present from is in contravention of Art. 19 (6)
and has to be struck down as violating the fundamental rights guaranteed by Art. 19 (1) (g).
The principle enunciated by Rajagopala Ayyangar J. is certainly a well settled one and it is the same principle that the Supreme Court applied in
Messrs. Dwaraka Prasad L. Narain v. State of U.P. 1954 S.C.J. 288. It should However be noticed that S. 92 of Madras Act X of 1950 is
analogous to S. 250 of the District Municipalities Act which deals with licences for construction of factories and installation of machinery. S. 91 of
Madras Act X of 1950 is analogous to S. 249 of the District Municipalities Act. The language of S. 249 (3) of the District Municipalities Act is not
identical with any of the provisions of S. 92 of Madras Act X of 1950. Still the question remains, does S. 92 of Madras Act X of 1950 clothe the
statutory authority, the Panchayat Board, with unrestricted and uncontrolled power to refuse the licence prescribed by that section ?
Before dealing with that question, I shall examine the scope of another unreported judgment of this Court to which reference was made during
the arguments before me. In W.A. No. 2 of 1953 with which W.P. No. 185 of 1953 was heard, the learned Judges had to consider the validity of
an order of the Government cancelling the grant of a licence and the validity of a subsequent order of the Panchayat Board refusing to grant a
licence. The licence which was cancelled was granted by the Panchayat Board under the provisions of S. 194 (3) of the Madras Local Boards
Act, 1920. When ultimately the question of cancellation of that by the Government came up, and when the Panchayat Board had to consider
afresh the question of granting or refusing the licence, Madras Act X of 1950 had come into force. In W.A. No. 21 of 1953 the validity of S. 92 of
Act X of 1950 was not pat in issue or canvassed. S. 194 (3) of the Madras Local Boards Act of 1920 as it stood before it was amended ran:
The Panchayat shall as soon as may alter the receipt of the application
(a).......
(b) refuse permission, if it is of opinion that such construction, establishment or installation is objectionable by reason of the density of the
population in the neighbourhood or that it is likely to cause a nuisance.
The difference between the language of this statutory provision and that of S. 92 of Madras Act X of 1950 should be obvious.
As I have already pointed out, S. 92 of Madras Act X of 1950 confers by necessary intendment the power to refuse the licence prescribed by
S. 92. The main contention of the learned Counsel for the petitioner was that it was an unrestricted and uncontrolled power vested in the statutory
authority, and that it did not satisfy the requirements of Art. 19 (6) of the Constitution. No doubt in S. 92 itself no express provision is made for the
considerations that would be relevant to justify the refusal of the prescribed licence. But that by itself is not enough to sustain the argument of the
learned Counsel for the petitioner, that it was an uncontrolled and unrestricted power to grant or to refuse licence that was conferred on the
Panchayat Board by S. 92 of Madras Act X of 1950.
As the learned Advocate General pointed out, the relevant considerations that should weigh with the Panchayat Board in granting or refusing to
grant the licence prescribed by S. 92 can be gathered from the context of S. 92 and from the scheme and policy underlying the provisions of
Madras Act X of 1950, particularly those in Chapter V of that Act in which S. 92 finds a place. Consideration of public safety, convenience and
health would certainly be relevant considerations in exercising the statutory power conferred by S. 92. in Globe Theatres Ltd. v. State of Madras
(1954) 2 M.L.J. 110 at 118=67 L.W. 64, the learned Chief Justice quoted with approval a passage from Willis Constitutional law :
If a statute declares a definite policy, there is a sufficiently definite standard for the rule against the delegation of legislative power, and also for
equality, if the standard is reasonable. If no standard is set up to avoid the violation of equality, those exercising the power must act as though they
were administering a valid standard. For this reason, there is need for a judicial review to see whether or not the power delegated has been
exercised arbitrarily.
After referring to the decisions of the Supreme Court, the learned Chief justice observed at page 120:
The net result of these three decisions of the Supreme Court appears to me to be this. If the policy and object of the Act can be discovered within
the four corners of that Act, including the preamble, and discretion is vested in the Government to make a selection in furtherance of that policy and
object for the application of the Act, than the provision conferring such power is not void as offending Art. 14 of the Constitution. If such power is
improperly exercised in any particular case, that is, not in furtherance of the policy and object of the Act, but arbitrarily, then the Court can strike
down the exercise of such power on every occasion.
These principles, in my opinion, also apply in considering whether the test of reasonable restriction postulated by Art. 19 (6) of the Constitution
has been satisfied, when there is an apparent abridgment or infringement of the fundamental right guaranteed by Art. 19 (1) (g).
The policy of the Act, particularly, Chapter V thereof, being to provide for public safety, convenience and health in Panchayat areas, these
considerations would certainly be relevant considerations, and those considerations certainly prescribe an ascertainable, definite and reasonable
standard for the exercise of the power conferred by S. 92 on the Panchayat. No doubt, the provisions of S. 194 (3) of the Madras Local Boards
Act, 1920, which were replaced by the provisions of S. 92 of Madras Act X of 1950, were more explicit. But that is not enough to deny a
provision of an ascertainable and reasonable standard to control and regulate the exercise of the statutory power in S. 92 itself.
The learned Counsel for the petitioner next urged that in the absence of any rules framed under S. 93 of the Act, any exercise of power under
S. 92 would be uncontrolled and unrestricted. I am unable to accept this contention. No doubt no rules have been framed. It is equally true that S.
93 provides that rules could be made for prohibiting or regulating the grant of permission under S. 92. But the existence of the rules for which
provision is made in S. 93, is not a condition precedent to the exercise of the jurisdiction conferred upon the Panchayat by S. 92 of the Act. In
Nemichand v. Secretary of State for India 34 Cel. 511 (F.B.), a Full Bench of the Calcutta High Court, in dealing with a similar contention,
observed at page 514:
It is contended that the Collector could not act until and unless the Governor-General in Council bad framed regulations under Sub-S. (2) of S.
19-A (of the Sea Customs Act) and, that no such regulations had been framed, as apparently is the case, when the goods were detained. We do
not think that the enabling power given to the Governor-General in Council to frame regulations can override the prohibiting language of S. 18 or
the implied power of detention under S. 19-A.
It was the same principle that was laid down by a Bench of this Court in Collector of Customs v. Gokuldoss (1955) 1 M.L.J. 422=68 L.W.
35 (F.B.), Rajagopala Ayyangar, J. pointed out at page 434 :
Of course if regulations have been framed the detention and confiscation would have to be effected in conformity with them but it is not as if these
regulations bring into operation the power to detain or to confiscate if there is a violation of an import control notification.
Section 93 is an enabling section. If rules are framed under S. 93 (1) (c), the Panchayat Board would have to conform to those rules. In the
absence of such rules, the Panchayat Board would have to conform to the standard which could be gathered from the provisions of Madras Act X
of 1950, that is, standards with reference to public safety, convenience and health for which provision has been made in Chapter V of that Act.
Failure on the part of the Government to exercise the enabling power conferred upon it by S. 93 of the Act does not affect either the existence of
the jurisdiction conferred by S. 92 of the Act on the Panchayat or the exercise of that jurisdiction.
In my opinion, S. 92 of Madras Act X of 1950 satisfies the requirements of Art. 19 (6) of the Constitution and it does not therefore offend
Art. 19 (1) (a) and 13 of the Constitution. The contention of the learned Counsel for the petitioner that S. 92 is void and unenforceable, fails. This
petition fails and is dismissed with costs of the first respondent. Counsel''s fee Rs. 100.