Pradyumna Kumar Mohapatra vs State Of Orissa & Others

Dr. S. Muralidhar, CJ.

The challenge in this writ petition is to an order dated 23rd November, 2020 passed by the Collector, Cuttack cancelling the licenses granted in

favour of the Petitioner in respect of (1) IMFL ‘Off’ Shop, Badambadi, (2) IMFL ‘Off’ Shop, Gandarpur, (3) IMFL ‘Off’ Shop,

Subhadrapur, (4) IMFL ‘Off’ Shop, Jaripada and (5) IMFL ‘Off’ Shop, Samserpur in the district of Cuttack for the remaining period of

2020-21.

The background facts are that the petitioner is an Excise Permit (EP) holder of aforementioned IMFL ‘Off’ Shops in five locations. It is

stated that all licenses were valid till 31st March, 2021. The Petitioner alleges that on account of his approaching the Superintendent of Police

(Vigilance), Cuttack a vigilance case came to be instituted against the Head-Clerk in the office of the Superintendent of Excise, Cuttack, which led to

the Petitioner being harassed by conducting surprise raids on three of his IMFL ‘Off’ Shops on 9th August, 2019. It is stated that from a letter

dated 10th August, 2019 from the Superintendent of Excise, Cuttack it transpired that during the said raid one half bottle of some noxious liquid was

recovered/seized from the sale counter of Badambadi IMFL ‘Off’ Shop.

On 16th September, 2019, the District Excise Office, Cuttack issued the Petitioner a show cause notice under Section 47(4) of the Odisha Excise

Act, 2008 (for short ‘OE Act’) in respect of Badambadi IMFL ‘Off’ Shop calling upon the Petitioner to submit his reply within seven

days. On 21st September 2019, the Petitioner wrote a letter to the Superintendent of Excise, Cuttack, seeking, inter alia, that a copy of the

result/report of the Chemical Analysis of the seized liquid. On 25th September 2019, the Petitioner wrote to the Collector, Cuttack seeking a fresh

enquiry into the matter. When there was no response received, the Petitioner filed W.P.(C) No. 19335 of 2019, which came to be disposed of on 15th

October, 2019 by a Division Bench of this Court by the following order:

“Heard the petitioner in person.

By way of this writ petition, the petitioner has challenged the order dated 10.08.2019 under Annexure-2. Further, the petitioner has a made a prayer to quash the

impugned order and direct the Collector, Cuttack to allow the petitioner to open his Badambadi IMFL OFF Shop at Cuttack.

During the course of hearing, it is stated by the petitioner that the Collector, Cuttack may be directed to consider and dispose of his representation dated 25.09.2019

at Annexure-6 within a stipulated period.

Considering the limited nature of prayer made by the petitioner and without expressing any opinion on the merits of the case, we direct opposite party no.3-Collector,

Cuttack to consider and dispose of the representation dated 25.09.2019 under Annexure-6 made by the petitioner, in accordance with law, within a period of four

weeks from the date of receipt of copy of this order, if such representation is still pending for consideration.

With the aforesaid observation and direction, the writ petition stands disposed of.

I.A(s) connected to the writ petition, if any, is/are disposed of accordingly.

Urgent certified copy of this order be granted as per the Rules.â€​

Thereafter, on 4th November, 2019, the Collector, Cuttack issued a communication to the Petitioner requiring him to appear before him on 6th

November, 2019. Again another notice was issued on 25th November, 2019 requiring him to appear on 27th November, 2019.

It appears that on 28th November, 2019, the Collector, Cuttack appointed the Sub-Collector, Sadar, Cuttack as Inquiring Officer to enquire into the

matter and submit a report. After conducing an inquiry, a report was submitted by the Sub-Collector on 7th  December, 2019 to the Collector. The

Petitioner states that the said report was prepared behind his back, since he had not participated in the enquiry. Thereafter on 14th  December 2019,

the Collector, in view of the finding of the Sub-Collector in his inquiry report, rejected the representation dated 25th  September, 2019 of the

Petitioner.

The Petitioner states that the said order dated 14th December, 2019 was served on him on 3rd January, 2020. However, despite the Petitioner

applying for it, the copy of the Inquiry report dated 7th December, 2019 of the Sub-Collector was not furnished to him. It appears that the Petitioner

filed another writ petition, being W.P.(C) No. 4284 of 2020 seeking the quashing of the order dated 10th August, 2019 whereby the Collector, Cuttack,

soon after the raid was conducted, directed temporary closure of the Badambadi IMFL ‘Off’ Shop. In that writ petition Petitioner also

challenged the order dated 14th December, 2019 passed by the Collector, Cuttack rejecting the representation of the Petitioner.

During the pendency of the said writ petition the impugned order dated 23rd November, 2020 was passed cancelling not only the licence in respect

of the IMFL ‘Off’ Shop at Badambadi but four other IMFL ‘Off’ Shops of the Petitioner as well for the remaining period of 2020-21.

Thereafter, the Collector, Cuttack decided to settle three of the aforementioned five IMFL ‘Off’ Shops through lottery for the remaining period

of 2020-21 on 3rd December, 2020. Aggrieved by the cancellation of license in respect of said five IMFL ‘Off’ Shops, the present writ petition

was filed on 26th  November, 2020.

When the present writ petition first listed for hearing before this Court on 1st December, 2020, the following order was passed:

“This Court is convened through Video Conferencing.

Heard Mr. M. Kanungo, learned Senior Advocate appearing on behalf of the petitioner.

List this matter on 4th December, 2020 along with W.P.(C) No.18889 of 2020.

As an interim measure, it is directed that the auction process may take place, but no final decision shall be taken thereon till the next date.

As restrictions are continuing due to COVID-19, learned counsel may utilize the soft copy of this order available in the High Court’s website or print out thereof at

par with certified copies in the manner prescribed, vide Court’s Notice No.4587, dated 25.03.2020.â€​

The said interim order is continuing till date.

In the reply filed by Opposite Party No.4 (Superintendent of Excise, Cuttack) it is denied that the institution of vigilance case against the ex-Head

Clerk, in charge of the office of the Superintendent of Excise, Cuttack at the instance of the present Petitioner, has anything to do with the

cancellation of the Petitioner’s IMFL ‘Off’ Shops licenses. It is stated that the raid was conducted on the basis of the complaint of the local

inhabitants of Badambadi, Cuttack and that during the raid some noxious liquid which was suspected to be spurious one was recovered/seized. Hence

the Collector issued the order dated 10th August, 2019 for temporary closure of Badambadi IMFL ‘Off’ Shop of the Petitioner. It is stated that

after the order dated 14th December 2019, the Collector sent a proposal to the Excise Commissioner, Odisha, Cuttack on 24th January, 2020 for

cancellation of the license of the Petitioner in respect of aforementioned five IMFL ‘Off’ Shops.

When the matter stood thus, and during the pendency of the W.P.(C) No. 8284 of 2020 filed by the Petitioner, one T.Kiran Kumar Rao had filed

W.P.(C) No. 18889 of 2020 for a direction to the Opposite Parties to close down the Shops of the Petitioner. The said writ petition came to be

disposed of by this Court on 25th August, 2020 permitting the Petitioner in that case to submit a comprehensive representation to the Collector,

Cuttack, on which the Collector would take a final decision within a period of one month. It is stated that thereafter the said Petitioner T. Kiran Kumar

Rao again filed I.A. No. 9838 of 2020 for modification of the above order. The said application was disposed of on 3rd September, 2020 modifying the

earlier order dated 25th August, 2020 to the extent that T. Kiran Kumar Rao was permitted to move the Principal Secretary to the Government in the

Excise Department, who would take a decision on the recommendation of the Collector, as forwarded by the Excise Commissioner to the

Government, within a period of one month.

It is stated that soon after the above order was passed by this Court, the Excise Commissioner, Odisha, Cuttack by letter dated 29th October, 2020

recommended the cancellation of the licences issued to the Petitioner in respect of the IMFL ‘Off’ Shops at Badambadi and four other

locations, on the basis of the proposal of the Collector, Cuttack in its letter dated 24th January, 2020.

In response to the principal ground urged by the Petitioner that the cancellation of the IMFL ‘Off’ Shops licenses was in violation of the

principles of natural justice, a point reiterated by Mr. B.P. Das, learned counsel for the Petitioner, it is contended by Mr. D. Mohanty, learned

Additional Government Advocate on behalf of the Opposite Parties that under Section 47(4) of the OE Act, as regards cancellation of the license of

the IMFL ‘Off’ Shop at Badambadi, a show cause notice was issued to the Petitioner and it is only after considering his reply thereto and after

the rejection of his representation, the impugned order was passed. Therefore there is no violation of the principles of natural justice.

As regards the cancellation of the license in respect of four other Shops of the Petitioner, Mr. Mohanty, draws attention of the Court to Section

47(2) of the OE Act, which envisages cancellation of other licenses held by the same persons, whose license has been cancelled in terms of Section

47(1) of the OE Act.

Mr. Mohanty, learned Additional Government Advocate also submits that criminal cases have been instituted against the present Petitioner arising

out of the raid and which are pending in the Court of the J.M.F.C.(City), Cuttack. Cases were also instituted against the Petitioner and his authorized

salesmen for the alleged commission of offences under Sections 47, 55,56,59,61 and 66 of the OE Act. It is stated that a charge sheet has also been

filed in that case.

Reference is made by Mr. Mohanty to the decision of this Court in Suryanarayan Sahoo v. Government of Odisha 2007 (Supp. II) OLR 84,5

where it has been observed as under:

“A comparative study of the aforesaid provisions shows that Section 42 though prescribes cancellation of license on conviction of the licensee on any offence

punishable under the Act and the violations mentioned therein but at the very outset it provides that the same is subject to such restrictions as the State Government

may prescribe. Section 43 provides that besides the grounds mentioned in Section 42, the license or exclusive privilege can be withdrawn for any cause other than

those specified in Section 42 meaning thereby that even if a person is not convicted of any offence and in whose case Section 42 does not apply, his license or

exclusive privilege can be withdrawn on any other cause. Therefore, it is not necessary that a person should be convicted and only then that the exclusive privilege

can be withdrawn. Section 45 clearly specified that no person to whom any license or exclusive privilege has been granted under the Act shall have any claim to the

renewal of license as a matter of right.â€​

The Petitioner has, in his rejoinder, contended that while initiating process of cancelling the Petitioner’s IMFL ‘Off’ Shops license, no

prior notice, in terms of Section 47(4) of the OE Act and Rule 49 of the Odisha Excise (OE) Rules was followed, particularly, in respect of

cancellation of license of four other IMFL ‘Off’ Shops. It is pointed out that there is no issue in relation to those Shops and therefore there is no

reason for cancellation of the licenses thereof. It is also pointed out that Rule 34 of the OE Rules does not expressly permit settlement of the excise

shops through lottery and therefore, the action taken in that regard was unlawful. Reference is also made to Rule 45 of the OE Rules, which

according to the Petitioner does not place an absolute embargo on a person from being issued a licence merely on the initiation of a criminal case

against such person. In this regard, reference is made by the learned counsel for the Petitioner to the decision of this Court in Dushasan Behera v.

State of Odisha 78 (1994) CLT 877 and the decision dated 3rd Sepetember, 2009 in W.P.(C) No. 8276 of 2009 (Iswar Chandra Behera v. State of

Odisha).

It may be mentioned here that I.A. No. 15447 of 2020 has been filed by three Interveners, who were the beneficiaries of the process of settlement

of three of the five IMFL ‘Off’ Shops at Samserpur, Jaripada and Subhadrapur as a result of cancellation of the Petitioner’s license in

respect of those shops. It is stated that because of the interim order passed by this Court, the final orders allotting the said Shops have not been

passed.

The above submissions have been considered by the Court. To begin with Section 47 of the OE Act reads as under:

“47. Power to cancel or suspend licence, permit or pass-

(1) Subject to such restrictions as may prescribed, the authority suspend granting any exclusive privilege, license, permit or pass under this Act may cancel or

suspend it irrespective of the period to which the same relates-

(a) if it is transferred or sublet by the holder thereof without the permission of the said authority; or

(b) if any duty or fee payable by the holder thereof has not been paid; or

(c) in the event of any breach by the holder thereof or by any of his servants, or by any one acting on his behalf, with his express or implied permission, of any of the

terms or conditions thereof; or

(d) if the holder thereof is convicted of any offence punishable under this Act or any other law for the time being in force relating to revenue or of any cognizable and

non-bailable offence; or

(e) where a licence, permit or pass has been granted on the application of the holder of an exclusive privilege granted under section 20 on the requisition in writing of

such holder; or

(f) if the conditions of the exclusive privilege, licence, permit or pass provide for such cancellation or suspension at will.

(2) When an exclusive privilege, licence, permit or pass held by any person is cancelled under clause (a), (b), (c) or (d) of sub-section (1), the authority aforesaid may

cancel any other exclusive privilege, licence, permit or pass granted to such person under this Act, or under any other law for the time being in force relating to

Excise.

(3) The holder of an exclusive privilege, licence, permit or pass shall not be entitled to any compensation for its cancellation or suspension under this section, or to

the refund of any fee or consideration money paid or deposit made, in respect thereof.

(4) Before cancellation of the exclusive privilege, licence, permit or pass the authority cancelling it shall give to the grantee at least seven days' notice in writing of his

intention to cancel it and offer an opportunity to him to show cause within the said period as to why his exclusive privilege, licence, permit or pass should not be

cancelled.â€​

As far as the cancellation of license of IMFL ‘Off’ Shop at Badambadi is concerned, a show cause notice was issued and opportunity of

hearing was also given to the Petitioner. It is apparent from the facts narrated and the documents placed on record that the rejection of the

representation of the Petitioner dated 25th September, 2019 by the Collector, Cuttack by the order dated 14th December, 2019 was based primarily on

the report submitted on 7th December, 2019 by the Sub-Collector, Sadar, Cuttack to the Collector. It is not in dispute that the copy of the said report

was not furnished to the Petitioner prior to the passing of the impugned order dated 23rd November, 2020 which simply states that the Collector

‘after careful consideration’ has decided to cancel the license granted to the Petitioner in respect of the five IMFL ‘Off’ Shops. The

order is, therefore, a non-speaking one. It does not spell out the reasons why the cancellation is justified. M

Mr. Mohanty, in seeking to defend the said order, refers to the fact that in the counter affidavit filed by Opposite Party No.4, there is a report of

the Sub-Collector dated 7th December, 2019 enclosed and that supplied the reasons for cancellation. In the considered view of the Court, the

impugned order cancelling the license ought to itself contain the reasons for cancellation. The reasons cannot be supplied subsequently through a

counter affidavit or a document enclosed with such counter affidavit. While the procedure under Section 47 of the OE Act may have been followed as

far as issuance of show cause notice and seeking the Petitioner’s reply, that will not obviate the Collector to spell out the reasons while cancelling

the licenses.

The legal position in this regard may be discussed at this stage. In Mahabir Prasad Santosh Kumar v. State of U.P AIR 1970 SC 130,2 the

appellants, who were holders of a licence under the U.P. Sugar Dealers' Licensing Order, 1962, to deal in sugar and were also licenced to deal in

flour, were called upon by a letter dated June 5,1967 to explain certain irregularities detected on inspection of their shop. The next day they were

directed to hand over their stocks of sugar and flour to a Cooperative Marketing Society. Their representations against this direction to the District

Magistrate were not attended to, and they were therefore obliged to surrender their stocks. By a letter dated June 28 1967, the appellants were

informed that the District Magistrate had cancelled their licences as dealers in sugar and flour but no reasons were given for this order.

An appeal under clause 8 of the Order of 1962 to the State Government was rejected but no reasons were communicated to the appellants for this

rejection. A writ petition challenging the orders of the District Magistrate and the State Government in appeal was dismissed by the High Court. On

appeal to the Supreme Court, it was held that the orders passed by the District Magistrate and the State Government cancelling the licences of the

appellants must be quashed.

“Opportunity to a party interested in the dispute to present his case on questions of law as well as fact, ascertainment of facts from materials before the Tribunal

after disclosing the materials to the party against whom it is intended to use them, and adjudication by a reasoned judgment upon a finding of the facts in

controversy and application of the law to the facts found, are attributes of even a quasi-judicial determination. It must appear not merely that the authority entrusted

with quasi-judicial authority has reached a conclusion on the problem before him : it must appear that he has reached a conclusion which is according to law and just,

and for ensuring that end he must record the ultimate mental process leading from the dispute to its solution. Satisfactory decision of a disputed claim may be

reached only if it be, supported by the most cogent reasons that appeal to the authority. Recording of reasons in support of a decision on a disputed claim by a

quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or

expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the

necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may deter-mine whether the facts were

properly ascertained, the relevant law was correctly applied and the decision was just.â€​

For the proposition that reasons must be contained in the order itself and not a subsequent affidavit filed after notice in the petition, reference may

be made to the opinion of Krishan Iyer, J. in Mohinder Singh Gill v. The Chief Election Commissioner AIR 1978 SC 85,1 the relevant portion of

which reads thus:

“…when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented

by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get

validated by additional grounds later brought ,out. We may here draw attention to the observations of Bose J. in Commissioner of Police v. Gordhandas Bhanji AIR

1952 SC 16:

Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order

of what he meant, or of what was in his mind, or what he intended to, do. Public orders made by public authorities are meant to have public effect and are intended to

effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

Orders are not like old wine becoming better as they grow older.â€​

In so far as the impugned order cancelling the license in favour of the Petitioner for the ‘Off’ Shop at Badambadi is concerned, the order

being a non-speaking one, cannot be sustained in the eye of law and the same is set aside on that ground.

As far as cancellation of the licenses in respect of other four shops, while Section 47 (2) can be read as an enabling provision, giving a discretion

to the authority to cancel other license, it is obviously subject to Section 47(4), which mandates giving of at least seven days’ notice in writing to

the holder of the license of the authority’s intention to cancel the license. In other words, Section 47(2) has to be read along with Section 47(4) of

the OE Act and not dehors it. Consequently, the action of the Opposite Parties that under Section 47(2) of the OE Act that the license in respect of

the Shop at Badambadi having been cancelled, it would give rise to automatic cancellation of other licences, even without notice to the Petitioner, is

not legally tenable and is rejected as such. In other words, the impugned order in so far as it cancels the licenses of four other IMFL ‘Off’

Shops of the Petitioner, it is unsustainable in law.

It may be added here that mere fact that a criminal case has been instituted against the Petitioner will not per se disqualify him from holding an EP

license. Learned counsel for the Petitioner rightly pointed out that Rule 35 of the OE Rules envisages not granting a license to a person ‘who has

been found guilty within the previous five years of any serious breach of the conditions of his licence’ or importantly “to a person, who has

been convicted by a Criminal Court of a non-bailable offenceâ€. In other words, mere institution of a criminal case against a person will not per se

make him ineligible to hold the license, if otherwise satisfies the other conditions under the OE Act and OE Rules.

For all the aforementioned reasons, the impugned order dated 23rd November, 2020 cancelling the Petitioner’s license in respect of five IMFL

‘Off’ Shops is hereby quashed. The Intervention Application is not entertained. It is clarified that all consequential actions taken by the Opposite

Parties including settling the licences in respect of three IMFL ‘Off’ Shops in favour of the interveners cannot be sustained in law. If any

money has been collected by the Opposite Parties from any of the interveners, it shall be forthwith returned by the Opposite Parties to them. The

Intervention Application is accordingly disposed of.

It is however clarified that it will be open for the Opposite Parties to proceed to initiate a fresh process for cancellation of the Petitioner’s

licenses strictly following the provisions of the OE Act and Rules.

With the above observations and directions, the writ petition is allowed, but in the circumstances, there shall be no order as to costs.

As restrictions are continuing due to COVID-19 situation, learned counsel for the petitioner may utilize the soft copy of this judgment available in

the High Court’s official website or print out thereof at par with certified copies in the manner prescribed, vide Court’s Notice No.4587 dated

25.03.2020.