Purshottam Bahel vs A.C. Baruah and Others

Pathak, J.—This application under Article 226 of the Constitution of India is directed against the appellate order dated 11th January 1971 passed by the Commissioner of Plains Division. Assam, affirming the order of the Chairman. Jorhat Municipal Board dated 9th April 1970 directing the Petitioner to close down his hotel and restaurant with immediate ef- fect and order dated 19-12-69 passed bv the Chairman. Jorhat Municipal Board reiectins the praver of the Petitioner for renewal of his license.

The Petitioner''s case is as follows: The Petitioner opened a restaurant in 19G7 Under a valid license No. 172 dated 4-12-67 for the year 1967-68 issued by the Jorhat Municipal Board (herein-after referred to as the Board) and his license was renewed till 1969. He applied for the renewal of his license on 15-4-69 for the year 1969-70. By his letter No. 5049 dated 19-12-69 the Chairman of the Municipal Board reliving on some roport of the Excise Superintendent held that the Petitioner violated an express condition of the license, namely, not to sell 1 allow use of liquor in the hotel and directed the Petitioner to close down his hotel and restaurant within seven days. The said letter of the Chairman of the Municipal Board is at Annexure I to the petition. On 26-12-69 the Petitioner submitted another application praying for reconsideration of the decision of the Board. In his application he denied to have ever violated any of the conditions of the license or that the Excise Inspector had seized any liauor from his hotel premises. It was further stated that the Excise Inspector''s allegation of seizure of liauor from the hotel premises of the Petitioner was sub iudice and it should not be accepted as correct.

By letter No. 112 dated 9th April 1970 the Chairman of the Municipal Board informed the Petitioner that the Board had decided to stand by its previous decision communicated Under letter No. 5049 dated 19-12-69 and directed the Petitioner to close down his hotel and restaurant with immediate effect failing which, necessary action would be taken. A copy of the said letter is Annexure II to the petition. Against this order of the Board the Petitioner preferred an appeal before the Commissioner of Plains Division u/s 296 of the Assam Municipal Act 1956 (Assam Act XV of 1957) (hereinafter called ''the Act'') The appeal was reiected by the Commissioner of Plains Division by his order dated 11th January 1971. Hence this writ petition for quashing the aforesaid orders of the Commissioner and the Board.

In his petition the Petitioner has stated that he preferred an appeal u/s 296 of the Act before the Commissioner of Plains Division from the Board''s order dated 9th April 1970 refusing renewal of the license. Such an appeal however lies not u/s 296 but u/s 322 of the Act. As no obiection was raised, it is presumed that the Commissioner was authorised bv the State Government to a entertain peal u/s 322 of the Act.

Mr. A.R. Bartnakur, the learned counsel for the Petitioner submits that the Chairman or the Board in re-fusing to renew the license acted illegally and in violation of the principlesi of natural iustice and therefore the impugned orders ''of the Board and the Commissioner, are liable to be quashed.

Relevant provisions of Section 229 of the Act, may be quoted here:

229 (1) Within such local limits as may be fixed bv the Board at a meeting, no place shall be used without license from the Board which shall be renewable a,nnuallv. for any of the following purposes, namely:

*****

(l) tea stall:

(m) sweetmeet stall:

(n) hotel or eating houses

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(2) Such, license shall not be, with-held unless the Boarid; has reason to believe that the business which it is intend-ed to establish or maintain, would be offensive or dangerous to persons residing; in or frequenting the neighborhood.

(3) ******

(4) ******

From the original license in the record it is found that the Petitioner''s license was issued for hotel and restaurant and the nature of food was described as rice. tea. sweets etc It is therefore clear that the Petitioner''s license was is- sued u/s 229(1)(1) (m) and (n) of the Act From the provisions of Sub-section (1) it is found that any person who wants to use any place within the local limits as fixed by the Board for the purposes mentioned in the Sub-section shall have to obtain a license from the Board and that license shall be renewable annually. In other words the Board may grant a license for one veer and the licensee will have to get it renewed annually thereafter It has been pro- vided in Sub-section (2). that such license shall not be withheld unless the Board has reason to believe that the business which it is intended to establish or maintain would be offensive or dangerous to persons residing in or frequenting the neighborhood. The expression ''the business which it is intended to establish or maintain in Sub-section (2) goes to show that for the purpose of withholding the license the Board may consider the conditions laid down in Sub-section (2) at the time of issusing the license for the first time as well as at the time of renewal of the license.

In the instant Case license for hotel and restaurant was issued to the Petitioner, by the Beard in 1967. That license was issued for the year 1967-68 and subsequently it was renewed for the year 1968-69 and the licensee applied for renewal of the same for the year 1969-70. By its order dated 19-12- 69 and 9-4-70 the Board for reasons re- corded there in refused to renew the license and directed the Petitioner to close down his hotel and restaurant with immediate effect. The Board therefore must have taken action under Sub-section (2) of Section 229 of the Act.

The points that fall for determination in the instant case are whether before withholding the license or refusing to renew the license on grounds mentioned in Sub-section (2) the Board is required to follow the principles of natural, justice, or, in other words whether the Board has a duty to give to the Petitioner an opportunity of showing cause and if the principles of natural justice were not followed whether the impugned orders are liable to be auashed.

From the impugned orders of the Board it appears that the Board got a report from the Excise Superintendent. Sibsagar. Jorhat to the effect that some bottles containing liauor were recovered and seized from Petitioner''s hotel and res taurant and therefore it concluded that the Petitioner violated an express condition of the license and so directed the Petitioner to close down his hotel and res taurant within seven days. From the order of the Board dated 19th December 1969 it is clear that no notice was given to the Petitioner to show cause against the al legation mentioned in the order. The Petitioner filed an application for review of that order and for renewal of the licen se, whereupon the Board passed the order dated 9th April 1970 affirming the earlier order dated 19th December 1969 and directed the Petitioner to close down the hotel and restaurant with immediate effect. The Board''s orders refusing renewal of license were based on allegations that in his hotel and restaurant the Petitioner used to slore or sell liquor as reported by the Exeise Superintendent and some other persons Before taking action against the Petitioner on these allegations made behind him. he was not given anv opportunity to meet those allegations. Before refusing to renew the license the Board did not issue any notice to the Petitioner to show cause. By refusing to renew the license, the Petitioner''s estab lished trade or business has been stopped. Act no stage the Petitioner admitted the allegations made against him and the re- ports made against him were behind his back. It is therefore found that in passing the impugned orders dated 19-12-69 and 9-4-1970 by which the Petitioner''s application for renewal was reiected and his hotel and restaurant was stooped, the Board did not follow the principles of natural iustice.

u/s 234 of the Act. the Board has the power to order the use of any place licensed'' u/s 229 and carrying on any dangerous and offensive trade to be discontinued in the circumstances .mentioned in the section. Section 234 itself provides that the licensee shall be given reasonable op port unity of showing cause against any notice that may be issued u/s 234 for discontinuance of the use of the licensed place.

Similarly when a license is withheld or a renewal of license is re- fused there is no reason to hold that in exercising such power u/s 229 (2) of the Act the Board is not required to observe the principles of natural iustice.

In State of Orissa Vs. Dr. (Miss) Binapani Dei and Others, while discussing the principles of natural iustice the Supreme Court observed as follows:

The rule that a party to whose pre judice an order is intended to be passed is entitled to a hearing applies alike to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences. It is one of the fundamental rules of our constitutional set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would therefore arise from the very nature of the function intended to be performed:

it need not be shown to be superadded. If there is power to decide and determine to the prejudice of a person duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made the order is a nullity.

It is true that the order is administrative in character, but even an administrative order which involves civil consequences as already stated must beamed consistently with the rules of natural justice after informing the first Respondent of the case of the State, the evidence in support thereof and after giving an opportunity to the first res-pendent of being heard and meeting or explaining the evidence.

In A.K. Kraipak and Others Vs. Union of India (UOI) and Others, it was observed y the Supreme Court as follows:-

The aim of the rules of natural justice is to secure iustice or to put it negatively to prevent miscarriage justice. These rules can operate in areas not covered bv any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has, Undergone a great deal of change in recent vears. In the past it was thought that it included just two rules, namely (1) no one shall be a Judge in his own cause (Nemodebet esse judex propria causa) and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judical enauiries must be held in good faith without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural iustice. Till very recently it was the opinion of the courts that unless the authority concerned was reauired by the law Under which it functioned to act judicially there was no room for the application of the rules of natural iustice. The validity of that limitation is now questioned. If the purpose of the rules of natural iustice is to prevent miscarriage of iustice one fails to see why those rules should be made inapplicable to administrative en-quiries. Often times it is not easv to draw the line that demarcates adminis-trative enauiries from auasi-iudicial en-quiries. Enquiries which were consider-ed administrative at one time are now being considered as qilasijudicial in character. Arriving at a iust decision is the aim of both qilasijudicial enquiries as well as administrative enquiries. An unjust decision in an administrative en-quiry may have more far reaching effect than a decision in a quasi-iudical. enquiry. As observed bv this Court in Suresh Koshy George Vs. University of Kerala and Others, the rules of natural justiccvr- are not embodied rules. What particular- rule of. natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law Under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a court that "some principle of natural iustice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case.

In the instant case the Board is a statutory authority constituted Under the Act. In refusing renewal of a license or withholding a license u/s 229 (2) of the Act it exercises a statutory power affecting the right 5f a citizen to carry on trade or business. When the Board directs a person to close down his established hotel and restaurant refusing renewal of license on grounds mentioned in Section 229 (2) such an order certainly involves civil consequences. Even though the Board''s order may be administrative in character, it has to be made consistently with the principles of natural justice, inasmuch as it involves civil consequences so far as the affected citizen is concerned.

In the circumstances the impugned orders of the Board are liable to be quashed for violation of the principles of natural justice as well as the appellate order of the Commissioner which did not take into consideration at all the question of violation of the principles of natural justice by the Board. Accordingly we auash the impugned orders of the Board and the Commissioner.

We however observe that this order will be no bar to the Board for taking necessary action against the Petitioner after duly observing the principles of natural iustice and in accordance with the provisions of the Municipal Act.

The petition is allowed and the rule is made absolute. In the facts and circumstances of the case, we make no order as to costs.

P.K. Goswami, C.J.

I agree.