# M/s Co-operative Co. Ltd v. State of U.P. & Ors

- **Citation:** (2022) 1 ILRA 1020
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-01-05
- **Case number:** Writ Tax No. 738 of 2021
- **Bench:** Jayant Banerji
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-co-operative-co-ltd-v-state-of-u-p-ors-48090
- **Pages:** 10

## Headnote

C.S.C., Sri Avinash Chandra Tripathi

A. Natural Justice - Opportunity of hearing
- The Court held that non-furnishing of the
inspection
report
resulted
in
denial
of
opportunity to the petitioner to submit a proper
reply to the show cause notice. (Para 23)

In the present case, FIR was lodged against the
petitioner on finding gross irregularities and
violations to the conditions of the license and of
the Act and Rules. Consequent to which show
cause notice-cum-order was issued to the
petitioner cancelling the license of the petitioner.
The Court did not find any discrepancy in
the cancellation of license after issuance
of show cause notice-cum-order based on
FIR and inspection. (Para 14)
1 All. M/s Co-Operative Co. Ltd. Vs. State of U.P. & Ors.
1021
Writ Petition Allowed. (E-10)

List of Cases cited:

## Text

1020 INDIAN LAW REPORTS ALLAHABAD SERIES
other. Concealment and suppression of
material facts is nothing but a fraud to
obtain the order in his favour. It is a settled
proposition of law that one who has not
come with clean hands is not entitled for
any relief. Therefore on this ground itself
the petitioner is not entitled for any relief or
interference by this Court.

18. The Hon'ble Supreme Court in the
case of M/S S.J.S. Business Enterprises vs
State
Of
Bihar
And
Ors;
MANU/SC/0236/2004 / (2004) 7 SCC 166
has held that as a general rule, suppression
of a material fact by a litigant disqualifies
such litigant from obtaining any relief. This
rule has been evolved out of the need of the
courts to deter a litigant from abusing the
process of court by deceiving it.

19. The Hon'ble Supreme court in the
case of Commissioner of Customs Versus
Aafloat Textiles India Pvt. Ltd. others;
(2009)
11
SCC 18,
has
held
that
suppression of a material document would
also amount to a fraud on Court. The
Hon'ble Supreme Court, in the case of
S.P.Chengalvaraya Naidu (Dead) by LRs
Versus Joganath (Dead) by LRs and
others; (1994) 1 SCC 1, has held that
"fraud avoids all judicial acts, ecclesiastical
or
temporal"
observed
Chief
Justice
Edward Coke of England about three
centuries ago and a judgment or decree
obtained by playing fraud on the court is a
nullity and non est in the eyes of law.

20. In view of above, this Court is of
the considered view that the impugned
orders have rightly been passed by
reasoned
and
speaking
orders
after
considering the pleadings of the parties and
evidence on record. There is no illegality or
error in the impugned orders. The petition
is misconceived, lacks merit and suffers
from material concealment and taking false
plea. It is liable to be dismissed with cost.

21. The petition is, accordingly,
dismissed with a cost of Rs.20,000/-.

22. The petitioner shall vacate the
portion in his tenancy and hand over it to
the respondents alongwith the aforesaid
cost of Rs.20,000/- within a period of six
weeks from today.
----------
(2022)01ILR A1020
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.01.2022

BEFORE

THE HON'BLE JAYANT BANERJI, J.

Writ Tax No. 738 of 2021

M/s Co-operative Co. Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Namit Srivastava, Shashi Nandan Sr.
Advocate, Sri Manoj Kumar Ahuja

Counsel for the Respondents:
C.S.C., Sri Avinash Chandra Tripathi

A. Natural Justice - Opportunity of hearing
- The Court held that non-furnishing of the
inspection
report
resulted
in
denial
of
opportunity to the petitioner to submit a proper
reply to the show cause notice. (Para 23)

In the present case, FIR was lodged against the
petitioner on finding gross irregularities and
violations to the conditions of the license and of
the Act and Rules. Consequent to which show
cause notice-cum-order was issued to the
petitioner cancelling the license of the petitioner.
The Court did not find any discrepancy in
the cancellation of license after issuance
of show cause notice-cum-order based on
FIR and inspection. (Para 14)
1 All. M/s Co-Operative Co. Ltd. Vs. State of U.P. & Ors.
1021
Writ Petition Allowed. (E-10)

List of Cases cited:

1. Smt. Raj Kumari Vs State of U.P. & ors. 2011
(3) ADJ 638 (DB)

2. Jagdish Narain Mishra Vs St. of U.P. & ors.
Civil Misc. Writ Petition No. 28051 of 2008

3. Natwar Singh Vs Director of Enforcement &
anr. (2010) 13 SCC 255

4. Har Shankar & ors. Vs The Deputy Excise &
Taxation Commissioner & ors. (distinguished)

5. Mangilal Vs St. of M.P. (2004) 2 SCC 447

6. Suresh Chandra Nanhorya Vs Rajendra Rajak
(2006) 7 SCC 800

7. Institute of Chartered Accountants of India Vs
LK. Ratna (1986) 4 SCC 537

8. Dharampal Satyapal Ltd. Vs CCE (2015) 8
SCC 519

9. City Corner Vs P.A. to Collector & ADM (1976)
1 SCC 124
(Delivered by Hon'ble Jayant Banerji, J.)

1. Heard Sri Shashi Nandan, learned
Senior Advocate assisted by Sri Namit
Srivastava and Sri Manoj Kumar Ahuja,
learned counsel appearing for the petitioner
and Sri Avinash Chandra Tripathi and Sri
Jagdish Mishra, learned Standing Counsel,
appearing for the respondents.

2. The facts, as appearing from the
writ petition are, that the petitioner, which
was initially registered on 08.09.1910 as a
Joint
Stock
Company,
was
allotted
Corporate
Identity
Number
U51226DL1910PL299886 and altered the
provisions
of
its
Memorandum
of
Association. The order of the Regional
Director,
Ministry
of
Corporate
Affairs, confirming the alteration was
registered under Section 13(5) of the
Companies Act, 2013 on 17.05.2016. The
petitioner has, as one of its main objects,
preparation and manufacture of liquor,
ethanol, etc., and to carry on trade in the
aforesaid product. Under the provisions of
United Provinces Excise Act, 19101 the
petitioner was granted a licence to distil
liquor which was renewed by the Excise
Commissioner, the respondent no. 3, by
means of its order dated 15.5.2018 and PD2 licence was issued for the Excise Year
2018-19, 2019-20, that is, from 1.4.2018 to
31.3.2020. The PD-2 licence of the
petitioner was further renewed for the
Excise Year 2020-21 and 2021-22 and by
an order dated 12.3.2020, the respondent
no.3 also issued a licence to manufacture
Extra Neutral Alcohol (ENA) for a period
of two years. The petitioner also has a
bottling plant of Indian Made Foreign
Liqour (IMFL) in the company premises,
for which a separate licence in Form FL3(A)
was
issued
by
the
Excise
Commissioner, U.P. for the Excise Year
2019-20 and 2020-21. The petitioner has
also obtained a licence for storage of IMFL
in Form FL-1.

3. A raid was conducted on the
petitioner's premises on 3.3.2021 and a
show cause notice-cum-order of suspension
of licence PD-2 dated 6.3.2021 was issued
by respondent no.3 to the petitioner to
submit a reply with regard to the inspection
done by a joint team of Excise officials and
a Special Task Force. Reference was made
in the notice to a Truck No. UP-11B.T.0935 which was intercepted and which
was carrying 1500 boxes of country made
liqour. It was also stated in the notice that
the inspection was carried out in the
1022 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioner's
distillery
and
glaring
irregularities were found. The allegation
was that the forged/duplicate bar codes
were being used by the petitioner on the
liqour bottles and it was also transporting
illegal liquor twice on one gate pass from
the distillery. A reply dated 10.3.2021 was
submitted by the petitioner to the aforesaid
show
cause
notice
denying
all
the
allegations made in the show cause noticecum-suspension order. It was specifically
stated in the reply that it was not possible to
comment on the so-called irregularities
because no copy of the inspection report,
which formed the basis of the show-cause
notice, was given to the representative of
the petitioner nor was the same enclosed
with the notice. However, by means of the
impugned order dated 01.04.2021, the
Excise Commissioner, respondent no.3,
cancelled the license PD-2 of the petitioner.
The revision petition filed by the petitioner
under Section 11 of the Act 1910 was also
dismissed by an order of the respondent
no.2 on 25.08.2021.

4. It is contended by the learned counsel
for the petitioner that the respondents have
failed to recover any evidence from the
premises of the petitioner pertaining to the
forged/duplicate
bar
code
or
illegal
production of ENA/spirit. It is contended that
by means of an order dated 1.4.2021, the
respondent
no.3,
without
giving
any
opportunity of personal hearing to the
petitioner, passed an order cancelling PD-2
licence of the petitioner with a further
direction forfeiting all amounts deposited by
the petitioner towards the PD-2 license, with
no compensation or refund. The contention of
the learned counsel for the petitioner is that
merely on the basis of an FIR lodged on
3.3.2021, the show cause notice dated
6.3.2021 was issued to the petitioner and the
respondent no. 3 has proceeded to cancel the
licence on the grounds mentioned in the FIR.
It is also contended that in the order of
cancellation, the respondent no. 3 refers to an
inspection report made by the joint team
which was never supplied to the petitioner. It
is contended that non-furnishing of the
inspection report, has caused grave prejudice
to the petitioner and violated his rights by
declining opportunity to answer the material
relied upon by the respondents. It is
contended that though the show cause notice
dated 6.3.2021, refers to an inspection report
but does not disclose relevant material, if any,
that may find place in the inspection report.

5. Learned counsel has referred to
Section 34 of the Act to contend that none of
the five conditions prescribed for suspension
or cancellation of licence exist, that would
vest the authority with the mandate to
suspend or cancel the licence PD-2. In
support of his contentions, learned counsel
for the petitioner has referred to judgment of
this Court in the matter of Smt. Raj Kumari
Vs. State of U.P. and others2, Jagdish
Narian Mishra Vs. State of U.P. and
others3 and a judgment of the Supreme
Court in Natwar Singh Vs. Director of
Enforcement and another4.

6. The cited judgements of Smt. Raj
Kumari and Jagdish Narain Mishra are
to substantiate that mere lodging of an FIR
cannot form the basis of action against the
petitioner for canceling the licence. With
regard to non-supply of inspection report
being in violation of principles of natural
justice and causing prejudice to the
petitioner, the case of Natwar Singh has
been relied upon.

7. Sri Avinash Chandra Tripathi,
learned standing counsel, spear-heading
the arguments on behalf of the respondent,
has stated that the State has got power to
1 All. M/s Co-Operative Co. Ltd. Vs. State of U.P. & Ors.
1023
prohibit anyone from dealing in any form
of intoxicants and that there is no
fundamental right to do trade or business
in intoxicants. In this regard the learned
counsel has referred to the judgement of
the Supreme Court in Har Shankar and
others v. The Deputy Excise and
Taxation Commissioner and others5.
The learned counsel has referred to the
provisions of Chapter IV of the Act 1910,
particularly Sections 17, 18, 24 and 24A.
Learned counsel has further referred to
Chapter VI of the Act, particularly Section
31 and 34 that deal with the form and
conditions of licences, and, the power to
cancel or suspend licences, respectively.
While referring to Rule 702(4) of Chapter
IX of the U.P. Excise Manual (Distilleries
Rules), learned counsel has stated that an
opportunity of hearing is to be afforded to
the
licensee
in
proceedings
for
cancellation of licence only if he so
desires. Learned counsel has drawn the
attention of the Court to the show cause
notice
that
has
been
appended
as
Annexure No.11 to the writ petition and
has referred to contents of the gate pass
quoted in the show cause notice to contend
that the irregularities reflected in that
clause of the show cause notice are those
that
are
distinct
from
the
other
irregularities like the non-functioning of
the CCTV camera in the factory premises.
Learned counsel has referred to the
various clauses of the show cause notice to
attempt to demonstrate that the seriousness
of the allegations against the petitioner
necessitated cancellation of the PD-2
licence. It is stated that on the basis of
inspection done by the joint team, the FIR
was lodged against the petitioner/its agent
and the show cause notice, which is based
on the FIR, is valid in view of the facts
and circumstances of the present case.

8. It is contended that the power
and duties of an officer of the department
are specified in Chapter IX of the Act 1910
and under Section 48, power is given to
enter and inspect, at any time by day or by
night any place in which the licensed
manufacturer carries on the manufacture of
or stores any intoxicant and my enter and
inspect at any time within the hours during
which sale is permitted, and at any other
time during which the same may be open,
any place in which any intoxicant is kept
for sale by any licensed person, and may
examine, test, measure or weigh any
materials,
stills,
utensils,
implements,
apparatus, or intoxicant found in such
place: and may seize any measures, weights
or testing instruments which he has reason
to believe to be false. It is stated that show
cause notice reveals various violations of
conditions of licence PD-2 and the
impugned cancellation order has taken into
account the violation of conditions of the
licence and is passed in accordance with
law and as such, no interference is
deserved.

9. In rejoinder, learned Senior
Advocate appearing for the petitioner has
stated that the order impugned, passed by
the respondent no.3 reflects non-application
of mind, and is merely based on an FIR and
a so-called inspection report which has
never been made available to the petitioner.
The contention is that though the learned
Standing Counsel is placing reliance on the
provisions of Section 34(1)(b) of the Act
1910, being the alleged breach for
suspending or cancellation of licence, that
provision will not apply in the case where
an FIR is lodged. Further contention is that
the show cause notice could have been
confined to address Clause (b) of Section
34(1) of the Act 1910. It is his contention
1024 INDIAN LAW REPORTS ALLAHABAD SERIES
that the FIR can only be relied upon with
regard to clause (c) of Section 34(1) of the
Act 1910 where conviction has actually
taken place. It is stated that there is no
statement in the show cause notice
regarding violation of clause (b) of Section
34(1) of the Act 1910. It is stated that the
power conferred upon the Government in
the revision, enjoined the Government to
deal with all the grounds raised in the
memorandum of revision, but, in the
revisional order neither were any ground
raised by the petitioner were discussed nor
was there any application of mind. It is
stated that the FIR does not incorporate the
inspection report, but is only purports to be
based on the inspection report and as such,
supply of inspection report was necessary
and
non-supply
thereof
has
caused
prejudice to the petitioner.

10. I have considered the rival
contentions of the respective counsel for
the parties and perused the record. At the
outset, the judgement cited by learned
counsel for the respondent in Har Shankar
may be considered. The main controversy
before the Constitution Bench was the
power of the Government to levy and
realize large license fees either through the
medium of auctions or on scales fixed
under the rules. Therefore, the controversy
was entirely different. The observation of
the Supreme Court that has been relied
upon by the learned counsel for the
respondents that there is no fundamental
right to do trade or business in intoxicants,
is almost axiomatic, in view of the law on
the issue, and need not tarry me.

11. As far as reliance placed by the
learned Senior counsel for the petitioner on
the aforesaid two judgements cited by him
in the matter of Smt. Raj Kumari and
Jagdish Narain Mishra to submit that
there can be no cancellation of licence on
the basis of an FIR, it is pertinent to
mention here that in the case of Jagdish
Narain Mishra, the authority cancelled the
petitioner's fair price shop license on two
grounds,
namely,
that
there
were
complaints
of
irregularities
regarding
distribution of scheduled commodities by
the petitioner and, secondly, the petitioner
was involved in a criminal case under
Section 3/7 of the Essential Commodities
Act. The observations of the Court made in
Jagdish
Narain
Mishra,
which
are
important for purpose of analysing the
present case, are as follows:

"The law is settled that a fair price
shop agreement cannot be cancelled merely
on the basis of allegations made against a
dealer unless the licensing authority on the
basis of evidence on record is satisfied that
such allegations stand proved. Hence the
cancellation of of petitioner's agreement by
the licensing authority only the ground of
there being serious allegations against him
without recording any finding that the
allegations/complaints
against
the
petitioner were proved by evidence on
record, can not be sustained at all.

The order of the licensing authority
further reveals that even the written
explanation submitted by the petitioner
before the Licensing Authority to the
charge sheet has not been considered in
accordance with law. The Licensing
Authority brushed aside the petitioner's
explanation by just mentioning in the
impugned order that the matter was
examined and the explanation was not
found to be satisfactory. No reason has
been given by the Licensing Authority for
not finding the explanation submitted by
the petitioner to be satisfactory. Such a
consideration of the explanation, in my
opinion no consideration in the eye of law.
1 All. M/s Co-Operative Co. Ltd. Vs. State of U.P. & Ors.
1025

Despite advancing lengthy arguments,
learned standing counsel has failed to bring
to the notice of the Court any provision
either under the Essential Commodities
Distribution Order, 2004 or under any other
Government Order issued either under the
2004 order or 1990 order empowering the
Licensing Authority to cancel a fair price
shop agreement merely on account of a
dealer being involved in a criminal case.
Hence the cancellation of the petitioner's
agreement
on
the
ground
of
his
involvement in aforesaid criminal case
under the Essential Commodities Act is
also unsustainable".

12. In the case of Smt. Raj Kumari
(supra), the fair price shop dealership of
the petitioner therein was cancelled on the
ground that an FIR under Section 3/7 of
the Essential Commodities Act was lodged
against the petitioner. The Division Bench
of this Court, relying upon the aforesaid
judgement of Jagdish Narain Mishra
held as follows:-

"5.Nothing has been brought to our
attention that the said judgment has been
overruled. Even otherwise, we are of the
opinion that the said conclusion cannot be
faulted for the reason that mere filing of a
F.I.R. cannot result in holding a fair price
shop owner guilty of the offences charged.
If there be a conviction, then it is possible
to proceed, based on the conviction and
not otherwise. In case if the F.I.R. is
lodged, it is still open to the respondents
to
proceed
by
leading
independent
evidence and statements of the persons
recorded.

.........

7. Considering what we have set out
earlier and the Judgment of this Court in
Jagdish Narain Mishra (supra), which we
approve, the cancellation of the
licence of the petitioner is without
authority of law.

8.Even otherwise we may point out
that a reading of the order dated 10.8.2010
discloses total non application of mind.
The said order purports to cancel the
license merely on the ground of lodging of
an F.I.R. and that suspension is going on
for
a
long
time
thereby
causing
inconvenience in distribution of essential
commodities to the card holders. The said
reasons cannot be justified in law to cancel
the dealership".

13. On perusal of the aforesaid two
judgements, it is evident that lodging of the
FIR was a ground for cancellation of
licence of the dealer. In Jagdish Narain
Mishra, no findings were recorded by the
authorities that the allegation/complaint
against the petitioner was proved by
evidence
on
record.
The
dealer's
explanation in Jagdish Narain Mishra
was cursorily brushed aside by the
authorities without assigning any reason
only by stating that the explanation
submitted by the petitioner was not found
to be satisfactory. In the case of Smt. Raj
Kumari, merely an FIR under Section 3/7
of the Essential Commodities Act was
lodged against the fair price shop dealer
and the Court held that the petitioner
cannot be held guilty of the offences
charged on the ground of lodging of an
FIR. It was further observed that if there be
a conviction, then it is possible to proceed,
based on the conviction and not otherwise.
It was further noticed by the Court that the
order cancelling licence disclosed total
non-application of mind.

14. In the present case, the fact
situation is different. The petitioner, who is
1026 INDIAN LAW REPORTS ALLAHABAD SERIES
a distiller, was served with a show cause
notice-cum-order purportedly on the basis
of material discovered during a raid
conducted in the premises of the petitioner
by a team of officials, the details of which
are stated to find place in the FIR. The
show cause notice-cum-order mentions
alleged violations of conditions of the
licence and of the Act and Rules, and,
suspends the licence PD-2 of the petitioner.
Under the facts and circumstances, though
consequent to the FIR the show cause
notice-cum-order was issued, however, the
discovery of alleged irregularities and
recovery of items during the raid conducted
at the petitioner's premises was the basis on
which the FIR was lodged. Moreover, after
consideration of the reply of the petitioner
to the show cause notice-cum-order, the
detailed impugned order was passed by the
respondent no.3 on 01.04.2021 cancelling
the license PD-2 of the petitioner. The
power to cancel or suspend licenses is
provided in section 34 of the Act 1910.
Therefore, under the circumstances, the
cancellation of licence after issuance of
show cause notice-cum-order based on the
FIR and inspection, cannot be faulted. This
observation, however, is not to be taken as
a finding on merits of the validity of the
cancellation order dated 01.04.2021 of the
license PD-2 of the petitioner.

15. The other points, which are being
considered in view of the facts and
circumstances of the present case, are:-

(i)
Whether
any
opportunity
of
personal hearing to the petitioner-company
or
its
authorized
representative
was
required to be given prior to canceling the
PD-2 license, and if so, would the order
dated 1.4.2021 passed by the Excise
Commissioner canceling the license of the
petitioner stand vitiated?

(ii) Whether non-furnishing of the
inspection report caused serious prejudice
to the petitioner thereby vitiating the
impugned order dated 1.4.2021?

16. As far as the opportunity of
personal hearing being granted to the
petitioner
is
concerned,
the
learned
standing
counsel
for
the
respondent
referred to sub-rule (4) of Rule 702 of
Chapter IX of Part 2 of the Excise Rules in
the U.P. Excise Manual to contend that
there is no right of privilege for grant of
license for the manufactures of spirit and
the license granted is liable to be revoked
or withdrawn at any time, in public interest,
after giving the holder of a license a notice
to show cause against such action and after
hearing him, if he so desires. It is the
contention that there is no provision in the
Act or the Rules that mandates grant of
personal hearing to the petitioner. It is
stated that a show cause notice-cum-order,
as per the aforesaid rule, was given to the
petitioner and the reply not having been
found
satisfactory,
the
Excise
Commissioner proceeded to cancel the
license, which is justified given the scale of
the tax evasion and irregularities. The
Special Secretary, Department of Excise,
respondent no. 2, in its order of 25.8.2021
on the revision filed by the petitioner, states
that though an objection regarding not
granting prior opportunity of hearing before
cancellation of license was raised by the
petitioner, however, the petitioner had not
been able to specify that under which rule
the same is mandatory. The respondent no.
2 proceeded to hold that there is want of
any rule which provides for mandatory
opportunity of hearing to a distiller and as
such the order dated 01.04.2021, canceling
the license under Section 34 of the Act of
1910, was passed after considering the
reply to the show cause notice-cum-order.
1 All. M/s Co-Operative Co. Ltd. Vs. State of U.P. & Ors.
1027
It is pertinent to mention here that in
paragraph 16 of the counter affidavit, in
reply to the contents of the paragraph 26 of
the writ petition, there is no specific denial
to the averment that the order cancelling
the PD-2 license of the petitioner was
passed by the respondent no. 3 without
giving any opportunity of personal hearing
to
the
petitioner
or
its
authorized
representative.

17. It is evident that sub-rule (4) of
the aforesaid Rule 702 of the Excise
Manual provides for opportunity of hearing
to a noticee provided it is so desired. By
cancellation of the license PD-2, the
petitioner has been visited with severe civil
consequences. The cancellation of license
has resulted in closure of the business of
the petitioner which has affected the
livelihood of several people employed in
the
petitioner-company.
In
various
decisions of the Supreme Court, it has been
held that even if a statute is silent and there
are no positive words in the Act or the
Rules made thereunder, there would be
nothing wrong in spelling out the need to
hear the parties whose rights and interest
are likely to be affected by the orders that
may be passed, and in making it a
requirement to follow a fair procedure
before taking a decision, unless the statute
provides otherwise. The principles of
natural justice must be read into the
unoccupied interstices of the statute, unless
there is a clear mandate to the contrary. It
has been further held that where the statute
is silent about the observance about the
principles of natural justice, such statutory
silence is taken to employ compliance with
the principles of natural justice where
substantial
rights
of
parties
are
considerably affected. The application of
natural justice becomes presumptive unless,
found excluded by express words of
statute or necessary intendment. Reference
may be had to the decisions of the Supreme
Court in Mangilal Vs. State of M.P.6,
Suresh Chandra Nanhorya Vs. Rajendra
Rajak7,
Institute
of
Chartered
Accountants of India Vs. L.K. Ratna8.
Further, the Supreme Court, in the case of
Dharampal Satyapal Ltd. v. CCE9,
observed as follows:-

"28.
It
is
on
the
aforesaid
jurisprudential
premise
that
the
fundamental principles of natural justice,
including
audi
alteram
partem,
have
developed. It is for this reason that the
courts have consistently insisted that such
procedural fairness has to be adhered to
before a decision is made and infraction
thereof has led to the quashing of decisions
taken. In many statutes, provisions are
made ensuring that a notice is given to a
person against whom an order is likely to
be passed before a decision is made, but
there may be instances where though an
authority is vested with the powers to pass
such orders, which affect the liberty or
property of an individual but the statute
may not contain a provision for prior
hearing. But what is important to be noted
is that the applicability of principles of
natural justice is not dependent upon any
statutory provision. The principle has to be
mandatorily applied irrespective of the fact
as to whether there is any such statutory
provision or not."

18. However, it was further observed
in Dharampal Satyapal Ltd. that every
violation of a facet of natural justice may
not lead to the conclusion that the order
passed is always null and void. The validity
of the order has to be decided on the
touchstone of "prejudice".
1028 INDIAN LAW REPORTS ALLAHABAD SERIES

19. The visiting of civil consequences
on the petitioner is prejudicial to its
interest. The Rule 702 (4) aforesaid
provides for an opportunity of hearing
where it is so desired. Therefore, it is held
that opportunity of personal hearing to the
petitioner,
under
the
facts
and
circumstances of the case, was required to
be given, and that having not been done,
the impugned order dated 1.4.2021 passed
by the Excise Commissioner is vitiated.

20. As far as the averment made in
paragraph no. 28 of the writ petition that no
inspection report, as alleged in the show
cause notice dated 6.3.2021 was made
available to the petitioner and as such the
petitioner could not submit its detailed reply,
in paragraph no. 17 of the counter affidavit
there is no categorical denial with regard to
non-furnishing of the inspection report to the
petitioner. In the counter affidavit, the
existence of the inspection report has not
been denied, but the inspection report has not
been enclosed. In the show cause notice-cumorder, serious irregularities are stated to have
been found in the working of the distiller at
the time of the inspection. However, though
the irregularities and violations have been
briefly narrated in the show-cause noticecum-order, the details of the irregularities
have not been mentioned. This assumes
significance as in its reply to the show-cause
notice-cum-order,
the
petitioner
has
questioned the allegation of recovery of
country made liquor and the allegation of
duplicate bar codes on the ground that the
same are not reflected in the FIR.

21. In the case of Natwar Singh
(supra), the Supreme Court was considering
whether a noticee served with a show cause
notice under Rule 4(1) of the Foreign
Exchange
Management
(Adjudication
Proceedings and Appeal) Rules, 2000 (Rules
of 2000) is entitled to demand to furnish all
the
documents
in
possession
of
the
adjudicating
authority
including
those
documents upon which no reliance had been
placed to issue a notice requiring him to show
cause why an inquiry should not be held
against him. The Supreme Court considered
the provisions of section 16 of the Foreign
Exchange Management Act, 1999, that
provides for holding an inquiry by the
adjudicating
authority
in
the
manner
prescribed after giving the person concerned
a reasonable opportunity of being heard. Also
considered was Rule 4 of the Rules of 2000,
which provides for issuance of notice by the
adjudicating
authority
to
the
person
concerned requiring him to show cause, the
show cause notice indicating the nature of
contravention
alleged
to
have
been
committed. In the context it was observed by
the Supreme Court as follows:-

"30. The right to fair hearing is a
guaranteed right. Every person before an
authority
exercising
the
adjudicatory
powers has a right to know the evidence to
be used against him. This principle is
firmly established and recognised by this
Court in Dhakeswari Cotton Mills Ltd. v.
CIT [AIR 1955 SC 65 : (1955) 1 SCR 941]
.
However,
disclosure
not
necessarily
involves supply of the material. A person
may be allowed to inspect the file and take
notes.
Whatever
mode
is
used,
the
fundamental principle remains that nothing
should be used against the person which has
not been brought to his notice. If relevant
material is not disclosed to a party, there is
prima facie unfairness irrespective of whether
the material in question arose before, during
or after the hearing. The law is fairly well
settled if prejudicial allegations are to be
made against a person, he must be given
particulars of that before hearing so that he
can prepare his defence. However, there are
1 All. M/s Birla Corporation Ltd. Vs. The State of U.P. & Ors.
1029
various exceptions to this general rule where
disclosure of evidential material might inflict
serious
harm
on
the
person
directly
concerned or other persons or where
disclosure would be breach of confidence or
might be injurious to the public interest
because it would involve the revelation of
official secrets, inhibit frankness of comment
and the detection of crime, might make it
impossible to obtain certain clauses of
essential information at all in the future (see
R. v. Secy. of State for Home Deptt., ex p H
[1995 QB 43 : (1994) 3 WLR 1110 : (1995) 1
All ER 479 (CA)])."

22. It is pertinent to note here that a three
Judge Bench of the Supreme Court in the case
of City Corner Vs. P.A. to Collector &
ADM10 has held that it is not always necessary
that the documents asked for should themselves
be furnished provided the substance of those
documents is furnished, always provided,
however, that the summary is not misleading.
The Supreme Court held that such was not the
case there, but when the appellant asked for the
original documents, he could at least have been
told that he had already been given a summary
of documents which was sufficient to enable
him to make his representation and he could
make his fuller representation as he had
promised in his earlier so called interim reply.

23. In view of the facts and circumstances
appearing in the present case, for want of the
inspection report before this Court, it cannot be
presumed that the substance of the inspection
report or the summary of the documents was
furnished and that the summary was not
misleading. It is also a matter of conjecture
whether the relevant facts contained in the
inspection
report
necessary
to
file
an
appropriate reply by the petitioner, were
declared in the show-cause notice-cum-order.
Therefore, it is held that non-furnishing of the
inspection report resulted in denial of
opportunity to the petitioner to submit a proper
reply to the show cause notice, and has
consequently caused serious prejudice to it, and
as such has vitiated the order impugned dated
1.4.2021 passed by the respondent no. 3.

24. Therefore, the order impugned dated
1.4.2021 passed by the respondent no. 3, Excise
Commissioner, Uttar Pradesh (Annexure No.
13 to the writ petition) and the order dated
25.8.2021 passed by the respondent no. 2,
Special Secretary, Department of Excise in
Revision No. 29 of 2021 (Annexure No. 18 to
the writ petition) cannot be sustained and are
hereby quashed.

25. It is, however, open to the respondents
to proceed in light of the observations made
above and take appropriate steps, in accordance
with the law, further to the reply dated
10.3.2021 furnished by the petitioner to the
show cause notice-cum-order dated 6.3.2021.

26. Subject to the aforesaid observations,
this writ petition is allowed.
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(2022)01ILR A1029
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 07.12.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 749 of 2020
With Writ Tax Nos. 766 of 2020, 767 of 2020 &
768 of 2020

M/s Birla Corporation Ltd. ...Petitioner
Versus
The State of U.P. & Ors. ...Respondents

Counsel for the Petitioner: