# M/s S.S. Brothers & Company v. State of U.P. & Ors

- **Citation:** (2020) 9 ILRA 552
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-02-19
- **Case number:** WRIT - C No. 23928 of 2019
- **Bench:** Bala Krishna Narayana, Shamim Ahmed
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-s-s-brothers-company-v-state-of-u-p-ors-46003
- **Pages:** 10

## Headnote

Law
-
U.P.
Mines
Minerals
(Concession) Rules, 1963 - Rules 58 - nonpayment of royalty / lease amount -
consequences - Rule 58 r/w Clause 19(3)
of G.O. Dt 14.08.2017 - forfeiture of
security
money
-
No
provision
for
forfeiture of security money deposited by
the lessee - only provides realization of
amount as arrears of the land revenue
along with the interest prescribed but
does - Held - Security amount deposited
by the lessee liable to be adjusted towards
the dues/liability fixed (Para 20)

B. Civil Law - U.P. Mines Minerals (Concession)
Rules, 1963 - Rules 58, 60 - non-payment of
royalty rent & contravention of conditions of
lease- Blacklisting - Show Cause Notice -
Essential Contents of show cause notice -
statement of imputations, alleged breaches &
defaults committed by notice - nature of
action proposed to be taken against him -
purpose to make noticee understand case set
up against him which he has to meet &
provide adequate and meaningful opportunity
to show cause against the same (Para 21)

Allowed. (E-5)

List of Cases cited: -

## Text

552 INDIAN LAW REPORTS ALLAHABAD SERIES

and; he should have "reasons to
believe" that the market value has not been
truly set forth in such instrument.

30. Thus, the power can be exercised
only when the Collector on the basis of
material before him either sou motu or in a
reference comes to a conclusion that he has
"reasons to believe".

31. In the present case, the instrument
of the land disclosed that the land was
being used for agriculture purposes only,
no
declaration
under
Section
143
converting the land use from agricultural to
non-agricultural land had been passed, in a
similar case, he had himself held in respect
of an agricultural land that there was no
deficiency in the stamp duty and thus in the
present case, there was no material before
the Collector to form a "reason to believe"
and thus the entire initiation of proceedings
was without the authority of law.

32. The said principle was also
elaborately dealt by this Court in the case
of Smt. Vijay Kumar and Another v.
Commissioner, Meerut Division, Meerut
and Another; 2008(3) AWC 2997, wherein
this Court while interpreting the words
"reason to believe" relying upon the
judgments of the Supreme Court and
similar words used in different Acts had
held that although the power conferred
under Section 47-A (3) are wide but are not
plenary and cannot be exercised without
there being material before the Collector to
form a "reason to believe". A reason to
suspect cannot be equated as "reason to
believe", the belief which the Collector has
to have prior to exercise of power under
Section 47-A (3) should be in good faith
and not merely a pretence and there should
be some material which can lead to
formation of such belief.

33. Thus, on the basis of the judgments
of this Court, and placing reliance on Rule 3
(1) (A) of Stamp Valuation Rules, the only
conclusion which can be drawn is that the
orders passed and impugned in the present
writ petition are wholly against the provisions
of law and in the teeth of the judgments of
this Court as well as in the teeth of the Stamp
Valuation Rules. The orders impugned are
further bad in law, as they do not even take
into consideration the exemplar cited in the
form of order dated 14.8.2000 passed in
respect of a similarly situated property in the
same village, in which a conveyance was
executed on 3.11.1999. Thus, the orders
impugned are perverse on that count also.

34. In view of the findings recorded
above, the impugned order dated 12.1.2007
and order dated 28.1.2003 are set aside.
The amount deposited by the petitioner as a
mandatory deposit for preferring an appeal
and in terms of the order dated 16.5.2007
shall be refunded to the petitioner along
with interest thereupon at the rate 8% per
annum within a period of three months
from the date of filing an application by the
petitioner before the respondent no. 2.

35. The writ petition is allowed in
terms of the said order.
----------
(2020)09ILR A552
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.02.2020

BEFORE

THE HON'BLE BALA KRISHNA NARAYANA, J.
THE HON'BLE SHAMIM AHMED, J.

WRIT - C No. 23928 of 2019

M/s S.S. Brothers & Company ...Petitioner
Versus
State of U.P. & Ors. ...Respondents
9 All. M/s S.S. Brothers & Companty Vs. State of U.P. & Ors.
553
Counsel for the Petitioner:
Sri Rakesh Nath Tripathi, Sri Ashok Nath
Tripathi, Sri Gopal Krishna

Counsel for the Respondents:
C.S.C.

A.
Civil
Law
-
U.P.
Mines
Minerals
(Concession) Rules, 1963 - Rules 58 - nonpayment of royalty / lease amount -
consequences - Rule 58 r/w Clause 19(3)
of G.O. Dt 14.08.2017 - forfeiture of
security
money
-
No
provision
for
forfeiture of security money deposited by
the lessee - only provides realization of
amount as arrears of the land revenue
along with the interest prescribed but
does - Held - Security amount deposited
by the lessee liable to be adjusted towards
the dues/liability fixed (Para 20)

B. Civil Law - U.P. Mines Minerals (Concession)
Rules, 1963 - Rules 58, 60 - non-payment of
royalty rent & contravention of conditions of
lease- Blacklisting - Show Cause Notice -
Essential Contents of show cause notice -
statement of imputations, alleged breaches &
defaults committed by notice - nature of
action proposed to be taken against him -
purpose to make noticee understand case set
up against him which he has to meet &
provide adequate and meaningful opportunity
to show cause against the same (Para 21)

Allowed. (E-5)

List of Cases cited: -

1. Gorkha Security Services Vs Government
(NCT of Delhi) & ors. (2014) 9 SCC 105

2. Erusian Equipment & Chemicals Ltd. Vs St. of
W.B. (1975) 1 SCC 70

3. Raghunath Thakur Vs St. of Bihar (1989) 1
SCC 229

4. M/s Mahabir Auto Stores & ors. Vs Indian Oil
Corporation Ltd (1990) 3 SCC 752

(Delivered by Hon'ble Shamim Ahmed, J)

1. The present writ petition has been
filed by the petitioner with the following
prayer:-

(I) Issue any writ, direction or
order in the nature of certiorari quashing
the impugned orders dated 21.06.2019
passed
by
respondent
no.2/District
Magistrate, Prayagraj (Annexure No.18).

(II) Issue any writ, direction or
order in the nature of writ of mandamus
commanding the respondents to refund the
lease money and stamp duty of petitioner.

(III) Issue any writ, direction or
order in the nature of writ of mandamus
commanding
21.06.2019
passed
by
respondent
no.2/District
Magistrate,
Prayagraj (Annexure No.18).

(IV) Command the respondent nos.2
& 3 decide representations of the petitioner
dated 26.05.2018, 21.06.2018, 16.10.2018,
18.12.2018,
12.02.2019
and
15.05.2019
(Annexure nos.8, 9, 10, 11 and 13).

(V) Issue any writ, direction or
order in the nature of writ of mandamus
commanding the respondents to grant three
months time.

(VI) Issue any writ, direction or
order in the nature of writ of mandamus
commanding the respondents.

(VII)
Pass
any
other
writ,
direction or order, as this Hon'ble Court
may deem fit and proper under the
circumstances of this case.

(VIII)
Award
cost
to
the
petitioners from the respondents.

2. Heard Sri Ashok Nath Tripathi,
learned counsel for the petitioner and Smt.
Archana Singh, learned Additional Chief
Standing Counsel representing all the
respondents.

3. Facts in brief as contained in the
writ petition are that
as per New
554 INDIAN LAW REPORTS ALLAHABAD SERIES
Government Policy-2017, a Government
order for settlement of lease under ChapterIV by e-tender/e-auction dated 14.8.2017
was issued and the Uttar Pradesh Miner
Minerals (Concession) (43 amendment)
Rules, 2017 (hereinafter referred to as "the
Amended Rules, 2017") framed thereunder.
Mining leases were to be granted as per the
procedure prescribed under the statutory
Rules and the Government Order dated
14.8.2017. In pursuance of the same, an
advertisement notice dated 01.12.2017 was
issued
by
the
District
Magistrate,
Prayagraj-respondent no.2 for settlement of
mining leases of sand and morrum under
the Amended Rules, 2017 in the District
Prayagraj for several mining blocks by etendering.

4. The petitioner after completing
necessary
formalities,
submitted
an
application for the grant of mining lease for
mining area in village- Kachra and
Mishrpur Nagarvar, in Tehsil Bara, District
Prayagraj, river Yamuna, measuring eight
hectares for a quantity of 1,60,000/- cubic
meters per year. In this regard, the
petitioner has given a bid of Rs.295/- per
cubic meter against the reserve price of
Rs.65/- which being the highest. The same
was
duly
accepted
by
the
District
Magistrate, Prayagraj/resondent no.2 vide
order dated 02.01.2018 and thereafter, a
letter of intent dated 03.1.2018 was issued
to the petitioner. After issuance of aforesaid
letter of intent, he had deposited requisite
amount namely security money and first
installment of the annual lease amount.
Subsequently, a lease deed was executed
and registered in favour of the petitioner on
08.05.2018 for a period of five years, i.e.,
from 08.05.2018 to 07.05.2023.

5. It is contended in paragraph 19 and
46
of
the
Writ
Petition
that
after
demarcation, when the petitioner entered in
his mining area, he found most of the area
submerged and only a small portion of the
area was dry in which small quantity of
sand was available for mining. In this
regard, he also approached the Senior
Mining
officer
Prayagraj/District
Magistrate, Prayagraj and who informed
the petitioner that after rainy season, the
situation will improve and the entire
mining area will be available for mining.

6. In this regard, the petitioner also
moved several representations before the
Senior Mine Officer, Prayagraj to get the
spot inspection of the area allocated to the
petitioner to verify that area of the
petitioner is submerged and to cancel the
lease deed and refund the amount deposited
by him. It is further contended that after
expiry of the rainy season, the petitioner
went to his mining area to start mining
operation but he found that the situation is
the same and only about 25% of the mining
area is available for mining. In this
background, the petitioner again submitted
a representation dated 16.10.2018 and
18.12.2018 addressed to the District
Magistrate/Senior Mines Officer, Prayagraj
with a request to either issue another letter
of intent for mining in respect of some
other dry area suitable for mining having
same quantity of sand and area in lieu of
aforesaid mining lease area in favour of the
petitioner or cancel the tender (lease of the
petitioner) and refund the entire money
deposited by the petitioner copy of the
representation
dated
16.10.2018
and
18.12.2018 is annexed as Annexure-10 &
11 to the writ petition.

7. It is further contended in paragraph
26 of the writ petition that surprisingly,
instead of taking any action on the
representation of the petitioner and making
9 All. M/s S.S. Brothers & Companty Vs. State of U.P. & Ors.
555
the entire area available to the petitioner for
carrying out mining operation, the Senior
Mines Officer, Prayagraj (respondent no.4)
issued demand notice on 26.04.2019
demanding installments of lease amount
without addressing the issue of the
petitioner regarding non-availability of the
complete mining area allotted to the
petitioner.

8. It is further contended that
respondent
no.2/District
Magistrate,
Prayagraj without inspecting the spot and
without considering the representation of the
petitioner and giving any show-cause notice
or opportunity of personal hearing, passed the
impugned order dated 21.06.2019 cancelling
the lease of the petitioner forfeiting the
security
amount
and
blacklisting
the
petitioner for a period of two years in
exercise of power conferred under Rules 58
and 60 of the U.P. Mines Minerals
(Concession)
Rules,
1963
(hereinafter
referred to as the Rules, 1963) on the ground
of non deposition of the installment of the
lease amount treating the same as the breach
of the lease conditions and rules.

9. It is contended by Sri Ashok Nath
Tripathi, learned learned counsel for the
petitioner that the order impugned passed
by the respondent No.3 is arbitrary, unjust,
illegal and is against the Rule 58 of U.P.
Minor Mineral (Concession) Rules, 1963
(hereinafter referred to as the Rules 1963)
and also against the provisions of Clause
19(3) of the Government Order dated
14.08.2017 which does not permit the
forfeiture of the security money deposited
by the lessee/petitioner and only provides
for the realization of the said amount as
arrears of land revenue along with the
interest prescribed and the same is liable to
be set aside by this Hon'ble Court due to
the following reason:-

(i) No opportunity of personal
hearing was given to the petitioner before
passing the order impugned by which not
only the lease of the petitioner was
cancelled but also security amount was
forfeited.

(ii) The show cause notice was
issued to the petitioner by Senior Mines
Officer but the order impugned has been
passed by the District Magistrate.

(iii) Nothing has been stated in the
show cause notice regarding blacklisting of the
petitioner but by the impugned order, the
petitioner was also blacklisted for two years
without giving any opportunity of hearing as
such the order of blacklisting the petitioner is in
complete violation of principles of natural
justice.

(iv) The impugned order has been
passed in violation of the Rule 58 of the
Rules, 1963 wherein it has been provided that
if the lessee will not pay the royalty or dead
rent then after giving the notice, the lease
shall be determined and the said amount shall
be realized as arrears of land revenue along
with interest prescribed under sub-rule (2), as
such while passing the order under Rule 58 of
the Rules, 1963 for cancelling the lease deed,
security amount deposited by lessee could not
be forfeited. The impugned order is also in
violation of the Clause 19(3) of the
Government Order dated 14.08.2017 which
does not provide forfeiture of the security
amount on the ground of non deposition of
the lease amount.

10. Learned counsel for the petitioner
further contended that identical issue was
already decided by this Court in Writ-C
No.24217 of 2019 (M/S Kamal Kumar
Shukla Vs. State of U.P. and 2 Others),
vide judgment and order dated 25.07.2019.

11. On the other hand, it is contended
by Smt.. Archana Singh, learned Additional
556 INDIAN LAW REPORTS ALLAHABAD SERIES
Chief Standing Counsel, that since terms
and conditions contained in the lease deed
were violated by the petitioner, therefore,
the action was rightly taken by the
respondent no.2. It is further contended by
her that the order impugned in the present
writ petition is absolutely perfect and valid
order does not warrant any interference
specially
under
Article
226
of
the
Constitution of India.

12. Heard learned counsel for the
parties and perused the record. With the
consent of learned counsel for the parties,
this writ petition is disposed of finally at
the admission stage itself.

13. The petitioner has assailed the
order
dated
21.06.2019
passed
by
respondent
no.2/District
Magistrate,
Prayagraj by which reply submitted by the
petitioner was rejected and the lease deed
was cancelled and an order was passed
directing the petitioner to deposit a sum of
Rs.4,83,80,000/- towards installments of
lease amount for first and second year apart
from Rs.12,03,600/- towards T.C.S. and
Rs.60,18,000/- as contribution to District
Mineral Foundation Trust. It was further
ordered that otherwise the same will be
realized as per the provisions of the Land
Revenue Act. Apart from the same, the
petitioner was also blacklisted for a period
of two years.

14. From perusal of the record it is
clear that before passing the impugned
order no opportunity of hearing was given
to the petitioner. It is also clear from
perusal of the record that notices were
issued by the Senior Mines Officer but the
impugned order was passed by the
respondent no.2, i.e. District Magistrate
Prayagraj. Apart from the same, it is also
clear that although nothing is contained in
the show cause notice regarding factum of
blacklisting of the petitioner or forfeiting
the security amount but while passing the
order
impugned,
the
petitioner
was
blacklisted for a period of two years and
the security amount deposited by him was
also forfeited.

15. The order impugned is in three
parts:-

(i) recovery against the petitioner
and cancelling the lease deed.

(ii) blacklisting of the petitioner
for two years.

(iii)
Forfeiting
the
security
amount deposited by the petitioner.

16. Insofar as the first part is
concerned, it is clear from the record that
the notices were issued to the petitioner by
the Senior Mines Officer, Prayagraj but the
order was passed by District Magistrate
Prayagraj, in this view of the matter, we are
of the opinion that the order passed by the
District Magistrate Prayagraj is in complete
in violation of principles of natural justice.

17. Insofar as the blacklisting of the
petitioner and regarding forfeiting the
security amount deposited by the petitioner
is concerned, from perusal of the impugned
order, we find that the respondents have
proceeded on the basis of a show cause
notice. Nothing has been stated in the show
cause notice regarding blacklisting of the
petitioner nor anything has been stated
regarding forfeiting the security money
deposited
by
the petitioner.
Learned
Standing Counsel has not been able to
refute this fact on record. In our opinion,
the issue which was not raised even in the
show cause notice, therefore, could not be
made the basis for blacklisting of the
petitioner and forfeiting the security money
deposited by the petitioner.
9 All. M/s S.S. Brothers & Companty Vs. State of U.P. & Ors.
557

18. In our view, as per Rule 58 of the
Rules, 1963 and Clause 19(3) of the
Government Order dated 14.08.2017 which
clearly says that if the lessee will not pay
the royalty or dead rent then after giving
the notice the lease shall be determined and
the said amount shall be realized as arrears
of land revenue along with interest
prescribed under sub-rule (2), as such while
passing the order under Rule 58 of the
Rules 1963 for cancellation of lease deed,
security
amount
deposited
by
the
lessee/petitioner could not be forfeited. In
this regard, Rule 58 of the Rules 1963 is
being quoted below :-

58.
Consequences
of
non
payment of royalty rent or other dues;

(1) The State Government or any
officer authorized by it in this behalf may
determine the mining lease after serving a
notice on the lessee to pay within thirty
days of the receipt of the notice any amount
due or dead rent under the lease including
the royalty due to the State Government if it
was not paid within fifteen days next after
the date fixed for such payment. This right
shall be in addition to and without
prejudice to the right of the State
Government to realize such dues form the
lessee as arrears of land revenue.

(2) Without prejudice to the
provisions of these rules, simple interest at
the rate of 18 per cent per annum may be
charged on any rent, royalty, demarcation
fee and any other dues under these rules,
due to the State Government after the
expiry of the period of notice under subrule (1).

19. Similarly as per the Government
Order dated 14.08.2017 the consequence of
non deposit of the lease amount/royalty in
time by the lessee has been clearly
provided in Clause 19(3) of which clearly
says that if the lease amount will be not
deposited by the lessee within time then
same shall be recovered along with the
interest as provided under the Rules 1963
and the forfeiture of the security money has
not been permitted in the said Government
Order on the ground of non deposition the
lease amount.

20. It is further observed that in the
impugned order, the District Magistrate,
Prayagraj has treated the non deposit of the
royalty / lease amount in time as violation
of the condition of the lease deed and rule
by the petitioner which is absolutely
baseless as consequences of the non
deposition of the lease amount/royalty in
time has been provided under Rule 58 of
the Rules 1963 and Clause 19(3) of the
Government Order dated 14.08.2017 which
does not permit the forfeiture of the
security
money
deposited
by
the
lessee/petitioner and only provided the
realization of the said amount as arrears
of the land revenue along with the
interest
prescribed.
Security
amount
deposited by the petitioner was liable to be
adjusted towards the dues/liability fixed
upon the petitioner after the cancellation of
the lease deed vide order dated 21.06.2019.

21. The central issue, however,
pertains to the requirement of stating the
action which is proposed to be taken. The
fundamental purpose behind the serving of
show cause notice is to make the noticee
understand the precise case set up against
him which he has to meet. This would
require the
statement of
imputations
detailing out the alleged breaches and
defaults he has committed, so that he gets
an opportunity to rebut the same. Another
requirement, according to us, is the nature
of action which is proposed to be taken for
such a breach. That should also be stated so
558 INDIAN LAW REPORTS ALLAHABAD SERIES
that the notice is able to point out that
proposed action is not warranted in the
given case, even if the defaults/ breaches
complained
of
are
not
satisfactorily
explained. When it comes to black listing,
this requirement becomes all the more
imperative, having regard to the fact that it
is harshest possible action. In the case of
Gorkha Security Services Vs. Government
(NCT of Delhi) and others (2014) 9 SCC
105, the Supreme Court was pleased to
hold that it is incumbent on the part of the
department to state in show cause notice
that the competent authority intended to
impose such a penalty of blacklisting, so as
to
provide
adequate
and
meaningful
opportunity to show cause against the
same.
Relevant
paragraph
namely
paragraph 27 of the aforesaid judgement is
quoted below:-

"27. We are, therefore, of the
opinion that it was incumbent on the part of
the Department to state in the show cause
notice
that
the
competent
authority
intended to impose such a penalty of
blacklisting, so as to provide adequate and
meaningful opportunity to the appellant to
show cause against the same. However, we
may also add that even if it is not
mentioned specifically but from the reading
of the show cause notice, it can be clearly
inferred that such an action was proposed,
that would fulfill this requirement. In the
present case, however, reading of the show
cause notice does not suggest that notice
could find out that such an action could
also be taken. We say so for the reasons
that are recorded hereinafter."

22. In the case of Erusian Equipment
& Chemicals Ltd. Vs. State of West
Bengal (1975) 1 SCC 70, it was held by the
Supreme Court that blacklisting has the
affect of preventing a person from the
privilege and advantage of name into
relationship with the Government for
purpose of aim. It was held by the Supreme
Court in the aforesaid case that the
fundamentals of fair play require that a
person concerned should be given an
opportunity
to
represent
his
case.
Paragraphs 12 and 20 of the said judgment
is quoted below :-

"12. Under Article 298 of the
Constitution the executive power of the
Union and the State shall extend to the
carrying on of any trade and to the
acquisition,
holding
and
disposal
of
property and the making of contracts for
any purpose. The State can carry on
executive function by making a law or
without making a law. The exercise of such
powers and functions in trade by the State
is subject to Part III of the Constitution.
Article 14 speaks of equality before the law
and equal protection of the laws. Equality
of opportunity should apply to matters of
public contracts. The State has the right to
trade. The State has there the duty to
observe equality. An ordinary individual
can choose not to deal with any person.
The Government cannot choose to exclude
persons by discrimination. The order of
blacklisting has the effect of depriving a
person of equality of opportunity in the
matter of public contract. A person who is
on the approved list is unable to enter into
advantageous
relations
with
the
Government because of the order of
blacklisting. A person who has been
dealing with the Government in the matter
of sale and purchase of materials has a
legitimate interest or expectation. When the
State acts to the prejudice of a person it has
to be supported by legality.

20. Blacklisting has the effect of
preventing a person from the privilege and
advantage
of
entering
into
lawful
9 All. M/s S.S. Brothers & Companty Vs. State of U.P. & Ors.
559
relationship with the Government for
purposes of gains. The fact that a disability
is created by the order of blacklisting
indicates that the relevant authority is to
have
an
objective
satisfaction.
Fundamentals of fair play require that the
person concerned should be given an
opportunity to represent his case before he
is put on the blacklist."

23. Again in the case of Raghunath
Thakur Vs. State of Bihar [(1989) 1 SCC
229] the aforesaid principles was reiterated
in the following manner: (SCC p. 230, para
4).

"4. ........ But it is an implied
principle of the rule of law that any order
having civil consequence should be passed
only after following the principles of
natural justice. It has to be realised that
blacklisting any person in respect of
business ventures has civil consequence for
the future business of the person concerned
in any event. Even if the rules do not
express so, it is an elementary principle of
natural justice that parties affected by any
order should have right of being heard and
making representations against the order.
In that view of the matter, the last portion
of
the
order
insofar
as
it
directs
blacklisting of the appellant in respect of
future contracts, cannot be sustained in
law.........."

20. Thus, there is no dispute
about the requirement of serving showcause notice. We may also hasten to add
that once the show-cause notice is given
and opportunity to reply to the show-cause
notice is afforded, it is not even necessary
to give an oral hearing. The High Court
has rightly repudiated the appellant's
attempt in finding foul with the impugned
order on this ground. Such a contention
was specifically repelled in Patel Engg.
[Patel Engg. Ltd. v. Union of India, (2012)
11 SCC 257 : (2013) 1 SCC (Civ) 445]."

24. In the case of M/s Mahabir Auto
Stores & Ors. Vs. Indian Oil Corporation
Ltd. (1990) 3 SCC 752 it was held by the
Supreme Court that arbitrariness and
discrimination in every matter is subject to
judicial review. Paragraph 11 of the
aforesaid judgement is quoted below :-

"It is well settled that every
action of the State or an instrumentality
of the State in exercise of its executive
power, must be informed by reason. In
appropriate cases, actions uninformed
by
reason
may
be
questioned
as
arbitrary in proceedings under Article
226 or Article 32 of the Constitution.
Reliance in this connection may be
placed on the observations of this Court
in M/s Radha Krishna Agarwal & Ors. v.
State of Bihar & Ors., [1977] 3 SCC
457.1t appears to us, at the outset, that
in the facts and circumstances of the
case, the respondent-company IOC is an
organ of the State or an instrumentality
of the State as contemplated under
Article 12 of the Constitution. The State
acts in its executive power under Article
298 of the Constitution in entering or
not entering in contracts with individual
par- ties. Article 14 of the Constitution
would be applicable to those exercises of
power. Therefore, the action of State
organ under Article 14 can be checked.
M/s Radha Krishna Agarwal v. State of
Bihar, (supra) at p. 462, but Article 14
of the Constitution cannot and has not
been construed as a charter for judicial
review of State action after the contract
has been entered into, to call upon the
State to account for its actions in its
manifold activities by stating reasons for
such actions. In a situation of this nature
560 INDIAN LAW REPORTS ALLAHABAD SERIES
certain activities of the respondent
company which constituted State under
Article 12 of the Constitution may be in
certain circumstances subject to Article
14 of the Constitution in entering or not
entering into contracts and must be
reasonable and taken only upon lawful
and relevant consideration, it depends
upon facts and circumstances of a
particular transaction whether heating
is necessary and reasons have to be
stated. In case any right conferred on
the citizens which is sought to be
interfered, such action is subject to
Article 14 of the Constitution, and must
be reasonable and can be taken only
upon lawful and relevant grounds of
public
interest.
Where
there
is
arbitrariness in State action of this type
of
entering
or
not
entering
into
contracts, Article 14 springs up and
judicial review strikes such an action
down. Every action of the(1975) 1 SCC
70. State executive authority must be
subject to rule of law and must be
informed by reason. So, whatever be the
activity of the public authority, in such
monopoly or semi-monopoly dealings, it
should meet the test of Article 14 of the
Constitution. If a Governmental action
even in the matters of entering or not
entering into contracts, fails to satisfy
the test of reasonableness, the same
would be unrea-
sonable.
In this
connection reference may be made to
E.P. Royappa v. State of Tamil Nadu &
Anr., [1974] 4 SCC 3; Maneka Gandhi
v. Union of India & Anr., [1976] 1 SCC
248; Ajay Hasia & Ors. v. Khalid Mujib
Sehravardi & Ors., [1981] 1 SCC 722;
R.D. Shetry v. International Airport
Authority of India & Ors., [1979] 3
SCC 1 and also Dwarkadas Marlaria
and sons v. Board of Trustees of the
Port of Bombay, [1989] 3 SCC 293. It
appears to us that rule of reason and
rule
against
arbitrariness
and
discrimination, rules of fair play and
natural justice are part of the rule of law
applicable in situation or action by State
instrumentality in dealing with citizens
in a situation like the present one. Even
though the rights of the citizens are in
the nature of contractual rights, the
manner, the method and motive of a
decision of entering or not entering into
a contract, are subject to judicial review
on the touchstone of relevance and
reasonableness,
fair
play,
natural
justice, equality and non-discrimination
in the type of the transactions and
nature of the dealing as in the present
case."

25. In view of the law laid down by
the Hon'ble Apex Court and the case
narrated by the learned counsel for the
petitioner, we consider it fit to interfere in
the impugned order on the ground that
there is a complete violation to follow due
process of law and the impugned order was
passed in violation of the principles of
natural justice, therefore, the impugned
order
dated
21.06.2019
passed
by
respondent
no.2-District
Magistrate,
Prayagraj is not sustainable in the eyes of
law and is liable to be quashed.

26. We, accordingly, quash the impugned
order dated 21.06.2019 passed by respondent
no.2-District Magistrate, Prayagraj and allow the
present writ petition. We further clarify that in case
the respondents do choose to initiate fresh
proceedings against the petitioner, we leave it
open to them to do so subject to the observation
that the proceedings if initiated shall be undertaken
in accordance with law and the observations
appearing herein above after affording opportunity
of personal hearing to the petitioner.
----------
9 All. M/s Chakor Cold Storage, District Firozabad & Ors. Vs. District Consumer Dipsute Redressal
Forum, District-Firozabad & Ors.
561
(2020)09ILR A561
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 16.09.2019

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE RAJEEV MISRA, J.

WRIT - C No. 27693 of 2019

M/s
Chakor
Cold
Storage,District
Firozabad & Ors. ...Petitioners
Versus
District Consumer Dispute Redressal Forum,
District Firozabad & Ors. ...Respondents

Counsel for the Petitioners:
Sri Adarsh Kumar

Counsel for the Respondents:
C.S.C.

A. Civil Law - Uttar Pradesh Regulation
Cold Storage Act,1976 - Section 24 &
Consumer Protection Act,1986 - Section
15-challenge to -jurisdiction of District
consumer Forum-U.P. Act 1976 will not
override
the
provisions
of
Central
Act,1986-both the remedies are available
to Farmer-right to claim damages and
compensation has been conferred upon
aggrieved person under both statutes-it is
open to person concerned to elect the
forum where he wants to have his right
adjudicated. (Para 1 to 15)

The petition is dismissed. (E-6)
List of Cases cited: -

1. GM Telecom Vs M. Krishnan & anr.,(2009) 8
SCC 481

2. Bihar School Examination Board Vs Suresh
Prasad Sinha, (2009) 8 SCC 483

3. M/s Behari Colds (P) Ltd. Vs St. Consumer
Disputes Redressal Commission & ors., W.P. No.
557 (MS) of 2009
4.
Chairman,
Thiruvalluvar
Transport
Corporation Vs Consumer Protection Council,
AIR (1995) SC 1384

(Delivered by Hon'ble Sudhir Agarwal, J.
& Hon'ble Rajeev Misra, J.)

1. This writ petition has been filed
assailing an order dated 6th July 2019
passed by District Consumer Forum,
Firozabad
(hereinafter
referred
to
as
"DCF") holding that it has jurisdiction to
entertain claim of a "Farmer" whose crop
(potatoes in the present case) kept for
storage in the petitioners' cold storage had
damaged and he is claiming compensation.

2. Though order passed by DCF is
appellable under Section 15 of Consumer
Protection Act, 1986 (hereinafter referred
to as "Central Act, 1986") before "State
Commission" but learned counsel for
petitioners submits that he has challenged
the very jurisdiction, thus alternative
remedy would not bar this writ petition.

3. Since a pure question of law has
been raised, with the consent of parties, we
proceed to hear and decide this matter
without relegating petitioner to avail
statutory alternative remedy and also
considering the fact that learned Standing
Counsel has not opted and requested for
time to file any counter affidavit but has
requested this Court to decide this matter at
this very stage.

4. Contention of the petitioners is that
they are running a cold storage, namely,
M/s Chakor Cold Storage situate at Saipuri
Road Aroon, Police Station, Sirsa Ganj,
District Firozabad under a licence obtained
under Uttar Pradesh Regulation Cold
Storages Act, 1976 (hereinafter referred to
as 'U.P. Act, 1976') and if there is any