# Pradesh v. McDowell and Company

- **Citation:** (2010) 1 ILRA 215
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2010-02-23
- **Case number:** Civil Misc. Writ Petition No. 61209 of 2007
- **Bench:** B.K. Narayana
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/pradesh-v-mcdowell-and-company-41556
- **Pages:** 4

## Headnote

Constitution
of
India-Art.
226cancellation of fair price shop licence-on
216 INDIAN LAW REPORTS ALLAHABAD SERIES [2010
basis of complaint of one BPL card
holder-statement recorded behind the
back of petitioner-neither the complaint
of such statement given-nor opportunity
to cross-examination given-cancellation
order
entail
civil
consequences-not
sustainable.

Held: Para 10

In view of the settled legal position, I
have no hesitation in holding that the
cancellation of petitioner's fair price
shop agreement by respondent No. 3 in
contravention of principles of natural
justice cannot be sustained. Since the
appellate authority failed to rectify the
error
committed
by
the
Licensing
authority, respondent No.3 the order of
the appellate authority is also liable to
be set aside along with the order of the
licensing authority.
Case law discussed:
(1998)7 SCC 66, (1993) 3 SCC 259.

## Text

1 All] Abu Bakar V. State of U.P. and others
215
In (1996) 3 SCC 709 State of Andhra
Pradesh Vs. McDowell and Company
and others, the apex Court again quoted
with the approval the opinion of the Field, J.
as noted above. Following was laid down in
paragraph 40:

"For the sake of completeness, and
without prejudice to the above holding, we
may examine the alternate line of thought.
In Cooverjee Bharucha, (AIR 1954 SC 220)
a Constitution Bench of this Court
expressed its whole-hearted concurrence
with the opinion of Field, J. in Crowley v.
Christensen, (1889-90) 34 L. Ed. 620, to the
effect that: "There is no inherent right in a
citizen to thus sell intoxicating liquors by
retail; it is not a privilege of a citizen of the
State or of a citizen of the United States. As
it is a business attended with danger to the
community, it may, as already said, be
entirely prohibited, or be permitted under
such conditions as will limit to the utmost its
evils. The manner and extent of regulation
rest in the discretion of the governing
authority." While laying down the said
proposition. Mahajan, C.J., speaking for the
Court, referred generally to the position
obtaining under Article 19(1) (g) and
Clause (6) of the Article. The learned Chief
Justice said that the reasonableness of the
restriction has to be determined having
regard to the nature of the business and the
conditions prevailing in that trade."

36. From the foregoing discussions, it
is clear that amendments as made by the
State in Rule 5(4) by 2008 amendments, is
manifestly unreasonable and arbitrary. It
clearly defeats the very purpose and object
of the policy of the Statute and the purpose
for which the State was clothed with the
rule making power to effectuate the policy.
It is not the case of the respondents that they
have withdrawn the policy or there is no
more policy of the Statute that excise shop
shall not be located near the place of public
resort, school, hospital, place of worship or
factory, or to the entrance to a Bazar or a
residential colony. The amendment of the
rule is clearly an eyewash and is contrary to
the very object and purpose for which rule
making authority was empowered to frame
the rules. Therefore, we are of the clear
view that amendments 2008 under rule 5(4)
deserves to be struck down as being
manifestly unreasonable and arbitrary.

37. In the result the writ petition is
allowed. The Rule 5(4) as amended by
notification dated 20.3.2008 is held to be
violative of Article 14 of the Constitution of
India and is consequently struck down. A
mandamus is also issued to the respondent
no. 1 to remove/shift the beer shop in
question situated near Bishop Johnson
School.

38. However, the parties shall bear
their own costs.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.02.2010

BEFORE
THE HON'BLE B.K. NARAYANA, J.

Civil Misc. Writ Petition No. 61209 of 2007

Abu Bakar

...Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioner:
Sri Anil Kumar Singh

Counsel for the Respondents:
C.S.C.

Constitution
of
India-Art.
226cancellation of fair price shop licence-on
216 INDIAN LAW REPORTS ALLAHABAD SERIES [2010
basis of complaint of one BPL card
holder-statement recorded behind the
back of petitioner-neither the complaint
of such statement given-nor opportunity
to cross-examination given-cancellation
order
entail
civil
consequences-not
sustainable.

Held: Para 10

In view of the settled legal position, I
have no hesitation in holding that the
cancellation of petitioner's fair price
shop agreement by respondent No. 3 in
contravention of principles of natural
justice cannot be sustained. Since the
appellate authority failed to rectify the
error
committed
by
the
Licensing
authority, respondent No.3 the order of
the appellate authority is also liable to
be set aside along with the order of the
licensing authority.
Case law discussed:
(1998)7 SCC 66, (1993) 3 SCC 259.

(Delivered by Hon'ble B.K. Narayana, J.)

1. Heard learned counsel for the
petitioner and learned Standing Counsel
for respondents.

2. The petitioner's fare price shop
licence was suspended by respondent No.
3 by order dated 23.12.2005 on the
allegations
that
the
petitioner
had
contravened the provisions of U.P.
Scheduled
Commodities
Distribution
Order, 2004 by charging excess amount
for the essential commodities from the
BPL card holders and Antodaya card
holders. By the same order, the petitioner
was also required to show cause as to why
his agreement he not cancelled. The
petitioner filed his reply to the show cause
notice denying the allegations made
against him and along with his reply, the
petitioner also filed documents before
respondent No. 3 for showing that the
grounds on which the petitioner's fair
price shop agreement was sought to be
cancelled
were
unfounded.
After
receiving petitioner's reply, respondent
No.3 recorded the statements of some of
the BPL and Antodaya card holders
behind the back of the petitioner and
without affording him any opportunity to
cross examine the said witness and
without furnishing him with the copies of
their statements by his order dated
7.2.2006, cancelled the petitioner's fair
price shop holding that the allegations
made against the petitioner were proved.
Against the order of respondent No.3
petitioner filed an appeal before the
respondent No.2 which was registered as
Appeal No. 153-A of 2004 and dismissed
by him by his order dated 23.12.2005.
Learned
counsel
for
the
petitioner
submitted that the cancellation of the
petitioner's fair price shop agreement by
the respondent No.3 on the basis of the
statement of the witness recorded behind
the back of the petitioner and without the
copies of the statements of the witnesses
being furnished to him and also without
giving him any opportunity to cross
examine the witness who had deposed
against him was not sustainable, action of
the
respondents
No.3
being
in
contravention of principles of natural
justice. He further submitted that the
order of respondent No. 3 was challenged
by the petitioner before the respondent
No.2 specifically on the aforesaid ground.
However, the respondent No.2 dismissed
the petitioner's appeal without considering
and recording any finding on the aforesaid
issue raised before him.

3. In support of his submissions
learned counsel for the petitioner placed
reliance upon decision of this Court in
Raj Pal Singh Vs State of U.P. and
1 All] Abu Bakar V. State of U.P. and others
217
others reported in 2008, 26, LCD page
931, National Building Construction
Corporation
Vs
S.
Raghunathan
(1998)7 SCC 66, and D.K. Yadav Vs
JMA Industries (1993) 3 SCC 259.

4. Learned counsel for the petitioner
next submitted that the failure of the
appellate authority to redeem the illegality
committed by the respondent No.3,
licensing authority has rendered the order
of the respondent No.2 is also liable to be
set aside.

5. Learned Standing Counsel
submitted that the impugned orders do not
suffer from any illegality or infirmity
warranting any interference by this Court.

6. I have considered the submissions
made by learned counsel for the parties
and perused the record of the writ petition
as well as the impugned orders. A close
reading of the order dated 23.12.2005
passed by respondent No.3 shows that the
petitioner's fair price shop agreement was
cancelled on the ground that he was
charging excess amount from BPL and
Antodaya card holders for the essential
commodities meant for sale through
public distribution system at a fixed price.
The order further shows that respondent
No. 3 had recorded the statements of
several BPL and Antodaya card holders
and while holding that the allegations
made against the petitioner were proved
he had relied upon the statements of the
said witnesses. There is no material on
record indicating either the petitioner was
given any opportunity to cross examine
the witness who had deposed against him
or the copies of the statements of
witnesses so recorded were furnished to
him. Thus what follows from the above
discussion is that the petitioner has been
penalised on the basis of the statements of
Antodaya and BPL. card holders recorded
behind his back although neither the
copies of the statements of the aforesaid
witnesses were furnished to the petitioner
nor he was given any opportunity to cross
examine the witness so examined.

7. The Hon'ble Supreme Court in
iota of cases has reiterated that a person
who is put to any harm, he shall first be
afforded adequate opportunity of showing
cause. In D.K. Yadav (Supra) the
Supreme Court while having emphasis on
affording opportunity by the authority
which has the power to take punitive or
damaging action held that orders affecting
the civil rights or resulting consequences
would have to answer the requirement of
Article 14. The Hon'ble Apex Court
concluded as under:

"The
procedure
prescribed
for
depriving a person of livelihood would be
liable to be tested on the anvil of Article
14. The procedure prescribed by a statute
or statutory rule or rules of orders
affecting the civil rights or result in civil
consequences would have to answer the
requirement of Article 14. Article 14 has a
pervasive
procedural
potency
and
versatile quality equalitarian in its soul
and principles of natural justice are part of
Article 14 and the procedure prescribed
by law must be just, fair and reasonable
and not arbitrary, fanciful or oppressive."

8.

In
National
Building
Construction Corporation (Supra), it
was observed by the Apex Court that a
person is entitled to judicial review, if he
is able to show that the decision of the
public authority deprived him of some
benefit or advantage which in the past he
had been permitted to enjoy and which he
218 INDIAN LAW REPORTS ALLAHABAD SERIES [2010
legitimately expected to be permitted to
continue to enjoy either until he is
informed the reasons for withdrawal and
the opportunity to comment on such
reasons.

9. This Court in the case of Rajpal
Singh (Supra) again held that where fair
price shop licence of a dealer is cancelled
by placing reliance on the report of the
Supply Inspector and the copy of the
report is not furnished to the dealer, such
an order is in contravention of principles
of natural justice and is liable to be set
aside.

10. In view of the settled legal
position, I have no hesitation in holding
that the cancellation of petitioner's fair
price shop agreement by respondent No. 3
in contravention of principles of natural
justice cannot be sustained. Since the
appellate authority failed to rectify the
error
committed
by
the
Licensing
authority, respondent No.3 the order of
the appellate authority is also liable to be
set aside along with the order of the
licensing authority.

11. For the aforesaid reasons, the
writ petition is allowed. The order dated
23.12.2005 passed by respondent No.3
(Annexure 8 to the writ petition) as well
as the appellate order dated 18.1.2007
passed by respondent No.2, (Annexure 16
to the writ petition) are hereby quashed.
Respondent No.3 may be at liberty to pass
a fresh order in the matter after complying
with the principles of natural justice.
---------