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PETITIONER: SUKHVINDER PAL BIPAN KUMAR

       Vs.

RESPONDENT: STATE OF PUNJAB & ORS.

DATE OF JUDGMENT02/12/1981

BENCH: KOSHAL, A.D. BENCH: KOSHAL, A.D. SEN, A.P. (J) ERADI, V. BALAKRISHNA (J)

CITATION:  1982 AIR   65            1982 SCR  (2)  31  1982 SCC  (1)  31        1981 SCALE  (3)1795  CITATOR INFO :  D          1987 SC 294  (40)  RF         1991 SC1557  (21)

ACT:      Punjab Foodgrains  Dealers Licensing  and Price Control Order, 1978-Second  proviso to  clause 11-Scope of-Licensing Authority could  suspend a licence without giving reasonable opportunity of  stating a  licenscee’s case for a period not exceeding ninety days during pendency or in contemplation of proceedings for  cancellation of licence-Power, if excessive and unguided.

HEADNOTE:      Clause 11  of the  Punjab Foodgrains  Dealers Licensing Price Control  Order 1978  (as amended in 1980) empowers the licensing authority  to cancel  or suspend  a licence if the licensee contravenes  any of the terms and conditions of his licence or  any provision of the order. The first proviso to this clause enjoins on the authority to give to the licensee a  reasonable   opportunity  of   stating  his  case  before cancelling or  suspending his  licence. The  second  proviso provides that "the licensing authority may suspend a licence without giving  a reasonable  opportunity to the licensee of stating his  case for  a period not exceeding 90 days during the pendency  or in  contemplation of  the  proceedings  for cancellation of his licence."      The petitioners,  whose  licences  had  been  suspended under clause 11, contended that the second proviso to clause 11(1) of  the Order  conferred on  the  licensing  authority unguided, uncontrolled  and arbitrary  power  to  suspend  a licence  which   infringed  their  fundamental  right  under Article 19(1)(g)  of the  Constitution and that conferral of such unguided  power offended Article 14 of the Constitution and (2) that the suspension of the licence was mala fide and motivated because it was passed on extraneous considerations namely, to  prevent them from exporting wheat from the State to other  parts of  the country in the course of inter state trade and commerce.      Dismissing the petitions, ^      HELD: The  power conferred  on the  licensing authority

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under the second proviso to clause 11(1) of the Order is not of an  excessive nature  and beyond  what is required in the interest of general public.      The power of suspension conferred by the second proviso to clause  11 is  by way  of an  interim measure, pending an enquiry as to whether there was any breach which must result in cancellation of the licence. The power of suspension is a necessary concomitant of the power to grant a privilege or a licence. 32 So long  as the  dealers complied  with  the  conditions  of licence and  the provisions  of the  Order they  are free to carry on  their trade  or business  in foodgrains.  If  they commit a  breach they  must face the consequences that their licence may  be cancelled or suspended and also face further consequence  of  suspension  of  their  licence  during  the pendency or  in contemplation  of the  proceedings for  such cancellation if  the breach is of such a nature that it must result in  the cancellation  of  a  licence.  The  power  of suspension  conferred   under  the   second  proviso  is  an important step  taken by  the  Government  to  subserve  the object of  the legislation  and in  is public  interest. Nor could it  to be  said that  it does  not satisfy the test of reasonableness. [37 A-G]      Nor again  could it  be said  that there is warrant for the submission  that the  second proviso  confers  upon  the licensing authority  unguided, uncontrolled  and uncanalised power to suspend a licence. It does not suffer from the vice of arbitrariness and is, therefore, not violative of Article 14 of the Constitution. [37 G]      It cannot  be said  that  licensing  authority  has  an unrestrained power  of suspension  of  licence  because  the suspension can only be for specified reasons which are spelt out in  the second  proviso. The  power of suspension is not exercisable unless  there is  a breach  and the breach is of such a  nature that  it  must  entail  cancellation  of  the licence. The first proviso is in the nature of limitation on the power  contained in  clause 11(1) and the second proviso carves out  an exception  to the first proviso by dispensing with the  requirement of  affording a reasonable opportunity to the  licensee in case of suspension of his licence during the pendency  or in  contemplation of  the  proceedings  for cancellation. The power of suspension during the pendency of an enquiry cannot be exercised unless there is contravention of any  of the terms and conditions of the licence or any of the provisions  of the  Order. Secondly,  it provides  for a reasonable  safeguard  in  that  it  limits  the  period  of suspension which would necessarily depend upon the nature of the breach  which in no case can exceed 90 days. Thirdly, as a check  on improper  exercise of power of suspension by the licensing authority  an additional  safeguard is provided by way of appeal to the Director of Food Supplies. [38 E-H]      On the material on record there is nothing to show that the licensing  authority acted  with improper motives or was actuated with  bias  in  directing  the  suspension  of  the licence held  by the  petitioners. The  affidavit filed by a partner of  one of  the  petitioners  does  not  fulfil  the requirements of  Order XIX  rule 3  of  the  Code  of  Civil Procedure under  which it  is incumbent upon the deponent to disclose  the  nature  and  source  of  his  knowledge  with sufficient  particularity.   The  allegations  in  the  writ petition are  not sufficient  to constitute  an averment  of mala fide  so as  to vitiate  the orders  of suspension. The burden of  establishing mala  fides lies very heavily on the person who alleges it. [39 E F]

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JUDGMENT:      ORIGINAL/CIVIL APPELLATE  JURISDICTION: Writ  Petitions Nos. 7477-79 of 1981 33       (Under article 32 of the Constitution of India)                             AND   SPECIAL LEAVE PETITION (CIVIL) NOS. 9116 & 8735 of 1981      From the  judgment and  order dated  the 15th  October, 1981 and 22nd September, 1981 of the Punjab and Haryana High Court  in  Civil  Writ  Petitions  Nos.  4734/81  &  4370/81 respectively.      B. Datta for the Petitioners in Writ Petitions.      Ravindra Bana for the Petitioners in both SLPs.      O. P. Sharma and M. S. Dhillon for the Respondents.      The Judgment of the Court was delivered by      SEN,  J.   These  petitions   under  Art.   32  of  the Constitution  and  the  connected  special  leave  petitions mainly challenge  the constitutional  validity of the second proviso to  sub-cl.(1) of  cl 11  of the  Punjab  Foodgrains Dealers Licensing  and Price  Control Order, 1978 (for short ’the Order’),  as inserted  by the Punjab Foodgrains Dealers Licensing and  Price Control  (First Amendment) Order, 1980, with effect  from March  27, 1980,  as violative of Arts. 14 and 19 (1) (g) of the Constitution, as also the legality and propriety of  the action  of the  licensing  authorities  in suspending the licences held by the petitioners.      It appears  that the  licences held  by the petitioners who are foodgrains dealers in the State of Punjab, have been suspended by orders passed by the District Food and Supplies Controllers,  Faridkot   and  Bhatinda,  for  a  period  not exceeding ninety  days under  the second  proviso to sub-cl. (1) of  cl. 11  of the  Order. The  orders of  suspension of licence in  each of  these cases rest on the allegation that the licensee  has committed a breach of conditions Nos. 4, 8 and 10  of the licence. The petitioners have all been served with notices  under the  first proviso to sub-cl. (1) of cl. 11 of  the Order to show cause why their licences should not be cancelled.      Some of  the petitioners accept that in the recent past their licences  were suspended  under the  second proviso to sub-cl. (1) of cl. 11 of the Order for alleged breach of the licence conditions 34 for having sold large quantities of wheat to dealers outside the State  without disclosing the names of the purchasers in their stock  registers.  It,  therefore,  appears  that  the present  suspension   is  for   a  repeated   breach.  These petitioners have  filed the  petitions under  Art. 32 of the Constitution for  protection of  their fundamental rights to carry on  trade or business as foodgrains dealers within the meaning of Art. 19 (1) (g) read with Art. 301 thereof.      The  other   petitioners  allege   that  because   they approached the High Court by way of petitions under Art. 226 of the Constitution, complaining against restrictions placed on movement  of wheat  by rail,  their  licences  have  been suspended under  the second  proviso to sub-cl. (1) of cl.11 of the  order as  a punitive  measure.  Incidentally,  these petitioners had first moved the High Court under Art. 226 of the Constitution,  but the  High Court  dismissed their writ petitions summarily.  The connected  special leave petitions are directed against the order of the High Court.      The State  of Punjab in the counter-affidavits filed by

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the Deputy  Secretary to  the Government of Punjab, Food and Supplies Department,  Chandigarh, and  the District Food and Supplies Controller, Faridkot, controvert the allegations of the petitioners. It is stated that the petitioners have been served with  show-cause notices  under the  first proviso to sub-cl.(1) of  cl. 11 of the Order for cancellation of their licences, for breach of the licence conditions.      Learned counsel  for the petitioners seek to assail the constitutional validity of the second proviso to sub-cl. (1) of cl.11 of the Order on two grounds. First of these is that the second  proviso to  sub cl.  (1) of cl. 11 of the Order, inserted by  the Punjab  Foodgrains  Dealers  Licensing  and Price Control  (First Amendment)  Order, 1980,  confers upon the licensing authority unguided, uncontrolled and arbitrary power to  suspend a licence and it, therefore, infringes the fundamental right  to carry  on trade or business guaranteed under Art.  19 (1) (g) of the Constitution. It is also urged that  the   conferral  of  such  unguided,  uncanalised  and arbitrary power  on the  licensing  authority,  without  any guidelines   whatsoever,    makes   the   impugned   proviso unconstitutional as  offending Art.  14 of the Constitution. The  second   contention  is  that  the  suspension  of  the foodgrains dealers’  licences held  by the  petitioners  was mala fide and motivated, as in reality it was not on account of any  breach of  the licence conditions on their part, but on extraneous considera- 35 tions. It  is said that the real purpose was to prevent them from exporting  wheat from  the State  of Punjab  to various other States in the course of inter-State trade and commerce within the  meaning of  Art. 301 of the Constitution. We are unable to accept any of these contentions.      To make the point intelligible, it is necessary to deal with the  scheme of  the Order.  Cl. 3 of the Order provides that no  person shall  carry on  business as a dealer except under and  in accordance  with the terms and conditions of a licence granted  by  the  licensing  authority.  Cl.  7  (3) thereof provides  that where  an application  for grant of a licence is  not refused, the licensing authority shall grant a licence  in Form  B subject  to the  conditions  specified therein. Condition  No. 4  of the  licence enjoins  that the licensee shall  submit to  the licensing authority concerned fortnightly returns  in Form  C of  the stock  receipts  and deliveries. Condition  No. 8  of the  licence lays down that the licensee shall exhibit the price list of foodgrains held by him  for sale and it shall indicate separately the prices of different  varieties  of  foodgrains.  Condition  No.  10 thereof  interdicts   that  the   licensee  shall  give  all facilities  at   all  reasonable   times  to  the  licensing authority or  any officer  authorised by  it  or  the  State Government, for the inspection of his stocks and accounts at any shop, godown or other place used by him for the storage, sale or  purchase of  foodgrains etc.  Cl. 11  of the  Order provides for  cancellation or  suspension of  a licence. The power of  cancellation or  suspension of a licence which was subject to  the giving  of a  reasonable opportunity  to the lincensee  of   stating  his   case  was  not  adequate  and sufficient  to   effectively  check   and  control  flagrant breaches of the provisions of the order, during the pendency of the  proceedings for cancellation of a licence. The State Government, therefore,  inserted the  second proviso to sub- cl. (1)  of cl.  11 of  the Order.  Cl. 11  of the Order, as amended, in so far as material, reads:           "Cancellation or  suspension of  licence:-(1) If a      licensee or  his agent  or any  person  acting  on  his

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    behalf contravenes  any of  the terms and conditions of      his licence  or  any  provision  of  this  Order  then,      without prejudice  to any  action  that  may  be  taken      against him, the licensing authority may by an order in      writing, cancel  or suspend  licence in  so far  as  it      relates  to   the  foodgrains   in  respect   of  which      contravention has been made. 36           Provided that  no order  shall be  made under this      clause unless  the licensee has been given a reasonable      opportunity of stating his case;           Provided further  that the licensing authority may      suspend  a   licence  without   giving   a   reasonable      opportunity to  the licensee  of stating his case for a      period not exceeding ninety days during the pendency or      in contemplation of the proceedings for cancellation of      his licence."      It is  plain upon the terms of sub-cl. (1) of cl. 11 of the order  that it  deals with the substantive punishment of cancellation or  suspension  of  a  licence.  The  power  of cancellation or  suspension of  a licence  of  a  foodgrains dealer under sub-cl. (1) of cl. 11 of the Order is, however, subject to  the limitation  contained in  the first proviso. The power  of cancellation  or suspension  of a  licence is, therefore, not  exercisable by the licensing authority until it affords  a reasonable  opportunity  to  the  licensee  of stating his case. This necessarily entails the holding of an inquiry into  the question of the alleged breach. The making of an  inquiry into  the breach  of licence  conditions by a foodgrains dealer is a time-consuming process which may many a time verily frustrate the purpose and object of the Order. The State  Government was  evidently of  the opinion  in the light of  the experience gained in the recent past, that for effective control and regulation of the trade in foodgrains, it was  necessary and expedient that the licensing authority should be  clothed with  powers to  suspend a licence on the spot when  it detects  contravention of any of the terms and conditions of  the licence  or any  of the provisions of the Order.  Otherwise,  a  foodgrains  dealer  after  committing flagrant breaches of the terms and conditions of his licence and the  provisions of  the Order, may, with impunity, carry on his trading activities without any check or control.      The power of suspension conferred by the second proviso to sub-cl.  (1) of  cl. 11  of the  Order is  by way  of  an interim measure,  pending the  holding of  an inquiry  as to whether  there   is  any   breach  which   must  result   in cancellation of  the licence. It is true that the suspension of licence  is a drastic measure, if taken without affording to the  dealer a reasonable opportunity of stating his case, but it is 37 a  measure  of  social  control  in  the  interests  of  the community.  The   power  of   suspension  is   a   necessary concomitant of  the power to grant a privilege or a licence. By reason of cl. 3 of the Order, no dealer can engage in the business of purchase and sale of foodgrains except under and in accordance  with the  terms and  conditions of  a licence issued by  the  licensing  authority  in  that  behalf.  The dealers are  free to  carry on  their trade  or business  in foodgrains, subject  to their  complying with  the terms and conditions of their licence and the provisions of the Order. But, if they commit a breach, they must face the consequence that their  licence may be cancelled or suspended under sub- cl. (1)  of cl.  11 of the Order. They must face the further consequence  of  suspension  of  their  licence  during  the

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pendency  or   in  contemplation   of  the  proceedings  for cancellation of  the licence,  if the  breach is  of such  a nature that it must result in the cancellation of a licence. As already  stated, the  power of  suspension is a necessary adjunct of  the power  to grant  a licence.  In view  of the acute shortage  of foodstuffs in the country, the Government is bound  to take  all  effective  steps  to  implement  the provisions of the Act and the various orders issued under s. 3 thereof,  from time to time. The conferral of the power of suspension of  the licence  of a foodgrains dealer under the second proviso  to sub-cl. (1) of cl. 11 of the Order during the pendency  or in  contemplation of  the  proceedings  for cancellation of  his licence,  is an important step taken by the Government to subserve the object of the legislation and is in  public interest.  It cannot  be said  that the second proviso to  sub-cl. (1)  of cl.  11 of  the Order  does  not satisfy the  test of  reasonableness. It  seeks to  strike a proper balance  between the  freedom of  trade  or  business guaranteed under  Art. 19  (1) (g)  and the  social  control permitted by  cl. (6) of Art. 19 of the Constitution. It is, therefore, difficult to hold that the second proviso to sub- cl. (1)  of cl.  11 of  the Order  is of an excessive nature beyond what  is required  in the  interests of  the  general public.      There is  no warrant for the submission that the second proviso to  sub-cl. (1)  of cl. 11 of the Order confers upon the   licensing   authority   unguided,   uncontrolled   and uncanalised power  to suspend  a licence  and is, therefore, void by  reason of  Art. 14 of the Constitution. It is urged that the  impugned orders  of suspension  in these cases are for a  period of 89 days, and the licensing authority would, as in the past, pass fresh orders of suspension ad infinitum 38 completely paralysing the business of the petitioners. There is no  substance in  the contention  that repeated orders of suspension of  a licence  can be  passed  under  the  second proviso in  respect of  the same  breach. The second proviso expressly states  that the licensing authority may suspend a licence  for   a  period  not  exceeding  ninety  days.  It, therefore, fixes  the period  of suspension.  From its  very terms, it is obvious that there cannot be repeated orders of suspension of  a  licence  under  the  second  provision  in respect  of   the  same   breach.  Normally,  the  order  of suspension under the second proviso to sub-cl. (1) of cl. 11 of the  Order after  the expiry  of the  period of  90 days, would automatically  lapse. However, if the licensee commits another  breach,   after  the   expiry  of   the  period  of suspension,  there  is  nothing  to  prevent  the  licensing authority to suspend his licence afresh.      On a  fair reading of the second proviso to sub-cl. (1) of cl. 11 of the Order, it cannot be said that it commits to the unrestrained  will of  the District  Food  and  Supplies Controller, who  is the  licensing authority,  the power  of suspension of  a licence.  It does  not confer arbitrary and uncontrolled power  because the  suspension can  only be for specified reasons  and the  second  proviso  lays  down  the circumstance or grounds on which the power may be exercised. Such guidelines  are expressly  and specifically  stated. In the first  place, the power of suspension is not exercisable unless there  is a breach and the breach is of such a nature that  it  must  entail  cancellation  of  the  licence.  The substantive provision  contained in sub-cl. (1) of cl. 11 of the  Order   provides  for  the  power  of  cancellation  or suspension, if  any dealer  commits any contravention of the ’terms and  conditions of  his licence  or any  provision of

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this order’.  The first  proviso  is  in  the  nature  of  a limitation on  the power contained in sub-cl. (1), and there can be no cancellation or suspension of a licence unless the licensee is afforded a reasonable opportunity of stating his case. The  proper function of the second proviso is to carve out an exception to the first proviso. It dispenses with the requirement of  affording a  reasonable opportunity  to  the licensee in  case of  suspension of  his licence  during the pendency  or   in  contemplation   of  the  proceedings  for cancellation. It  must, however, be read along with the main enacting provision in sub-cl. (1), and, if so construed, the power of suspension during the pendency of an inquiry cannot be exercised  unless there  is contravention  of any  of the terms and conditions of the licence or any of the 39 provisions  of  the  Order.  Secondly,  it  provides  for  a reasonable safeguard,  in  that  it  limits  the  period  of suspension.  The  period  of  suspension  would  necessarily depend upon the nature of the breach, and in no case, can it exceed  ninety  days.  During  this  period,  the  licensing authority is  expected to  complete the  inquiry and  take a decision as to the cancellation or otherwise of the licence. Thirdly, as  a check  upon  possible  injustice  that  might result from  an improper exercise of the power of suspension of a  licence by  the licensing  authority under  the second proviso, there is an additional safeguard to a dealer by way of an  appeal to  the Director, Food and Supplies, under cl. 13 of  the Order.  This Court  has repeatedly laid down that where the discretion to apply the provisions of a particular statute is  left with  the Government  or one of the highest officers, it  will be presumed that the discretion vested in such  highest  authority  will  not  be  abused.  It  would, therefore, appear  that the second proviso to sub-cl. (1) of cl. 11  of the Order furnishes sufficient guidelines for the exercise of  the power of suspension of a licence during the pendency of  or in  contemplation  of  the  proceedings  for cancellation thereof,  and it  does not suffer from the vice of arbitrariness and is, therefore, not violative of Art. 14 of the  Constitution. On the contrary, as already indicated, it affords reasonable safeguards.      There still  remains the  question whether the impugned orders of  suspension are  mala fide  or motivated.  We  are unable  to  hold  from  the  material  on  record  that  the licensing authorities  acted with  improper motives  or were actuated with  bias  in  directing  the  suspension  of  the licences held  by the  petitioners. All  that is  averred in para 9 is:           "(Under oral instructions of the Punjab Government      from the  Civil Supplies and Food Department to all the      Licensing Authorities,  including the  Food  Department      and Supplies Controllers, instructions were issued that      if any  one dealer  is found exporting wheat to another      State, there  being no  direct or  indirect ban on such      movement, he  should be  punished at the spot by way of      suspension of  licences so  that  the  dealer  may  not      export wheat  to any other State for which there are no      restrictions imposed by 40      any law  or  notified  order  or  even  the  terms  and      conditions of the licence." The petitioners then go on to say in para 12:           "Under oral  instructions from the Secretary, Food      and Supplies  Department, the  Director Food  and Civil      Supplies, and  up to  the District  Food  and  supplies      Controller,   the   Punjab   Government   has   imposed

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    restriction  on  inter-State  movement  of  foodgrains.      There are  already restrictions  on stock  holding  and      dealer to  dealer  sale.  The  petitioners  have  never      violated any conditions of the licence except that they      have been,  in exercise  of their  fundamental  rights,      exporting foodgrains to various destination outside the      State of Punjab..." In the  case of M/s Sukhwinder Pal Bipan Kumar in support of the petition,  there is  an  affidavit  of  one  Raj  Kumar, claiming to  be a  partner, who asserts that the allegations in paras 9 and 12 are ’correct to the best of my knowledge’. To say  the least,  this is no affidavit at all. Under order XIX, Rule  3, of  the Code  of Civil Procedure, 1908, it was incumbent upon  the deponent  to  disclose  the  nature  and source of  his knowledge  with sufficient particularity. The allegations in the petition are, therefore, not supported by an affidavit  as required  by law.  That being so, the State Government was  fully justified in answer, ’Denied. There is no  restriction  on  the  movement  of  wheat’.  The  Deputy Secretary in  his counter  affidavit has further denied that the  impugned  orders  of  suspension  were  passed  on  the direction  of   the  State  Government.  In  our  view,  the allegations in  the writ  petitions are  not  sufficient  to constitute an  averment of  mala fides  so as to vitiate the impugned orders  of suspension. The Court would be justified in refusing  to carry  out investigation into allegations of mala fides,  if necessary  particulars of  the charge making out a  prima facie  case are  not given in the petition. The burden of  establishing mala  fides lies very heavily on the person  who   alleges  it.   The  petitioners  who  seek  to invalidate the  impugned orders of suspension must establish the charge  of bad faith or bias or misuse by the Government of its  powers. The  impugned orders  of suspension ex facie show breaches  of conditions Nos. 4, 8 and 10 of the licence by the  petitioners.  The  question  whether  or  not,  they committed the breaches is a matter for 41 inquiry by  the licensing  authorities under  sub-cl. (1) of cl. 11 of the Order.      In  the   result,  the  petitions  must  fail  and  are dismissed with costs. P.B.R.                                  Petitions dismissed. 42