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PETITIONER: NAGAR RICE & FLOUR MIILLS & ORS.

       Vs.

RESPONDENT: N.   TEEKAPPA GOWDA & BROS. & ORS.

DATE OF JUDGMENT: 27/02/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S. GROVER, A.N.

CITATION:  1971 AIR  246            1970 SCR  (3) 846  1970 SCC  (1) 575  CITATOR INFO :  F          1976 SC 578  (50)  R          1992 SC 443  (8)

ACT: Rice  Milling Industry (Regulation) Act, 1958 (21 of  1958)- Shifting of existing rice mill to new site-Prior  permission under  s.  8  (3) (c) how  far  necessary-Considerations  in giving  such permission-Another mill situated near new  site objecting  that  its business would be  adversely  affected- Objection   whether  sustainable  under  Art.  19(1)(g)   of Constitution--Locus standi of party making such objection.

HEADNOTE: According  to  s.  8(3)(c)  of  the  Rice  Milling  Industry (Regulation)  Act,  1958,  no owner of a  rice  mill  "shall without  the previous permission of the Central  Government, change  the location of the whole or any part of  that  rice mill  in respect of which licence has been granted under  s. 6".  The lands and buildings of the appellants’ rice mill in the State of Mysore were acquired under the Land Acquisition Act 1894 and the award expressly recited that the appellants were  entitled  to remove the machinery of  the  mill.   The appellants  were  allotted  a new site by  the  Mysore  Gov- ernment.   After obtaining sanction from the  Tehsildar  the appellant   shifted  their  machinery  to  the   new   site. Thereafter  the  Director  of Food  and  Civil  Supplies  in purported  exercise, of the delegated powers of the  Central Government  passed an order under s. 8(3)(c)  sanctioning  a change  in  the location of the appellants’ rice  mill.   He overruled  the objection of the respondents whose rice  mill was situated near the new site.  The, respondents challenged the  order  before the High Court in a writ  petition.   The High  Court having allowed the same the  appellant  obtained special  leave  and appealed to this Court.   The  questions that fell for consideration were : (i) whether the  shifting of  the appellants’ rice mill to the new site without  prior permission of the Central Government as required by s.  8(3) (c)  of the Act,- was legal, and if not whether it  affected the   respondents’  right  under  Art.  19(1)  (g)  of   the Constitution; (ii) whether the order under s. 8 (3) (c)  was

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bad  for the reason that it did not take into  consideration the  relevant  factors such as mentioned in s. 5(4)  of  the Act. HELD : (i) Section 8(3) (c) is merely regulatory : if it was not complied with the appellants may probably be exposed  to a  penalty, but a competitor in the business could not  seek to  prevent  the appellants from exercising their  right  to carry  on  business, because of the default, nor  could  the rice mill of the appellants be regarded as a new rice  mill. Competition in the trade or business may be subject to  such restrictions as are permissible and are imposed by the State by  a  law enacted in the interests of  the  general  public under Art. 19(6), but a person cannot claim independently of such  restriction  that another person shall  not  carry  on business  or  trade so as to affect his  trade  or  business adversely.   The  appellants ,complied  with  the  statutory requirements for carrying on rice milling operations in  the building  on the new site.  Even assuming that  no  previous permission was obtained, the respondents would have no locus standi for challenging the grant of the permission,  because no right vested in the respondents was infringed. [851 G-H] (ii) The  considerations which arc prescribed by sub-s.  (4) of s. 5 only apply to the grant of a permit in respect of  a new rice mill or a defunct 84 7 rice  mill.   They have no application  in  considering  the shifting the location of an existing -rice mill.  In respect of  a  new or defunct mill a permit and a licence  are  both required  :  in  respect of an existing  rice  mill  only  a licence  is required.  The conditions prescribed  by  sub-s. (4)  of s. 5 only apply to the grant of a permit and  not  a licence.   By s. 8 (3) (c) it is made one of the  conditions of the licence that the location of the rice mill shall  not be  shifted without the previous permission of  the  Central Government.   It  is  true that  the  appropriate  authority clothed  with  the  power must consider  the  expediency  of permitting a change of location.  But there is no  statutory obligation  imposed upon him to take into consideration  the matters  prescribed  by sub-s. (4) of s. 5 in  granting  the permission to change the location. [852 E-G]    On  the facts of the present case the permission  granted under s.   8  (3)  (c)  could not be said to  be  granted  without considering the relevant circumstances.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2228 of1969. Appeal  by special leave from the judgment, and order  dated September 26, 1969 of the Mysore High Court in Writ Petition No. 496 of 1969.  S. V. Gupte, S. S. Javali, H. N. Narayan and B. Datta, for the appellants.  H. R. Gokhale, C. R.-Somasekharan, H. G. Balakrishna, and P.   C. Bhartari, for respondent No. 1. The Judgment of the Court was delivered by Shah, J. This appeal is filed with special leave against the judgment of the High Court of Mysore setting aside the order dated  January  20, 1969, of the Director of  Food  &  Civil Supplies  of  the  State of Mysore under  the  Rice  Milling Industry (Regulation) Act 21 of 1958. The  appellants  established a rice mill many years  ago  in village  Mudugoppa, District Shimoga, in the  former  Indian State  of  Mysore and carried on  milling  operations.   The

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respondents-N.  Teekappa Gowda & Bros-established in 1963  a rice  mill in village Kelandur at a distance of  about  11/2 miles from the site of the appellant’s mill.  A notification under the Land Acquisition Act 1894 was issued in March 1966 for compulsory acquisition of the land and buildings on  the site of the appellants’ rice mill for use in the  Sharavathi Hydro-Electric Project.  In October 1967 an award  acquiring the  land  and  buildings was  made.   The  award  expressly recited  that  the appellants were entitled  to  remove  the machinery of the rice Mill. The  appellants  in  the meanwhile applied  to  the  Special Officer  for Rehabilitation of the State of Mysore to  allot them a suitable 848 new  site  in  which their rice mill may  be  located.   The Special  Tehsildar  for Rehabilitation sanctioned  that  the rice  mill building may be shifted to a site in  Survey  No. 233  of Mudugoppa granted to the appellants by the State  of Mysore.   By order dated January 20, 1969, the  Director  of Food & Civil Supplies passed an order sanctioing the  change in  the  location  of the appellants’  rice  mill  from  its original  site  to  the  new site  "as  per  the  provisions contained  in section 8(3)(c) of the Rice  Milling  Industry (Regulation)  Act, 1958", and rejected the objection  raised by the respondents. The respondents then moved a petition in -the High Court  of Mysore for a direction quashing the order dated January  20, 1969 passed by the Director of Food & Civil Supplies on  the plea that the appellant’ s mill was moved to a place in  the vicinity  of  their  rice mill in the  kelandur  village  in contravention  of ss. 5 and 8 of the Rice  Milling  Industry (Regulation) Act, 1958, and in consequence of the removal of the  appellants’  mill  "their business was  likely  to.  be adversely affected". The High Court held that permission under S. 9 (3) (c) was a condition  precedent to the shifting of the location of  the rice  mill,  and  since the appellants did  not  obtain  the previous  permission  to shift the mill, the  order  of  the Director was liable to be "struck down as ultra vires".   In the  view of the Court, by the shifting of  the  appellants’ rice  mill the respondents’ business was  directly  affected and they had a right to challenge the legality of the order. The  High Court upheld the claim of the respondents  on  the sole  ground,  that the order of the Director  was  made  in violation  of the mandatory in junction of the Rice  Milling Industry  (Regulation) Act 21 of 1958 and  it  prejudicially affected the business of the respondents as rice-millers. The   Parliament   enacted   the   Rice   Milling   Industry (Regulation) Act 21 of 1958 to regulate rice milling.  By s. 3(a)  a "defunct rice-mill" is defined as meaning  "a  rice- mill  in  existence at the commencement of this Act  but  in which rice-Milling operations have not been carried on for a period  exceeding one year prior to such commencement".   By S.  3(b) "existing rice-mill" means cc a rice mill  carrying on rice-milling operations at the commencement of this  Act, and  includes a rice-mill in existence at such  commencement which  is  not carrying on rice-milling  operations  but  in which  rice-milling operations have been carried on at  -any time  within  a period of one year prior to  such  commence- ment".  By s. 2(e) "new rice-mill" means "a rice will  other than an existing rice mill or a defunct rice mill".  By s. 2 (f  )  "rice  mill" is defined as  meaning  "the  plant  and Machinery  with  which  and  the  premises,  including   the precincts  thereof in which or in any part of  which,  rice- milling operations is carried on." By S. 5 provision

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                           849 is  made for grant of permits in respect of new  or  defunct rice  mill.  By sub-s. (1) of S. 5 it is provided  that  any person  or authority may make an application to the  Central Government for the grant of permit for the establishment  of a new rice mill,, and any owner of a defunct rice mill  may, make  a like application for the grant of a permit  for  re- commencing  rice-milling operation in such mill.  By  sub-s. (3) if, on receipt of any such application for the grant of’ -a  permit, the Central Government is of opinion that it  is necessary so to do for ensuring adequate supply of rice,  it may, subject to the provisions of sub-s. (4) and sub-s.  (5) grant the permit specifying therein the period within  which the mill is to be established.  Subsection (4) provides -               "Before granting any permit under  sub-section               (3), the Central Government shall cause a full               and  complete investigation to be made in  the               prescribed   manner   in   respect   of    the               application -and shall have due regard to-               (a)   the  number of rice mills  operating  in               the locality;               (b)   the   availability  of  paddy   in   the               locality;               (c)   the  availability  of power  ’and  water               supply for the. rice mill in respect of  which               a permit is applied for;               (d)   whether  the  rice mill  in  respect  of               which a permit is -applied for will, be of the               huller type, sheller type or combined sheller-               huller type;               (e)   Whether the functioning of the rice mill               in  respect of which a permit is  applied  for               would  cause substantial unemployment  in  the               locality;               (f)   such   other  particulars  as   may   be               prescribed." By  sub-s. (6) a permit granted under s. 5 is effective  for the period specified therein or for such extended period  as the  Central Government may think fit to allow in any  case. Section  6 provides for grant of licences.  Any owner of  an existing  rice mill or of a rice mill in respect of which  a permit  has been granted under S. 5 may make an  application to  the  licensing officer for the giant of  a  licence  for carrying  on rice-milling operations in that rice mill.   By sub-s. (3) of s. 6 the licensing officer is obliged to grant the licence on payment of the fee and on deposit of such sum as  may be prescribed.’ -as security for due performance  of the conditions.  By sub-s. (4) a licence granted under s.  6 is  valid  for  the period specified  therein,  and  may  be renewed from time to time for such period and on, payment of such fees and on conditions as may be prescribed. 850 Section 7 provides for revocation, suspension and  amendment of licences.  By S. 8 restrictions are placed on rice mills. Under  Sub-s.  (1) no person or authority shall,  after  the commencement of the Act, establish any new rice mill  except under  and in accordance with ’a permit granted under S.  5. By  sub-s.  (2)  no owner of a rice mill  shall,  after  the comencement  of  the Act, carry  on  rice-milling  operation excent under and in accordance with a licence.granted  under S.  6.  By  sub-s. (3), insofar as it  is  relevant,  it  is provided               "No owner of a rice mill,(a)               (b)               (c)   shall, without the previous  permissions

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             of the Central Government, change the location               of  the whole or any part of the rice mill  in               respect  of which a licence has  been  granted               under section 6; ’Section  13  provides for penalties  for  contravention  or attempts to contravene or abetting the contravention of  any of the provisions, inter alia, of s. 8. Power of the Central Government  to issue a permit under s. 5 and under s. 8  (3) (c) to change the location of Tice mill is delegated to  the Director of Food & Civil Supplies. The  Director  of  Food  &  Civil  Supplies  sanctioned,  in exercise of the power under s. 8 (3) (c) of the Act that the location of the rice mill of the appellants may be  shifted. The High Court declared the order invalid on the ground that the  previous  sanction had not been  obtained.   The  Court observed  that  "where  an officer  granting  a  licence  or passing an administrative order exceeds his powers and makes an  order in violation of the provision which  ,clothes  him with that power, his order is liable to be struck down", and since  S.  8 (3) (c) contemplated grant  of  permission  for change  of location before the plant and the machinery  were actually shifted to a new site, the Director of Food & Civil Supplies  had  no  power  to  grant  permission  after   the machinery and plant had been shifted. The rice mills for the purpose of the Act were divided  into three classes : defunct rice-mills, existing rice-mills  and new  rice-mills.   Defunct rice mills are  those  which  had ceased functioning for a period exceeding one year prior  to the commencement of the Act; existing rice mills ’are ’those which carry on rice milling operations -at the  commencement of tile Act or had carried on rice milling 8 51 operations within one year prior to the commencement of  the Act;  and  new  rice-mills are those which  are  other  than existing  rice mills or defunct rice mills.  In  respect  of all  rice  mills  a licence for  carrying  on  rice  milling operations  under  S. 6 must be obtained.  In respect  of  a rice mill new or defunct a permit under s. 5 has first to be obtained.  No permit is required by and existing rice  mill. In granting the permit the authority has to take into consi- deration matters which are specified in sub-s. (4) of s.  5. The licensing authority must on application issue a  licence to an existing rice mill or a rice mill in respect of  which a  permit  has been granted under s. 5. For  change  in  the location  of  any rice mill in respect of  which  a  licence hasbeen  granted under s. 6 the previous permission  of  the Central Government is necessary under S. 8 (3) (c). The Parliament has by the Rice Milling Industry (Regulation) Act, 1958, prescribed limitations that an existing rice mill shall  carry on business only after obtaining a licence  and if  the  rice  mill  is to  be  shifted  from  its  existing location,  previous  permission of  the  Central  Government shall  be obtained.  Permission for shiftng their rice  mill was  obtained by the appellants from the Director of Food  & Civil Supplies.  The appellants had not started rice milling operations  before  the sanction of the Director of  Food  & Civil Supplies was obtained.  Even if it be assumed that the previous  sanction has to be obtained from  the  authorities before  the  machinery is moved from its existing  site,  we fail to appreciate what grievance the respondents may  raise against the grant of, permission by the authority permitting the  installation of machinery on a new site.  The right  to carry on business being a fundamental right under Art.  19(1 )  (g) of the Constitution, its exercise is subject only  to the  restrictions  imposed by law in the  interests  of  the

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general public under Art. 19 (6) (i). Section  8  (3)  (c) is merely regulatory :  if  it  is  not complied  with the appellants may probably be exposed  to  a penalty,  but  a competitor in the business cannot  seek  to prevent the appellants from exercising their right to  carry on  business, because of the default, nor can the rice  mill of the appellants be regard as a new rice mill.  Competition in the trade or business may be subject to such restrictions as  are  permissible and are imposed by the State by  a  law enacted in the interests of the general public under Art. 19 (6),  but  a  person  cannot  claim  independently  of  such restriction that another person shall not carry on  business or  trade so as to affect his trade or  business  adversely. The appellants complied with the statutory requirements  for carrying  on rice milling operations in the building on  the new  site.   Even assuming that no previous  permission  was obtained,  the  respondents would have no locus  standi  for challeng- 852 ing the grant of the permission, because no right vested  in the respondents was infringed. But  Mr.  Gokhale  for the  respondents  contended  that  in granting  the permission under s. 8 (3 ) (c)  the  authority was  bound  to take into account matters which  -govern  the issue  of  a  permit under s. 5 (4)  of  the  Act.   Counsel submitted  that  sub-s. (3) (c) of s. 8 was enacted  with  a view  to  ensure adequate mining facilities and  to  prevent unfair  competition and on that account it is provided  that when  the  location  of an, existing rice  mill  has  to  be shifted,  the authority had to take into  consideration  the number  of  rice  mills  operating  in  the  locality;   the availability of power and water supply for the rice mill  in respect  of  which  a permit is  applied  for;  whether  the functioning of the rice mill in respect of which a permit is applied  for  would cause substantial  unemployment  in  the locality;  and such other particulars as may be  prescribed. According to counsel, since the Act was intended to regulate the carrying on of business of rice mills in the country, it was implicit in s. 8 (3) (c) that the authority  sanctioning the change of location of a rice mill shall consider whether ’ another person was by the shifting likely to be prejudiced thereby.  ’This counsel says, the Director did not consider, and  on  that account the order is liable to  be  set  aside because  the  right of the respondents is  infringed.   This argument was not advanced before the High Court, and, in our judgment,  has no substance.  The considerations  which  are prescribed by sub-s. (4) of s. 5 only apply to the grant  of -a  permit in respect of a new rice mill or a  defunct  rice mill.  They have no application in considering the  shifting the location of an existing rice mill.  In respect of a  new or  defunct  rice  mill  a permit and  a  licence  are  both required  :  in  respect of an existing  rice  mill  only  a licence  is required.  The conditions prescribed  by  sub-s. (4) of s. 5 only apply to the grant of -a permit and not  to a licence.  By s. 8 (3) (c) it is made one of the conditions of the licence that the location of the rice mill shall  not be  shifted without the previous permission of  the  Central Government.   It  is  true that  the  appropriate  authority clothed  with  the  power must consider  the  expediency  of permitting a change of location.  But there is no  statutory obligation  imposed upon him to take into consideration  the matters  prescribed by sub-s. (4) of s. 5 in  granting’  the permission to change the location. The appellants had been carrying on business in milling rice for  more  than 30 years and the mill was by reason  of  the

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proposal  to  submerge  the site in  the  Sharawathi  Hydro- Electric  Project had to be shifted from its location.   The State  allotted another piece of land to the appellants  and did  not acquire their machinery and permitted  erection  of their rice mill building on the new location.  This was done with a view to cause minimum hardship to the appel- 853 lants arising in consequence of the proposed construction of the  dam resulting in submergence of their land.  The  State also  granted  permission to the appellants  to  change  the location  under the Rice Milling Industry (Regulation)  Act, 1958.   The permission cannot be said to be granted  without consideration of the relevant circumstances. The  appeal  is  allowed, -and the  petition  filed  by  the respondent  N.  Teekappa  Gowda & Bros.  is  ordered  to  be dismissed with costs throughout in favour of the appellants. G.C.                                                  Appeal allowed. 85 4