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PETITIONER: NARAYANAN SANKARAN MOOSS

       Vs.

RESPONDENT: THE STATE OF KERALA AND ANOTHER

DATE OF JUDGMENT12/10/1973

BENCH: DWIVEDI, S.N. BENCH: DWIVEDI, S.N. REDDY, P. JAGANMOHAN GOSWAMI, P.K.

CITATION:  1974 AIR  175            1974 SCR  (2)  60  1974 SCC  (1)  68

ACT: Indian  Electricity  Act  (9  of  1910)  s.  4(1)  and  (3)- Consultaion  with State Electricity Board before  revocation of licence of licensee-If mandatory.

HEADNOTE: Section  4(1),  Indian Electricty Act, 1910, as  amended  in 1958,  provides  that the State Government may,  if  in  its opinion   the  public  interest  so  requires,   and   after consulting the State Electricity Board, revoke a licence  in certain  cases.   Sub-section (3) provides that  no  licence shall   be  revoked  under  sub-S.  (i)  unless  the   State Government  has  given to the licensee not less  than  three notice  in  writing  stating  the grounds  on  which  it  is proposed  to  revoke the licence, and,  has  considered  the cause shown by the licensee. On  June  21, 1962, the respondent-Government wrote  to  the State Electricity Board that the respondent considered  that the  licence  of the appellant should be  revoked  under  s. 4(1)(a)  and requested the Board to communicate  its  views. On July 26, the Board recommended the revocation.  On August 17, the respondent issued a notice to the licensee, of which the  appellant was proprietor under s. 4(3), to  show  cause why the licence should not be revoked.  On November 5, 1962, within three months, the appellant sent his explanation.  On April  6, 1963 the respondent wrote to the Board  that  they had  considered the explanation of the licensee, that  since the  explanation  was not satisfactory the  respondent  had decided to revoke the licence. and inquired if the Board was willing  to purchase the undertaking.  On 20th April,  1963, the   Board  expressed  its  willingness  to  purchase   the undertaking with effect from August 1, 1963.  On May 17.  1963. the  respondent revoked the licence with effect from  August 1, 1963, and   directed   the  appellant  to   deliver   the undertaking to the Board. The appellant’s writ petition to the High Court  challenging the orders was dismissed. Allowing the appeal to this Court, HELD : (1) Section 4 contemplates that the Board should make its recommendation only after considering the explanation of the licensee.  When the government consults the Board on the

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question of revocation of a licensee the Board is to make up its  mind as to whether it should recommend, (i)  to  revoke the licence, or (ii) not to revoke the licence, or (iii)  to permit  the  licence  to remain in  force  subject  to  such further  terms and condition, as may be though proper.   The Board would not be able to make a choice out of these  three courses without considering the explanation of the licensee, because, the explanation may make out case for not  revoking a  licence.   In the present case, the Board  was  consulted much before the receipt of the appellant’s explanation.  The entire  chain of correspondence between the  Government  and the  Board  shows  that there  was  no  second  consultation between   the  Government  and  the  Board   regarding   the revocation of the licence after the Government had  received the  appellant’s explanation to the show cause notice.   Any telephonic  consultation is out of question,  because,  such telephonic  consultation  could not be held with  the  three members of the Board at one and the same time, nor could the members bestow collective consideration on the matter before giving the Board’s opinion thereon. [64D-E; 65F; 68F-H; 69A- C] (2)  There   is  no  force  in  the  contention   that   the consultation  with  the  Board is only  as  regards  ’public interest. [69C] (3)  The  words "after consulting the Board" show  that  the construction suggested by the respondent that the Board  was to be consulted only at the stage when the Government  takes a provisional decision is not correct. [69D] (4)Having  regard to the object and context the  condition of consulting the Board after the licensee’s explanation was received is mandatory and the breach of this condition  will makes the order of revocation void, [70F] 61 (a) The power of revoking a licence is a drastic power as it results in the severe abridgment of the right to carry on  a business.  Having in mind the requirements of Art.  19(1)(g) of the Constitution, Parliament has prescribed conditions to prevent  the abuse of power and to ensure just  exercise  of the power,. [69G] (b)When  revoking a licence the State-Government  acts  in two   stages.   It  forms  a  tentative  opinion   regarding revocation  of a licence and calls for explanation from  the licensee.   When  the explanation  is  received,  Government considers  it and thereafter, if not satisfied,  passes  the final  order  of  revocation.   But  first  impressions  and provisional  judgments  have a tendency to  become  Ultimate ideas and final judgments.  Therefore, Parliament interposed the   condition  of  consultation  with  the   Boar   before government  takes  its  final decision.   The  Board  is  an independent body consisting of three members one of whom  is a  technical  expert, the other a financial expert  and  the third  an  administrative expert.   While considering  the facts presented to it by the Government and by the  licensee in  his  explanation, the Board will act with an  open  mind and will offer unbiased counsel to the Government. [706-E] (c)The  clause "if in its opinion the public  interest  so requires" and cls. (.a) to (d) of s. 4 prescribe some of the conditions  precedent  for  the exercise  of  the  power  of revocation  and an order of revocation in breach of  any  of these conditions will be void.  The phrase "after consulting the  State Electricity Board" occurs between the clause  ’if in its opinion the public interest so requires’ and cls. (a) to  (d).  The context shows that the consultation  with  the Board is also a condition precedent for making the order  of revocation  and  breach of this  condition  precedent  would

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entail  the  same  consequences  as  the  breach  of   other conditions, [69G-70B] (d)It is true that the opinion of the Board is not binding on  the  government,  for, in spite of  the  Board  advising against revocation, the government, if satisfied that it  is necessary to revoke the licence, may revoke the.licence. But this   should   not   be   regarded   as   an   overweighing consideration,  because, it will normally be  difficult  for the government to ignore the Board’s expert advice. [71D-E] State  of  U.P. v. Manbodham Lal Srivastava,  [1958]  S.C.R. 533, H. N. Rishbud v. State of Delhi, [1955] 1 S.C.R.  1150. Ram  Gopal Chaturvedi v. State of Madhya Pradesh, The  State of  Bombay V. D. .A. Korgaonkar, [1970] 1 S.C.R. 472,  Rollo v.  Minister  of  Town and Country  Planning,  Civil  Appeal No._289  of  1958  decided on  6-5-1960,  Derham  v.  Church Commissioners for England, [1954] Appeal Cause 245  referred to. (5)It  is true that the appellant did not urge the  point, regarding  consultation with the Board, in the  High  Court. But  no prejudice would be cause to the respondents  if  the point was.permitted to raised in this Court. [63A; 65G] (a)The counter affidavits of the Government and the  Board show  that  the Government as well as the  Board  understood that petition as raising the challenge to the orders on  the ground  of  want of due consultation with the  Board  before making  the  impugned orders and they have  replied  to  the implicit challenge in the petition. [63F-G] (b)The  facts  requisite  for deciding the  issue  are  on record and the appellant had raised the point as a ground in the  statement of the cm, and the respondents are not  taken by surprise. [63G-H; 64A] State of U.P V. Manbodhan Lal Srivastava, [1958] S.C.R. 533, Hamdard Dwakhana (wakf), Delhi and another v. Union of India and others, [1965] 2 S.C.R. 192, Kargagatchi and  others  v. Nagarathinathachi,  [1965] 3 S.C.R. 335, State of Mysore  v. Guduthuk Thimmappa and son and another, [1967] 1 S.C.R. 627, and Motibhai Pulabhai Patel & Co. v. M/s, R. Prasad and others, [1969] 1 S.C.R. 580, distinguished.

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeal No. 1279 of 1967. Appeal  from the judgment and order dated the  1st  February 1965 of the Kerala High Court in O.P. No. 1138 of 1963. 62 B.   Sen,  S.  S. Ananthakrishna Iyer, K. B. Rathee,  N.  M. Ghatate and S. Balakrishnan, for the appellant. V.   A.  Seiyid Mahmud and A. G. Pudissery,  for  respondent No. 1 A.   R.  Somanatha Iyer and M. R. K. Pillai, for  respondent No. 2 The Judgment of the Court was delivered by DWIVEDI J. The Kattayam Electric Supply Agency, Kottayam, is the licensee for the supply, of electric energy in  Kottayam in the State of Kerala.  The appellant, N. S. Mooss, is  the proprietor of the licensee, By an order, dated May 17  1963, the  State  of Kerala revoked the licence with  effect  from August 1, 1963.  The order was made under s. 5(1) (a) of the Indian  Electricity Act, 1910 (hereinafter called  the  Act. On  the  same date, the State of Kerala made  another  order under  s.  5  ( 1 ) (c) and (3) of  the  Act  directing  the appellant   to.  deliver  the  undertaking  to  the   Kerala Electricity  Board  (hereinafter  called the  Board)  on  or before  July 1, 1963.  The appellant filed a  writ  petition

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under  Art.  226  of the Constitution  challenging  the  two orders.   The High Court has dismissed the petition.   Hence this appeal. Sri  Sen, counsel for the appellant, has urged  four  points before us.  One of these points is : The Board endorsed  the State proposal for the revocation of the licence before  the explanation  of  the  appellant  reached  the  State.    The explanation was not placed before the Board and  accordingly not   considered  by  the  Board.   So  there  was  no   due consultation  of  the Board and the order of  revocation  is void.   As we are accepting this point, it is not  necessary to  notice his remaining points.  We shall state  only  such facts  as  are necessary for the decision of  the  aforesaid point. On August 17, 1962, the State Government issued a notice  to the  appellant under s. 4 (3) of the Act asking him to  show cause  why the licence should not be revoked.  He was  asked to  send his explanation within three months and three  days from the date of the receipt of the notice.  Much before the issue  of  this  not I ice.  On June  21,  1962,  the  State Government sent the letter No. 11795-EL 1/61/17/P.W. to  the Board.   The  letter states that the  Government  considered that the licence of the appellant should be revoked under s. 4(1)(a) and requested the Board to communicate its views  to the  Government.  On July 26, 1962 the Board sent its  reply to the Government.  The reply letter is No.  B.VII/57051/62. The  Board  recommended the revocation of the  licence.   On November  5, 1962, Within three months of the issue  of  the notice under s. 4(3), the appellant sent his explanation  to the  Government.  The Government was not satisfied with  the explanation.   It passed the impugned order on,May 17,  1963 revoking  the  licence.   These  facts  support  Sri   Sen’s contention that the Board’s recommendation was made  without looking  into the appellant’s explanation.  Indeed.  it  was humanly  impossible  for the Board to have looked  into  the explanation. Counsel for the State Government and the Board have raised a preliminary  objection.   They point out that  the  argument advanced by Sri Sen was neither raised in the writ  petition nor urged before the 63 High Court.  According to them, it should not be allowed  to be  raised in this Court. it is true that the point  is  not specifically raised in the writ petition.  But, in our view, it  is  embedded  in paragraphs 6 and 22  of  the  affidavit accompanying  the  petition.  Paragraph 6 asserts  that  the aforesaid  two  orders  are  "illegal and  void  and  of  no effect."  Paragraph 22 states that "the  entire  proceedings culminating  in the issue of, (the two orders) constitute  a gross violation of the .... provisions of the Act" Paragraph 22  clearly asserts that the impugned orders have been  made in  breach  of  the  statutory  conditions  for  revoking  a licence.  Earlier we have, said that Sri Sen’s contention is embedded  in paragraphs 6 and 22.  We are reassured  of  our construction  of  these  paragraphs by  the  fact  that  the Government  as  well as the Board have  also  construed  the petition in the same sense and have controverted it in their affidavits.  Paragraph 3 of the affidavit filed on behalf of the  Government states : "(The appellant’s) objections  were considered and the Government formed an opinion that it  was in   public  interest  to  revoke  the  licence  and   after consulting the Electricity Board revoked the licence as  the Government  were  satisfied  that  in  their  opinion   the, petitioners  hid  made  wilful  and  unreasonably  prolonged default in doing several things required of him by or  under

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the Indian Electricity Act." In reply to paragraph 22 of the petition,  the  Government’s affidavit states  that  "orders were  passed  in accordance with the provisions of  all  the relevant  Acts  and  the Rules  and  after  considering  the objections  raised  by  the licensee." Paragraph  5  of  the Board’s  affidavit  is  more outspoken  and  elaborate.   It states  : "The State Government consulted the Board  in  the matter  of  revoking the licence of  the  Kottayam  Electric Supply  Agency  by  invoking  s. 4 (1)  (a)  of  the  Indian Electricity  Act, 1910 and the’ Board vide letter  No.  BVI/ 5705/62,   dated  26-7-1962  endorsed  the  views   of   the Government on the matter (and) recommended the revocation of the  licence."  Paragraph 18 of the Board’s affidavit  is  a reply  to  paragraph  22  of  the  appellant’s  affidavit’s. Paragraph  18 asserts that the impugned orders "were  passed in accordance with Law and the Rules thereunder." It is thus unmistakably plain that the Government as well as the  Board understood the petition as raising a challenge to the orders on  the  ground of want- of due consultation  of  the  Board before  the  making of the impugned orders.  And  they  have replied  to  that implicit challenge in  the  petition.   It appears to us that there is little force in the  preliminary objection  that  Sri Sen’s contention is not raised  in  the petition. It  is true that this point was not urged on behalf  of  the appellant in the High Court.  But as the facts requisite for deciding  the issue are on record, we think that  we  should allow  the point to be raised as it goes to the root of  the matter.  It may be noted that the appellant has raised  this point in ground No. 6 of his statement of case.  That ground is : ."The Government without any further though and relying solely  on this report proceeded to revoke the  licence  and sought the view of the Electricity Board on the matter.  The Board  with the Managing Director of the Company as  one  of its members readily accepted the report and agreed with  the suggestion of the Government for revocation of the  licence. It is after having made up its mind to revoke the 64 licence,  as seen from Ex.  R-2, that the Government  issued notice  to the appellant to show cause against  revocation." It  cannot be said that the respondents have been  taken  by surprise.   They  already,  know that  the  point  would  be agitated in the Court. Counsel  for the Government says that if the point had  been clearly taken in the petition and raised in the High  Court, the  Government  could have led evidence to  show  that  the Board  was  consulted  a second time after  receipt  of  the appellant’s   explanation   and  that   the   Board,   after considering  the,  explanation, had again  agreed  with  the Government’s proposal.  He has advanced an extreme  argument that  even  telephonic  consultation could  have  been  held between  the Government and the Board after the  receipt  of the explanation. Telephonic  consultation is out of question.  The  Board  is constituted under the Indian Electricity (Supply) Act, 1948. It  is  a  corporate body.  It consists of  at  least  three members.   One of them has experience of commercial  matters and administration; the other is an Electrical Engineer with wide experience; and the third has experience of  accounting and  financial  matter  in  a  Public  utility  undertaking, preferably an electricity supply undertaking.  Section 13 of the  said Act provides that all orders and decisions of  the Board  shall  be.  authenticated by  the  signature  of  the Chairman.  It is obvious that telephonic consultation  could not be held with. three members of the Board at one and  the

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same   time,  nor  could  the  members  bestow-   collective consideration  on  the  matter before giving  the  Board’s opinion  thereon.   We have little doubt in  our  mind  that there was no second consultation between the Government  and the  Board after the receipt of the explanation.  Had  there been  a  second consultation, the Board  would  surely  have disclosed it in its counter-affidavit.  The evidence already on record excludes the possibility of a second  consultation after  the  receipt  of the explanation.   We  have  earlier quoted the number and date of the Government letter by which the Government asked for the Board’s opinion on the issue of revoking  the licence.  The number and date of  the  Board’s letter recommending revocation of the licence has also  been mentioned  earlier.   On receiving the Board’s  letter,  the Government  sent another letter to the Board.  It  is  dated April  6,  1963.  The number of the letter  is  11795-WY/61- 20/PW.  The subject of the letter is : "Electricity Electric Supply Agency acquisition of." The letter makes reference to two  earlier  letters : "(1) Government  letter  No.  11765- ELI/1/17/PW; (2) your reply No. BVI/5705/62 dated 26-7-1962. It may be seen that the Government letter referred to  above is the letter by which the Government asked for the  opinion of the Board ,on the question of revocation of the’ licence. The  second  letter is the reply of the  Board  recommending revocation  of  the licence.  We have  already  referred  to these  letters.   The.  Government letter of April  6,  1963 states that the Government "have considered the  explanation furnished by the Kottayam Electric, Supply Agency.. . . . to the show cause notice served on him (No.  11795/ELI/61/19/PW dated 17-81962) under S. 4(3) of the Indian Electricity Act, 1910.  Since the 65 explanation  is not satisfactory, the Government  in  public interest have  decided-to revoke the licence granted to  the said Agency." It adds : "I am therefore directed to  enquire as required under section 5(b)     of  the said Act  whether the Kerala State Electricity Board is  willing    to purchase  the  undertaking. If so, the  willingness  of  the Board may be communicated to the Government at the earliest.      The  Board replied to this letter. The reply  is  dated April 20, 1963. The letter’s number is LAW  5705-62/20-4-63. The letter informs the Government that the Board was willing to purchase the     undertaking  with effect from August  1, 1963.  On  May 17, 1963 the Government revoked  the  licence with effect from August 1, 1963. The    same   day   another order was passed by the Government. The number of the  Order is 11795-EE 1/61-31/PW. The material portion of the order is :  "Whereas  the  Government have, under  S.  5,               sub-section  (1)  Clause  (b)  of the  Act  enquired  from               the Kerala State Electricity Board whether the               Board is willing to purchase   the undertaking               owned by the Kottayam Electric Supply agency               And  whereas,  the  Kerala  State  Electricity               Board  has  in  its letter  No.  Law-I-5705/62               dated 20-4-63 intimated the Government that it               is willing to purchase the said Undertaking;  Now,  therefore,  in exercise of  the  powers               conferred by  Section  5,  sub-section (1) Clause  (c)  and               Section  5  Sub-section (3) (of the  Act)  the               Government of Kerala hereby give notice to the               Kottayam  Electric Supply Agency to  sell  and               deliver possession of the said Undertaking  to

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             the  Kerala  State  Electricity  Board  on  or               before the first day of   July, 1963." This  entire chain of correspondence between the  Government and  the Board would unmistakably show     that there was no second  consultation  between the Government and  the  Board regarding the revocation of the licence after the Government had received the appellant’s  explanation to the show  cause notice  served on him. In the circumstances of the  case  we are  satisfied  that  no prejudice will  be  caused  to  the respondents  if the point is permitted to be raised in  this Court. So we permit Sri Sen to argue the point. In  State of U.P. v. Manbodhan Lal  Srivastava,(1),  Hamdard Dwakhana  (Wakf),  Delhi and another v. Union of  India  and others, (2) Karpagathachi and others v. Nagarathinathachi(3) and  State  of  Mysore v. Guduthur Thimmappa  and  son’  and another(4) this Court did not permit a new issue of fact  to be urged by the appellant. In Motibhal Pulabhai Patel &  Co. v. M/s R. Prasad and others(5) the case (1)[1958] S.C.R. 553. (2)  [1965] 2 S.C.R. 192. (3) [1965]     3 S.C.R.  335. (4) [1967] 1 S.C.R. 627. (5) [1969] 1 S.C.R.580. 6-L447 SuP CI/74 66 was remanded to the High Court and the appellant was allowed to urge before.the High Court his new contention.  The facts of  all  these  cases are different from the  facts  of  the present  case.  The Government cannot derive any  assistance from them. It  is necessary to consider whether the Act  obligates  the Board  to consider the explanation of the  licensee,  before recommending any action against him.  Section 4, as it stood originally read:               "(1)  The  State  Government may,  if  in  its               opinion  the  public  interest  so   requires,               revoke  a  licence  in any  of  the  following               cases, namely:               (a)   where the licensee in the opinion of the               State Government makes wilful and unreasonably               prolonged  default in doing anything  required               of him by or under this Act;               (b)   where  the  licensee breaks any  of  the               terms or conditions of his licence the  breach               of which is expressly declared by such licence               to render it liable to revocation;               (c)   where  the  licensee fails,  within  the               period fixed in this behalf by his licence  or               any  longer period which the State  Government               may substitute therefore by order under sub-s.               (3), cl. (b) and before exercising any of  the               powers conferred on him thereby in relation to               the execution of works:               (i)   to  show,  to the  satisfaction  of  the               State  Government,  that he is in  a  position               fully and efficiently to discharge the  duties               and obligations imposed on him by his licence,               or               (ii)  to  make  the  deposit  or  furnish  the               security required by his licence;               (d)   where  the licensee. is, in the  opinion               of the State Government, unable, by reason  of               his   insolvency  fully  and  efficiently   to               discharge  the duties and obligations  imposed               on him by his licence.

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             (2)   Where the State Government might,  under               sub-s.  (1) revoke a licence, it may,  instead               of  revoking the licence, permit it to  remain               in  force  subject to such further  terms  and               conditions as it thinks fit to impose and  any               further  terms or conditions so imposed  shall               be   binding  upon,  and  observed   by,   the               licensee,  and  shall  be of  like  force  and               effect  as  if  they  were  contained  in  the               licence." The  original section 4 was considered by the Privy  Council in Hubli Electricity Company v. The Province of  Bombay.(’.) The  Privy Council held that in s. 4(1) (a) the  opinion  of the Government (1)  A.I.R. 1949 P.C. 136. 67 was  not subject to any objective tests.  The Privy  Council said  "The  language leaves no room for the relevance  of  a judicial examination as to the sufficiency of the grounds on which the Government acted in forming an opinion."  However, it  was  held that the opinion should  relate  to  "anything required  under the Act." The’ Privy Council said :  "If  it relates  to something which was not required under  the  Act the revocation of the licence would be invalid." Then  there  came our Constitution with  its  Art.  19(1)(g) conferring  on the citizens. the right to carry on  business subject to reasonable restrictions in public interest.  This Court in Dr. N. B. Khare V. The State of Delhi(1) held  that if  an  Act,  which  imposes  restrictions  on  the   rights specified  in  Art. 19, does not provide for  a  reasonable, hearing to the party affected, the restriction could not  be said  to be reasonable in certain circumstances.   It  seems that  Parliament realised, though late, in 1958, that  s.  4 may  not stand the test of Art. 19(1) (g).   Accordingly  it made radical amendments in s. 4. The amended section 4 reads               "(1)  The  State  Government may’  if  in  its               opinion  the public interest so requires,  and               after consulting the State Electricity  Board,               revoke  a  licence  in any  of  the  following               cases, namely :--               (a)   where  the licensee, in the  opinion  of               the   State  Government,  makes   wilful   and               unreasonably   prolonged  default   in   doing               anything required of him by or under this Act;               (b)   where  the  licensee breaks any  of  the               terms or conditions of his licence the  breach               of   which  is  expressly  declared  by   such               licence, to render it liable to revocation;               (c)   where  the  licensee fails,  within  the               period fixed in this behalf by his licence  or               any  longer period which the State  Government               may   substitute  therefore  by  order   under               section   4A,  sub-section  (1)   and   before               exercising any of the powers conferred on  him               thereby in relation to the execution of works-               (i)   to  show,  to the  satisfaction  of  the               State  Government,  that he is in  a  position               fully and efficiently to discharge the  duties               and obligations imposed on him by his licence,               or               (ii)  to  make  the  deposit  or  furnish  the               security required by his licence;               (d)   where  in  the  opinion  of  the   State               Government  the  ’financial  position  of  the               licensee  in such that he is unable fully  and

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             efficiently   to  discharge  the  duties   and               obligations imposed on him by his licence;               (7) [1950] S.C.R. 519.               68               (e)   where a licensee, in the opinion of  the               State   Government,   has  made   default   in               complying  with  any  direction  issued  under               section 22A.               (2)   Where in its opinion the public interest               so permits,               the  State Government may, on the  application               or with the consent of the licensee, and after               consulting  the State Electricity  Board,  and               the  Central Government where that  Government               is  interested, and if the licensee is  not  a               local  authority,  after consulting  also  the               local  authority, if any, concerned, revoke  a               licence  as  to the whole or any part  of  the               area of supply upon such terms and  conditions               as it thinks fit.               (3)   No  licence shall be revoked under  sub-               section  (1) unless the State Government  has,               given  to  the licensee not  less  than  three               months’ notice in writing, stating the grounds               on which it is proposed to revoke the  licence               and  has  considered any cause  shown  by  the               licensee  within  the period of  that  notice,               against the proposed revocation.               (4)   Where  the State Government might  under               sub-section (1) revoke   a  licence   it   may               instead  of revoking the license permit it  to               remain in force subject to such further  terms               and conditions as it thinks fit to impose  and               any  further  terms or conditions  so  imposed               shall be binding- upon, and be observed by the               licensee,  and  shall  be of  like  force  and               effect  as  if  they  were  contained  in  the               licence. The amending Act adds sub-sections (2) and (3) and  converts the  former sub-section (2) into sub-section (4).   It  adds clause  (e)  to sub-section (1).  It also  adds  ’and  after consulting the State Electricity Board’ in the opening  part of  sub-section (1).  The amendments relevant in  this  case are  the  phrase  ’after consulting  the  State  Electricity Board’ and sub-section (3) which now provides for a  hearing to the licensee before revocation of. his license. It  appears from a reading of S. 4 that when the  Government consults  the  Board  on the question  of  revocation  of  a licence  under s. 4, the Board is to make up its mind as  to whether  it should recommend (1) to revoke the  licence,  or (2) not to revoke the licence, or (3) to permit the  licence to  remain  in  force  subject to  such  further  terms  and conditions  as  may be thought proper.  It is  difficult  to conceive how the Board will make a choice out of these three courses without considering the explanation of the licensee. The  explanation  may make out a case for not  revoking  the licence  or  a  case for continuance  of  the  licence  with certain  over-added  conditions.  In a particular  case  the Government  may  propose  to revoke  the  licence  under  s. 4(1)(c)  on the ground that the licensee has failed to  show that he is in a position fully and efficiently to  discharge the  duties and obligations imposed on him by  his  licence. Similarly.  it  may propose to revoke the licence  under  S. 4(1)  (d)  where the financial position of the  licensee  is such  that he is unable fully and efficiently  to  discharge

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the  duties and obligations imposed on him by  his  licence. In none of these cases the Board will be able to make a just choice out of the aforesaid three 69 courses without applying its mind to the explanation of  the licensee.  In case of a charge under s. 4(1) (d), it is open to the Board to advance a loan to the.licensee and recommend against  the proposed revocation. of his licence.   We,  are accordingly of opinion that s. 4 contemplates that the Board should  make its recommendation only after  considering  the explanation of the licensee.  It would follow that the Board should  be consulted by the Government after the  licensee’s explanation has been received.  We have already said that in the  present  case the Board was consulted much  before  the receipt  of the appellant’s explanation and that  the  Board consequently could not consider the explanation at the  time of making its recommendation in favour of revocation of  the licence. Counsel for the Board has submitted that the Board is to  be consulted   only  as  regards  ’public  interest’.   It   is sufficient  to  state that we find no force at all  in  this argument.  In the alternative, it is said that the Board  is to be consulted only at the stage when the Government  takes a  provisional  decision to revoke the licence.   The  words ,after   consulting  the  Board’  have  been  added  by   an amendment.   The  suggested  construction  would  make   the amendment a mere pompous word-spinning. It  is  now  to be seen as to what is  the  effect  of  this premature consultation of the Board by the Government on the impugned order.  The Act does not expressly provide for  the consequence of premature consultation. it does not say  that the order of revocation is void.  Sri Sen contends that  the order  will  be void.  Counsel for the Board, on  the  other hand, contends that it will not be void.  According to  him, the  provision  regarding  consultation  of  the  Board   is directory,   and  not  mandatory.   Non-compliance  with   a directory  provision does not nullify the order.  It is  not disputed  that if the provision is mandatory, the  order  of revocation will be void. The object and setting of the, phrase "after consulting  the Board  in  section 4 will have to be examined  for  deciding whether  the  provision is mandatory or directory.  (H.   N. Rishbud v. State of Delhi [1955] 1 S.C.R. 1150). The  power  to revoke the licence is a drastic  power.   The revocation  of licence. results in severe aeridgment of  the right to carry on business.  Having in mind the requirements of  Art.  19  (1  ) (g), Parliament  has,  it  seems  to  us prescribed certain conditions to prevent the abuse of  power and to ensure just exercise of power.  Clauses (a) to (d) of s.  4  prescribe some of the- conditions precedent  for  the exercise  ,of power.  The order of revocation, in breach  of any one of those conditions, will undoubtedly be void.   The clause if in its opinion the public interest so requires" is also  a condition precedent.  On a successful  showing  that the order of revocation has been made without the Government applying  its  mind  to the aspect  of  Public  interest  or without forming an honest opinion on that aspect, it  will,, we have no doubt, be void.  The phrase "after consulting the State  Electricity Board" is sandwiched between  the  clause "if in its opinion the public 70 interest so requires" and cls. (a) to (d).  In this  context it appears to us that consultation with the Board is also  a condition,  precedent  for making the order  of  revocation. Accordingly  the breach of this condition  precedent  should

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also entail the same consequence as the breach of the  other conditions  referred to earlier.  It may be observed  that the  phrase "after. consulting the State Electricity  Board" did  not find place in s. 4 as it stood originally.  It  was introduced in s. 4 in 1959 by an amendment.  It seems to ’us that it was introduced in s. 4 with the object of  providing an  additional safeguard to the licensee.  When  revoking  a licence, the State Government acts in two stages.  At ’first it  forms  a  tentative opinion in favour  of  revoking  the licence.  Then it call for an explanation from the licensee. When   the  explanation  is  received,  it  considers   the, explanation.   If  not satisfied ’with the  explanation,  it passes the final order of revocation.  First impressions and provisional  judgments have, a tendency to  become  ultimate ideas and final judgments.  They would settle  unconsciously on  the  investigator’s  mind as  the  imperceptible,  dust- particles   on  an  optical  lens.   They  would   dim   his understanding  and obfuscate his observation.   Facts  which will  dovetail with them would arrest his  attention;  facts which  will conflict with them would flit  his  observation. If  by any chance he happens to notice refractory facts,  he would seek to reconcile them with his first impressions  and provisional   judgments.    This  understanding   of   human psychology  seems to have persuaded Parliament to  interpose the  condition  of the Board’s consultation to  the  Govern- ment’s  action.   The  Board is  an  independent  body.   It consists  of  three  members.  One of them  is  a  technical expert,  the  other  a financial expert, and  the  third  an administrative   expert.    While  considering   the   facts presented to it by the Government and by the licensee in his explanation, the Board will undoubtedly act with an open and unconditioned  mind  and  will be  able  to  offer  unbiased counsel to the Government.  Having regard to the object  and context,.  we  are  of  the  view  that  the  condition  _of consulting  the  Board is mandatory and the breach  of  this condition  will make the order of revocation void.  We  have already  held  that the Board was not  consulted  after  the explanation  was  received.  Accordingly we are  of  opinion that  the  order  is  void.   The  consequential  order   of acquisition will ipso facto fall down. Counsel  for  the  Board  has relied on  State  of  U.P.  v. Manbodhan  Lal Srivastava (supra), Ram Gopal  Chaturvedi  v. State of Madhya Pradesh(1) and The State of Bombay v. D.  A. Korgaonkar(2).  He has also relied on Rollo v. Minister  of’ Town   and   Country  Planning(3)  and  Derham   v.   Church Commissioners  for England(4) Ram Gopal Chaturvedi v.  State of   Madhya  Pradesh(1)  and.   State  of  Bombay  v.D.   A. Korgaonkar(2)   have  followed  Manbodhan   Lal   Srivastava (supra).  In Manbodhan Lal this Court held that Art.. 320(c) of  the  Constitution  is directory and  not  mandatory.   A Government   employee  was  dismissed  from  service   after complying  with  the  provisions  of  Art.  311(2)  of   the Constitution.  The U.P. Public Service Commission (1)  [1970] 1 S.C.R. 472. (2)  Civil Appeal No. 289 of 1958 decided on 6-5-1960. (3) [1948] (1) All England Law Reports 13. (4) [1954]  A.C. 245. 71 was  consulted  as to the punishment to be imposed  on  him. But it was consulted before the explanation of, the employee was  received by the Government.  The argument was  that  as the Commission did not have the, opportunity of  considering his explanation, there was no real consultation as  required by  Art.  320(c).  It was also argued that  Art.  320(c)  is directory.   The proviso to Art. 320 empowers the  approved.

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This  Court  pointed out several reasons for the  view  that Art. 320(c) is directory.  The proviso to Art. 320  empowers the  appropriate  Government to issue directions as  to  the classes  of  cases in which consultation of  the  Commission will not be necessary.  The proviso therefore indicates that the  provision  is directory.  Another reason given  by  the Court  is that Art. 320(c) does not occur in the Chapter  in which Art. 311 occurs.  It finds place in the Chapter  deal- ing  with  the Public Service  Commission.   Accordingly  it cannot  be  said  that it confers any  right  on  Government employees.   The third reason given is that consultation  of the Commission is not binding on the Government.  The  first two reasons do not apply in our case.  We have shown earlier that the condition of consulting the Board has been inserted by  an  amendment  of s. 4 with the  object  of  creating  a safeguard in favour of the licensee.  There is no  provision in the Act authorising the Government to waive the condition of  consultation  in any case.  It is true  that  the  third reason given by the Court in Manbodhan Lal (supra),  applies in this case.  As there, so here the opinion of the Board is not  binding  on  the Government.  In  spite  of  the  Board advising  against revocation, the Government,  if  satisfied that  it is necessary to revoke the licence may  revoke  it. But having regard to the object and context of s. 4, we  are of  opinion  that  it should not be  regarded  as  an  over- weighing  consideration.  It will normally be difficult  for the Government to ignore the Board’s expert advice.  We  are satisfied  from  the  object  and  context  of  s.  4   that Parliament  intended  to make consultation of the  Board  an imperative condition to revoking a licence. In the result, we allow the appeal and, set aside. the order of the High Court.  The petition of the appellant under Art. 226 of the Constitution is allowed and the notice No. 11795- EL  1/61/19 PW dated 17-8-1962, the order of revocation  No. 11795/EL 1/ 1PW dated 17-5-1963 and the order No.  .11795-EL 1/61-31/PW  dated 17-5-1963 directing the appellant to  hand over  the’  Undertaking  to  the  Board  are  quashed.   The appellant  shall  not get his costs here as well as  in  the High Court, as the point on which the appeal is allowed  was not raised in the High Court’. V.P.S.           Appeal  allowed. 72