IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 2490 of 1999 WITH SPECIAL CIVIL APPLICATION NOS. 1995/99 AND 2496/99 For Approval and Signature: Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE J.R.VORA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- DS RANA & ORS. Versus AHMEDABAD MUNICIPAL CORPORATION -------------------------------------------------------------- Appearance: Spl. C.A No. 2490/99 and 2496/99: MR K.S. NANAVATI WITH MR C.G SHARMA for Petitioners MR S.N. SHELAT WITH MR R.R MARSHALL for Respondent No. 1 MR D.P. JOSHI, ASSTT. GOVERNMENT PLEADER for Resp. State. Spl. C.A No. 1995/99: MR NIRAV MAJMUDAR for MR P.B. MAJMUDAR for Petitioners MR S.N. SHELAT WITH MR R.R MARSHALL for Respondent No. 1 MR D.P. JOSHI, ASSTT. GOVERNMENT PLEADER for Resp. State. -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE J.R.VORA Date of decision: 13/09/1999 ORAL JUDGEMENT (Per R.K.Abichandani,J.) This group of petitions raises the question whether a local authority can impose a condition while issuing a trade licence that the trade or its operation which in the opinion of the Commissioner, is dangerous to health, life or property or likely to create nuisance either from its nature or by reason of the manner in which or the conditions under which the same is or is proposed to be carried on, can be carried on only in an industrial zone, thereby prohibiting such trade or operation to be carried on in other areas including residential areas. 2. In this set of three petitions, the lead matter being Special Civil Application No. 2490 of 1999 has been filed by thirty three petitioners against the Ahmedabad Municipal Corporation, Deputy Health Officer of the Corporation and the State of Gujarat, seeking a direction on the respondents to renew the licences of the petitioners as required under the provisions of The Bombay Provincial Municipal Corporation Act, 1949 and for quashing and setting aside the impugned notices dated 18th March, 1999 of the nature at Annexure "F" to the petition and the impugned orders dated 31st March, 1999 of the nature at Annexure "I" to the petition. According to the petitioners their trade or business of melting gold and silver is done since several decades under licences given to them under Section 376(1) and it does not cause any nuisance or health hazard in the locality in which it is carried on. It is alleged that the impugned action is arbitrary, violative of principles of natural justice, excessive and unwarranted and takes away their fundamental right to do business or trade guaranteed by Article 19(1)(g) of the Constitution. 3. Special Civil Application No. 2496 of 1999 is preferred by the Gujarat Bullion Refinery, being a Partnership firm for the reliefs which are identical to those framed in Special Civil Application No. 2490 of 1999. 4. Special Civil Application No. 1995 of 1999 has been filed by fortysix persons seeking similar reliefs and claiming trade licences to be issued to them for the said business and challenging the show cause notices and the orders similar to those as are challenged in the other petitions, requiring them to close down their trade and operations of gold and silver melting and refineries at the places where it was being carried on by them without a licence, in view of the decisions taken by the local authority. 5. The contentions which were raised on behalf of the petitioners of Special Civil Application Nos. 2490 of 1999 and 2496 of 1999 by their learned Counsel were adopted by the learned Counsel who appeared for the petitioners in Special Civil Application No. 1995 of 1999 and he supplemented those contentions. 6. By the notice at Annexure "F" dated 18th March, 1999, being the type of notice issued to all the petitioners, the petitioners were informed that their trade operations were causing nuisance as detailed in the show cause notice and were hazardous to health for the reasons mentioned therein and also caused environmental pollution and therefore, the petitioners should show cause as to why their licence should not be cancelled in the interest of public health. Alongwith the notice was, attached Schedule-A, which contained the findings reached by the National Institute of Occupational Health, which had carried out a detailed study of various silver foundries in the areas where the petitioners used to carry out their trade activities. The Institute had concluded that the overall industrial hygiene conditions prevailing in the silver foundries are very bad, illumination is also very poor and the problem of heat stress, respirable dust and fumes containing metals especially cadmium and lead is of serious concern. The gist of the report was mentioned in Schedule-A to the show cause notice. A reply was sent on 23rd March, 1999, in response to the show cause notice by the petitioners and a copy of one such reply is at Annexure "G" to this petition. By that reply, the petitioners inter-alia called upon the respondent authority to furnish particulars on the basis of which they alleged that these units of gold and silver melting and refineries were causing nuisance and health hazards as alleged in the show cause notice. Thereafter, the Ahmedabad Bullion Meltors' Association sent a representation dated 25th March, 1999 to the Chairman of the Standing Committee of the Ahmedabad Municipal Corporation, after appearing in person on 22.3.1999, as stated therein, requesting for the issuance or renewal of the licences to these traders who were doing the trade or operations connected with the trade in gold and silver melting and refineries. Thereafter, an order was made on 31st March, 1999 by the Deputy Health Officer, who exercised powers of the Municipal Commissioner delegated to him, cancelling the licences of the petitioners, requiring them to stop the said trade, on the basis of the resolution of the Standing Committee dated 26.2.1999, by which it was decided that the trade of gold and silver melting and refining could not be carried on at any place other than an industrial zone under a licence. It appears that by office order No. 3053 dated 9th July, 1990, a copy of which was placed on record with an affidavit of the Deputy Health Officer of the Corporation, the Municipal Commissioner, in exercise of his powers under Section 69(1) of the Bombay Provincial Municipal Corporation Act, 1949, had empowered the Deputy Health Officer or the Additional Health Officer in respect of the respective zone placed under him, to exercise, perform or discharge the powers, duties or functions conferred, imposed upon or vested in the Municipal Commissioner by or under the said Act as per the Schedule appended to the order, which included issuance of licences and permits under Chapter XXII as specified therein. It also appears that the Municipal Commissioner had put up a note on 6th March, 1999, proposing to the Standing Committee to take a policy decision of not issuing any licence in respect of trades or operations connected with gold and silver melting and refineries except for an industrial zone and not to allow it at any other place and to cancel such licences which were already granted and to effect closure of such refineries and furnaces. He also proposed change in the licensing rules, keeping in view the recommendations of the National Institute of Occupational Health. A resolution came to be passed by the Standing Committee, being Resolution No. 1314 dated 26.3.1999 by which considering the Health Committee's resolution No.77 of 18.3.1999, the Municipal Commissioner's proposal dated 6th March, 1999, the representations made by the Association of the Ahmedabad Bullion Refineries Association, including their written representation dated 25th March, 1999, resolving to empower the Municipal Commissioner to take necessary steps in the matter, in light of the expert report of the National Institute of Occupational Health, Ahmedabad, for not issuing such licence except in respect of an industrial zone and for cancellation of the existing licences. The resolution of the Standing Committee was approved by the General Body of the Municipal Corporation on 22.4.1999, by its resolution No.33, a copy of which is also placed on record alongwith the affidavits of the Deputy Health Officer. Thus, the stand taken up by the respondent authorities is that in view of the health hazards and nuisance created by carrying on the said trade and its operations in the thickly populated area in which they were hitherto located, the local authority has taken a policy decision to confine such activities to an industrial area only, by imposing a condition to that effect in the licences, which are required to be issued under Section 376 of the Act. 7. Before we proceed to consider the rival contentions, we may take note of the fact that by Special Civil Application Nos. 9322/97, 1467/98 and 1368/98, as also in Special Civil Application No. 1364/98, the petitioners had earlier approached this Court on the ground that they were carrying on the business of melting of old silver/gold articles within the city area mentioned therein for last about five decades and that they were not creating any nuisance and therefore, they were entitled to the issuance of licences for such trade. In that group of petitions also it was contended by the local authority that the petitioners were carrying on their business illegally in a very densely populated region and this results in an unhygienic environment, nuisance and inconvenience and health hazard to the residents of the area. It was contended that the activity of melting gold and silver ornaments by running furnaces in residential houses, caused great inconvenience and nuisance of heat, noise, dirty stink due to use of acid which also damage the drainage line and was increasing the chances of respiratory track infection and eye diseases to the inhabitants of the locality. It was pointed out that the Municipal Corporation had passed a resolution No. 68 on 31.1.1997 to get a study made of the consequences of running such silver melting furnaces in the residential area and the health hazards created thereby, through the National Institute of Occupational Health and for stopping all such furnaces which were operating without a valid licence. The learned Single Judge, in his order dated 16th March, 1998, made in those petitions observed that the power of judicial review in such matters was limited and that the Court would not sit in appeal over the decision of administrative authorities in such matters decided under Section 376 of the said Act. However, since the petitioners and similarly situated persons were carrying on their business since many decades, the learned Single Judge found it just and proper to give them one more opportunity to make improvements in the manner in which or the conditions under which they were carrying on their business. The Court directed the petitioners not to carry on any business of melting of silver and gold in the premises for the period from 1.4.1998 to 30.4.1998 and thereafter, they were required to apply for licence under Section 376 of the Act. Thereafter, from 1.5.1998, the respondents were to permit the petitioners to carry on the business for a limited period of one month for ascertaining as to whether the business carried on by them caused any nuisance or health hazard to the persons in the neighbourhood. It was directed that it was open for the petitioners to produce expert opinion and other material to show that no such nuisance or health hazard was caused. The respondents were required to consider the applications of the petitioners for grant of licence for carrying on business of melting silver and gold on merits, in accordance with law. It was made clear in paragraph 12 of the said order that the Court was not sitting in appeal over the decision of the administrative authorities and these directions were given only to give one more opportunity to the petitioners and not with a view to give the petitioners another round of litigation. As noted above, after this order, show cause notice was issued to all these petitioners and the Standing Committee of the Corporation, on the basis of the proposal made by the Municipal Commissioner, took a policy decision of not allowing such activity in the areas in which they were being carried on within the city, by imposing a condition in the licence that it could be carried on only in an industrial zone. 8. Detailed arguments were canvassed by both the sides and the matter was finally argued both the sides at the admission stage itself. The learned Senior Counsel appearing in Special Civil Application Nos. 2490/99 and 2496/99, contended that the licences of the petitioners of Special Civil Application No. 2490/99 were valid upto 31.3.1998 and were not renewed thereafter except in petitioner No.3, whose licence was operative till 31.3.2000 and was cancelled. The licences of the petitioners of Special Civil Application No. 2496/99 were valid upto 31.3.1999 and thereafter they were not renewed. The Counsel for the petitioners of Special Civil Application No. 1995/99 submitted that these fortysix petitioners had no licences earlier, but their applications for licence were rejected in view of the impugned decision. 8.1 The questions involved in these three petitions are identical. It was contended by the learned Counsel for the petitioners that the Municipal Commissioner has exceeded his authority in stopping the business of melting gold and silver by the petitioners. It was argued that the Corporation has no power to stop any business and all that it can do, is to impose terms and conditions in a licence which it is required to issue. It was submitted that in cases where the licence was earlier issued, the Commissioner is deemed to have made up his mind that the said trade or its operations were not inherently dangerous. Earlier, no such condition of carrying on such trade or operations in an industrial zone was ever imposed and licences were being issued, on the basis of which the business could be carried on in these areas of Manekchowk etc. within the city of Ahmedabad. It was submitted that when for several decades the Commissioner did not find anything objectionable against carrying on these activities in Manekchowk and other areas of the city, he could not have now insisted that the activity should be carried on only in an industrial zone. It was argued that on the basis of the legitimate expectation that all these traders had, in view of they being allowed to carry on their activities nearly for five decades, the Municipal Commissioner cannot make such a sudden shift by imposing a condition which had the effect of prohibiting the said trade at all places other than an industrial zone. It was submitted that the Commissioner had therefore, exercised his discretion of imposing such a condition arbitrarily and in violation of the fundamental rights of the petitioners guaranteed by Articles 14 and 19(1)(g) of the Constitution. It was argued that the petitioners have a right to carry on the said trade, which was being taken away by imposing such prohibition, which was not a reasonable restriction. It was submitted that any condition which was arbitrary or unreasonable or imposes any excessive restriction on the right to trade of the petitioners was not warranted by the provisions of Section 376(1)(d)(ii) of the Act. Initially, it was sought to be contended that the Deputy Health Officer could not have issued the impugned order and that the resolution of the Standing Committee was subject to the Corporation's approval, but these contentions were given up when the orders showing the authorisation of the Deputy Health Officer and the resolution of the Municipal Corporation approving the resolution of the Standing Committee, were placed on record. 8.2 The next important contention raised by the learned Counsel for the petitioners was that in making the impugned decision of prohibiting the activity in places other than the industrial zone, which had the net effect of refusing the licences or their renewal in respect of the places other than the industrial zones for doing the said trade or business in gold and silver melting and refining, was violative of principles of natural justice, as the material which was sought to be relied upon for reaching its decision by the local authority, was not supplied to the petitioners though it was sought and that no proper hearing was given to the petitioners. It was contended that the report of the National Institute of Occupational Health on "HEALTH HAZARDS IN AND AROUND SILVER FOUNDRIES IN AHMEDABAD" was not given to the petitioners with the show cause notice, nor was the material on the basis of which the said report was prepared by the experts, supplied to the petitioners. It was therefore, submitted that the decision taken by the local authority in the matter was void, as the same has contravened the principles of natural justice requiring an adequate opportunity of hearing to be given to the petitioners before taking an adverse decision, which had the effect of denying the licence or renewal of the licence for such trade in the areas other than industrial zone and in which the trade or business was being carried on for nearly five decades. It was submitted that the decision which had the effect of prohibiting the said trade or business activity in areas other than the industrial zone was an arbitrary decision based on insufficient material and was taken without considering other material which would have shown that by certain regulations the business could have been carried on at the same places. It was also argued that even if the decision was assumed to be a change in policy, it was essential for the local authority to have heard the petitioners. It was submitted that the restriction imposed was totally disproportionate to the mischief which was sought to be remedied and the work could have been allowed to be carried on with some additional safeguards at the same place where it was being done for all these years. It was contended that the impugned order was vague and cannot be said to be a policy decision. 9. In support of their contentions, the learned Counsel for the petitioner placed reliance on the following decisions:- (a) Decision of the Supreme Court in Express Newspaper Ltd. Vs. Union of India, reported in AIR 1958 S.C 578 was relied upon in support of the contention that the phrase `reasonable restriction' in clause (6) of Art. 19 connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interest of the public. (b) Paragraphs 6, 7 and 8 of the decision in Chintamanrao Vs. State of Madhya Pradesh, reported in AIR 1951 S.C 118 were relied upon in support of the contention that a prohibition which is arbitrary in nature and has no relation to the object which the legislation seeks to achieve, cannot be said to be a reasonable restriction on the exercise of the right. (c) Reliance was placed on the decision in State of Assam Vs. Bharat Kala Bhandar Ltd., reported in AIR 1967 S.C 1766, which was rendered in context of sub-rule (4) of Rule 126-AA of the Defence of India Rules, 1962, and in which it was held that the power conferred which was of wide and far reaching effect could not be exercised purely on subjective satisfaction of the authority and that before the Government exercised power under sub-rule (4), it should even in a real emergency, consult the interested concerned before taking action thereon. (d) Reference was made to the decision in M/s. North Bihar Agency and ors. Vs. The state of Bihar and ors., reported in AIR 1981 S.C 1758, in which the Court was satisfied that no proper opportunity was given to the appellants before their licences were cancelled and additional material was not furnished to them and the order of the State's Drug Controller and the appellate authority were set aside with a direction to proceed afresh in the matter of cancellation of the licence, after giving the petitioners proper opportunity of hearing and following the principles of natural justice. In that case, the appellate authority was greatly influenced by the fact that four drugs resembling the reputed drugs, which were sent to the Central Drugs Laboratory for test, were declared not to be of standard quality. This aspect of the matter was not mentioned in the show cause notice and the report of the laboratory test was not furnished to the petitioners. (e) Decision in M.C. Mehta (Taj Trapezium Matter) Vs. Union of India and ors. reported in (1997) 2 S.C.C 353 was referred to for contending that with proper changes and safeguards, the petitioners could have been allowed to carry on their business at the same place. In that case the Supreme Court had directed that the relocation of the industries from Taj Trapezium Zone was to be resorted to only if the natural gas which has been brought at the doorstep of Taj Trapezium Zone was not acceptable or available by/to the industries as a substitute for coke/coal. (f) Reference was made to the decision of the Supreme Court in Punjab Communications Ltd. Vs. Union of India, reported in AIR 1999 S.C 1801, in which it was held that the doctrine of legitimate expectation in the substantive sense has been accepted as a part of our law and that the decision maker can normally be compelled to give effect to his representation in regard to the expectation based on previous practice or past conduct unless some overriding public interest comes in the way. (g) Decisions in M.C. Mehta Vs Union of India, reported in 1998 (9) S.C.C 149 and reported in (1996) 4 S.C.C 750, were relied upon to show and contend that the petitioners ought to have been relocated at some suitable place and that they should be given incentives which are normally extended to new industries in new industrial estates. (h) Decision of the Supreme Court in Olga Tellis and ors. Vs. Bombay Municipal Corporation, reported in AIR 1986 S.C. 180, was referred to for its proposition that any action taken by a public authority which is invested with statutory powers, has to be tested by the application of two standards: the action must be within the scope of the authority conferred by law and secondly, it must be reasonable. (i) Decision of the Supreme Court in Hari Chand Sarda Vs. Mizo District Council and anr. reported in AIR 1967 S.C 829 was referred to, for its proposition that regulation which leaves to licensing authority unrestricted power in the matter of granting or refusing licence or its renewal to non-tribal trader was violative of Art. 19(1)(g) of the Constitution of India. 10. The learned Counsel appearing for the respondent local authority and it's official pointed out from the record that various complaints were received in year 1991 onwards against the health hazards and nuisance caused by the business activity of the petitioners of melting and refining gold and silver in the areas in question. He referred to the earlier petitions which were filed and in which Hon'ble Mr.Justice M.S.Shah, gave directions on 16th March, 1998, which we have already noted above. He pointed out that in Letters Patent Appeal No. 505/98 decided on 16.6.1998, that earlier decision was confirmed with slight modification in the order of the learned Single Judge and an observation that the authorities, while taking the decision afresh, will not be influenced by any of the observations made in the order dated 16.3.1998. It was argued