* THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR + WRIT APPEAL Nos.41 AND 47 OF 2010 % 23-06-2010 # Santhoshima Parboiled Modern Rice ….Petitioner AND $ The District Collector, Nalgonda District, And others. ...Respondents ! COUNSEL FOR PETITIONERS: Sri Mahmood Ali ^ COUNSEL FOR RESPONDENTS: GP for Revenue <GIST >HEAD NOTE: CITATIONS: 1. AIR 1987 SC 943 2. 1998 (6) ALT 627 (D.B.) 3. AIR 1989 Cal.294 4. (2004) 3 SCC 440 5. 2003 (1) ALD 435 6. (2002) 7 SCC 478 7. (2006) 3 SCC 178 8. (2004) 6 SCC 213 9. (1993) 2 SCC 746 10. (1994) 1 SCC 243 11. (1999) 6 SCC 667 THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE VILAS V. AFZULPURKAR WRIT APPEAL Nos.41 AND 47 OF 2010 23.06.2010 Between: Santhoshima Parboiled Modern Rice, Rep.by its Managing Partner Sri Gouru Venkatesharlu, R/o H.No.1-72, Vidyanagar Colony, Miryalaguda Town, Nalgonda District. ….Appellant AND The District Collector, Nalgonda District, Office of the District Collector, Nalgonda, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE VILAS V. AFZULPURKAR WRIT APPEAL Nos.41 AND 47 OF 2010 COMMON JUDGMENT (Per Hon’ble Sri Justice V.V.S.Rao): Sri Santhoshima Parboiled Modern Rice Mill, Gadipally Village and Mandal, a firm, filed these two appeals aggrieved by the order of the learned single Judge in W.P.No.16900 of 2009 and W.P.No.12805 of 2009 respectively. As the two matters along with another writ petition being W.P.No.14867 of 2009 were disposed of by a common order and the background of the case being the same, it is expedient to dispose of both the matters by common order. In this order, we refer to the parties as they are arrayed in W.P.No.12805 of 2009. The petitioner firm is a trading rice mill. It obtained a Food Grain Licence (FGL), dated 17.11.2008 under the Andhra Pradesh Scheduled Commodities (Licensing, Storage and Regulation) Order, 2008 (hereafter called, Licensing Control Order). At the relevant time, it had capacity to mill 12.75 tonnes per hour. The licence requires the firm to comply with the provisions of the Essential Commodities Act, 1955 (the EC Act, for brevity), Licensing Control Order, the Andhra Pradesh Procurement (Levy) Order, 1984 (hereafter called, Levy Control Order), the conditions of licence and/or the guidelines and instructions issued by the Government from time to time. The petitioner asserts that on 17.06.2009, second respondent, namely, Joint Director (CS) inspected the petitioner’s rice mill. Deputy Tahsildar, Huzur Nagar, Revenue Inspector (Procurement), Suryapet and special squad members accompanied second respondent. Huge quantity of rice, paddy and broken rice was seized - 2942 quintals of BPT paddy, 26224 quintals of JJ Variety paddy, 34454 quintals of 1010 variety paddy, 550 quintals of BPT rice, 550 quintals of boiled rice, 360 quintals of rejected rice and 495 quintals of broken rice. In addition, three volumes of Form-B registers maintained for the period from 01.10.2008 to 16.06.2009 were also seized. The stocks seized were handed over to Pabba Nageshwar Rao, Managing Partner of M/s.Mahalakshmi Rice Company, Suryapet. In their Panchnama drafted on that day, it was alleged that the petitioner contravened and violated clauses 9, 12 and 16 of Levy Control Order and clause 10(1) of Licensing Control Order. Within a week after search and seizure operation on the basis of the report submitted by second respondent, on 23.06.2009, the District Collector issued notice under Section 6-B of the EC Act calling upon the petitioner to show cause as to why the entire stock seized should not be confiscated under Section 6-A of the EC Act. Two days thereafter, by proceedings No.CS1/1017/09, dated 25.06.2009, first respondent, namely, the District Collector passed orders under Section 6-A(2) of the EC Act directing third respondent, namely, District Manager, Andhra Pradesh State Civil Supplies Corporation Limited (DM, for brevity) to sell 550 quintals of BPT variety paddy by converting into rice through special counters of Hyderabad, Ranga Reddy District and Nalgonda for public consumption at the rates prescribed by the Government. A direction was also issued to park the recovered money in revenue deposit till final orders are passed under Section 6-A of the EC Act. Further, the District Collector also directed petitioner to deliver 1971 quintals out of seized quantity of BPT variety paddy 2942 quintals to special counters of Hyderabad, Ranga Reddy District and Nalgonda simultaneously on milling under the supervision of the DM. Aggrieved by the seizure, petitioner filed W.P.No.12805 of 2009 corresponding to writ appeal No.47 of 2010. After initiating action under Section 6-A of the EC Act, third respondent, namely, Joint Director (CS), by communication No.CS6/2370/2009, dated 11.08.2009 issued notice to show cause as to why their FGL should not be cancelled and debarred from participation of mill levy operations for violating the provisions of Licensing Control Order. Challenging the same, petitioner filed W.P.No.16900 of 2008. In the meanwhile, alleging that respondents stopped issuing permits for exporting boiled rice to other States and sale of raw rice and boiled rice within the State as well as MSP certificates for delivering rice to Food Corporation of India, yet another writ petition being W.P.No.14867 of 2009 was filed. It appears in an interlocutory application being W.P.M.P.No.19518 of 2009 filed therein, by order, dated 24.07.2009, this Court directed the District Collector to pass appropriate orders on the representations made by petitioner on 10.07.2009 and 19.07.2009 for grant of permits for sale of raw rice and boiled rice. In W.P.No.16900 of 2009, this Court also passed interim orders on 18.08.2009 directing the authorities not to cancel the FGL of the petitioner. Yet another interim order was passed in W.P.M.P.No.23452 of 2009 in W.P.No.12805 of 2009 directing release of the stock to petitioner on furnishing bank guarantee as determined by the District Collector. It appears the District Collector determined the value of the stocks seized at Rs.7,00,00,000/-, but the petitioner could not furnish Bank Guarantee to obtain release of stocks. After disposal of the writ petitions by learned single Judge, it appears all the stocks were released to the petitioner to the extent of 75%. The petitioner contends that the seizure of the stocks and the action of the Collector for cancellation of FGL as well as confiscation of seized stock is illegal, arbitrary and without jurisdiction. The case of the respondents as can be culled out from the counter affidavit filed by second respondent is as follows. Several complaints were received by the Government about the abnormal price increase of rice in the open market as a result of unlawful activities by the traders, dealers and millers. It has come to the notice of the Government that several millers and dealers are creating artificial shortage of superfine variety of rice in the open market. The Government issued G.O.Ms.No.49, Consumer Affairs, Food and Civil Supplies Department, dated 25.11.2008 fixing the stock limits that can be held by millers in addition to limiting the stock of superfine variety (preferred variety) of paddy to 10% of the total stock. Subsequently, the Government issued Memo No.41/CS1/09, dated 05.06.2009 to the effect that the miller can hold 10% of total of superfine variety without reference to the total stock available at the time of inspection. The Government also issued orders, dated 02.12.2008 authorising District Collector to direct any rice miller at any time to convert paddy into rice and deliver to Government Agency at required percentage or sell in the open market. While referring to storage and seizure operation on 17.06.2009 and seizure of the stocks, it is alleged in the counter that the variation of stock of rice is beyond permissible limits as provided under clause 18(2)(c) of the Licensing Control Order. In the counter affidavit in W.P.No.16990 of 2009, second respondent stated that as there are contraventions of provisions of Levy Control Order and Licensing Control Order, show cause notice was issued but no further action was taken when interim order was passed by this Court on 18.08.2009 directing not to cancel the FGL. The counsel for the petitioner firm submits that second respondent who seized the stock proceeded on the premise that resultant rice of milling is 1,92,374 quintals of paddy should be 1,28,890 quintals by taking 67% as quantity of rice obtained by milling, which is erroneous. Petitioner never exceeded paddy stock limits as prescribed by the Government in the Notification issued vide G.O.Ms.No.49, dated 25.11.2008 read with Memo No.41/CS/09, dated 12.01.2009. As per these two Government Orders, a rice mill with capacity of five tons paddy per hour can store 25,200 tonnes of paddy and in any event as per the latter G.O., a rice mill with one ton per hour milling capacity can hold upto 3,600 tonnes paddy at any point of time and the petitioners milling capacity being 12.75 tonnes per hour is entitled to store paddy at that rate and there cannot be any variation as alleged. Counsel also disputes the method and manner of weighing the paddy stock at the time of seizure. In view of these, he would submit that second respondent had no authority or jurisdiction to seize the stock on 17.06.2009. Nextly he submits that when the matter is sub judice before this Court, the initiation of action under Section 6-A of the EC Act and initiation of action for cancellation of FGL under clause 7(1) of the Licensing Control Order is improper and illegal. Lastly, he submits that pending the writ petition, the order passed by District Collector under Section 6-A of the EC Act on 23.03.2010 is non est as the petitioner was not given adequate opportunity and the District Collector proceeded on the basis of the affidavit filed by the petitioner in W.P.No.12805 of 2009 which is erroneous. He relied on the precedents of which reference will be made if necessary at appropriate place. The Government Pleader for Civil Supplies made the following submissions. While disposing of the writ petitions, the learned single Judge directed the District Collector to complete the enquiry under Section 6-A of the EC Act within a period of eight weeks from the date of the order, dated 30.12.2009 and even after receiving the notice under Section 6-B of the EC Act as the petitioner did not submit explanation, the District Collector passed orders on 23.03.2010. He points out that the charges 1 and 2 were dropped and delegation under charge No.3 is correct, 25% of the value of the seized stock was directed to be confiscated to the Government. He also submits that the writ petition filed challenging the show cause notice would not lie. The validity of seizure of stocks of paddy and rice, the propriety of passing order under Section 6-A of the EC Act and the legality of the show cause notice issued for cancellation of FGL are the three issues which can be considered together. Before doing so, the admitted facts need to be reiterated. The petitioner firm is a licencee under Licensing Control Order. The licence in Form-B issued under clause 3(ii) requires to maintain register as contemplated under clause 3 shall not contravene the Licensing Control Order and the provisions of EC Act and also comply with other conditions of licence as prescribed therein. Section 2(i)(a) of EC Act defines Collector as including Additional Collector and such other Officer as authorized by the Collector to perform such functions under the Act. Section 6-A of the EC Act empowers the Collector to seize any essential commodity for contravention of any Control Order and initiate further action for confiscation duly following the procedure contemplated therein. Any order passed by the Collector confiscating the seized essential commodity is subject to an appeal under Section 6-C before the Judicial Authority i.e., the Court of Sessions Judge in State of Andhra Pradesh. Section 15 bars a suit, prosecution or any other proceeding against any person for anything which is good faith done in pursuance of order made under Section 3 of EC Act. When we consider the question of jurisdiction these provisions cannot be ignored. At the stage of seizure for alleged contravention of the Control Order made under Section 3 of EC Act, it is not possible for any Inspecting Official to decide the contravention. It has to be ultimately decided by the competent authority under Section 6-A of EC Act. If in the enquiry, it is found that the contravention alleged by the Inspecting Officer is without merit, the action proposed for confiscation can be dropped. Merely because a search and seizure operation is conducted by Officer entrusted with the duty enforcing the Controlling Order, it cannot be faulted nor it becomes without jurisdiction only because a licensee perceives damage to reputation. When a wholesaler obtains Form-B licence under Licensing Control Order, he impliedly accepts to the right of the Licensing Authority to inspect the licensed premises and if necessary to seize the stock, which is allegedly held in contravention of EC Act, Licensing Control Order and/or Levy Control Order. Even if G.O.Ms.No.49 and the subsequent memo of the Government support the contention of petitioner firm, the same does not bar the jurisdiction of the second respondent to seize the stock especially when he is authorized by the District Collector to seize the stock. The contention of the petitioner that the respondents had no jurisdiction to inspect or seize, as the stocks held by the petitioner were within the permissible limits, is clearly not sustainable, inasmuch as the competent authority under the Act certainly had jurisdiction to investigate into the facts and satisfy itself that the provisions of the Control Order and the directions of the Government are complied with by the petitioner. The power to inspect and on being prima facie satisfied seize the stocks are, therefore, within the jurisdiction conferred on the competent authority under Section 6-A of the Act. The petitioner had been given adequate opportunity to explain the circumstances appearing against him. The record, however, reveals that the petitioner has not availed the said opportunity and has not filed any explanation merely on the ground that the present writ petitions questioning the jurisdiction are pending. During the course of pendency of these proceedings, the competent authority has passed final order and though the said order is not part of the record, both the learned counsel agreed that the same can be part of the record and we have accordingly perused the said order of the competent authority. The said order passed under Section 6-A of the Act directing confiscation of 25% of the seized stocks shows that the detailed investigation has been taken up by the competent authority and the order was passed directing the confiscation of 25% of the seized stocks. We however hasten to add that pursuant to the order of learned Single Judge, District Collector has passed orders under Section 6-A of EC Act directing confiscation of 25% of seized stock. This order is appealable under Section 6-C of EC Act before the Court of District and Sessions Judge and the petitioner can raise all questions in the appeal including the grounds urged before us. For the purpose of this case, we need to hold that the submission that the second respondent has no jurisdiction to seize the stock is wholly misconceived and devoid of any merit. The show cause notice for cancellation of FGL, which is challenged in W.P.No.16900 of 2009, against which W.A.No.41 of 2010 preferred, is issued under proviso to Clause 7(1) of the Licensing Control Order. As it is mandatory requirement, it cannot be faulted. It is now axiomatic that against show cause notice no writ petition would lie even where the question of jurisdiction is raised. In State of U.P. v Shri Brahma Datta Sarma[1], the Supreme Court held: The High Court was not justified in quashing the show-cause notice. When a show-cause notice is issued to a Govt.servant under a statutory provision calling upon him to show-cause, ordinarily the Govt.servant must place his case before the authority concerned by showing cause and the Courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued palpably without any authority of law. The purpose of issuing show-cause notice is to afford opportunity of hearing to the Govt. servant and once cause is shown it is open to the Govt. to consider the matter in the light of the facts and submissions placed by the Govt. servant and only thereafter a final decision in the matter could be taken. Interference by the Court before that stage would be premature. The High Court in our opinion ought not to have interfered with the show-cause notice. (emphasis supplied) In Special Officer, ULC v M.Vijayalakshmi[2], a Division Bench of this Court was concerned with the validity of a show-cause notice issued by the Government of Andhra Pradesh under Section 34 of the Urban Land (Ceiling and Regulation) Act, 1976. While holding that a writ petition seeking judicial review under Art.226 of the Constitution at the stage of show-cause notice is not maintainable, it was held as follows: Two principal issues arise for consideration: Firstly, the power of the State Government to review the order in terms of the provisions of Section 24 of the Act and secondly, the jurisdiction of the High Court under Article 226 of the Constitution in the matter of interference at a stage of the proceeding when the governmental authority did deem it fit to exercise its statutory power and has issued a show-cause notice in terms therewith. Turning attention onto the second count first, it is rather pertinent to note that scope of judicial reviewability in a situation like the present one is extremely limited and the High Court would be rather slow and loath to intervene at this stage of proceedings since the authority ought to be given a free hand and a full play in the matter of enquiring into the circumstances which prompted the authority concerned to issue the show cause notice. It is in this context, the observations of a learned single Judge of the Calcutta High Court in the case of I.T.C.Limited v Union of India[3] seem to be rather apposite wherein the learned single Judge observed that ordinarily, a writ petition is not maintainable against a show-cause notice in as much as, when a show-cause notice is issued, the party gets an opportunity to place his case before the authority concerned and there are elaborate proceedings by way of an appeal and/or revision against such order passed in such proceeding… (emphasis supplied) A reference may also be made to a recent judgment of Supreme Court in Special Director v Mohd.Ghulam Ghouse[4], wherein it is laid down as under: This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show- cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection granted. In view of the binding precedents, a writ petition against show cause notice would not lie even if the aggrieved person raises question of jurisdiction. All the questions should be raised before the authority. We are also not impressed with the contentions before the authority who issued show cause notice for cancellation of FGL. The counsel for appellant vehemently contends that by taking illegal seizure respondents tarnished image and reputation of petitioner and, therefore, he is entitled for award of compensation. We are afraid the submission is misconceived. Awarding of compensation for “Constitutional Tort” is part of Indian Constitutional Law. However for all alleged violations of Constitutional rights and statutory rights, this Court cannot award compensation. I n K.P.Hussain Reddy v Executive Engineer, M.I.Division, Nandyal[5], this Court after referring to various Indian and British authorities on constitutional tort noticed emerging principles as below: (i) Torts like assault, battery, and false imprisonment which are trespass to person by Police Officer and investigating agencies which are not authorised under law are Constitutional Torts. (ii) Awarding of compensation is public law remedy and available in a claim for deprivation of life and liberty alone. The compensation awarded is for the pecuniary and non- pecuniary loss suffered by the person due to illegal detention/imprisonment and is given to recompense for the inconvenience and distress suffered by the person. (iii) The order of compensation is in the nature of palliative and is passed to mulct the violators of the fundamental rights in payment of monetary compensation. (iv) When a person is arrested and imprisoned with malicious intention his constitutional and legal rights are said to be invaded. The malice and invasion of the right is not washed away by setting the person free and in appropriate cases the Court has jurisdiction to award compensation to the victim. (v) The public law remedy of monetarily compensating the violation of fundamental rights is part of the constitutional scheme based on strict liability for such contravention of rights and therefore the principle of sovereign immunity does not apply as it applies in private law. (vi) Judicially evolved right to compensation in public law is available for breach of public duty by the State of not protecting the fundamental right, but it is given for infringement of inalienable right to life and by way of applying balm to the wounds of the deceased family. (vii) For the tortuous acts of the Government Officers and Police Officers, the State is liable to pay compensation for violation of fundamental rights to life and liberty; and (viii) The order for awarding compensation need not be in the coercive form. It can be by way of declaration of the right of the person to be paid by the Government certain amount to be assessed by the Court. This is especially so in a case where fundamental right to property is breached in violation of law. Only in the cases of violation of Article 21 of Constitution of India alone, a citizen can seek adequate compensation from this Court notwithstanding the availability of civil law remedy for enforcing tortuous liability. This view of this Court is the law of the land in view of the decisions of Supreme Court in Rabindra Nath Ghosal v University of Calcutta[6], Sube Singh v State of Haryana[7], and Hindustan Paper Corporation Limited v Ananta Bhattacharjee[8]. In Rabindra Nath Ghosal (supra), the appellant appeared for M.A., Examination in Islamic History and Culture in November, 1984. Though University of Calcutta announced the results, the appellant's result was not declared. After writing to University to declare his result, he filed a writ petition before the Calcutta High Court seeking appropriate directions. In the meanwhile on 12.07.1991 he was declared to have failed in the examination. A learned single Judge of the High Court appointed a Committee to investigate into the reasons for the delay in declaration of the appellant's result. The Committee found that the appellant knew