Case: Mannalal Jain Vs. The State Of Assam And Others

open to the licensing authority to give preference to co-operative societies if it was of the opinion that granting a license to a co-operative society in a particular locality would facilitate the objects of S. 3 of the Act. This is not what the licensing authority did. He repeatedly refused a license to the petitioner, for the only reason and purpose of granting a monopoly to co-operative societies. In other words, the discrimination that has been made by the licensing authority is really in the administration of the law. It has been administered in a discriminatory manner and for the purpose of achieving an ulterior object, namely, the creation of a monopoly in favour of co-operatives, an object which, clearly enough, is not within sub-cl. (e) of Cl. 5 of the Control Order, 1961. We have quoted earlier the various orders which the licensing authority had passed. Those orders clearly show that the licensing authority refused a license to the petitioner not on grounds referred to in sub-cls. (a) and (b) of Cl. 5 but on the ground that the State Government had decided to introduce a right of monopoly procurement of paddy in favour of co-operative societies and therefore, no licenses should be granted to individual dealers other than co-operative societies. Judged against the background of facts to which we have earlier referred in this judgment, the impugned order dated April 11 1961, appears to us to have been based on the same ground, namely, the creation of a monopoly in favour of co-operatives, even though the order refers to existing licenses and the quantity of foodgrains available in the locality. In the course of the hearing before us, the case was adjourned in order to give the parties an opportunity of filing necessary affidavits to show whether individual dealers other than co-operatives have been completely excluded in the whole of the State in the matter of dealing in paddy. The affidavits show that private dealers have been completely excluded. In the affidavit filed on behalf of respondent No. 1, it has been stated in para. 4:"It is not denied that in the year 1961 licenses for the procurement of paddy have been issued to the co-operatives in all the paddy producing districts in Assam."To show however that no monopoly has been created in favour of a particular co-operative society like respondent No. 6, it has been stated that a number of co-operative societies have been or are being granted licenses for the procurement of paddy. In our view these statements in the affidavits filed on behalf of the respondents show only one and one object, viz., creation of a monopoly in favour of co-operatives. To achieve that object the State Government has resorted to an indirect method. Instead of making an order authorising such monopoly (if the State was competent to make such an Order under the Essential Commodities Act, 1955, as to which we express no opinion), it has chosen to adopt the indirect method of issuing instructions to the licensing authorities in all the districts to grant licenses to co-operatives only. The vice of the impugned order lies in the licensing authority accepting such instructions and passing an order in accordance therewith. The duty of the licensing authority was to pass orders in accordance with Cl. 5 of the Control order, 1961. Instead of doing that, it passed an order in accordance with the instructions given to it on behalf of the State Government, instructions which appear to us to be not in consonance with sub-cl. (e) of Cl. 5; because sub-cl. (e) contemplates a preference to co-operative societies in certain circumstances, but not a monopoly in their favour.11. We accordingly hold that the impugned order is bad as violating the rights of the petitioner guaranteed under Arts. 14 and 19 of the Constitution. We must, therefore, quash the order of the licensing authority dated April 11, 1961. We must also quash the order by which the licensing authority granted a license in favour of respondent No. 6.The licensing authority must now consider the application of the petitioner for a license for the year 1961 on merits along with the application of respondent No. 6 and such other applications as may be still pending. In dealing with these applications the licensing authority must have regard to the provisions of Cl. 5 of the Control Order, 1961, and such other provisions of law as have a bearing on them, in the light of the observations made in this judgment. It would be the duty of the licensing authority to ignore all instructions which are not, in consonance with the provisions of law by which it is to be guided. As the year 1961 will come to an end within a few months, the applications should be dealt with as expeditiously as possible so that the right of the petitioner may not be rendered anfractuous by reason of the delay made in disposing of the applications.12. Before we part with this case we must express our deep concern over the manner in which the State Government or its officers have issued instructions in the matter of granting of licenses, instructions which clearly enough are not in consonance with the provisions of law governing the grant of such licenses. We doubt the wisdom of issuing executive instructions in matters which are governed by provisions of law; even if it be considered necessary to issue instructions in such a matter, the instructions cannot be so framed or utilised as to override the provisions of law. Such a method will destroy the very basis of the rule of law and strike at the very root of orderly administration of law.We have thought it necessary to refer to this matter because we feel that the instructions which the State Government or its officers have issued in the matter of granting of licenses for the procurement of paddy are not in consonance with the provisions of Cl. 5 of the Control Order, 1961.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Obviously enough it is open to the licensing authority to consider all matters relevant to the grant or refusal of a license and the five matters enumerated in the clause merely highlight some of those matters. All that can be said is that sub-cl.(e) enables the licensing authority to prefer a co-operative society in certain circumstances in the matter of granting a license; in other words, there may be cases or localities where the consideration set out in sub-cl. (e) may override other considerations in the matter of granting a license. We do not think that sub-cl. (e) has any more far-reaching effect. Indeed, the learned Attorney-General appearing for the respondents conceded that sub-cl. (e) of Cl. 5 did not have the effect of creating a monopoly in favour of co-operativeprinciples underlying Art. 14 of the Constitution are now well-settled and have been enunciated and explained in a number of decisions of this Court and we consider it unnecessary to refer to those principles it detail. In the case under our consideration no discrimination has been made between one class of license-holders and another class of license-holders as in the case of AIR 1961 Gujarat 38. What has happened in the present case is that licenses have been granted only to co-operative societies and a license has been denied to the petitioner, the licensing authority proceeding on the footing that a monopoly must be created in favour of co-operative societies. A discrimination has indeed taken place as against, the petitioner, a discrimination which is not justified by the provisions of Cl. 5 of the Control Order, 1961.We accordingly hold that the impugned order is bad as violating the rights of the petitioner guaranteed under Arts. 14 and 19 of the Constitution. We must, therefore, quash the order of the licensing authority dated April 11, 1961. We must also quash the order by which the licensing authority granted a license in favour of respondent No. 6.The licensing authority must now consider the application of the petitioner for a license for the year 1961 on merits along with the application of respondent No. 6 and such other applications as may be still pending. In dealing with these applications the licensing authority must have regard to the provisions of Cl. 5 of the Control Order, 1961, and such other provisions of law as have a bearing on them, in the light of the observations made in this judgment. It would be the duty of the licensing authority to ignore all instructions which are not, in consonance with the provisions of law by which it is to be guided. As the year 1961 will come to an end within a few months, the applications should be dealt with as expeditiously as possible so that the right of the petitioner may not be rendered anfractuous by reason of the delay made in disposing of the applications.12. Before we part with this case we must express our deep concern over the manner in which the State Government or its officers have issued instructions in the matter of granting of licenses, instructions which clearly enough are not in consonance with the provisions of law governing the grant of such licenses. We doubt the wisdom of issuing executive instructions in matters which are governed by provisions of law; even if it be considered necessary to issue instructions in such a matter, the instructions cannot be so framed or utilised as to override the provisions of law. Such a method will destroy the very basis of the rule of law and strike at the very root of orderly administration of law.We have thought it necessary to refer to this matter because we feel that the instructions which the State Government or its officers have issued in the matter of granting of licenses for the procurement of paddy are not in consonance with the provisions of Cl. 5 of the Control Order, 1961.