Case: State Of West Bengal And Ors Vs. R.K.B.K. Ltd.

2. The facts which need to be exposited for adjudication of this appeal are that the first respondent was granted the licence for carrying on the business of superior kerosene oil as an agent by the Joint Director of Consumer Goods, West Bengal in accordance with the paragraph 5(1) of the Control Order. The monthly allocation of public distribution system of superior kerosene oil to the said respondent was fixed by the Director of Consumer Goods, West Bengal at 1,82,000 litres per month. On 10.8.2012 a physical inspection was carried out by the Area Inspector attached to the office of the Sub Divisional Controller, Food and Supplies, Burdwan (for short,at the depot of the respondent. The concerned Inspector submitted the report to the SCFS stating that 71,494 litres of superior kerosene oil had been delivered in excess by the dealer. On 8.4.2013, the SCFS issued a notice seeking explanation about the discrepancy pointed out by the Area Inspector. On receipt of the said show cause notice, the first respondent submitted his explanation on 16.4.2013. The SCFS afforded an opportunity of personal hearing to the dealer on 3.5.2013 and the same was availed of. After conducting the enquiry, the SCFS forwarded the entire record to the District Controller, Food and Supplies Department, Burdwan, who in turn sent the entire case records to the Director of Consumer Goods for appropriate decision. After scrutiny of the records, the Director of Consumer Goods issued a show cause notice to the dealer on 26.6.2013. The first respondent replied to the same on 28.6.2013 through his counsel stating, inter alia, that under the Control Order, after the licence is issued to an agent by the Office of the Director, the District Magistrate having jurisdiction or any officer authorised by him, is alone empowered to look into the functioning of the said agency and to give directions to him and/or initiate action against the concerned agent. Additionally, it was also put forth that the second show cause notice on the self-same allegations was untenable in law and accordingly prayer was made to withdraw and/or rescind the notice and take steps for disposal of the matter in terms of the provisions of the Control Order.3. As the factual matrix would further undrape, the Director of Consumer Goods, vide order dated 22.7.2013 narrated the facts in detail and came to hold that SCFS has the authority to ask for explanation regarding distribution of superior kerosene oil in his jurisdiction; and that the Director of Consumer Goods being the Licensing Authority, can exercise the power to issue show cause notice and after giving the delinquent agent a fair opportunity of being heard, pass appropriate orders. The said order also would reflect that the counsel for the first respondent had appeared before the Director on 17.7.2013. The concerned Director analysed the factual matrix and in exercise of power conferred on him under paragraph 9(ii) of the Control Order imposed a penalty of Rs.26,08,816.00 and further directed reduction of monthly allocation of superior kerosene oil of the agent by 12,000 litres for a period of one year.4. The order passed by the Director was assailed by the agent in W.P.No. 25204 (W) of 2013. The learned Single Judge vide order dated 22.08.2013 referred to paragraph 10 of the Control Order which provides for an appeal to be preferred and accordingly directed that if the agent prefers an appeal by 6.9.2013, the appellate authority shall dispose of the same by 31.12.2013. The learned Single Judge further directed that the agent shall maintain with utmost care an inventory of stocks and accounts for periodical submission to the authorities and the penalty amount should be deposited by 6.9.2013 and the said penalty amount shall be kept in a separate interest bearing account.5. Being aggrieved by the aforesaid order, the respondents 1 and 2 preferred an appeal being AST No. 177 of 2013 before the Division Bench. It was urged in the intra-court appeal that the proceeding before the Director of Consumer Goods was patently without jurisdiction, for power of cancellation or suspension could only be exercised by the Director or District Magistrate having jurisdiction and in the case at hand the District Magistrate, Burdwan is the competent authority to exercise the power under paragraph 9 of the Control Order and not the Director of Consumer Goods; that assuming the Director had jurisdiction, the proceeding that was initiated had lapsed after expiry of 30 days after the date of issuance of the show cause notice by the Director; and that in any case the proceeding was initiated by SCFS and he could not have sent the record to the Director after expiry of 30 days when the proceeding stood lapsed. It was also urged that the order in question was served on the first respondent on 12.8.2013 and, therefore, the date mentioned in the order could not validate the same as it was not dispatched within 30 days. The submissions put forth by the first respondent before the Division Bench of the High Court were seriously contested by the learned counsel for the Department.6. The Division Bench posed the following twoWho is the competent authority to take disciplinary action either by cancellation or suspension of the licence of a S.K. Oil agent appointed in a district outside the Calcutta?b. Whether the order of cancellation or suspension of licence in terms of Paragraph 9 of the West Bengal Kerosene Control Order will become effective on the date of passing of the said order or when the said order is communicated to the concernedAfter posing the aforesaid two questions, the Division Bench took note of the fact that the respondent-dealer was authorised to carry on the business as an agent of super kerosene oil in the district of Burdwan and the SCFS had issued a show cause to the respondent and instead of taking the final decision himself, forwarded the records to the Director of Consumer Goods for necessary action who issued a fresh show cause notice on the self-same allegations and passed a order on 22.07.2013 which was without jurisdiction in view of the conjoint reading of the language employed in paragraphs 8, 9 and 10 of the Control Order. Thereafter, the Division Bench proceeded to deal with the issue whether the Director had passed the order imposing penalty within 30 days from the date of serving the show cause notice in terms of paragraph 9 of the Control Order, for the same was served on the dealer on 12.8.2013. The Court took note of the contention of the advanced by the learned counsel for the appellants therein that the order under Paragraph 9 passed by the competent authority in writing within 30 days from the date of serving the show cause notice should mean the communication of the order in writing within the said period of 30 days and not from the signing of the order and accepted the same. To arrive at the said conclusion, the appellate Bench placed reliance on Rani Sati Kerosene Supply Company and Others v. The State of West Bengal and Others (2005 (4) CHN 264 ). It referred to paragraphs 27 and 29 of the said decision and thereafter came to holdthe reasons discussed hereinabove, we hold that the Sub-Divisional Controller, Food and Supplies, Burdwan lawfully initiated the proceeding against the appellant/writ petitioner no. 1 by issuing show cause notice but did not conclude the same within 30 days as required under paragraph 9 of the West Bengal Kerosene Control Order, 1968.We further hold that the Director of Consumer Goods had no jurisdiction and/or authority to initiate any proceeding against the appellant/writ petitioner no. 1 in terms of paragraph 9 of the West Bengal Kerosene Control Order since the licence was granted to the appellant/writ petitioner no. 1 for carrying on business as S.K. Oil agent in the district of Burdwan which is outside Calcutta.In the result, the impugned order dated 22nd July, 2013 passed by the Director of Consumer Goods cannot survive and is liable to be set aside since the said Director had no authority and/or jurisdiction to pass any order under paragraph 9 of the West Bengal Kerosene Control Order, 1968 in respect of S.K. Oil agent of Burdwan. Therefore, the impugned order dated 22nd July, 2013 issued by the Director of Consumer Goods in respect of the appellant/writ petitioner no. 1 isof this view, it allowed the appeal and set aside the judgment of the learned Single Judge of the High Court.

Reasoning: 18. On a reading of that paragraph it is clear that power conferred on the Director and the District Magistrate are different, for the Director is a higher authority and the rule clothes him with more authority. Needless to say, the said paragraph has to be read in juxtaposition with other paragraphs. It is clear from paragraph 5 that the Director alone is authorised to grant a licence to an agent whereas alicence can be granted either by the Director or by the District Magistrate.3 of Paragraph 5 of the Control Order is also indicative of the fact that the agent operates at a larger scale than the dealer. An agent can sell, supply or transfer kerosene to a dealer, holder of a permit or delivery order and no other person.2 of Paragraph 6 of the Control Order is differently worded as it postulates that conditions can be specified by the Director or the District Magistrate having the jurisdiction. The conditions imposed may vary from time to time for the sake of fair distribution of kerosene. The authorities are also different as per the dictionary clause.Keeping in view the aforesaid rule of interpretation, we are constrained to think that it would be incongruous to hold that even when the licence of an agent at the State level is granted and issued by the Director, a District Magistrate, as defined in paragraph 3(e) of the Control Order, in exercise of concurrent jurisdiction can suspend or cancel the State level licence. Be it noted, as per Section 21 of the General Clauses Act, power to issue notification/etc. includes the power to amend/ vary or rescind. Though the said provision is not applicable, yet it is indicative that generally unless the statute or rule provides to the contrary, either expressly or impliedly, issuing or appointing authority would also exercise the right to cancel or suspend the licence. As has been stated earlier, on a cursory reading it may appear that paragraph 9 confers concurrent jurisdiction. The said paragraph deals with suspension or cancellation of licence and is a composite paragraph, which applies to licence granted to an agent as well as the dealer. It refers to the power of a Director and District Magistrate having jurisdiction. The wordsare also used in paragraph 6. The expressionreflects the legislative intent that District Magistrate having jurisdiction under paragraph 9 would be the same District Magistrate or authority which has the power to grant licence to a dealer in Form B under paragraph 6. Read in this manner, we have no hesitation in holding that it is the Director alone who could have issued the show cause notice under paragraph 9 and has the authority and jurisdiction to pass an order in terms of paragraph 9 of the Control Order. The earlier notice issued by SCFS has to be regarded at best a show cause notice to ascertain and affirm facts alleged and it ensured a response and reply from the first respondent. The said notice by SCFS could not have culminated in the order under paragraph 9, for he has no authority and jurisdiction to pass an order suspending or cancelling the licence. Therefore, the matter was rightly referred to the Director for action, if required, in terms of paragraph 9 of the Control Order.22. Having held that, we think it appropriate to refer to the aspect of communication pertaining to period as prescribed in paragraphs 9 and 10. The High Court has taken note of the fact that SCFS had issued the notice of show cause to which the agent had replied. The said authority has forwarded the matter to the Director, Consumer Goods for his perusal and necessary action, who in exercise of his authority had passed the order on 22.7.2013 which was received by the first respondent on 12.8.2013. The Division Bench has opined that as per Paragraph 9, the order has to be passed within 30 days after the issue of the notice to show cause and same has to be communicated within the said period and passing an order on the file would not tantamount to an order.Keeping in view the aforesaid principles, if it is held that the order would become a nullity, it really does not serve the purpose of the Control Order. On the contrary, it frustrates it and, therefore, the interpretation placed by the High Court on Paragraph 9 in juxtaposition with Paragraph 10 to treat the order has null and void is neither correct nor sound. It is desirable that the authority shall pass an order within 30 days from the date of show cause. Be it noted that there are two contingencies when the show cause is issued for violation or when an order of suspension is passed. There can be no trace of doubt that the order will take effect from the date when it is served. The order, unless it is served, definitely neither the agent nor the dealer would suspend its activities or obey any order, for he has not been communicated. Regard being had to this aspect, it is to be seen whether the prescription of 30 days from the date of order as provided in Paragraph 10 would make the order null and void. The order passed by the authority comes into effect when it is communicated. An order passed in file in case of this nature would not be an effective order, for it is adverse to the interest of the dealer or agent and, therefore, paragraph 10 has to be given a purposive meaning. It has to convey that 30 days from the date of the order which is an effective order, and that is the date of communication. Unless such an interpretation is placed, the intention of the rule making authority and also the intention behind the object and reasons behind the Control Order and the Essential Commodities Act, 1955 would be frustrated. Thus, we are of the considered opinion that the view expressed by the High Court on this score also is absolutely incorrect and wholly unsustainable.29. Apart from above, the words used in Paragraph 10 areIn the scheme of the Control Order, the order comes into effect from the date of receipt by the agent or the dealer. Once that becomes the decision, the commencement of limitation of 30 days for the purpose of Paragraph 10 would be the date when the order is effective. The High Court in Rani Sati Kerosene Supply Company and Others (supra) has opined that if the order of cancellation is not served on the affected person and the appeal period expires, there is the possibility that the adverse order would become unassailable. The reasoning is totally fallacious. An appeal can only be preferred when the order is effective. The ineffective order, that is to say, uncommunicated order cannot be challenged. Therefore, the reasoning given by the court in earlier judgment is erroneous and hence, the reliance thereupon by the impugned order is faulty. There has to be a purposive construction of the wordsthe date ofTo place a construction thatthe date ofan order would mean passing of the order, though not made effective would lead to an absurdity.