L.S.Shivakumar vs L.B.Sannaiah & Ors

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, “SCFS”) 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.

28. 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 are “date of the order”. In 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 words “from the date of order”. To place a construction that the date of an order would mean passing of the order, though not made effective would lead to an absurdity.

30. In view of the aforesaid analysis, we arrive at the irresistible conclusion that the High Court has erroneously interpreted Paragraph 9 and 10 of the Control Order and that is why it has arrived at an erroneous conclusion. When we had reserved the judgment, we were apprised that a fresh show cause notice had been issued for the self-same allegation by the SCFS and an appeal has been preferred against them. As we have held, the Director alone has the jurisdiction to pass the order, the said order remains a valid order and can be challenged in an appeal under Paragraph 10 and the appellate authority would be the State Government.

31. Consequently, the appeal is allowed and the order passed by the Division Bench in AST No. 177/2013 is set aside and the respondent no.1 is granted liberty to prefer an appeal within the prescribed period before the State Government. Be it noted, the Control Order has been amended in 2014 whereby the period of limitation has been extended. Be that as it may, we direct that the period of limitation shall commence from today. There shall be no order as to costs.