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

The petitioner states that he is an Indian citizen carrying on a business dealing in rice and paddy in the district of Kamrup in the State of Assam. In 1955 was enactedthe Essential Commodities Act, 1955 (Act 10 of 1955). In exercise of the powers conferred by S. 3, of the said Act, read with a notification by which the said powers were delegated by the Central Government to the Government of Assam, the latter Government made an Order called the Assam Foodgrains (Licensing and Control) Order, 1958. The result of this was that no dealing in rice and paddy in wholesale quantities was permissible unless the petitioner obtained a license from the relevant licensing authority. The petitioner states that he obtained such a license in 1958. This license expired on December 31, 1958. The case of the petitioner is that in 1959 also he carried on his business though there is some dispute as to whether he obtained a license for that year. On November 26, 1959, the petitioner received a letter from the office of the Deputy Director of Supply, Gauhati, which said that his license would not be renewed after December 31, 1959. This communication, it is stated, was the result of a decision taken by the Government of Assam on the advice of a body called the Food Advisory Council to give a right of monopoly procurement of paddy to a co-operative society in the district of Kamrup known as the Assam Co-operative Apex Marketing Society Ltd. (respondent No. 6 before us). In a letter dated November 13, 1959, the Director of Supply, Assam, indicated the policy to be followed to give effect to the decision aforesaid in these termsright of monopoly procurement in respect of Kamrup district including Mangaldai Sub-division, Taxpur Sub- division, Cachar district, Nowgong district including United Mikir and North Cachar Hills and North Lakhimpur Sub-division has been given to the Co-operative Apex Marketing Society. The Society will procure paddy from the growers though various service Co-operative Societies spread over the district or sub-division. They will procure all available surplus paddy and deliver to Supply Department the quantity required for the buffer stock for those areas. Any paddy procured by them which is not required by us may be delivered to thecopy of the letter was forwarded to all licensing authorities. On January 5, 1960, the Assam Foodgrains (Licensing and Control) Order, 1960, came into force. This replaced the earlier Order of 1958. Clause 5 of the 1960 Order was in these termsMatters to be taken into consideration for granting a license. - In granting or refusing a license under this Order, the licensing authority shall among other matters have regard to the following, namely :-(a) the stock of foodgrains available in the locality for which the license is required;(b) the number of persons who have applied for and/or been granted licenses in respect of the foodgrains under this Order in the locality;(c) the business ordinarily carried on by the applicant; and(d) the past activities of the applicant as a licensee or business man/firm.Provided that the State Government may from time to time modify the conditions for granting aJanuary 28, 1960, the petitioner made his application for a license for the year 1960. This application was rejected by an order dated February 17, 1960. The reason given for the rejection was in these termsare hereby informed that as the Co-operative Apex Marketing Society has been given the right of monopoly purchase in the Kamrup district this year, your case cannot be considered for issue of thereason was obviously based on the decision as to monopoly procurement which the Government of Assam had adopted.3. Against this order the petitioner moved the High Court of Assam by means of a writ petition under Art. 226 of the Constitution. The High Court allowed the petition mainly on the ground that the application of the petitioner for a license for the year 1960 was not considered on merits by the licensing authority in accordance with the provisions of Cl. 5 of the Assam Foodgrains (Licensing and Control) Order, 1960. The High Court did not go into the larger question whether the State could or could not create a monopoly in the matter of procurement of paddy under the said provisions by means of executive instructions issued to the licensing authorities. It, however quashed the order dated February 17, 1960, and issued a writ of mandamus directing the licensing authority to consider the application of the petitioner on merits and in accordance with the provisions of the aforesaid Control Order. Till June 7, 1960, no order was passed by the licensing authority, and on that date the petitioner made two applications to the High Court, one for directing the licensing authority to grant him a license for 1960 and the other for taking action for contempt of court. A notice of these applications, it is stated, was served on the respondents. On June 8, 1960, the licensing authority made another order refusing to grant a license to the petitioner. This order statedthe Assam Co-operative Apex Marketing Society Ltd. had already, been granted a license to deal in rice and paddy, with its branches spread all over the district, it was considered unnecessary to grant further dealing licenses to individual dealers for the sameJune 9, 1960, the applications earlier made by the petitioner to the High Court on June 7, 1960, were withdrawn and a fresh application was made on June 15, 1960, which was directed against order dated June 8, 1960. On August 10, 1960, the High Court again set aside the order and directed the licensing authority to act independently of instructions received from the Government and to apply its mind to the merits of the application and decide it in accordance with the relevant provisions of the Assam Foodgrains (Licensing and Control) Order, 1960, Again, no orders were made by the licensing authority till September 8, 1960, in accordance with the directions of the High Court, and the petitioner made two applications on that date : one for enforcing the direction of the High Court, and the other for initiating proceedings in contempt. These applications were admitted and it is stated that notices were served on the respondents, including the licensing authority, on that very date. On September 13, 1960, the licensing authority made another order, again rejecting the application of the petitioner. This order stated interthe areas for which the applications have been made the Assam Co-operative Apex Marketing Society Ltd. has earlier applied for and has been granted license. This is a relevant consideration under Clause 5(b) of the Assam Foodgrains (Licensing and Control) Order, 1960, The stock of foodgrains available in the area can easily be procured by the party already given license. Being a co-operative, it has better facility in this respect.As such, I do not find it necessary to grant license to the applicant. The petition is, therefore, rejected.This time instead of going to the High Court of Assam, the petitioner came here and filed his writ petition on October 17, 1960 (Writ Petition No. 303 of 1960). Thereafter, certain proceedings took place in this Court to which we have earlier referred in the first paragraph of this judgment. The amended writ petition as it now stands is directed against the order of the licensing authority dated April 11, 1961, by which it rejected the application of the petitioner for a license for 1961. The provisions of the Assam Foodgrains (Licensing and Control) Order, 1960, are no longer relevant, because a fresh Order called the Assam Foodgrains (Licensing and Control) Order, 1961, was made by the Governor of Assam. We shall hereinafter call this the Control order, 1961. It is necessary to read here Cl. 5 of the Control Order, 1961.Matters to be taken into consideration for granting a license. -In granting or refusing a license under this Order, the licensing authority shall, among other matters, have regard to the following, namely :-(a) the stock of foodgrains available in the locality for which the license is required.(b) the number of persons who have applied for and those who have been granted licenses in respect of the foodgrains under this Order in the locality;(c) the business ordinarily carried on by the applicant;(d) the past activities of the applicant as a licensee or business man/firm; and(e) whether the applicant is a co-operativeshould be noticed that the proviso to old Cl. 5 was omitted and a new sub-cl. (e) was added. This sub-clause enables the licensing authority, in granting or refusing a license, to have regard to the consideration whether the applicant is a co-operative society. To complete the statement of facts, it may perhaps be observed that on November 10, 1960, the High Court rejected the application for proceeding against the opposite parties by way of contempt, mainly on the ground that the order made on September 13, 1960, was not before it.

Court's reasoning:
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.