Case: Narayanan Sankaran Mooss Vs. The State Of Kerala And Another

1. The Kottayam Electric Supply Agency, Kottayam, is the licensee for the supply of electric energy in Kottayam in the State of Kerala The appellant, N. S. Mooss, is the proprietor of the licensee. By an order, dated May 17, 1963, the State of Kerala revoked the licence with effect from August 1. 1963. The order was made under Section 5 (1) (a) of the Indian Electricity Act, 1910 (hereinafter called the Act). On the same date, the State of Kerala made another order under Section 5 (1) (c) and (3) of the Act directing the appellant to deliver the undertaking to the Kerala Electricity Board (hereinafter called the Board) on or before July 1, 1963. The appellant filed a writ petition under Art. 226 of the Constitution challenging the two orders. The High Court has dismissed the petition Hence this appeal.On August 17, 1962, the State Government issued a notice to the appellant under S. 4 (3) of the Act asking him to show cause why the licence should not be revoked. He was asked to send his explanation within three months and three days from the date of the receipt of the notice. Much before the issue of this notice. On June 21,1962, the State Government sent the letter No. 11795 EL 1/61/17/ P. W. to the Board. The letter states that the Government considered that the licence of the appellant should be revoked under S. 4 (1) (a) and requested the Board to communicate its views to the Government. On July 26, 1962 the Board sent its reply to the Government. The reply letter is No. B. VI/5705/62. The Board recommended the revocation of the licence. On November 5, 1962 within three months of the issue of the notice under Section 4 (3), the appellant sent his explanation to the Government. The Government was not satisfied with the explanation. It passed the impugned order on May 17, 1963 revoking the licence. These facts support Sri Sens contention that the Boards recommendation was made without looking into the appellants explanation. Indeed, it was humanly impossible for the Board to have looked into the explanation.4. Counsel for the State Government and the Board have raised a preliminary objection. They point out that the argument advanced by Sri Sen was neither raised in the writ petition nor urged before the High Court. According to them it should not be allowed to be raised in this Court. It is true that the point is not specifically raised in the writ petition. But, in our view, it is embedded in paragraphs 6 and 22 of the affidavit accompanying the petition. Paragraph 6 asserts that the aforesaid two orders are "illegal and void and of no effect." Paragraph 22 states that "the entire proceedings culminating in the issue of (the two orders) constitute a gross violation of that the impugned order have been made in breach of the statutory conditions for revoking a licence. earlier we have said that Sri Sens contention is embedded in paragraphs 6 and 22. We are reassured of our construction of these paragraphs by the fact that the Government as well as the Board have also construed the petition in the same sense and have controverted it in their affidavits. Paragraph 3 of the affidavit filed on behalf of the Government states: "(The appellants) objections were considered and the Government formed an opinion that it was in public interest to revoke the licence and after consulting the Electricity Board revoked the licence as the Government were satisfied that in their opinion the petitioners had made willful and unreasonably prolonged default in doing several things required of him by or under the Indian Electricity Act." In reply to paragraph 22 of the petition, the Governments affidavit states that "orders were passed in accordance with the provisions of all the relevant Acts and the Rules and after considering the objections raised by the licensee." Paragraph 5 of the Boards affidavit is more outspoken and elaborate. It states: "The State Government consulted the Board in the matter of revoking the licence of the Kottayam Electric Supply Agency by invoking S. 4 (1) (a) of the Indian electricity Act, 1910 and the Board vide letter No. BVI/5705/62, datedendorsed the views of the Government on the matter (and) recommended the revocation of the licence." Paragraph 18 of the Boards affidavit is a reply to Paragraph 22 of the appellants affidavit. Paragraph 18 asserts that the impugned orders "were passed in accordance with Law and the Rules thereunder." It is thus unmistakably plain that the Government as well as the Board understood the petition as raising a challenge to the orders on the ground of want of due consultation of the Board before the making of the impugned orders. And they have replied to that implicit challenge in the petition. It appears to us that there is little force in the preliminary objection that Sri Sens contention is not raised in the petition.5. It is true that this point was not urged on behalf of the appellant in the High Court. But as the facts requisite for deciding the issue are on record, we think that we should allow the point to be raised as it goes to the root of the matter.It may be noted that the appellant has raised this point in ground No. 6 of his statement of case. That ground is: "The Government without any further thought and relying solely on this report proceeded to revoke the licence and sought the view of the Electricity Board on the matter. The Board with the Managing Director of the Company as one of its members readily accepted the report and agreed with the suggestion of the Government for revocation of the licence. It is after having made up its mind to revoke the licence, as seen from Ex.that the Government issued notice to the appellant to show cause against revocation." It cannot be said that the respondents have been taken by surprise. They already knew that the point would be agitated in the Court.

Court's reasoning:
4. Counsel for the State Government and the Board have raised a preliminary objection. They point out that the argument advanced by Sri Sen was neither raised in the writ petition nor urged before the High Court. According to them it should not be allowed to be raised in this Court. It is true that the point is not specifically raised in the writ petition. But, in our view, it is embedded in paragraphs 6 and 22 of the affidavit accompanying theis thus unmistakably plain that the Government as well as the Board understood the petition as raising a challenge to the orders on the ground of want of due consultation of the Board before the making of the impugned orders. And they have replied to that implicit challenge in the petition. It appears to us that there is little force in the preliminary objection that Sri Sens contention is not raised in the petition.This entire chain of correspondence between the Government and the Board would unmistakably show that there was no second consultation between the Government and the Board regarding the revocation of the licence after the Government had received the appellants explanation to the show cause notice served on him. In the circumstances of the case we are satisfied that no prejudice will be caused to the respondents if the point is permitted to be raised in this Court. So we permit Sri Sen to argue the point.It appears form a reading of S. 4 that when the Government consults the Board on the question of revocation of a licence under S. 4, the Board is to make up its mind as to whether it should recommend: (1) to revoke the licence, or (2) not to revoke the licence, or (3) to permit the license to remain in force subject to such further terms and conditions as may be thought proper. It is difficult to conceive how the Board will make a choice out of these three courses without considering the explanation of the licensee. The explanation may make out a case for not revoking the license or a case for continuation of the licence with certainIt is now to be seen as to what is the effect of this premature consultation of the Board by the Government on the impugned order. The Act does not expressly provide for the consequence of premature consultation. It does not say that the order of revocation is void. Sri Sen contends that the order will be void. Counsel for the Board, on the other hand, contends that it will not be void. According to him, the provision regarding consultation of the Board is directory, and not mandatory.with a directory provision does not nullify the order. It is not disputed that if the provision is mandatory, the order of revocation will be void.The power to revoke the licence is a drastic power. The revocation of licence results in severe abridgment of the right to carry on business. Having in mind the requirements of Art. 19 (1) (g), Parliament has, it seems to us, prescribed certain conditions to prevent the abuse of power and to ensure just exercise of power. Clauses (a) to (d) of S. 4 prescribe some of the conditions precedent for the exercise of power. The order of revocation, in breach of any one of those conditions, will undoubtedly be void. The clause "if in its opinion the public interest so requires" is also a condition precedent. On a successful showing that the order of revocation has been made without the Government applying its mind to the aspect of public interest or without forming an honest opinion on that aspect, it will, we have no doubt, be void. The phrase "after consulting the State Electricity Board" is sandwiched between the clause "if in its opinion the public interest so requires" and cls. (a) to (d). In this context it appears to us that consultation with the Board is also a condition precedent for making the order of revocation. Accordingly the breach of this condition precedent should also entail the same consequence as the breach of the other conditions referred to earlier. It may be observed that the phrase "after consulting the State Electricity Board" did not find place in S. 4 as it stood originally. It was introduced in Section 4 in 1959 by an amendment. It seems to us that it was introduced in Section 4 with the object of providing an additional safeguard to the licensee. When revoking a licence, the State Government acts in two stages. At first it forms a tentative opinion in favour of revoking the licence. Then it calls for an explanation from the licensee. When the explanation is received, it considers the explanation. If not satisfied with the explanation, it passes the final order of revocation. First impressions and provisional judgments have a tendency to become ultimate ideas and final judgments. They would settle unconsciously on the investigators mind as the imperceptibleon an optical lens. They would dim his understanding and obfuscate his observation. Facts which will dovetail with them would arrest his attention; facts which will conflict with them would flit his observation. If by any chance he happens to notice refractory facts, he would seek to reconcile them with his first impressions and provisional judgments. This understanding of human psychology seems to have pursuaded Parliament to interpose the condition of the Boards consultation to the Governments action. The Board is an independent body. It consists of three members. One of them is a technical expert, the other a financial expert, and the third an administrative expert. While considering the facts presented to it by the Government and by the licensee in his explanation, the Board will undoubtedly act with an open and unconditioned mind and will be able to offer unbiased counsel to the Government. Having regard to the object and context, we are of the view that the condition of consulting the Board is mandatory and the breach of this condition will make the order of revocation void. We have already held that the Board was not consulted after the explanation was received. Accordingly we are of opinion that the order is void. The consequential order of acquisition will ipso facto fallhave shown earlier that the condition of consulting the Board has been inserted by an amendment of Section 4 with the object of creating a safeguard in favour of licensee. There is no provision in the Act authorising the Government to waive the condition of consultation in any case.It is true that the third reason given by the Court in Manbodhan Lal 1958 SCR 533   = (AIR 1957 SC 912  ) (supra) applies in this case. As there, so here the opinion of the Board is not binding on the Government. In spite of the Board advising against revocation, the Government may, if satisfied that it is necessary to revoke the licence, may revoke it. But having regard to the object and context of Section 4, we are of opinion that it should not be regarded as anconsideration. It will normally be difficult for the Government to ignore the Boards expert advice.We are satisfied from the object and context of Section 4 that Parliament intended to make consultation of the Board an imperative condition to revoking a licence.