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Case Number

C.M.W.P No. 27637 of 2004

Attorney(S)

R.S.Yadav
R.K.Singh
H.C.Dwivedi

Judges

Ashok Bhushan, J.

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petitioner is a fair price shop dealer whose agreement was suspended following an inspection dated 30 August 2001 and subsequently cancelled by the Sub Divisional Officer (SDO) on 24 October 2001. The petitioner filed an appeal (Appeal No. 13 of 2001). The appellate court, by order dated 27 January 2004, set aside the cancellation order and remanded the matter to the SDO for fresh consideration after giving the petitioner an opportunity to be heard. After the cancellation, the shop had been allotted to respondent No. 3 (Purusottam Singh).

Respondent No. 3 filed Writ Petition No. 7525 of 2004 challenging an order dated 27 January 2004; that writ petition was dismissed by this Court on 23 February 2004. The SDO issued a notice to the petitioner on 25 February 2004 to submit a reply and on 26 February 2004 restored the petitioner’s supply while stopping the supply to respondent No. 3. Respondent No. 3 appealed, and the appellate authority, by order dated 9 July 2004, set aside the SDO’s 25/26 February 2004 order and directed literal compliance with its earlier order dated 27 January 2004. The present writ petition challenges the 9 July 2004 order insofar as it set aside the SDO’s restoration of the petitioner’s supply.

Legal Issues Presented

What is the legal consequence of the appellate court's order dated 27 January 2004 (which set aside the cancellation order and remanded the matter)? Specifically, did that remand operate to restore the petitioner’s supply/ licence as a matter of right?
Whether the appellate authority committed an error in setting aside the SDO’s order dated 25/26 February 2004 which had (a) restored the petitioner’s supply and (b) stopped the supply to respondent No. 3.

Arguments of the Parties

Petitioner's Arguments

The petitioner’s counsel argued that the appellate court erred in setting aside the SDO’s order of 26 February 2004 restoring the petitioner’s supply; once the cancellation order had been set aside by the appellate court, the SDO rightly restored supply to the petitioner.
It was also argued that the SDO correctly stopped the supply to respondent No. 3 because respondent No. 3’s writ petition challenging the appellate order had been dismissed on 23 February 2004.
The petitioner’s counsel relied on this Court’s decisions: Nand Lal Maurya v. State of U.P. (2002 (1) JCLR 738 (All)) and Naumi Ram v. Deputy Collector (2001 (1) CRC 558 : 2001 All LJ 444).

Respondents' Arguments

Respondents contended that the original agreement of the petitioner had been suspended earlier and no appeal was filed against the suspension; further, the appellate court’s order dated 27 January 2004 did not restore the petitioner’s licence or direct restoration of supply but only remanded the cancellation proceedings to be decided afresh.
Accordingly, the SDO should not have restored the petitioner’s supply on 26 February 2004, and the appellate court was correct in setting aside that restoration as an illegal order.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nand Lal Maurya v. State of U.P., 2002 (1) JCLR 738 (All)	Held that once a cancellation order is set aside on the appeal of an existing licensee, a subsequent allotment/ dealership granted after the cancellation automatically comes to an end.	The Court observed that this decision confirms that an allotment made after cancellation falls away when the cancellation is set aside, but the judgment did not address the specific issue whether, when a matter is remanded, the existing licensee's supply must necessarily be restored. Accordingly, the precedent was found not to be dispositive of the remand-scenario issue in the present case.
Naumi Ram v. Deputy Collector, 2001 (1) CRC 558 : 2001 All LJ 444	In that case, a writ petition by an existing licensee challenging an SDO order stopping supply was allowed and the stoppage order was set aside.	The Court held that the facts and the order in Naumi Ram differ from the present case because the appellate order of 27 January 2004 remanded the matter for fresh consideration and did not indicate restoration of supply; therefore Naumi Ram does not apply to the present facts.

Court's Reasoning and Analysis

The Court accepted the factual chronology as agreed by the parties: suspension and cancellation of the petitioner’s agreement (24 October 2001), the appellate court’s setting aside of that cancellation and remand to the SDO (27 January 2004), subsequent allotment to respondent No. 3, dismissal of respondent No. 3’s writ on 23 February 2004, and the SDO’s restoration of the petitioner’s supply and stoppage of respondent No. 3’s supply on 26 February 2004.

The core analytical focus was the legal effect of the appellate court’s remand order dated 27 January 2004. The Court analyzed the text and scope of the appellate order and observed that an appellate court hearing an appeal against a cancellation order has a range of powers — it may set aside the cancellation and restore the shop, or it may set aside the cancellation and remand the matter, or make other appropriate orders. In the present case, the appellate court did not finally decide that the licence should be restored; it remanded the matter for fresh decision because the petitioner’s reply to the show-cause notice had not been considered and the SDO had not given reasons for rejecting the Supply Inspector’s recommendation.

From that analysis the Court drew two consequences:

The remand itself did not constitute a direction to restore the petitioner’s supply; therefore the SDO’s unilateral restoration of supply on 26 February 2004 was not valid because the cancellation proceedings had not been finally resolved.
However, a secondary and automatic consequence of setting aside the cancellation order was that any allotment made after the cancellation (i.e., the allotment to respondent No. 3) ceased to have effect. Thus, the SDO’s stoppage of respondent No. 3’s supply was justified by the fact that the allotment in respondent No. 3’s favour had fallen away once the cancellation was set aside.

The Court examined the authorities relied upon by the petitioner and concluded they did not control the present dispute. Nand Lal Maurya established that subsequent allotments fall away when cancellation is set aside, but did not address whether a remand requires restoration of supply; Naumi Ram also concerned a different factual posture (an SDO stoppage subsequently set aside) and thus was inapplicable to the remand situation here.

Applying these principles to the facts, the Court concluded that the appellate authority correctly set aside the part of the SDO’s 25/26 February 2004 order that restored the petitioner’s supply, but erred in setting aside the part of that order that stopped respondent No. 3’s supply; the stoppage was warranted because the allotment to respondent No. 3 had been negated by the appellate court’s earlier order setting aside the cancellation.

Finally, since no final decision on cancellation had been taken after the remand, the Court directed the SDO to take a final decision pursuant to the remand order dated 27 January 2004 expeditiously and preferably within three months from the production of a certified copy of the present order.

Holding and Implications

Holding: The writ petition is disposed of with a partial modification of the appellate authority's order dated 9 July 2004. The Court upheld the appellate order insofar as it set aside the SDO’s order of 25/26 February 2004 restoring the petitioner’s supply. However, the Court set aside that portion of the appellate order which had quashed the SDO’s stoppage of respondent No. 3’s supply; the stoppage of respondent No. 3 was held to be justified because the allotment in his favour fell away when the cancellation order was set aside.

Consequences for the parties:

The petitioner’s restoration of supply effected by the SDO on 26 February 2004 is invalid in consequence of the remand and is set aside.
The stoppage of supply to respondent No. 3 effected by the SDO is valid because the allotment to respondent No. 3 ceased to operate after the appellate court set aside the cancellation.
The SDO is directed to decide the cancellation proceedings afresh in accordance with the remand order dated 27 January 2004, preferably within three months of production of a certified copy of this Court’s order.

The opinion does not purport to announce or rely upon any newly articulated legal principle; it applies existing principles to the facts and clarifies the effect of a remand order vis-à-vis restoration of supply versus the automatic consequence that subsequent allotments fall away.

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Shiv Kumar Yadav v. State Of Uttar Pradesh And Others

1. Heard counsel for the petitioner, Sri Rohlt Kumar Singh, learned counsel, appearing for respondent No. 3 and learned standing counsel.

2. By this writ petition, the petitioner has prayed for quashing the order dated 9th July, 2004 passed by Assistant Commis sioner, Varanasi in Appeal No. 7/131 of 2004 (Purusottam Singh v. State). Brief facts necessary for deciding the controversy raised in the writ petition are; petitioner is a fair price shop dealer, On the basis of inspection dated 30th August, 2001, the fair price agreement of the petitioner was suspended. The petitioner submitted his reply on 19th August, 2001 on which the Supply Inspector made a recommendation dated 23rd October, 2001 for restoring the licence of the petitioner. The Sub Divisional Officer by the order dated 24th October, 2001 cancelled the agreement. Against the order dated 24th October, 2001, the petitioner filed Appeal No. 13 of 2001. The appellate Court took the view that petitioner's explanation was not considered and the order cancelling the licence cannot be sustained. The appellate Court took the view that matter requires reconsideration after giving opportunity to the petitioner. The appeal of the petitioner was allowed and the matter was remanded to the Sub Divisional Officer for passing fresh order after giving opportunity to the petitioner. After the cancellation of agreement of the petitioner, the shop was given to respondent No. 3. Respondent No. 3 filed a writ petition before this Hon'ble Court being Writ Petition No. 7525 of 2004 challenging the order dated 27th January, 2004. The writ petition filed by respondent No. 3 was dismissed by the order dated 23rd February, 2004 taking the view that since the appeal filed by the petitioner has been allowed, the licence granted in favour of petitioner (Purusottam Singh) stood cancelled. The Sub Divisional Officer issued a letter dated 25th February, 2004 to the petitioner to submit reply within fifteen days. On 26th February, 2004, the Sub Divisional Officer restored the supply of the petitioner and by the same order stopped the supply of respondent No. 3 (Purusottam Singh). Against the order dated 26th February, 2004, an appeal was filed by respondent No. 3 which has been allowed by the appellate Court. The appellate Court set-aside the order dated 25/26th February, 2004 of the Sub Divisional Officer and directed the Sub Divisional Officer to literally comply the order dated 27th January, 2004 of the appellate Court. The above order dated 9th July, 2004 is under challenge in this writ petition.

3. The counsel for the petitioner challenging the order dated 9th July, 2004 contended that appellate Court committed error in setting aside the order of Sub Divisional Officer restoring the supply of the petitioner. The counsel for the petitioner contended that after order cancelling the agreement having been set-aside by the appellate Court on 27th January, 2003, the supply of the petitioner was rightly restored by Sub Divisional Officer. He further contended that the Sub Divisional Officer did not commit any error in stopping the supply of respondent No. 3 whose writ petition challenging the order dated 27th January, 2004 has already been dismissed on 23rd February, 2004. Learned counsel for the petitioner has placed reliance on judgment of this Court reported in 2002 (1) JCLR 738 (All); Nand Lal Maurya v. State of U.P judgment of Division Bench of this Court reported in 2001 (1) CRC 558 : (2001 All LJ 444); Naumi Ram v. Deputy Collector.

4. Learned counsel appearing for respon dents contended that agreement of the peti tioner was suspended earlier and against the suspension order no appeal was filed by the petitioner and appellate Court vide its order dated 27th January, 2004 did not restore the licence of the petitioner nor directed for restoration of supply and only proceedings for cancellation were directed to be taken afresh. He contended that supply of the pe titioner should not have been restored by the Sub Divisional Officer and the order of appellate Court setting aside the said illegal order cannot be faulted.

5. I have considered the submissions raised by counsel for the parties and perused the record.

6. There is no dispute regarding facts of case between the parties. Agreement of the petitioner was earlier suspended and there after cancelled on 24th October, 2001. The order cancelling the agreement was set-aside by the appellate Court on 27th January, 2004 by which order the appellate Court remanded the matter to the Sub Divisional Officer to pass fresh order after giving op portunity to the petitioner. The issue be tween the parties is as to what is the conse quence of the order dated 27th January, 2004, whether in consequence of the order dated 27th January, 2004 the supply of the petitioner was also to be restored or not. The answer of the question is to be found out from the order dated 27th January, 2004 itself. The appeal was filed against the can cellation order and the appellate Court has every jurisdiction to pass any order in the appeal. The appellate Court while deciding the appeal against the cancellation order can set-aside the cancellation and restore the shop, can set aside the cancellation and remand the matter and can pass any other order. In the present case, the order dated 27th January, 2004 against the cancellation order dated 24th October, 2001 was not an order finally deciding the controversy. The appellate Court remanded the matter to the Sub Divisional Officer to decide the cancellation afresh due to the reason that reply of the petitioner given to the show cause notice has not been considered by the Sub Divisional Officer and further no reasons were given by the Sub Divisional Officer for not accepting the report of the Supply Officer dated 23rd October, 2001. The appellate Court, thus, intended that fresh order be passed as to whether the shop of the petitioner is liable to be cancelled or not. The appellate Court's order did not direct for restoration of the supply of the petitioner. However, one of the consequences of the order dated 27th January, 2004 is that allotment of the shop made consequent to the cancellation will come to an end. The shop of respondent No. 3, admittedly, was given after cancellation of petitioner's shop and after setting aside the cancellation order dated 27th January, 2004, the consequential act of allotment in favour of respondent No. 3 automatically came to an end. This Court has already taken this view in writ petition filed by respondent No. 3 being writ petition No. 7525 of 2004 which was dismissed by this Court on 23rd February, 2004. The consequence of the order dated 27th January, 2004 is that position prior to cancellation of the agreement i.e prior to 24th October, 2001 was to be restored. In the facts of the present case, it cannot be held that in consequence of the order dated 27th January, 2004 the supply of the petitioner ought to have been restored. The Sub Divisional Officer committed error in passing the order dated 26th February, 2004 restoring the supply of the petitioner. The order of the appellate authority dated 9th July, 2004 up to that extent impugned in the writ petition cannot be faulted. However, the order of Sub Divisional Officer dated 26th February, 2004 by which he stopped the supply of respondent No. 3 was a correct order. After setting aside of the order dated 24th October, 2001, the allotment in favour of respondent No. 3 automatically falls on the ground and the appellate Court ought not to have set-aside the entire order dated 25/26th February, 2004.

7. Coming to the decisions relied by counsel for the petitioner in Nand Lal Maurya's case (supra), in the said case writ petition was filed by subsequent allottee challenging the order of appellate Court by which appeal was allowed. This Court took the view that once the cancellation order is set-aside on the appeal of existing licensee, the subsequent dealership automatically comes to an end. In the above judgment, the issue which has been raised in the present writ petition that in case the appellate Court has remanded the matter to the Sub Divisional Officer, the supply of the existing licensee has to be necessarily restored, has neither been gone into nor decided, hence the said judgment has no bearing in the present controversy.

8. Another judgment in Naumi Ram's case (2001 All LJ 444) (supra), relied by the petitioner, also has no application in the facts of the present case. In Naumi Ram's case (supra) the writ petition was filed by existing licensee challenging the order of Sub Divisional Officer stopping the supply on some complaint, the said order was set aside. From the facts of the present case, as noted above, and from the contents of the order dated 27th January, 2004 of the appellate Court, it is clear that the appellate Court remanded the matter to Sub Divisional Officer for deciding cancellation proceeding afresh. The appellate Court neither specifically directed nor from the order it can be found that there is any indication of restoration of supply of the petitioner. In view of the above, the order of Sub Divisional Officer dated 26th February, 2004 restoring the licence, although cancellation proceeding has not yet been finalised, is not valid and the appellate Court did not commit any error in setting aside that part of the order. The order dated 26th February, 2003 of the Sub Divisional Officer was in two parts. By subsequent part the supply of respondent No. 3 was stopped. Stoppage of supply of respondent No. 3 was justified order. The appellate Court ought not to have quashed the order dated 25/26th February, 2004 in its entirety.

9. In view of the aforesaid, the writ petition is disposed of maintaning the order of appellate Court dated 9th July, 2004 in so far as it set-aside the order dated 25/26th February, 2004 restoring the supply of the petitioner. However, the order dated 9th July, 2004 in so far as it set-aside the later part of the order dated 25/26th February, 2004 stopping the supply of respondent No. 3 cannot be sustained and is hereby set-aside. In pursuance of the order dated 27th January, 2004 no decision has yet been taken by the Sub Divisional Officer. The Sub Divisional Officer is directed to take a final decision in pursuance of the remand order dated 27th January, 2004 expeditiously, preferably, within a period of three months from the date of production of a certified copy of this order. The writ petition stands disposed of accordingly.

10. Order accordingly.

Shiv Kumar Yadav v. State Of Uttar Pradesh And Others

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Shiv Kumar Yadav v. State Of Uttar Pradesh And Others

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