M. Sadasiva Sekhar v. District Collector, Kurnool

1. This writ petition is filed questioning the order of the first respondent dated 17-5-1997 confirming the order of the second respondent as well as the third respondent dated 22-3-1997 and 16-11-1995 respectively. The petitioner prays for a writ of mandamus declaring the orders of the first and second respondents as illegal, arbitrary and contrary to the provisions of the Essential Commodities Act, 1955 (for short ‘the Act’) and the A.P Scheduled Commodities (Regulation of Distribution by Card System) Order, 1973 (for brevity ‘the Control Order’).

2. The fact of the matter is not in dispute. The petitioner was appointed as permanent fair price shop dealer of Nemakal village in the year 1987. The villagers made certain allegations against the petitioner. The local M.L.A forwarded the representation of the villagers to the Revenue Divisional Officer who is competent authority to appoint a fair price shop dealer. The villagers appear to have alleged that the petitioner is charging higher rates for sugar and kerosene, that he issued less quantity of rice depriving the eligibility of the cardholders and that he made false entries in the Record though he did not issue full entitlement. The Mandal Revenue Officer conducted an inquiry into the allegations and submitted a Report to the third respondent, who by an order dated 2-6-1995 kept the petitioner under suspension. On 6-9-1995 a show cause notice was issued to the petitioner informing the charges as noticed hereinabove.

3. The petitioner submitted his explanation on 18-9-1995 inter alia stating that he sold sugar and kerosene at correct prices, that he supplied rice intended to cardholders according to the entitlement and that he made correct entries in the registers as well as the cards after distributing essential commodities to the cardholders. He also submitted that there are no complaints at any time by any of the cardholders. After considering the explanation of the petitioner herein, the third respondent by proceedings dated 16-11-1995 cancelled the authorization of the petitioner. The petitioner's appeal to the Joint Collector was dismissed on 22-3-1996 and the subsequent revision to the Collector was also unsuccessful.

4. Sri K.V Chalapathi Rao, learned Counsel for the petitioner made submissions to the following effect. The order passed by the District Collector confirming the order of the appellate authority as well as the original order is vitiated by procedural irregularity and illegality. Under sub-clause (4) of Clause 3 of the Control Order, the Revenue Divisional Officer has to conduct an Enquiry before passing an order of cancellation; no such enquiry was conducted and the order was passed merely based on the report alleged to have been submitted by the Mandal Revenue Officer. The Revenue Divisional Officer is required to adhere to the principles of natural justice in letter and spirit by not only issuing a notice in writing enabling the petitioner to submit an explanation but also affording opportunity of hearing. Though a show cause notice was issued on 6-9-1995 informing that the petitioner will be heard in person, if he so desires, on 13-9-1995, no such opportunity was given. As the petitioner submitted his explanation on 18-9-1995, the Revenue Divisional Officer could not have heard the petitioner on 13-9-1995 and that it is incumbent on the Revenue Divisional Officer first to consider the explanation submitted by the petitioner and then fix the date for hearing, which procedure is violated. The report of the Mandal Revenue Officer was not furnished. The requirement of giving an opportunity of being heard is essential and mandatory because when a minor penalty of forfeiture of deposit is imposed in accordance with sub-clause (2) of Clause 3, the Control Order provide for an opportunity of being heard. Therefore, when a major penalty like suspension or cancellation of authorization is imposed, an order passed without giving an opportunity of being heard must be held to be void.

5. The learned Government Pleader refutes the various contentions made by the learned Counsel for the petitioner. She submits that the petitioner did not specifically ask for a personal hearing; that the procedure contemplated under sub-clause (2) of Clause 3 of the Control Order cannot read into sub-clause (4) of Clause 3; and that the Revenue Divisional Officer had conducted an inquiry as per Clause 3 and passed orders and therefore the requirement of law are complied with.

6. The question for consideration is - Whether while passing orders under sub-clause (4) of Clause 3 of the Control Order, the Revenue Divisional Officer, as a condition precedent, is required to afford an opportunity of being heard to the fair price shop dealer? An incidental question that also requires examination is as to what is the nature of Enquiry be conducted by the Revenue Divisional Officer as contemplated under sub-clause (4) of Clause 3 of the Control Order.

7. It is axiomatic that every State action - be it legislative, executive or judicial, must be in accordance with the principles of fairness. That a person, whose rights are being deprived, must be given an opportunity of being heard for giving explanation for the proposed action is also part of doctrine of fairness. The principles of natural justice, however, cannot be an end in themselves. They are means to an end. Each and every State action does not require the adherence to principles of natural justice and like all the rules of law the principles are subjected to various exceptions. The same applies to the maxim ‘audi alteram partem’ as well as the two maxims ‘nemo judex in causa sua’ and ‘nemo debet essejudex in propria causa’. It is also well settled that even if the legislature or delegated legislation does not specifically provide for principles of natural justice, unless principles of natural justice are specifically excluded, the Court must read natural justice into a provision of law or a rule by delegated legislation. (See Union of India v. Tulsiram Patel, (1985) 3 SCC 398 : AIR 1985 SC 1416.)

8. The appointing authority is the RDO. Under sub-clause (4) of Clause 3 of the Control Order, if any fair price shop dealer has contravened the provisions of the Act, Rules or conditions of authorisation, it is competent for the RDO to suspend or cancel the authorisation after “conducting such enquiry as is necessary”. The said sub-clause also provides that the competent authority shall provide an opportunity of milking a representation before passing such an order. Under sub-clause (2) of Clause 3, without prejudice to the power of the RDO, to cancel or suspend the authorisation, the security deposit given by the fair price shop dealer can be forfeited. This sub-clause provides that the dealer shall be given an opportunity of filing explanation and also of opportunity of being heard before passing order of suspension. Sub-clauses (2) and (4) of Clause 3 of the Control Order read as under:

(2) Every authorised fair price shop, dealer or co-operative society as the case may be, shall deposit with the State Government or the Appointing Authority or any person authorised in this behalf a sum of Rs. 2,000/- (Rupees Two thousand only) in urban areas and Rs. 1,000/- (Rupees One thousand only) in rural areas as refundable trade deposit in the shape of Security Deposit for the due performance of the conditions of the authorisation and the sum so deposited or any part thereof may without prejudice to any other penalty, after enquiry and after giving a reasonable opportunity to the person to whom the authorisation is issued of stating his case and also of being heard and for reasons to be recorded in writing, be forfeited by the State Government or the Appointing Authority for contravention of any of the provisions of this order or any conditions of the authorisation issued thereunder. If, as a result of any departmental action, the sum deposited or any part thereof is forfeited the authorised fair price shop shall forthwith pay to the State Government such amount as may be required to make up the prescribed sum to be deposited as security.

(4) The Appointing Authority may, at any time whether at the request of the authorised fair price shop or authorised establishment suo motu after making such enquiry as may be deemed necessary, and for reasons to be recorded in writing, add to, amend, vary, suspend or cancel the authorisation issued or deemed to be issued to him under this clause……………….

9. As noticed hereinabove, sub-clause (4) of Clause 3 does not provide for giving an opportunity of being heard. It only requires giving an opportunity of submitting explanation to the charges. Insofar as sub-clause (2) of Clause 3 is concerned, the competent authority is required to hear the dealer before passing an order. Therefore, there cannot be any doubt that no such requirement is provided in sub-clause (4) of Clause 3 to give an opportunity of being heard. The submission is that even before passing an order of cancellation, the RDO is required to give an opportunity of being heard. Learned Counsel for the petitioner submits that as sub-clause (4) of Clause 3 does not specifically and explicitly exclude an opportunity of being heard, having regard to the phrase “after making such enquiry as may be deemed necessary” and also having regard to sub-clause (2) of Clause 3, such requirement must be inferred by reading the entire Control Order as a whole and harmoniously and construed accordingly. Reliance is placed on the judgment of the Supreme Court in Padmasundara Rao v. State of Tamil Nadu, (2002) 3 SCC 533 : AIR 2002 SC 1334, and Rakesh Kumar Jain v. State Through CBI, New Delhi, 2000 (2) Supreme 359.

10. In Padmasundara Rao v. State of Tamil Nadu (supra), the Supreme Court considered the question whether after quashing of notification under Section 6 of the Land Acquisition Act, 1894, fresh period of one year is available to the State Government to issue another notification under Section 6. It was contended that it is permissible for the Court to fill up casus omissus by reading the statute as a whole and finding out the true legislative intention. Dealing with this question the Supreme Court laid down.

……….. Under the first principle, a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a Section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. “An intention to produce an unreasonable result”, said Danckwerts, L.J, in Artemiou v. Procopiou [1966 1 QB 878], “is not to be Imputed to a statute if there is some other construction available”. Where to apply words literally would “defeat the obvious intention of the legislation and produce a wholly unreasonable result” we must “do some, violence to the words” and so achieve that obvious intention and produce a rational construction. [Per Lord Reid in Luke v. I.R.C, (1966 AC 557) where at p. 577 he also observed: “this is not a new problem, though our standard of drafting is such that it rarely emerges”.]

11. In Rakesh Kumar Jain v. State Through CBI, New Delhi (supra), the Supreme Court reiterated that in construing a provision of the statute, the Court must give effect to the natural meaning of the words used therein if those words are clear enough. Only in a case of any ambiguity that a Court is entitled to ascertain the intention of the Legislature by considering the provisions of the statute as a whole and taking into consideration other matters and circumstances which led to the enactment of the statute. By and large, these principles of interpretation are applied only in relation to the statutory provisions. Ordinarily, while interpreting the delegated legislation or sub-delegated legislation, provisions are to be interpreted in the light of the parent statute in such a way that it does not result in unfairness.

12. While conferring power to make rules to give effect to the statute, the Legislature is presumed, never intends the delegatee to make rules which are unfair and unreasonable. The Legislature also is presumed to have never permitted rule making which either substantially or procedurally ultra vires. The legislation, on the other hand, is presumed to be constitutional unless otherwise proved. The same is not the case with the subordinate legislation. The subordinate legislation should satisfy the test of reasonableness and fairness and it should be within the four corners of the main statute. A reference may be made to Indian Express Newspapers (Bombay) P. Ltd. v. Union of India, (1985) 1 SCC 641 : AIR 1986 SC 515, wherein after referring to the principle of law stated by Diplock L.J in Mixnam Properties Ltd. v. Chertsey U.D.C, (1964) 1 QB 214, it was observed:

A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say “Parliament never intended authority to make such rules. They are unreasonable and ultra vires”.

13. It was held by the Supreme Court that the enquiry into vires of the delegated legislation mainly must be confined to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity offending Article 14 of the Constitution. If a subordinate legislation does not specifically or explicitly provide for affording opportunity of making a representation by a person who would suffer civil consequences and/or does not specifically or explicitly exclude such opportunity, it is presumed that the Legislature expected the executive to be reasonable and provide such opportunity. Therefore, the Court would read the principles of natural justice into the rules. Indeed, in given circumstances, the rule can be read down so as to provide for principles of natural justice (See Delhi Transport Corpn. v. D.T.C Mazdoor Congress, 1991 Supp (1) SCC 600 : AIR 1991 SC 101).

14. Whether personal hearing is part of natural justice in all circumstances? The two principal modes of hearing are oral or personal before the adjudicatory authority and the other is hearing by way of a written representation. It is no doubt true that oral personal hearing is more fruitful to the affected person for he can effectively persuade the authorities to countenance his view. However, in all situations, oral personal hearing is not compulsory. An opportunity of making a representation is equally efficacious. It also amounts to hearing. However, it must be clarified that where a provision of law or a rule specifically provides that oral personal hearing should be afforded, strict compliance is required, and as the law exists, ordinarily not affording oral personal hearing could itself prejudice the person and render the order invalid or ineffective. A reference may be made to M.P Industries Ltd. v. Union of India, AIR 1966 SC 671, Union Of India v. Jyoti Prakash Mitter† , (1971) 1 SCC 396 : AIR 1971 SC 1093, Indru Ramchand Bharvani v. Union of India, (1988) 4 SCC 1.

15. The decision in M.P Industries Ltd. v. Union of India (supra) was concerned with interpretation of Rule 55 of Mineral Concession Rules, 1960, which provided that an opportunity to make a representation is to be afforded to a person who makes a petition for revision under Rule 54 before passing an order either affirming or modifying or setting aside the order. A question arose whether personal hearing should be afforded before passing an order. His Lordship Sri Justice Koka Subba Rao (as he then was) laid down.

As regards the second contention, I do not think that the appellant is entitled as of right to a personal hearing. It is no doubt a principle of natural Justice that a quasi judicial Tribunal cannot make any decision adverse to a party without giving him an effective opportunity of meeting any relevant allegations against him. Indeed, Rule 55 of the Rules, quoted supra, recognize the said principle and states that no order shall be passed against any applicant unless he has been given an opportunity to make his representations against the comments, if any, received from the State government or other authority. The said opportunity need not necessarily be by personal hearing. It can be by written representation. Whether the said opportunity should be by written representation or by personal hearing depends upon the facts of each case and ordinarily it is in the discretion of the Tribunal. The facts of the present case disclose that a written representation would effectively meet the requirements of the principles of natural justice…………..

(emphasis supplied)

16. In Union Of India v. Jyoti Prakash Mitter† (supra), the Supreme Court held that oral personal hearing is not an incident of rules of natural justice. In the said case, the question was whether the President of India is required to give an oral personal hearing to the Judge of a High Court while deciding the age of such Judge under Article 217(3) of the Constitution. Speaking for the unanimous Bench, His Lordship Chief Justice J.C Shah opined:

Article 217(3) does not guarantee a right of personal hearing. In a proceeding of a judicial nature, the basic rules of natural justice must be followed. The respondent was on that account entitled to make a representation. But it is not necessarily an incident of the rules of natural justice that personal hearing must be given to a party likely to be affected by the order. Except in proceedings in Courts, a mere denial of opportunity of making an oral representation will not, without more, vitiate the proceeding. A party likely to be affected by a decision is entitled to know the evidence against him, and to have an opportunity of making a representation. He however cannot claim that an order made without affording him an opportunity of a personal hearing is invalid.

(emphasis supplied)

17. In Indru Ramchand Bharvani v. Union of India (supra), the Supreme Court observed that a fair hearing has two justiciable elements, that an opportunity of hearing must be given and that opportunity must be reasonable. Whether a person has a fair hearing can be gone into by the Court and a Court's conscience shall be satisfied that an administrative tribunal charged with the duty of deciding a dispute has conformed to the principles of natural justice.

18. The discussion on the question of mandatory oral personal hearing cannot be complete without reference to the test of prejudice which is gaining ground in various jurisdictions in relation to principles of natural justice. A reference may be made to Institute of Chartered Accountants of India v. L.K Ratna, (1986) 4 SCC 537 : AIR 1987 SC 71, State Bank of Patiala v. S.K Sharma, (1996) 3 SCC 364 : AIR 1996 SC 1669, M.C Mehta v. Union of India, (1999) 6 SCC 237 : AIR 1999 SC 2583 and Aligarh Muslim University v. Mansoor Ali Khan, (2000) 7 SCC 529 : AIR 2000 SC 2783, wherein this aspect of the matter has been considered in detail.

19. In Institute of Chartered Accountants of India v. L.K Ratna (supra), the respondent-Ratna, who was a partner in A.F Ferguson & Co., a member of Institute of Chartered Accountants was charged for violating Section 21 of the Chartered Accountants Act, 1949 read with Clauses 6 and 7 of Part I of the First Schedule to the Act. The allegations related to misconduct of Ratna in dealing with clients. After receiving written statement, the Council of the Institute referred the matter to the Standing Disciplinary Committee constituted under the provisions of the Act, who submitted a report opining that Ratna was guilty of professional misconduct under Clauses 6 and 7 of Part 1 of the First Schedule. The Council considered the report, of the Disciplinary Committee and found Ratna guilty of misconduct, as charged, and it, was proposed to remove his name from the register of members for a period not exceeding five years in accordance with the procedure laid down in Section 21(4) of the said Act. He was informed that he will be called to appear before the Council for oral hearing for consideration of the written representation and oral hearing is restricted to the penalty proposed. In the meanwhile, another enquiry was initiated in the case of two other Chartered Accountants. The council followed the procedure and issued notice to them to appear in person or to make a written representation against proposed penalty of removal. Ratna and two others filed writ petitions before the High Court of Bombay, which were allowed on the ground that the council should have given an opportunity to the members to make representation against the report of the disciplinary committee. The appeal filed by the Institute was summarily dismissed by a Division Bench of Bombay High Court. Before the Supreme Court, a question was raised inter alia whether a member of the Institute is entitled to hearing by the council of the Institute after the disciplinary committee has submitted report to the council. The Supreme Court considered Sections 21 and 22-A of the Chartered Accountants Act and came to a conclusion that there is nothing in the provisions which exclude personal hearing by the council and accordingly held the member accused of misconduct is entitled to hearing by the council when on receipt of the report of the disciplinary committee, the Council proceeds to find out whether the member is guilty or not. The reasoning from the said conclusion is as follows:

It is next pointed out on behalf of the appellant that while Regulation 15 requires the council, when it proceeds to act under Section 21(4), to furnish to the member a copy of the report of the Disciplinary Committee, no such requirement is incorporated in Regulation 14 which prescribes what the council will do when it receives the report of the Disciplinary Committee. That, it is said, envisages that the member has no right to make a representation before the council against the report of the Disciplinary Committee. The contention can be disposed of shortly. There is nothing in Regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the council when it proceeds to render its finding. The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary.

(emphasis supplied)

20. In State Bank of Patiala v. S.K Sharma (supra), the Supreme Court considered the question whether a decision arrived at in violation of any and every facet of principles of natural justice is void. After referring to Ridge v. Baldwin, 1964 AC 40, M. Vasudevan Pillai v. City Council of Singapore, (1968) 1 WLR 1278 (PC), Al Mchdawi v. Secretary of State for the Home Department, (1990) 1 AC 876, Malloch v. Aberdeen Corporation, (1971) 2 All ER 1278, R. v. Secretary of State for Transport, (1987) 1 All ER 161, State Of U.P v. Mohammad Nooh ., AIR 1958 SC 56, Janakinath Sarangi v. State of Orissa, (1969) 3 SCC 392, Chintapalli Agency T.A.S.C.S Limited v. Secretary (F&A), Government of Andhra Pradesh, (1977) 4 SCC 337 : AIR 1977 SC 2313, S.L Kapoor v. Jagmohan, (1980) 4 SCC 379 : AIR 1981 SC 136, K.L Tripathi v. State Bank of India, (1984) 1 SCC 43 : AIR 1984 SC 273, Managing Director, Managing Director, E.C.I.L, Hyderabad v. B. Karunakar (Ii)., (1993) 4 SCC 727, C.B Gautam v. Union of India, (1993) 1 SCC 78, Krishan Lal v. State of Jammu and Kashmir, (1994) 4 SCC 422, the Supreme Court laid down that a decision or order which is passed or taken without fully complying the principles of natural justice, is not rendered void unless the aggrieved person pleads and proves the prejudice caused by such violation of principles of natural justice. The Supreme Court summarised the principles emerging from various decisions considered by the Court. Some of these are as under.

(1) An order passed imposing a punishment on an employee consequent upon a disciplinary/departmental enquiry in violation of the rules/regulations/statutory provisions governing such enquiries should not be set aside automatically. The Court or the Tribunal should enquire whether (a) the provision violated is of a substantive nature or (b) whether it is procedural in character.

(2) A substantive provision has normally to be complied with as explained hereinbefore and the theory of substantial compliance or the test of prejudice would not be applicable in such a case.

(3) Violation of any and every procedural provision cannot be said to automatically vitiate the enquiry held or order passed. Except cases falling under - “no notice”, “no opportunity” and “no hearing” categories, the complaint of violation of procedural provision should be examined from the point of view of prejudice, viz., whether such violation has prejudiced the delinquent officer/employee in defending himself properly and effectively.

4(a) In the case of a procedural provision which is not of a mandatory character, the complaint of violation has to be examined from the standpoint of substantial compliance. Be that as it may, the order passed in violation of such a provision can be set aside only where such violation has occasioned prejudice to the delinquent employee.

4(b) In the case of violation of a procedural provision, which is of a mandatory character, it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. If it is found to be the former, then it must be seen whether the delinquent officer has waived the said requirement, either expressly or by his conduct. If he is found to have waived it, then the order of punishment cannot be set aside on the ground of the said violation. If, on the other hand, it is found that the delinquent officer/employee has not waived it or that the provision could not be waived by him, then the Court or Tribunal should make appropriate directions (include the setting aside of the order of punishment), keeping in mind the approach adopted by the Constitution bench in B. Karunakar. The ultimate test is always the same, viz., test of prejudice or the test of fair hearing, as it may be called.

(5) While applying the rule of audi alteram partem (the primary principle of natural justice) the Court/Tribunal/Authority must always bear in mind the ultimate and overriding objective underlying the said rule, viz., to ensure a fair hearing and to ensure that there is no failure of justice. It is this objective which should guide them in applying the rule to varying situations that arise before them.

(6) There may be situations where the interests of State or public interest may call for a curtailing of the rule of audi alteram partem. In such situations, the Court may have to balance public/State interest with the requirement of natural justice and arrive at an appropriate decision.

21. In M.C Mehta v. Union of India (supra), the Supreme Court, after referring to Ridge v. Baldwin, Malloch v. Aberdeen, S.L Kapoor v. Jagmohan and State Bank of Patiala v. S.K Sharma (supra), observed thus:

It is not always necessary for the Court to strike down an order merely because the order has been passed against the petitioner in breach of natural justice. The Court can under Article 32 or Article 226 refuse to exercise its discretion of striking down the order if such striking down will result in restoration of another order passed earlier in favour of the petitioner and against the opposite party, in violation of principles of natural justice or is otherwise not in accordance with law.

22. In Aligarli Muslim University v. Mansoor Ali Khan (supra), after referring to earlier case law, the Supreme Court laid down as under:

The principle that in addition to breach of natural Justice, prejudice must also be proved has been developed in several cases. In K.L Tripathi v. State Bank of India (supra), Sabyasachi Mukharji, J. (as he then was) also laid down principle that not mere violation of natural Justice but de facto prejudice (other than non-issue of notice) had to be proved. It was observed; quoting Wade Administrative Law (5th Ed. Pp. 472-475) as follows (para 31):

“…… it is not possible to lay down rigid rules as to when principles of natural justice are to apply, nor as their scope and extent … ….There must have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the facts and circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with and so forth”.

Since then, this Court has consistently applied the principle of prejudice in several cases. The above ruling and various other rulings taking the same view have been exhaustively referred to in State Bank of Patiala v. S.K Sharma (1996) 3 SCC 364 : (1996) AIR SCW 1740 : AIR 1996 SC 1669). In that case, the principle of ‘prejudice’ has been further elaborated. The same principle has been reiterated again in Rajendra Singh v. State of M.P (1996) 5 SCC 450 : (1996 AIR SCW 3424 : AIR 1996 SC 2736).

23. Before summing up, the principles emerging from the various authorities noticed hereinabove, I may again refer to Clause 3(4) of the Control Order which reads as under.

3(4) The Appointing Authority, may, at any time whether at the request of the authorised fair price shop or authorised establishment suo motu after making such enquiry as may be deemed necessary, and for reasons to be recorded in writing, add to, amend, vary, suspend or cancel the authorization issued or deemed to be issued to him under this clause.

24. The above sub-clause confers power on the appointing authority to suspend or cancel the authorization subject to conducting enquiry and recording reasons. The phrase “after making such enquiry as may be deemed necessary” makes it plain that discretion is vested in the appointing authority as to the nature, method and manner of conducting enquiry as is deemed necessary. There can be no hard and fast rule that in every case of suspension or cancellation, the appointing authority should afford an opportunity of being heard to the fair price shop dealer {See M.P Industries Ltd. v. Union of India (supra)}. No doubt, the word “enquiry” into the allegations against a dealer has a broad connotation and takes in its fold an opportunity of filing explanation to the parties and/or affording a right of hearing. Because the legislature used the words “such enquiry as may be deemed necessary”, we have to give a restricted meaning to the phrase and leave it to the appointing authority whether or not the fair price shop dealer should be heard. It is not possible to accept the submission of the learned Counsel for the petitioner and supply the words so as to make sub-clause (4) of Clause 3 read providing opportunity of being heard’. This conclusion also derives support from the various principles laid down by the Supreme Court in the cases discussed hereinabove and the same may be stated thus:

1. ‘Personal hearing’ is not considered as an incident of rule, of audi alteram partem. A person is entitled to an opportunity of making a representation even if delegated legislation is silent on the same. The same is not, however, true with regard to affording a personal hearing to an aggrieved party. The law treats an opportunity to make a representation also as a personal hearing. {See M.P Industries Ltd. v. Union of India and Indru Ramchand Bharvani v. Union of India (supra)};

2. When delegated legislation excludes ‘personal hearing’ it is not permissible for the Court to read into the rule ‘an opportunity of being heard by the authority’;

3. When the rule itself says that an authority is vested with the power to conduct “such enquiry as deemed fit”, the discretion is left to the authority as to what is the nature of enquiry. If the authority, as a part of such enquiry, intends to give an opportunity of being heard, it must be treated as a manifestation of exercise of discretion in the facts of a particular case and not as a general rule;

4. Clause 3(4) of the A.P Scheduled Commodities (Regulation of Distribution by Card System) Order, 1973 does not require the appointing authority to afford an opportunity of being heard to the fair price shop dealer. However, if proposed action is both for cancellation/suspension as well as forfeiture of the deposit under Clause 3(2) of the Control Order, it is a case where the appointing authority compulsorily is required to afford an opportunity of making a representation as well as an opportunity of being heard;

5. In all cases where an enquiry is conducted under Clause 3(4) of the Control Order and where an opportunity of personal hearing is not given, the burden is on the dealer to plead and prove the prejudice caused to him by not giving a personal hearing illegality of the order cannot be readily presumed wherever no personal hearing was given {See State Bank of Patiala v. S.K Sharma, M.C Mehta v. Union of India and Aligarh Muslim University v. Mansoor Ali Khan (supra)};

6(a) In a case where a show cause notice is issued requiring submission of explanation and also affording personal hearing, if desired, and the authority fails to afford such opportunity, the impugned order has to be scrutinized by applying the test of prejudice; and

(b) In a case where a show cause notice is issued requiring submission of explanation and also affording personal hearing, if desired, and the aggrieved party fails to exercise such option for personal hearing, it should be deemed that he has waived such right of being heard {See State Bank of Patiala v. S.K Sharma (supra)}.

25. In every case where the authorization is cancelled after affording an opportunity of making a representation/filing explanation, even if oral hearing is not held, the dealer has to plead and prove the prejudice caused to him. Whether the petitioner has been successful in this regard?

26. The case against the petitioner was initiated on a report submitted by the Mandal Revenue Officer, Chippagiri to the effect that the petitioner has committed certain irregularities. A show cause notice was issued to the petitioner calling upon him to submit explanation to the following charges: that the dealer issued essential commodities at higher rates i.e Sugar @ Rs. 9.25 per kg. instead of Rs. 9.05 and Kerosene @ Rs. 3.50 per litre instead of Rs. 2.95 p. that the dealer issued less quantities of rice depriving the eligibility of the card holders; and that the dealer made false entries in cards even though he failed to issue full entitlement. In the show cause notice, the Revenue Divisional Officer also informed the petitioner that if he so desires he will be heard in person on 13-9-1995. There cannot be any doubt that the RDO at one point of time himself felt that an opportunity of being heard should be given to the petitioner.

27. The petitioner submitted his explanation on 18-9-1995. After receiving the explanation, the RDO did not fix any date for hearing. He passed orders on 16-11-1995 considering the explanation in which the petitioner stated that he has issued Sugar and Kerosene at the rates fixed by the Government and that he has issued Rice as per the norms fixed and that he has made entries in the records as distributed by him. The RDO recorded a finding that the explanation submitted by the petitioner is not convincing and that he did not produce any evidence in support of his claim.

28. Learned Counsel for the petitioner submits that the details of the cardholders to whom the petitioner allegedly issued less quantities of Rice and the ration cards where the petitioner allegedly made false entries were not furnished to him. If really an oral hearing was given by the RDO, the petitioner would have brought to the notice of the appointing authority the circumstances to support his case. As the show-cause notice required the petitioner to be present on 13-9-1995, the petitioner was under the impression that after receiving his explanation, the RDO will fix the date of hearing. Therefore, he did not specifically ask for oral hearing at a later date. He also submits that on 13-9-1995, no hearing was held. This aspect of the matter is proved by reference to the file which is produced before this Court.

29. A reading of the show cause notice and the order passed by the RDO would support the contention of the learned Counsel for the petitioner that prejudice has been caused to the petitioner by not giving an opportunity of oral hearing. It is true that if really he had been given an opportunity, the petitioner would have explained the discrepancies pointed out in the show cause notice. When the show cause notice does not give details of the cardholders who received less quantities of Rice, certainly prejudice is caused to the petitioner by depriving the opportunity of oral hearing. The appellate authority, no doubt, afforded an opportunity to the Advocate representing the petitioner. It was contended before the appellate authority that cancellation order was passed based on a perfunctory enquiry. The petitioner was not given an opportunity to cross-examine the 29 cardholders. The appellate authority dealt with this aspect in the following manner.

………..However, records reveal that the inspecting officer has verified 29 cardholders and found that the dealer had charged higher rates and issued lesser quantities and made false entries in the cards. Hence 1 find no merit in the argument of Advocate. The Advocate further argued that he was not given an opportunity to cross-examine the 29 cardholders. The fact is that trial conducted under the Act is summary and time required for summoning and cross-examination of 29 cardholders is forbidding. The Advocate has not submitted anything to cast doubts about the veracity of statement of 29 cardholders. Hence I find no merit in the argument of Advocate and appeal is dismissed.

30. The revisional authority went a step further and gave the details of 29 cardholders to whom the petitioner issued less quantities than required for the months of March, April and May 1995. The revisional authority observed as under.

In view of the above arguments made by the Advocate, I have verified the records thoroughly. Perusal of the proceedings of the appellate authority i.e, the Joint Collector reveal that similar arguments were made there and the Joint Collector gave a speaking order to counter the arguments made by the Advocate and has rightly upheld the orders of the Revenue Divisional Officer, Adoni. The Progs. And the record of the Revenue Divisional Officer reveal that the cancellation of the authorization was not satisfactory and the detailed findings for each charge are given in the proceedings of the Revenue Division Officer. Further the statements given by the following cardholders are quite adequate to substantiate the charges against the dealer.

31. A reading of the order passed by the appellate authority as well as the revisional authority would show that they relied on 29 ration cards in relation to which the petitioner committed irregularities. The petitioner was not given opportunity either by the MRO or the RDO to examine these cardholders. The prejudice caused to the petitioner is writ large. The submission of the learned Counsel for the petitioner that the appointing authority is required to give an oral hearing, in every case, cannot be accepted. Having regard to the show cause notice in this case, denying such opportunity of being heard, it must be held that prejudice is caused to the petitioner. Therefore, the impugned order passed by the District Collector as well as respondents 2 and 3 are unsustainable. They are accordingly set aside. The matter is remitted to the RDO to conduct a fresh enquiry giving an opportunity of being heard to the petitioner and to pass appropriate orders within a period of three months from the date of receipt of a copy of this order.

32. The writ petition is allowed above without any order as to costs.