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Messrs Kashiram Dalmia v. The State Of Bihar And Others

Patna High Court

Jul 11, 1977

Judgment

Subsequent
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Structured Summary of the Opinion

Factual and Procedural Background

The two writ applications were filed by the same petitioner, a firm carrying on business at Forbesganj in Purnea under a licence (No. 111-F of 1965) issued under the Bihar Cotton Cloth and Yarn (Control) Order, 1956 ("the Order"). By order dated 8 September 1976 the Subdivisional Officer, Araria, suspended the petitioner's licence (Annexure '1' to Civil Writ Jurisdiction Case No. 2564 of 1976). The petitioner appealed to the District Magistrate, Purnea, who by order dated 24 November 1976 dismissed the appeal and upheld the suspension (Annexure '2' to that writ).

Separately, by order dated 16 March 1977 the Subdivisional Officer, Araria, cancelled the petitioner's licence (Annexure '1' to Civil Writ Jurisdiction Case No. 678 of 1977). The two writ applications were heard together and disposed of in a common judgment.

Legal Issues Presented

Whether the cancellation order dated 16 March 1977 (Annexure '1' to C.W.J.C. No. 678 of 1977) was valid when the date of cancellation fell on a day that had been declared a public holiday in the relevant parliamentary constituency, and whether that affected the petitioner's entitlement to file an explanation.
Whether the order of suspension dated 8 September 1976 (Annexure '1' to C.W.J.C. No. 2564 of 1976) was permissible without affording the petitioner an opportunity of being heard, i.e., whether an interim suspension could be passed without prior hearing and whether a subsequent appellate hearing cured any defect of natural justice at the original stage.

Arguments of the Parties

Petitioner's Arguments

The petitioner contended that the cancellation order dated 16 March 1977 was passed after 5:30 P.M. on a day that had been declared a public holiday (notification No. 3918 dated 3 March 1977 under Section 25 of the Negotiable Instruments Act, 1881), and therefore the petitioner was entitled to file its explanation on the following day (17 March 1977).
Regarding the suspension, the petitioner argued that the authorities had no jurisdiction to pass an interim order of suspension at all and relied on earlier decisions of this Court (C.W.J.C. Nos. 27 of 1974 — Sitaram Sah v. Subdivisional Magistrate, C.W.J.C. No. 1110 of 1975 — Dewat Narain Singh v. State of Bihar, and C.W.J.C. No. 771 of 1973 — Babulal Sah Radhelal Sah v. The State of Bihar) in support of that contention.
Alternatively, even if an interim suspension were permissible, the petitioner submitted that it must be afforded an opportunity of being heard and showing cause before such an order is passed; the petitioner relied on Leary v. National Union of Vehicle Builders and Ridge v. Baldwin to argue that a right to natural justice exists both at the original and appellate stages and that the appellate hearing did not cure the original defect.

Respondents' Arguments

With respect to the cancellation, respondents filed a counter-affidavit stating that offices at Araria were open on 16 March 1977 despite the gazette notification, and therefore the petitioner could have filed its explanation on that date.
Regarding the suspension, respondents argued that the suspension was merely an interim order (not a final punishment) and that when it is contemplated to consider suspension or cancellation, interim suspension may be necessary if prima facie materials suggest continuing the licence would cause irreparable injury to society.
Respondents further submitted that earlier decisions relied upon by the petitioner required reconsideration because holding that no interim suspension could ever be passed might defeat the purpose of conferring such power under the Order.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
C.W.J.C. No. 27 of 1974 — Sitaram Sah v. Subdivisional Magistrate (Biharsharif, 9 Jan. 1974)	Relied on by the petitioner to support the contention that the authorities had no jurisdiction to pass an interim suspension.	The court noted these decisions were relied upon by the petitioner but stated it was unnecessary, for the purposes of this case, to decide whether those decisions should be reconsidered.
C.W.J.C. No. 1110 of 1975 — Dewat Narain Singh v. State of Bihar (21 Apr. 1976)	Relied on by the petitioner for the proposition that interim suspension may be without jurisdiction.	As with the other similar decisions, the court refrained from deciding their correctness and instead disposed of the case on the basis that the suspension order was passed without affording the petitioner a hearing.
C.W.J.C. No. 771 of 1973 — Babulal Sah Radhelal Sah v. The State of Bihar (3 Aug. 1976)	Relied on by the petitioner to challenge the validity of interim suspension orders.	The court acknowledged reliance but did not adjudicate on the correctness of these prior decisions, deciding the matter on the procedural deficiency (lack of hearing).
Leary v. National Union of Vehicle Builders (1971 (1) Ch D 34) — Megarry, J.	Cited for the proposition, relying on Ridge v. Baldwin, that where there is a right to appeal the plaintiff is entitled to natural justice both before the original tribunal and the appellate tribunal; a complete rehearing may not cure breach at the original stage.	The court invoked this reasoning to support the view that the appellate hearing did not cure the absence of an opportunity to be heard before the original suspension; it held the defect was not cured and the orders had to be quashed.
Ridge v. Baldwin (1964 App. Cas. 40)	Expressed the principle, quoted in the opinion, that appealing to another tribunal does not prevent the appellant from asserting that the original decision was a nullity; appeal does not imply waiver of rights to challenge original procedural defects.	The court relied on the reasoning in Ridge v. Baldwin (as discussed in Leary) to conclude that a hearing before the appellate authority did not cure the violation of natural justice at the original stage in this case.
(1968) 67 DLR (2d) 165 — Supreme Court of Canada decision	Referenced as a contrary authority where it was held that where full opportunity is given before the appellate tribunal the defect at the original stage may be ignored.	The court noted this contrary view but treated the question as not free from difficulty and, on the facts of the present case, declined to adopt the Canadian approach; instead it held the appellate hearing did not cure the original defect.

Court's Reasoning and Analysis

The court's reasoning can be divided by the two writ proceedings and the distinct issues raised in each:

Cancellation (C.W.J.C. No. 678 of 1977)

The court examined the impugned cancellation order dated 16 March 1977 and the supplementary affidavit asserting that 16 March 1977 had been declared a public holiday in the Araria Parliamentary Constituency by Gazette notification No. 3918 dated 3 March 1977 under Section 25 of the Negotiable Instruments Act, 1881.
The court found the Gazette notification placed before it confirmed that 16 March 1977 was a public holiday which included Araria; accordingly, under the law the petitioner was entitled to file its explanation on the following day (17 March 1977).
The respondents' argument that offices were open on 16 March was rejected as immaterial once the day had been officially declared a public holiday; the petitioner could rely on the holiday and file its explanation on the next working day.
Because the cancellation was passed when the petitioner was not entitled to be required to file an explanation on that date, the court held the cancellation order was illegal, set it aside, and directed that the petitioner be given a further opportunity to file its explanation within a reasonable time before any fresh order of cancellation is passed.

Suspension (C.W.J.C. No. 2564 of 1976)

The respondents argued that the suspension was an interim order intended to prevent irreparable injury to society pending consideration of final suspension or cancellation, and that such an interim order could be valid where prima facie material existed.
The petitioner relied on prior decisions of this Court contending interim suspension was without jurisdiction, and also argued that, even if interim suspension were permissible, the petitioner should have been afforded an opportunity to be heard before suspension.
The court stated it was unnecessary in this case to resolve the broader question whether interim suspension powers should be restricted or whether prior decisions require reconsideration. Instead, the court focused on the procedural fact that the impugned suspension order (Annexure '1') was passed without affording the petitioner any opportunity to be heard.
Although the petitioner had an appellate hearing (Annexure '2') where explanations were considered at length, the court considered precedent and authorities about whether an appellate hearing cures a defect of non-observance of natural justice at the original stage. Citing Leary and Ridge v. Baldwin, and noting a contrary Canadian decision, the court concluded that on the facts and circumstances of this case the defect was not cured by the appellate hearing.
Consequently, the court held that both the suspension order and the appellate order upholding it had to be quashed because the petitioner had not been afforded the opportunity of being heard before suspension.

Other Practical Considerations

The court observed that on receipt of records the Sub-divisional Officer, Araria, should fix a date for hearing the petitioner, if he still considers suspension or cancellation necessary.
The court noted the criminal case filed against the petitioner has a final police report on file, which is a fact to be taken into account.
The court made no order as to costs.

Holding and Implications

Writ petitions allowed; the impugned orders of cancellation and suspension (as specified in the judgments) are set aside.

Implications and direct consequences:

The cancellation order dated 16 March 1977 (Annexure '1' to C.W.J.C. No. 678 of 1977) is quashed because the date of the order fell on a day declared to be a public holiday, which entitled the petitioner to file its explanation on the following day; the petitioner must be given a further opportunity to file its explanation within a reasonable time before any fresh cancellation order is passed.
The suspension order dated 8 September 1976 (Annexure '1' to C.W.J.C. No. 2564 of 1976) and the appellate order upholding it (Annexure '2') are quashed because the original suspension was passed without affording the petitioner an opportunity to be heard and the appellate hearing did not cure that defect in the circumstances of this case.
It is open to the authorities to pass such orders of suspension or cancellation as they may deem fit after affording proper opportunity to the petitioner of being heard and explaining its case.
The Sub-divisional Officer, Araria, upon receipt of the records, shall fix a hearing date if he still considers suspension or cancellation necessary; the court noted the existence of a final police report in the related criminal case as a relevant fact to be considered by the authorities.
The court made no order as to costs.

The opinion does not purport to resolve the broader doctrinal question whether interim suspension powers are ever permissible without prior hearing; the court disposed of the matters before it on specific procedural grounds and did not set out any new general precedent on that broader question.

Show all summary ...

1. These two writ applications are by the same petitioner, which is a firm carrying on business at Forbesganj in the district of Purnea in cloths under licence bearing No. 111-F of 1965 issued under the Bihar Cotton Cloth and Yarn (Control) Order, 1956 (hereinafter referred to as ‘the Order’). By an order dated the 8th Sept., 1976, the Subdivisional Officer, Araria, suspended the said licence of the petitioner. That order has been made Annexure ‘1’ to the application in Civil Writ Jurisdiction Case No. 2564 of 1976. Against the said order of suspension, the petitioner went in appeal to the District Magistrate, Purnea who by his order dated the 24th Nov., 1976, dismissed the appeal and upheld the order of suspension of the petitioner's licence. That order has been made Annexure ‘2’ to the said writ applition. In the said writ case there is a prayer for quashing the aforesaid two orders. By another order dated the 16th March, 1977, the Subdivisional Officer, Araria, has cancelled the aforesaid licence of the petitioner. This order has been made Annexure ‘1’ to the petition in Civil Writ Jurisdiction Case No. 678 of 1977, and a prayer has been made in this case for quashing the order. The writ applications, in the circumstances have been heard together and are being disposed of by a common judgment.

2. So far Civil Writ Jurisdiction Case No. 678 of 1977 is concerned, it appears from the impugned order dated 16th March, 1977 (Annexure ‘1’) that it was passed after 5.30 P.M that day when the petitioner did not submit any explanation by that time. A supplementary affidavit has been filed on behalf of the petitioner stating that by a notification No. 3918 dated the 3rd March, 1977, 16th March, 1977 was declared a public holiday under Section 25 of the Negotiable Instruments Act, 1881 in the Araria Parliamentary Constituency. The order (Annexure ‘1’) was passed by the Sub-divisional Officer, Araria. A copy of the said gazette notification has also been placed before us and it confirms the aforesaid statement that 16th March, 1977 was declared a public holiday in the Araria Parliamentary Constituency which included Araria itself. The 16th March, 1977, being the public holiday, under the law the petitioner became entitled to file his explanation till the following day i.e, 17th March, 1977. A counter-affidavit has been filed on behalf of the respondents stating that the offices at Araria were opened on the 16th March, 1977, in spite of the gazette notification and the petitioner could have filed his explanation on that date. Once the 16th March, 1977 was declared a public holiday, whether the offices were kept open or not on that day is immaterial. The petitioner could ignore the fact that offices were open on that day and in law he became entitled, as observed earlier, to file his explanation on the following day. In the circumstances, the order, cancelling the licence of the petitioner by respondent No. 3 of that case, is illegal and cannot be sustained and it has to be set aside. In this circumstance it is not necessary to go into other contentions raised on behalf of the petitioner in the case. The petitioner is entitled to get further opportunity for filing his explanation in the matter of cancellation of its licence and the authorities must consider that explanation, if filed within a reasonable time allowed for the purpose before passing order if any of cancellation.

3. So far Civil Writ Jurisdiction Case No. 2564 of 1976 is concerned, as stated earlier, in that case the licence of the petitioner has been suspended. It has been submitted on behalf of the respondents that the order of suspension was merely an interim order and not a final one by way of punishment. According to the learned counsel for the respondents, such an order could be passed once it was contemplated to consider the question whether the licence of the petitioner should be finally suspended or cancelled or not, for in such circumstances if there were prima facie materials before the authorities for suspension or cancellation of the licence of the petitioner, allowing him to continue his business would have done irreparable injury to the society. On the other hand, it has been submitted on behalf of the petitioner that under the order the authorities had no jurisdiction at all to pass an interim order of suspension. Reliance has been placed in support of his contention on certain orders and decisions of this Court, namely, C.W.J.C No. 27 of 1974 (Sitaram Sah v. Subdivisional Magistrate, Biharsharif dated 9th Jan., 1974), C.W.J.C No. 1110 of 1975 (Dewat Narain Singh v. State of Bihar, D/- 21st April, 1976) and C.W.J.C No. 771 of 1973 (Babulal Sah Radhelal Sah v. The State of Bihar, D/- 3rd Aug., 1976). However, on behalf of the respondents it has been submitted at some length that these decisions require reconsideration, for, to hold that no interim order of suspension can be passed at all may defeat the very purpose for which the power is conferred on the authorities under the order. We do not consider it necessary to go into that question in this case, for, the impugned order of suspension as contained in Annexure ‘1’ to this writ application was passed without affording any opportunity to the petitioner of being heard in the matter. According to the learned counsel for the petitioner, even it be assumed that the authorities have got jurisdiction to pass an interim order of suspension they must afford an opportunity to the person whose licence is going to be suspended of being heard in the matter and showing cause. Undoubtedly, the order suspending licence be it interim or final affect the licencee adversely and, therefore, he should be afforded opportunity of being heard in the matter and showing cause before such an order is passed. In this case, however, there was an appeal by the petitioner and as it appears from the appellate order, as contained in Annexure ‘2’ to this writ application, the matter was heard by the appellate authority at length and explanations offered by the petitioner were considered. On behalf of the respondent it has been contended that in cases where adequate opportunity of being heard and explaining the position is afforded to the aggrieved person at the appellate stage, he cannot make grievance that he was not afforded opportunity of being heard at the original stage. Learned counsel for the petitioner in reply has placed reliance on a decision in Leary v. National Union of Vehicle Builders (1971(1) Ch D 34) Megarry, J. relying on the decision in Ridge v. Baldwin (1964 App Cas 40) held that while a complete rehearing by original tribunal or by some other body competent to decide an issue might satisfy the requirement of natural justice, a plaintiff where there was right to appeal from a original decision, was entitled to natural justice both before the original tribunal and the appellate tribunal. As it appears from the facts of Ridge v. Baldwin, there the appellant before the Home of Lords had gone in appeal against the criminal order to the Secretary of State and it was contended that thereby he was debarred from taking the point that the rule of natural justice was violated before the original tribunal. Dealing with that question Lord Reid observed, as follows:

“Finally, there is the question whether by appealing to the Secretary of State the appellant is in some way prevented from now asserting the nullity of the respondents' decision. A person may be prevented from asserting the truth by estoppel, but it is not seriously argued that that doctrine applies here. Then it is said that the appellant elected to go to the Secretary of State and thereby waived his right to come to the court. That appears to me to be an attempt to set up what is in effect estoppel where the essential elements for estoppel are not present. There are many cases where two remedies are open to an aggrieved person, but there is no general rule that by going to some other tribunal he puts it out of his power thereafter to assert his rights in court; and there was no express waiver because in appealing to the Secretary of State the appellant reserved his right to maintain that the decision was a nullity.”

4. This view of Lord Reid was accepted by the majority of the Lord Justices. In the case, however, Megarry, J. has also noticed a decision of the Supreme Court of Canada, (1968) 67 DLR (2d) 165. In that case a contrary view was taken and it was held that where full opportunity is given before the appellate tribunal, the defect of violation of rule of natural justice at the original stage may be ignored. The decision in Ridge v. Baldwin was referred to and distinguished on the ground that there were some differences between the facts of the two cases. The question is not free from difficulty. Be that as it may, on the facts and in the circumstances of the present case, we are of the view that the defect of non-observance of the rule of natural justice by not giving opportunity to the petitioner of being heard and showing cause before suspending his licence by the original authority was not cured by the hearing before the appellate authority. We are, therefore, of the view that the orders as contained in Annexures ‘1’ and ‘2’ to this writ application are also to be quashed.

5. In the result both the writ applications are allowed and the orders as contained in Annexure ‘1’ to Civil Writ Jurisdiction Case No. 673 of 1977 and as contained in Annexures ‘1’ and ‘2’ to Civil Writ Jurisdiction Case No. 2564 of 1976 are set aside.

6. It will be open to the authorities to pass such order of suspension or cancellation of the petitioner's licence as they may deem fit and proper after affording proper opportunity to the petitioner of being heard in the matter and explaining its case before them.

7. On receipt of the records the Sub-divisional Officer, Araria, will fix a date for hearing the petitioner in the matter, if he still considers that it is necessary to suspend or cancel the licence of the petitioner, for, one more fact has to be taken into account and that fact is that in the criminal case filed against the petitioner the police has submitted final report. In the circumstances of the case there will be no order as to costs.

8. Petitions allowed.