The Judgment of the Court was delivered by

P. Shanmugam, J.:— The petitioner is an unemployed under graduate who has set up a small scale industrial unit to manufacture bone meal. He applied for a permission before the Panchayath on 22.4.1998 for establishment and installation of the factory. Petitioner has also in furtherance of his establishment applied and obtained the following certificates:

1) A plan approved by the Assistant Executive Engineer, Kerala Water Authority (Ext. P1) stating that the nearest residential building is located more than 192 Mtrs. away from the proposed building.

2) The Electricity Board allocation for 35 HP industrial unit dated 29.11.1997

3) No objection certificate from the Kerala State Pollution Control Board to set up industry for production of 55 t/month bone meal and bone chips subject to 10 conditions set out thereunder.

2. However, the Panchayath has decided to reject the application and the said decision was communicated by Ext. P3 dated 2.5.1998 Petitioner preferred an appeal before the Green Channel Committee. The Committee by order dated 19.5.1998 decided to issue clearance to the unit. By Ext. P6 dated 22.6.1998 the General Manager, District Industries requested the Panchayath to issue licence to the unit based on the decision of the Green Channel Committee. By Ext. P8 dated 29.7.1998 the District Medical Officer has also issued a certificate of approval based on the technical report accorded for establishment of the bone meal factory. The District Medical Officer had also certified that the factory had satisfied all the conditions stipulated earlier. Since the Panchayath has not been granting the licence as directed by the Green Channel Committe, the petitioner preferred O.P No. 15364/98 on 11.8.1998 for a direction to the Panchayath to comply with the orders made in Exts. P4 and P6. Notice was issued on 12.8.1998 Thereafter, it appears that the Panchayat has preferred a revision against the decision of the Green Channel Committee. The Government by order dated 17.8.1998 granted stay of the proceedings of the Green Channel Committee till the disposal of the revision petition. Subsequently the Original Petition was amended to quash Ext. P10 since, according to the petitioner, the stay order was obtained on a holiday after receipt of the notice from this Court. By an interim order dated 25.9.1998 this Court directed the Government to dispose of the revision and accordingly the Government by order dated 24.10.1998 set aside the decision taken by the Green Channel Committee. Petitioner has preferred O.P No. 21468/98 against the order of the Government. Additional respondents 3 to 12 were impleaded who are said to be the affected parties and residents of the localities as parties in this Original Petition. They have filed counter affidavit opposing the relief sought for in the writ petitions.

3. The following questions arise for consideration in this original petition:

1) Whether the Green Channel Committee is a statutory body and the decisions are binding:

2) Whether the order of the Panchayath as confirmed in revision is sustainable on merits.

4. Section 232 and 233 of the Kerala Panchayath Raj Act, 1994, hereinafter referred to as ‘the Act’, come under the heading “dangerous and offensive trades and factories”. S. 232 of the Act states that no place in the Panchayath shall be used for any purpose specified in the rules without a licence. S. 233 states that no person shall without permission of the Panchayath construct or establish any factory or install any machinery or manufacturing plant. S. 234 of the Act empowers the Government to make rules in respect of the grant and renewal of licences and permissions.

5. The Government has framed the Kerala Panchayath Raj (Licencing of Dangerous and Offensive Trades and Factories) Rules, 1996 under Ss. 232, 233, 234 read with S. 254 of the Act. These rules were notified. The rules provide for specification of dangerous and offensive trades, the procedure of application and disposal. R. 4 provides for an appeal against the orders of the Grama Panchayath. These rules are statutory and made by the Government in exercise of the provisions of Ss. 232, 233 and 234 read with S. 254 of the Act. S. 234 specifically states that the Government may make rules prohibiting or regulating the grant of licences under Ss. 232 and 233 of the Act. There is no doubt in the minds of the Government that these rules are made in exercise of the power conferred by the Act. As a matter of fact by Ext. P9 communication of the Additional Secretary dated 6.3.1998 who happened to pass the impugned order in revision, Ext. P1, has categorically stated that the Green Channel Committee is the appellate authority as per the rules issued under the Panchayath Raj Act, and Panchayaths will have to adhere to the decision of the Green Channel Committee. It is further pointed out that the Panchayaths are refusing to grant installation permission overlooking the decision of the Green Channel Committee in contravention of the instructions. According to him, a revision is available against the decision of the Green Channel Committee. Therefore, it is very clear that the Green Channel Committee is an appellate authority constituted under the statutory rules. The decision taken by the Green Channel Committee is binding on the Panchayath.

6. The Government order in revision holding that the Green Channel Committee is not constituted under any statute and hence the order of Panchayath cannot be questioned by the Green Channel Committee is a fallacious conclusion.

7. It is unfortunate that the Government has overlooked the specific statutory provision. If the Government really is of the view that R. 12(4) of the Rules cannot be supported, they should have clarified the position so that the aggrieved parties instead of filing an appeal before the Green Channel Committee could have moved other appellate authority provided under the general power of appeal. On the contrary, this Green Channel Committee appears to have been made specially for the purpose of providing a speedy relief and for the industrial development of the State, as stated in G.O (P) No. 14/96.LAD dated 18.1.1996 (Vide Ext. P9 order). S. 234 of the Act which empowers the Government to make rules for regulating the grant of licence will include the power to make the provisions for an appellate forum relating to the granting of the licence. The Government who has made rules are bounded by these rules.

8. Incidentally an objection was raised that there is no separate application for a licence by the petitioner. The Panchayath has furnished the copy of the application dated 22.4.1998 and according to them, this application is for permission under S. 233 of the Act. On the other hand, learned counsel for the petitioner submits that he has also made a separate application for a licence under S. 232 of the Act and that has been referred to by the Panchayath in a revision memorandum before the Government. In that it is admitted that the petitioner has submitted an application requesting for NOC for the commencement of the bone meal unit and along with that he also submitted an application for permission for construction under S. 233 of the Act. Therefore the petitioner had submitted both applications one for licence and the other for establishment of the factory.

9. The decision of the Panchayath as communicated states that the application had been rejected since there was a mass petition protesting against the commencement of the unit. In other words the only ground for rejecting the application is the protest of residents of the village. On the face of it the order of the Panchayath cannot be sustained. The application has to be decided on its merits and not on the mere protest of the residents of the locality. However, this order of the Panchayath has been reversed by the Green Channel Committee and the Panchayath was directed to issue the licence. On revision the decision of the Green Channel Committee was reversed. Here also the reasons stated by the Government for reversing the orders cannot be sustained. According to the impugned order the Green Channel Committee has no statutory powers and that the President is the supreme authority to decide whether a factory should be allowed to function within the Panchayath area and the same cannot be questioned by the Green Channel Committee.

10. It is true that the Panchayath has got a right to decide and exercise their power under S. 232 of the Act. S. 232 and 233 of the Act did not set out the grounds on which the licence can be considered. It is only the rules which state that the application should specify the number of workers proposed to be employed, the plan of the factory and such other particulars that may require in this behalf. R. 3(b) states that the Panchayath may refuse permission, if it is of opinion that such construction, establishment or installation is objectionable by reason of the density of population in the neighbourhood or that is likely to cause nuisance. In this case the Panchayath has not stated the reasons for the rejection, the density of population in the neighbourhood or that is likely to cause nuisance or matters that have been taken into account by the Pollution Control Board and the District Medical Officer. Neither the Panchayath nor the Government had applied their mind in reference to these questions. They have not also overruled the opinion or the approval granted by the various authorities. Therefore, by reading of the impugned orders, it is clear that there is a total non-application of mind. Besides from the stand taken by both the Panchayath as well as the government it is clear that they proceed on the basis that the Panchayath is the “supreme” authority to decide. No authority constituted under the Act can be “supreme” since the authorities are bound by the rule of law. They are under misconception that the authorities can decide anything as they like. Petitioner has got fundamental right guaranteed under Art. 19(1)(g) of the Constitution to establish his own industry and he is entitled to be treated equally before law under Art. 14 of the Constitution. Of course the Panchayath is entitled to make a reasonable restriction on the enjoyment of his freedom. However, the way that the authorities proceeded is that they are the ultimate authority to decide without any basis or reason whatsoever. As a matter of fact the Government has stated that even if statutory authorities like Pollution Control Board, Factories and Boilers, Health Authorities, Electrical Inspectors, Fire Force have issued NOC to establish the factory, the Panchayat is not bound to issue a running licence to an establishment. This view is totally arbitrary and illegal. The competent authorities like Pollution Control Board and Health Authorities are empowered to issue the permission and NOC and especially in reference to the nuisance they are the most technically qualified persons to say about it. Unless the Panchayath has got any reason to over rule this, they cannot take decision on their own. That apart the decision of the Panchayath is subject to an appeal in this case before the Green Channel Committee. The Government having failed to give effect to the appellate decision has committed a serious error on the face of the record. By going through the permission granted by the Pollution Control Board, Ext. P5 and the conditions set out in the order it is clear that they have applied mind in reference to this particular industry and has taken care with the standard norms that are required for an industry of this nature. The District Medical Officer has also set out nine conditions. A combined reading of these conditions would clear all the misgivings and apprehensions of the residents including the impleading parties.

11. Their only apprehension is that the licencing of this industry would create foul smell creating serious pollution and nuisance. In my view that is a matter to be looked into after starting of the industry. Besides the orders of the competent authorities have taken care of this pollution by directing the petitioner to provide air tight store room and also regarding process of it. Other conditions are also made specifically in the light of the possible objections and pollution. In the above circumstances the orders passed by the Government are liable to be set aside and accordingly quashed and Exts. P4 and P6 are given effect to. Panchayath is, therefore, directed to issue licence under S. 233 of the Act to the petitioner within a period of four weeks from the date of receipt of a copy of this judgment. The Original Petitions are allowed.