PAWAN CHAUBEY v. THE STATE OF UTTAR PRADESH, Supreme Court Of India, Judgment, Law, casemine.com

Factual and Procedural Background

The Licensing Authority had cancelled the fair price shop licence of Respondent No. 4 on the basis of his earlier suspension during 2013–2014. Respondent No. 4 filed Writ-C No. 27656 of 2018 before the High Court, challenging that cancellation. The High Court, after hearing only Respondent No. 4 and the State authorities, allowed the writ petition on 18-08-2021, holding that the cancellation could not rest solely on past conduct once the earlier suspension orders had been revoked.

By that time, the licence had already been re-allotted to the present appellant, who had applied for impleadment in the High Court but whose application was never considered. Contending that the High Court’s order adversely affected her interest as the subsequent allottee, the appellant approached the Supreme Court in the present appeal.

Legal Issues Presented

Whether a subsequent allottee of a fair price shop licence has the right to be impleaded and heard in a writ petition challenging the cancellation of the original licensee’s licence.

Whether the High Court erred in restoring Respondent No. 4’s licence without affording the appellant a hearing.

Arguments of the Parties

Appellant's Arguments

The appellant’s rights as the current licence holder were directly affected by the restoration of Respondent No. 4’s licence; therefore she was entitled to be impleaded and heard.

Relied on the Supreme Court’s order in Smt. Sumitra Devi v. State of U.P. to assert that a subsequent allottee must be heard before the original licensee’s licence is restored.

Respondent No. 4's Arguments

Invoked Poonam v. State of U.P. (2016) 2 SCC 779 to contend that the appellant lacked locus standi and need not be heard.

Maintained that the High Court correctly set aside the cancellation as it was founded solely on past conduct already condoned.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Poonam v. State of U.P. (2016) 2 SCC 779	A subsequent allottee does not possess an independent legal right to the licence.	Distinguished on facts; the Court noted that although no independent right exists, the subsequent allottee had in fact been heard in Poonam, supporting the need for a hearing here.
Smt. Sumitra Devi v. State of U.P. & Ors., Civil Appeal Nos. 9363-64 of 2014 (order dated 08-10-2014)	The High Court must hear a subsequent allottee before restoring the original licensee’s licence.	Relied upon to hold that the appellant should have been impleaded and heard, and that failure to do so rendered the High Court’s order unsustainable.

Precedent

Rule or Principle Cited For

Application by the Court

Poonam v. State of U.P. (2016) 2 SCC 779

A subsequent allottee does not possess an independent legal right to the licence.

Distinguished on facts; the Court noted that although no independent right exists, the subsequent allottee had in fact been heard in Poonam, supporting the need for a hearing here.

Smt. Sumitra Devi v. State of U.P. & Ors., Civil Appeal Nos. 9363-64 of 2014 (order dated 08-10-2014)

The High Court must hear a subsequent allottee before restoring the original licensee’s licence.

Relied upon to hold that the appellant should have been impleaded and heard, and that failure to do so rendered the High Court’s order unsustainable.

Court's Reasoning and Analysis

The Supreme Court observed that even if a subsequent allottee lacks an “independent” right to the licence, the restoration of the original licensee’s rights indisputably impacts the subsequent allottee. Citing Smt. Sumitra Devi, the Court emphasized that principles of natural justice mandate giving such an allottee an opportunity to be heard. The Court distinguished Poonam on the ground that the subsequent allottee in that case had been heard at every stage; therefore, the precedent did not support denying a hearing in the present matter.

Concluding that the High Court had set aside the cancellation order without considering the appellant’s interest or submissions, the Supreme Court found the High Court’s judgment procedurally defective. Consequently, the judgment was set aside and directions were issued for fresh consideration after impleading the appellant.

Holding and Implications

APPEAL ALLOWED; HIGH COURT JUDGMENT SET ASIDE.

The appellant is to be added as a party in the writ proceedings, which the High Court must dispose of within three months after granting the appellant a reasonable opportunity to be heard. The decision reinforces the procedural requirement that subsequent allottees be heard in litigation that may divest them of their licences; however, it does not create a new substantive right beyond ensuring adherence to natural justice.

PAWAN CHAUBEY v. THE STATE OF UTTAR PRADESH

Indira Banerjee, J.:— Leave granted.

2. This appeal is against a final judgment and order dated 18-08-2021 Writ- C No. 27656 of 2018 allowing the writ petition being WC No. 27656 of 2018 filed by the Respondent No. 4, challenging an order of cancellation of the Fair Price Shop licence of the Respondent No. 4.

3. The appellant before us is the subsequent allotee of the licence for the fair price shop. The appellant has been running the fair price shop. The appellant had made an application in the said writ petition for being impleaded as respondent. The said application was not considered.

4. After hearing learned counsel appearing on behalf of Respondent No. 4 and learned counsel appearing on behalf of the respondent authorities, the High Court found that the licencing authority had proceeded to cancel the licence solely on the ground of previous conduct of the Respondent No. 4 as his licence had been suspended earlier in 2013-2014. The High Court was of the view that once the orders of suspension passed in 2013-2014 were revoked, the licence could not have been cancelled on account of his previous conduct but only on the basis of fresh materials which the authority concerned was bound to discuss and the charges needed to be proved. It appears that the concerned licencing authorities made no efforts to prove the charges against the respondent No. 4 either before the Appellate Authority or before the High Court. The High Court concluded that the authorities had fallen into the “trap of cancelling the licence solely on the basis of previous conduct of the appellant”.

5. It is the case of the appellant that the appellant ought to have been impleaded as party and given a hearing before cancellation of the fair price shop licence. There can be no doubt that the impugned order whereby the order of cancellation of the fair price shop licence of the respondent No. 4 has been cancelled, adversely affects the interest of the appellant as subsequent allottee of the fair price shop licence.

6. Our attention has been drawn to the judgment of this Court in Poonam v. State of U.P. (2016) 2 SCC 779. Relying on the aforesaid judgment, learned counsel appearing on behalf of the Respondent No. 4 contended that the appellant need not be heard. She had no right or locus to be impleaded.

7. In Poonam (2016) 2 SCC 779, the subsequent allottee had actually been heard at all stages. What the Court held was that the subsequent allottee had been trying to establish her right independently. She contended that she had an independent legal right. This Court found that it was extremely difficult to hold that she had an independent legal right.

8. In Smt. Sumitra Devi v. State Of U.P & Ors.. Civil Appeal No. 9363-64 of 2014, a Bench of coordinate strength of this Court comprising Hon'ble Ms. Justice Ranjana P. Desai and Hon'ble Mr. Justice N.V. Ramana (As His Lordship then was) passed an order dated 08.10.2014, the relevant parts whereof are extracted hereinbelow:

“The appellant being the subsequent allottee filed an application for impleadment in the writ petition on 17.10.2008. That application was neither entertained nor allowed.

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Learned counsel for the appellant urged and, in our opinion, rightly that the High Court should have heard the appellant before restoring the licence of respondent no. 6 as the appellant was the subsequent allottee and his rights were affected by the restoration of licence of respondent no. 6. We are entirely in agreement with learned counsel for the appellant. In our opinion, the High Court could not have restored the licence of respondent no. 6 without hearing the appellant as his rights were certainly affected by such order.”

9. Even if a subsequent allottee does not have an independent right, he/she still has a right to be heard and to make submissions defending the order of cancellation.

10. It is true that the order of appointment of the appellant reads that the order is subject to the outcome of the proceedings pending in court. This does not disqualify the appellant from appearing and contesting the proceedings by trying to show that the order of cancellation had correctly been passed against the Respondent No. 4.

11. The appeal is, accordingly, allowed. The impugned judgment and order Writ- C No. 27656 of 2018 is set aside.

12. The appellant shall be added as party to the writ proceedings. The writ proceedings shall be disposed of after giving a reasonable opportunity of hearing to the appellant. Considering that the proceedings have been pending for a long time, we request the High Court to dispose of the Writ Petition pending in the High Court within three months from the date of receipt of a copy of this order.

C.A. No.-003668-003668 / 2022

PAWAN CHAUBEY v. THE STATE OF UTTAR PRADESH

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent No. 4's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

PAWAN CHAUBEY v. THE STATE OF UTTAR PRADESH

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