2012 (11) TMI 973 - HC - Indian Laws

Court quashes show-cause notices, allows fresh proceedings if prima facie violation found. Petitioner's application dismissed.

The court quashed the show-cause notices issued by the DC due to lack of jurisdiction and allowed the appropriate authority to initiate fresh proceedings ... Writ petition - Essential Commodities Act – West Bengal Public Distribution System, (Maintenance and Control) Order 2003 - whether there was any manipulation by the writ petitioner in obtaining the licence under the 2003 Control Order, by suppressing the identity of the intervenor and Wahuda Rasul as partners of Damodar Enterprise. - Held that:- The Control Order prescribes that in relation to an allegation of violation of condition of licence, the SDC is required to issue the notice to show cause. This implies that there should be prima facie satisfaction on the part of the SDC that there has been such violation, and then only notice seeking explanation shall be issued. Explanation is also required to be given to the SDC. He is to apply his mind over the explanation, give his own comments. The DC must have comments of the SDC before deciding the issue finally, upon giving opportunity of hearing to the distributor. This is the prescription of the Control Order. Deviation from this course ex-facie would be without the authority of law, being contrary to the provisions of the statue. Any step taken in violation of the statutory provision, particularly where there is overtaking on the part of the authorities in the decision making hierarchy, cannot be protected as being mere irregularity. It would be impermissible to legitimize an action on the part of an authority in initiating a proceeding which the statute mandates another authority to initiate on the ground that such action would cause no prejudice to the person against whom such action is initiated. Such show cause notice has been issued by DC without having jurisdiction to do so, and no further step ought to be taken in pursuance of the same. - Notices quashed. Regarding intervenor - held that:- business of distribution never involved the intervenor, and he cannot compel the food and supplies department to allow him to act as a licencee - intervenor cannot implement a partnership agreement by making complaint before the food and supplies authorities - District Controller had no jurisdiction to issue such notice. The appropriate authority under the 2003 Control Order however shall be at liberty to institute a proceeding afresh, if such authority is of prima facie opinion that there has been any violation of the provisions of the Control Order or any condition stipulated therein - writ petition is allowed Issues Involved:1. Validity of the M.R. Distributorship license issued to the petitioner.2. Allegation of suppression of partnership reconstitution.3. Jurisdiction of the District Controller (DC) in issuing the show-cause notice.4. Validity of subsequent inquiries on the same issue.5. Impact of reconstitution of the partnership on the license validity.Detailed Analysis:1. Validity of the M.R. Distributorship license issued to the petitioner:The petitioner, a partner in 'Damodar Enterprise,' was issued a distributorship license under the West Bengal Public Distribution System (Maintenance and Control) Order 2003. The license was initially valid until December 31, 2006, and was issued in the names of Abdul Malek (AM) and Monohar Chandra Halder (MH) as proprietors of the firm. The controversy arose when an intervenor claimed to be a partner in the firm and alleged that the license was obtained without disclosing all partners' names.2. Allegation of suppression of partnership reconstitution:The intervenor, Sk. Ajimuddin, claimed that the firm was reconstituted on April 1, 1994, to include him and Safi Wahuda Rasul, the petitioner's wife, as partners. He alleged that the petitioner obtained the license under the 2003 Control Order without disclosing the reconstitution. The District Controller's report dated November 6, 2006, found no formal application for inclusion of new partners and identified Sk. Ajimuddin as an outsider.3. Jurisdiction of the District Controller (DC) in issuing the show-cause notice:The petitioner challenged the legality of the show-cause notices dated April 4 and 20, 2007, issued by the DC, arguing that under clause 26(c) of the Control Order, the Sub-Divisional Controller (SDC) was the competent authority to issue such notices. The Regional Deputy Director (RDD) also opined that the SDC was the competent authority, making the DC's notice invalid. The court held that the DC lacked jurisdiction to issue the show-cause notice, as the Control Order mandated the SDC to initiate such proceedings.4. Validity of subsequent inquiries on the same issue:The petitioner argued that the DC's earlier report dated November 6, 2006, had settled the controversy, and subsequent inquiries were barred by principles akin to res judicata. The court found that the earlier inquiry did not address the issue of reconstitution of the firm and unauthorized participation in the distributorship business. Therefore, the subsequent inquiry was not barred as it addressed different aspects of the controversy.5. Impact of reconstitution of the partnership on the license validity:Clause 11 of the license conditions specified that the license would cease to be valid upon reconstitution of the partnership firm. The petitioner argued that the reconstitution occurred before the 2003 Control Order, and the intervenor was not involved in the distributorship business. The court did not adjudicate on the factual issues of reconstitution and its impact on the license, leaving it to the appropriate forum to decide if necessary. The court quashed the impugned show-cause notices issued by the DC due to lack of jurisdiction but allowed for the possibility of fresh proceedings by the appropriate authority if there was a prima facie case of violation.Conclusion:The court quashed the show-cause notices issued by the DC due to lack of jurisdiction and allowed the appropriate authority to initiate fresh proceedings if there was a prima facie case of violation of the Control Order or license conditions. The petitioner's application for sanction to prosecute the intervenor was dismissed, and the writ petition was allowed with no order as to costs.