Judicial exercise of licensing discretion under warehouse rules cannot rest on inherited suspicion or unsupported assumptions.

Refusal to grant a private warehouse licence under Rule 140 was held arbitrary because the licensing discretion had to be exercised judicially and in line with the rule's conditions and safeguards. The authority relied chiefly on past irregularities attributed to the applicant's parents and on an unsupported assumption that the applicant would act similarly, without tying the decision to the applicant's own conduct or the statutory criteria. The refusal also ignored available safeguards such as bond, surety, and security, which could have been considered to test bona fides. The decision was therefore not in accordance with law and was set aside.

---

---

Issues: Whether the refusal to grant a private warehouse licence under Rule 140 of the Central Excise Rules was vitiated by arbitrariness and irrelevant considerations.

Analysis: The licensing authority had discretion under Rule 140, but that discretion had to be exercised judicially and with reference to the rule's conditions and safeguards. The refusal was based mainly on past irregularities attributed to the petitioner's father and mother and on an unsupported assumption that the petitioner would also act similarly or that the business would ingly be run by the father. The order did not show consideration of the rule's prescribed conditions, including the possibility of insisting upon bond, surety, security, and other safeguards to test the applicant's bona fides. A decision founded on speculation and inherited suspicion, without linking it to the applicant's own conduct or the statutory criteria, could not stand.

Conclusion: The refusal was arbitrary and not in accordance with law, and the petitioner succeeded.

---