Full Judgment Text
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PETITIONER:
PURTABPORE CO. LTD.
Vs.
RESPONDENT:
CANE COMMISSIONER OF BIHAR & ORS.
DATE OF JUDGMENT:
21/11/1968
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
SIKRI, S.M.
CITATION:
1970 AIR 1896 1969 SCR (2) 807
1969 SCC (1) 308
CITATOR INFO :
D 1973 SC 258 (5)
R 1978 SC 597 (87,99)
D 1982 SC1407 (18)
ACT:
Sugar Cane (Control) Order, 1955---Central Government’s
power under cl. 6 of Order to regulate supply of sugarcane
to factories--Power under cl. 6 delegated under cl. 11 to
State Governments and Cane Commissioners-Cane Commissioner
passing Order under cl. 6(1) on direction given by Chief
Minister such order is invalid--An order under s. 6(1)
modifying a reservation in favour of a factory is quasi
judicial--Requirement of natural justice must be satisfied.
HEADNOTE:
The Sugar Cane (Control) Order, 1955 was promulgated by the
Central Government in the exercise of its powers under the
Essential Supplies Act. Under cl. 6 of the Order the
Central Government could reserve any area where sugarcane
was grown for a factory taking into account various
relevant ’factors. Clause 11 allowed the Central Government
to delegate its power under el. 6, and the Central
Government by a notification dated July 16, 1966 delegated
the said power to the several State Governments and the Cane
Commissioners of those States. The appellant was a sugar
mill situated in U.P. near the border of Bihar State. For a
long time its source of supply of sugarcane had been the
neighboring area of Bihar State consisting of 208 villages.
For the seasons 1966-67 and 1967-68 the 5th respondent--a
sugar mill situate on the Bihar side of the order-sought to
have the area reserved for itself but by order dated
November 30, 1966 the request was rejected by the State
Government. In December 1966 the Cane Commissioner, Bihar
passed an order under el. 6(1) of the Sugar Cane (Control)
Order reserving the said area of 208 villages for the
appellant for the seasons 1966-67 and 1967-68. The 5th
resportdent made representations to the Chief Minister.
Acting on directions given by the Chief Minister the Cane
Commissioner, Bihar passed orders on November 14, 1967,
whereby by a notification in the Bihar Government Gazette
121 of the aforesaid villages were reserved for the
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appellant and 99 villages for the 5th respondent. The
appellant filed a writ petition in the High Court
challenging this order of the Cane Commissioner but the
petition was rejected. With certificate appeal was filed in
this Court. The contentions urged on behalf of the appellant
were: (i) The orders in question though purported to have
been made by the Cane Commissioner were in fact not so, and
were therefore invalid; (ii) Every proceeding to modify any
reservation under cl. 6 is a quasi-judicial proceeding. As
the impugned notifications were made without affording the
appellant reasonable opportunity for representing its case
they were bad in law; (iii) Even if the said proceeding was
considered an administrative proceeding the impugned orders
were liable to be set aside on the basis of the rule laid
down by this Court in State of Orissa v. Dr. (Miss) Binapani
Dei, [1967] 2 S.C.R. 625.
HELD: (i) From the material on record the only
conclusion possible was that the Chief Minister imposed his
opinion on the Cane Commissioner. The power exercisable by
the Cane Commissioner under cl. 6(1) is a statutory power.
He alone could have exercised that power. While exercising
that power he cannot abdicate his responsibility in favour
of anyone--not even in favour of the State Government or the
Chief Minister. It was not proper for the Chief Minister to
have interfered with the
808
functions of the Cane Commissioner. In this case what had
happened was that the power of the Cane Commissioner had
been exercised by the Chief Minister, an authority not
recognised by el. (6) read with cl. (11) but the
responsibility for making those orders was asked to be taken
by the Cane Commissioner.
The executive officers entrusted with statutory
discretions may in some cases be obliged to take into
account considerations of public policy and to some context
the policy of a Minister or the Government as a whole when
it is a relevant factor in weighing the policy but this will
not absolve . them from their duty to exercise their
personal judgment in individual cases unless explicit
statutory provision has been made for them to be given
binding instructions by a superior. [816]
Commissioner of Police, Bombay v. Gordhandas Bhanji,
[1952] S..C.R. 135 and State of Punjab v. Hari Kishan
Sharma, A.I R. 1966 S.C. 1081, applied.
(ii) As soon as the 5th respondent moved the Government
for altering or modifying the reservation made in favour of
the appellant, a lis commenced. The dispute that arose
between the appellant and the 5th respondent had to be
decided on the basis of the objective criteria, prescribed
by el. 6 of the order i.e. (1 ) the crushing capacity of the
appellant mill; (2) the availability of the sugarcane in the
reserved area and (3) the need for the production of sugar.
There could hardly be any doubt that the modification of the
reservation made in favour of the appellant would have had
serious repercussions on the working of the appellant’s
mill. It was bound to affect its interests adversely.
Hence it was not possible-to accept the conclusion of the
High Court that the proceeding before the Cane Commissioner
was not a quasi-judicial proceeding. [817 E-H]
Province of Bombay v. Kusaldas S. Advani & Ors., [1950]
S.C.R. 621 at p. 725, Shivji Nathubhai v. The Union of
India, [1960] 2 S.C.R. 775, Board of High School and
Intermediate Education U.P. Allahabad v. Ghanshyam Das
Gupta & Ors., [1962] 3 Supp. S.C.R. 36. New Zealand Dairy
Board v. Okitu Co-operative Dairy Co. Ltd., (1953) New
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Zealand Law Reports. p. 366, and James Edward Jeffs &
Ors. v. New Zealand Dairy Production & Marketing Board &
Ors., [1967] A.C.p. 551, referred
tO.
(iii) In the present case both the appellant and the 5th
respondent were making repeated representations to the Chief
Minister as well as to the Cane Commissioner. The
representations made by the 5th respondent or even the
substance thereof were not made available to the appellant.
The proposal to split the reserved area into two or the
manner in which it was proposed to be split was not made
known to the appellant and his objection invited in that
regard. It had no opportunity to represent against the
same. Hence the appellant was justified in complaining that
the principles of natural justice had been contravened. [822
D--F]
Suresh Koshy George v. The University of Kerala &
Ors., [1969] 1 S.C.R. 317, referred to.
(iv) The appellant’s interest was adversely affected by
the impugned order and the contention of the respondent
that as no orders had been passed under cls. 6(c) and (d) of
the ’order’ the appellant could not be considered as an
aggrieved party. was not correct. [823 A]
809
[The Court did not consider it necessary to decide the
questions (a) whether the impugned orders could have been
validly made in an administrative proceeding, (b) whether
the Cane Commissioner who. had the power to make the
reservation in question also had the power to alter or
modify that reservation]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1464 of 1968.
Appeal ,from the judgment and order dated March 18, 1968
of the Patna High Court in C.W.J.C. No. 816 of 1967.
A. K. Sen, Bhola Sen, D. Parkar Gupta, Om Khetan, B.P.
Maheshwari and R.K. Maheshwari, for the appellant.
M.C. Chagla and R.C. Prasad, for respondents Nos. 1 and 2.
M.C. Chagla, D.P. Singh, S.C. Agarwal, Uma Dutta and S.
Chakravarti, for respondent No. 5.
Sobhugmal Jain and Krishna Sen, for respondent Nos. 6 to 8.
The Judgment of the Court was delivered by
Hegde, J. This appeal by certificate arises from the
decision rendered on 18th March 1968 by the Patna High Court
in C.W.J.C. No. 816 of 1967. That was a petition filed by
the appellant under Art. 226 of the Constitution praying,
inter alia, that the High Court may be pleased to quash the
two orders made by the Cane Commissioner, Bihar on November
14, 1967 under which he excluded 99 villages from the area
reserved by him in favour of the appellant under cl. 6 of
the Sugar Cane (Control) Order 1966 (to be hereinafter
referred to as the ’order’) and included those villages in
the area reserved in favour of New Siwan Mill (5th
respondent in this appeal). The High Court dismissed that
writ petition.
The appellant Co. was established in 1903. Though its
sugar mill is in U.P. it used to draw its sugarcane
requirement mainly from the neighboring areas in Bihar
State. The mill in question is within about 100 yards of
the Bihar border. The appellant’s case is that for the last
over 30 years the 208 villages of Bihar, with which we are
concerned in this appeal had been the principal source of
its supply of sugarcane and that the Bihar authorities used
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to reserve those villages for it. The appellant claims to
have spent huge amount in the development of sugarcane
growing areas in the said 208 villages in the course of
years. It also claims to have advanced large sums to the
sugarcane growers in the said villages, such sums to be
adjusted later on against the price of the sugarcane
purchased. In 1955 the Central Govern-
810
ment promulgated the ’order’ in exercise of its powers under
the Essential Commodities Act. One of the main purpose of
that order was to regulate the supply and distribution of
sugarcane. Reservation of the said 208 villages in favour of
the appellant continued under that order. But in view of
the agitation carried on by the 5th respondent and
others, .during the two seasons 1962-63 and 1963-64 those
villages were kept unreserved. Hence any factory was free to
make purchases in that area. Even during that period the
appellant continued to get its supplies from that area. On
February 3, 1964, there was a meeting of the Cane
Commissioners of Bihar and U.P. with the object of deciding
on a long term basis the question of allotting sugarcane
grown in the border area among the sugar factories situated
near the Bihar U.P. border. In that meeting it was decided
inter alia that the aforementioned 208 villages should be
reserved in favour of the appellant; at the same time some
of sugarcane growing areas in U.P. were reserved for some of
the Bihar sugar mills. Accordingly the Cane Commissioner of
Bihar passed orders reserving the aforementioned 208
villages for the appellant for two seasons i.e. 1964-65 and
1965-66. For the New Siwan mill (5th respondent) 100 more
villages were reserved in Guthani area. The representation
of the New Siwan mill for reserving the 208 villages
mentioned earlier was rejected by the Cane Commissioner.
The powers of the Central Government under cls. 6, 7, 8
and 9 of the ’order’ were delegated to the several States
and the Cane Commissioners mentioned in the notification
issued by the Central Government on July 16, 1966. The
State Government of Bihar and the Cane Commissioner of Bihar
are amongst the authorities to whom the powers under those
clauses were delegated. By its order of November 4, 1966,
the State Government of Bihar rejected the representation
made by New Siwan mill by its application of February 17,
1966 asking for reservation of the 208 villages mentioned
earlier. Thereafter by his order of December 30, 1966, the
Cane Commissioner Bihar reserved those villages for the
appellant under el. 6(1)(a) of the ’order’ for two seasons
(1966-67 and 1967-68). The New Siwan mill challenged the
validity of that order in C.W.J.C. No. 63 of 1967 in the
Patna High Court. The appellant filed its counter affidavit
in that proceeding on March 21, 1967. The application was
heard in part on Aprii 13, 1967 and April 14, 1967 but
thereafter the case was adjourned. Later the appellant
learnt that the 5th respondent had moved the Chief Minister
of Bihar to revoke the reservation made in favour of the
appellant. Apprehending that the appellant’s interest may
be jeopardised, one of the Directors of the appellant
company wrote to the Chief Minister on June 15, 1967 praying
that the reservation made in favour of the appellant should
811
not be disturbed. Subsequent to that, the appellant made
numerous other representations both to the Chief Minister as
well as to the Cane Commissioner. One of the Director of
the appellant company met the Chief Minister as well as his
Private Secretary. Meanwhile the 5th respondent was also
making representations, to the Chief Minister as well as to
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the Cane Commissioner. From the records produced before us,
it is clear that the Cane Commissioner was firmly of the
opinion that there was no justification for disturbing the
reservation made in favour of the appellant. He strongly
recommended to the Chief Minister against interfering with
the said reservation. According to him it was in the
interest of the Sugar industry as well as that of the Sugar
mills in Bihar not to disturb the agreement arrived at the
meeting of the Sugar Cane Commissioners of U.P. and Bihar.
From the records. produced before us it is seen that one of
the grounds urged by the 5th respondent in support of his
plea was that while it was a Bihar mill, the appellant was a
U.P. mill and as such the Bihar villages should be reserved
for its use. From the note submitted by Shri Taring Sahai,
an officer in the Cane Commissioner’s department, to the
Assistant Cane Commissioner on July 5, 1967, it is seen that
the Chief Minister was interesting himself’ in the
controversy between the appellant, and’ the 5th respondent.
That is also clear from the note submitted by S. Asanullah
another officer in the same department to the Cane
Commissioner’ on 7-7-1967. It is unnecessary to refer to
the correspondence that passed between the Cane Commissioner
and the Chief Minister but one thing is clear from that
correspondence that while the Cane Commissioner was firm in
his opinion that the agreement entered into between him and
his counter-part in U.P. should be respected, the Chief
Minister was inclined to alter the reservation made in
favour of the appellant. In the notes submitted by the
Assistant Cane Commissioner to the Cane Commissioner we find
the following statement:
"As verbally ordered by the Cane
Commissioner in the background of the above
notes of the Assistant Cane Commissioner
in connection with the discussions held with
the Chief Minister the undersigned examined
the geographical positions given in the map.
208 villages of Bihar are reserved for Pratabpur mill.
They are divided as follows:
(a) Mirganj police station .. 87
(b) Siwan police station .. 106
(c) Darauli police station .. 15
Total . 208 ", -
812
In the note submitted by the Cane Commissioner to the
Chic Minister on October 27, 1967, it is stated:
"As per order, the above two
suggestions (Ka and Kha) have been given for
division of 208 villages between the New Siwan
Mill and the Pratabpur Mill. According to one
(Ka) the New Siwan Mill gets 121 villages and
according to the second proposal (Kha) it gets
99 villages. As it is clear from the notes of
the Assistant Cane Commissioner, the Chief
Minister has ordered that most of these 208
villages may be given to the New Siwan Mill.
This order is carried out under proposal
’Kha’, but under it, about 20-22 such villages
come as are at a distance of only 2-3 miles
from the Pratabpur Mill and the farmers
of those villages can also have some objection
on account of it.
Hence only after obtaining a clear
order from the Chief Minister, the necessary
notification will be issued.
Sd/-Illegible
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27-10."
On November 7, 1967, the Chief Minister passed
the following order on the above note.
"I agree with the notes as at Kha of
page 33. 99 villages be left to the New Siwan
Mill and 109 villages to the Pratabpur Mill.
None of the two mills will have the right to
keep the weigh bridge of sugar-cane collecting
centre in the area of each other.
Sd/- Mahamaya Pd. Sinha
7-11-67."
On the basis of this direction the Cane Commissioner
made the impugned orders on November 14, 1967, which were
duly published in the Gazette.
In the High Court the validity of the order made by the
Cane Commissioner on November 14, 1967 was challenged on six
different grounds i.e. (1 ) that the Cane Commissioner had
no jurisdiction to pass those orders; (2) in passing those
orders, the Cane Commissioner practically abdicated his
statutory functions and mechanically implemented the
directions issued by the Chief Minister; (3) the orders are
vitiated as the proceeding before the authority culminating
in those orders was a quasi-judicial proceeding and the
authority had failed to afford a reasonable opportunity to
the appellant to represent against the orders proposed to be
made; (4) even if the proceeding in question should be
813
considered as an administrative proceeding as the orders
made involve civil consequence and the proceeding having not
been conducted consistently with the rules of natural
justice, the impugned orders cannot be sustained; (5) those
orders were passed mala fide and lastly (6) they are
discriminatory against the petitioner and hence hit by Art.
14 of the Constitution. The High Court rejected every one
of the contentions. It came to the conclusion that the Cane
Commissioner who had the power to make reservations under
cl. 6 of the ’order’ had also the power to modify Or cancel
those reservations in view of s. 21 of the General Clauses
Act; the impugned orders were that of the Cane Commissioner
both in fact as well as in law; the proceeding before the
Cane Commissioner which resulted in making the impugned
orders is a purely administrative proceeding; even if it is
considered to be quasi-judicial proceeding, reasonable
opportunity had been given to the appellant to represent its
case and in fact it had represented its case fully and
effectively; the plea of mala-fide is unsubstantiated and
the orders in question did not contravene Art. 14 of the
Constitution.
In this Court Shri A.K. Sen, learned Counsel for the
appellant attacked the impugned order on the following
grounds:
(1) The orders in question though purported to have been
made by the Cane Commissioner, were in fact not so; the Cane
Commissioner merely acted as the mouth-piece of the Chief
Minister; in truth he had abdicated his statutory functions
and therefore the orders are bad; (2) Every proceeding to
modify any reservation made under cl. 6 of the ’order’ is
a quasi-judicial proceeding. As the impugned modifications
were made without affording the appellant reasonable
opportunity for representing its case they are bad in law;
(3) Even if the said proceeding is considered as an
administrative proceeding, the impugned orders are liable to
be set aside on the basis of the rule laid down by this
Court in State of Orissa v. Dr. (Miss) Binapani Dei and
Ors. (1), and ( 4 ). The impugned modifications contravene
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Art. 301 of the Constitution.
Shri Sen did not address any arguments on the last
ground formulated by him. Therefore we shall not deal with
the same.
The contentions of Shri M.C. Chagla, learned Counsel for
the State of Bihar as well as the 5th respondent were as
follows:
Though the Cane Commissioner had consulted the Chief
Minister, the impugned orders were really made by the
former, hence it cannot be said that he had abdicated his
statutory func-
(1) [1967] 2 S.C.R. 625.
814
tions. According to him, the proceeding before the Cane
Commissioner was administrative in character and to such a
proceeding rules of natural justice are not attracted. He
further urged that even if it is held that the said
proceeding was a quasi-judicial proceeding, there was no
contravention of the principles of natural justice as the
appellant had represented his case fully both before the
Chief Minister as well as before the Cane Commissioner.
Before we proceed to examine the contentions advanced on
behalf of the parties, it is necessary to refer to the
relevant provisions of law. Clause 5 of the ’order’ which
deals with the power to regulation, distribution and
movement of sugarcane reads as under:
(1) The Central Government may, by order notified in the
official gazette:
(a) reserve any area where sugarcane is
grown (hereinafter in this clause referred to
as reserved area) for a factory having regard
to the crushing capacity of the factory, the
availability of sugarcane in the reserved area
and the need for production of sugar, with a
view to enabling the factory to purchase the
quantity of sugarcane required by it;
(b) determine the quantity of sugarcane
which a factory will require for crushing
during any year;
(c) fix, with respect to any specified
sugarcane grower or sugarcane growers
generally in a reserved area, the quantity or
percentage of sugarcane grown by such grower
or growers, as the case may be, which each
such grower by himself or, if he is a member
of a co-operative society of sugarcane growers
operating in the reserved area, through such
society; shall supply of the factory
concerned;
(d) direct a sugarcane grower or a
sugarcane growers’ cooperative society
supplying sugarcane to a factory, and the
factory concerned to enter into an agreement
to supply or purchase, as the case may be, the
quantity of sugarcane fixed under paragraph
(c);
(e) direct that no gur (jaggery) or
khandsari sugar or sugar shall be manufactured
from sugarcane except under and in accordance
with the conditions specified in the licence
issued in this behalf;
(f) prohibit or restrict or otherwise
regulate the export of sugarcane from any area
(including a reserved
815
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area) except under and in accordance with a
permit issued in this behalf.
(2) Every sugarcane grower, sugarcane growers’ co-
operative society and factory, to whom or to which an order
made under paragraph (c) of sub-clause (1) applies, shall be
bound to supply or purchase, as the case may be, that
quantity of sugarcane covered by the agreement entered into
under the paragraph and any wailful failure on the part of
the sugarcane growers’ cooperative society or the factory to
do so, shall constitute a breach of the provisions of this
Order:
Provided that where the default committed by any
sugarcane growers’ co-operative society is due to any
failure on the part of any sugarcane grower, being a member
of such society such society shall not be bound to make
supplies of sugarcane to the factory to the extent of such
default.
Clause (11 ) deals with delegation of powers. It reads:
"The Central Government may, by
notification in the Official Gazette, direct
that all or any of the powers conferred upon
it by this Order shall, subject to such
restrictions, exceptions and conditions, if
any, as may be specified in the direction, be
exercisable also by:
(a) any officer or authority of the
Central Government;
(b) a State Government or any officer
or authority of a State Government."
As seen earlier, the Central Government had delegated
its power under cl. (6) to the State Government of Bihar as
well as to the Cane Commissioner, Bihar.
In the matter of exercise of the power under rule 6(1)
the State Government and the Cane Commissioner are
concurrent authorities. Their jurisdiction is co-ordinate.
There was some controversy before us whether a Cane
Commissioner who had reserved an area for a sugar factory
for a particular period can alter, amend, or modify the area
reserved in the middle of the period fixed. As seen earlier
208 villages With which we are concerned in this case were
reserved for the appellant for two seasons i.e. 1966-67 and
1967-68. The contention was that the Cane Commissioner
could not have interfered with that reservation within that
period. The High Court has come to the conclusion that the
Cane Commissioner who had the power to make the reservation
in question must be held to have had the power to alter or
modify that reservation. But it is not necessary for us to
pronounce on this question as we are of the opinion that the
816
impugned orders though purported to have been made by the
Cane Commissioner were in fact made by the Chief Minister
and hence they are invalid. We have earlier seen that the
Cane Commissioner was definitely of the view that the
reservation made in favour of the appellant should not be
disturbed but the Chief Minister did not agree with that
view. It is clear from the documents before us that the
Chief Minister directed the Cane Commissioner to divide the
reserved area into two portions and allot one portion to the
5th respondent. In pursuance of that direction, the Cane
Commissioner prepared two lists ’Ka’ and ’Kha". Under the
orders of the Chief Minister, the villages contained in list
’Ka’ were allotted to the appellant and in list ’Kha’ to the
5th respondent. The Cane Commissioner merely carried out
the orders of the Chief Minister. It is true that the
impugned orders were issued in the name of the Cane
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Commissioner. He merely obeyed the directions issued to him
by the Chief Minister. We are unable to agree with the
contention of Shri Chagla that though the Cane Commissioner
was initially of the view that the reservation made in
favour of the appellant should not be disturbed, he changed
his opinion after discussion with the Chief Minister. From
the material before us, the only conclusion possible is that
the Chief Minister imposed his opinion on the Cane
Commissioner. The power exercisable by the Cane
Commissioner under cl. 6(1) is a statutory power. He alone
could have exercised that power. While exercising that
power he cannot abdicate his responsibility in favour of
anyone--not even in favour of the State Government or the
Chief Minister. It was not proper for the Chief Minister to
have interfered with the functions of the Cane Commissioner.
In this case what has happened is that the power of the Cane
Commissioner has been exercised by the Chief Minister, an
authority not recognised by cl. (6) read with cl. (11) but
the responsibility for making those orders was asked to be
taken by the Cane Commissioner.
The executive officers entrusted with statutory
discretions may in some cases be obliged to take into
account considerations of public policy and in some context
the policy of a Minister or the Government as a whole when
it is a relevant factor in weighing the policy but this will
not absolve them from their duty to exercise their personal
judgment in individual cases unless explicit statutory
provision has been made for them to be given binding
instructions by a superior.
In Commissioner of Police, Bombay v. Gordhandas
Bhanji(1) this Court struck down the order purported to
have been passed by the Commissioner of Police in the
exercise of his powers
(1) [1952] S.C.R. 135.
817
under the Bombay Police Act and the rules made thereunder as
the order in question was in fact that of the Government.
The rule laid down in that decision governs the question
under consideratiing. This Court reiterated that rule in
State of Punjab v. Hari Kishan Sharma(1). Therein this Court
held that the State Government was not justified in assuming
jurisdiction which had been conferred on the licensing
authority by s. 5 (1 ) and (2) of the Punjab Cinemas
(Regulation) Act. For the reasons mentioned above we hold
that the impugned orders are liable to be struck down as
they were not made by the prescribed authority.
This takes us to the question whether the proceeding
which resulted in making the impugned orders is a quasi-
judicial proceeding or an administrative proceeding. There
was some controversy before us whether a proceeding under
el. 6(1) of the ’order’ is a quasi-judicial proceeding. It
is not necessary for us to decide that question as in this
case we are only concerned with the proceeding which
resulted in making the impugned orders. In that proceeding
the only question before the authorities was whether all or
some of the villages reserved for the appellant should be
taken out from the reserved area and reserved for the 5th
respondent. The plea of the 5th respondent was that all
those villages should be reserved for it whereas the
appellant insisted that the reservation made in its favour
should not be disturbed. Whether there was a lis between
the appellant and the 5th respondent at an earlier stage or
not, we are of the opinion, as soon as the 5th respondent
moved the Government for altering or modifying the
reservation made in favour of the appellant, a lis
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commenced. The dispute that arose between the appellant
and the 5th respondent had to be decided on the basis of the
objective criteria, prescribed by cl. 6 of the ’order’ i.e.
(1) the crushing capacity of the appellant mill; (2) the
availability of the sugarcane in the reserved area and (3)
the need for the production of sugar.
There is hardly any doubt that the modification of the
reservation made in favour of the appellant would have had
serious repercussions on the working of the appellant’s
mill. It was bound to affect its interests adversely. Hence
it is not possible to accept the conclusion of the High
Court that the proceeding before the Cane; Commissioner was
not a quasi-judicial proceeding.
The impugned orders are similar to orders revoking or
modifying licenses. It would not be proper to equate an
order revoking or modifying a licence with a decision not to
grant a licence. Therefore Shri Chagla is not right in his
contention that
(1) A.I.R. 1966. S.c. 1081.
818
in this case we are called upon to deal with a privilege and
not right. As observed by S.A. De Smith in his Judicial
Review Administrative Action (2nd Edn.) at p. 211:
"To equate a decision summarily to
revoke a licence with a decision not to grant
a licence in the first instance may be still
more unrealistic. Here the "privilege" concept
may be peculiarly inapposite; and its aptness
has not been enhanced by the manner in which
it has been employed in some modern cases. It
is submitted that the courts should adopt a
presumption that prior notice and opportunity
to be heard should be given before a licence
can be revoked. The presumption should be
rebuttable in similar circumstances to those
in which summary interference with vested
property rights may be permissible. That the
considerations applicable to the revocation of
licences may be different from those
applicable to the refusal of licences has
indeed been recognised by some British
statutes and a number of judicial decisions in
other Commonwealth jurisdictions."
In Province of Bombay v. Kusaldas S. Advani and Ors.(1)
Das, J. formulated the following tests to find out whether
proceeding before an authority or a tribunal .’is a quasi-
judicial proceeding :--
(i) that if a statute empowers an
authority, not being a Court in the ordinary
sense, to decide disputes arising out of a
claim made by one party under the statute
which claim is opposed by another party and to
determine the respective rights of the
contesting parties who are opposed to each
other, there is a lis and prima facie and in
the absence of anything in the statute to the
contrary it is the duty of the authority to
act judicially and the decision of the
authority is a quasi-judicial act; ,’red
(ii) that if a statutory authority has
power to do any act which will prejudicially
affect the subject, then although there are
not two parties apart from the authority and
the contest is between the authority proposing
to do the act and the subject opposing it, the
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final determination of the authority will yet
be a quasi-judicial act provided the authority
is required by the statute to act judicially.
These tests were adopted by this Court in Shivji
Nathubhai v. The Union of India and Ors.(2). Therein this
Court was
(1) [1950] S.C.R. 621 at p. 725.
(2) [1960] 2, S.C.R. 775.
819
considering the validity of cancellation in review by the
Central Government a mining lease granted by the State
Government. In that context this Court held that even if
the act of the State Government in granting a mining lease
was an administrative act, it was not correct to say that no
right of any kind passed to the lessee until the review was
decided by the Central Government where a review had been
applied for. Rule 52 of the rules framed under the Mines and
Minerals (Regulation and Development) Act, No. 53 of 1941
which gives the aggrieved party the right to a review
created a lis between him and the lessee and, consequently,
in the absence of anything to the contrary either in rule 54
or the statute itself there could be no doubt that the
Central Government is required to act judicially under rule
54.
This Court in Board of High School and Intermediate
Education U.P, Allahabad v. Ghanshyam Das Gupta and Ors.(1)
held that where the statute in question is silent as to the
manner in which the power conferred should be exercised by
the authority acting under it, the exercise of power will
depend on the express provisions of the statute read
alongwith the nature of the rights affected, the manner of
disposal provided, the objective criteria, if any, to be
adopted, the effect of the decision on the persons affected
and other indicate afforded by the statute. The mere fact
that the Act in question or the relevant Regulations do not
make it obligatory on the authority to call for an
explanation and to hear the person concerned is not
conclusive on the question whet- her the authority has to
act as a quasi-judicial body when exercising its power under
the statute.
On applying the various tests enunciated in the above
decisions, there is hardly any doubt that the proceeding
before the Cane Commissioner was a quasi-judicial
proceeding. In this connection reference may be usefully
made to the decision of the Court of Appeal of New Zealand
in New Zealand Dairy Board v. Okitu Co-operative Dairy Co.,
Ltd.(2). We are referring to that decision because the
facts of that case bear a close resemblance to the facts of
the present case. Therein as a result of a Zoning Order
made by the Executive Commissioner of Agriculture in May
1937, the respondent dairy company, carrying on business in
Gisborne and the surrounding district, and the Kia Ora Co-
operative Dairy Co. Ltd. became entitled to operate
exclusively in a defined area in the Gisborne district.
They were excluded from operating outside that area. The
zoning conditions so established continued to exist until
1950, when the appellant Board issued the zoning orders
which were impugned in that case. It may be noted that the
zoning orders were made in the exercise of the statutory
power conferred on the appellant board.
(1). [1962] Supp. 3 S.C.R. 36.
(2). (1953) New Zealand Law Reports p. 366.
820
Before 1942, the respondent Co. was approached by the Health
Department with a request that it undertakes the treatment
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and supply of pasteurised milk to the public’ schools, and
it was informed that other dairy companies had declined the
proposal. the company complied with the request, after
overcoming the difficulties of finance. The scheme was put
into operation. In 1942 the respondent company put up a
treatment plant and expanded its business. This expansion
resulted in an annual turnover in the company’s milk
department going upto about A 90,000 as against pound 43,000
in its butter department. In March, 1950, the Kia era
company, by letter, expressed its desire that the appellant
Board (which had been substituted by regulation for the
Executive Commission) should examine the question of cream
and milk supplies in the Gisborne and surrounding districts.
This letter was, in substance, an application to the Board
to review the whole question of zoning and to require the
respondent company to cease the manufacture of butter.
Moreover the letter set out the circumstances in a manner
prejudicial to the respondent company. After various
meetings and negotiations between the appellant Board,
companies concerned, and interested parties, at none of
which were the contents of the Kia Ora company’s letter to
the Board disclosed to the respondent company, no agreement
was reached. The result of discussions with the Kia Ora
company and detailed replies to complaints were given to
the Board by the respondent company, and its letter ended
with a statement to the effect that it would appreciate the
privilege of appearing before the full Board with the object
of stating its case more fully or of answering any
questions. The Board ignored this specific request. At a
full meeting of the Board held on May 31, 1950, the Board
decided that only one butter factory should operate in the
Gisborne district. On August 3, the Board by resolution,
decided to give notice of its intention of issuing a zonal
order to operate as from October 1, 1950 assigning to the
Kia Ora company the cream collection area over which the two
companies then operated. On August 29, the respondent
company wrote to the Board protecting against its proposal
and asking for recession of the Board’s resolution and ,for
an opportunity of being heard. On September 2, 1950, the
appellant Board in exercise of the power conferred upon it
by Regulation 716 of the Dairy Factory Supply Regulations,
1936 and in terms of its resolution of August 3, 1950, made
Zoning Order No./20 which was the subject of the proceedings
before the Supreme Court of New Zealand. That order was to
come into force on October 1, 1950. Its effect was to
assign exclusively to the Kia Ora Co. the area defined in
Zoning Order (No. 30) of 1937 as that in which the two
companies could jointly collect cream produced in supplying
dairies situated in that area, and’ to prohibit the res-
821
pondent dairy company after October 1, 1950 from collecting
or receiving any cream so produced for the purposes of
manufacture into cream or butter.
The respondent company and others presented a petition
to the Parliament praying for relief and remedy by way of
legislation either in the direction of reversing and setting
aside the Board’s decision in the matter of the zoning order
or setting aside such decision and rehearing of the matter
by an independent tribunal. The petition was heard by a
select Committee of the House of Representatives, which
decided to make no recommendation on the petition. On
August 4, the Board made an amended Zoning Order (No. 120A)
postponing until June 1, 1951, the date of the coming into
operation of Zoning Order No. 120 already made, but
otherwise confirming that order. The respondent company
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commenced an action against the Board claiming (a) a
declaration that Zoning Orders Nos. 120 and 120A issued by
the Board were invalidly passed and were of no legal effect;
(b) an order of certiorari to remove into the Supreme Court
and quash the zoning orders; and (c) an injunction
restraining the Board from carrying out its intention of
promulgating the zoning orders or from proceeding further or
exercising any jurisdiction in accordance with the same.
The action was heard by Mr. Justice Hay, who found that, in
the conduct of the inquiry instituted by the Board,
following the application made to it by the Kia Ora Company,
there was, in the various respects mentioned in the
judgment, a departure from those principles of natural
justice which were incumbent on the Board; and in
particular, the plaintiff company was denied a hearing on
the crucial issue as to whether or not a zoning order should
be made. The learned Judge held that the plaintiff company
was entitled to succeed in the action in respect of all the
reliefs it claimed and he gave the judgment in its favour
with costs against the Board. The Court of Appeal affirmed
by majority the judgment of the learned trial judge. The
Court held that the New Zealand Dairy Board in making its
zoning order No. 120 on September 1, 1950 was determining a
question affecting the rights of the respondent company and
further that the order of the Board was that of a body that
was, at least primarily, an administrative body and the
question whether such a body was under a duty to act
judicially in the course of arriving at an administrative
decision was to be determined on the true construction of
the authorising legislative provisions and the conditions
and circumstances under which, and in which, the
jurisdiction fell to be exercised. It held that on the
facts and circumstances of the case the power exercised by
the Board vitiated as the Board had failed to conform to the
principles of natural justice in making the zoning order in
question and hence the same is unsustainable. The decision
822
Of the Privy Council in James Edward Jeffs and Ors. v. New
Zealand Dairy Production and Marketing Board and Ors. (1)
proceeded on the basis that the aforementioned decision of
the Court of Appeal is correct.
Shri Chagla contended that even if we are to hold that
the power exercised by the authorities in making the
impugned orders had to be exercised judicially, on the facts
of his case we must hold that there was no contravention of
the principles of natural justice. He took us to the
various representations made by the appellant. According to
him the appellant had stated in its representations to the
authorities all that it could have said on the subject.
Therefore we should not hold that there was any
contravention of the principles of natural justice. It is
true as observed by this Court in Suresh Koshy George v. The
University Kerala and Ors.(2) that "the rules of natural
justice are not embodied rules. The question whether the
requirements of natural justice have been met by the
procedure adopted in a given case must depend to a great
extent on the facts and circumstances of the case in point,
the constitution of the tribunal and the rules under which
it functions." In this case what has happened is that both
the appellant as welt as the 5th respondent were making
repeated representations to the Chief Minister as well as to
the Cane Commissioner. The representations made by the 5th
respondent or even the substance thereof were not made
available to the appellant. The proposal to split the
reserved area into two or the manner in which it was
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proposed to be split was not made known to the appellant and
his objections invited in that regard. The appellant
complains that the manner in which the area had been divided
had caused great prejudice to it. Its grievance may or may
not be true but the fact remains that it had no opportunity
to represent against the same. Hence the appellant is
justified in complaining that the principles of natural
justice had been contravened.
In view of our finding that the proceeding which
resulted in the making of the impugned orders was a
quasi˜judicial proceeding, it is unnecessary to decide
whether the impugned orders could have been validly made
in an administrative proceeding. We see no merit in the
contention advanced on behalf of the 5th respondent that the
Cane Commissioner was not competent to reserve the area in
question for the appellant as its mill is in U.P. The
reserved area is in Bihar. The Cane Commissioner of Bihar
had power to reserve that area for any sugar mill whether
situated in Bihar or not.
(1). [1967] A.C. 551. (2) [1969] 1 S.C.R. 317
823
The contention of Shri Chagla that as no orders had yet
been passed under cls. 6(c) and (d) of the ’order’ the
,appellant cannot be considered as an aggrieved party is not
correct. As soon as a portion of the area reserved for the
appellant was ordered to be taken away and added to the
reserved area of the 5th respondent, the appellant’s
interest was adversely affected. Therefore it is immaterial
for the appellant what orders are passed under sub-cls. (c)
and (d) of el. 6 of the ’order’, because it can no more get
any sugarcane from the area in question. What hurts the
appellant is the impugned orders and not the further orders
that may be passed.
For the reasons mentioned above this appeal is allowed
and the orders impugned quashed. The State of Bihar as well
as the 5th respondent shall pay the costs of the
appellant both in this. Court as well as in the High Court.
G.C. Appeal allowed.
824