Cancellation of PDS License Without Supplying Inquiry Report Violates Principles of Natural Justice and is Unsound.

The petitioner, Chairman of the Chapra Megh Primary Agriculture Credit Co-operative Society, held a Public Distribution System (PDS) license (No. 06-MUS-01-10).

His license was cancelled by the Sub-Divisional Officer (SDO), Muzaffarpur, via order dated 15.12.2015.

This cancellation was based on an inquiry report that was never supplied to the petitioner, and his show-cause reply was allegedly not considered.

The petitioner’s subsequent statutory appeal to the Collector, Muzaffarpur, and revision petition to the Commissioner, Tirhut Division, were both dismissed in 2017 and 2019, respectively.

The petitioner challenged these orders before the Patna High Court on the grounds of violation of principles of natural justice.

1. Whether the cancellation of a PDS license is legally sustainable when the inquiry report forming the basis of the charge is not supplied to the licensee.

2. Whether the impugned orders by the Licensing, Appellate, and Revisional authorities reflected an independent application of mind or were based on insufficient materials.

The Court primarily applied the principles of natural justice and procedural fairness as interpreted in the precedent Raghuvir Prasad v. The State of Bihar & Ors. (CWJC No. 253 of 2014).

The rule establishes that the non-supply of an inquiry report, which serves as the foundation for a show-cause notice, prejudices the licensee’s right to file a purposeful reply.

Orders involving civil consequences must reflect a clear application of mind regarding the materials used to prove charges.

The Court noted that the facts of the present case were "squarely covered" by the decision in Raghuvir Prasad.

The Court reasoned that by failing to provide the inquiry report or the names of complaining consumers, the respondent authorities prejudiced the petitioner’s ability to defend himself.

The Court observed that the Licensing Authority and the higher statutory bodies passed orders that failed to deal with the actual materials forming the basis of the charges.

Since the foundation of the cancellation—the inquiry report—was withheld, the subsequent orders were deemed to be based on "no materials" and were therefore "indefensible" in the eyes of the law.

The petitioner’s PDS license was ordered to be restored.

The respondents are not precluded from initiating fresh proceedings against the petitioner in accordance with the law, provided they adhere to the principles of natural justice and the observations made in this judgment.