Patna High Court
Darbhanga Laheriasarai Electric ... vs The State Of Bihar And Anr. on 15 December, 1972
Equivalent citations: AIR1973PAT408, AIR 1973 PATNA 408
ORDER Madan Mohan Prasad, J.
1. This is an application in revision against an order dismissing the appeal filed by the petitioner against an order refusing to grant ad interim injunction during the pendency of the suit filed by the petitioner.
2. The petitioner is a public company registered under the Indian Electricity Act, having its registered office at Darbhanga. The Company filed a suit (Title Suit No. 244 of 1967) in the Court of the Subordinate Judge. Darbhanga for a declaration that the notice issued by the Government of Bihar in the Department of Electricity dated the 21st July 1967 under Section 4 (3) of the Indian Electricity Act (hereinafter referred to as 'the Act') asking the petitioner to show cause as to why its license should not be revoked under Section 4 (1) of the Act, is without jurisdiction, illegal and mala fide. A further prayer was made in the suit for grant of a permanent injunction restraining the opposite party from revoking the licence of the petitioner.
3. Briefly stated the case of the plaintiff-petitioner is that on the 3rd March 1937. the State Government had granted a license to one Padma-nabh Prasad for supplying electrical energy to the town of Darbhanga. According to the terms of the license, the State Government had reserved to themselves an option to purchase the undertaking after the lapse of thirty years and to exercise the said option at the end of every ten years thereafter. In case of exercise of such option, the State Government is to pay to the licensee over and above the purchase price, a further amount of fifteen per cent as compensation for compulsory acquisition. The Company was. accordingly, floated and is since then supplying electrical energy within the municipal limits of the town of Darbhanga. Before the expiry of thirty years on the 3rd March 1967. the State Government served a notice on the Company on the 7th January 1966, intimating that they would exercise their option to purchase the undertaking after the expiry of thirty years. The petitioner made a representation. Presumably on that account and also on account of the fact, as disclosed from the statement made in the Bihar Legislature, of financial stringency with which the State Government were faced, the aforesaid notice was withdrawn. It is said that during the general elections in February 1967, the managing agent of the Firm. K. K. Bai-roliya. incurred the wrath of the communist party being a strong supporter of the congress party. On this account the communist workers of Darbhanga influenced the then Minister of Electricity Sri T. N. Jha, to acquire the Company's undertaking. The Chief Electrical Engineer of the Government of Bihar was sent to Darbhanga and he made some sort of an inquiry, and the communist party workers moved in the town making announcements with the aid of mike and loud-speaker about this fact and inviting the consumers to lodge grievances with the communist party. Soon thereafter, on the 21st July 1967 the Deputy Secretary to the Government of Bihar in the Electricity Department sent a notice under Section 4 (3) of the Act to the Company to show cause why the petitioner's license shall not be revoked under Section 4 (11 of the Act on various grounds under (a) to (e) of that section. The petitioner challenged the right of the Government to issue such notice in violation of Article 166 of the Constitution of India by its letters dated the 16th October 1967 and the 20th October 1967. It, however, filed a petition showing cause which was received by the State Government on the 21st of October 1967. It is further said that soon after the issue of the notice aforesaid, i. e. on the 27th July 1967. the State Minister Sri T. N. Jha, held a meeting in front of the Power House and gave out that the plaintiff-Company would be acquired by the State Government after the expiry of the period granted by the show cause notice. The petitioner, further said that the aforesaid notice did not disclose any ground of public interest nor any good ground justifying the revocation of the license, but the same was actuated by malice on the part of the aforesaid State Minister and the communist party workers and the petitioner, therefore, had reasonable apprehension that in spite of these facts the State Government were determined to take over the Company and revoke its license. Hence, the present suit was filed.
4. An application praying for grant of ad interim injunction restraining the State Government from revoking the license of the petitioner or taking any step towards the same was filed in the Court of the Subordinate Judge. Darbhanga, who granted the. injunction in the first instance but vacated it by an order dated the 10th May 1968. As against this order the petitioner went up in appeal to the District Judge, Darbhanga but the aforesaid appeal was dismissed by the First Additional District Judge, Darbhanga by an order dated the 26th September 1970. Hence, this application.
5. Before the trial Court three points were raised :--
(i) That the aforesaid notice was not valid and legal;
(ii) that the notice did not disclose that it was in the public interest within the meaning of Section 4 (1) of the Act, and
(iii) that the petitioner had made out a prima facie case and the balance of convenience was in its favour. The learned Subordinate Judge held on all the points against the petitioner inasmuch as he found the notice to be valid and legal and the balance of convenience to be in favour of the defendant On the second point the learned Subordinate Judge held that it was not open to the Court to enter into the reasons given in the notice and find out whether it was in public interest. In his view it was for the State Government to decide whether it was in public interest, and the Courts could not enter into the question.
6. The learned Additional District Judge, however, held that the cause shown by the petitioner was still under consideration of the State Government and they had not formed an opinion yet, under Section 4 (1) (a) of the Act, and. therefore, it was not open to the petitioner at this stage to challenge the aforesaid notice. He found the suit itself to be premature in view of the fact that the Court cannot judge the issues which are yet pending consideration of the Government, and, therefore, held that the petitioner could not get an order of injunction. He further held that on that account the petitioner has at present no prima facie case, nor is the balance of convenience in its favour. Accordingly, he dismissed the appeal.
7. Mr. J. C. Sinha appearing on behalf of the petitioner has urged only two points. Firstly, that both the Courts below have refused to exercise jurisdiction under a misapprehension of law inasmuch as they have refused to consider the question whether the aforesaid notice was covered by Section 4 (1) (a) of the Act, or if it was merely a malicious act According to him the Courts below should have considered whether there were any grounds alleged to show wilful and unreasonably prolonged neglect by the Company to do anything required of him under the Act. Secondly that both the Courts below have erred in holding that the balance of convenience is not in favour of the petitioner. The learned Advocate General appearing for the State of Bihar has, on the other hand, urged that it has not been shown by the petitioner that the grounds in the notice are wholly alien and the reasons not germane to the provisions of Section 4 of the Act, and, therefore, the Courts could not interfere with the opinion of the State Government in respect of it being necessary in public interest to revoke the license, and the Courts below have thus taken a correct view of the law. I find however, that the argument of the learned Advocate General is not tenable in the circumstances of the present case, and the contention of Mr. J. C. Sinha has great force.
8. On the first point raised by Mr. Sinha. it must be said that the lower appellate Court has refused to consider the contents of the notice for itself and to go into the merits of the question whether even prima facie grounds alleged in the notice for revocation of the license were germane to the question of neglect to do anything required by the Act. He also refused to consider the question of mala fide raised by the petitioner. The entire basis for his order dismissing the appeal appears to be that the State Government had yet not finally made up their mind on the question of revocation of the license of the petitioner and. therefore, the suit itself is premature and the Court could not enter into the question of public interest. In my view the learned Additional District Judge has not taken a correct view of law in the circumstances of the present case, and, therefore, refused to exercise the jurisdiction vested in him.
9. I shall first deal with the point whether the suit itself is premature. It has been urged by Mr. J. C. Sinha in this connection that in a case where a legal right is going to be infringed and the fact becomes imminent, it is open to a person to come to Court against the threatened invasion of his right, and the suit would not be premature. In this connection he placed reliance on a decision of this Court in the case of Province of Bihar v. Kamakshya Narain Singh, AIR 1950 Pat 366. That was a case where the plaintiff had filed a suit to obtain a declaration that certain statutes passed by the provincial legislature for the abolition of zamindaries. and pending this consummation directed at taking over the management of the properties of the zamindaries, were ultra vires. Three pieces of legislation were referred to in this connection. They were the Bihar Private Forests Act under which the Government had taken possession of the private forests of the plaintiff; the abolition of Zamindaries Act which had not then been enforced and the Bihar State Management of Estates and Tenures Act under which it was proposed to take over the management of the plaintiff's estate. In other words, the second legislation not having come into effect and under the third one there being only a proposal to take over the management, Acts had not been completed thereunder. It was held that the suit was in the nature of a bill quia timet, and the plaintiffs right of action, therefore, arose as soon as threat to his right became imminent. The argument addressed in this case was that the cause of action on which the plaintiff relied was not an individual act. but the whole course of the conduct of the Government directed to one end. In the present case, it is not merely the notice issued under Section 4 (3) of the Act which is the basis of the present suit but the entire course of conduct of the State Government in this connection has been challenged as mala fide and the notice aforesaid is said to be merely a result of that.
10. On the question of mala fide, I may point out that the plaintiff not merely alleged it. but swore affidavits and produced materials before the trial Court in respect of the conduct of certain political workers and the State Minister, prior to the issue of the notice and even subsequent thereto. Newspaper cuttings of the speeches of the State Minister showing clearly that the undertaking would be acquired after the expiry of the period of notice and newspaper cuttings of the statements made in the Assembly etc.. had also been produced. It was also alleged that the notice had been issued mala fide in order to gain an undue advantage by not acquiring the undertaking by purchase, as was proposed to be done in the first instance, but by revoking the license so as to avoid payment of purchase price and solatium as per terms of the agreement which the State Government would have to pay if the option of purchase were to be exercised. I am surprised that the learned Additional District Judge should have ignored the allegations and the documents and said that there was no material at all in connection with the proof of mala fide. He has obviously not considered these materials at all.
11. In the circumstances of the present case, therefore, I am unable to hold that unless the State Government have finally made UP their mind and issued the order revoking the license, the petitioner has no cause of action at all and the suit is. therefore, premature. It is quite obvious that in the present case even though a notice had been issued under Section 4 (3) of the Act asking the petitioner to show cause against the revocation of the license, there are circumstances leading to the conclusion that the State Government have already formed a tentative opinion that the license ought to be revoked and have acted by issuing the notice aforesaid in pursuance of that opinion. There can thus be no doubt that the right of the Company is threatened and is imminent that the right would be taken away. The Company is, therefore, in my view entitled to file a suit for the declaration prayed for. The suit is thus not premature.
12. The next point is whether the State Government have formed any opinion under Section 4(1) (a) of the Act. It will be relevant to notice the provision of Section 4 of the Act. which is as follows :--
"4. (1) The State Government may, if in its opinion the public interest so requires and after consulting the State Electricity Board, revoke a license in any of the following cases, namely :--
(a) where the licensee, in the opinion of the State Government, makes wilful and unreasonably prolonged default in doing anything required of him by or under this Act;
(b) where the licensee breaks any of the terms or conditions of his license the breach of which is expressly declared by such license to render it liable to revocation;
(c) where the licensee fails, within the period fixed in this behalf by his license or any longer period which the State Government may substitute therefor by order under Section 4-A. Sub-section (1). and before exercising any of the powers conferred on him thereby in relation to the execution of works,--
(i) to show to the satisfaction of the State Government, that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his license, or
(ii) to make the deposit or furnish the security required by his license :
(d) where In the opinion of the State Government the financial position of the licensee is such that he is unable fully and efficiently to discharge the duties and obligations imposed on him by his license;
(e) where a licensee, in the opinion of the State Government, has made default in complying with any direction issued under Section 22-A. (2) Where in its opinion the public interest so permits, the State Government may. on the application or with the consent of the licensee, and after consulting the State Electricity Board, and the Central Government where that Government is interested, and if the licensee is not a local authority, after consulting also the local authority, if any, concerned, revoke a license as to the whole or any part of the area of supply upon such terms and conditions as it thinks fit.
(3) No license shall be revoked under Sub-section (1) unless the State Government has given to the licensee not less than three months' notice, in writing, stating the grounds on which it is proposed to revoke the license and has considered any cause shown by the licensee within the period of that notice, against the proposed revocation.
(4) Where the State Government might under Sub-section (1) revoke a license it may instead of revoking the license permit it to remain in force subject to such further terms and conditions as it thinks fit to impose and any further terms or conditions so imposed shall be binding upon, and be observed by the licensee, and shall be of like force and effect as if they were contained in the license."
Reading the Section it is Quite clear that the State Government have to form an opinion firstly that the public interest requires the revocation of a license and secondly that the circumstances mentioned in the different clauses of the aforesaid Section exist. An order of revocation cannot, however, be passed unless an opportunity has been given to the licensee under Sub-section (3) of Section 4 of the Act. I am not prepared to construe this provision so as to mean that the State Government may start action under Sub-section (3) without forming any opinion whatsoever. If this construction were to be adopted, it would mean that the State Government act without applying their mind altogether to the question and without forming any opinion whatsoever even tentatively. Reading the Section it is quite clear that the State Government have to form an opinion first regarding the requirement of public interest and then consult the Electricity Board and then give a notice under Sub-section (3) to the licensee to show cause and then finally pass an order revoking the license. Reading Clause (a) of Sub-section (1) of Section 4 of the Act, it is quite clear that there are two opinions at two stages which have to be formed by the State. The first one is the opinion regarding requirement of public interest and the second one is the opinion in respect of the wilful and unreasonably prolonged default in doing anything required of him by or under the Act. The two opinions are entirely different from each other. The consideration of public interest may require consideration of various matters even other than the wilful and prolonged default. There may be a case where in spite of such neglect, public interest may not require the revocation of the license. But so far as the ground for revocation of the licence under Section 4 (1) (a) of the Act is concerned, the only question which has to be considered by the State Government is whether there has been a wilful and unreasonably prolonged neglect to do what is required by or under the Act. In other words, under Clause (a) the State Government has also to form an opinion on the question of law, viz. what is required by or under the Act. When the State. Government enumerates these grounds in the notice under Section 4 (3) of the Act. it is obvious that the State Government have come to the conclusion even though tentatively that the licensee has not done something required of him by or under the Act. It cannot, therefore in my view be said that as long as the State Government have not passed the final order under Section 4 (1) (a) revoking the license, a suit would be premature.
13. The next question which has been raised is whether the opinion of the State Government with regard to public interest is open to judicial test. The learned Advocate General has placed reliance on the decision of the Privy Council in the case of Hubli Electricity Co. Ltd. v. The Province of Bombay, AIR 1949 PC 136 for the proposition that such opinion is not open to iudicial scrutiny. Reliance has been placed on the observation of their Lordships to the fol-lowing effect :--
"21. Their Lordships now turn to the question of construction of Section 4 (1) (a). Their Lordships are unable to see that there is anything in the language of the sub-section or in the subject-matter to which it relates upon which to found the suggestion that the opinion of the Government is to be subject to objective tests. In terms the relevant matter is the opinion of the Government not the grounds on which the opinion is based. The language leaves no room for the relevance of a iudicial examination as to the sufficiency of the grounds on which the Government acted in forming an opinion."
It will be noticed that their Lordships have referred to the judicial examination of the question of sufficiency of the grounds alone. Their Lordships go on to say :--
"22. Further the question on which the opinion of the Government is relevant is not whether a default has been wilful and unreasonably prolonged but whether there has been a wilful and unreasonably prolonged default. Upon that point the opinion is the determining matter and -- if it is not for good cause displaced as a relevant opinion -- it is conclusive. But there the area of opinion ceases. The phrase "anything required under the Act" means "anything which is required under the Act" The question what obligations are imposed on licensees by or under the Act is a question of law. Their Lordships do not read the section as making the Government the arbiter upon the construction of the Act or as to the obligations it imposes. Doubtless the Government must in expressing an opinion for the purpose of the section also entertain a view as to the question of law. But its view on law is not decisive. If in arriving at a conclusion it appeared that the Government had given effect to a wrong apprehension of the obligations imposed on the licensee by or under the Act the result would be that the Government had not expressed such an opinion as is referred to in the section."
It is quite obvious thus that it is not open to the Court to scrutinise the opinion of the Government regarding public interest or to enter into the question as to whether the facts are sufficient for the opinion arrived at under Section 4 (1) (a) of the Act and so far as these are concerned, the opinion of the State Government is conclusive. Their opinion is also conclusive on the point whether there has been a wilful and unreasonably prolonged neglect. Whether the subject-matter of neglect is an act required by or under the Act is also a point on which the Government have to form an opinion. But this is a question of law. and so far as this question of law is concerned the Government are not an arbiter, and it is open to the Court to scrutinise that. It is thus open to the Court to find whether the Government have acted under a wrong apprehension of the obligations imposed on the licensee by or under the Act. The case is. therefore, no authority for the proposition that the opinion of the State Government whether it be on the question of public interest or on the question of requirements of the Act. is not open to judicial scrutiny.
14. In respect of this point reliance has been placed by Mr. J. C. Sinha on the decision of the Supreme Court in the case of Barium Chemicals Ltd. v. Company Law Board, AIR 1967 SC 295. In the case the Secretary of tile Company Law Board had issued an order on its behalf under Section 237 (b) of the Companies Act 1956. appointing Inspectors for Investigating the affairs of the aforesaid company. The application for writ was directed against this order and the prayer was founded on amongst others the following grounds. (1) That the order was mala fide and (2) that in making the order the Board had acted on materials extraneous to the matters mentioned in Section 237 (b) of the Companies Act. Their Lordships were considering the provision which said that the Central Government could appoint Inspectors if "in the opinion of the Central Government" there were circumstances suggesting matters mentioned in Clauses (1) to (3). The words "in the opinion of" came up for discussion. Mudholkar. J., speaking for himself and Sarkar. C. J., held that the formation of an opinion must, therefore, be as to whether there are circumstances suggesting the existence of one or more of the matters mentioned in the aforesaid clauses and not about anything else and that the opinion must of course, not have been arrived at mala fide. The learned Judge further observed that a Court cannot go into the question of the aptness or sufficiency of the grounds upon which the subjective satisfaction of authority is based, but if the grounds are disclosed it is open to the Court to consider whether those grounds are relevant or are irrelevant because they are extraneous to the question as to the existence or otherwise of any of the matters referred to in the sub-clauses. Hidayatullah. J., also held that "no doubt the formation of opinion In subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable ..... Since the existence of 'circumstances' is a condition fundamental to the making of an opinion, the existence of the circumstances, if questioned has to be proved at least prima facie." Shelat J., held as follows :--
"Though an order passed in exercise of power under a statute cannot be challenged on the ground of propriety or sufficiency, it is liable to be quashed on the ground of mala fides, dishonesty or corrupt purpose. Even if it is passed in good faith and with the best of intention to further the purpose of the legislation which confers the powers, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it, it did not apply its mind to the relevant facts."
15. It is obvious from the aforesaid decision of the Supreme Court that in the present case the action of the State Government could be challenged either on the grounds of mala fide or on the ground of their having formed an option without any basis or upon matters extraneous or upon a dishonest consideration of the matter etc. As I have said earlier. Section 4 (1) (a) of the Act discloses that the State Government have to form an opinion before revoking a license that the licensee has made a wilful and unreasonably prolonged default in doing anything required by or under the Act. Clause (b) applies to a case where the licensee breaks any of the terms or conditions of his licence rendering it liable to revocation. Clause (c) deals with the case where the licensee fails within a certain period to show to the satisfaction of the State Government that he is in a position to discharge his duties and obligations imposed by the licence, etc. Clause (d) applies to the case where the financial position of the licensee is such that he is unable to discharge such duties and obligations and Clause (e) refers to a case where a licensee has made default in complying with any directions under Clause 22 (a) of the Act relating to supply of energy to certain classes of consumers. It appears that on these questions the State Government have to be satisfied in respect of the existence of these facts. It is only when these circumstances exist that the State Government can act by way of revoking the licence. If the licencee can show that none of these circumstances exist at all surely the opinion formed by the State Government would be an opinion on no materials whatsoever and it would be open to a court to quash an order in such a case. If a licencee can show that what is supposed to be a term or condition of the licence is no such term or condition at all, there is again an absence of the circumstance. It is, therefore, not correct to say that the courts below could not at all have gone into these questions, viz. the grounds mentioned in the notice which appear to come under different clauses of Section 4 (1) of the Act.
16. Another question which the courts below had to consider in the pre-
sent case was whether it was on account of the existence of these circumstances that the State Government have purported to act in the matter or it was on account of mala fide on the part of the State Minister and the political workers behind him. If mala fide could be prov-ed surely the act of the State Government had to be quashed. It was, there-lore, necessary for the court below to enter into the question on merits and find out whether prima facie there was a case made out by the plaintiffs either in respect of mala fide or in respect of the non-existence of any of the circumstances on the basis of which alone the State Government could act. To say that the State Government have not formed any opinion at all and. therefore, the stage for such consideration has not arisen is the result of a wrong approach to the question. If the State Government had not applied their mind at all and not formed tentatively any opinion there would have been no grounds disclosed as there are in the notice under Section 4 (3). If the State Government had to act under Section 4 (3) of the Act it had to know and make up its mind about the existence of the grounds because Sub-section (3) requires the grounds on which it is proposed to revoke the licence to be stated in the notice. It is true that after the consideration of the cause shown by the licensee it is open to the State Gov-ernment to change their mind. That does not. however, mean that the State Government have not formed any opinion whatsoever and have acted as if it were a roving enquiry or a fact finding enquiry which they were making. In my view, that could not be the purpose of Sub-section (3) of Section 4 of the Act. The grounds have to be alleged in the nature of charges which have to be explained by the licensee. Unless such charges were known and determined they could not be stated in the notice and such charges could not be determined except after a consideration thereof and formation of a tentative opinion on the point.
17. The learned Advocate-General has placed reliance on the decision in the case of P. V. Jagannath Rao v State of Orissa, AIR 1969 SC 215. That was a case where a commission had been appointed to make an enquiry under the Commission of Enquiry Act. 1952, to enquire into the conduct of certain political leaders, which was challenged. This case is, however, of no avail to the opposite party inasmuch as even in this case their Lordships held :
"It is well settled that if a statutory authority exercises its power for a purpose not authorised by the law. the action of the statutory authority is ultra vires and without jurisdiction. In other words, it is a mala fide exercise of power in the eye of law. that is. an exercise of power by a statutory authority for a purpose other than that which the Legis-lature intended."
Two other cases were relied upon, name-ly. Narayanan Sankaran Mooss v. State of Kerala, AIR 1965 Ker 253 and Bar-nagar Electric Supply and Industrial Co. Ltd. v. State of Madhya Pradesh. AIR 1963 Madh Pra 41. In the Madhya Pradesh case an order of revocation of licence under Section 4 of the Electricity Act had been passed. The argument raised in that case was that the Government are bound to act in a judicial manner in exercising power under Section 4 (1) (a) of the Act and that the existence of the circumstances stated in Clauses (a) to (e) of Section 4 (1) as objective facts was a condition precedent to the exercise of the power of revocation. The argument was not accepted. The learned Chief Justice says:--
".....It will be seen that under Section 4 (1) of the Act it is only in the circumstances enumerated in Clauses (a) to (e) that a licence can be cancelled if the Government forms the opinion that public interest requires the revocation of the licence. If those circumstances exist, then the opinion of the Government whether the licence should be revoked is a subjective matter which is not open to an objective test. But the Legislature has made the formation of opinion by the Government as to revocation of a licence subject to certain con-ditions precedent laid down in Clauses (a) to (e). These conditions must be complied with before the Government exercises its power of revocation under Section 4 (1). Now the conditions specified in Clauses (a) to (e) are not of the same character. Under Clause (e). it is the opinion of the State Government on the question whether a licensee has made a wilful and unreasonably prolonged default in doing anything required of him by or under the Act which is a condition precedent to the exercise of the right of the Government to revoke a licence. It must, however, be noted that the opinion of the Government is conclusive only on the point whether there has been a wilful and unreasonably prolonged default and not on the question as to the obligations imposed on a licensee by or under the Act. This is a question of law.
No doubt, in forming opinion for the purpose of Clause (a) the Government is required to form its opinion as to the obligations imposed on a licensee by or under the Act. But its view on this question would not be decisive. If the Government takes a wrong view of the obligations of a licensee, then the opinion formed by the Government under Clause (a) cannot be said to be such an opinion as is contemplated by the clause (See Hubli Electricity Co. v. Province of Bombay. AIR 1949 PC 136). So also under Clause (d) the condition precedent is again the opinion of the Government with regard to the financial position of the licensee. That is a condition precedent for the exercise of the power of revocation. Thus under Clauses (a) and (d) what is condition precedent is not the actual existence of the matters stated in those clauses but the subjective opinion of the Government as to the existence of those matters,"
Great reliance has been placed on the concluding sentence aforesaid.
18. In the Kerala case the notice Issued under Section 4 (3) of the Act and the order passed under Section 5 (1) (a) of the Act revoking the licence and another order under Sections 5 (1) (c) and 5 (3) of the Act were challenged. One of the arguments before their Lordships was that the opinion that is formed by the State Government under Section 4 (1) of the Act is an objective one which can be reviewed by courts and that it was a quasi-judicial function. Vaidia-lingam J. referred to the cases of AIR 1949 PC 136 and AIR 1963 Madh Pra 41 (supra) and repelled the argument that all the clauses of Section 4 (11 were to be read in spite of the differences in the wordings in the same manner. The learned Judge held :--
"These decisions clearly lay down, in our view, that when the Legislature has left it to the authority concerned to form an opinion on certain matters the grounds for the formation of the opinion, or the correctness of the opinion so formed by the authority concerned do not fall for consideration or review at the hands of the Courts so long as the authority has acted honestly and there were materials available before it, on the basis of which such an opinion could be formed. In this case, we have already stated that the petitioner accepts the position that the various matters referred to in Ext. P-1 relate to matters which he is required to do by or under the Act. If so. it follows that as in this case the formation of the opinion by the Government as such before passing the order Ex. P-2. is established, this court cannot consider either the grounds for the formation of that opinion or the correctness of the opinion, so formed by the Government."
19. In the instant case before me the petitioner has challenged that the grounds mentioned in the notice under Section 4 (3) are no grounds at all under Section 4 (1) of the Act. On behalf of the State it is said that these grounds come under Clauses (a), (b). (c) and (e). There are various other grounds which admittedly do not come under any of the clauses of Section 4 (1). In my view, if those conditions do not exist at all and the State Government merely say that they are satisfied about the existence of those matters, it would not be enough to give the State Government a jurisdiction to act under Clause (a) of Section 4 (1). In such a case the opinion of the Government will be based on no materials whatsoever and, therefore, would be no opinion at all in the eye of law. It cannot, therefore, be said that apart from the actual existence of the matter mentioned in Clauses (a) and (d) the State Government have the right to form an opinion and that opinion would become conclusive in respect of the existence thereof. Under Sub-section (1) of Section 4 the State Government have to form an opinion about the re-quirement of public interest. This is not open to judicial scrutiny. Next so far as Clause (a) is concerned, it has to form a further opinion whether there has been a wilful and unreasonable default. This also is a matter of subjective opinion. But the question of default to do anything required by or under the Act necessitates the consideration of the question as to what the Act requires of the licensee. This also is a matter for opinion but the opinion on this point is open to judicial scrutiny. The opinion in respect of the requirements of the Act under Clause (a) is based on the interpretation put upon the Act. Now so far as Clause (b) is concerned, it is a matter regarding the existence or non-existence of certain facts and. therefore, no opinion has to be formed by the State Government in respect of them. Under Clause (b) question is whether the licensee has broken any condition of the licence and whether the condition is one which is declared to render the licence liable to revocation. These are objective facts and do not come within the realm of opinion. Conclusion has to be come to on the existence or non-existence of these facts. Clause (c) refers to the failure of the licensee to show to the State Government that he is in a position to discharge his duties or to make deposits or furnish security etc. It is. therefore, a matter partly of facts and partly of opinion. In other words, the condition precedent is matter partly subjective and partly objective. Clause (d), however, deals with the financial position of the licensee and whether it is such that he Is unable to discharge his duties and obligations under the licence. This is a matter in which again opinion has to be formed. Facts and figures may be sup-
plied in this respect but the question whether the financial position is such as would allow the licensee to discharge his duties and obligations is a matter for opinion of the State Government. The subjective element comes in where an authority has to form an opinion but it cannot be said that the opinion which is subjective in its nature cannot be challenged at all on the ground of non-existence of the basic facts. Clause (e) again requires formation of an opinion regard-ins the default in complying with any direction under Section 22 (a) by which, the State Government may in public interest direct a licensee to supply, in preference to any other consumer, energy required by an establishment, establish-ed for maintenance, supplies and services essential to the community. The question whether such a default has been made or not. is a question on which the State Government has to form an opinion. If the circumstances do not exist there is no question of any formation of opinion thereon. In my view, therefore, the question as to whether such materials exist or not. is a sine qua non for the formation of the opinion by the State Government for the purpose of re-vocation of the licence.
20. In the circumstances of the present case, therefore, the court below was under an obligation to apply its mind to the question and the materials relating thereto as to whether the act complained of and the conduct of the State Government through the State Minister was mala fide and whether the grounds alleged were at all grounds ger-mane to the grounds mentioned in Sec-tion 4 (11. The refusal to consider these matters altogether undoubtedly amounts to a refusal to exercise jurisdiction.
21. On the question of balance of convenience again the court below has not considered the question in its pro-per perspective. It has been pointed out that if the petitioner is asked to wait and the final order of revocation is passed, his business will come to a standstill and he will suffer incalculable loss whereas the State Government will not suffer any loss at all by not passing the final order of revocation until the decision of the suit. It has also been urged that to say that the same can be adequately compensated by payment of compensation is also not correct inasmuch as the business will have to be wound up soon after the order of revocation, the services of a large number of persons employed will have to be dispensed with, there will be unemployment on the part of the promoters of the undertaking as well as those employed therein. I do not wish to express any opinion on the merits of this argument in view of the fact that the case has to be sent back to the court below for a fresh consideration of the question on merits.
22. In the result. I find that the order passed by the learned Additional District Judge cannot be sustained. It is accordingly set aside and the case is remanded to him for fresh consideration in the light of the observations made above and for disposal in accordance with law. Accordingly, the petition is allowed.