Gujarat High Court
Ghanshyam Salt & Chemicals Pvt Ltd ... vs State Of Gujarat Through on 12 March, 2013
Author: Abhilasha Kumari
Bench: Abhilasha Kumari
GHANSHYAM SALT & CHEMICALS PVT LTD THROUGH DIRECTOR....Petitioner(s)V/SSTATE OF GUJARAT THROUGH SECRETARY C/SCA/8755/2011 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 8755 of 2011 With SPECIAL CIVIL APPLICATION NO. 8756 of 2011 With SPECIAL CIVIL APPLICATION NO. 8758 of 2011 FOR APPROVAL AND SIGNATURE:
HONOURABLE SMT. JUSTICE ABHILASHA KUMARI ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
No 2 To be referred to the Reporter or not ?
No 3 Whether their Lordships wish to see the fair copy of the judgment ?
No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?
No 5 Whether it is to be circulated to the civil judge ?
No ================================================================ GHANSHYAM SALT & CHEMICALS PVT LTD THROUGH DIRECTOR....Petitioner(s) Versus STATE OF GUJARAT THROUGH SECRETARY & 2....Respondent(s) ================================================================ Appearance:
Mr.N.D.Nanavati, learned Senior Advocate with MR HRIDAY BUCH, ADVOCATE for the Petitioner(s) No. 1 Ms.Nisha M.Thakore, learned ASST.GOVERNMENT PLEADER for the Respondents ================================================================ CORAM:
HONOURABLE SMT.
JUSTICE ABHILASHA KUMARI Date : 12 /03/2013 CAV COMMON JUDGMENT
1. Rule.
Ms. Nisha M. Thakore, learned Assistant Government Pleader waives service of notice of Rule on behalf of the respondents, in each petition. On the facts and in the circumstance of the case and with the consent of learned counsel for the respective parties, the petition is being heard and finally decided.
2. The challenge in these petitions is to the impugned order dated 23.03.2011 passed by the Addl. Secretary (Appeals), Revenue Department, as well as the order dated 25.03.2004 passed by the Collector, whereby the Applications for the renewal of leases made by the petitioners have been rejected. As identical issues of fact and law are involved in the petitions, for the sake of brevity, the facts as obtained in Special Civil Application No.8755 of 2011 only, are being noticed.
3. The petitioner is a Company registered under the Companies Act, 1956. The dispute is regarding the land admeasuring 350 Acres of Survey No.313 of Village Gandhar, Taluka: Vagra, District: Bharuch. On 06.05.1993, the said land was given on lease to one Shri Gaurang Hariharbhai Khambholja (the original lessee) for the purpose of salt production, in the name of Khambholja Salt Works , which was a sole proprietary Concern. The land was granted for a period of five years. Upon expiry of the period of five years, the original lessee applied for extension/renewal of the lease. The Collector renewed the lease for a further period of five years, upto 5.5.1998. In the year 1999, the original lessee incorporated a Private Limited Company in the name of Ghanshyam Salt and Chemicals Private Limited (the present petitioner) on 22.11.1999, in which he was one of the three Directors. As there was a change in the status of the lessee, an application was made to the Collector seeking permission for recognition of the said change and for execution of a supplementary lease deed in favour of the petitioner. The Collector, vide order dated 15.07.2000, allowed the said application and ordered that the supplementary lease be executed in favour of the petitioner. On the basis of the said order, a supplementary lease deed was executed on 02.08.2000, granting lease of the land in question to the petitioner for a period of five years, with effect from 5.5.1998 upto 4.5.2003. As the lease was to expire on 4.5.2003, the petitioner made an application on 23.12.2002 for renewal of the lease. The said application remained pending. However, to the shock and surprise of the petitioner, a Show- Cause Notice dated 16.01.2004 was issued by the Collector, calling upon the petitioner to Show Cause why the lease should not be cancelled for breach of the conditions of the lease. The only reason mentioned in the Show-Cause Notice was that the lessee did not harvest salt for a period of three years, and has, committed a breach of the conditions of lease. The Show-Cause Notice was not addressed to the petitioner but to one Mr.Q.S. Ansari, whose designation, if any, in the petitioner Company, is not on record. Mr. Q.S. Ansari, replied to the Show-Cause Notice on behalf of the petitioner on 04.02.2004, explaining that there was no breach of any condition of the lease and the petitioner has harvested salt and paid Royalty to the Salt Commissioner as well, in addition to rent paid to the Collector. A second Show-Cause Notice was issued by the Collector in the name of the original lessee on 20.02.2004, stating that there has been a change of Directors, without prior permission, which constitutes a breach of the conditions of the lease. The petitioner was asked to show cause why the lease should not be cancelled on this ground. The second notice was followed by the impugned order dated 25.03.2004, passed by the Collector, cancelling the lease granted to the petitioner. As the said order was an ex-parte one, the petitioner approached the High Court by filing a petition, being Special Civil Application No.4756 of 2004. This Court, vide order dated 16.04.2004, issued notice and granted interim relief. Ultimately, vide order dated 18.06.2004 this Court relegated the petitioner to avail of the alternative remedy of filing a Revision Application before the Secretary (Appeals), Revenue Department.
4. The petitioner, therefore, moved a Revision Application before the Special Secretary (Appeals), Revenue Department, which has been rejected by the impugned order dated 23-3-2011, confirming the order passed by the Collector. Aggrieved thereby, the petitioner has approached this Court by filing the present petition.
5. Mr. N.D.Nanavati, learned Senior Advocate with Mr.Hriday Buch, learned counsel for the petitioners has submitted that the petitioner was never granted an opportunity of hearing. None of the two Show Cause Notices issued by the Collector have been addressed to the petitioner. The first notice dated 16-1-2004, has been addressed to one Mr.Q.S.Ansari, and the second Show Cause Notice dated 20-2-2004 has been addressed to Shri Gaurang Hariharbhai Khambholja, the original lessee. Though Mr. Ansari has filed a reply, purportedly on behalf of the petitioner, there is no material on record to indicate that the second notice has ever been served, even upon the original lessee. The petitioner is a Company incorporated under the Companies Act and is a legal entity. The Collector is aware of the change of lease from the original allottee to the name of the Company as the said change was effected by the order dated 15-7-2000, passed by the said authority himself. In spite of the same, the second notice has been issued to the original lessee and not to the petitioner. It is vehemently submitted that the subject matter of both the Show Cause Notices is different. In one Notice, Mr.Ansari has been asked to show cause why the lease should not be cancelled as, according to the Collector, salt has not been harvested, whereas in the second Show Cause Notice the original lessee has been asked to show cause why the lease should not be cancelled due to the change of Directors without prior permission. It is submitted that, had the Show Cause Notice been addressed to the petitioner, and had the petitioner been provided a proper and adequate opportunity of hearing, it would have been in a position to show that salt has been harvested from the land in question and royalty has been paid. Similarly, had the second Show Cause Notice been addressed to the petitioner, it would have been in a position to show that there is no requirement of prior permission for change of Directors. The petitioner is a Company and the said condition applies to a Partnership Firm, and not to a Company.
6. However, it is submitted by learned Senior Counsel that without going into the merits of the case, the petitioners would urge the Court to set aside the impugned orders passed by the Additional Secretary (Appeals), cancelling the lease and to remand the matter to the Collector in order to grant a fair and adequate opportunity of hearing to the petitioners.
7. Ms.Nisha M.Thakore, learned Assistant Government Pleader has submitted that though the first Show Cause Notice was issued to Mr.Ansari, it has been replied to by Mr.Ansari, on behalf of the petitioner, therefore, it cannot be said that the petitioner was not aware of the proceedings. In respect of the second Show-Cause notice, it is submitted that it has been issued to Shri Gaurang Hariharbhai Khambholja, who is one of the Directors of the petitioner Company. Although the notice is addressed to Shri Gaurang Hariharbhai Khambholja as the original lessee, however,it cannot be said that the petitioner has not been granted an opportunity of hearing as,on behalf of the petitioner, time was sought to file a reply. The order passed by the Collector cancelling the lease cannot, therefore, be said to be an order passed without granting an opportunity of hearing to the petitioner. Consequently, the impugned order passed by the Addl. Secretary (Appeals), upholding the order of the Collector, may not be disturbed.
8. I have heard learned counsel for the respective parties,perused the averments made in the petitions, contents of the impugned orders and other documents on record.
Considering the submissions advanced by learned Senior Counsel for the petitioners regarding denial of a fair and adequate opportunity of hearing, it is no doubt true that the first Show Cause Notice dated 16-1-2004, has not been issued to the petitioner Company but has been issued to one Mr.Q.S. Ansari. A perusal of the said Show Cause Notice does not reveal that it has been addressed to Mr.Ansari in his capacity as holding any designation in the petitioner Company. Who Mr.Q.S.Ansari, is, cannot be ascertained from the material on record. It cannot be denied that the said Mr.Q.S.Ansari has replied to the Show Cause Notice on behalf of the petitioner. However, before any proceedings pursuant to this Show Cause Notice regarding harvesting of salt could be over, the second Show Cause Notice dated 20-2-2004 was issued by the Collector to Shri Gaurang Hariharbhai Khambholja, in his capacity as the original lessee. The subject matter of this notice is regarding the change of Directors of the petitioner Company. It may be noted that the Collector, vide his order dated 15-7-2000, has allowed the change in the name of the petitioner as lessee, and Mr. Gaurang Hariharbhai Khambholja is no longer the lessee. There does not appear to be a reply by the petitioner Company to this Show Cause Notice. It is stated by the learned Assistant Government Pleader that some person on behalf of the Company had sought time to file a reply. What transpired is not clear from the material on record as, the impugned order dated 25-3-2004 came to be passed by the Collector directing cancellation of the lease on the ground of breach of conditions. A perusal of this order makes it clear that it is an ex parte order. It does not indicate that the petitioner has been heard or even that the submissions advanced in the reply filed by Mr.Q.S.Ansari on behalf of the petitioner, to the first Show Cause Notice, have been considered. It further appears that the petitioner was not granted an opportunity of hearing, even in respect of the second Show Cause Notice.
Upon perusal of the record, especially the two Show Cause Notices, it is apparent that the manner in which the said notices have been issued displays total non-application of mind and a casual approach on the part of the Collector. As already stated hereinabove, the first Show Cause Notice dated 16-1-2004, has been issued to Mr.Q.S.Ansari, whose designation, if any, in the petitioner Company, is unknown. The second Show Cause Notice dated 20-8-2004, has been issued to Shri Gaurang Hariharbhai Khambholja, in his capacity as the original lessee, even though the Collector has himself changed the lease in favour of the petitioner, vide order dated 15-7-2000. The petitioner is a Company incorporated under the Companies Act and is a legal entity in its own right. In spite of this fact, none of the two Show Cause Notices have been addressed to the petitioner. Whether or not the petitioner was aware of them is not a matter that can be successfully urged on behalf of the respondents as both the Show Cause Notices suffer from the inherent defect of being issued to a wrong person apart from having been issued in a careless manner.
11. From the manner in which the Show Cause Notices have been issued, it is apparent that no opportunity of hearing, in the proper spirit, has been granted to the petitioner. The opportunity of hearing must be adequate and not illusory, or merely an empty formality, as in the present case.
12. In Malavkumar Arunbhai Patel v. Sardar Patel University, reported in 2006(3) GLH 695, this Court has held as below:
23.
Any action taken by an administrative or quasi judicial authority which entails civil consequences should only be taken after complying with the principles of natural justice. Although the principles of natural justice cannot be put into a strait-jacket formula, it cannot be disputed that the doctrine of natural justice exists not only to secure justice but also to prevent the miscarriage of justice. It is true that strict rules of evidence do not apply in proceedings such as those which took place in the case of the petitioner before the Unfair Means Committee . However, even the requirement of preponderance of probabilities has not been adhered to since the impugned Notification dated October 4,2000 as well as the Minutes of the proceedings which led to the passing of the impugned order do not disclose the material which was available with the committee which pointed out the involvement of the petitioner in the incident. In that view of the matter, the impugned order is also not a speaking one and does not disclose the reasons or the grounds on which the decision to permanently debar the petitioner has been taken.
24. In A.K.Kraipak v. Union of India, reported in AIR 1970 SC 150 the aim and relevance of the principles of natural justice have been clearly enunciated by the Constitution Bench of the Supreme Court in para 20 thereof, which reads as under:
20.
The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules, namely (1) no one shall be a judge in his own cause (Nemo debet esse judex propria causa), and (2) no decision shall be given against a party without affording him a reasonable hearing (Audi alteram partem).
Very soon thereafter a third rule was envisaged and that is that quasi judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice. The validity of that limitation is not questioned. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi judicial enquiry. As observed by this Court in Suresh Koshy George v. University of Kerala, Civil Appeal No. 990 of 1968, D/- 15-7-1968 = (AIR 1969 SC
198) the rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the frame-work of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case.
25. Further in Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant, reported in (2001)1 SCC 182, the Supreme Court has held as under in paragraphs 1 and 2 of the reported judgment:
Since the decision of this Court in Kraipak's case (A. K. Kraipak v. Union of India) one golden rule that stands firmly established is that the doctrine of natural justice is not only to secure justice but to prevent miscarriage of justice. What, however, does this doctrine exactly mean? Lord Reid about four decades ago in Ridge v. Baldwin very succinctly described it as not being capable of exact definition but what a reasonable man would regard as a fair procedure in particular circumstances - who then is a reasonable man
- the man on the clapham omnibus? In India, however, a reasonable man cannot but be a common man similarly placed. The effort of Lord Reid in Ridge v. Baldwin in not attributing a definite meaning to the doctrine but attributing it to be representing a fair procedure still holds good even in the millennium year. As a matter of fact this Court in the case of Keshav Mills Co. Ltd. v. Union of India upon reliance on the attributes of the doctrine as above stated as below (SCC p.387,para 8) "8.
The second question, however, as to what are the principles of natural justice that should regulate an administrative act or order is a much more difficult one to answer. We do not think it either feasible or even desirable to lay down any fixed or rigorous yard-stick in this manner. The concept of natural justice cannot be put into a strait-jacket. It is futile, therefore, to look for definitions or standards of natural justice from various decisions and then try to apply them to the facts of any given case. The only essential point that has to be kept in mind in all cases is that the person concerned should have a reasonable opportunity of presenting his case and that the administrative authority concerned should act fairly, impartially and reasonably. Where administrative officers are concerned, the duty is not so much to act judicially as to act fairly. See, for instance, the observations of Lord Parker in H. K. (an infant), In re. It only means that such measure of natural justice should be applied as was described by Lord Reid in Ridge v. Baldwin case as 'insusceptible of exact definition but what a reasonable man would regard as a fair procedure in particular circumstances'. However, even the application of the concept of fair-play requires real flexibility. Everything will depend on the actual facts and circumstances of a case. As Tucker, L.J observed in Russell v. Duke of Norfolk:
"The requirements of natural justice must depend on the circumstances of the case, the nature of the enquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with and so forth.
"
2. While it is true that over the years there has been a steady refinement as regards this particular doctrine, but no attempt has been made and if we may say so, cannot be made to define the doctrine in a specific manner or method. Strait-jacket formula cannot be made applicable but compliance with the doctrine is solely dependent upon the facts and circumstances of each case. The totality of the situation ought to be taken note of and if on examination of such totality, it comes to light that the executive action suffers from the vice of non-compliance with the doctrine, the law courts in that event ought to set right the wrong inflicted upon the person concerned and to do so would be a plain exercise of judicial power. As a matter of fact the doctrine is now termed as a synonym of fairness in the concept of justice and stands as the most-accepted methodology of a governmental action.
26. It is now an accepted proposition of law that any statutory body which is entrusted by statute with discretion, must act fairly. It does not matter whether its functions are described as judicial or quasi-judicial on the one hand, or as administrative on the other. Even an administrative order, which involves civil consequences must be made consistently with the rules of natural justice. Although the expression 'civil consequences' has not been defined anywhere, the observation made in Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405 at para-66 on page 440 is relevant in this context and reads as below:
What is civil consequence, let us ask ourselves, by passing verbal booby-traps? 'Civil consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties material deprivation and non-pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence
13. The cancellation of the lease of the petitioner would entail serious civil consequence. It was, therefore, incumbent upon the respondents to grant a fair and adequate opportunity of hearing to the petitioners. The manner in which the Show Cause Notices have been issued does not indicate that such an opportunity has been granted, as the impugned order passed by the Collector, as confirmed by the Additional Secretary (Appeals), is an ex-parte one.
14. From the facts and circumstances of the case as discussed hereinabove, this Court finds that a fair and adequate opportunity of hearing has not been afforded to the petitioners. In view of the same, there is no necessity, at this stage, to enter into the merits of the case regarding whether there is a breach of conditions.
15. For the above reasons and as the principles of natural justice have been violated by not granting the petitioners a reasonable opportunity of hearing, the impugned orders dated 25-3-2004, passed by the Collector, Bharuch and the impugned orders dated 23-3-2011, passed by the Addl. Secretary (Appeals), Revenue Department are quashed and set aside, in each petition. The matters are remanded to the Collector, with a direction to decide each matter afresh, after issuing proper notices to the petitioners and providing them with an adequate opportunity of hearing, in accordance with law.
16. The petitions are partly-allowed, in the above terms. Rule is made absolute, accordingly, in each petition. There shall be no orders as to costs.
(SMT. ABHILASHA KUMARI, J.) ARG Page 20 of 20