THE HON'BLE SRI JUSTICE P.S. NARAYANA

W.P.No.23247 of 2007

19-11-2007

Azmeera Boopathi Nayak.

The District Collector (Civil Supplies)

Karimnagar and 2 others.

Counsel for petitioner : Mr. B. Vijayasen Reddy.

Counsel for Respondent No.2: A.G.P. for Civil Supplies.

:ORDER:-

This Court ordered notice before admission on 2-11-2007. Counter affidavit is filed by the respondents.

2. Heard Sri Venkata Mayur representing Sri B.Vijaysen Reddy, the Counsel for writ petitioner and the learned A.G.P. for Civil Supplies. Sri Venkata Mayur placed strong reliance on the decisions of this Court in G. RAMA MURTHY v THE DISTRICT COLLECTOR1 and also M.SHASHIKALA v. COLLECTOR, MAHABOOBNAGAR AND ANR.2 and would maintain that in the light of the same, the impugned order cannot be sustained. The learned A.G.P. for Civil Supplies had taken this Court through the contents of the counter affidavit and would explaint under what circumstances, the impugned order was made.

3. Heard the Counsel.

4. The Writ Petition is filed for a Writ of Mandamus declaring the impugned order in proceedings No.C/410/2007, dt.2-5-2007, issued by the 2nd respondent as being illegal, arbitrary and unjust and pleased to pass such other suitable orders.

5. It is stated by the petitioner that he was appointed as Fair Price Shop Dealer bearing shop No.4016 of Azmeera Thanda H/o.Vattimall village, Konaraopet Mandal, Karimnagar District since 21 years and that from the date of his appointment, he had been distributing the essential commodities to the cardholders duly following the instructions of the higher authorities and the provisions of Essential Commodities Act and relevant Control Order made there under. It is also stated by the petitioner that a false complaint is lodged by some persons who are inimical to him alleging that he illegally stored rice in his house at Azmeera Thanda and selling the rice in market for illegal gain. It is further stated that on 1-4-2007 the 3rd respondent inspected the petitioner's house and seized 145 quintals of rice from his house and opined in his report dt.1-4-2007 submitted to the 1st respondent that he had a reason to believe that there is contravention of provisions of APPDS Order 2001 and by seizing 145 quintals of Food for Work Rice handed over the same to the Village Revenue Officer of Kondapoor village of Konaraopet mandal for safe custody and recommended to take action against the petitioner under Section 6-A of the EC Act for confiscation of the entire seizure of stock and also stated that Section 6-A proceedings are still pending and no further orders are passed. That while so, under proceedings No.C/410/2007, issued by the 2nd respondent, the petitioner's authorization was cancelled temporarily on the ground that the case was booked against the petitioner under Section 6-A of E.C.Act and also stated that the petitioner submitted a detailed explanation to the respondents 1 and 2 and he stated in his explanation that his Fair Price Shop is running in a small tin shed and since he found it to be unsafe to store huge quantity of FFW rice in the said shop which may be damaged due to rain or vagaries of nature and that he shifted the stocks to his house. Further it is stated that that portion of stocks of FFW rice received by the petitioner was supplied to the beneficiaries and the rice which was stored in his house was the stocks not allotted to the beneficiaries who did not receive the stocks as they were not issued coupons from the Gram Panchayat. It is further stated by the petitioner that under release order No.11448 dt.10-10-2006 he received 190 quintals of rice and under release order No.11449 dt.19-10-2006 he received 35 quintals of rice and that the space in his shop is sufficient to store small quantity of ration stocks of rice, sugar and kerosene and did not have space to store 225 quintals of rice and hence he had to store the same in his house and that he requested the concerned contractors and Assistant Engineers to issue Muster Rolls and Coupons for the purpose of distributing FFW rice to each labourer. Further it is stated that since four months the petitioner had been pursuing with them but the coupons are not issued and only muster rolls are issued and when there was a lot of pressure from the poor labourers during Sankranti festival in 2007, the petitioner distributed one quintal of rice to 80 labourers by taking their signatures in the muster rolls and the remaining stock is kept in his house and hence, he requested the authorities to drop proceedings issued under Section 6-A of EC Act and restore his authorization, but the respondents so far had not taken any action. Further it is stated by the petitioner that the impugned proceedings No.C/410/2007, dt.2-5-2007 issued by the 2nd respondent is illegal and arbitrary and the action of the respondents for seizure of essential commodities under Section 6-A of the Act cannot a ground to suspend or cancel his authorization and that the respondents had not initiated separate proceedings for cancellation or suspension of his authorization. It is also stated that cancellation/suspension of authorization is governed by the provisions of APPDS Order 2001 and no such proceedings are so far initiated by the respondents. The petitioner also stated that if his authorization is to be suspended or cancelled, an enquiry has to be conducted under APPDS Order, 2001, but mere booking of a case under Section 6(A) of the Act cannot be a ground for keeping his authorization under suspension and that therefore, the impugned order passed by the 2nd respondent is liable to be suspended. It is also stated that so far in-charge Fair Price Shop Dealer is not appointed for Fair Price Shop bearing No.4016. Further it is stated that the petitioner did not approach this Court immediately from the date of impugned proceedings since the petitioner submitted his explanation before tats and he had a fond hope that his authorization will be restored by the authorities and also more so he was advised legally that remedy for restoring his authorization lies only before the Joint Collector and later having obtained better opinion, he chose to file this instant Writ Petition and the delay if any caused approaching his Court is neither willful nor wanton but for the reasons stated above. It is also stated that if the interim directions are not issued suspending the operation of proceedings No.C/410/2007 dt.2-5-2007 passed by the 2nd respondent, the petitioner will be put to irreparable loss and injury. In the said circumstances, the writ petitioner approached this Court praying for the relief specified supra.

6. In the counter affidavit filed by the respondents, it is stated that on receipt of reliable information that the petitioner had stored huge quantity of FFS rice in his house with intention for diversion into black market to gain illegal profits by disposing at higher rates, the Vigilance Officials and respondent No.3 have proceeded to Azmeera thanda of Vattimalla of Konaraopet Mandal on 1-4-2007, secured the mediators and had surprised visit to petitioner's house bearing No.5-96. It is also stated that at the time of their inspection, the petitioner is present and the inspection team had explained the reasons for inspection and later, on verification they found huge quantity of rice stored there and on demand, the petitioner had not produced any valid documents and on verification, it was found (290) full bags of rice which weight (145) qts. It is also stated that as per the condition (1 & 9) of the authorization issued under A.P.State P.D.S.(Control) 2001, the petitioner has to store the PDS stocks and other stock i.e., FFW rice etc., in authorized premises only. It is further stated that the respondent No.3 had found the petitioner had stored the huge quantity of FFW rice in unauthorized premises thereby contravening the conditions of the authorization issued under the AP State PDS (Control) Order 2001. Therefore, the respondent No.3 had seized the entire rice quantity under a cover of panchanama and filed report to the respondent No.1 U/s.6-A of the E.C.Act 1955 and that the action taken by the respondent No.3 is within the purview of the provisions of Section 6-A of the E.C.Act, 1955. Further it is stated that as per conditions of the authorization issued to the Fair Price Shop Dealer, the Dealer has to store the stocks allotted to them in authorized premises only to avoid malpractices, diversions of PDS commodities and that if any stocks allotted are to be stored which are beyond the capacity of the authorized premises, the dealer has to obtain the permission from the concerned authorities. It is also stated that in the instant case, the petitioner had lifted 190 quintals rice on 10-10-2006 vide release order No.11448 and 35 quintals rice on 19-10-2006 vide release order No.11449. It is further stated that admittedly the petitioner had lifted huge quantity and if he cannot store it in his authorized Fair Price Shop premises, he ought to have informed the facts to the concerned officer and store the rice in the permitted premises. It is also stated that the petitioner had stored huge quantity of rice in unauthorized place with all intention to divert the said stocks into black market to sell at excess rate to gain illegal profits and the irregularity committed by the petitioner was prima facie found true and therefore the respondent No.3 had cancelled the petitioner's dealership temporarily vide order No.C/410/07, dt.2-5-2007 till completion of enquiry and that pending enquiry alternate arrangements are made. It is also stated that prima facie it is found that the irregularities were committed by the petitioner and therefore the respondent No.2 had issued orders for temporary cancellation of petitioner's dealership vide order No.C/410/2007, dt.2-5-2007 and that the action taken by the respondent No.3 is within the Rules in vogue. It is further stated that to avoid inconvenience to the cardholders and smooth functioning of public distribution system, commodities are being distributed to the cardholders through adjacent Fair Price Shop Dealer after temporary cancellation orders were issued by the respondent. It is also stated that it is only pending enquiry the orders are passed and that the petitioner can file statutory appeal before the Joint Collector which he has not availed. In the said circumstances, the dismissal of the Writ Petition had been prayed for.

7. In G. Rama Murthy's case (referred 1 supra) in paras 3 and 4, the learned Judge of this Court observed as hereunder:-

"In my view, the primary authority as well as the appellate authority have not adopted the correct approach to the legal issue. It is to be remembered that the proceedings under the Essential Commodities Act are quite distinct and different from the proceedings under the A.P.Scheduled Commodities Dealers (RDCS) Order. The authority which is competent to exercise power under Section 6-A and the authority empowered to cancel or suspend the authorization under Clause 3 (4) of the Control Order are also different. Respondents 2 and 3 evidently felt that passing of an order under Section 6-A of the Essential Commodities Act should automatically result in cancellation of the authorization. But as I have already stead, this is a wrong approach to the problem. The authority exercising the power under the A.P.Scheduled Commodities Dealers (RDCS) Order shall take an independent decision after considering the relevant facts and after giving due opportunity of making representation to the petitioner and then only pass an order under Clause 3(4). That the principles of natural justice apply even though Clause 3(4) of the Control Order does not specifically say so, cannot be doubted. In the present case, no show cause notice was issued to the petitioner framing charges and the petitioner was never called upon to submit his explanation. As already stated, the sole ground for the cancellation of authorization and for dismissal of the appeal is that confiscation of the seized goods was ordered under Section 6-A. This cannot form the sole basis for passing an order under Clause 3(4) of the Control Order. It may be the competent authority can take into account the relevant material as disclosed from Sec.6-A proceedings, and propose to rely on them in the show cause notice. But as I have already held it is the satisfaction of the authority exercising power under Clause 3(4) of the Control Order that is material but not the satisfaction reached in the course of the proceedings under Section 6-A of the Essential Commodities Act. The findings in the proceedings under the Essential Commodities Act may, at the most, be relevant but not binding on the authority exercising the power under Clause 3(4) of Control Order. In a case of suspension of authorization pending enquiry under Section 6-A, I have clarified the legal position in P.Hanumantha Rao v. Chief Rationing Officer (1993 (3) ALT 443) as follows:

"It is axiomatic that an authority to whom statutory power is vested has to apply his mind independently and to reach a conclusion-prima facie or otherwise whether any order is to be passed in exercise of that power. The prima facie satisfaction must be that of the 2nd respondent but not that of the Vigilence Officials. It may be that while exercising the power of suspension pending further enquiry, the adverse material which has come to light in the course of investigation by the Vigilence Officials can be taken into account. But there should not be mechanical exercise of power based merely on a report that a vigilence case has been filed against the petitioner. Secondly interim suspension of the authorization cannot be made on the ground of mere pendency of 6-A enquiry. There is no such provision in the Control Order. In the very nature of things, interim suspension is meant only to facilitate further enquiry under the provisions of the Control Order and it would only be a prelude to take final action under Clause 3(4) by way of suspension for a specific period or cancellation of the authorization. The 2nd respondent obviously fell into error in assuming that so long as proceedings under Section 6-A, were pending against the petitioner, the suspension of the dealer's licence should be an automatic consequence. In the present case, though nearly two months have elapsed since the date of passing the suspension order, no steps have been taken so far to initiate the enquiry as a step-in-aid to pass final order under Clause 3(4). Obviously the 2nd respondent does not want to do anything more than suspending the licence until and unless the case under Section 6-A is disposed. Such an action cannot be countenanced in law. Suspension of the authorization cannot go on for an indefinite length of time linking it up with the outcome of the proceedings under Section 6-A. No doubt the material which formed the basis for initiating action under Section 6-A of the Essential Commodities Act by the Vigilence Cell Officials can also form the basis for initiation of the proceedings under Section 3(4) of the Control Order. But, without contemplating to take any such proceedings, it is not open to the 2nd respondent to pass a blanket order allowing the suspension to remain in force until Section 6-A proceedings are finalized."

In view of the foregoing discussion, the impugned orders of respondents 2 and 3 cancelling the authorization and upholding the same in appeal are unsustainable in law. Accordingly they are quashed. At the same time, I give liberty to the 3rd respondent to initiate an enquiry by framing specific charges and to take appropriate decision under Clause 3(4) of the Control Order after giving an opportunity of making representation to the petitioner. If within two months from the date of receipt of this order, the enquiry is not initiated and completed, the petitioner shall be allowed to run the Fair Price Shop by allotting the scheduled commodities. No further action shall be taken pursuant to the notification dated 4-11-1993 calling for applications for filling up the so-called vacancy. The question of acting further pursuant to the said notification will arise only in the light of the ultimate decision taken under Clause 3 (4) of the Control Order and subject to any stay that may be granted by the appellate authority.

Reliance also was placed on the decision of the Division Bench in M.Shashikala's case (referred 2nd supra) and the learned Division Bench observed at para 11 as hereunder:-

"There can be no doubt that the Essential Commodities Act, 1955 (for short "E.C.ACT") has been enacted with the object to provide, in the interest of the general public, for the control, production, supply and distribution of Trade and Commerce in certain Essential commodities. We are not concerned here in these proceedings whether the proceedings initiated against the petitioners under Section 6-A of the Act are legal or not. That is a matter to be canvassed by the petitioners before the appropriate authority before whom the proceedings under Section 6-A are pending for the establishment of their rights as to the legality or the propriety of the action initiated against the petitioners and for an appropriate relief in this behalf, the petitioners must, in our opinion, establish the necessary facts in proceedings under Section 6-A of the Act. We are, however, concerned in these proceedings whether during the pendency of the said proceedings under Section 6-A, the petitioners can seek the aid of this Court for release of supplies of essential commodities to the Fair Price Shops being run by the petitioners so as to enable the petitioners to distribute the same to the Cardholders. It is not in dispute that the petitioners are also holding authorizations to function as Fair Price Shop Dealers and are governed by the provisions of Andhra Pradesh Scheduled Commodities (Regulation of Distribution by Card System) Order, 1973 (for short "Control Orders"). It is also to be noted that the said authorization has neither been suspended nor cancelled. Power to do so is, however, traceable to sub-clause (4) of Clause 3 of the Control Orders enabling the Appointing Authority (Revenue Divisional Officer) to suspend or cancel the authorization for any violations suo motu after making such enquiry as may be deemed necessary. Several Judgments of learned single Judges of this Court, reference to which has been made supra, have consistently held that the nature of proceedings under Section 6-A of the Essential Commodities Act and proceedings for cancellation or suspension of the authorization under Clause 3(4) of the Control Orders are different and distinct. The authorities under the Essential Commodities Act and the Control Orders for initiating the proceedings are also different and distinct. The aforesaid Judgments (referred to supra) have also recognized and declared that the concerned statutory authorities on whom the power is conferred have to act independently and objectively. In so far as the Appointing Authority under Clause 3(4) of the Control Order is concerned, it has been categorically held that he has to take an independent decision in the matter instead of mechanically following the orders that may be passed under Section 6-A of the Essential Commodities Act or where no orders under Section 6-A have been passed and proceedings are pending. The Appointing Authority under the Control Order cannot pass interim orders of suspension of authorization on the ground of mere pendency of enquiry under Section 6-A of the Essential Commodities Act. It has also been held that there is no such provision in the Control Orders. We agree to that extent with the Judgments of learned single Judge P.Venkatrama Reddy, J. and Syed Shah Mohammed Quadri, J. in the cases referred to supra."

It is pertinent to note that the Judgment in G.Rama Murthy's case (referred 1 supra) also had been referred to by the learned Division Bench specified above.

8. In the light of the views expressed in the decisions specified supra, it is needless to say that the impugned order cannot be sustained. In view of the same, the Writ Petition is hereby allowed. No order as to costs.

?1 1994 (2) ALT 59

2 1997 (2) ALD 379 (DB)