ORDER
B.K. Somasekhara, J.
1. The petitioner held a licence DS-XI-A 7-D dated 13-9-1993 to manufacture Di-ethyl Pthalate mixing Pthalic Anhydrate along with Sulphuric Acid as a catalyst. It is said to be a firm carrying on the activities at Jeedimetla in Ranga Reddy District. The first respondent is the Commissioner of Excise and Prohibition, Hyderabad, the second Respondent is the Deputy Commissioner of Excise and Prohibition and the 3rd respondent is the Superintendent of Excise and Prohibition. The excise officials inspected the factory premises of the petitioner on 6-12-1993 being a Monday and said to have found certain irregularities and the 3rd respondent suspended the licence of the petitioner under the proceedings No. E. 7/1600/93 dated 17-12-1993 pending enquiry into certain deficiencies or allegations. A show-cause notice was issued to the petitioner in Lr.No. E7/1600/93 dated 10-1-1994 calling upon the petitioner to explain as to why the licence should not be cancelled. The explanation was submitted on 25-1-1994 and thereafter the third respondent issued the impugned order of cancellation of the licence in D. 6/1600/93 dt. 26-5-1994. Such is the order which is impugned by the petitioner in this Writ Petition.
2. The factuations leading to the impugned order and the grounds for cancellation of the licence of the petitioner find the basis to proceed further. It appears that the Special Squad of Excise detected on 4-12-1993 one arrack sacheting machine in D.No. 3-69, Razdharkhanpet, h/o Kothus village of Shamirpet Mandal of R.R. District and seized certain items 1 to 4 mentioned in the impugned order. Two persons were also taken into custody in that connection. During their interrogation they gathered that 12 barrels of alcohol have been brought in a lorry on 12-12-1993 and also that they brought the machine on 4-12-1993. Four persons were arrested in that connection. Among them one Mr. Vijayakumar who is said to be the owner of the premises from where the sacheting machine was seized in addition to other materials, is said to have confessed that he along with three persons jointly purchased 12 barrels on 29-11-1993 from the factory of the premises in Plot Nos. 152 and 160, Jeedimetla, Ranga Reddy District at the rate of Rs. 40/- per litre. On that basis, the licence of the petitioner was suspended. As already pointed out, the excise officials conducted inspection in the factory premises of the petitioner on the even date. It was found that out of Rs. 36000 bulk litres of liquor got from Maharashtra State, 8000 bls had been released to the petitioner in 40 barrels for manufacture of the product and the balance of 28000 bls were kept in 128 barrels. During the inspection, out of 40 barrels issued by the excise officials only 9 empty barrels were found and 7 full barrels were with the DS. It appears that some product had already been produced but the records were not made available at the time of inspection to account for the use of the particular quantity of denatured spirit and for the deficiency noted therein. In addition to that there were other deficiencies noted during inspection viz., no stock records were produced, as per the plan the unit had shown office room which was not in actual existence and therefore a show cause notice was issued to the petitioner and it led to the impugned order after explanation was submitted. The petitioner challenged the impugned order before the second respondent in Appeal No. B.1/4715/94 which was dismissed on 13-7-1994 and against that he went in appeal to the first respondent in No. 32950/95 P & E/B.3 which came to be dismissed on 23-11-1995.
3. In addition to the grounds taken up in the affidavit filed in support of the petition by the petitioner, Mr. Balamukunda Rao, the learned Counsel for the petitioner has raised the following grounds:-
(1) The impugned order is opposed to Section 31 of the Excise Act.
(2) It is opposed to the principles of natural justice.
(3) The impugned order is passed due to bias and without any basis.
(4) The impugned order which is confirmed in the appeals are without applying the mind by the appropriate authorities.
(5) The impugned order is illegal, arbitrary and opposed to principles of natural justice and therefore void and unenforceable.
4. Mr. Jagannadha Rao, the learned ‘AGP for Excise and Prohibition while repelling the above contentions has pointed out that the impugned order has been passed only after complying with the statutory requirement under Section 31 of the Excise Act by issuing the show cause notice to the petitioner giving an opportunity to explain and after applying the mind by the 3rd respondent which has been re-examined and reassessed by the two authorities, respondents 1 and 2, and under the circumstances there is no reason to interfere with such confirmed decisions nor to quash the impugned order. In particular, he has contended that in a case like this when the petitioner was given an opportunity of making of representation in accordance with proviso to Section 31 (1), nothing more was to be done by the third respondent except to apply the mind and pass the impugned order which is justifiably confirmed by respondents 1 and 2.
5. In substance, the matter before this Court to consider the impugned order may not warrant this Court to examine the questions of facts which are already set at rest not only by the 3rd respondent in the impugned order, but also the two authorities, respondents 1 and 2, in appeals. This Court is not concerned whether the petitioner really violated the terms of the licence or actually committed any offence directly or indirectly so as to suffer the cancellation of the licence by virtue of the impugned order. This Court is only anxious to know whether the 3rd respondent has conformed to the statutory requirement under Section 31(1) proviso of the Excise Act before passing the impugned order, or in other words whether the procesual justice and the means of achieving the end in the discharge of statutory duties by the third respondent and the appellate authorities have been satisfactorily complied with while examining the real issue in the matter. The reason being that whether the petitioner has violated the terms of the licence, whether he gave proper explanation or not, whether the third respondent was satisfied or not with such explanation are all the intrinsic mental obligations of the petitioner and the concerned authorities which this Court may not be able to examine under Article 226 of the Constitution of India, particularly in the nature of the questions involved in the case.
6. Both the learned Counsel have rightly concentrated on the implications of Section 31 (1) proviso of the Excise Act (in short, the Act), to substantiate their respective contentions and to read the provision as follows:
“31. Power to cancel or suspend licence etc:-
(1): Subject to such restrictions as may be prescribed the authority granting any licence or permit under this Act may cancel or suspend it, irrespective of the period to which the licence or permit relates,-
(a) x x x x x x x
(b) x x x x x x x
(c) x x x x x x x
(d) x x x x x x x
(e) x x x x x x x
Provided that no licence or permit shall be cancelled or suspended unless the holder thereof is given an opportunity of making his representation against the action proposed.”
Mr. Balamukunda Rao, the learned Counsel for the petitioner has meant the expressions ‘opportunity of making his representation’ and the power of the third respondent to cancel or suspend the licence are an integral part of the rule of natural justice preceding the impugned order. According to him, not merely making a representation will sustain the totality of the rule of natural justice as the other limb of the decision making by the authorities viz., the third respondent to consider such a representation and to be satisfied to lead to the impugned order is the real pith and core of the natural justice. According to him, in such a decision making process not only the petitioner ought to have been given an opportunity to place all the materials in support of the explanation, but also an enquiry into such allegations and if possible an oral hearing. Unless such ingredients were fulfilled, according to the learned Counsel for the petitioner, there is no beginning or end of natural justice statutorily incorporated in Section 31(1) proviso of the Act. The learned Counsel for the petitioner has tried to read every one of his contentions in such an expression ‘opportunity of making his representation’. Mr. Jagannadha Rao, the learned AGP for Excise and Prohibition totally disagrees with such a meaning into such expression as the whole process of natural justice in a case like this is only to give an opportunity to make a representation which the authority like the third respondent was obliged to seek, applying the mind, and take a decision in the matter subjectively and not objectively, or else the very purpose for which such powers are vested in such authorities would be frustrated. Particularly in this case, according to him, having due regard to the facts and circumstances of this case, the excise officials and the third respondent were convinced that there was a nexus between the deficiency of the denatured spirit found in the factory of the petitioner and certain materials found with certain persons who were doing nefarious activities, on their confession that they purchased the spirit from the factory premises of the petitioner, thereby exposing the petitioner to the commission of such a serious offence as is attributed to others either as an abettor or the perpetrator of the crime.
7. The contentions raised by Mr. Balamukunda Rao, the learned Counsel for the petitioner, as above are not without substance/particularly in a case like this. It cannot be gainsaid that ‘the opportunity of making the representation’ contemplated in the proviso to Section 31 (1) of the Act is beyond the principles of natural justice. It also cannot be overlooked that by means of the impugned order, not only licence of the petitioner was cancelled but also he was condemned to be either a criminal or an abettor of a crime. Read in that background, the ‘opportunity to make a representation’ before cancelling the licence under the impugned order was meant to be a natural justice to be expended before the petitioner was condemned as such. The cancellation of the licence with such an allegation should obviously expose persons like the petitioner to the stigma and would be blacklisted not only in the official circles but also in the society as a whole. Therefore, within the fundamentals of the principles of natural justice, the petitioner was entitled to the real and true natural justice, not merely an opportunity to make his representation but also an opportunity to effectively and satisfactorily defend such allegations by a proper enquiry and if possible with some sort of hearing in the situation.
8. The learned Counsel for the petitioner has also fortified himself with some precedents in regard to the actual meaning and purport of the expression like ‘opportunity to make the representation’ or the ‘opportunity to submit explanation’ in such a situation. First of them is Gauhati Municipal Board, Gauhati v. State of Assam and Ors. AIR 1966 Assam 120. wherein the question involved was whether the Municipal Council could be superseded by the Government merely on seeking and getting the explanation leading to the decision of supersession. The provision under which the Government was to form the opinion that the Board was not competent to perform or persistently make default in the performance of the duty imposed on them by or under the Act or otherwise by law or has exceeded or abused its powers was to tentatively form an opinion and give the opportunity to the Board of submitting explanation in regard to the matter and after giving the Board an opportunity of submitting explanation in regard to the matter the Government had to declare by notification that the Board is incompetent or in default or has exceeded or abused its power. (Section 298 of Assam Municipality Act, Act 15/57). In regard to the implication of calling upon the Board to submit its explanation under the said provision to form a decision by the Government, the legal position as to natural justice was explained by the Division Bench as follows:
“Any decision on these matters will affect the right of the Board and relate to objective facts. The decision is to be arrived at after giving an opportunity to the Board to submit an explanation. In the order the reasons are to be recorded. All these requirements clearly show that the legislature has cast a duty on the Government to act judicially. Unless the evidence in possession of the Government and the evidence placed by the Board in support of its explanation is examined by the Government objectively, it is difficult for the Government to arrive at any conclusion with regard to the facts on which the action can be taken. The requirement of the Section that an opportunity should be given to the Board to submit an explanation, does not only mean that the Board should be asked to send a written explanation. It contemplates a fuller opportunity to be given to place materials in support of the explanation given by the Board.”
The next of them is Eastern Railway Employees Congress v. General Manager, Eastern Railway . The issue therein was about the withdrawal of recognition of the Trade Union of Railway employees registered as Eastern Railway Employees Congress by virtue of Railway Establishment Code, 1951 Appendix 13 Part-B, Rule 1. The rule only stated that the opportunity should be given to such an association before recognition was withdrawn. The implication of such an opportunity was explained as follows:-
“Of course, the rule simply requires ‘opportunity’ and does not mention that such opportunity must be reasonable. But the concept of adequacy or reasonableness not only follows from the Dictionary meaning of the word ‘due’ but is inherent in the requirement of ‘opportunity’ being given, for, the object of rule 1 is to afford the association sought to be affected by the withdrawal of recognition an opportunity to meet the charge or cause upon which the recognition is sought to be withdrawn. If the opportunity is given in such circumstances that the petitioner gets no proper time, or no chance of referring to the requisite materials, for meeting the charges, it would be only a ‘colourable’ compliance with the Rule, having regard to its object and nature of the right which is sought to be affected by the withdrawal. The very word ‘opportunity’ requires a reasonable opportunity to be afforded just as the word ‘compensation’ simpliciter was interpreted by the Supreme Court to imply ‘just’ compensation or a ‘full and fair monetary equivalent’ in………..”
What the learned Counsel for the petitioner has tried to drive home is that mere expressions like ‘opportunity of making representation or explanation’ will not by themselves serve the true implications of natural justice but that should enable the affected party to have full facilities and opportunities to provide all the materials to the deciding authority whereby the deciding authority will be in a real position to apply the mind and come to the clear opinion as to the action to be taken against such a person. As rightly pointed out by him, if the rules of natural justice stops or completes the moment an explanation is offered or submitted, the result would be a mere compliance of the empty formality without the true result of the justice, which according to him, would be unnatural justice instead of natural justice. Further elaboration of the contention finds an expression in Appukutty v. Sales Tax Officer where it was a question of giving an opportunity to explain as to the matter of tax in regard to which the precedent elaborated the concept of natural justice in its own words-
“…..Courts have been at pains to lay down principles to guide authorities who have to determine questions in a quasi-judicial manner and the insistence has always been on adherence to the principles of natural justice. This, of course, requires a fair opportunity being afforded to a person charged or a person to be fixed, to show cause against the proposal and state his case. It appears to me, that it does not end there. By merely telling a person of the proposal arid giving him a chance to explain the principles of natural justice are not satisfied. If giving a mere opportunity to show cause and to explain would satisfy the principles of natural justice the notice to show cause becomes an empty formality signifying nothing for, after issuing the notice to show cause the authority can decide according to his whim and fancy. The judicial process does not end by making known to a person the proposal against him and giving him a chance to explain but extends further to a judicial consideration of his representation and the materials and a fair determination of the question involved…..”
The stage is only to conclude that the expression in any statute like Section 31(1) proviso of the Act an ‘opportunity to make a representation’ in a set of given situation to mean only to make a representation will not by itself satisfy the requirements of natural justice.
9. The learned Asst. Government Pleader for Excise and Prohibition relied upon a Full Bench ruling of this Court in Tappers’ Co-op. Society, Maddur v. Superintendent of Excise, Mahabubnagar 1986 (1) An.W.R. 387 = 1984 (2) APLJ 1 = 1984 (1) ALT 66 (NRC) (F.B.) which according to him has something to do with the implications of Section 31 (1) proviso of the Act. This Court having heard both the sides and having gone through the precedent finds no comparison between the facts and the law involved in that case and in this case. That only concerned the question of notice or no notice for suspension pending enquiry under Sub-Clause (2) of Section 31 of the Act and had nothing to do with the interpretation of the expressions in the proviso to Section 31(1) of the Act. In other words, such a decision will not help the learned AGP in support of his contention.
10. The learned Counsel for the petitioner is right in pointing out that the copy of the report said to have been prepared at the time of inspection was not furnished to the petitioner along with the show cause notice. It is true that so many details were given in the impugned order, which according to the learned AGP were purported to have been prepared at the time of the inspection. Such a stand does not stand to reason. The report of the inspection and the contents of the impugned order cannot tantamount to one document. What is contained in the report may not be taken to have been totally incorporated in show cause notice. A show cause notice may or may not contain everything in the report and that will be question of fact. There is no guarantee that the show cause notice mentions everything or what is all necessary contained in a report or any material. It is also rightly pointed out that the statement of some individual involved in the alleged offence or misdemeanour like an accomplice was not provided to the petitioner as to how such a person could make a statement against the petitioner or the concerned persons with or without basis. Admittedly, the petitioner placed some materials before the third respondent before the impugned order was passed which has been disbelieved or not accepted. The petitioner had no opportunity to cross-examine any person or persons said to have made a statement that the denatured spirit has been purchased from the factory premises of the petitioner or that had been used or misused by the said persons. Moreover, the petitioner himself had no opportunity of explaining the correctness or otherwise of the accounts or material produced before the third respondent as to the deficiency of the barrels, quantity of the denatured spirit found or not found in the factory premises at the time of inspection. Inspite of all that the petitioner was condemned to be the culprit and upon which the licence was cancelled. Barring the opportunity to submit the representation, the petitioner did not have any other opportunity either to demolish the allegations or refurbish or strengthen his case.
11. Now the question is whether the act of the third respondent in passing the impugned order without providing such facilities to the petitioner as above could conform to the true and real spirit and the letter of the principles of natural justice codified in the expressions in the proviso to Section 31(1) of the Act. The doctrine of ‘natural justice’ is as simple as it appears in expression and as sweet as sugar candy but a proper understanding of the same requires not only a legal mind but also a mind of common parlance in addition to the understanding of a common man who is also considered to be a man of wisdom and prudence. Although ‘natural justice’ is equated to precessual justice, it has got an intent in it of true justice and nothing but justice. “In its broad sense natural justice may mean simply ‘the natural sense of what is right and wrong’ and even in its technical sense it is now often equated with ‘fairness’. It has been said that romantic word ‘natural’ adds nothing ‘except perhaps a hint of nostalgia’, and that ‘justice is far from being a ‘natural concept-the closer one goes to a state of nature, the less justice does one find.’ (Page 466 of H.W.R. Wade’s Administrative Law, 6th Edition of 1988). In a codified system of justice in the form of accepted law, the rule finds its words in ‘Audi Alteram’ Partem, to mean that ‘it is fundamental to fair procedure that both sides should be heard; Audi alterm partem, ‘hear the other side’. This is the more far-reaching of the principles of natural justice, since it can embrace almost every question of fair procedure, or due process, and its implications can be worked out in great detail. It is also broad enough to include the rule against bias, since a fair hearing must be an unbiased hearing; but in defence to the traditional dichotomy, that rule has already been treated separately.”(Page 496 of Administrative Law by Wade supra). Now the law is settled that the principle of natural justice enshrined as above is not confined to be understood, applied and implemented not only by judicial and quasi judicial authorities, but also to administrative authorities wherever the results lead to penal consequences. Some times it may be difficult to tear the veil between such authoritatives as administrative authorities called judicial and quasi-judicial and administrative. Therefore the rule of abundant caution to follow the principle of natural justice is a safety valve to avoid victimisation of the persons affected by the orders of the authorities including administrative authorities.
12. The embryo of prenotions in selfism or the prejudice in any authority dealing with a serious matter of the criminal consequences is another aspect to be always examined by the Courts in determining the nature and the scope of the rule of natural justice given in a particular situation. As rightly pointed out by Mr. Balamukunda Rao, the learned Counsel for the petitioner supported with precedents, the rule of natural justice is neither stable nor constant. It alters, fluctuates and reverberates and encompasses a situation depending upon facts and circumstances of each case and sometimes the Court has to evolve the rule of natural justice to be applied to a given situation. Even where the provision does not mention that a written explanation should be given, as pointed out in Radeshyam Khare v. State of Madhya Pradesh , the requirement of submitting an explanation means, action has to be taken only after the explanation is furnished by or on behalf of the concerned person, however hasten to add, depending upon the facts and circumstances of each case.
13. Then what are the facts and circumstances of the present case to follow the rule of natural justice to conform to the principles therein to do real justice and not of formal justice. A simple reading of the impugned order would go to show that the action taken against the petitioner to cancel the licence followed by an order of suspension was not merely for violating the mere terms of the licence, but for acting as an accomplice along with certain persons by selling denatured spirit to misuse it for manufacting a certain compound which was considered to be spurious. In other words, the petitioner was called by name as an offender, if not a criminal, the petitioner was called a ‘mad dog’ to be hanged and the petitioner was blacklisted by condemnation by cancelling the licence. Anybody reading the case papers relating to the cancellation of licence by the respondent and also the papers in this case should necessarily think that the petitioner is an anti-social element in the conduct of becoming a companion or privy in nefarious activities of using denatured spirit supplied for a particular purpose to manufacture some compound and misused it for some other objectionable purpose. The summum bonum of the consequence of such a condemnation of the petitioner by the respondent in the process of cancelling the licence can be brought within the meaning of simple literary word called ‘stigma’. The dictionary and law lexicon meaning confirms that. Because ‘stigma’ means “attaint, bad repute, brand, discredit, disgrace, dishonour, disparagement, ignominy, infamy, notoriety, obloquy, opprobrium, reproach, scandal, shame etc., (Page 977 of Legal Thesaurus, Regulation Edition by William C. Burton, 1981). With the word stigma, the figure of speech and parts of speech to become ‘stigmatize’ would mean, charge, defame, denigrate, denounce, discredit, disagree, dishonour, disparage, humiliate, incriminate, involve, lessen, pillory, smear, stain, sully, tarnish etc. (Page 977 of Legal Thesaurus supra) whether intentional or otherwise, the process of cancellation of the licence of the petitioner has definitely exposed it to either one or all of such attributes to the petitioner within the simple expression ‘stigma’. Now the question is whether the proviso to Section 31(1) of the Act to mean only to give an opportunity to explain without resorting to an enquiry after giving reasonable opportunity to the petitioner of either oral hearing or by production of the evidence etc., can be permitted to condemn the petitioner with such stigma or austerisation in the social status and the survival? The Court had occasions to legally propound the meaning of the expression ‘stigma’ in the background of Article 311 (2) of the Constitution of India to mean-some aspersion or reflection on the conduct, efficiency or the like made in the order, which would adversely affect his future prospects relating to so many things (Regional Manager v. Pawan on page No. 961 of Shorter Constitution of India by D.D. Basu, 12th Edition, 1996). The law is also settled in that context and the background with all consensus of opinion that a stigma will require compliance with the implications of such an article like Article 311(2) when it in attached to the consequences. (Saxena v. State of M.P. and Jagdish v. Union of India in addition to Pawan’s case supra. In substance of the law so stated and settled, wherever there is stigmatisation, the implications of Audi Alterant Partem extends the right of hearing, right of opportunity to place the material and duty to record reasons in support of any decision. Judged in that background, the expressions in Section 31(1) proviso of the Act of ‘an opportunity to make a representation’ would mean a full fledged enquiry into the allegations of misconduct in the nature attributed to the petitioner exposing the petitioner to stigma. If such expression is understood normally such a meaning should follow. Particularly if that is applied to the facts and circumstances of this case, there is no escape in following the strict principles of natural justice by an authority before cancelling the licence. The illustrations may be many. The licence may be cancelled under the provision for so many reasons like technical violation of maintaining the infrastructure, to maintain the timings of the factory, to enforce the discipline in the factory, to maintain all the accounts and the production of accounts when called for and not merely for stigmatisation. If such an expression is read in that context, the meaning of natural justice may assume a different meaning and proportion. To cancel the licence with the allegation of the petitioner being an accomplice to commit the offence by other person stated above in the impugned order, the meaning of such an expression in the provision would be nothing but a legislative intent to bring out the total meaning of the principles of natural justice to hold an enquiry and condemn. Contrary to this, the third respondent and the appellate authorities were satisfied with merely examining the explanation or the representation given by the petitioner and were satisfied otherwise of what was explained by the petitioner. Even a copy of the report was not given to the petitioner, much less, opportunity to lead evidence or to argue the matter. Under the circumstances, Mr. Balamukunda Rao, the learned Counsel for the petitioner is totally justified in postulating that the impugned order has violated the principles of natural justice within the correct and known meaning of the expression under Section 31 (1) proviso of the Act. The consequence of such violation of the principles of natural justice to throw the impugned order into void need not be over-emphasised. All the subsequent events of the decision in the appeals etc., cannot be but to be covered by such consequence of void.
14. Mr. Balamukunda Rao, the learned Counsel for the petitioner tried to demonstrate that the nexus between the conduct of the petitioner and the real culprits is not established to pass the impugned order. That would be a matter on merits of the case and the question of fact regarding which this Court will not be in a position to express any opinion nor it is desirable to probe into such a matter. If proper opportunity had been given to the petitioner to defend such allegations in the nature of charge of the criminality, with so many reasons given by the respondent No. 3 in the impugned order in addition to the reasons given in the appellate orders, possibly this Court would not have interfered with the same. But the result of this case is mainly based upon violation of principles of natural justice within the meaning of such an expression in the said provision.
15. The result is that the impugned order becomes liable for quashing. The period of licence of the petitioner is over. He may perhaps apply for renewal or make a fresh application for licence. At the same time, under the circumstances and having due regard to the gravity of the situation, it may be open to the respondents to initiate any action necessary and to decide it in accordance with law in the light of the observations made above.
16. In the result, the Writ Petition is allowed and the impugned order of the 3rd respondent is quashed. The petitioner shall be at liberty to make a fresh application for licence, which shall be considered on merits by the concerned authorities. The respondents shall also be at liberty to initiate action against the petitioner for any such violation in the light of the observations made above and dispose it of in accordance with law. In the circumstances, there shall be no order as to costs.
