ORDER
Anand Byrareddy, J.
1. The facts of the case are as follows:
2. The petitioner is engaged in the business of providing security services. It has under its employment more than 500 persons. It provides security services to various industries by entering into independent contracts operating all over the State of Karnataka. The provisions of the Contract Labour (Regulations and Abolition) Act, 1970 (for brevity ‘the Act’), and the Contract Labour (Regulation and Abolition) (Karnataka) Rules, 1974 apply to the petitioner. The petitioner has registered itself under the said Act as well as the Karnataka Shops and Commercial Establishments Act, 1961. The petitioner had entered into a contract with respondent 4, dated 1-8-2000, which has paper and sugar mills and other establishments at Bhadravathi. The said agreement was in force for two years. The petitioner had filed an application before respondent 1, which is the Licensing Authority under the Act. The licence was granted on 24-11-2000 for a period of one year from 30-7-2000. It is stated that the petitioner was carrying on its activity of providing services and complied with all other statutory requirements such as the payment of minimum wages and compliance with the provisions of the Provident Funds Act, 1925 and Employees’ State Insurance Act, 1948 so on and so forth. When the matter stood thus, the petitioner was served with summons calling upon the petitioner to appear before the Court of Magistrate in respect of the complaint lodged by respondent 2. The complaint was in relation to the prosecution of the petitioner under Section 26 of the Act.
3. The petitioner contends that there was no prior notice for production of any documents and hence, there was no occasion for the petitioner to have complied with such a requirement and therefore prosecution was initiated without there having been any willful non-compliance on the part of the petitioner. But in order to avoid further proceedings, had pleaded guilty before the Court of Magistrate for the offence alleged and paid the fine which was imposed in a sum of Rs. 1,000/- in the bona fide plea that the matter would stand closed and the petitioner continued to believe that it was not required to do anything further.
4. The petitioner had thereafter applied for renewal of licence from 1-8-2001. In response, however, the petitioner had received notice dated 18-6-2001, wherein, it was contended that in view of the petitioner having been convicted for violating Rule 83(1) and 83(2) of the Rules, the petitioner was not eligible to hold the licence and that it should return the licence granted earlier within 7 days. The petitioner had replied to the same. However, the petitioner thereafter received a copy of the proceedings dated 12-7-2001, informing the petitioner that the licence issued to it in the above said contract had been cancelled. The petitioner being left with no other alternative had filed an appeal under Section 15 of the Act as on 30-7-2001. I
5. Further, the respondent 3 having issued a General Circular dated 18-7-2001, directing the Assistant Labour Commissioners all over the State who are the jurisdictional Licensing Officers under the Act, to cancel the licences issued to the petitioner in respect of other contracts on the ground that the petitioner had been convicted under Rule 83(1) and 83(2) of the Rules, this action of respondent 3 was questioned by the petitioner by way of a writ petition in W.P. No. 30629 of 2001 before this Court. An interim order was granted by this Court by an order dated 29-9-2001, staying the operation of the impugned order namely the circular referred to hereinabove. The petition was disposed of as on 9-8-2001, wherein the Appellate Authority was directed to dispose of the appeal of the petitioner within three weeks from 9-8-2001. In view of these developments, the respondent 4-Company, had terminated the agreement on the plea that the petitioner’s licence stood revoked by the authorities. In the mean while, the Appellate Authority had summarily dismissed the appeal by an order dated 10-9-2001. It is in this background that the present petition is filed challenging Annexure-L, which is the notice dated 18-6-2001 issued by the first respondent, Annexure-N, which is the copy of the order dated 12-7-2001 passed by the first respondent to withdraw the licence, Annexure-P, which is the circular dated 18-7-2001, issued by the third respondent to the Assistant Labour Commissioners and Deputy Labour Commissioners in the State, Annexure-T, which is the copy of the order dated 10-9-2001, passed by the second respondent rejecting the appeal of the petitioner.
6. Sri D. Leelakrishnan, learned Counsel appearing for the petitioner would submit that the action of respondents 1 to 3 in refusing to renew the licence issued to the petitioner under Section 12 of the Act so as to carry on the business as a contractor are illegal, high handed and arbitrary and it is tainted with mala fides, which is a colourable exercise of power and therefore is void ab initio.
7. He would point out that under Rule 22 of the Contract Labour (Regulation and Abolition) (Karnataka) Rules, 1974 the licensing officer is empowered to take into consideration the matters enumerated therein while granting or refusing to grant the licence. The first respondent has refused the renewal of licence and revoked the same under Annexures-L, N and R by invoking Rule 22-A of the Rules. He would point out that the power to refuse a licence could be exercised only if the applicant is convicted of an offence, which involves moral turpitude. The charge that the petitioner had failed to produce the documents called for by the second respondent and the petitioner having been imposed with a fine by the learned Magistrate, it could not be said that the conduct of the petitioner in not, producing the documents before the respondent amounted to moral turpitude and hence, Rule 22-A could not be attracted in the respondent refusing the renewal of licence and the order is without, jurisdiction, in that, the order is issued for violation of Rule 83(1) and (2) of the Karnataka Rules and that the petitioner would not be eligible to hold the licence nor eligible for renewal of the licence already granted.
8. Further, the learned Counsel would submit that Rule 83(1) and (2) empowers the authority under the Act to call for any information and non-compliance of such a Rule is an offence under Section 24 of the Act. The said offence is only a technical offence not involving any moral turpitude. This would in any case not empower the authority to cancel the licence already issued. Therefore, the impugned order passed by the first respondent invoked Rule 22-A in cancelling the licence is illegal and without jurisdiction.
9. Further, the learned Counsel would also assert that insofar as the notice dated 18-6-2001, calling upon the petitioner for production of certain records for inspection is concerned, such a notice was not received at the first instance and therefore there was no hesitation in pleading guilty to the offence alleged of not having produced the records and it was only in order to put an end to the criminal prosecution. In my event, under the general law, if an order is passed entailing civil consequences, it would be mandatory on the part of the officers discharging such public duties to issue notice and call upon the party to explain and shew cause as to why the proposed action should not be taken. It is not the case of the respondents that there was otherwise non-compliance of any such statutory provision pertaining to the payment of minimum wages, coverage of contract labourers under the Provident Funds Act and Employees’ State Insurance Act or such other statutory requirements, the plea of guilt insofar as the offence involved being of a technical nature was not so grievous to prompt the authorities to initiate staunch measures as has been taken in cancelling the existing licence, refusing the renewal of licence and proceeding to cancel the licences held by the petitioner elsewhere in the State. Learned Counsel would therefore submit that there is no justification either in law or otherwise for the authorities who have acted in the manner that they have, having regard to the provisions of the Act under which, such power is exercised by the authorities and therefore would pray that the impugned orders be quashed.
10. Sri Honnappa, learned High Court Government Pleader for the respondents would make a weak attempt to sustain the orders passed and seeks to reiterate the statement of objections that has been filed by the State, The primary contention is that the petitioner has failed to respond to the show-cause notice in compliance with the requirement of the production of documents that were called for and therefore, the action of the authorities could not be faulted.
11. On these rival contentions, it is to be examined whether the action of the authorities is arbitrary, capricious of otherwise warrants interference in the writ jurisdiction of this Court. There is no serious dispute on facts and therefore consideration of the provisions of the Act would be relevant in order to address the action of the respondents. Section 14 of the Act provides for revocation, suspension and amendment of the licence, which provides that the Licensing Officer may revoke or suspend the licence, if the holder of the licence has without reasonable cause failed to comply with the condition, subject to which the licence has been granted or contravened any provisions, Act or Rules made therein. On an application being made by the petitioner for renewal of licence, the application has been rejected with reference to Rule 22(a)(iv), which would be wholly inapplicable. The petitioner having been convicted for non-compliance with Rule 83(1) and (2) of the Rules could not be said to be an offence involving moral turpitude. As laid down by the Supreme Court in the case of Pawan Kumar v State of Haryana and Anr. it could not, by any stretch of imagination be said that the violation of Rule 83(1) and (2) of the Karnataka Rules by the petitioner could be an offence involving moral turpitude. The petitioner was duty-bound to produce such records as called for by the respondents. The lapse on the part of the petitioner ought to have prompted the respondents to issue such further notice on a possible lapse of communication and the authorities proceeding to cancel the licence on the ground that the petitioner had not complied with the same, has the ring of the Authorities having over-reached their power under the Act, under cover of reasons, which are not justified.
12. Learned Counsel for the petitioner would also point out that notice dated 18-6-2001, required compliance with the return of the licence which had been cancelled and threatened an appropriate legal action if this was not complied with the non-compliance with this requirement could not be held to be a violation of Rule 83(1) and (2). Even if this could be held in violation of Rule 83(1) and (2), it did not warrant the extreme measure of cancelling the licence of the petitioner and also directing the cancellation and withholding the renewal of licences pertaining to the petitioner within the jurisdiction of other licensing authorities.
Hence, the petition is allowed and the impugned Annexures-N, P and T are quashed.