1. Challenge to the constitutionality of Section 39, Calcutta Police Act, 1866, concerning the discretionary power of the Commissioner of Police to grant licenses for eating houses. (Para 1 )
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1960 Supreme(SC) 343
SUPREME COURT OF INDIA
9th December, 1960
B.P. SINHA, C.J.I., J.L. KAPUR, P.B. GAJENDRAGADKAR, K. SUBBA RAO AND K.N. WANCHOO JJ.
Kishan Chand Arora, Petitioner
Versus
Commissioner of Police, Calcutta and others, Respondents.
Petition No. 22 of 1960.
Advocates appeared
M/s. H. J. Umrigar and B. P. Maheshwari, Advocates, for Petitioner; Mr. A. C. Mitra, Senior Advocate, (M/s. B. Das and P. K. Bose Advocates, with him), for Respondents Nos. 1 and 2 ; Mr. P. K. Mukherjee, Advocate, for Respondent No. 3.
Advocates:
A.C.Mittal, B.DAS, B.P.MAHESHVARI, H.J.Umrigar, P.K.BOSH, P.K.MUKHERJI
A.C.Mittal, B.DAS, B.P.MAHESHVARI, H.J.Umrigar, P.K.BOSH, P.K.MUKHERJI
A discretionary licensing power is constitutional if guided by specific objectives like public order. The absence of a formal hearing or reasons for refusal does not necessarily make an administrative police order an unreasonable restriction on the fundamental right to carry on trade.
Headnote:(A) Police Act - Section 39 - Constitution - Articles 19(1)(g) and 19(6) - Validity of licensing power - Whether the power to grant licenses at the discretion of a police authority is an unreasonable restriction on the fundamental right to carry on trade - Guidance for discretion can be inferred from the objects of the section, namely securing good behavior of keepers and prevention of drunkenness and disorder (Paras 3, 4).
(B) Administrative Law - Procedural Reasonableness - Absence of a provision for hearing or communicating reasons for refusal in a licensing statute - In matters of law and order, an administrative order may be reasonable even without a judicial process or the requirement of a hearing, provided the authority acts reasonably (Para 5).
(C) Dissenting View - Uncanalised power - A law that makes the enjoyment of a fundamental right depend on the subjective satisfaction of an executive officer without procedural safeguards or an appeal mechanism is an unreasonable restriction (Paras 20, 23).
Facts of the case:
The petitioner operated an eating house without a license. His application for a license was rejected by the licensing authority on the grounds that his antecedents and conduct indicated he would not maintain good behavior or prevent disorder. The petitioner challenged the constitutionality of the statutory provision granting the authority discretion to issue licenses.
Findings of Court:
The majority held that the statutory provision is constitutional as it contains implicit guidance based on the objectives of maintaining law and order. The lack of a mandatory hearing or recorded reasons does not render the provision unreasonable in the context of police administration.
Issues: Whether the provision conferring discretionary power to grant licenses to eating house keepers is arbitrary and unguided, thus violating the fundamental right to carry on trade under Article 19(1)(g) of the Constitution.
Ratio Decidendi: The court reasoned that the discretion is guided by the need to ensure the good behavior of the keeper and the prevention of disorder. Since the order is administrative and relates to public order, the principles of natural justice are not strictly applicable, and the authority is expected to act reasonably.
Result: Petition dismissed with costs.
Legal Category Hierarchy
Table of Contents
2. Contention that Section 39 confers arbitrary, uncanalised power without guiding criteria or procedural safeguards, thereby imposing unreasonable restrictions on the fundamental right to carry on trade. (Para 2 , 10 )
3. Reasonableness of restrictions on fundamental rights requires examination of both substantive and procedural aspects, ensuring that executive discretion is not arbitrary or devoid of natural justice safeguards. (Para 11 , 20 , 23 )
4. A law restricting the fundamental right to trade is void if it grants uncontrolled, uncanalised discretionary power without objective criteria or effective procedural remedies for the aggrieved. (Para 20 , 23 )
5. Petition dismissed with costs. (Para 25 )
6. What is the test for determining the reasonableness of restrictions on fundamental rights?
The test involves examining both substantive and procedural aspects of the law, considering the nature of the right, the underlying purpose of the restriction, the extent of the evil to be remedied, and the proportionality of the imposition. (Para 11 , 20 )
7. When does discretionary power to grant licenses become an unreasonable restriction on the right to trade?
Discretionary power is unreasonable when it is arbitrary, uncanalised, and unregulated by any rule or principle, leaving the exercise of power entirely to the discretion of an officer without checks or controls by higher authorities. (Para 15 , 20 )
8. Is the absence of a hearing or appeal mechanism fatal to the validity of a licensing statute?
Yes, if the law deprives a person of their livelihood based on subjective executive determination without providing a suitable machinery for implementation according to principles of natural justice or an appeal process. (Para 20 , 23 )
9. Does the high official status of the deciding authority validate the absence of objective criteria?
No; the status of the officer is of minor importance because fundamental rights are guaranteed against the State, and presumed fairness cannot substitute for objective criteria and procedural safeguards. (Para 20 , 23 )
Judgment
WANCHOO, J. : This petition under Art. 32 of the Constitution challenges the constitutionality of S. 39 of the Calcutta Police Act, No. IV of 1866, (hereinafter called the Act). The facts necessary for our purpose are these. On August 11, 1954, the petitioner entered into an agreement with one Haripada Bhowmick, who is respondent No. 3 with respect to an eating house named Kalpatoru Cafeteria , situate in No. 2 Chowranghee Road, Calcutta. The petitioner was appointed a contractor by this agreement and was given the exclusive use and occupation of the said eating house upon certain terms and conditions. A licence has to be taken out with reapect to an eating house under S. 39 of the Act. It appears that originally the licence was in the name of Bhowmick, and one of the conditions of the licence was that the eating house should not be sublet without permission of the Commissioner of Police (hereinafter referred to as the Commissioner). On the date of the agreement, Bhowmick held a licence for the eating house, which was to expire on March 31, 1955. It is said that under the agreement the licence was to remain in the name of Bhowmick while the petitioner was to carry on the business as contractor. The petitioner carried on the business from after the date of the agreement and no application for a fresh licence was made by him before March 31, 1955, when the licence in the name of Bhowmick was to expire. It was only on August 8, 1955, that an application for licence was made by the petitioner on behalf and in the name of Bhowmick though the business was continued to be run by him all the time after March 31, 1955. It appears that the application made in the name of Bhowmick was rejected on December 27, 1956; but in the meantime Bhowmick was prosecuted on September 10, 1955, for running the eating house without a licence and was fined on December 12, 1955. Thereafter a notice was issued to Bhowmick on September 7, 1956, to show cause why his application for licence should not be refused inasmuch as he had not applied in time and violated the condition of the licence by sub-letting the eating house to the petitioner. Thereafter the petitioner applied on September 21, 1956, for the issue of a licence in his own name. It may be mentioned that in the meantime there had been disputes between Bhowmick and the petitioner and a suit had been filed by Bhowmick against the petitioner in October 1956 in that connection. It may also be mentioned that though the petitioner applied for the first time on September 21, 1956, for licence he had already been prosecuted in October, 1955, for keeping an eating house without a licence and convicted in November 1955. The application made by the petitioner on September 21, 1956, was eventually rejected on March 30, 1958, though in the meantime the petitioner was all along continuing the business of the eating house without having obtained a licence. After the rejection of his application the petitioner applied to the High Court under Art. 226 of the Constitution challenging the constitutionality of S. 39 and also challenging the order of the Commissioner rejecting his licence on various grounds. This application was dismissed on August 7, 1958. Thereupon the petitioner went up in appeal to a Division Bench of the High Court which was disposed of on March 4, 1959. The Division Bench held S. 39 to be constitutional. It further held that as extraneous matters had been taken into account in rejecting the application of the petitioner for a licence the rejection was not in accordance with law. However, as the period of one year for which a licence is valid under S. 39 had expired in September 1957, and the judgment was being delivered in March 1959, the appeal was dismissed on the ground that that application could not be considered in 1959. Thereupon the petitioner made another application to the Commissioner on March 30, 1959, for the period from April 1, 1959 to March 31, 1960. During all this time
