IN THE HIGH COURT OF MADHYA PRADESH
Gurpal Singh Ahluwalia and Avanindra Kumar Singh, JJ.
Rathore and Mehta Associated v. The State of Madhya Pradesh & Others
Writ Petition No. (Jabalpur); Decided on 30.5.2023
(1) Natural Justice -- opportunity of hearing -- order cannot be quashed merely on ground that opportunity of hearing was not given, unless prejudice is caused to aggrieved person -- however, where law requires grant of opportunity of hearing, respondents must make out very strong case for bypassing such statutory provision. (2013) 8 SCC 20, (2022) 2 SCC 301, (2015) 8 SCC 519, (2003) 4 SCC 557 and (2020) SCC Online SC 847 followed. [Para 17]
(2) Penal Code, 1860 -- S. 52 -- good faith -- anything not done with due care and attention cannot be said to have been done in good faith. [Para 21]
(3) Fraud -- vitiates all solemn acts -- means intention to deceive -- whether it is from expectation of advantage to party himself or from ill-will towards other, is immaterial. Civil Appeal No. 2447 of 2007 decided on 16.2.2007 followed. [Para 24]
(4) Excise Act, 1915 (M. P.) -- S. 31 (1A) -- cancellation of license -- opportunity of hearing -- petitioner obtained license by submitting forged/fake bank guarantee -- no order can be allowed to stand if it was obtained by fraud -- no prejudice caused to petitioner for reason that no opportunity of hearing was given before cancellation of licence. 2006 (1) MPLJ 498 distinguished. [Paras 26 to 28]
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ORDER
Ahluwalia, J:- 1. This Writ Petition under Article 226 of the Constitution of India has been filed against the order dated 26.5.2023 (Annexure-P/7) and 27.5.2023 (Annexure-P/8) passed by the Collector (Excise) Bhopal, by which the license to run the liquor shop awarded to the petitioner has been cancelled and fresh e-tender has been issued.
2. It is the case of the petitioner that the petitioner is a partnership firm constituted under the name and style “Rathore and Mehta Associates”. Initially there were three partners namely, Shri Sanjeev Kumar Mehta, Shri Sushil Singh and Shri Surendra Rathore. The petitioner was under obligation to submit the bank guarantee which was done by the petitioner firm. As per the partnership deed, Shri Sanjeev Kumar Mehta had 45% share in profit and loss, Shri Surendra Rathore had 45% share in profit and loss and Shri Sushil Singh had 10% share in profit and loss. It is the case of the petitioner that without the information, knowledge and consent of other partners, Shri Sanjeev Kumar Mehta entered into a memorandum of understanding on 04/05/2023 i.e. subsequent to the submission of the bank guarantee and inducted one more person namely Shri Anand Tripathi as a partner and by the said memorandum of understanding, Shri Sanjeev Kumar Mehta reduced his share in profit and loss to 30% and the remaining 15% share in profit and loss was given to Shri Anand Tripathi. It is submitted that father of Anand Tripathi namely Shri Narayan Tripathi had assured the petitioner that he would submit the bank guarantee and accordingly, a bank guarantee dated 7.4.2023 (Annexure P/6) was submitted which was purportedly issued by the Union Bank of India, Thana Dara, Kalimpong, Siliguri, West Bengal. It is submitted that it appears that the respondents tried to verify the genuineness of the bank guarantee and ultimately by order dated 26.5.2023, Annexure-P/7, informed the petitioner that the bank guarantee submitted by the petitioner was a fake bank guarantee and accordingly, cancelled the license awarded to the petitioner and also directed for registration of FIR against the partners. It is submitted that on the very next date i.e. on 27.5.2023, Annexure-P/8, impugned etender notice has been issued for award of license to run composite liquor shops at Lalghati, District Bhopal.
3. Challenging the impugned order dated 26.5.2023, Annexure-P/7, it is submitted by the counsel for the petitioner that the said order has been issued in utter violation of Section 31(1A) of the M.P. Excise Act, 1915. An opportunity of hearing should have been awarded to the petitioner before cancelling the license. However, the same has not been done and the license has been cancelled by the impugned order. It is further submitted by the counsel for the petitioner that it is clear from the impugned order dated 26.5.2023, Annexure-P/7, an e-mail was received on 26.5.2023 from the concerning bank that bank guarantee submitted by the petitioner has not been issued by the said bank and immediately thereafter on the very same day impugned order dated 26.5.2023 was passed.
4. It is further submitted by the counsel for the petitioner that in fact the petitioner itself has been defrauded by one of the partner Shri Sanjeev Kumar Mehta. In fact father of Anand Tripathi had assured the petitioner that he would get the bank guarantee prepared. The petitioner was not aware of the fact that father of Shri Anand Tripathi has prepared a forged bank guarantee. It is further submitted that if the respondents have given an opportunity of hearing to the petitioner, then they would have explained each and every aspect of the matter and could have furnished a fresh bank guarantee. To buttress his contention, the counsel for the petitioner has relied upon judgment passed by the Single Bench of this Court in the case of Gwalior Distilleries Pvt. Ltd. v. State of M.P. and others reported in 2006 (1) M.P.L.J. 498. It is further submitted that although the order under
The court affirmed that admissions obtained through fraud are invalid, emphasizing that principles of natural justice do not apply in such cases.
The classification of an account as fraud must adhere to principles of natural justice, including providing a reasoned order and opportunity to be heard.
Fraud vitiates everything, and no person can benefit from their own fraud.
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