Simplified Explanation of the Judgment
In a notable ruling dated February 3, 2022, the Patna High Court addressed a case involving the cancellation of a fertilizer wholesale license by the District Agriculture Officer of Madhubani. The petitioner, a proprietorship firm engaged in wholesale trade of fertilizers, challenged the cancellation on the grounds that it was done without giving him an opportunity to be heard, thereby violating the principles of natural justice and provisions under the Fertiliser (Control) Order, 1985.
The petitioner held a valid license, renewed last on April 18, 2019, under the Fertiliser (Control) Order, 1985. The issue arose when officials conducted an inspection at the petitioner’s premises on October 27, 2021, based on allegations of black-marketing of fertilizer. A show cause notice dated October 28, 2021, was issued, citing non-cooperation during inspection. The petitioner submitted a written response stating he was not present at the time of the inspection.
Subsequently, a letter dated October 30, 2021, mentioned that the petitioner’s godown had been sealed, and he was asked to be present for the preparation of a seizure memo. The petitioner disputed this, claiming the godown was never actually sealed.
On November 8, 2021, the District Agriculture Officer issued an order cancelling the license, not on the original grounds of non-cooperation, but on a new ground — that the petitioner had allegedly broken the seal of the godown and was engaged in black-marketing.
The petitioner approached the High Court, arguing that the cancellation order was arbitrary and illegal because no show cause notice was issued for the alleged breaking of the seal — a fresh and serious allegation. Moreover, Clause 31(2) of the Fertiliser (Control) Order requires a licensee to be given an opportunity of being heard before any cancellation.
The Court agreed with the petitioner. It held that the impugned order suffered from procedural irregularity and violated the principle of natural justice. Since the cancellation was based on a new charge (breaking the seal) for which no notice was issued or explanation sought, the cancellation was held unsustainable.
Accordingly, the Court quashed the cancellation order and directed that the matter be reconsidered by following proper procedure.
Significance or Implication of the Judgment
This judgment is critical for reinforcing legal safeguards for traders and license holders. It establishes that any administrative action involving suspension or cancellation of a license — which has direct consequences on a person’s livelihood — must be backed by fair procedure, including prior notice and opportunity to be heard.
For regulatory authorities, the verdict serves as a reminder to strictly adhere to statutory procedures before passing punitive orders. Any deviation could result in quashing of the action by the court.
For businesses dealing in fertilizers and similar regulated goods, the case underscores the importance of timely legal recourse when faced with arbitrary action.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Whether a license can be cancelled without issuing a specific show cause notice for the ground invoked:
- No. The Court held that cancellation based on a ground not mentioned in the original notice (breaking seal) violated the principle of natural justice.
- Whether prior opportunity of hearing is mandatory before canceling a fertilizer license under Clause 31(2) of the Fertiliser (Control) Order, 1985:
- Yes. The Court reiterated that reasonable opportunity must be given before such civil consequences are imposed.
- Whether the action of the District Agriculture Officer was arbitrary:
- Yes. Since the cancellation was on new grounds without notice, it amounted to arbitrary exercise of power.
- What remedy was granted to the petitioner:
- The cancellation order was quashed. The petitioner was allowed to appear before the authority, submit a fresh reply, and the authority was directed to pass a reasoned order after a full hearing within a specific timeline.
Case Title
M/s Sanjeet Traders v. State of Bihar & Ors.
Case Number
CWJC No. 19439 of 2021
Coram and Names of Judges
Hon’ble The Chief Justice Sanjay Karol
Hon’ble Mr. Justice S. Kumar
Names of Advocates and who they appeared for
- For the Petitioner:
Mr. Suraj Samdarshi, Advocate - For the Respondents (State of Bihar):
Mr. Anant Prasad Singh (Standing Counsel 15)
Link to Judgment
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