Ghaio Mall and Sons vs The State Of Delhi and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 481 of 1957

Decision Date: 30 September 1958

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, K.N. Wanchoo, Sudhi Ranjan Das

Ghaio Mall and Sons filed a petition against the State of Delhi and other respondents, and the matter was decided on 30 September 1958 by the Supreme Court of India. The case was reported in 1959 AIR 65 and 1959 SCR 1424, and it also appears in several citator references, namely RF 1961 SC1762 (25), R 1964 SC1823 (4, 32) and RF 1967 SC1145 (16). The bench that heard the appeal consisted of Justice Natwarlal H. Bhagwati, Justice Bhuvneshwar P. Sinha and Justice K. N. Wanchoo. The petitioner was Ghaio Mall and Sons, and the respondents were the State of Delhi together with the Chief Minister, the Excise Commissioner, the Secretary and the Under-Secretary (Finance) of the State. The judgment was delivered on the same day, 30 September 1958. The procedural posture involved a rule of certiorari issued on an application, and the Court emphasized that an inferior court or tribunal to which such a rule is addressed is required to produce the whole record along with the return so that the superior court may ascertain the correctness of the lower body’s decision.

The factual background disclosed that Ghaio Mall and Sons had applied for a licence to vend foreign liquor in New Delhi for the year 954-1955, but the application was unsuccessful. Consequently, the firm approached the High Court under article 226 of the Constitution, seeking a writ of certiorari to set aside the order that granted the licence to a rival applicant. In that petition the firm also impleaded as respondents the Chief Minister, the Excise Commissioner, the Secretary and the Under-Secretary (Finance) of the State of Delhi. The core of the petitioners’ claim was that the applications for the licence had never been placed before the Chief Commissioner, who alone possessed the authority to grant such a licence under Chapter 5, rule i of the Delhi Liquor License Rules, 1935, which were framed under section 59 of the Punjab Excise Act (Punjab Act 1 of 1914) as extended to Delhi. The petitioners asserted that no order authorising the licence had ever been made by the Chief Commissioner.

The respondents, despite repeated directions from the High Court, failed to produce the complete record and instead filed evasive affidavits. Ultimately they produced a letter written by the Under-Secretary (Finance) to the Excise Commissioner, in which the Under-Secretary stated that the Chief Commissioner had made the order granting the licence to the rival applicant and affirmed that the order had indeed been issued by the Chief Commissioner. The High Court, relying on a mistaken understanding of the facts and misinterpreting the true nature and effect of that letter, concluded that the licence order had been passed by the Chief Commissioner.

When the matter reached the Supreme Court, the entire record was produced. The Supreme Court’s examination of the complete file made it clear, and the respondents even conceded, that the applications had never been placed before the Chief Commissioner and that no licence-granting order had ever been issued by him. The Court found that the actual sequence of events was that an order was first made by the Chief Minister, based on a note prepared by the Under-Secretary (Finance). Following that, the Under-Secretary wrote a letter to the Excise Commissioner in response to a previous communication, indicating that the licence might be granted to the rival applicant. The specific wording of the letter, which the High Court had relied upon, began: “With reference to your letter No. 295/C/54 dated…”. The Supreme Court therefore held that the attempt by the official respondents to bypass the Court was strongly censured and that the High Court’s order must be reversed.

In the letter dated 31 August 1954, the writer indicated that, as directed, the Chief Commissioner was pleased to approve, under Rule 5.1 of the Delhi Excise Manual Volume 11, the grant of an L-2 licence to Messrs Gainda Mall Hem Raj of New Delhi, to replace the L-2 licence that had been surrendered by Messrs Army & Navy Stores of New Delhi, and requested that the necessary licence be issued to the party concerned with appropriate intimation to the Secretariate. There was no evidence on the record showing that the Chief Commissioner ever concurred with the order made by the Chief Minister on the file. The Court held that the official respondents’ attempt to bypass the judicial process must be strongly condemned and that the order of the High Court should be reversed. It further held that when a superior Court issues a rule on an application for a writ of certiorari, the inferior Court or quasi-judicial body to which the rule is addressed must produce the complete records together with the return, so that the superior Court can determine that the inferior authority has not exceeded its lawful jurisdiction. The failure to produce such records, as occurred in the present case, defeats the purpose of the writ. The Court also held that, because the established practice was that a licence granted by the Chief Commissioner was automatically renewed each year by the Collector, the expiry of the disputed licence could not render the writ application and appeal ineffective; consequently, the appeal had to be heard on its merits. In the facts, it was impossible to conclude that the Under Secretary’s letter embodied the Chief Commissioner’s order or that the Court could not examine the matter beyond the letter. The correspondence was merely a communication of the sanction and could not be equated with the sanction itself. Although an Under Secretary could authenticate an order made by the Chief Commissioner, the letter in question was not issued in the name of the Chief Commissioner and therefore could not be treated as a properly authenticated order to which the presumption under Article 166 of the Constitution would apply. The precedent set in Dattatreya Moreshwar Pangarkar v. State of Bombay, [1952] S.C.R. 612, was held to be inapplicable. The judgment concerned a civil appellate jurisdiction matter, specifically Civil Appeal No. 481 of 1957, arising from a special leave petition against the Punjab High Court’s order dated 12 December 1955 in Civil Writ Application No. 11-D of 1955. The appeal was argued by counsel for the appellant and counsel for respondents numbered one to five, and the judgment was delivered on 30 September 1958 by Justice Das C.

The Court set out the material facts that were relevant for deciding the appeal by special leave. The appellants asserted that they had been engaged in the business of dealing in foreign liquor since the year 1922. They further claimed that, prior to the partition of India, they possessed licences of the types designated as Forms L-1, L-2, L-10 and L-11 for premises located in the cities of Amritsar, Sialkot and Multan. According to the appellants, in 1945 they also obtained a licence in Form L-2 for certain premises situated in Chawri Bazar, Delhi. However, they said that the operation of that licence had to be suspended because the premises in Chawri Bazar were deemed unsuitable. When communal riots broke out in the aftermath of Partition, the licence could not be renewed.

In the year 1951 the appellants filed an application with the Chief Commissioner of Delhi (Exhibit 1) seeking the grant of licences in both Forms L-1 and L-2 for the locality of Karolbagh or for any other place in Delhi. On 17 May 1951 the Home Secretary to the Chief Commissioner, by means of a letter (Exhibit 2), conveyed the sanction of the Chief Commissioner authorising the issuance of a licence in Form L-2 for Karolbagh, Delhi. That licence has subsequently been renewed on an annual basis. In 1954 a vacancy arose for a licence in Form L-2 because the business of Messrs Army and Navy Stores, located in the Regal Buildings, New Delhi, closed, leaving the licence unoccupied. Consequently, on 21 January 1954 the appellants submitted an application (Exhibit 4) to the Deputy Commissioner requesting the grant of a foreign-liquor licence in Form L-2 to fill the vacancy. In that application they stated, inter alia, that they were “prepared to operate it in such a part of Delhi as may be determined by the authorities.”

Having received no response for almost three months, the appellants feared that certain interested parties were attempting to obstruct the grant of the licence by contending that the appellants lacked premises in Connaught Place. On 11 March 1954 they therefore wrote a letter (Exhibit 5) to the Chief Commissioner, drawing attention to the fact that their existing L-1 licence was already situated in Karolbagh, New Delhi. They reiterated in the letter that they had previously indicated in their application dated 21 January 1954 that they were ready to operate the licence in any locality the authorities might deem appropriate. The letter was acknowledged by the Personal Assistant to the Chief Commissioner, who on 15 March 1954 recorded (Exhibit 6) that “application No. Nil dated 18-3-1954 on the subject of grant of foreign liquor licence in Form L-2” had been forwarded to the Home Secretary of the Delhi State for disposition. An additional document, Exhibit 7, is a letter dated 21 May 1954 addressed by the appellants to the Excise and Taxation Commissioner, which forms part of the material before the Court.

The Taxation Commissioner wrote to the appellants indicating that, in order to avoid any possible objection regarding locality, the appellants had secured suitable premises in the Connaught Place area of New Delhi, a vacancy created by the surrender of a licence previously held by Messrs. Army and Navy Stores. The letter concluded by urging that orders on their application be issued promptly.

Subsequently, on 30 July 1954, the appellants sent a detailed letter to the Chief Commissioner, seeking justice in connection with their application for the L-2 licence. In the second paragraph of that correspondence the appellants alleged that their opponents and their associates claimed to have removed the sole obstacle to the grant of the L-2 licence by arranging that the Excise Commissioner had kept the appellants’ application pending while forwarding five or six other less meritorious applications to the Chief Commissioner so that those applicants might receive favourable treatment. The appellants prayed that the Excise Commissioner be directed to forward all records relating to the case to the Chief Commissioner so that a fair conclusion could be reached, and they requested a hearing to fully explain their claim.

A copy of this letter was endorsed to the Excise Commissioner on 13 August 1954 by the Under-Secretary, Finance. In response, the Excise Commissioner issued a letter numbered 295/C/54 dated 31 August 1954 to the Under-Secretary, Finance, a copy of which was produced by the learned Solicitor General during the hearing. In that letter the Excise Commissioner set out his reasons for considering the appellants’ application unsatisfactory and explained why the applications of two other parties, including Messrs. Gainda Mall Hem Raj (respondent No 5), ought to be given preference. In the penultimate paragraph he added that the applicant had no premises in New Delhi and therefore had no claim, noting that an L-2 licence is granted only with respect to specific premises. He concluded that, under the circumstances, there was “no force” in the application of Messrs. Ghaio Mall and Sons.

It appears that the Excise Commissioner had overlooked the fact that the appellants, in their letter dated 21 May 1954 (Exhibit 7) addressed to him, had asserted that they had secured suitable premises in the Connaught Place area of New Delhi. Nonetheless, on 11 September 1954 the appellants wrote another letter (Exhibit 9) to the Chief Commissioner, reiterating their claim. In that letter they referred to their earlier communication of 21 May 1954 to the Excise Commissioner, in which it had been stated

In its correspondence, the appellants asserted that they had secured suitable premises in the Connaught Place area of New Delhi. A copy of this assertion was forwarded to the Under-Secretary of Finance, who had earlier received a letter from the Excise Commissioner dated 31 August 1954 claiming that the appellants possessed no premises in New Delhi. Exhibit 9A records the postal acknowledgment by the Under-Secretary that the appellants’ letter had been received, but the record shows that the Under-Secretary did not consider it necessary to remind the Excise Commissioner of the appellants’ claim of having secured premises. Subsequently, the appellants sent a further letter (Exhibit 10) to the Excise Commissioner indicating that an application had been made to the Collector on 11 September 1954 for changing the location of their L-1 license from Karolbagh, New Delhi to H-32 Connaught Circus, New Delhi. Although this letter concerned the change of the L-1 license, it explicitly stated that the appellants had secured the premises at H-32 Connaught Circus. The Personal Assistant to the Excise Commissioner responded (Exhibit 11) that the matter was under consideration. On 8 December 1954, a reminder (Exhibit 12) was sent to the Excise Commissioner concerning the proposed change of the L-1 license from Karolbagh to Connaught Circus. For the first time, documents produced at the hearing revealed that on 3 September 1954 the Under-Secretary of Finance placed a note before the Finance Secretary, Shri S. K. Mazumdar, which began with the statement, “The applicants (Messrs Ghaio Mall and Sons) have no premises in Connaught Circus. For these reasons, if for no other, their claim has to be rejected.” The note concluded with a recommendation that, should a vacancy be filled, the Excise Commissioner’s recommendation to award the L-2 license to Messrs Gainda Mall Hem Raj (Respondent No. 5) should be accepted. On 8 September 1954, the Finance Secretary simply endorsed the file to the Chief Minister, who on 14 September 1954 entered an order on the file stating, “Commissioner’s recommendation may be accepted.” No record was produced before this Court indicating that the matter had been referred to the Chief Commissioner or that his concurrence under section 36 of the Government of Part C States Act (No. 49 of 1951) had been obtained. On 14 December 1954, the Under-Secretary of Finance wrote a letter to the Excise Commissioner, which was produced for the first time at the High Court hearing and will be discussed later. Finally, on 15 January 1955 the appellants were informed that the change they had sought for their L-1 license had been granted, but they received no information regarding any rejection of their application for the L-2 license.

In this case the appellants discovered that the licence classified as L-2, which had become vacant because Messrs. Army and Navy Stores had closed, had been awarded to Messrs. Gainda Mall Hem Raj, who were identified as respondent No 5. Consequently, on 24 December 1954 the appellants each wrote separate letters to the Home Secretary (exhibit 14), the Finance Secretary (exhibit 15) and the Under-Secretary of Finance (exhibit 16) requesting a copy of the order that granted the licence to Messrs. Gainda Mall Hem Raj and also asking for any order that might have rejected their own application for an L-2 foreign-liquor licence. The record contains three postal acknowledgements (exhibits 16A, 16B and 16C) confirming that those letters had been received, yet none of the addressed officials replied to any of the requests. Because the appellants received no response, they filed on 21 December 1954 an application before the Punjab High Court, Circuit Bench, invoking article 226 of the Constitution for appropriate writs or orders. At that stage it was still uncertain whether an order granting the licence to Messrs. Gainda Mall Hem Raj had actually been made, and the Circuit Bench therefore dismissed the writ application as premature. The appellants later pursued separate proceedings seeking leave to appeal first to this Court under article 136, a matter that was adjourned sine die, and thereafter to the High Court under article 133; the details of those proceedings were not considered essential for the present narration. After they had finally confirmed beyond doubt that the L-2 licence had indeed been granted to Messrs. Gainda Mall Hem Raj, the appellants did not continue with the earlier application for leave to appeal to this Court. Instead, they instituted a fresh writ petition before the same High Court, Circuit Bench, and it is from that petition that the present appeal originates. In the fresh writ petition the appellants named seven respondents: (1) the State of Delhi, (2) the Chief Minister of Delhi, (3) the Excise and Taxation Commissioner of Delhi, (3A) the Secretary of the Delhi State, (3B) the Under-Secretary of Finance, (4) the Chief Commissioner of Delhi and (5) Messrs. Gainda Mall Hem Raj. The principal ground advanced by the appellants was that neither their own applications nor those of other prospective licence holders had ever been placed before the Chief Commissioner, who, according to rule I of Chapter 5 of the Delhi Liquor Licence Rules, 1935, framed under section 59 of the Punjab Excise Act (Punjab I of 1914) as extended to Delhi, was the sole authority empowered to grant an L-2 licence for the wholesale and retail vending of foreign liquor to the public. The appellants asserted that the Chief Commissioner had never examined the applications nor issued any order, and that respondents 2 and 3 had purportedly exercised jurisdiction and powers that were not vested in them by law. Further, they argued that any decision made by those respondents, if any, lacked the concurrence of the Chief Commissioner that is required by the proviso to section 36 of the Government of Part C States Act. The appellants therefore prayed for the issue of appropriate writs.

In the petition the appellants asked the Court for two specific orders. First, they sought a direction that the order granting an L-2 licence to respondent number five be set aside and cancelled. Second, they requested that respondent number four, the Chief Commissioner, be instructed to conduct a proper inquiry into the suitability of the premises, to hear both sides, and to decide the petitioner's application before taking any action on the application of the fifth respondent. In addition to these primary prayers, the petition included a request for further and other reliefs as well as the usual prayer for costs.

A written statement, verified by an affidavit of Shri S. K. Majumdar, the Finance Secretary, had been filed on behalf of respondents one to four. In paragraph five of that written statement it was asserted that all applications, including those of the appellants, had been considered; however, the statement did not specify by whom the consideration had been made. Messrs Gainda Mall Hem Raj filed an affidavit stating only that they had been informed that the Chief Commissioner had sanctioned the grant of the licence to them.

The appellants, with leave of the High Court, filed a consolidated affidavit in which they set out the facts that, although they had written to the Home Secretary, the Finance Secretary and the Under-Secretary (Finance) requesting a copy of the order granting the licence to Messrs Gainda Mall Hem Raj, they had received neither a copy of the order nor any reply to their letters. In response to this consolidated affidavit, the Finance Secretary filed an affidavit of his own. In paragraph thirteen of that affidavit it was stated that, because no appeal lay against the Chief Commissioner’s order, there was no question of supplying a copy of the order to the appellants.

Such statements, the Court observed, inevitably gave the impression that the respondents were not dealing squarely with the case presented by the appellants but were instead evading the production of the Chief Commissioner’s order, which was apparently not even made. Consequently, the appellants filed an application before the High Court, supported by an affidavit, seeking to compel the respondents to produce the original order, if any existed. Paragraph two of the petition, which was quoted precisely, read: “That with reference to paragraphs 7 & 8 of the written statement and paragraphs 10 and 11 of the affidavit of the Finance Secretary it is submitted that the respondents have not filed any proper return to the rule issued by the Court inasmuch as the original order sought to be quashed with nothings etc., which led to those orders have been withheld by the respondents. The respondents have not even stated that the Chief Commissioner, Delhi, who is admittedly the only competent authority for the grant of an L-2 licence, passed any orders himself. The replies are evasive. It is not stated who considered the application of …”

In the application filed by the petitioner, the High Court issued an order on 11 April 1955 directing that the order rejecting the petitioner’s application be produced in court by an officer or official of the department concerned. The Finance Secretary responded in paragraph 3 of his reply, stating that he had carefully examined the relevant papers and that the petitioner’s case had been considered together with those of other applicants. He further explained that the decision had been taken to issue the license in favour of Messrs Gainda Mall Hem Raj and that it had not been deemed necessary to send a notice of rejection to all persons who had not obtained the licence. Consequently, the Finance Secretary asserted that no specific order rejecting the petitioner’s application existed, as was ordered to be produced by the Court.

Although the appellants clearly sought the original order of the Chief Commissioner, the respondents exploited the wording of the High Court’s order and argued that no specific order rejecting the appellants’ application existed. The Court observed that this argument amounted to a technical evasion, noting that the order granting the licence to Messrs Gainda Mall Hem Raj effectively served as a rejection of the appellants’ application. The appellants returned to the High Court on 8 August 1955, contending that the respondents were avoiding the real issue. In paragraph 5 of their petition they categorically claimed that the Chief Commissioner of Delhi, the competent authority, had not passed any order sanctioning the licence to Messrs Gainda Mall Hem Raj and prayed that the respondents be directed to file the original record of the case, including the actual sanction for the grant of the licence. On 19 August 1955 the Court ordered that the relevant records be called for. The respondents were ultimately able to produce only a letter dated 14 December 1954 from the Under-Secretary, Finance, to the Excise Commissioner. The solicitor-general appearing for respondents 1 to 4 pointed out that the order being challenged was the grant of an L-2 licence for the year 1954/1955, which had long since expired, and suggested that both the writ petition and the appeal had become infructuous. The Court noted the usual practice that, once an L-2 licence is granted by the Chief Commissioner, it is automatically renewed each year by the Collector unless the licence holder is found guilty of breaching an excise rule, in which case renewal does not occur.

There is no vacancy that would permit any external competitor to apply for a licence in Form L-2. This circumstance is not contested, and it is of decisive importance to the appellants that the Court examine the legitimacy of the L-2 licence granted for the fiscal year 1954-1955 to Messrs Gainda Mall Hem Raj. If the Court were to determine that the order conferring that licence is void because it was not issued by a competent authority, the vacancy created by the cessation of business of Messrs Army and Navy Stores would persist, thereby giving the appellants an opportunity to have their own application considered by the proper authority. Consequently, the appeal was heard on its substantive merits. The central issue, which was also raised before the High Court, concerns whether the Chief Commissioner of Delhi issued any order pursuant to rule 1 of Chapter 5 of the Delhi Liquor License Rules, 1935. It is noteworthy that the Chief Minister, the Excise Commissioner, the Secretary of Delhi State, the Under-Secretary (Finance), and the Chief Commissioner have all been impleaded in these proceedings as respondents Nos. 2, 3, 3A, 3B and 4 respectively. Although these officials, or at least some of them, were in a position to give testimony regarding material facts within their personal knowledge, none submitted an affidavit addressing the appellants’ categorical assertion that the Chief Commissioner never made any order granting the L-2 licence to Messrs Gainda Mall Hem Raj or rejecting the appellants’ application. Rather than adopting a direct and straightforward approach, the respondents chose to rely on the Finance Secretary, whose answers were evidently evasive and wholly unconvincing. Such questionable tactics fail to engender a favorable impression before the Court concerning the good faith of the authorities involved. Moreover, it must be emphasized that when a superior court issues a rule in an application for certiorari, it is incumbent upon the inferior court or quasi-judicial body to which the rule is addressed to produce the complete records before the Court together with its return. The fundamental purpose of a writ of certiorari is to bring the records of the inferior tribunal before the superior court for scrutiny, enabling the latter to determine that the former has neither exceeded its jurisdiction nor acted beyond the limits prescribed by law. The failure to produce those records defeats the very objective of such writs, as occurred in the instance before the High Court. The Court unequivocally disapproves of the official respondents’ attempt to circumvent judicial process. It is necessary to observe that the facts set out in the records before this Court disclose

In this case the Court observed that the circumstances revealed by the record did not present the administration of the former State of Delhi in a favorable light. Nevertheless, the Court noted that the learned Solicitor-General had, during the hearing of the appeal, produced the complete set of records for consideration. The principal issue before the Court was whether the Chief Commissioner had issued an order granting the L-2 licence to Messrs Gainda Mall Hem Raj. The High Court had answered this question affirmatively on two grounds. First, it relied on an affidavit filed by the Finance Secretary, which stated that the decision concerning the grant of the licence to Messrs Gainda Mall Hem Raj had been taken by the Chief Commissioner. Second, it relied on a specific statement made by the learned Solicitor-General that the matter had in fact been decided by the Chief Commissioner. After examining the material now before it, the Court concluded that the High Court had been mistaken on both points. The Court recalled that it had already summarized all the statements and affidavits made by the Finance Secretary and found that the Secretary had never said that the Chief Commissioner had considered the applications or had issued any order. The learned Solicitor-General, exercising his usual fairness, had also informed the Court that, apart from reliance on a letter dated 14 December 1954, he had made no claim that the Chief Commissioner had taken any decision in the matter. Accordingly, the Court felt free to examine the issue independently and render its own determination. The record, including the newly produced documents, showed no evidence that the applications had ever been placed before the Chief Commissioner. There was no entry, order, note, signature or initials of the Chief Commissioner on the subject. What emerged from the record was that the Excise Commissioner (respondent No 3) had, by a letter dated 31 August 1954, explained why the appellants’ applications could not be entertained, one reason being the absence of premises in the Connaught Place area of New Delhi. Subsequently, the Under-Secretary of Finance, on 3 September 1954, entered a note suggesting that the appellants’ application should be rejected, at least on the ground that they did not possess premises in New Delhi – a statement the appellants disputed in view of their earlier correspondence. The same note also indicated that the L-2 licence should be granted to Messrs Gainda Mall Hem Raj. On 14 September 1954, the Chief Minister made an order in the file to that effect, and finally, on 14 December 1954, the Under-Secretary of Finance wrote to the Excise Commissioner stating that the Chief Commissioner had been pleased to approve the grant of the licence to Messrs Gainda Mall Hem Raj. The Court found no record showing that any concurrence with the Chief Minister’s order had been obtained from the Chief Commissioner.

The Court observed that there was no evidence that the order had been obtained directly from the Chief Commissioner. The weight of the facts now placed on the record compelled the learned Solicitor General to admit that, given the present documents, he could not affirm that the Chief Commissioner had actually issued the order. Nevertheless, the Solicitor General argued that, because of the letter issued by the Under Secretary, Finance, dated 14 December 1954, the existence of a Chief Commissioner’s order could not be challenged in any court. In other words, he submitted that the letter itself embodied the Chief Commissioner’s order and that the Court should not be required to look behind the letter to determine whether the Chief Commissioner had truly made the order. The Court noted that for this contention to succeed, the Solicitor General must demonstrate that the letter is indeed the embodiment of the Chief Commissioner’s order and that it has been properly authenticated. On the authentication issue, the Court agreed with him, observing that a rule dated 17 March 1952, made by the then Chief Commissioner under the powers conferred by section 38(3) of the Government of Part C States Act (49 of 1951), authorized an Under Secretary to authenticate a Government of Delhi order or instrument. The remaining question, therefore, was whether the letter in question constituted the order of the Chief Commissioner. The Court reproduced the full text of the letter relied upon by the respondents, which read: “DELHI STATE SECRETARIAT, DELHI STATE No. F. 10(139)/54-G A & R Dated the 14th December 54. From Shri M. L. Batra, M.A., P.C.S., Under Secretary Finance (Expenditure) to Government, Delhi State. To Shri Dalip Singh, M.A., I.R.S., Commissioner of Excise, Delhi State, Delhi. Subject:-Grant of L-2 License. Sir, With reference to your letter No. 295/C/54 dated the 31st August 1954, on the above subject, I am directed to say that the Chief Commissioner is pleased to approve under Rule 5.1 of Delhi Excise Manual Vol. 11 the grant of L-2 licence to Messrs Gainda Mall Hem Raj, New Delhi, in place of the L-2 licence surrendered by Messrs Army & Navy Stores, New Delhi. Necessary licence may kindly be issued to the party concerned upon intimation to this Secretariat. Yours faithfully, (Sd.) M. L. Batra, Under Secretary, Finance (Exp.) to Government, Delhi State.” The Court noted first that the document was an inter-departmental communication. Second, it was written in response to an earlier communication from the Excise Commissioner and therefore, on its face, appeared to be a reply to the August 31, 1954 letter. Third, the writer expressly stated that he was “directed to say” something, without identifying the authority directing him. This, the Court held, clearly indicated that the document was not itself the order of the Chief Commissioner.

The Court observed that the document in question merely pretended to be a communication issued at the direction of an unidentified person, rather than the order that the Chief Commissioner had actually made. In paragraph 7 of the respondents’ statement filed in the High Court on 2 February 1955, the letter was described as having “conveyed the sanction of the Chief Commissioner of the grant of licence to the fifth respondent.” The Court noted that a document which merely conveys a sanction cannot be equated with the sanction itself. Moreover, the document failed to bear the usual form of authentication; it did not contain any concluding statement indicating that it was written “by order of the Chief Commissioner.” For these reasons the Court held that the document could not be read as the Chief Commissioner’s order. Counsel for Messrs Gainda Mall Hem Raj relied on the decision in Dattatreya Moreshwar Pangarkar v. The State of Bombay (1). In that precedent there was ample evidence that the appropriate authority had actually made a decision, and the defect in the form of authentication did not invalidate the order but merely prevented the State from enjoying the presumption of regularity. That case was decided on the existence of a genuine order, not on the correctness of the authentication, and therefore did not apply here, where it was conceded that the Chief Commissioner had neither made nor concurred in an order granting the licence to Messrs Gainda Mall Hem Raj. The Court further held that it was unnecessary to determine whether the action taken under the Excise Act and its rules was judicial or executive, because even if it were executive, the letter dated 14 December 1954 could not be treated as a properly authenticated order to which the presumption under Article 166 of the Constitution attaches. Consequently, the Court concluded that no valid order granting the L-2 licence to Messrs Gainda Mall Hem Raj existed, and that, in the eyes of the law, the vacancy created by the closure of the business of Messrs Army and Navy Stores remained unfilled. The applications of the appellants and other parties sought an L-2 licence for 1954-1955, a year that has now passed. In the changed circumstances the Court directed the Chief Commissioner to fill the vacancy caused by the closure of Messrs Army and Navy Stores by inviting applications from all interested licencees, including the appellants and Messrs Gainda Mall Hem Raj, and to grant the licence to the most suitable candidate. The appeal was therefore allowed, the High Court order was reversed, and a mandamus was issued directing the stated course of action.

The Court ordered that the first four respondents listed in the proceedings were required to pay the costs incurred by the appellants. This payment obligation covered the expenses that the appellants had borne in connection with the present appeal as well as the costs that arose during the earlier proceedings in the High Court from which this appeal originated. The judgment further directed that Messrs. Gainda Mall Hem Raj were each to be responsible for their own costs, meaning that they would not receive any contribution from any other party and would have to bear all expenses incurred by them in respect of the litigation. By making these cost orders, the Court allocated the financial burden of the litigation in accordance with its findings on liability and the merits of the case. The Court also concluded that the appeal was successful, indicating that the relief sought by the appellants was granted and that the earlier decision of the High Court was set aside. Consequently, the appeal was allowed, and the directions regarding costs were to be implemented as part of the final order of the Court.