“Non-Supply of Enquiry Report is Fatal”: Patna High Court Quashes License Cancellation in Fair Price Shop

In a significant judgment, the Patna High Court has set aside the cancellation of a fair price shop license and the subsequent rejection of appeals by the petitioner, Sukhnandan Chaudhary. The court, presided over by Justice A. Abhishek Reddy, emphasized the necessity of adhering to procedural requirements and principles of natural justice, particularly the need to provide an enquiry report alongside a show-cause notice, as mandated by the Bihar Targeted Public Distribution System (Control) Order, 2016.

The petitioner, Sukhnandan Chaudhary, had his fair price shop license canceled by the Sub-Divisional Officer, Hajipur, on March 14, 2012. Subsequent appeals to the Additional District Magistrate, Vaishali, and the Commissioner, Tirhut Division, Muzaffarpur, were also rejected. Chaudhary challenged these orders in the Patna High Court, arguing that the cancellation was unlawful due to procedural lapses, including the failure to supply an enquiry report with the show-cause notice and the omission of a clear proposal for cancellation in the notice.

Justice A. Abhishek Reddy noted that the show-cause notice issued to the petitioner did not include the enquiry report, nor did it explicitly propose the cancellation of the license. This was deemed contrary to Rule 27(ii) of the Bihar Targeted Public Distribution System (Control) Order, 2016. The court highlighted that these omissions violated the principles of natural justice, as the petitioner was not given adequate information to respond effectively to the notice.

The court referenced earlier judgments, particularly in CWJC No. 253 of 2014 and CWJC No. 21202 of 2021, which underscored the importance of supplying an enquiry report and mentioning the proposed action in the show-cause notice. Justice Reddy quoted, “It is mandatory for a licensing authority issuing a notice under order 27(ii) to a licensee to mention that there is a proposal for cancellation of his license, failing which such notice cannot be treated as valid.”

The court’s reasoning was grounded in the principle that any action with significant civil consequences, such as the cancellation of a license, must be preceded by a fair and transparent process. The court found that the absence of the enquiry report and the failure to explicitly propose the license cancellation in the show-cause notice deprived the petitioner of the opportunity to make a meaningful defense.

Justice Reddy observed, “The non-supply of the enquiry report and the absence of a clear proposal for cancellation in the show-cause notice are not mere procedural lapses but go to the root of the matter, affecting the fairness of the entire process.”

The Patna High Court’s judgment mandates the issuance of a fresh show-cause notice to the petitioner, ensuring compliance with the procedural requirements under the Bihar Targeted Public Distribution System (Control) Order, 2016. The decision reaffirms the judiciary's commitment to upholding the principles of natural justice, particularly in administrative actions that impact individuals’ rights and livelihoods. The case has been remanded to the Sub-Divisional Officer, Hajipur, with instructions to follow due process before making any further decisions regarding the petitioner's license.

Date of Decision: September 2, 2024

Sukhnandan Chaudhary vs. The State of Bihar and Others