BIHAR SMALL ARMS Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are partners of a firm, M/s. Bihar Small Arms. The firm was granted a manufacturing licence No. 3/61 in Form No. IX for locating a manufacturing unit of gun factory at Monghyr. The licence was renewed from time to time as required by Law. The manufacturing unit of the petitioners is located in a very small space at gun factory within Jail compound at Monghyr, and they could not get extra space there in spite of all efforts by them. Accordingly, the petitioners approached the authorities for location of their unit (within the same manufacturing limit as shown in the licence) outside the jail campus (at Monghyr). On the 16th September. 1970, they applied for an additional manufacturing unit at Bakhtiarpur. By a letter dated the 20th February, 1970 (Annexure 18), the Under-Secretary to the Government of India had intimated to the Secretary to the State Government that the Government of India (respondent No. 1) had no objection to any change in respect of such place of business, factory or shop being allowed by the State Government to any licensed unit within their State. The State Government (respondent No. 2) approved the addition of Bakhtiarpur as a place of business/factory of the petitioners, and, accordingly, on the 15th December, 1972, Bakhtiarpur was added in column No. 3 of the licence in Form IX meant for the place of business, factory or shop. By letter No. 4573 dated the 19th October, 1974 (Annexure 5) the District Magistrate, Patna (respondent No. 3) informed the petitioners that by the order of the Government all the permissions and facilities granted to the petitioners for the manufacturing unit at Bakhtiarpur." were cancelled with effect from the 11th October, 1974. By the said letter, the petitioners were also directed to produce their licence in Form IX for necessary amendment. By this writ application under Article 226 of the Constitution of India the petitioners want quashing of the order and directions contained in Annexure 5. Their case is that after their licence was amended and they were allowed to have a manufacturing unit at Bakhtiarpur, they spent a huge amount to the tune of lacs over erection of Sheds, construction of factory, purchasing modern machines, tools and equipments, etc. and advance payment to the labourers, etc. They further claim that they were not heard before the letter (Annexure 5) was issued. It has been urged on their behalf in the circumstances, the order contained in Annexure 5 is bad for two reasons : firstly, that there has been a violation of the rule of natural justice in passing the order without hearing the petitioners, and, secondly, that respondent No. 1 having intimated by Annexure 18 that the State Government could permit a change in respect of the place of business and the State Government (respondent No. 2) having allowed such a change, they cannot be allowed to resile from the approval accorded to the petitioners earlier. Reliance is placed on the doctrine of promissory estoppel.

(2.) A lengthy rejoinder has been filed on behalf of respondent No. 2. The sum and substance of the rejoinder is that there has been no illegality in issuing the order and direction contained in Annexure 5. A letter dated the 22nd April, 1972 from the Deputy Secretary to the Government of India in the Ministry of Home Affairs to the Secretary to the Government of Bihar, political (Police) Department has been made Annexure A to the rejoinder. It is stated in the said letter with reference to the earlier letter dated the 20th February, 1970 (Annexure 18) that the Government of India have no objection to the shifting of the factory of the petitioners' unit to the proposed industrial estate which the Bihar Government was intending to establish subject to the condition that this Firm shifts along with all other firms together, to the proposed industrial estate, where proper security arrangement could be made. The case of respondent No. 2 is that the licence of the petitioners was amended by mistake in ignorance of this direction of respondent No. 1. Another letter of the said Deputy Secretary to the Government of India written to the said Secretary of the State Government which is dated the 16th May, 1973, has been made Annexure B to the rejoinder. Prom this letter, it, appears that respondent No. 2 was not prepared to shift all the manufacturing units located at Monghyr to the proposed industrial estate at Bakhtiarpur, and, in the circumstances, respondent No. 1 was not agreeable to the shifting of the manufacturing unit of the petitioners only to Bakhtiarpur either in whole or in part It has been urged on behalf of the respondents that under the law the respondent No. 2 had no power to amend the licence and, therefore, the amendment allowed was without jurisdiction. It has further been contended that as the matter is governed by statutes and statutory rules, no question of promissory estoppel would arise in the case and that remanding the matter to the authorities for giving a hearing to the petitioners on the question of cancellation will be a futile exercise inasmuch as respondents 2 and 3 cannot amend the licence as to the place of manufacture.

(3.) The real question, therefore, which arises for decision in the case is whether it was within the power of the State Government (respondent No. 2) to amend the licence of the petitioners and thereby permit them to have a manufacturing unit at Bakhtiarpur.