Facts of the Case

The appellants were street vendors carrying on business in fish, chicken and other food items in the Khadgarha Market area, Ranchi. Several vendors possessed licences issued by the Ranchi Municipal Corporation under the Ranchi Municipal Corporation Act, 2001, while others held registration certificates under the Food Safety and Standards Act, 2006.

Following implementation of the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, the Ranchi Municipal Corporation conducted a survey and developed vendor markets. Thereafter, the appellants were allotted shops through a lottery system after depositing the prescribed rent and GST. Possession of the shops was handed over, and the allottees invested substantial amounts in installing shutters, deep freezers, interior fittings and other infrastructure.

Subsequently, the Ranchi Municipal Corporation cancelled the allotment of all 39 shops through a communication dated 02.07.2020 without assigning reasons or providing any opportunity of hearing. The cancellation was challenged before the High Court. The learned Single Judge dismissed the writ petition, after which the appellants preferred the present Letters Patent Appeal.

Issues Involved

  1. Whether cancellation of shop allotments without issuing notice or granting an opportunity of hearing violates the principles of natural justice.
  2. Whether an administrative order cancelling vested rights can be sustained when it contains no reasons.
  3. Whether reasons absent in the original order can subsequently be supplied through a counter affidavit filed before the Court.
  4. Whether the learned Single Judge was justified in relying upon the inquiry committee report despite the impugned cancellation order being non-speaking.

Petitioners’ Arguments

  • The cancellation order consisted of only one line and did not disclose any reason for cancelling the allotments.
  • No show cause notice or opportunity of personal hearing was provided before depriving the petitioners of their allotted shops.
  • The petitioners had already deposited the prescribed charges, taken possession and invested considerable money in developing their shops, thereby acquiring valuable rights.
  • The learned Single Judge wrongly relied upon reasons contained in the counter affidavit although those reasons were completely absent from the cancellation order itself.
  • The impugned order violated settled principles of natural justice and therefore deserved to be quashed.

Respondents’ Arguments

The Ranchi Municipal Corporation contended that:

  • A committee inquiry revealed that out of 39 shops, 18 shops had been allotted to members belonging to only six families.
  • Since the policy contemplated allotment of only one shop per family, the allotments suffered from serious irregularities.
  • The competent authority therefore cancelled all allotments based on the inquiry report.
  • As the factual irregularities were undisputed, granting an opportunity of hearing was unnecessary.
  • The learned Single Judge rightly upheld the cancellation order.

Court Order / Findings

The Division Bench allowed the appeal and set aside both the order of the learned Single Judge and the cancellation order passed by the Municipal Corporation.

The Court held that:

  • The cancellation order was a non-speaking order, containing absolutely no reasons.
  • Any administrative decision resulting in civil consequences must comply with the principles of natural justice.
  • Even if the inquiry committee had found irregularities, every individual allottee was entitled to an opportunity to explain that he or she did not belong to a family which had received multiple allotments.
  • A quasi-judicial authority must record reasons while passing an adverse order.
  • Reasons cannot subsequently be introduced through a counter affidavit to justify an otherwise invalid administrative order.

Accordingly, the High Court:

  • Quashed the order of the learned Single Judge.
  • Allowed the writ petition.
  • Set aside the cancellation order dated 02.07.2020.
  • Remitted the matter to the competent authority for fresh adjudication after issuing individual show cause notices, considering individual replies and passing a reasoned order in accordance with law.

The Court also clarified that it had not expressed any opinion on the merits of the alleged irregularities.

Important Clarification

This judgment does not declare the shop allotments to be permanently valid.

The High Court merely held that cancellation without assigning reasons and without granting an opportunity of hearing is legally unsustainable.

The Municipal Corporation remains free to proceed against the allottees after:

  • Issuing individual show cause notices,
  • Granting adequate opportunity of hearing, and
  • Passing a reasoned speaking order in accordance with law.

Sections  Involved

  • Article 226 of the Constitution of India
  • Clause 10 of the Letters Patent
  • Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014
  • Section 36 – Rule-making power
  • Section 38 – Street Vendors Scheme
  • Section 407 of the Ranchi Municipal Corporation Act, 2001
  • Food Safety and Standards Act, 2006
  • Principles of Natural Justice
  • Doctrine of Speaking Orders
  • Audi Alteram Partem

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783922288_2121compressed.pdf

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