Facts of the Case

The appellants were street vendors engaged in the sale of fish, chicken and other commodities in the Khadgarha Market area of Ranchi. Several vendors possessed licences issued under the Ranchi Municipal Corporation Act, 2001 and registration certificates under the Food Safety and Standards Act, 2006. Following an encroachment drive, the Ranchi Municipal Corporation (RMC) assured eligible vendors that they would receive preferential allotment of shops whenever vendor markets were established.

After the enactment of the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 and the framing of the Jharkhand Street Vendors Rules, 2015 and Scheme, 2017, the RMC conducted surveys and allotted shops through a lottery process. The appellants deposited the prescribed rent and GST, took possession of the allotted shops, invested in shutters, freezers and fittings, and initiated business activities.

Subsequently, the Municipal Corporation cancelled the allotment of all 39 shops through a brief order dated 02.07.2020 without assigning reasons or granting any opportunity of hearing. The cancellation was allegedly based upon an inquiry report stating that multiple members of six families had received allotments. The Single Judge upheld the cancellation, leading to the present Letters Patent Appeal before the Jharkhand High Court.

 

Issues Involved

  1. Whether cancellation of shop allotments without assigning reasons violates the principles of natural justice.
  2. Whether a non-speaking administrative order can be sustained in law.
  3. Whether reasons absent in the impugned order can subsequently be supplied through a counter affidavit before the Court.
  4. Whether every allottee is entitled to an individual opportunity of hearing before cancellation of vested rights.
  5. Whether the learned Single Judge erred in relying upon the inquiry report despite the absence of reasons in the cancellation order.

 

Petitioners’ Arguments

  • The cancellation order was a one-line, non-speaking order devoid of any reasons.
  • No show-cause notice or opportunity of personal hearing was granted before cancelling the allotments.
  • The appellants had acquired vested rights after lawful allotment, payment of consideration, taking possession and making investments in the shops.
  • Reliance upon an inquiry report not disclosed in the impugned order was impermissible.
  • The learned Single Judge wrongly justified the cancellation by relying upon reasons furnished subsequently in the counter affidavit instead of examining the legality of the impugned order itself.

Respondents’ Arguments

  • The inquiry committee found that out of 39 shops, 18 shops had been allotted among members of only six families.
  • Such allotment violated the intended policy of one shop per family and adversely affected other eligible vendors.
  • Since the factual position regarding multiple allotments was undisputed, no further opportunity of hearing was necessary.
  • The cancellation was based upon the inquiry report submitted by the competent committee and was therefore justified.

Court Order / Findings

The Jharkhand High Court allowed the appeal and held that the cancellation order was legally unsustainable.

The Court observed that:

  • The cancellation order was completely non-speaking and contained no reasons whatsoever.
  • Even where an inquiry report exists, each allottee must be given an independent opportunity to establish that he or she does not fall within the alleged irregularity.
  • The principles of natural justice require that any administrative action resulting in civil consequences must be preceded by a fair hearing.
  • A quasi-judicial or administrative authority exercising statutory powers must pass a reasoned order.
  • Reasons missing from the original order cannot subsequently be supplied through pleadings or affidavits filed before the Court.
  • The learned Single Judge failed to appreciate these settled principles of law.

Accordingly, the High Court:

  • Quashed the judgment of the Single Judge.
  • Allowed the writ petition.
  • Set aside the cancellation order.
  • Remitted the matter to the competent authority.
  • Directed issuance of individual show-cause notices.
  • Directed submission of individual replies by each allottee.
  • Directed the authority to pass fresh reasoned orders after granting adequate opportunity of hearing.
  • Clarified that the Court had not examined the merits of the alleged irregularities and left the matter open for fresh adjudication.

Important Clarification

This judgment does not declare the original allotments valid on merits.

The High Court only held that:

  • Cancellation affecting civil rights cannot be made through an unreasoned order.
  • Natural justice is mandatory before depriving any person of vested rights.
  • Administrative authorities cannot cure defects in an order by subsequently filing explanations through affidavits.
  • Fresh proceedings may be initiated after issuing proper show-cause notices and passing reasoned speaking orders.

Sections / Legal Provisions Involved

  • Clause 10 of the Letters Patent
  • Section 407 of the Ranchi Municipal Corporation Act, 2001
  • Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014
  • Section 36 – Rule Making Power
  • Section 38 – Scheme for Street Vendors
  • Jharkhand Street Vendors (Protection of Livelihood and Regulation of Street Vending) Rules, 2015
  • Jharkhand Street Vendors (Protection of Livelihood and Regulation) Scheme, 2017
  • Food Safety and Standards Act, 2006
  • Principles of Natural Justice (Audi Alteram Partem)

Important Case Laws Referred

  • Maneka Gandhi vs Union of India, (1978) 1 SCC 248 – Opportunity of hearing is an essential component of natural justice.
  • Siemens Engineering & Manufacturing Co. of India Ltd. vs Union of India, (1976) 2 SCC 981 – Every quasi-judicial order must contain reasons.
  • Mohinder Singh Gill & Another vs Chief Election Commissioner & Others, (1978) 1 SCC 405 – Validity of an administrative order must be judged on the reasons contained in the order itself and cannot be supplemented by affidavits. 

 

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785221162_2121compressed.pdf

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