IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF NOVEMBER, 2019 BEFORE THE HON’BLE MR.JUSTICE B. VEERAPPA WRIT PETITION NO.45010 OF 2019 (GM-ST/RN) BETWEEN:
Karnataka State Licensed Electrical Contractor’s Association ®, No.33, Avenue Road, Bengaluru – 560 002. Rep. by its President.
(By Sri.Raghupathy T.N, Advocate) AND:
1. State of Karnataka, Rep. by its Principal Secretary, Revenue Department, M.S.Buildings, Bengaluru – 560 001.
2. The Inspector General of Registration and Commissioner of Stamps & Chief Controlling Revenue Authority In Karnataka, 8th Floor, Kandaya Bhavana, K.G.Road, Bengaluru – 560 009.
... Petitioner … Respondents (By Sri.Sridhar N Hegde, HCGP ) This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to declare that the order dated 04.09.2019 issued by respondent No.2 vide Annexure-K is illegal and quash the same and etc., This writ petition coming on for Orders, this day, the Court made the following:
ORDER The present petitioner who is the Karnataka State Licensed Electrical Contractor’s Association ® filed the present writ petition for issue a writ of certiorari and to declare that the order dated 04.09.2019 issued by respondent No.2 as per Annexure-K is illegal and quash the same.
2. It is the case of the petitioner that the petitioner is an Association registered under the Societies Registration Act, 1960. It has been in existence since 1992 and the Association was given facility of keeping two franking machines in order to enable its members to secure indemnity bonds and agreements easily so that they could function more effectively. The license was granted in the year 2002 and the same was being renewed from time to time. However, in the year 2015 on a frivolous complaint by one Eshwar Raj who claims to be a special correspondent for the newspaper ‘Karavali ale’, enquiry was conducted by the 2nd respondent against the petitioner on several false and frivolous charges. The petitioner participated in the enquiry by giving explanation to the charges. However, by an order dated 29.07.2015, the 2nd respondent cancelled the license Nos.4 and 109 granted for the user of the two franking machines.
3. The said order was the subject matter of the writ petition before this Court in W.P.No.33924/2015. This Court by the order dated 12.08.2015 granted interim order and another interim order on 10.02.2016 for renewal of license to franking machines. It is further contended that for the year 2017, the Authorities automatically without the necessity of the petitioner having to obtain an interim order, renewed the license. For the year 2018, the petitioner obtained another interim order dated 12.02.2018. After hearing the learned Government Advocate, this Court directed the benefit of renewal of the franking machines as sought stands extended to the petitioner till further consideration is made in the writ petition.
4. It is further contended that for the year 2019, the petitioner obtained an interim order for renewal of license from this Court. The said order was not complied with. Therefore, the petitioner has filed an application for initiation of contempt proceedings against respondent No.2 for disobedience of the order passed by this Court. When the said application came up for hearing, the learned Government Advocate made a statement that the order dated 29.07.2015 had lost its efficacy after the end of 2015. Therefore, this Court quashed the order dated 29.07.2015 and disposed off the writ petition as per Annexure-H.
5. It is further case of the petitioner that the petitioner submitted a copy of the order passed by this Court to the 2nd respondent with a request to grant renewal of license. The 2nd respondent went on postponing the renewal of license. Therefore, the petitioner was constrained to file writ petition No.32568/2019 before this Court and this Court by an interim order directed the 2nd respondent to decide the application for renewal of license in respect of two franking machines bearing No.04 and 109 for the year 2019. This Court, after admitting the matter, taken up for final hearing on 13.08.2019. When the matter came up before this Court, the learned counsel for petitioner submitted that the application filed by the petitioner for renewal of the license is pending consideration before the 2nd respondent since April 2019. However, till today, no decision in the matter has been taken. Learned Government Pleader Sri.Sridhar N.Hegde submits that suitable action in accordance with law shall be taken. In view of the submission made and in the facts of the case, the writ petition is disposed off with a direction to the 2nd respondent to decide the application submitted by the petitioner for renewal of license in respect of two franking machines, in accordance with law, by a speaking order within a period of two weeks from the date of receipt of certified copy of the order. Thereafter, the 2nd respondent passed the impugned order dated 04.09.2019 by rejecting the renewal of two franking machine Nos.4 and 109. Therefore, the petitioner is before this Court.
6. State Government/respondents filed objections to the main Writ Petition and contended that in the year 2002, the petitioner’s Association was given authorization for use of two franking machines to issue indemnity bond, the authorization which was of a term of one year. The petitioner as per rule and conditions enumerated in the license was authorized to frank the instruments/documents which have been executed in favour of the petitioner’s Association only. Thereafter, in the year 2015 on certain allegation against the petitioner’s Association, the 2nd respondent cancelled the authorization. The Writ Petition came to be filed before this Court in W.P.No.33924/2015 by the petitioner and interim order was granted. Thereafter, in the year 2019, the petitioner filed another Writ Petition No.32568/2019 seeking for a writ of mandamus to the 2nd respondent to renew the license and the said writ petition came to be disposed off. After disposal of the said writ petition, the 2nd respondent has taken up the matter and after considering all the materials on record and considering the order passed by this Court and considering the relevant rules and provisions, the 2nd respondent has passed a detailed speaking order dated 04.09.2019 rejecting the application filed by the petitioner for renewal of license of two franking machines, which is impugned in the present writ petition.
7. It is further contended that respondent No.2 after verifying all the material on record and after considering the relevant rules and provisions and after taking into consideration of the condition of affidavit and indemnity bond executed by the petitioner in favour of the Chief Revenue Authority and as per the condition number and VI(XII) to the effect that there is no provision that by using the Stamp Franking License obtained under Rule 5, does not permissible to do the Stamp Franking to the documents wherein it is not a party and to sell the documents and it is found that the petitioner’s Association have done franking to the Labour Contract Works documents given by the Chamundeshwari Electricity Supply Company Limited and documents of other Electricity Supply Companies. Hence, the petitioner’s Association violated the condition number VI(XII) of the condition of the affidavit and indemnity bond. It is further contended that in terms of Sub-Rule (1) of Rule 5 of the Karnataka Stamp (Franking Impression of Stamps), the intending user has to give an undertaking and Indemnity Bond and in terms of that in fact the petitioner Association has given undertaking and indemnity bond. Further contended that there is no scope/provision to do Stamp Franking to the documents, wherein the petitioner Association is not a party. However, it is found that the petitioner has done franking to the Labour Contract Works documents given by the Chamundeshwari Electricity Supply Company Limited. Hence, there is a clear violation of the condition of the undertaking and indemnity bond and also violation of Rule 5 of the Karnataka Stamp (Franking Rules) 2000. Therefore, the 2nd respondent rightly passed the impugned order. Hence, sought to dismiss the Writ Petition.
8. I have heard the learned counsel for the parties to the lis.
9. Sri.Raghupathy T.N., learned counsel for petitioner reiterating the grounds in the writ petition contended that the impugned order passed by the 2nd respondent is without holding any proper enquiry as directed by this Court cannot be sustained. He further contended that on the complaint made against the Mangalore Branch of the petitioner’s Association, has influenced the 2nd respondent to pass present order. He would further contend that as per Rule 5 of the Karnataka Stamp (Franking Impression of Stamp) Rules, 2000, the license holder must utilize the franking impression for the purpose of documents got written for the institution or to be issued to the documents executed by the institution and not in respect of other documents which require franking or for its members or for sale to third parties. The petitioner who is a registered society under the Societies Registration Act, has a collective body of electrical contractors/electrical license holders. Franking machine is utilized by the members for the purpose of obtaining Indemnity bond from the consumers with regard to the work done in favour of the consumers. He would further contended that the words used in the Authorization Clause VI (xii) indicates that the impression of the franking machine are valid only instruments specified in Para No.1 and Para No.2 executed by or in favour of: M/s.Karnataka State Licensed Electricals Contractors Association ®, i.e., the petitioner. Admittedly, in the present case, Sri.B.S.Chandrakumar, Hon’ble Treasurer, Karnataka State Licenced Electrical Contractor’s Association ® executed on behalf of Association and not for his individual capacity. He would further contend that the members of the petitioner’s Association are the electrical license holders. Whenever electrical work is taken up by the members for consumer, Indemnity Bond is obtained. He would further contend that from the year 2012 up to 2018 from time to time, every year the authorities continued the renewal of two franking machines either on the instance of this Court or as usual. Only after remand made by this Court, the Authorities without holding any proper enquiry, based on the assumptions and presumptions passed the impugned order. Therefore, he sought to allow the Writ Petition.
10. Per contra, Sri.Sridhar N Hegde, learned HCGP reiterating the averments made in the statement of objections strongly contended that the petitioner’s Association members are misusing the franking machines for their individual benefit and not on behalf of the Association. Therefore, the authorities considering the entire material on record, has come to the conclusion that the petitioner has violated the condition No.VI (xii) and Rule 5 of the Karnataka Stamp (Franking Rules) 2000. Therefore, respondent No.2 rightly rejected the application for renewal and the same is in accordance with law. Therefore, he sought to dismiss the Writ Petition.
11. Having heard the learned counsel for the parties. It is an undisputed fact that the petitioner’s Association was given Authorization of use of two franking machines to issue indemnity bonds and agreements in the year 2002 and renewed the license from time to time till 2018. The disturbance starts when certain allegations made against the petitioner’s Association, Mangalore Branch by one Eshwar Raj, the authorization came to be cancelled in the year 2015, which was the subject matter of the writ petition before this Court in W.P.No.33924/2015. This Court by the order dated 24.04.2019 considering the entire materials on record has observed in para No.5 of the judgment, which reads as hereunder;
“5. I have considered the submissions made by the learned counsel for the parties. Admittedly license was granted in favour of the petitioner for a period from 01.01.2015 till 31.12.2015. The aforesaid period has already come to an end and on account of an interim order passed by this Court, the petitioner has continued with the franking authorizations till 31.12.2018. Therefore, it is evident that the order dated 29.07.2015 by which license was issued in favour of the petitioner had lost its efficacy on account of efflux of time. The impugned order dated 29.07.2015 therefore does not survive for consideration. Accordingly, the same is quashed. In the result, the petition is disposed of.”
12. Thereafter, when the petitioner’s Association approached the 2nd respondent by way of representations along with the order passed by this Court, 2nd respondent neither considered the representations nor passed any order. Therefore, second time the petitioner was driven before this Court against the 2nd respondent for writ of mandamus in W.P.No.32568/2019 for renewal of license of two franking machines. This Court considering the entire materials on record and on the statement made by the learned Government Advocate that suitable action in accordance with law shall be taken, the writ petition came to be disposed off on 13.08.2019, the relevant para No.5, which reads as under;
“5. In view of the submission made and in the facts of the case, writ petition is disposed of with a direction to the 2nd respondent to decide the application submitted by the petitioner for renewal of licence in respect of two franking machines, in accordance with law, by a speaking order within a period of two weeks from the date of receipt of certified copy of the order passed today.
Accordingly the writ petition is disposed of.”
13. It is relevant to consider at this stage that for the first time on 08.07.2015, the 2nd respondent issued notice to the petitioner for violation of provision of Rule 5 and Condition Nos.VI(xii) and VI(xvi) and specifically stated that the petitioner’s Association has to show cause within 7 days from the date of receipt of the notice in writing and he should appear before the Authority for oral statement of the petitioner’s Association. Failing which, the action will be taken to cancel the license and to initiate action for recovery of loss of revenue to the State Government.
14. Admittedly, the petitioner’s Association filed objection on 14.07.2015 and subsequently, on 20.07.2015 and denied the contents of the notice and contended that the Association has been dutifully complied with all the laws and regulations framed from time to time. They have not caused any loss to the exchequer. Hence, in the wake of the submission, they sought to request to withdraw the subject notice and not to initiate any proceedings with regard to cancellation of license. When the 2nd respondent issued notice making certain allegations, the same is denied by the petitioner’s Association by filing detailed objections and contended that they are not violated under Rule 5 of the Karnataka Stamp Franking Stamp Rules 2000 or condition No.VI(xii) and condition No.VI(xvi). It is the duty of the authority to hold enquiry and come to a definite conclusion that whether the individual members misusing the name of Association for their personal gain or not.
15. Admittedly, in the present case, no enquiry is conducted even though the notice issued in the year 2015 and in spite of repeated orders passed by this Court, the 2nd respondent never venture to hold enquiry and come to a definite conclusion that what is the misuse of the franking machine by the individual members in order to defeat the revenue exchequer. Admittedly, no records are produced before this Court though a detailed sparking order was passed by the 2nd respondent reiterating the observation made by this Court on two occasions in the writ petition. The Authority is not definite in any violation of the prima- facie that the petitioner’s Association violated the Condition Nos.VI(xii) and VI(xvi).
16. On careful perusal of the condition No.VI(xii) of the Annexure-A dated 10.01.2003 – the authorization for use of Franking Machine for payment of stamp duty, the impression of the franking machine are valid only on the instruments specified in para No.1 and para No.2 above executed by or in favour of: M/s. Karnataka State Licenced Electrical Contractors Association, and only such impressions are attested by authorized signatures of the authorized user. The Annexure-A does not depict para Nos.1 and 2 on the instruments specified. Still by reading of the said clause, it clearly indicates that impression of the franking machines are violated on the instrument executed by or in favour of M/s. Karnataka State Licenced Electrical Contractors Association, it means either executed by the Association or anybody executed in favour of M/s. Karnataka State Licenced Electrical Contractors Association. The impugned order depicts that there is a violation. But, there is no proper reasoning on particular instance by any individual member misusing for their personal gain or on behalf of the Association. If that is so, the 2nd respondent ought to have hold proper enquiry and ought to have intimated the Association to take action against erring member for misusing the Stamp Paper meant for the Association and the same has not been reflected in the impugned order.
17. Though the learned Government Advocate tried to persuade based on the statement of objection, it is well settled that what is not reflected in the impugned order, cannot be added by way of statement of objection or by way of arguments supplemented to the impugned order. Though this is the 3rd round litigation, the 2nd respondent has not held any full pledged proper enquiry for the allegations made in the notice and denied in the objections. If there is an admission, then there was no need to hold any enquiry.
When there is a specific denial, it is the duty obligation for the 2nd respondent to initiate proper enquiry and come to a definite conclusion that how the petitioner’s Association or its members are misusing the two franking machines. In the absence of the same, the impugned order passed by 2nd respondent cannot be sustained and the same is the violation of the principles of natural justice and in violation of Articles 14 and 21 of the Constitution of India.
18. In view of the aforesaid reasons, I proceed to pass the following;
ORDER The writ petition is allowed.
The impugned order passed by the 2nd respondent as per Annexure-K dated 04.09.2019 is hereby quashed.
The 2nd respondent is directed to renew the authorization license in respect of two Franking Machines bearing No.04 and 109 for the year 2019 within a period of two weeks from the date of receipt of the copy of this order.
However, liberty is reserved to the 2nd respondent to initiate fresh enquiry after following the procedures as contemplated and after giving opportunity to both parties, pass fresh orders strictly in accordance with law.
Sd/- JUDGE NBM