G. Mehrotra, J. - (1.) THIS petition under Article 226 of the Constitution has been filed by one Manmoth Nath Ghosh, Petitioner of Messrs. Rasiklal Ghose and Sons. The Petitioner is a dealer in medicines in the town of Mangaldai. After the introduction of the Drugs Act of 1940, the Petitioner applied for a licence for sale, stocking and exhibiting for sale of patent medicines in 1951 which was duly granted. In the year 1955 it was renewed for a period of two years from 8th September, 1955 by the Civil Surgeon, Darrang. Before the expiry of two years, on the 19th August, 1957 the Petitioner applied to the Civil Surgeon, Darrang for renewal of the licence for a period of two years on depositing a renewal fees of Rs. 5/ -. The application was returned by the Civil Surgeon, Darrang on the ground that the power of granting licences has now been entrusted to the Inspector of Drug, Assam, Shillong, opposite party No. 1 to this petition. The Petitioner then applied to Respondent No. 1 for renewal of the licence. By a letter dated 9th November, 1957 the Petitioner was informed by the Respondent No. 1 that the fee for renewal had been enhanced and he was directed to deposit a further sum of Rs. 5/ -. The balance of Rs. 15/ - was deposited on the 11th of November, 1957 and the application form No. 19A. duly filled in was sent to Respondent No. 1 on 21st November, 1957. By a letter dated 19th June, 1958 the application of the Petitioner was rejected on the ground that there were sufficient number of pharmacies to meet the medicinal needs of the public of the locality and as such issue of licences to unqualified persons was not necessary. An appeal was preferred by the Petitioner against that order in the Court of the District Judge, Lower Assam Districts at Gauhati. The appeal was however rejected by the District Judge on the 9th of March, 1959 on the ground that the Inspector of Drugs had power to cancel the licence and that no appeal lay against an order of refusal to renew the licence. The present petition has been filed challenging the validity of these orders.
(2.) TWO main points have been urged by the counsel for the Petitioner. Firstly it is contended that the appointment of the Inspector of Drugs as the licensing authority was illegal. Respondent No. 1 therefore had no jurisdiction to refuse to grant licence. Secondly it was contended that the rule, giving power to the licensing authority to refuse, to renew or cancel the licence is ultra vires of Article 19(1)(g) of the Constitution in as much as it gives a naked and arbitrary power to the authority to grant or refuse to grant a licence. It is also urged that the said rule violates Article 14 as it is discriminatory. In this connection, it was further contended that if Rule 66 which provides for appeal against the order of the licensing authority is interpreted to confine to the case of cancellation, then the power to refuse to grant a licence is unregulated. In case however, it is held that the order of refusal is appealable under Rule 66 the decision of the District Judge rejecting the appeal on that ground will be without jurisdiction and the Petitioner will be entitled to a mandamus directing the District Judge to dispose of the appeal in accordance with law. After the passing of the Drugs Act 1940, different States trained rules under the Act providing for granting of licences. The Assam Drugs Rules 1945 were framed under the authority of the Drugs. Act and under those Rules power was given to the State to appoint a licensing authority. The Civil Surgeon, Darrang was appointed as the licensing authority. The Drugs Act was amended by amending Act II of 1955. Section 33 of the Drugs Act was substituted by a new Section. Under the new Section. 33 the power to frame rules was exclusively entrusted to the Central Government. The Drug Rules of 1945 were amended and by Rule 128 of the amended rules, the Assam Drug Rules of 1945 were repealed except the acts already done under the repealed rules. The contention of Mr. Ghose is that after the Drugs Amending Act in the year 1955 the power was taken away from the State Government to frame rules. The State Rules therefore, providing for appointment of the licensing authorities became non -existent and any order passed by the State Government appointing Respondent No. 1 in place of the Civil Surgeon, Darrang, as the licensing authority was illegal, The acts done under the Assam Rules were only validated after the amending rules were passed. Further it was only under Rule 59 of the amended rules that the State Government was authorised to appoint licensing authority. If any appointment had been made under the Assam Rules of 1945 after the amending rules were framed, such an appointment would have been valid, but any appointment made between the period of coming in force of the amending Act and the passing of the amending rules was illegal. I do not think that there is any force in this contention. If after the passing of the amending Act, 1955, the Rules framed by the State of Assam, in 1945 became invalid, there was no question of repealing those rules subsequently. The rules framed by the State of Assam in the year 1945 were valid rules therefore so long not repealed by the amending rules, and any action taken by the State Government under those rules will be valid. The appointment of the Respondent No. 1 as the licensing authority was made in the year 1956. Even accepting the argument of the Petitioner that the appointment when made in the year 1956 was without any authority, admittedly on the date when the orders were passed by Respondent No. 1, the State Government had power to appoint a licensing authority and as such, it cannot be said that the Respondent No. 1 had no jurisdiction to deal with the application of the Petitioner. On the date of passing the order the Respondent No. 1 will be deemed to have been validly appointed.
(3.) AS the constitutionality of Rule 59 of the Rules framed under the Drugs Act - - hereinafter called the Rules has been challenged, it is convenient to set out the material provisions of the Act and Rules. Section 18 of the Act provides that from the date as may be fixed by the State Government by notification in the official Gazette, no person shall himself or by any other person on his behalf manufacture for sale or sell, or stock or exhibit for sale, or distribute any drug except under and in accordance with the conditions of a licence issued for such purpose under this Chapter. The necessity to obtain a licence therefore arises under this section. It is not contended that Section 18 is violative of Article 19. Having regard to the Act, the restriction placed on a person's carrying on business in drugs to obtain a licence before carrying on such a business, cannot be said to be an unreasonable restriction. Under Section 33(1)(e) of the Act, the Central Government can frame rules prescribing the forms of licences for the manufacture for sale, for the sale and for the distribution of drugs; the form of such licence, the condition subject to which such licence may be issued, the authority empowered to issue the same and the fees payable therefor. In the exercise of the aforesaid power, Rule 59 has been framed by the Central Government which reads as follows: 59. (1) The State Government shall appoint licensing authorities for the purpose of this Part for such areas as may be specified. (2) Applications for the grant of renewal of a licence to sell, stock or exhibit for sale or distribute drugs shall be made in Form 19 or Form 19 -A, as the case may be, to the licensing authority and shall be accompanied by a fee of Rupees twenty. Rule 60 then provides that a licensing authority may with the approval of the State Government by an order in writing delegate the power to sign licence to any other person. Rule 61 provides for the forms of licences to sell drugs. The Petitioner in this case has asked for restricted licence to be issued in form 20A. Rule 62 -A provides that restricted licences in forms 20 -A and 21 -A shall be issued subject to the discretion of the licensing authority to dealers or persons in respect of drugs whose sale does not require the supervision of a qualified person. Rule 64 lays down the condition to be satisfied before a licence in form 20, 20 -B, 21 or 21 -B is granted. This rule does not apply to the grant of a licence in form 20 -A. There is no other rule laying down the condition to be satisfied before a licence in form 20 -A is to be granted. Rule 66(1) provides that licensing authority may, alter giving the licensee an opportunity to show cause why such an order should not be passed, by an order in writing stating the reasons therefor, cancel a licence issued under this part or suspend it. Under Clause (2) of Rule 66 an appeal has been provided against an order or cancellation or suspension to the District Judge, when this Rule 66 is contrasted with Rule 62 -A, it is clear that there is no check provided against an order granting or refusing to grant a licence while there is an ample check against an order of cancellation or suspension of the licence by providing for an appeal against such an order. The argument is that Rule 62 -A leaves to the uncontrolled discretion of the licensing authority a right to grant or to refuse to grant a licence to any person. The discretion is unregulated. No directions are laid down for the guidance of the licensing authorities in granting or refusing a licence. The power thus granted to a licensing authority is naked and arbitrary, the exercise of which will affect the right of the Petitioner to carry on business. A law giving such a wide discretion is an unreasonable restriction on the right of the Petitioner to carry on business and such a legislation has in itself the germs of discrimination.;