147-NLR-NLR-V-48-MOHAMED-CO.-Petitioner-and-THE-CONTROLLER-OF-TEXTILES-Respondent.pdf
HOWARD CJT.—Mohamet! & Co. v. The Controller of Textiles.
461
1947Present; Howard CJ.
MOHAMED & CO., Petitioner, and THE CONTROLLEROF TEXTILES, Respondent.
S. C. 75—Application for a Writ of Certiorari on the Controller
of Textiles.
Certiorari—Defence {Control of Textiles) Regulations—Cancellation of licence—Regulation 62—Dealer not heard in his defence—Controller not actingjudicially—Rule absolute.
Where the Textile Controller acting tinder regulation 62 of the Defence(Control of Textiles) Regulations cancelled the licence granted to thepetitioner on the ground that a fraud had been committed by himwithout giving the petitioner an opportunity of being heard in hisdefence—
Held, that a writ of Certiorari would lie.
^^PPLICATION for a writ of Certiorari on the Controller of Textiles.
H. V. Perera, K.C. (with him C. Suntheralingam), for the petitioner.
H. W. R. Weerasooriya, C.C. (with him Walter Jayawardene, C.C.,and Douglas Jansze, C.C.), for the respondent.
Cur. adv. vult.
September 19, 1947. Howabd C.J.—
The petitioner who is a dealer in textiles applies for a mandate in thenature of a Writ of Certiorari under section 42 of the Courts Ordinanceagainst the respondent, the Controller of Textiles, quashing an orderof the respondent made under regulation 62 of the Defence (Controlof Textiles) Regulations, 1945. This order is contained in a letter tothe petitioner dated February 21, 1947, and revoked the petitioner’slicences granted under the Regulations. The facts leading up to theorder quashing the licences of the petitioner are set out briefly as follows.On or about February 13, 1947, the officers working in the Departmentof Textiles made certain inquiries into an alleged shortage of textilecoupons aggregating to 40,000 points in respect of the textile couponssurrendered on behalf of the petitioner to the Textile Coupon Bankon November 30, 1946, and December 18, 1946. On November 30, 1946,the petitioner’s firm surrendered textile coupons to the Coupon Bank.According to the foil and counterfoil of the paying-in slip 21,500 couponswere surrendered. The foil and counterfoil of this paying-in slip areboth initialled by the representative of the petitioner’s firm, one PeterFernando, and three departmental officers, namely, a Staff Assistant,the Shroff and the Ledger Clerk. On December 18, 1946, furthercoupons were surrendered by the petitioner’s firm amounting accordingto foil and counterfoil of the paying-in slip to 22,000 coupons. Onthis occasion the foil and counterfoil were signed by Peter Fernando,
462 HOWARD C.J.—Mohamed &. Co. v. The Controller of Textiles.
the same Staff Assistant, the acting Shroff and a different Ledger Clerk.The procedure followed by the department after the surrender of couponsis as follows. The Receiving Clerk counts the coupons and checks thenumber received with the number entered in the paying-in slip. Hethen enters the number in a Scroll Book and obtains the signature ofthe depositor. After this he passes on paying-in slips together withcoupons to the Assistant Shroff. The latter officer checks the numbersof the coupons, initials paying-in slips and passes to the Shroff withoutthe coupons which are sent elsewhere for cancellation. The Shroffenters in a register the number of points as they appear in the paying-inslip, signs foil and initials counterfoil and passes them to the Chief Clerk.The Chief Clerk also goes through the formality of countersigning foiland counterfoil and enters in the Credit Control Book the number ofpoints appearing in the paying-in slip. He then detaches foil of paying-inslip which he passes to the Ledger Clerk and at the same time returnsto the dealer the counterfoil. The Ledger Clerk enters in the dealer’sledger as a credit the number of points appearing in the foil. In regardto the surrender of coupons by the petitioner's firm on the two datesin question the numbers credited to the firm in the ledger account agreewith the numbers purported to have been surrendered according to thefoil and counterfoil. On. the other hand according to the Scroll Bookonly 1,500 coupons ^vere surrendered by Peter Fernando on November30, 1946, and 2,000 coupons on December 18, 1946. Perusal of the foilsand counterfoils suggested that interpolations had been made, the figures“ 1,500 ” having been converted into “ 21,500 ” and the figure “ 2,000 ”into “ 22,000 The Textile Controller in view of these discrepanciesin the documents providing for the accounting of the coupons that hadbeen surrendered by the petitioner’s firm came to the conclusion that thefirm had been credited with 40,000 more coupons than had beensurrendered. On discovering this irregularity he wrote a letter to thepetitioner’s firm dated February 18, 1947 (referred to as “ B ” inpetitioner’s affidavit). This letter was worded as follows : —
“ Control of Textiles Office,
P. O. Box No. 538, Colombo:
My No. CR. C. 691/4324 of 18th February, 1947.
Messrs. H. A. N. Mohamed & Co.,
209/211, Main St., Colombo.
Gentlemen,
An examination of your account in the Coupon Bank and thesupporting documents and registers has revealed the followingirregularities: —
(1) Whereas according to the scroll book kept by the Counter Clerkwho receives coupons from depositors, and according to theregisters kept by the Shroff and the Assistant Controllerrespectively, the nuiftber of coupon points surrendered by
HOWARD CJ.—Mohamed & Co. v. The Controller of Textiles. 463
you on the undermentioned dates were as shown in column(2) below, your ledger account has been credited on the samedates with amounts as shown in column (3) .
(2)(3)
Points surrendered accord-ing to registers kept by Points credited inthe Counter Clerk, Shroff your Ledgerand Assistant ControllerAccount
1,500..21,500
2,000..22,000
(2) On inspecting the corresponding paying-in slips submitted byyou along with the coupons it is found that interpolationshave been made on these slips (on foils and counterfoils both),in figures as well as letters, so as to show the bigger amountsas credited in the Ledger Account. The interpolations andthe original entries appear to be in the same, writing.
I have reason to believe that you got these interpolations made andcontrived to obtain in the Ledger Account credit for abigger amount than you were entitled to on the. basis of thecoupons surrendered by you.
If that is so, I have to regard you as a person unfit to continue tohold a licence to deal in textiles and I propose accordinglyto revoke your licence.•
If you have any explanation to offer in respect of these mattersin addition to what you have already stated to the Assistant Controller,please send it to me in writing on or before 4 p.m. on Thursday,20th February, 1947.
If you desire to see the documents referred to above you may doso at this office at any time during office hours on application tomy Office Assistant.
I am. Gentlemen,
Your obedient Servant,
Sgd. M. F. de S. Jayahatne,Controller of Textiles.”
The petitioner’s firm on receipt of this letter consulted their legaladviser who replied to “ B ” by a letter dated February 20, 1947,(marked “C”). This letter took the form of denying , the allegationsmade against the petitioner. The submission was made that inspectionof the relevant documents indicated a colossal fraud by the officers ofthe Textile Department who it was also suggested had corrupted PeterFernando, the employee who had surrendered the coupons. Theletter disclaimed any awareness on the part of the petitioner of anythingamiss in the work of Peter Fernando who after failing to give any ex-planation had disappeared and could not be traced. The petitioneralso maintained that it would be unfair and unjust to revoke his licencewhen it was impossible to say whether the fraud was committed entirelyby the officers of the department acting by themselves alone or with
(1)
Dates
On 30.11.46On 18.12.46
48/36
464 HOWARD C.J.—Mohamed & Co. v. The Controller of Textiles.
complicity on the part of one of the petitioner’s employees. Thepetitioner further maintained that his books showed that all the couponsindicated by the paying-in slips had been surrendered. On February21, 1947, the respondent cancelled the licences of the petitioner in aletter marked “ D ” which is in the following terms : —
“ Control of Textiles Office,
P. O. Box 538, Colombo.My No. CR C 691/4324 of 21.2.1947.
Messrs. H. A. N. Mohamed & Co.,
Colombo.
Sirs,
With reference to my letter No. CR C 691/C 691 of 18.2.47 andthe letter of 20.2.47 submitted by your lawyers, I find you a personunfit to hold a textile licence. I therefore order the revocation ofall the licences held by you to deal in textiles under Reg. 62 of theDefence (Contro! of Textiles) Regulations, 1945, with effect from21. 2. 1947, i.e., your licences No. 691/C 691 and No. 696/C. 696.
Please hand over to my officer your licence, Identity Card,Coupon Issue Card, Coupon Account Register and any coupons youmay have in your possession.
You are alsoinformed thatyoucan keep anyof your own
stocksin your possession for 15daysafter the dateof revocation.
Meanwhile, if you can make suitable arrangements to deliver the goodsto another dealer, on such terms as you like, I shall sanction the transferbefore that date on condition that :
' you surrender the remaining coupons in your hand and the
coupons you obtained by the sales with my sanction.
The transferee surrenders the coupons for the goods transferred.
Possessionof the goods after15 days will be regarded as
unlicensedpossession andthegoods will beseized and a
prosecution entered.
I am, Sirs,
Your obedient Servant,
Sgd. M. F. de S. Jayaratne,Controller of Textiles.”
Mr. H. V. Perera on behalf of the petitioner contends that regulation62 of the Defence (Control of Textiles) Regulations, 1945, under whichthe respondent acted did not entitle him to cancel the licences of thepetitioner. Regulation 62 is worded as follows: —
“62. Where the Controller has reasonable grounds to believethat any dealer is unfit to be allowed to continue as a dealer, the Con-troller may cancel the textile licence, or textile licences issued to thatdealer.”
Mr. Perera has referred to paragraph (2) of “ B ” in which the respondentstates “ I have reason to believe that you got these interpolations made
HOWARD C.J.—Mohamed & Co. v. The Controller of Textiles. 465
and contrived to obtain on the Ledger Account credit for a biggeramount than you were entitled to on the basis of the coupons surrenderedby you.” Mr. Perera maintains that the respondent had no reasonablegrounds for this allegation. Such grounds have not been disclosed bythe respondent so that the petitioner might have an opportunity ofmeeting them. In these circumstances the allegation rests only onsuspicion. Suspicion is not, to use the words of the regulation “ areasonable ground” on which to base the Controller’s belief that thelicensee, is unfit to be allowed to continue as a dealer and hence to cancelthe licence.
Although by inference from “ B ” and “ D ” the cancellation purportedto be made on the allegation that the petitioner contrived these frauds,Mr. Weerasooriya, on behalf of the respondent, has contended in thisCourt that the latter was justified in cancelling the licences by reasonof the fact that the petitioner employed a dishonest employee to sur-render the coupons to the Coupon Bank. In reply to this contentionMr. Perera argues that the unwitting employment of a dishonest employeewould not be a sufficient ground under the regulation for cancellingthe licences. The words of the regulation are that the “ dealer ” andnot his employee should be deemed to be unfit to be allowed to continueas a dealer. Mr. Perera has also pointed out that this was not theground on which the respondent purported to act and if it was, thepetitioner has not been given any opportunity of meeting this allegation.Mr. Weerasooriya has further contended that the petitioner was givenevery opportunity of showing cause against the cancellation of the licence.He maintains, moreover, that it is not open to this Court to inquireinto the materials or sufficiency of the materials on which therespondent reached his conclusion. In this connection Mr. Weerasooriyahas cited the case of the King v. Nat Bell Liquors Ltd.' in which it washeld that a conviction by a Magistrate for a non-indictable offence cannotbe quashed on certiorari on the ground that the depositions show thatthere was no evidence to support the conviction or that the Magistratehas misdirected himself in considering the evidence. Absence ofevidence does not affect the jurisdiction of the Magistrate to hear thecharge. The same principle was laid down in R. v. Furnished Houses RentTribunal for Paddington and St. Marylebome.’.
In Abdul Thassim v. Edmund Rodrigo 3 it was held by a Court consti-tuted by five Judges of the Supreme Court that the fact that the Controllercan only act under regulation 62 when he has “ reasonable grounds ”indicates that he is acting judicially and not exercising merely adminis-trative functions. He is therefore amenable to a mandate in the natureof a Writ of Certiorari.
In the circumstances the question I have to decide is whether theController in cancelling the licences of the petitioner has acted judicially.Mr. Weerasooriya has invited my attention to the fact that, whereasregulation 62 fails to provide for the observance of any procedure by theController, regulation 58 does so provide. Mr. Weerasooriya also points
> (1922) 2 A. C. 128.* (1947) 1 All Englarul Reports 448.
3 (1947) 48 N. L. R. 121.
466
HOWARD C.J.—Mohamed & Co. v. The Controller of Textiles.
out that regulation 63 provides the Textile Controller with an AdvisoryBoard, but he is under no obligation to seek the advice of this Boardwhen action for the cancellation of a licence is taken under regulation62. Mr. Weerasooriya refers to these provisions in order to show thatthe .Legislature did not intend to fetter the discretion of the Controllerwhen it was a question of cancellation of licences. After taking intoconsideration the various submissions by Mr. Weerasooriya can it besaid that the Controller has acted judicially? The principles on whicha tribunal not having the status of a Court of Law should act have beenlaid down in the judgment of Lord Haldane L.C. in Local GovernmentBoard v. Arlidge This case dealt with the duties of a tribunal whenthe duty of deciding an appeal is imposed. At page 132-133 LordHaldane stated as follows : —
“ My Lords, when the duty of deciding an appeal is imposed, thosewhose duty it is to decide it must act judicially. They must dealwith the question referred to them without bias, and they must giveto each of the parties the opportunity of adequately presentingthe case made. The decision must be come to in the spirit and withthe sense of responsibility of a tribunal whose duty it is to mete outjustice. But it does not follow that the procedure of every suchtribunal must be the same. In the case of a Court of law tradition inthis country has prescribed certain principles to which in the mainthe procedure must conform. But what that procedure is to be indetail must depend on the nature of the tribunal. In modem timesit has become increasingly common for Parliament to give an appealin matters which really pertain to administration, rather than to theexercise of the judicial functions of an ordinary Court, to authoritieswhose functions are administrative and not in the ordinary sensejudicial. Such a body as the Local Government Board has the dutyof enforcing obligations on the individual which are imposed in theinterests of the community. Its character is that of an organization withexecutive functions. In this it resembles other great depart-ments of the State. When, therefore, Parliament entrusts it withjudicial duties, Parliament must be taken, in the absence of anydeclaration to the contrary, to have intended it to follow the procedurewhich is its own, and is necessary if it is to be capable of doing its workefficiently. I agree with the view expressed in an analogous caseby my noble and learned friend Lord Lorebum. In Board of Educa-tion v. Rice3 he laid down that, in disposing of a question which wasthe subject of an appeal to it, the Board of Education was under aduty to act in good faith, and to listen fairly to both sides, inasmuchas that was a duty which lay on every one who decided anything.But he went on to say that he did not think it was bound to treatsuch a question as though it were a trial. The Board had no powerto administer an oath, and need not examine witnesses. It could, hethought, obtain information in any way it thought best, alwaysgiving a fair opportunity to those who were parties in the controversyto correct or contradict any relevant statement prejudicial to their *
(1915) A. C. 120.
* (1911) A. C. 179.
HOWARD CJ.—Mohamed & Co. v. The Controller of Textiles.
467
view. If the Board failed in this duty, its order might be the subjectof certiorari and it must itself be the subject of mandamus.”
At page 134 Lord Haldane also stated : —
“ What appears to me to have been the fallacy of the judgmentof the majority in the Court of Appeal is that it begs the question atthe beginning by setting up the t«ct of the procedure of a Court ofjustice, instead of the other standard which was laid down for suchcases in Board of Education v. Rice (supra). I do not think theBoard was bound to hear the respondent orally, provided it gave himthe opportunities he actually had. Moreover, I doubt whether itis correct to speak of the case as a Its inter partes.”
One of the principles formulated in Local Government Board v. Arlidge(supra) was that the tribunal must give the parties an opportunity of statingtheir case or in the words of Lord Haldane “ a fair opportunity to thosewho were parties in the controversy to correct or contradict any relevantstatement prejudicial to their view.” This same principle was em-phasised in the case of Hopkins v. Smethwick Local Board of Health1in which it was held that, where a building has been erected in contra-vention of the bye-laws of a local board of health, the board cannotunder section 158 of the Public Health Act, 1875, pull down the buildingwithout giving the owner an opportunity of showing cause why it shouldnot be pulled down. I have also been referred to the case of A, a Pleader v.The Judges of the High Court of Madras1 in which it was held that chargesof professional, misconduct must be clearly proved and should not beinferred from mere ground of suspicion.
Applying the principles formulated in the cases to which I havereferred I am of opinion that, inasmuch as the grounds on which therespondent had come to the conclusion that the petitioner “ had got theinterpolations made and contrived to obtain in the Ledger Accountcredit for a bigger amount than he was entitled to on the basis of thecoupons surrendered by him ” had not been disclosed to the petitioner,the latter had not been given a fair opportunity of stating his case. More-over it would appear that the respondent condemned the petitionermerely on suspicion. If the grounds were as stated in document “ B ”the respondent has not acted judicially. On the other hand, if therespondent cancelled the licences because the petitioner employed PeterFernando, a dishonest employee, the respondent cannot be said to haveacted judicially inasmuch as this was not the ground on which hepurported to act and moreover the petitioner has not been given anopportunity of stating his casee if such was the ground on which actionwas taken.
For the reasons I have given I direct that the rule nisi be made absoluteand that Writ of Certiorari issue as prayed by the petitioner in hispetition dated February 25, 1947, together with costs.
Rule made absolute.* (1930) A. l.Jt. P. C. 144.
' 24 Q. B. D. 112.