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1946 (10) TMI 14

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..... ich as is now admitted, was wholly irrelevant and unnecessary. If the appellant's memorandum of appeal, which contains no less than sixty-one grounds of appeal, is any guide, the appellant proposed to attempt in this Court also to embark upon much irrelevant matter. But Mr. M.V. Desai, who now appears for the appellant, admits that what is relevant lies within a narrow compass, viz. whether the respondent on April 3, 1943, being the date of the letter, to which I will presently refer, effectually introduced into the appellant's license for the supply of electrical energy, new conditions, by virtue of Sub-section 4(2) of the Indian Electricity Act, 1910. This question as to the validity of the new conditions involves the basic question whether the respondent's power of revocation under Sub-section 4 (1)(a) of the Act was operative, for if it was not, there was no power or right to impose the new conditions under Sub-section 4(2). 3. If the answer to this question is in the negative, that would be an end of the case in favour of the appellant, but if an affirmative answer is given, the respondent would be entitled to have this appeal dismissed; since it cannot be, and .....

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..... the prescribed form and on payment of the prescribed fee (if any), grant to any person a license to supply energy in any specified area The section makes it compulsory for the applicant for a license to publish a notice of his application, in the prescribed manner and with the prescribed particulars , and for the Provincial Government to receive objections within three months from the first publication of the notice. By Section 3(2) (b) the Provincial Government, in respect of an objection which has been received from any local authority, shall, if in its opinion the objection is insufficient, record in writing, and communicate to such local authority its reasons for such opinion . It is not seriously disputed by Sir Jamshedji Kanga, on behalf of the respondent, that the Provincial Government in coming to a decision whether a license should be granted or not, must exercise its functions in a judicial manner. 8. Having granted a license, it is Section 4 of the Act which invests the Provincial Government, as the licensing authority, with the power to effect its revocation, alteration and extension, and it would, in my opinion, need precise and unambiguous language if the licen .....

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..... he licensee is not a local authority, after consulting the local authority (if any) concerned,- (a) revoke a license as to the whole or any part of the area of supply upon such terms and conditions as it thinks fit, or (b) make such alterations or amendments in the terms and conditions of a license, including the provisions specified in Section 3, Sub-section (2), Clause (f), as it thinks fit. 10. Section 5 forms a material part of the scheme for granting and revoking licenses by it, notice of revocation must be served on the licensee and in certain circumstances on the local authority. The licensee does not get any compensation for the damage, which may be inflicted if an established electrical undertaking has to close down because its license is revoked. What Section 5 provides is for purchase, and options are given in the first place to the local authority, in the second place to any other person and in the third place to the Provincial Government, to purchase the undertaking; but, as I read this section, the purchase price will not be for the undertaking as a going concern, and it is only if none of the three options are exercised, that the former licensee: shall have .....

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..... cumstances quite beyond our control under the present abnormal conditions. 15. On December 23, 1942, the Personal Assistant to the Electrical Inspector wrote the following minute on that letter : I think the Electrical Co's proposal is the best way to meet the situation and so long as consumers are not seriously handicapped no action is called for by this department. 16. But the Inspector himself took a sterner view, and on the day following he wrote this minute:- It is extremely regrettable that S. Co. should be forced to close down completely for so many days. The matter should be reported to Government immediately. 17. In spite of this minute no reply was sent to the appellant by the Provincial Government to its covering letter of December 18, 1942, enclosing the circular and no communication was it seems made to the appellant by Government until February 10, 1943, when Mr. Nadkarni, who is the Electrical Inspector, arrived at the appellant's works on a visit of inspection. Mr. Amte, who is the managing agent of the appellant, says of this visit : He did not come personally to conduct the annual inspection. He came some time in February 1943-about the 1 .....

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..... with 82 KVA generator. The set is in a very bad condition and repairs are badly needed. It will be seen from the above that only one set. No. (5), can be used for obtaining power, the maximum being 60 KW against the company's average peak load of 180 KW. 2. Government is satisfied that there are sufficient ground for revoking your license under Section 4(1) of the Indian Electricity Act but it is pleased to permit this license to remain in force under Section 4(2) of the Act, subject to the following conditions :- (a) that within a period of six months from the date of their letter you recondition your plant and put the same in proper working order for the purpose of ensuring a continuous and efficient supply to all consumers connected to the system and in order to fulfil the obligations imposed on you by virtue of the contract with the consumers as laid down in Clause VI of the Schedule to the I. 10. Act, 1810, subject to the limitations imposed by the orders issued under the Defence Of India Rules, and (b) that you make proper arrangements for the maintenance of the plant immediately. 3. Should you fail to take necessary steps to fulfil the above conditions you .....

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..... plaintiffs in doing what was required Of them by or under the Act and whether the public interest required the revocation of the plaintiffs' license. The defendant says that it had clear grounds for being of opinion and was in fact of opinion that the plaintiffs had made a wilful and unreasonably prolonged default in doing what was required of them under the Act and that public interest required the revocation of their license. The defendant submits that this Hon'ble Court has no power to inquire into the grounds on which it could reasonably form such opinion. 24. In this state of the pleadings it is, in my opinion, open to the appellant to say that the respondent must exercise the functions under Section 4 of the Act in a judicial manner, because that is purely a question of law, and it is also open to the appellant to contend that ex facie the letter of April 3, 1943, shows that the respondent did not do so. But further than that it cannot go, the appellant cannot be heard to contend, as it wished to do, that the respondent did not exercise its function judicially, because it did not give the appellant ar opportunity of being heard. That depends on a question of fact, .....

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..... same principle does not apply. Upon matters which rest on opinion only, it may be however far more difficult to show that the licensing authority did not come to such an opinion, or that it dame to it for reasons open to challenge. In a case dealing with the discretion of licensing justices to renew a license for the sale of intoxicating liquors it was said by Lord Halsbury (see Sharp v. Wake field, [1891] A.C. 173 p. 179) :- An extensive power is confided to the justices in their capacity as justices to be exercised judicially; and 'discretion' means when it is said that something is to be done within the discretion of the authorities that that something is to be done according to the rules of reason and justice, not according to private opinion : Rooke's case : according to law, and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man competent to the discharge of his office ought to confine himself. 27. In Rex v. Electricity Commissioners, [1924] 1 K.B. 171 Lord Atkin in giving examples of cases in which writs of prohibition, and certiorari will be granted said (p. .....

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..... erial, and that these cases are not of the same character. Cases (b) and (c) (ii) are purely factual and case (c) (i) is factual except in so far as what the licensee has to do must be done to the satisfaction of the Provincial Government. Cases (a) and (d) depend on the opinion of the Provincial Government, but the basic ingredients default of an obligation in the former case and insolvency in the latter are matters of fact, which must be determined by the Provincial Government by the same process as case (b). In arriving at its factual decisions, not only must the Provincial Government act in a judicial manner, but the manner of its acting is open to investigation by the Court. In principle the formation of its opinion on the requirements of public policy stands on the same footing, though such an opinion would be very difficult to challenge, because its formation must depend on questions of expediency and general policy with which the Court would not lightly interfere. 29. In giving its notice of revocation pursuant to Sub-section 5(a), or notice imposing new conditions under Sub-section 4(2), the Provincial Government must in my opinion in order to act judicially speci .....

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..... tor's visit on which his report was based took place on February 10, 1943, nearly two months before the letter of April 3, 1943, by which date the whole position was capable of change, e.g. set No. 4 which was out of use at the date of the Inspector's visit was, to quote from the letter: dismantled and new parts are being fitted from the railway workshop . There is no suggestion that the appellant's sets could only generate 60 kilowatts on April 3, 1943. Accordingly in my opinion the appellant succeeds on this contention also. 31. With regard to the third contention. Case (a) of Sub-section 4(2) of the Act postulates three contingencies, (1) an obligation in the licensee to do something required of him by or under the Act , (2) a default of that obligation and (3) that the default is wilful and unreasonably prolonged . All] these three are no doubt introduced by the words where... in the opinion of the Provincial Government ; but there is considerable difference in the nature and character of the process to be employed with regard to them, No. 8 is governed by an opinion in the strict sense of the word, whereas Nos. 1 and are decisions on a question of fact. 3 .....

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..... ntil there is an obligation, breach of which is called in question, the Provincial Government as the licensing authority has not the right to consider whether there has been a wilful or unreasonably prolonged default . No obligation is suggested, far less is any disclosed by the letter of April 3, 1943, and in my opinion the appellant has successfully challenged the fact, that on April 3, 1943, there was no obligation by or under this Act of which he was in default. 36. Lastly, there is a submission of Sir Jamshedji Kanga, on behalf of the respondent, that the decision of the Provincial Government cannot be investigated by the Court. Not only do the cases of Sharp v. Wakefield, Rex v. Electricity Commissioners and Eshugbayi Eleko v. Government of Nigeria, to which I have already referred, show that such is not the case, but the Indian Electricity Act itself points strongly in that direction, because there are no words of finality incorporated in Section 4, whereas by contrast, as was pointed out by the learned Judge in the Court below, it is significant that Sub-section 13(1)(b), Sub-section 26(4) and (6) and Sub-section 28(2) of the same Act do provide in the case of the fir .....

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..... il 3, 1943, Government wrote to the appellants setting out excerpts from the report of the Electrical Inspector which complained of there being no qualified Engineer or other person in charge of the appellants' supply station and works either electrical or mechanical, and also that there was only one engine which could be used for obtaining power, the maximum being 60 k.w. against the appellants' average peak load of 180 k.w. Then Government go on to say that they are satisfied that there are sufficient grounds for revoking the appellants' license under Section 4(1) of the Act but they permit it to remain in force under Section 4(2) of the Act subject to the following conditions: (i) that within six months the plant was reconditioned and (ii) that proper arrangements were made for the maintenance of the plant immediately; and the letter ended by warning the appellants that should they fail to take necessary steps to fulfil the above conditions, their license would be revoked. On January 28, 1944, the Government served a notice of revocation upon the appellants alleging that they had failed to comply with the requirements communicated to them in Government letter of Apri .....

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..... Sub-section (2) of Section 4 and, therefore, the revocation of the license for a breach of the imposed conditions was unjustified. 42. The question that arises for determination is whether the conditions laid down in Section 4(1)(a) of the Act which have to be complied with before Government could exercise their right to revoke the license are subjective or objective conditions. In other words, is it a question of fact or a question of the opinion of the Government first that the public interest requires the revocation of the license; second that the licensee has committed default in discharging his obligations under the Act; and third whether that default is wilful and unreasonably prolonged: In my opinion the Government have not to establish these facts in a Court of law. All that they have to establish is that they formed the opinion with regard to these facts. The Court cannot investigate the grounds on which the Government arrived at their opinion. The Legislature constitutes the Government the sole judge for forming an opinion as to the existence of these facts. An attempt has been made to distinguish between the opinion that Government have to form with regard to public .....

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..... an opinion. Again, in Section 4(1), Sub-clause (c)(i), the licensee has to show to the satisfaction of the. Provincial Government that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his license. 45. It has not been seriously disputed that as Section 4(1) (a) stands, it would not be open to the Court to inquire into the ground of that opinion or to consider the reasonableness or otherwise of the opinion formed by the Government. But it is suggested that in view of the very wide powers that would be conferred upon Government if such a construction were adopted, the Court, if necessary, should even put upon the sub-clause a strained construction in order to avoid such a consequence. It is always the duty of the Court to protect the subject against an all-powerful Executive. The Court has always looked upon itself as the custodian of the liberty of the subject, and the history of judicial interpretation of statutes both in England and here is full of many bright pages which show how the Courts of Justice time and again have thwarted and defeated attempts of the Executive to deprive the subject either of his liberty or of his prope .....

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..... as to what are the obligations under the Act and whether there is a default or not should be determined by the Court but as to the unreasonableness or the prolonged delay of the default may be left to the opinion of the Government. I cannot accede to that argument. If the Legislature intended what it is suggested it did intend, then the sub-clause would have been drafted in. an entirely different manner. It should have read : where the licensee makes a default in doing anything required of him by or under this Act which, in the opinion of the Provincial Government, was wilful and unreasonably prolonged. 48. There are many instances where the Legislature has chosen to constitute the Executive the sole judge of what the facts are in a particular ease. A rather striking instance is to be found in Section 86 of the Civil Procedure Code. That section provides that Princes, Chiefs, Ambassadors and Envoys can only be sued with the consent of the Governor-General; and Sub-section (2) of that section provides under what circumstances the consent of Government can be given. Before that section was amended certain conditions had to be satisfied, and if one looks at those conditions the .....

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..... ed according to the opinion of the Judge, still the Court of Appeal went into the grounds of that opinion and in fact came to a contrary conclusion. Now it must be remembered that the opinion which a Judge has to form under Section 57 was a judicial opinion. It was a judicial discretion that he had to exercise, and it is patent that if an appeal lay from his order, the Court of Appeal would undoubtedly have the right to consider whether the discretion was judicially exercised. If there is an appeal from a decision of a Judge, no opinion that he forms and no judicial discretion that he exercise's can. ever be final. It is. always subject to review by the Court of Appeal. But the opinion that the Provincial Government have to form under Section 4(1) (a) is not as a Judge or as a Court of law but as an Executive, and that opinion is not subject to appeal to this Court, and there is all the difference in the world between the two positions. 50. In Eshugbayi Eleko v. 'Government of Nigeria (Officer Administering) [1931] A.C. 662 the Privy Council considered the powers of the Governor of a Colony to order the removal of a certain Native Chief from the Colony. The Ordinance whi .....

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..... Section 4(2) (a). Although the fact of the formation of the opinion might not have been stated in the letter of April 3, 1943, in the written statement of Government it is so stated in clear and precise terms. It also seems that the appellants themselves understood the Government's letter to mean that the grounds they were relying on were the grounds mentioned under Section 4(2)(a) because in paragraph 11 of the plaint they state that after the letter was written, the plaintiffs interviewed the Deputy Secretary, Public Works Department, and satisfied him that no wilful and/or unreasonably prolonged default was committed by them in carrying out the said requirements mentioned in that letter. It should also be borne in mind that the statute does not cast any obligation upon the Government to state the. grounds on which the Government purport to exercise the right to revoke the license. The only obligation upon them is that if the revocation is challenged, they should satisfy the Court that the conditions which are the prerequisite of the right to revoke the license have been satisfied. In my opinion it is not open to the appellants to urge that the Government have failed to prov .....

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..... was a pure question of law which arises from facts alrealy established or admitted on the record, even though such a point was not urged before the trial Court, it would have been competent to the appellants to do so. But the question that Mr. Desai wants to argue is not a pure question of law. Facts have got to be established and the Government do not admit and there is no such admission on the record that they came to that decision which was communicated to the appellants by their letter of April 3, 1943, without hearing the appellants. 54. I should like to point out that the course which this trial took before the learned Judge below was entirely different from what it has taken before us. In the Court below the right of Government to impose conditions under Section 4, Sub-section (2), was disputed for the reason that there were no grounds for the opinion of the Government that the public interest required the revocation of the plaintiffs' license or that the plaintiffs had made wilful and unreasonably prolonged default in doing what was required of them by or under the Indian Electricity Act, The learned Judge held that the Court had no jurisdiction to inquire into the .....

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..... nment of the said license. The appellants were supplying the city of Hubli with electricity under the said license when on April 3, 1943, the Deputy Secretary, Public Works Department, called upon the plaintiffs to carry out certain requirements mentioned in his letter dated April 3, 1943, which is Ex. B to the plaint. The letter sets out that there was no qualified Engineer or other person in charge of the plaintiffs' supply station and works either electrical or mechanical. Thereafter it sets out the conditions of six machines, the first three being entirely unserviceable for reasons set out on the face of the document, the fourth being dismantled and new parts were being fitted, the fifth being in such a bad condition that not more than 60 k.w. load could be put on the generator, and the sixth being in a very bad condition and repairs were badly needed to it. Thereafter it is set out that only one set could be used for obtaining power out of six engines and the maximum energy generated was 60 k.w. against the company's average peak load of 180 k.w. Thereafter it is set out that Government was satisfied that there were sufficient grounds for revoking the license under Sec .....

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..... f the powers conferred by Section 4 of the said Act the Government of Bombay was pleased to declare that the said Hubli Electric License, 1924, should stand revoked with effect from May 1, 1944. 60. The plaintiffs have filed this suit for the purpose of a declaration that the revocation of the said license was illegal, inoperative and void in law, for a further declaration that the plaintiffs are entitled to retain and act under the said license as if the notice had not been given. The plaint sets out that, the said order of revocation is ultra vires and bad in law inasmuch as Clause (b) of Sub-section (2) of Section 4 had no application to the facts of the case as the plaintiffs have not committed breach of any of the terms and conditions contained in the said license. In paragraph 15 of the plaint the plaintiffs say that in sending the said notice the defendant acted arbitrarily and no reasonable opportunity was given to the plaintiffs to place the real facts before the Government. 61. In the written statement the Province of Bombay says that in the circumstances it was the sole judge to decide whether there was wilful and unreasonably prolonged default on the part of the p .....

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..... uted that it did. The learned Judge was of opinion that he did not think the defendant was bound to hear both parties or to do anything which remotely resembles a trial in a Court of justice, and he answered issue 10(6) in the affirmative. It may also be noted that the appellants have not appealed against the finding on issue No. 6. 63. The main question raised in this appeal is whether on a proper construction of Section 4 of the Indian Electricity Act the action of the respondent in revoking the license was valid in law on admitted facts and circumstances of the case. A further question was attempted to be raised in this Court, namely, whether the action taken by the respondent was contrary to the principles of natural justice. On this question the view of the majority of Judges of this Court was that the appellants were precluded from advancing this question in this appeal on the following grounds. Although a reference has been made in the plaint to the arbitrary act of the respondent in paragraph 15 and the same has been traversed, no specific issue has been raised on this point. The question raised is a mixed question of law and fact, and as no issue on his point was joined .....

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..... he public interest so requires, revoke a license in any of the following cases, namely:- (a) where the licensee, in the opinion of the Provincial Government, makes wilful and unreasonably prolonged default in doing anything required of him by or under this Act; (b) where the licensee breaks any of the terms of the conditions of his license the breach of which is expressly declared by such license to render it liable to revocation; (c) where the licensee fails, within the period fixed in this behalf by his license or any longer period which the Provincial Government may substitute therefor by order under Sub-section (3), Clause (b) and before exercising any of the powers conferred on him thereby in relation to the execution of works,- (i) to show, to the satisfaction of the Provincial Government, that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his license, or (ii) to make the deposit or furnish the security required by his license; (d) where the licensee is, in the opinion of the Provincial Government, unable by reason of his insolvency, fully and efficiently to discharge the duties and obligations imposed on .....

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..... ution under Section 42 (b) of the Act. This is for the purpose of ensuring a continuous supply of energy, and the penalty is imposed if the supply is not so maintained. 67. Therefore it is clear that the license is granted at the discretion of the Government on the terms and conditions laid down in the license and subject to the provisions of the Indian Electricity Act of 1910, and the Act itself makes an incorporation of clauses under the schedule into the license itself. It is therefore clear that the licensee is fully aware or deemed to be aware of the provisions of the license and of the schedule and of the provisions of the Act, and as remarked by Mr. Justice Blagden Those who, not out of philanthropy but for business purposes, take the benefit of a license under the Act must also, without grumbling, take the burden... They must take their statutory rights with all the statutory defects, and one of the statutory defects of a license is that it is liable to be revoked under Section 4. It is clear that grant of a license is the grant of a monopoly to the licensee to serve a particular area and that monopoly is controlled and circumscribed by the provisions of the Act and t .....

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..... ul and unreasonably prolonged default in doing anything. It is contended that the formation of the opinion is a mental process embracing what is actually required under the Act, viz. whether the requisition has or has not been complied with or whether there is or there is not a prolonged default. Section 4(2) (b) is purely a factual one, and in the event of there being a default as contemplated within proviso (a) a notice would be served under proviso (b) which would be thereby attracted and would come into operation in the event of a determination that there was a default within the provision of Sub-section (a). 69. In other words the question is whether there was a continuous supply of energy. The Government called upon the appellants to recondition the machines so as to comply with Clause 6 of the schedule and by the letter of April 3, 1943, sufficiently indicated the nature of the default, and under Section 4(2) of the Act the Government called upon the appellants to recondition the machines within six months, and on January 20, they being of the opinion that default had been committed under Section 4(2) (a), served a notice terminating and revoking the license as of May 1, .....

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..... ct as pointed out by the learned trial Judge in which words to the following effect are used whose decision, after considering the reasons given by the repairing authority for its action, shall be final . That is a decision given by the statutory authority as between the consumers and the licensee. This indicates that the Legislature did not intend when it used the word opinion to convey the same meaning as indicated by the word decision as set out in the other sections. The opinion of a party is nothing more than a mental process arrived at on certain grounds, but the opinion of a Judge in similar circumstances must necessarily amount to a decision. The question therefore is whether the word opinion of the Government is opinion that is absolute and unqualified or whether it is one that can be called into question in a Court of law and reviewed. The only allegation in the plaint is that the plaintiffs deny that the Provincial Government had sufficient grounds . That is the only allegation in the plaint. The question of the formation of the. opinion has not been challenged in the pleadings. 73. In this connection certain authorities have been referred to and I need only r .....

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..... will defeat that intention. The learned Law Lord further added as follows (p. 219) : I am not disposed to deny that, in the absence of context, the prima facie meaning of such a phrase as 'if A.B. has reasonable cause to believe' a certain circumstance or thing, it should be construed as meaning 'if there is in fact reasonable cause for believing' that thing and if A.B. believes it. But I am quite unable to take the view that the words can only have that meaning. It seems to me reasonably clear that, if the thing to be believed is something which is essentially one within the knowledge of A.B. or one for the exercise of his exclusive discretion, the words might well mean if A.B. acting on what he thinks is reasonable cause (and, of course, acting in good faith) believes the thing in question. 75. I may at this stage refer to the case referred to by the learned Chief Justice on the question of import of the phrase in the opinion . The case is Ormerod v. Todmorden Mill Co. (1882) 8 Q.B.D. 664 where it was held that : The Court of Appeal has power to review the order made by a Judge under Section 57 of the Judicature Act, 1873, who, having jurisdiction to .....

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..... e Court of Appeal to rescind such an order and he held that even if there was jurisdiction under Section 19 of the Judicature Act, 1873, it is the jurisdiction which ought not to be exercised in that particular case for reasons of convenience of parties as set out by their Lordships at p. 664, and he held that he was of opinion that the discretion of the Judge under this particular section was not intended to be and could not be reviewed. This was a minority judgment. Lord Justice Brett held otherwise on the ground that Section 19 of the Judicature Act, 1873, allows every kind of appeal pursuant to this Act and the only limitation is in the words of Section 19 save as hereinafter mentioned. He posed the question at p. 678 whether the Court of Appeal had jurisdiction to review that exercise of discretion which the Judge did exercise and stated that the words in the opinion of the Court or a Judge seemed to him to be equivalent to according to the judgment of the Court or a Judge , and inasmuch as there cannot be any positive rule of law applicable to the particular case, for that reason it is that this opinion is an opinion of discretion as distinguished from an absolute rule o .....

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..... act and the Province of Bombay has been made under this section the sole judge, in the absence of a pleading to the effect that there was either malice or collateral purpose, and the words opinion of the Provincial Government qualify and control the whole of the sub-section. 79. Therefore there is no further point to be considered, but it may be stated that if the act of the Provincial Government was a quasi-judicial one, then the proceedings would be in the nature of an application for writ of certiorari, namely, for the purpose of sending for the proceedings and quashing them not on the ground that the Government was right or Government was wrong in its conclusion and opinion but on the ground that either the action was taken in excess of jurisdiction or that jurisdiction was entertained where there was want of jurisdiction or that the proceedings were contrary to the principles of natural justice. As I have pointed out above the question of the formation of opinion has not been challenged, and therefore even if the discretion exercised was a judicial one no grounds have been set out to challenge that position. 80. As I have stated above this is a narrow question of const .....

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