Kar HC | Trade licence is necessary for storage and distribution of ‘Auto LPG’ since said business activity is hazardous and likely to cause nuisance

Karnataka High Court: S. Sunil Dutt Yadav, J. heard a writ petition which dealt with granting of trade licence on the basis of a NOC.

The petitioner was a registered company engaged in the business of automobile, engineering and energy products. For storage of Auto LPG at the premises, NOC was sought from the Commissioner of Police, who in turn sought for NOCs from other authorities including the second respondent, Medical Officer of Health. But after a few months, the second respondent issued notice highlighting the requirement to obtain trade licence from Bruhat Bengaluru Mahanagara Palike (BBMP). Accordingly, petitioner applied for trade licence from the second respondent.  The petitioner submitted that instead of issuing the trade licence, the second respondent issued an endorsement, stating that a complaint had been filed against its business and it was asked to obtain a NOC from the complainants as a pre-condition for issuance of trade licence. Through further communication, it was informed that the petitioner’s business would be closed in case of failure to obtain the NOC. Later on, the petitioner was served with an order by the second respondent that it must stop its business within 24 hours from receipt of notice. This led to the filing of the petition under Article 226 and 227 of the Constitution of India seeking for a declaration that it was not required to obtain a trade licence under the Karnataka Municipal Corporations Act, 1976 (KMC Act) for dispensing autogas at its retail outlet. Hence, it had sought for issuance of a writ of certiorari to quash the order passed by BBMP.

The issues involved in the present case were, firstly, whether the petitioner was required to obtain trade licence in terms of Section 353 read with Schedule X of the KMC Act. Secondly, whether neighbor’s consent was required for obtaining trade licence and can be insisted upon by the BBMP Authorities as being mandatory.

The learned counsels for the petitioner, G Krishna Murthy and Rakesh Bhatt contended that once permission was obtained under the Petroleum Act, 1934 or Rules or Notifications published under the Act then, obtaining permission under the KMC Act did not arise. Moreover, it had obtained various licences and NOCs, which obviated the requirement of a trade licence from the respondents. The other contention was, that their property comes within ‘Commercial Axes Zone’ as per the Revised Master Plan 2015 and that neighbors consent was not required for obtaining licence as their property was located in a commercial zone.

The learned counsel for respondents, K.N. Puttegowda contended that mere obtainment of licences under other statutory regulations cannot do away with the statutory requirements under the KMC Act, which was required for the purpose of trading. Moreover, the power is vested with the Commissioner of BBMP under Section 353(5) of the KMC Act to refuse the grant of trade licence, if nuisance was likely to be caused in the neighborhood. The other contention was, that consent from neighboring property owners was essential, failing which, the respondents were justified in directing, closure of petitioner’s business.

The Court relied on the judgment in Faseela v. Chief Town Planner, 2014 SCC OnLine Ker 1355, in which requirement for the obtainment of NOCs from neighbors for vending LPG was struck down and it was held that the condition of obtaining NOC is not only onerous but also arbitrary, unfair and unreasonable.

It was further held that LPG shares characteristics of both gas and petroleum products. Considering the hazardous nature of LPG, the petitioners cannot be exempted from the requirement of obtaining trade licence. Hence, the petitioner was required to obtain trade licence from BBMP for vending of autogas. Moreover, BBMP had been unable to provide any statutory provision or delegated legislation which mandated obtainment of NOCs from private third parties, like petitioners’ neighbours. As regards the requirement of obtaining trade licence by the petitioner, it was held that the petitioner was required to obtain the trade licence.[Sipani Energy Ltd. v. Commr., Bruhat Bangalore Mahanagara Palike, 2019 SCC OnLine Kar 881, decided on 27-05-2019]

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