Dwarka Prasad Laxmi Narain v State of U.P. (1954)

It is the leading authority for control of discretion at the point of conferment: a provision which hands an official an unguided power to grant, withhold or cancel a licence is void on that ground alone, before anyone has exercised it badly. It also destroys the common student assumption that a duty to record reasons cures unguided power.

Clause 4(3) of the Coal Control Order allowed licences to be granted, withheld or cancelled by the licensing authority — an officer defined so widely that the power could be delegated to "any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person." The petitioners' licence was cancelled and they challenged the clause under Article 19(1)(g).

Clause 4(3) was "void as imposing an unreasonable restriction upon the freedom of trade and business guaranteed under Article 19(1)(g)" and outside the protection of Article 19(6); and since the clause formed "an integral part of the entire structure" of the Order, the cancellation made under it was "ineffective".

The vice, in one sentence. "No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the Order commits to the unrestrained will of a single individual the power to grant, withhold or cancel licenses in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same."

Why the duty to record reasons was no safeguard. "This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person." A duty to give reasons is a control only when someone can review them.

Why unguided power is peculiarly dangerous, from Yick Wo v Hopkins as quoted: the action or non-action of such officers "may proceed from enmity or prejudice, from partisan zeal or animosity, from favouritism and other improper influences and motives which are easy of concealment and difficult to be detected and exposed", so that the injustice "capable of being wrought under cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation."

What survived, and why it matters. The Court examined the price formula in Schedule III "with some care" and held it was "not in a position to say that the formula is unreasonable". A detailed statutory formula supplies exactly the guidance whose absence killed clause 4(3), so the case shows both sides of the test in one judgment.

A provision conferring on an official an unrestrained and unguided power to grant, withhold or cancel a licence imposes an unreasonable restriction on the freedom of trade and is void; neither a duty to record reasons nor any similar formality saves it unless there is an authority that can review the reasons.

• On judicial control of discretion: pair it with A. N. Parasuraman, where a licensing statute for educational institutions failed for the same reason and where an opportunity to make representations was held not to cure discriminatory power. The lesson from the pair is that guidance must come from the statute — its sections, its scheme or its preamble.
• On delegated legislation: it is the counterpoint to Darshan Lal Mehra, showing that delegation of legislative power which is arbitrary, or its exercise, may be quashed.