A.P. Excise (Grant of licence of selling by shops and conditions of licence) Rules, 2012 - inviting applications for grant of licences for the relocated A-4 excise shops Challenged - their lordships of High court held that Whether or not the undisposed A-4 shop should be relocated are matters of legislative or executive policy and this Court would not sit in judgment over
the policy decisions of the State. and dismissed the writ petitions =
The notifications issued by District Collectors, inviting applications for grant
of licences for the relocated A-4 excise shops, is questioned in these Writ
Petitions as being arbitrary, illegal and contrary to the A.P. Excise (Grant of
licence of selling by shops and conditions of licence) Rules, 2012 (hereinafter
called the "2012 Rules").=
The State exercises two different powers on such occasions. The mere fact that
the State levies taxes and fees on trade or business in liquor or derives income
from it, does not make the right to carry on trade or business in liquor a
fundamental right. (R. Selvaraj68).
Whether or not the undisposed A-4 shop should be relocated are matters of
legislative or executive policy and this Court would not sit in judgment over
the policy decisions of the State.
The Excise Policy for the year 2014, while
permitting the Commissioner to relocate undisposed shops, requires an intensive
campaign to be undertaken to educate the public about the evil effects of
drinking and for steps to be taken to initiate establishment of de-addiction
centres in each district.
The manner in which the revenue needs of the State
should be balanced with the need to educate the public of the evil effects of
drinking are also not for this Court to adjudicate in proceedings under Article
226 of the Constitution of India.
This contention urged by the petitioners, who
are carrying on trade in the sale of IMFL and FL in retail shops, is akin
to the devil quoting the scriptures, and does not merit acceptance.
XXIII: CONCLUSION:
Viewed from any angle, I see no reason to exercise discretion, under
Article 226 of the Constitution of India, to interfere. The Writ Petitions fail
and are, accordingly, dismissed. The miscellaneous petitions pending, if any,
shall also stand dismissed. No costs.
2014( March. Part ) judis.nic.in/judis_andhra/filename=10965
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NOs.35116 OF 2013
05-03-2014
B. Venkateswarlu and two others.....Petitioners
Government of A.P. Revenue (Excise) Department, rep., by its Prl. Secretary to
Govt. Secretariat, Hyderabad and three others.....Respondents
Counsel for the petitioners: Sri K. Ramakrishna Reddy, Learned Senior
Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy, Sri I.
Chandrasekhar, Sri P. Nagendra Reddy, Sri P.V. Ramana, Sri C. Damodar Reddy, Sri
B. Vijaysen Reddy and Sri S. Rajasekhar Rao, Learned Counsel appearing on behalf
of the petitioners.
Counsel for respondents: Learned Government Pleader for Prohibition and Excise
<GIST:
>HEAD NOTE:
?Citations:
1) AIR 1980 SC 1502: 1980 Supp SCC 81
2) (2004) 11 SCC 26
3) 2005(6) ALD 514
4) (2007 (3) ALT 678 = (2007) 2 ALD 830
5) AIR 1961 SC 1170 : (1961) 3 SCR 185
6) AIR 1997 SC 2239
7) AIR 1990 SC 1747
8) AIR 1966 SC 1678
9) (1984 (2) SCC 500
10) (2001)8 SCC 61
11) (2003)5 SCC 134
12) (2005)10 SCC 437
13) (2004)11 SCC 625
14) (2001) 8 SCC 540
15) (1995) 1 SCC 351
16) (1974) 2 SCC 579 = AIR 1974 SC 1905
17) (1969) 1 AnWR 77
18) AIR 1951 SC 467
19) (2010) 6 SCC 545
20) 2012 (6) ALD 98 (DB
21) (1987) 1 SCC 658
22) AIR 1986 SC 1518
23) (1994) 5 SCC 198
24) (1980) 2 SCC 752
25) AIR 1965 SC 722
26) (2003) 1 SCC 506 : AIR 2003 SC 269
27) 2012 (6) ALD 390
28) (1985) 3 SCC 360
29) AIR 1982 SC 33: (1982) 1 SCC 39
30) AIR 1967 SC 1170
31) AIR 1967 SC 1836
32) AIR 1975 SC 2299
33) (1995) 1 SCC 574
34) (2006) 4 SCC 327
35) (2001) 9 SCC 432
36) 1999 American Law Reports 1137
37) 1978 (2) SCC 213
38) 1990 (3) SCC 447
39) 1993 Supp.(3) SCC 716
40) 1999 (4) SCC 135
41) 1999 (6) SCC 275
42) (1964) 4 SCR 280
43) (1986) 4 SCC 447
44) AIR 1958 Allahabad 692
45) AIR 1994 SC 813 = 1994 Supp (1) SCC 8
46) (2008) 5 SCC 33
47) 2008 28 JT 639
48) AIR 1958 SC 731
49) (2010) 7 SCC 643
50) AIR 1959 SC 942
51) AIR 1968 SC 1
52) AIR 1964 SC 1135
53) (2012) 4 SCC 483
54) (1988) 3 SCC 382
55) LAWS -TLMAD 2003-0-582: MANU/TN/0192/2003
56) (2013) 5 SCC 427
57) (2011) 7 SCC 639
58) (1966) 5 SCC 125
59) (2013) 2 SCC 772
60) (2013) 8 SCC 519
61) (1974) 1 SCC 19
62) AIR 1955 SC 191
63) AIR 1958 SC 538
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65) (1990) 4 SCC 366
66) (2003) 7 SCC 83
67) (2013) 8 SCC 154
68) 2002 (1) MLJ 627
69) AIR 1954 S.C. 220
70) AIR 1972 S.C 1816
71) AIR 1975 S.C. 360
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73) AIR 1977 S.C. 722
74) (2009) 14 SCC 85
75) (1986) 4 SCC 566
76) (1994) 5 SCC 509
77) 2004 (3) SCC 402
78) AIR 1984 S.C. 1030
79) (1993) 1 SCC 445
80) (2011) 2 SCC 575
81) 48 L Ed 971
82) (2008) 1 SCC 683
83) (1989) 1 SCC 89
84) AIR 1978 SC 597
85) AIR 1969 SC 198(1969)1 SCR 315
86) (1971) 3 SCC 864 = AIR 1973 SC 205
87) (1985) 3 SCC 398
88) (2006) 3 SCC 276
89) (1970) 2 SCC 458
90) (1981) 1 SCC 664
91) (1980) 2 SCC 295
92) (1981) 2 SCC 722
93) (1985) 1 SCC 641
94) (1972) 1 WLR 1373
95) (1980) 3 SCC 97
96) (2001) 3 SCC 635
97) (2010) 4 SCC 192
98) AIR 1952 SC 16
99) (1973) 1 SCC 409
100) (1980) 2 SC 471
101) (1985) 3 SCC 1
102) (2002) 7 SCC 222
103) (2004) 9 SCC 362
104) (2011) 6 SCC 508
105) (1993) 1 SCC 71
106) (1994) 4 SCC 42
107) (1999) 4 SCC 727
108) (2003) 3 SCC 485
109) (2003) 5 SCC 134
110) (2006) 4 SCC 1
111) (2006) 5 SCC 702
112) (2006) 8 SCC 381
113) (2009) 1 SCC 180
114) (1993) 3 SCC 499
115) (2011) 1 SCC 640
116) (1994) 4 SCC 104
117) 2004(2) ALD 599 (DB
118) AIR 1989 SC 997
119) (1875) Ch.D.426)
120) AIR 1964 SC 35
121) (2001) 4 SCC 9
122) (2007) 2 SCC 588
123) AIR 1969 SC 634
124) AIR 1956 SC 593
125) AIR 1965 SC 1216
126) AIR 2009 SC 713
127) AIR 2011 SC 1869
128) (2011) 10 SCC 420
129) (20120 12 SCC 133
130) (2013) 5 SCC 470
131) (1921) 2 KB 608
132) (1992) 4 SCC 683
133) (1998) 6 SCC 507
134) (2002) 1 SCC 100
135) AIR 1984 SC 1401
136) (1984) 4 SCC 371
137) 2005(4) Laws (APHC) 106
138) (2008) 12 SCC 481
139) (1980) 2 SCC 437
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NOs.35116, 35260, 35286, 35294, 35298, 35299, 35303, 35304, 35405,
35475, 35488, 35496, 35500, 35535, 35548, 35610, 35648, 35745, AND 35750 OF 2013
COMMON ORDER:
The notifications issued by District Collectors, inviting applications for grant
of licences for the relocated A-4 excise shops, is questioned in these Writ
Petitions as being arbitrary, illegal and contrary to the A.P. Excise (Grant of
licence of selling by shops and conditions of licence) Rules, 2012 (hereinafter
called the "2012 Rules").
It would suffice, for the disposal of this batch of Writ Petitions, if the facts
in W.P. No.35116 of 2013 are noted. The petitioners were allotted A-4 shops at
Konijerla and other villages for the licence period 01.07.2012 to 30.06.2013.
They paid the licence fee of Rs.32.5 lakhs per annum. The licence was renewed,
on completion of one year, in accordance with Rule 8 of the Rules. In the
notification dated 30.11.2013, published in the District Gazette, the District
Collector stated that the licence for the right of selling by shop was to be
granted for the licence period from 01.07.2013 to 30.06.2014; the Commissioner
of Prohibition & Excise had fixed 153 A-4 shops to be licensed in the
areas/localities by proceedings dated 12.07.2012; among the 153 notified shops,
147 shops, which were disposed and established for the year 2012-13, were being
renewed for the year 2013-14; in addition thereto, two new shops were allotted
by the Commissioner of Prohibition & Excise by proceedings dated 29.11.2013;
consequently he was issuing a notification for the A-4 shops which were either
not disposed or had been cancelled or withdrawn for the year 2012-13; and,
consequently, seven A-4 shops were being relocated under Rule 4 for drawal of
lots.
The petitioners are aggrieved by the said notification of the District
Collector, informing the public and intending applicants, that A-4 shops were
being relocated from one area to another either within or beyond the District.
It is the petitioner's case that a similar attempt to relocate shops, by
issuance of a notification, was under challenge in W.P. No.21377 of 2013 and
batch; during the pendency of the Writ Petitions, the said notifications were
withdrawn by the Government; and, consequently, the Writ Petitions were disposed
of by order dated 21.08.2013.
In the counter-affidavit filed on behalf of the Commissioner of Prohibition &
Excise it is stated, among others, that the Commissioner had granted permission
to relocate only 314 of the 1311 undisposed shops after considering all relevant
factors; accordingly notifications dated 15.07.2013 were issued inviting
applications for 300 shops at the proposed places; 810 applications were
received for 127 A-4 shops; W.P. No.21474 of 2013 and batch was filed
challenging the notification dated 15.07.2013; this Court had, by order dated
22.07.2013, permitted the authorities to proceed with the process of receipt of
applications and drawal of lots, but had directed that no licenses shall be
issued for any of the relocated shops; when the matter was being heard, the
respondents withdrew the notifications with liberty to issue notifications
afresh for relocation of the A-4 shops at all places where the turnover of the
existing shops exceeded seven times the licence fee; as the cause in the Writ
Petition did not survive, necessitating adjudication by this Court, the Writ
Petitions were closed by order dated 21.08.2013; 60 A-4 shops, notified at their
original places in the third round of notification, were confirmed;
notifications dated 03.11.2013 were issued by the District Collectors inviting
applications for establishing A-4 shops at the notified places; 547 applications
were received pursuant to these notifications; among the 547 applications, 14
were received for the 12 A-4 shops notified in their original locations; as
against the 121 A-4 shops sought to be relocated, 533 applications were received
for 72 A-4 shops; lots were drawn on 07.12.2013 by the District Collectors, and
successful applicants were declared; the Prohibition and Excise Superintendents
had issued provisional licences to the successful applicants, except in
Doulatabad of Medak district where the successful applicant did not pay the
license fee; the Government had increased the price of liquor on more than three
occasions without changing the percentage of margin allowed to the retailer on
the purchases made from Andhra Pradesh Beverages Corporation Limited ('APBCL'
for short); as the margin was fixed on the issue price, there would be no change
in the profit margin of the licensees; because of the increase in price, the
margin for the retailer had automatically increased, though there may not be a
proportionate increase in sales; and, in such circumstances, it cannot be said
that the gazette notification issued by the respective District Collectors are
illegal, arbitrary and contrary to the provisions of the A.P. Excise Act; and,
in similar circumstances, this Court had, by its order in W.P.No.22095 of 2013
dated 25.09.2013, held that relocation of an A-4 shop, at a place where the
turnover is 14 times, cannot be said to be arbitrary or in violation of Article
14 of the Constitution of India.
In the additional counter-affidavit, filed on behalf of the Commissioner, it is
stated that 110 A-4 shops had crossed the turnover of 14 times and above
throughout the State; two of such A-4 shops were disposed of at the relocated
places in the second round of notification; the three A-4 shops, proposed in
scheduled areas, were not notified for want of Gram Sabha resolution; of the
remaining 104 A-4 shops, notified at places where the turnover was 14 times and
more, 17 A-4 shops have been notified for relocation at places where there is
not even a single A-4 shop for the entire mandal; from out of these 104 A-4
shops, 61 were disposed of; out of 17 A-4 shops, notified at places where there
is not even a single shop in the entire Mandal, 11 shops have been disposed of;
in all 72 A-4 shops have been disposed of under the present notifications; in
all these cases, the licensees were granted A-4 licences for the excise year
2012-13; in accordance with Rule 21, the licences of all A-4 licensees were
renewed for a further period of one year from 01.07.2013 to 30.06.2014, wherever
the licensees had sought renewal; the 7 times turnover, prescribed under Rule
16(9), is for each licence year; in the present notification a fixed licence fee
is notified, in proportion to the period for which a licence was issued, in
terms of Rule 16(9); if the licensee's turnover crosses 7 times the licence fee,
or the proportionate licence fee, in that excise year such licensees are liable
to pay privilege fee; the petitioners' contention that they would be put to loss
if licences are issued to prospective applicants is not tenable; under Section 3
of the Act and Rule 11 of the Rules, the District Collector is the selection
authority to conduct the process of selection of applicants for grant of
licences, which includes the power to issue a notification duly inviting
applications for grant of licences; at the time of selection of the applicants,
the Commissioner had informed all the District Collectors, through D.O. letters,
to issue notifications inviting applications for grant of licences; and as many
as 5510 A-4 shops have been allotted to the successful applicants for the year
2013-14 as per the notification issued, in the District Gazettes, by the
District Collectors concerned.
Oral submissions were put forth by Sri K. Ramakrishna Reddy, Learned Senior
Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy, Sri I.
Chandrasekhar, Sri P. Nagendra Reddy, Sri P.V. Ramana, Sri C. Damodar Reddy, Sri
B. Vijaysen Reddy and Sri S. Rajasekhar Rao, Learned Counsel appearing on behalf
of the petitioners. Learned Government Pleader for Prohibition and Excise
presented his arguments on behalf of the State Government. Written arguments
have also been filed. The rival contentions, urged by Counsel on either side,
are dealt with hereinafter under different heads.
I. RULE 4 AS AMENDED AND NOTIFIED IN G.O.MS. NO.357 DATED 22.06.2013 : ITS
SCOPE:
It is contended on behalf of the petitioners that the 2012 Rules do not confer
any power on the Commissioner to transfer A-4 shops fixed for a particular
area/locality to another; no material has been placed before the Court to show
whether the "public order" requirement of Rule 4 is satisfied; and opening new
shops would create law and order problems.
The Andhra Pradesh Excise Act is an Act intended to raise and secure revenue to
the State without, at the same time, sacrificing the public interest involved in
the regulation of trade in intoxicants. Administration of the Act is,
therefore, vested primarily and centrally in the Commissioner of Excise. The
fixation of the number of shops, their location, and grouping are considered by
the legislative delegate to be matters of such vital importance in Excise
administration that the power in this regard is vested in the Excise
Commissioner. (Rajamallaiah v. Anil Kishore1). The provisions confer ample
regulatory power upon the Excise Authority to regulate, several activities
related to liquor, in any reasonable manner. (State of Punjab v. Devans Modern
Breweries Ltd.,2).
The 2012 Rules were amended by the Government in the exercise of the powers
conferred by Section 72 r/w. Sections 17, 28, and 29 of the Act. The amendments
were notified in G.O.Ms. No.357 dated 22.06.2013, and were published in the A.P.
Gazette on 24.06.2013. Rule 4, after its amendment, reads as under:
"Rule 4. Establishment of Shops:- Subject to such directions, which the
Government may issue in this regard from time to time, the Commissioner of
Prohibition and Excise, having due regard to the requirement, public order,
health, safety and other factors as he thinks fit, may fix the number of shops
to be established in an area/ locality before the publication of notification
under Rule 5, and may relocate any un-disposed shops from any area/locality as
he thinks fit."
The word "un-disposed", in amended Rule 4, disables the Commissioner from
relocating any A-4 shop, and his power to relocate A-4 shops is confined only to
those which remained undisposed for the Excise Year 2013-14. The un-disposed
A-4 shops are those for which either no licence was granted in the Excise Year
2012-13 or for which the licensees chose not to renew their licences for the
Excise Year 2013-14. As against the stipulated 6596 shops for the entire State,
the number of A-4 shops for which licences were renewed for the Excise Year
2013-14 were 4986. Around 1610 A-4 shops remained un-disposed, and were sought
to be sold to augment State revenue. It is only these un-disposed A-4 shops
which the amended Rule 4 empowered the Commissioner to relocate for augmenting
State revenue through collection of licence fees.
Reliance placed on behalf of the petitioners, on the judgments in Arji Sankara
Rao v. Government of Andhra Pradesh3, and G. Venkatesh v. Commissioner of
Prohibition and Excise4, is misplaced. In Arji Sankara Rao3, this Court held
that, before issuing the auction notice, the Commissioner is required to fix the
number of shops to be established in an area/locality; and, on a combined
reading of Rules 3, 4 and 5, it was clear that the lease of the right to sell
Indian Liquor and Foreign Liquor by shop by way of public auction can be granted
only in respect of the shops fixed by the Commissioner in the particular
area/locality identified by him, and in no other area/ locality. In G.
Venkatesh4, this Court held that there is no provision under the Shop Rules
permitting shifting of the shop even by the Commissioner from one
mandal/municipality to another; if any of the shops are not disposed of, it is
for the APBCL to sell liquor at the said outlet in the notified area; if the
respondents are permitted to relocate the shop it would result in unhealthy
competition as a result of the shops being relocated from an area where there
are lesser sales to another area where there are higher sales; the location and
upset price has been notified so as to enable the auction purchasers to take
into account all relevant factors and offer their bids; and there is no
justification in relocating un-disposed shops to some other mandal or locality.
Both in Arji Sankara Rao3, and in G. Venkatesh4, the rules under consideration
were the A.P. Excise (Lease of Right of selling by Shop and Conditions of
Licence) Rules, 2005 (hereinafter called the "2005 Rules"). These Rules did not
confer any power on the Commissioner of Excise to relocate un-disposed A-4
retail shops from an area/locality. The 2012 Rules were published in the A.P.
Gazette on 18.06.2012. The power conferred on the Commissioner under Rule 4 of
the 2012 Rules (before its amendment) was also limited to fixing the number of
shops to be established in an area/locality before publication of the
notification under Rule 5. It is only under the amended Rule 4 of the 2012 Rules
that power has been conferred on the Commissioner to relocate an undisposed A-4
shop from an area/locality.
II. AMENDED RULE 4 - CONSTRUCTION TO BE PLACED THEREON:
The contention that the addition to Rule 4, by amendment of the rules, does not
carry any meaning, does not merit acceptance. In the interpretation of
statutes, the court always presumes that the legislature has inserted every part
thereof for a purpose, and the legislative intent is that every part of the
statute should have effect. These presumptions will have to be made in the case
of the rule-making authority also. (J.K. Cotton Spinning & Weaving Mills Co.
Ltd. v. State of U.P.5). It is a cardinal principle of construction of a
statute or a statutory rule that effort should be made in construing the
different provisions so that each provision will have its play. A statute, or
rules made thereunder, should be read as a whole and one provision should be
construed with reference to the other so as to make the rules consistent. Any
construction which would bring any inconsistency or repugnancy between one
provision and the other should be avoided. A construction that reduces one of
the provisions to a 'dead letter' is not a harmonious construction as one part
is being destroyed. (Jagdish Singh v. Lt. Governor Delhi6). To harmonise is
not to destroy.
Relocation of an A4 shop is permissible only if it was not disposed of at the
beginning of the Excise Year 2013-14. Accepting the contention that the number
of shops fixed in an area/locality, when the notifications were issued for the
Excise Year 2012-13, cannot be increased subsequently, under the guise of
relocation, would mean that an un-disposed shop can only be relocated to an area
where no licence was either granted or renewed for an A-4 shop in the Excise
year 2013-14. Undertaking such an exercise would be futile. As no one had
sought licences in such areas/location in the first place, they are not likely
to seek licences for the undisposed shops relocated to the same area/locality.
The construction sought to be placed by the petitioner would render the very
amendment of Rule 4 meaningless. Reading any limitation on the power conferred
by the amended Rule 4, to relocate an un-disposed A-4 shop only within the
district in which it was originally fixed, would also require this Court to read
the words "to an area/locality within the district" into the amended Rule 4. A
construction which requires, for its support, addition or substitution of words,
or which results in rejection of words, has to be avoided. (Gwalior Rayons Silk
Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests7, Shyam Kishori Devi v.
Patna Municipal Corpn8, A. R. Antulay v. Ramdas Sriniwas Nayak9, Dental Council
of India v. Hari Prakash10, J. P. Bansal v. State of Rajasthan11 and State of
Jharkhand v. Govind Singh12). Courts should not, ordinarily, add words to a
statute or read words into it which are not there, especially when a literal
reading thereof produces an intelligible result. (Delhi Financial Corpn v. Rajiv
Anand13). Effect should be given to all the provisions and a construction that
reduces one of the provisions to a "dead letter" must be avoided. (Anwar Hasan
Khan v. Mohd. Shafi14).
The contentions that the Commissioner lacks the power to relocate an undisposed
shop from any area as he thinks fit under the amended Rule 4 "to any area at any
time as he thinks fit", as it would amount to adding words, which were omitted
in the Rule, by the Rule making authority; and no words which are omitted can be
read into the Rule (casus omissus); are not tenable as no words have been
omitted from Rule 4. On the contrary the words "and may relocate any undisposed
shops from any area/locality as he thinks fit" has been inserted thereto.
On a plain and literal reading, it is evident that the amended Rule 4 is open
ended, and leaves it to the discretion of the Commissioner to decide the place
where an undisposed A-4 shop should be relocated. No words need be added
thereto. On the other hand reading any limitation in the amended Rule 4,
regarding the areas/locality to which it should be relocated, would require
addition of words thereto which is impermissible in law.
III. ARE THE FACTORS ENUMERATED IN RULE 4 REQUIRED TO BE TAKEN INTO
CONSIDERATION EVEN WHILE RELOCATING UNDISPOSED A-4 SHOPS?
It is contended on behalf of the petitioners that, even while relocating
A-4 shops, the factors enumerated in Rule 4 should be taken into consideration
as fixation of the number of shops is at a micro level. The prescription in Rule
4, of having due regard to the requirement of public order, health, safety and
other factors, is before the Commissioner fixes the number of shops to be
established in an area/locality. Such an exercise has already been undertaken
and completed in the previous Excise Years. On a plain and literal reading of
the amended Rule 4 it is evident that the Commissioner is not obligated to again
have due regard to these factors while relocating an un-disposed shop from an
area/locality.
It is unnecessary to delve further on this aspect as the counter-affidavit
filed by the respondents discloses that, after permission was given by the
Government, the Commissioner had requested the Deputy Commissioners of
Prohibition & Excise, vide letter dated 08.07.2013, to provide information for
relocation of the undisposed A-4 shops; a meeting with all the Deputy
Commissioners were held on 11.07.2013 exclusively for the purpose of relocating
the undisposed shops; the respective supervisory officers, monitoring affairs in
the allotted districts, held deliberations with the respective Deputy
Commissioners to decide about relocation of the undisposed shops strictly in
accordance with Rule 4; during these discussions all the factors, envisaged
under Rule 4, were considered; ultimately the field level officers had
identified only 314 shops, from out of 1311 undisposed shops, for relocation all
over the State; the Deputy Commissioners had submitted their proposals with
specific remarks for relocation of the A-4 shops which were not disposed off;
their proposals contained specific remarks with regards spatial gaps, to
overcome the disqualifications under Rule 25, plugging unauthorised sale of I.D.
liquor and to streamline the number of shops in a particular area/locality; they
had pointed out that the shops had not been evenly distributed among the
mandals/municipalities; there were some mandals where not even a single shop is
located; in certain mandals there was only one A-4 shop in the entire mandal;
in some municipalities there were only one or two shops; as A-4 shops were not
rationally distributed earlier, there were excess shops in some areas, and no
shops at other places; while there was no requirement of A-4 shops in certain
areas, there was a requirement in others; in order to curb the menace of I.D.
liquor, the field level officers had proposed some places for relocation; by
virtue of the powers conferred under Rule 4 the Commissioner, after taking into
consideration the requirement, public order, health, safety and other factors
before relocating the A-4 shops, had accorded permission for relocation of
shops; and, taking into consideration all relevant factors and the proposals
submitted by the Deputy Commissioners, he had granted permission for relocation
of 314 shops from out 1,311 undisposed shops. From the aforesaid averments in
the counter-affidavit, it is evident that the Commissioner had again taken into
consideration the factors enumerated in Rule 4 before relocating undisposed A-4
shops.
IV. CAN SHOPS, HITHERTO FIXED FOR AN AREA/LOCALITY WITHIN A DISTRICT, BE
RELOCATED TO ANOTHER AREA/LOCALITY IN ANOTHER DISTRICT OF THE STATE?
It is contended on behalf of the petitioners that there are six zones in the
State which are divided into two multi-zones; in the absence of any definition
in the rules, and as the Licensing Authority (Excise Superintendent) is in-
charge of an excise district, the word "area" can only mean a part of a district
and not beyond; a "locality" is similar to an "area"; the words "area/locality"
should be read ejusdem generis, and cannot travel beyond the district; the words
"any area" must be read to mean a locality within the same mandal; the entire
State cannot be taken as one area; the contemporaneous understanding of the
Commissioner, in the impugned notification dated 30.11.2013, is that the word
"area/locality" means a "district"; from the Excise Policy, notified in G.O.Ms.
No.358 dated 22.06.2013, it is clear that the government understood "district"
to be the "area"; as a result of the impugned notifications the number of shops,
already fixed at the time of starting of the Excise Year, in an area has
increased; the amended portion of Rule 4 does not confer power to relocate
undisposed shops from one district to another after the number of shops, for
each district, has been fixed on the basis of the criteria laid down in Rule 4;
no power is conferred on the authority to enhance the number of shops in the
transferee district; transfer of a shop from one district to another defeats the
population ratio, falls foul of Rule 16(1), and adversely affects the licensee
as there cannot be more than one shop for the same population; and the number of
shops, fixed in an area / locality at the time of the notification, cannot be
increased subsequently under the guise of relocation.
It is no doubt true that Rule 4 of the 2012 Rules confers power on the
Commissioner to fix the number of shops to be established in an area/locality,
and it is in exercise of this power that the Commissioner had, hitherto, fixed
the number of shops in different areas/localities in the State. The relocation,
sought to be made by way of the impugned notifications, is of undisposed shops
hitherto fixed in a particular area/locality. As the power of the Commissioner
to relocate an undisposed shop, from an area/locality to another, is not
fettered by village/municipal/municipal corporation/mandal/district level
restrictions, it is open to him, for just and valid reasons, to relocate
undisposed shops from an area/locality in a district/zone/multi-zone to another
area/locality in a different district/zone/multi-zone.
Reference made in the impugned notifications, issued by the District Collectors,
is to the initial fixation of shops, by the Commissioner on 12.07.2012, in an
area/locality. The distinction, between fixation of shops in an area/locality
and relocation of an undisposed shop, must be borne in mind. While the initial
exercise undertaken by the Commissioner under Rule 4 is to fix the total number
of 6596 shops, stipulated in the Excise Policy of the Government for the entire
State, in different areas/localities of the State, the exercise of power to
relocate undisposed shops is restricted only to those shops for which no
licences were renewed/granted for the Excise Year 2013-14. It is only because
the shops, hitherto fixed in an area/locality, were not disposed of (for which
either no licences were granted or renewed) are they now sought to be relocated.
In Shaktikumar M. Sancheti v. State of Maharashtra15, the Supreme Court
considered the scope of the words "local area" under the Motor Vehicles Taxation
Act and observed that the expression "local area" must be understood in the
sense of any area administered by a local body. In C.P. Sikh Regular Motor
Service v. State of Maharashtra16, the observations of the Supreme court were in
the context of Section 2(1) of the Motor Vehicles Act, 1939 as inserted by Act
56 of 1969 whereby 'area', in relation to any provision of said Act, was defined
to mean such area as the State Government may, having regard to the requirements
of that provision, specify by notification in the Official Gazette. The
definition of "local area" under the Motor Vehicles Taxation Act, and "area"
under the Motor Vehicles Act, cannot be extrapolated to the 2012 Rules. The
amended Rule 4 refers merely to the area/locality where the un-disposed shop was
hitherto located. It does not specify the area/locality to which the un-
disposed A-4 shop should be relocated. Even if the words "area" or "locality"
is read to mean a town/village or a part thereof, the amended Rule 4 does not
prohibit relocation of an un-disposed A-4 shop to an area/locality where an A-4
shop licence has already been granted. The meaning to be given to the words
"area" or "locality" is, therefore, of no consequence.
While the Excise Policy for 2013-14 places restrictions on relocation of an
undisposed shop, from a higher population slab to a lower population slab, it
does not prohibit an undisposed shop from being re-located in an area/locality
where an A-4 shop is in operation. The population ratio of a
village/municipality/municipal corporation is relevant only for fixation of the
licence fee, and has no bearing on the relocation of an undisposed shop. The
petitioners' contention that the number of shops fixed in an area/locality, when
the notifications were issued in July, 2012, cannot be increased subsequently is
not tenable as such a power inheres, under the amended Rule 4 of the 2012 Rules,
in the Commissioner.
V. DISTINCTION BETWEEN THE EXERCISE OF POWER UNDER THE AMENDED RULE 4 AND
RULE 18:
It is contended on behalf of the petitioners that the rule making authority was
conscious of the difference between an "area" or "locality" as referred to in
Rule 18(1), and the words "any where in the State" as referred to in Rule 18(2);
an area/locality is the basis for fixation of shops, and power must be exercised
under Rule 4 for each area; and the very fact that the words "anywhere in the
state" has not been used in the amended Rule 4 goes to show that undisposed A-4
shops can only be relocated within the same district, and not beyond.
The power of the District Collector, under Rule 18(1) of the Rules, to permit
APBCL to open outlets to sell IMFL and FL is circumscribed by the requirement of
obtaining approval of the Commissioner. Exercise of such a power is limited
only to such areas/localities where (i) the privilege of sale of shops could not
be disposed of through selection; or (2) when a licence already granted is
cancelled and the said shop could not be re-allotted for any reason. As the
jurisdiction of the District Collector is confined to a "district" and not
beyond, his power to permit APBCL to open outlets is not only confined to the
district of which he is the Collector but also, as is clear from the use of the
word "such", to the very same area where the licence granted earlier was
cancelled, or no licence was granted, that too only with the approval of the
Commissioner. On the other hand the Commissioner's power under Rule 18(2), to
permit APBCL to open outlets, is neither limited by any area/locality
restrictions nor is his power confined only to grant of permission in such
places where an A-4 shop licence could not be disposed of or where a cancelled
licence could not be re-allotted. The only limitation on his power is his
satisfaction that granting such permission is in public interest. The words
"anywhere in the State" were used in Rule 18(2) only to distinguish the powers
conferred on the District Collector and the Commissioner. While the power of
the District Collector under Rule 18(1) is confined to the area/locality in the
District, the power of the Commissioner under Rule 18(2) is not.
Unlike Rule 18(1) which is confined to outlets being opened by the APBCL, no
power is conferred under the 2012 Rules on the District Collector to relocate an
un-disposed A-4 shop by grant of a licence. While Rule 18(2) enabled him to
permit APBCL to open outlets anywhere in the State, the Commissioner, hitherto,
lacked the power to relocate un-disposed A-4 shops from a certain area/locality
to another. Such a power is now conferred on the Commissioner by the amended
Rule 4. Consequent to Rule 4 being amended, the Commissioner not only has the
power to permit APBCL to open outlets anywhere in the State, he also has the
power to relocate un-disposed A-4 shops from any area/locality as he thinks fit
to another.
VI. DISTINCTION BETWEEN SHIFTING OF AN A-4 SHOP IN TERMS OF RULE 28 AND
RELOCATION OF AN UNDISPOSED A-4 SHOP IN TERMS OF THE AMENDED RULE
4:
It is contended on behalf of the petitioners that the words "shifting" and
"relocating" mean the same; relocation of shops under Rule 4 can only be in
accordance with the proviso to Rule 28(3); and the very fact that the rule
making authority has neither amended Rule 28(3), nor has the word "district"
been used in Rule 4, can only mean that the words "area/locality" in Rule 4
covers an area within the same mandal, and not beyond.
Rule 28 of the 2012 Rules empowers the Commissioner to permit a licensed
premises to be shifted either within a notified area or beyond a notified area
but within the same Mandal or Municipality or Municipal Corporation. Unlike
Rule 28, which relates to a licensed premises (ie an A-4 shop for which the
licence has been renewed for the Excise Year 2013-14), power is conferred under
the amended Rule 4 only to relocate those A-4 shops for which licences have not
been granted or renewed for the Excise Year 2013-14. The power conferred under
the amended Rule 4 to relocate an un-disposed shop is not fettered, unlike under
Rule 28, by any "area" restrictions. The distinction between the amended Rule 4
and Rule 28 can be explained by way of an illustration. Let us say, for example,
two A4 shops were fixed for grant of licences in "X" municipality. However
licence was granted only in respect of one shop, and the other shop remained un-
disposed. While a request made by a licensee, for shifting the shop for which a
licence was granted in his favour, can be considered in terms of Rule 28 only
within the area limits of "X" Municipality, the power to relocate the other A-4
shop, which remained un-disposed, is not confined to the area limits of "X"
Municipality. The only limitation placed by the Excise Policy for the year 2013-
14, on relocation of an un-disposed A-4 shop, is that it should be from an area
to another within the same population slab or from a lower population slab to a
higher population slab.
VII. POWER OF THE COMMISSIONER TO RELOCATE AN UNDISPOSED A-4 SHOP,
HITHERTO FIXED IN A SCHEDULE AREA, TO A NON-SCHEDULE AREA:
It is contended, on behalf of the petitioners, that Rule 4 does not empower the
Commissioner to relocate shops, situated in scheduled areas, to non-scheduled
areas; under Rule 5(1)(i) shops to be located in scheduled areas are separately
listed and serially numbered; and shops in the scheduled areas cannot be
relocated to non-scheduled areas unless the Commissioner deletes it from the
said list, and includes it in the list of "plain areas".
Rule 2(t) of the 2012 Rules defines "Scheduled Area" to mean the Scheduled Areas
notified under para 6 of the V Schedule to the Constitution. Rule 3(2)
stipulates that, in the case of shops located in scheduled areas, the right to
sell IMFL and FL in retail shops shall be granted to local scheduled tribe
candidates; in case there is no such applicant available, it should be granted
to any other scheduled tribe candidate; and, if not available, to any other
candidate. The notification, under Rule 5(1), is required to separately list the
shops to be located in scheduled areas, and for their being serially numbered,
to make the applicants aware that licences, to sell IMFL and FL in such shops,
would be granted only to the local scheduled tribes.
Section 4 of the Panchayats (Extension to the Scheduled Areas) Act, 1996
stipulates that, notwithstanding anything contained under Part IX of the
Constitution, the Legislature of a State shall not make any law under that Part
which is inconsistent with any of the features mentioned in the clauses
thereunder. Clause [c] of Section 4 requires every village to have a Gram Sabha
consisting of persons whose names are included in the electoral rolls for the
Panchayat at the village level. Clause (d) provides that every Gram Sabha shall
be competent to safeguard and preserve the traditions and customs of the people,
their cultural identity, community resources and the customary mode of dispute
resolution. Clause (m) (i) stipulates that, while endowing Panchayats in the
Scheduled Areas with such powers and authority as may be necessary to enable
them to function as institutions of self government, a State Legislature shall
ensure that the Panchayats, at the appropriate level, and the Gram Sabhas are
endowed specifically with the power to enforce prohibition or to regulate or
restrict the sale and consumption of any intoxicant.
The Andhra Pradesh Panchayat Raj Act, 1994 was amended by the Andhra Pradesh
Panchayat Raj (Amendment) Act, 1998. Section (2A), inserted thereto, stipulates
that in their application to the Scheduled Areas in the State, as referred to in
clause (1) of Article 244 of the Constitution of India, the remaining provisions
of the Act shall apply subject to the provisions of Part VI-A of the Act. Part
VI-A contains special provisions relating to the Panchayats, Mandal Parishads
and Zilla Parishads located in the Scheduled Areas. Under Section 242-C (1),
every Gram Sabha shall be competent to safeguard and preserve the traditions and
customs of the people, their cultural identity, community resources and, without
detriment to any law for the time being in force, the customary mode of dispute
resolution. Section 242-I(1)(a) stipulates that the Gram Panchayat or, as the
case may be, the Gram Sabha shall exercise such powers and perform such
functions in such manner and to such extent as may be prescribed in respect of
the enforcement of prohibition or regulation or restriction of the sale and
consumption of any intoxicant.
In the exercise of the powers conferred under Section 268(1) r/w. Sections
242-A to 242-I under Part VI-A of the Act, the Andhra Pradesh Panchayats
Extension to Scheduled Areas (PESA) Rules, 2011 were made and notified in
G.O.Ms. No.66 dated 24.03.2011. Rule 8(I)(b) requires the Gram Sabha to be
consulted before the grant of any licence to open liquor shop in the village;
for the Gram Sabha to convey its opinion, in the form of a resolution, within
four weeks; and for licences to be granted only to the local Scheduled Tribes.
Rule 8(I)(c) requires the department to issue a speaking order for granting or
not granting any licence to open liquor shop/bar in the village under intimation
to the concerned Gram Sabha, and that the Gram Sabha resolution shall be binding
and final. In view of the aforesaid provisions, it is only if the Gram Sabha
passes a resolution, permitting grant of a licence to open an A-4 to sell IMFL
and FL in scheduled areas, can such licenses be granted.
While the aforesaid provisions restrict opening of A-4 shops in schedule areas,
and for relocation of an A-4 shop from a non-scheduled area to a scheduled area,
neither the aforesaid provisions nor Rule 5(1)(i) of the Rules prohibit
relocation of an un-disposed shop from a scheduled area to a non-scheduled area.
VIII. THE AMENDED 2012 RULES CAME INTO FORCE ON ITS PUBLICATION IN THE
A.P. GAZETTE ON 24.06.2013:
Section 72(1) of the Act enables the Government, by notification, to make rules
for carrying out all or any of the purposes of the Act. Section 2(23) of the Act
defines "notification" to mean a notification published in the A.P. Gazette.
There is no presumption that the public would be aware of subordinate
legislation as soon as it is made. The principle that there can be no law that
is not published or promulgated is as true a principle of justice and fair play
as principles of natural justice. The idea that a person may be governed by a
law that cannot be known by him because it is not published or promulgated is
revolting to judicial conscience and civilised thought. (R. Narayana Reddy v.
The State of A.P. by the Secretary, Home17). Before a law can become operative,
it must be promulgated or published. It must be broadcast in some recognisable
way so that all men may know what it is or, at the very least, there must be
some special rule or regulation or customary channel by or through which such
knowledge can be acquired with the exercise of due and reasonable diligence.
Promulgation or publication of some reasonable sort is essential. (Harla v.
State of Rajasthan18; T. Narasimhulu v. State of A.P.,19). The object of
publication is to enable the public to acquire knowledge. (Tirumala Devi Eada v.
State of Andhra Pradesh20; B.K. Srinivasan v. State of Karnataka21; Sonic
Industries, Rajkot v. Municipal Corporation of the city of Rajkot22; Harla18).
Where a law, whether parliamentary or subordinate, demands compliance, those
that are governed must be notified of the law and all changes and additions made
to it by various processes. Whether law is viewed from the standpoint of the
'conscientious good man' seeking to abide by the law or from the standpoint of
Justice Holmes 'unconscientious bad man' seeking to avoid the law, the law must
be known, that is to say it must be so made that it can be known. Subordinate
legislation, in order to take effect, must be published or promulgated in some
suitable manner, whether such publication or promulgation is prescribed by the
parent statute or not. It will then take effect from the date of such
publication or promulgation. (B.K. Srinivasan21; Pankaj Jain Agencies v. Union
of India23; Sonic Industries22; Harla18).
When a statute vests a public power and conditions the manner of exercise of
that power then the law insists on that mode of exercise alone. (Charles K.
Skaria v. C. Mathew (Dr)24). Where the law prescribes the mode of publication
of the law to become operative, the law must be published in that mode only.
Where the statutory requirement of the mode or form of publication is mandatory,
a failure to comply with those requirements might result in there being no
effective order or rule, but where the mode of publication of the law is not
prescribed by the law, such law should be published in some usual or recognised
mode to bring it to the knowledge of all persons concerned. (State of
Maharashtra v. Mayer Hans George25; T. Narasimhulu19).
The mode of publication, prescribed under Section 72(1) of the A.P. Excise Act,
is by way of a notification in the A.P. Gazette. "Notification", in common
english acceptation, means and implies the formal announcement of a legally
relevant fact and in the event of a statute speaking of a notification being
published in the official gazette, it cannot but mean a notification published
by authority of law in the official gazette. Once the Rules are published in
the Official Gazette they shall be deemed to have been published, and to be
effective. (Subhash Ramkumar Bind v State of Maharashtra26; M.K. Rajasekhar v.
Government of A.P.27). The amendment to the 2012 Rules, notified in G.O.Ms.
No.357 dated 22.06.2013, was published in the A.P. Gazette on 24.06.2013 and, on
such publication, the general public has been made aware of these Rules having
been made. The amended 2012 Rules thus came into force on 24.06.2013.
IX. HAS THE AMENDED RULE 4 BEEN GIVEN RETROSPECTIVE EFFECT?
It is contended on behalf of the petitioners that, when licences were granted to
them in the year 2012, there was no statutory rule or provision for relocation
of an undisposed shop; even the renewal endorsement in the year 2013-14 does not
refer to the possibility of relocation of other shops; licenses granted to the
petitioners for the Excise year 2012-13, following the policy then in existence,
cannot be changed as the licences were merely renewed and not issued afresh; the
amended Rule 4 cannot be made applicable retrospectively to licences granted on
01.07.2012; and the exercise of relocation of undisposed shops should have been
undertaken, if at all, before the licences were renewed and not thereafter.
Para 4 of the 2012-13 Excise Policy stipulates that the period of licence shall
be for one year. The one year period, for which the licence was originally
granted, was from 1st July 2012 till 30.06.2013. For the second year 2013-14 the
licensee was only entitled to have his request for renewal of the licence
considered in terms of the Excise policies for the years 2012-13 and 2013-14.
Rule 21 of the 2012 Rules provides that a licence granted under the Rules, for
the period from 1st July, 2012 to 30th June, 2013 or part thereof, shall be
considered for renewal for the period 1st July, 2013 to 30th June, 2014 subject
to the applicant completing all formalities stipulated thereunder. The
amendment made, by G.O.Ms. No.357 dated 22.06.2013, is to the 2012 Rules and, on
its coming into force, forms part of the 2012 Rules which, in terms of Rule 21,
necessitate compliance for grant of renewal of a licence. The original licence
for the Excise Year 2012-13, which is a binding contract between the petitioners
and the State, is only for one year and came to an end on 30th June, 2013. The
renewed A-4 licence is a fresh contract between the petitioners and the State
for a period of one year from 01.07.2013 till 30.06.2014. The licences for the
Excise year 2013-14 were renewed, and a new contract was entered into between
the petitioners and the State on or after 01.07.2013, in accordance with the
amended Rules which came into force on 24.06.2013 prior to the commencement of
the Excise Year 2013-14 on 01.07.2013. Neither the Act nor the Rules stipulate
that the amended Rules would come into force only on each licensee being
intimated thereof. The mere fact that the renewal endorsement on the petitioners
licence does not refer to the amended rule is of no consequence, as the
licensees are presumed to have knowledge of the Rules which were notified and
published in accordance with law. As the amended rules have been made applicable
only for renewal of licences for the Excise Year 2013-14, the contention that
the amended Rule 4 has been applied retrospectively is not tenable.
Reliance placed, on behalf of the petitioners, on State of A.P. v. Guntakal
Toddy Tappers Coop. Society28 is misplaced. In Guntakal Toddy Tappers Co-op
Society28, the Supreme Court held:-
".....The net position, therefore, is that upto September 30, 1982, under the
original Rule 3 annual leases were being granted following public auction. A
five year basis was adopted under the newly introduced proviso to Rule 3 in
respect of Tappers Cooperative Societies but at the end of one year out of the
term of five years, there was a reversal of the policy and annual settlements
were again adopted. That again was changed and a three year basis was adopted at
the end of the year. It gives us a very uneasy feeling that the State has dealt
with the Tappers Cooperative Societies, with whom contracts had been entered
into, in such a cavalier fashion. If the State's intention was really to earn
more revenue and, with a view to protecting the interests of the State
Exchequer, there was a deviation from the policy of settlement for five years
with the Tappers Societies to the old scheme of one year, there could be no
warrant for the adoption of a three year basis. At this juncture, counsel for
respondents readily agreed to increase of the fee payable by each of them under
the contracts entered into in 1982 valid for five years taking into
consideration the general rise in prices and the corresponding rise in auction
money fetched in other districts in respect of settlement of excise shops. It
was also pointed out to us by counsel for respondents that in respect of three
of the Tappers Societies out of four - exception being the Society in Guntakal
District, the Societies have been running the shops not as lessees but as agents
of the State. Learned counsel for the State told us that in regard to Guntakal
no arrangement at all has been made during the current excise year.
We are of the view that the State should not have interfered with the existing
rights of the Tappers Societies and if it wanted to bring in a change, effect
should have been given to such change only after the existing contracts with the
respondent Societies came to terminate by efflux of time.......".
(emphasis supplied)
Unlike in Guntakal Toddy Tappers Co-op Society28, where the Rule was
amended when the five year license period was in operation, Rule 4 has been
amended and applied for the Excise year 2013-14 (i.e., from 01.07.2013 to
30.06.2014) only after the one year license, granted for the Excise year 2012-
13, expired on 30.06.2013.
X. CAN RESTRICTIONS BE PLACED, ON A LICENCE GRANTED TO CARRY ON TRADE IN
LIQUOR, ONLY BY PLENARY LEGISLATION AND NOT SUBORDINATE:
It is contended, on behalf of the petitioners, that a property right cannot be
affected by way of Rules and Executive Instructions; the authority of law,
within the meaning of Article 300-A, is a law made by legislative authority; the
word 'law', in the context of Article 300-A, must mean an Act of Parliament or
of a State Legislature; the State or its Executive Officers cannot interfere
with the rights of others unless a specific rule of law authorizes their acts;
"Every act done by the Government or by its officers must, if it has to operate
to the prejudice of any person, be supported by legislative authority"; the
respondents have usurped power not vested in them under the Act and the Rules;
the power so usurped will militate against the very scheme and intendment of the
Excise statute, interfering and even destroying the existing legitimate
contractual rights with the State, without compensation; and this would result
in violation of Articles 14, 300-A and 19(1)(g) of the Constitution of India as
it would be in violation of Sections 17, 23, 28, 32 and 33 of the Act.
Reliance placed, on behalf of the petitioners, on Bishambhar Dayal Chandra Mohan
v. State of U.P.,29; State of M.P. v. Thakur Bharat Singh30; Satwant Singh
Sawhney v. Ramarathnam, Assistant Passport Officer, Government of India, New
Delhi31 and Smt Indira Nehru Gandhi v. Raj Narain32, to contend that the State
or its executive officers cannot interfere with the rights of others unless they
can point to some specific rule of law which authorises their acts; the State or
its officers may not, in the exercise of executive authority, without any
legislation in support thereof, infringe the rights of citizens merely because
the legislature of the State has the power to legislate in regard to the subject
on which the executive order is issued; and every act done by the Government or
by its officers must, if it is to operate to the prejudice of any person, be
supported by some legislative authority; is misplaced.
In Bishambhar Dayal Chandra Mohan29 the scope and extent of the executive power
of the State, under Article 162 of the Constitution of India, in relation to
trade and commerce in, and the production, supply and distribution of, food
stuffs arose for consideration. In Smt. Indira Nehru Gandhi32, the validity of
Article 329-A of the Constitution of India, and certain provisions of the
Representation of the People Act, 1951, were in issue. In Thakur Bharat Singh30,
the validity of an order, made in the exercise of the powers conferred by
Section 3 of the Madhya Pradesh Security Act, 1959, was under challenge. In
Satwant Singh Sawhney31, the validity of the action of the Regional Passport
Officer, in calling upon the petitioner to surrender both his passports to the
Government, was under examination.
None of these judgements relate to the executive power of the State to control
and regulate trade in liquor. Even if the "license" granted in the petitioners
favour is presumed to be a proprietary right, restrictions on the right of a
licensee to carry on trade in liquor can be imposed by subordinate legislation
or even executive instructions. There is nothing in clauses (2) to (6) of
Article 19 which makes it imperative to impose restrictions on trade or business
in potable liquor only by a law enacted by the legislature. Restrictions can
also be imposed by subordinate legislation as long as it is not violative of any
provisions of the Constitution. The trade or business in potable liquor is a
trade or business in res extra commercium and, hence, can be regulated and
restricted even by an executive order. (Khoday Distilleries Ltd. v. State of
Karnataka33). The contention that the power to relocate undisposed A-4 shops,
from an area/locality to another, can only be conferred by plenary legislation,
and not subordinate, does not, therefore, merit acceptance.
XI. IS THE PETITIONERS RIGHT OF EXCLUSIVE PRIVILEGE, TO SELL IMFL AND FL
IN AN AREA, VIOLATED ON RELOCATION OF UNDISPOSED A-4 SHOPS TO THESE
AREAS?
Learned Counsel for the petitioners would contend that, Section 17 to 23 and 28
deals with parting of exclusive privilege vested in State; the distinction
between "privilege to sell" and "exclusive privilege to sell in an area" in
Sections 13 and 17 should be borne in mind; once the right to carry on business
has been conferred by the State, after collecting the prescribed licence fee, no
fetters can be placed, or an embargo imposed, on the privilege conferred on the
licencees; the parting of exclusive privilege for consideration in such
area/locality as the Commissioner may fix for sale by notification, and the
licence granted over such an area, is an exclusive privilege granted to the
contractor to the debarment of others from articulation in the said area, as a
particular right or favour by law contrary to the general law, or else it is not
a privilege much less an exclusive privilege granted under the Act; the State
cannot claim a right over such an area/locality for granting further licences
until the existing contract is terminated or expires by efflux of time; grant of
exclusive privilege for an area creates a binding contract and a vested right in
a licensee, to the exclusion of all others in the licensed area, for the excise
year; the substantive right conferred on the petitioners under Section 17, on
licenses being granted in their favour, was renewed during the current year
under Rule 21; this substantive right is affected, in terms of sales, on
undisposed shops being relocated in their area, causing them considerable
prejudice; new conditions cannot be imposed varying the subsisting contract with
the petitioners who were granted exclusive privilege under Section 17; once
areas/localities are demarcated by the Commissioner under Rule 4, sold to
bidders for a consideration, and licenses are granted, there is a "concluded
contract" between the State and the citizen/contractor; the statutory right of a
licensee, under Section 23 of the Act, cannot be undermined; a shop can be
relocated only to an area where no shops were licensed earlier; there was no
provision in the Act or the Rules earlier for shifting or relocating an A-4 shop
to an area in which exclusive privilege was already conferred; and the impugned
action of the Commissioner, to relocate undisposed shops from other areas into
the petitioners' area over which they have exclusive privilege, is contrary to
law, illegal and without jurisdiction.
Trade in liquor is not a fundamental right. It is a privilege of the State. The
State parts with this privilege for revenue considerations. (Devans Modern
Breweries Ltd2; Kerala Samsthana Chethu Thozhilali Union v. State of Kerala34).
The State can impose limitations and restrictions on the trade or business in
potable liquor as a beverage which restrictions are in nature different from
those imposed on the trade or business in legitimate activities and goods and
articles which are res commercium. When the State permits trade or business
in potable liquor with or without limitation, the citizen has the right to carry
on trade or business subject to the limitations, if any. (Khoday Distilleries
Ltd.33). Section 17(1)(v) of the Act enables the Government, subject to the
provisions of Sections 28 and any rules made in this behalf and subject to such
conditions as they may deem fit to impose, to grant for a fixed period, to any
person at any place, a lease/licence for the exclusive privilege of selling
Indian Made Foreign Liquor (IMFL) and Foreign Liquor (FL) by shop. Section
17(2) empowers the Government to prescribe, from time to time, different methods
of selection for grant of exclusive privilege for different purposes under
Section 17(1). Section 17(3) stipulates that, notwithstanding anything
contained in sub-section (1), a lease/licence in respect of a shop may be
granted for a period not exceeding two years at a time.
What do the words "Exclusive Privilege", used in Section 17(1) of the Act, mean?
The word "Exclusive" is defined in "Law Lexicon of Ramanatha Iyer" to mean
possessed and enjoyed to the exclusion of others; debarred from participation or
enjoyment, undivided, sole(as exclusive) possession; not including, admitting or
pertaining to any other; opposed to inclusive, not to be taken in to account.
In Blacks Law Dictionary, the word "exclusively" is shown to have multiple
nuances or shades of meanings such as only or solely or substantially all or for
the greater part. It also means to the exclusion of all others. (CBI v. Braj
Bhushan Prasad35; Anoka County v. City of St. Paul36). The word "Privilege", as
commonly used in its broad and commonly accepted sense, means a particular
advantage or a personal benefit or favour and a private or personal favour
enjoyed. It also means a particular and peculiar benefit or advantage enjoyed by
a person beyond the common advantage of other citizens; and some particular
right or favour granted by law contrary to the general rule.
The doctrine of Noscitur a sociis (meaning of a word should be known from its
accompanying or associating words) has relevance in understanding the import of
words in a statutory provision. (Bangalore Water Supply & Sewerage Board v. A
Rajappa37; Rohit Pulp and Paper Mills Ltd. vs. CCE38; Oswal Agro Mills Ltd. vs.
CCE39; K. Bhagirathi G. Shenoy v. K.P. Ballakuraya40; Lokmat Newspapers (P) Ltd.
v. Shankarprasad41; Braj Bhushan Prasad35). On application of the said doctrine,
and reading both the words "Exclusive" and "privilege" together, the term
"exclusive privilege" can only mean a privilege granted to a person to the
exclusion of all others. However a lease/licence for such "exclusive privilege"
is, by Section 17(1) itself, made subject to Section 28 of the Act, the Rules
made thereunder and the conditions which the Government may deem fit to impose.
The expression "subject to" conveys the idea of a provision yielding place to
another provision or other provisions to which it is made subject. (South India
Corpn. (P) Ltd. v. Secy., Board of Revenue, Trivandrum42; Chandavarkar Sita
Ratna Rao v. Ashalata S. Guram43). The operative part of Section 17(1) is
prefaced by the words "subject to the provisions of Section 28, any rules made
in this behalf and such conditions as the government may deem fit to impose",
which means that the exclusive privilege granted by the State must yield to the
provisions of Section 28 of the Act, any rules made in this behalf, and such
conditions as the government may deem fit to impose. (Indian Minerals Co. v.
N.I.L.M. Assos.44).
The power conferred on the Government, under Section 17(1)(v) of the Act, to
grant an exclusive privilege to any person to sell IMFL and FL in a shop is
subject to (1) the provisions of Section 28 of the Act; (2) any Rules made in
this behalf; and (3) any conditions which the Government may deem fit to impose.
Section 28(1) requires every permit/licence to be issued or granted on payment
of such fees, for such period, subject to such restrictions and conditions, to
be in such form and to contain such particulars as may be prescribed. Section
2(26) of the Act defines 'prescribed' to mean prescribed by Rules made under the
Act. The 2012 Rules were made in the exercise of the powers conferred by
Section 72 r/w. Sections 17, 28 and 29 of the Act. Rule 1(4) of the 2012 Rules
makes these rules applicable for grant of licence for selling IMFL and FL in
retail by shop, the conditions governing such licence, and the transport of IMFL
and FL by such licence holders.
The Rules, subject to which exclusive privilege was granted to the petitioners
for the Excise Year 2013-14 (i.e, from 01.07.2013 to 30.06.2014), are the 2012
Rules as amended by G.O.Ms.No.357 dated 22.06.2013. The conditions imposed by
the Government, to which the exclusive privilege granted to the petitioners are
subject to, are those stipulated in the Excise Policy for the year 2012-13 as
notified in G.O.Ms.No.390 dated 18.06.2012, and for the Excise Year 2013-14 as
notified in G.O.Ms.No.358 dated 22.06.2013. The power conferred on the
Commissioner, under Rule 4 of the Rules, is subject to such directions which the
Government may issue from time to time. Para 5 of the Excise Policy, formulated
by the Government for the Excise year 2012-13, stipulates that the number of
retail shops shall be retained at the present level i.e., 6596. The
Commissioner was, therefore, not entitled to increase the total number of retail
shops in the State beyond the 6596 shops fixed by the Government.
The State can adopt any reasonable mode of selling licences for trade or
business with a view to maximise its revenue. (Khoday Distilleries Ltd.33). The
State Government's exclusive privilege, or right to carry on certain activities
in liquor, are given or sold by it to a private person under a licence for the
amount receivable under the Act and the Rules. Such an amount constitutes the
consideration for the licence and is termed as a 'licence fee'. The term
'licence fee' connotes the idea of it being the consideration in money
receivable by the Government from a private person by grant of a licence, for
parting in such person's favour, its exclusive privilege or right of carrying on
certain activities in respect of liquor. (State of U.P. v. Sheopat Rai45). The
issuance of a liquor licence constitutes a contract between the parties i.e.
between Excise Authorities on the one hand and the individual applicant-
contractor on the other. (Devans Modern Breweries Ltd.,2). However the said
contract has, by law, been made subject to the amended 2012 Rules and the Excise
Policy of the year 2013-14. Notwithstanding the exclusive privilege granted to
the petitioners, to sell IMFL and FL in the stipulated areas/localities, un-
disposed A-4 shops can be relocted in accordance with the amended 2012 Rules and
the Excise Policy for the year 2013-14.
Reliance placed by the petitioners on Sections 13 and 21 to 23 of the Act is
misplaced. Section 13 of the Act relates to manufacture and bottling of liquor
for sale and has no application to sale of IMFL and FL in an A-4 shop. Section
21 enables the Government to levy excise duty or/and a countervailing duty on
any excisable article manufactured or produced in the State, and Section 22
prescribes the modes in which excise duty and countervailing duty may be levied
on any excisable article. Section 23(1) stipulates that, instead of or in
addition to any excise duty or fees leviable under Sections 21 and 22, the
Commissioner may accept payment of a sum in consideration of the grant of
licence or both for the exclusive privilege in respect of liquor or any other
intoxicant under Section 17. Section 23 relates merely to the consideration for
the lease or licence for grant of exclusive privilege under Section 17 and, as
Section 17 itself makes the lease/licence for grant of exclusive privilege
subject to Section 28, the Rules made in this behalf and the conditions which
the Government may deem fit to impose, the petitioners cannot claim exclusive
privilege either under Section 17 or Section 23 of the Act contrary to the
amended 2012 Rules and the Excise Policy for the year 2013-14.
XII. STATUTORY RULES ARE PRESUMED TO BE CONSTITUTIONALLY VALID:
It is contended, on behalf of the petitioners, that the power to make rules can
only be exercised to make rules consistent with the Act and not contrary
thereto; relocation of shops from one district to another, and from one zone to
another, is ultra-vires Rule 4 as it is not in relation to an "area" or a
"locality"; and any unreasonable rule or condition, in the excise contract
licence, is ultra vires the Act.
It is no doubt true that the power of delegated legislation can be exercised to
give effect to, and must be in conformity with, the provisions of the Act.
(Kerala Samsthana Chethu Thozhilali Union34). The vires of the amended Rule 4
of the 2012 Rules has not been subjected to challenge in this batch of Writ
Petitions. Judicial restraint is in order while judging the constitutional
validity of statutes and delegated legislation. There is a presumption in favour
of the constitutionality of both statutes and delegated legislation, and it is
only when there is a clear violation of a constitutional provision (or of the
parent statute, in the case of delegated legislation) beyond reasonable doubt
that the court should declare it to be unconstitutional. (Hinsa Virodhak Sangh
v. Mirzapur Moti Kuresh Jamat46; Govt. of A.P. v. P. Laxmi Devi47). The Courts
must presume that the legislature understands and correctly appreciates the
needs of its own people, that its laws are directed to problems made manifest by
experience, that its discriminations are based on adequate grounds, and that the
legislature is free to recognise degrees of harm, and confine its restrictions
to those cases where the need is deemed to be the clearest. (Mohd. Hanif
Quareshi v. State of Bihar48; Nagaland Senior Govt. Employees Welfare Assn. v.
State of Nagaland49; Mahant Moti Das v. S.P. Sahi50; A.C. Aggarwal, Sub-
Divisional Magistrate, Delhi v. Ram Kali51). The statutory provision must be
interpreted and read broadly, and not narrowly. The approach must be to uphold
the validity of the impugned delegated legislation by a process of fair and
broad reading of the statutory mandate. (Devans Modern Breweries Ltd.,2). It
would be wholly inappropriate for this Court, therefore, to examine the validity
of the amended Rule 4 on the basis of submissions made across the bar.
XIII. BURDEN LIES HEAVILY ON THE PERSON, WHO SEEKS TO IMPEACH THE RULE,
TO PLEAD AND PROVE THAT IT IS UNCONSTITUTIONAL:
The contention that Rule 4 is ultra vires the Act, and Article 14 of the
Constitution, is without support of any pleadings in the Writ Petitions. It is
well settled that, even in cases where there is a challenge to the validity of a
statutory rule, the burden is on the party, who seeks to impeach the validity of
a rule made by a competent authority on the ground that the rules offend Article
14, to plead and prove that there has been a clear violation of the
constitutional principles. If the validity of the rule is challenged on the
ground either of its unreasonableness or its discriminatory nature, the
petitioners ought to have laid a foundation for it by setting out the facts
necessary to sustain such a plea and adduce cogent and convincing evidence, for
there is a presumption that every factor which is relevant or material has been
taken into account in formulating the classification. (State of U.P. v. Kartar
Singh52; K.B. Nagur v. Union of India53; Nagaland Senior Govt. Employees Welfare
Assn.49). The action of governmental authorities must be presumed to be
reasonable and in public interest and the person assailing it must plead and
prove the contrary. (Fertilisers and Chemicals Travancore Ltd. v. Kerala SEB54;
Nagaland Senior Govt. Employees Welfare Assn.49). Courts must be slow to embark
upon an unnecessary, wide or general enquiry, and confine their decision within
the narrow limits required on the facts of a case. Decisions, on questions of
constitutionality, should not be taken unless such adjudication is unavoidable;
and the policy of strict necessity must be followed in disposing of a
constitutional issue. (K.B. Nagur53).
XIV. IS THE ACTION OF THE COMMISSIONER, IN RELOCATING UNDISPOSED A-4
SHOPS TO AREAS WHERE THE PETITIONERS SHOPS ARE LOCATED,
DISCRIMINATORY?
It is contended that the petitioners have been discriminated against as the A-4
shops in other districts, and in scheduled areas, are now being relocated to
areas/localities where they are running their A-4 shops; the turnover in each A-
4 shop for the year 2012-13 was taken into consideration to determine the
areas/localities where undisposed A-4 shops should be relocated; under Rule
16(1), the license fees are proportionality reduced for new entrants; no shop
has been relocated in areas where the turnover of the A-4 shop is 13 times or
below; on shops being relocated, the turnover of the existing licensees would
fall below the turnover of the A-4 shops whose turnover is 13 times the license
fee; failure to relocate undisposed shops, in areas where the turnover is 13
times, would also result in discrimination; and a new A-4 shop should not be
established in their area, in the middle of an excise year, more so as the
Government would not get any extra monetary benefit.
Article 14 forbids class legislation, and not a reasonable classification. What
is forbidden is discrimination. Persons similarly situated must be similarly
treated. Where, however, the persons are not similarly situated, there is no
prohibition to treat them separately, provided of course there is a reasonable
nexus between the basis of classification and the object to be achieved. (K.
Muthusamy v. Government of Tamilnadu55). Every instance of discrimination does
not necessarily fall within the ambit of Article 14 of the Constitution.
Discrimination means an unjust and unfair action in favour of one and against
another. It involves an element of intentional and purposeful differentiation
and unfavourable bias; an unfair classification. (Rajasthan State Industrial
Development & Investment Corporation v. Subhash Sindhi Coop. Hs. Society56; The
State of M.P. v. Narmada Bachao Andolan57; Madhu Kishwar v. State of Bihar58).
A valid classification based on a just objective is truly a valid
discrimination. The result to be achieved by the just objective presupposes the
choice of some for differential consideration/treatment over others.
Legalistically, the test for a valid classification may be summarized as a
distinction, based on a classification founded on an intelligible differentia,
which has a rational relationship with the object sought to be achieved.
(Kallakkurichi Taluk Retired Officials Assn. v. State of T.N.59).
Classification must be truly founded on substantial differences which
distinguish persons grouped together from those left out of the group and such
differential attributes must bear a just and rational relation to the object
sought to be achieved. (State of Maharashtra v. Indian Hotel & Restaurants
Assn.60; State of Jammu and Kashmir v. Shri Triloki Nath Khosa61). To pass the
test of permissible classification two conditions must be fulfilled, namely, (i)
the classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others left out
of the group, and (ii) the differentia must have a rational relation to the
object sought to be achieved by the statute in question. The classification may
be founded on different bases. What is necessary is that there must be a nexus
between the basis of classification and the object of the provision under
consideration. (Indian Hotel & Restaurants Assn.60; Budhan Choudhry v. State of
Bihar62).
Rule 16(9) of the 2012 Rules required a licensee to pay privilege fee at 8%,
plus applicable Value Added Tax (VAT) thereon, on the sale price of IMFL and FL
purchased from APBCL where the cumulative value of purchases, during the licence
period, exceeded six times the annual licence fee. The "six times", prescribed
under the 2012 Rules, was enhanced to "seven times" on Rule 16(9) being amended
by G.O.Ms. No.357 dated 22.06.2013. While all licencees are required to pay the
annual licence fee or the proportionate licence fee as stipulated in Rule 16(1)
and its proviso, a privilege fee is levied only when the cumulative purchases of
IMFL and FL by the licensee, during the Excise Year, exceeds seven times the
annual licence fee. If his cumulative purchases for the Excise Year are less
than seven times the annual licence fee, the licensee is not required to pay the
privilege fee. Implicit in Rule 16(9) is that the Rule making authority
considered the profit earned on cumulative purchases of IMFL and FL by the
licensee, upto seven times the annual licence fee, as a reasonable return on
their investment. By the impugned notifications, undisposed A-4 shops were
sought to be relocated only to areas/localities where the cumulative purchases
of each A-4 shop, during the Excise year 2012-13, exceeded fourteen times their
licence fee. The licensees, whose turnover exceeded fourteen times the annual
licence fee in the previous Excise Year 2012-13, form a distinct class,
different from those who did not achieve a turnover of fourteen times the
licence fee. The object sought to be achieved by relocation of shops only to
such areas is two fold. Firstly, to generate more revenue for the State and,
secondly, to ensure that, even after relocation, both the existing and the
relocated A-4 shops achieve, on an average, a turnover of seven times the annual
licence fee and, thereby, achieve a reasonable return on their investment.
The contentions that, as the turnover is not uniform throughout the year, the
monthly turnover should have been taken as the basis; the turnover from 1st July
to 30th November, 2013 should also have been taken into consideration before
deciding on which shop should be relocated; as the licence fee is correlated to
population, the population figures should have been factored, while identifying
areas/localities for relocation of undisputed A-4 shops; all shops, whose
turnover exceeds 14 times, should have been arranged in a descending order, and
notified in seriatum; a chronological order should have been followed, and shops
should have firstly been relocated in areas where the turnover is the highest;
leaving big mandals, and proceeding against smaller ones, violates Article 14 of
the Constitution of India; and if the State intends to raise revenue, and
dispose of un-disposed shops, they should reduce the basis of the number of
times turnover; are not tenable. Classification, to be valid under Article 14,
need not necessarily fall within an exact or a scientific formula for exclusion
or inclusion of persons or things. There is no requirement of mathematical
exactness or for doctrinaire tests to be applied for determining the validity,
as long as it is not palpably arbitrary. (Indian Hotel & Restaurants Assn.60;
Ram Krishna Dalmia v. S.R. Tendolkar63; Welfare Association, A.R.P. v. Ranjit
Pl.Gohili64; Shashikant Laxman Kale v. Union of India65). So long as there is a
nexus between the basis of classification and the object sought to be achieved,
the classification is valid. (The State of Madhya Pradesh v. Gopal D.
Tirthani66). The test ought not to be what would be a 'better' basis for the
categorization for that would introduce subjectivity in the process. The test
is whether categorization, on the basis adopted, results in hostile
discrimination and adoption of the criteria has no reasonable nexus with the
object sought to be achieved. (Samaj Parivartana Samudaya v. State of
Karnataka67). It is no doubt true that, on another shop being established in
his area/locality, the licensee, who had earlier achieved a turnover of
fourteen times the licence fee in the Excise Year 2012-13, may achieve a
turnover less than a licensee who had achieved a turnover of thirteen times the
licence fee in the earlier Excise year 2012-13. However relocating an undisposed
shop to an area, where the turnover achieved in the Excise Year 2012-13 was
thirteen times or below the licence fee, would have resulted in each of the two
licencees not being able to achieve a turnover of seven times the annual licence
fee, which Rule 16(9) presumes to be a reasonable return on their investment.
The licence fee is fixed for a population slab. It is the very same licence
fee, fixed in terms of Rule 16(1) on the basis of population, that is levied
even on relocation of an un-disposed A-4 shop. Where an un-disposed A-4 shop is
relocated after 31st July, the licence fee is required to be reduced
proportionately in terms of the proviso to Rule 16(1). While the licence fee,
even for the relocated A-4 shop, would be the licence fee prescribed under Rule
16(1), the proviso to Rule 16(1) would require a proportionate reduction of such
licence fee, if a licence is granted to the relocated un-disposed shop after
31st July, 2013. The privilege fee, of 8% plus VAT, is required to be paid by
the licensees of the relocated undisposed A-4 shops as soon as their purchases
exceeed seven times the proportionate licence fee paid by them, and not the
prescribed annual licence fee.
It is not even the petitioners' case that any area/location, where an A-4 shop
had achieved a turnover of less than fourteen times the licence fee in the
Excise Year 2012-13, has been identified for relocation of un-disposed A-4
shops. Even with regards the new shops, in the relocated areas, there is no
discrimination shown by the State as the existing licensees are not being
deprived of their rights to vend liquor in retail. (R. Selvaraj v. Government
of TN rep. by its Secretary, P & E Dept.68). In the additional counter-
affidavit, the allegation that the respondents had not notified some places
where the cumulative value of purchases is more than that of the place of the
petitioners is denied. The respondents state that at Munugodu the two A-4
shops, notified and disposed of for the year, had recorded a turnover of 18.5
and 7.14 times respectively on their licence fee for the year 2012-13; the
average turnover of Munugodu village was 12.93 times and, as such, no shop was
proposed for relocation at Munugodu; in Valigonda the two A-4 shops had
recorded an average turnover of 23.36 times during 2012-13, and hence one more
A-4 shop was notified thereat to which as many as 33 applications had been
received, and the said shop has been disposed of in the present notification.
XV. IS EXERCISE OF POWER BY THE COMMISSIONER, TO RELOCATE UNDISPOSED A-4
SHOPS TO PLACES WHERE THE PETITIONERS SHOPS ARE SITUATED, SO
UNREASONABLE AND ARBITRARY AS TO VIOLATE ARTICLE 14 OF THE CONSTITUTION?
It is contended, on behalf of the petitioners, that "requirement" under Rule 4
can be assessed only after taking sales into consideration; the impugned
decision to relocate undisposed A-4 shops, by the notifications dated
30.11.2013, was taken in the latter half of the excise licence year 2013-14; by
this time some of the petitioners had lifted more than 7 times the licence fee,
and were paying privilege fee of 8% plus VAT; as the rival competitor is not
liable to pay privilege fee or VAT, the competitive edge of the petitioner in
the market would be adversely affected; the impugned action would result in a
difference in the sale price, as additional tax need not be paid by the new
entrants; payment of additional tax at 13.5% by the existing licensees is almost
equal to the licence fee; treating unequals as equals is in violation of Article
14 of the Constitution of India; the Commissioner cannot relocate shops from one
district to another at his whims and fancies; he must take viability, under Rule
16(9), into consideration; except collection of the licence fee, no other object
is achieved in establishing another shop in the same area; a new shop being
established in the area will only result in dispersal of customers, and creation
of unhealthy competition; there is no transparency as state-wide statistical
data has not been published; the counter-affidavit is also silent whether the
Commissioner was appraised of the statistical details of the entire State; shops
with higher turnover have not been notified; exercise of power, to relocate
shops from one district to another, is unwarranted and unreasonable; and,
instead, the power under Rule 18 should have been exercised, and APBCL ought to
have been permitted to open outlets in the localities/areas where shops could
not be disposed or could not be allotted for any other reason.
Article 19 (1) (g) of the Indian Constitution confers a fundamental right to
trade subject to reasonable restrictions. However, liquor trade is viewed
differently on the premise that there is no fundamental right to trade in
intoxicants. (R. Selvaraj68; Cooverjee v. Excise Commissioner, Ajmer69; State
of Orissa v. Harinarayan70; Nashirwar v. State of M.P.71, Harishankar v. Dy.
Excise and Taxation Commissioner72 and Lakhanlal v. State of Orissa73). The
State can create a monopoly, either in itself or in the agency created by it,
for the sale and distribution of liquor as a beverage. It can also sell the
licence to the citizens, for the said purpose, by charging fees. This can be
done under Article 19(6), or even otherwise, as the State can impose limitations
and restrictions, on the trade or business in potable liquor as a beverage,
which are in their nature different from those imposed on the trade or business
in goods and articles which are res commercium. (R. Selvaraj68; Khoday
Distilleries Ltd33). Privilege can be claimed by a State in a "no-right"
situation, namely, when a citizen is not permitted to carry on trade. However
persons in whose favour licences have been granted, in terms of a statutory
enactment, derive a right to deal in liquor. (Devans Modern Breweries Ltd.,2).
While the power to relocate an un-disposed shop may well be unfettered save
population - slab restrictions, it cannot be exercised by the Commissioner at
his mere whim or fancy. The power conferred by legislation - plenary or
subordinate - must be exercised reasonably and should be informed by reason.
Article 14 of the Constitution would be attracted even in the matter of trade in
liquor. (Kerala Samsthana Chethu Thozhilali Union34; V.K. Ashokan v. Assistant
Excise Commissioner74). The State can, for the purpose of selling the licence,
adopt any mode with a view to maximise its revenues but, while doing so, must
conform to the equality clause enshrined in Article 14 of the Constitution.
(Devans Modern Breweries Ltd.,2). When the State decides to grant such a right
or a privilege to carry on trade or business in liquor to others, it cannot
escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will.
It must comply with the equality clause while granting the exclusive right or
privilege of selling liquor. The State cannot ride roughshod over the
requirement of that Article. (State of M.P. v. Nandlal Jaiswal75; Devans Modern
Breweries Ltd.,2). The State, while parting with its exclusive privilege or a
part thereof, may impose conditions but, once such terms and conditions are laid
down by reason of a statute, the same cannot be deviated from. (Kerala Samsthana
Chethu Thozhilali Union34).
The power conferred on the Commissioner, to relocate undisposed A-4 shops, is by
subordinate legislation (amendment of Rule 4 of the 2012 Rules) and by Executive
Policy (para 2 of G.O.Ms. No.358 dated 22.06.2013). The principle of non-
arbitrariness cannot apply to a change of policy by legislation. (Madras City
Wine Merchants' Assn. v. State of T.N.,76). As the vires of the amended Rule 4
is not under challenge in these Writ Petitions, this Court is only required to
examine whether exercise of power, under the said Rule, by the Commissioner is
in violation of Article 14 of the Constitution. While considering the
applicability of Article 14 to liquor trade, the Court would be slow to
interfere with the policy laid down by the State Government, for the sale of
liquor, having regard to the nature of the trade or business. The Court would,
in view of the inherently pernicious nature of the commodity, allow a large
measure of latitude to the State Government in determining its policy of
regulating trade in liquor. The grant of licence for the sale of liquor would
essentially be a matter of economic policy where the Court would hesitate to
intervene and strike down what the State Government has done unless it appears
to be plainly arbitrary, irrational or malafide. What can be said in regard to
legislation relating to economic matters must apply equally in regard to
executive action in the field of economic activities'. (Nandlal Jaiswal75; R.
Selvaraj68).
While the Excise policy for 2013-14 prohibits relocation of an undisposed A-4
shop from a higher population slab to a lower population slab, the Commissioner
has confined exercise of his power under the amended Rule 4, to relocate A-4
shops which remained undisposed in an area/locality, only to those
areas/localities where the existing A-4 shops achieved a turnover of 14 times or
more the annual license fee in the earlier Excise year 2012-13 thereby striking
a balance between augmenting State revenue and ensuring a reasonable return on
investment for both the existing A-4 shop and the relocated undisposed A-4 shop.
The amended Rule 16(9), in levying privilege fee at 8% plus VAT only on
purchases from APBCL in excess of seven times the annual license fee, presumes
that a turnover of seven times the annual license fee is a reasonable return on
investment.
It is only if this Court were to be satisfied that the exercise of power by the
Commissioner is so unreasonable, as to violate Article 14, would interference be
justified. The concept of 'reasonableness' defies definition. The functional and
conceptual implication of the term 'reasonableness' is that it is essentially
another word used for public policy. (Om Prakash v. State Of Uttar Pradesh77;
Friedmann: 'Legal Theory, 4th Ed., at pages 83-85'). The authority must, by the
use of his reason, ascertain and follow the course which reason dictates. He
must act reasonably. The word 'unreasonable' is frequently used as a general
description of the things that must not be done. A person entrusted with a
discretion must direct himself properly in law. He must call his own attention
to the matters which he is bound to consider. He must exclude from his
consideration matters which are irrelevant to what he has to consider. If he
does not obey those rules, he may truly be said, and often is said, to be acting
'unreasonably'. Similarly, there may be something so absurd that no sensible
person could ever dream that it lay within the powers of the authority. The
rule of reason has thus become a generalized rubric covering not only sheer
absurdity or caprice, but merging into illegitimate motives and purposes, a wide
category of errors commonly described as 'irrelevant considerations', and
mistakes and misunderstandings which can be classed as self-misdirection.
(Administrative Law: HWR Wade & C.F. Forsyth - Tenth Edition).
Can exercise of power, to relocate undisposed A-4 shops to areas where the
existing shops achieved a turnover exceeding fourteen times the annual licence
fee in the previous Excise Year 2012-13, be said to be so arbitrary and
unreasonable as to violate Article 14 of the Constitution of India? The grant
of a liquor licence does not involve any right or expectation but is a matter of
privilege. All that is required is that the Commissioner should act fairly, and
deal with the applications without any bias, and not in an arbitrary or
capricious manner. (M/s. Chingleput Bottlers v. M/s. Majestic Bottling Co.78).
The doctrine that powers must be exercised reasonably has to be reconciled with
the no less important doctrine that the court must not usurp the discretion of
the public authority appointed to take the decision. Within the bounds of legal
reasonableness is the area in which the deciding authority has genuinely free
discretion. If it passes those bounds, it acts ultra vires. The court must,
therefore, resist the temptation to draw the bounds too tightly, merely
according to its own opinion. It must strive to apply an objective standard
which leaves to the deciding authority the full range of choices which the
legislature is presumed to have intended. If the decision is within the
confines of reasonableness, it is no part of the court's function to look
further into its merits. 'With the question whether a particular policy is wise
or foolish the court is not concerned; it can only interfere if to pursue it is
beyond the powers of the authority." (Sterling Computers Ltd. v. M & N
Publications Ltd.79; Administrative Law, Prof. Wade). Article 14 cannot be
interpreted in a doctrinaire or dogmatic manner. Excessive interference by the
judiciary in the functions of the executive is not proper. In view of the
inherent complexities involved in modern society, some free play must be given
to the executive. (Transport and Dock Workers Union v. Mumbai Port Trust80;
Missouri, Kansas and Texas Railway Co. v. May81; Aravali Golf Club v. Chander
Hass82). While fair play in action is an essential requirement, "free play in
the joints" is also a necessary concomitant for an administrative body
functioning in an administrative sphere. (Fasih Chaudhary v. D.G.,
Doordarshan83).
It is un-understandable as to how, in the instant case, the action of the
State and the Commissioner can be termed arbitrary as their endeavour is only to
sell as many of the remaining undisposed A-4 shops as is possible and, thereby,
augment State revenue. The exercise undertaken by the Commissioner is merely to
relocate undisposed A-4 shops within the maximum number of shops fixed by the
Government. The State can always re-locate undisposed shops, for augmenting
public revenue, as long as the existing licensees are not deprived of their
privilege of carrying on their business. (R. Selvaraj68). It is not even the
petitioners' case that they are prevented from trading in liquor as a result of
relocation of an undisposed shop in their area. It does not stand to reason
that the power to relocate an undisposed shop should be exercised only at the
beginning of the Excise year, and not thereafter. If the respondents could have
exercised the power under the amended Rule 4 at the inception, without any
demur, there is no reason to contend that the respondents cannot take any steps
subsequently to settle such vacant shops in accordance with the Rules. (K.
Muthusamy55).
The undisposed shops, which have been relocated consequent to the impugned
notifications, are required, in terms of the proviso to Rule 16(1), only to pay
the proportionate licence fee, and not the annual licence fee in its entirety.
Privilege fee, under Rule 16(9), would be levied on these shops the moment they
achieve a turnover of seven times the proportional licence fee paid by them.
The decision of the Commissioner , to relocate undisposed A-4 shop only to those
areas where the existing licensees had achieved twice the purchases prescribed
in Rule 16(9), is informed by reason and has not been exercised at his whim or
fancy. As licensees who achieved a turnover of 14 times the annual licence fee,
in the Excise Year 2012-13, constitute a distinct class, it cannot be said that
unequals have been treated equally. No material has been placed by the
petitioners to even show, let alone establish, that relocation of undisposed A-4
shops would either create a law and order problem or unhealthy competition.
Those A-4 shops, which have already achieved a turnover of seven times or more
the annual licence fee for the Excise Year 2013-14, cannot be heard to complain
of loss of competitive edge as they have already earned a reasonable return on
their investment, in terms of Rule 16(9), even before completion of 3/4th of the
said Excise Year.
Any reduction in the price, at which the relocated A-4 shops would sell IMFL and
FL till they achieve a turnover of seven times the proportionate license fees
paid by them, would only benefit consumers. Permitting APBCL to open outlets,
in areas where the A-4 shops could not disposed of, may not help the State in
enhancing its revenues as the very fact that no one came forward to seek
licences in such areas reflects low consumption of IMFL and FL thereat. The
contention that the decision of the Commissioner, to relocate undisposed A-4
shops to areas/localities in which the petitioners were granted renewal of their
licences, is arbitrary and in violation of Article 14 must therefore fail.
XVI. DOES PRINCIPLES OF NATURAL JUSTICE NECESSITATE COMPLIANCE BEFORE AN
UNDISPOSED A-4 SHOP IS RELOCATED?
It is contended, on behalf of the petitioners, that the decision of
Commissioner, to relocate some other undisposed shop into the area of the
petitioners shops, was taken without notice to them, and without giving them an
opportunity of being heard; and the administrative decision of the Commissioner,
affecting the exclusive privilege of the petitioner to sell IMFL & FL in their
licenced area, infringes their right, results in civil consequences, and is in
violation of principles of natural justice.
The rules of natural justice are not embodied rules. What particular rule of
natural justice should apply to a given case must depend to a great extent on
the facts and circumstances of that case and the framework of the law under
which the enquiry is held. Whenever a complaint is made before a Court that some
principle of natural justice has been contravened, the Court has to decide
whether observance of that rule was necessary for a just decision on the facts
of the case. (Maneka Gandhi v. Union of India84; Suresh Koshy George v.
University of Kerala85; D.F.O., South Kheri v. Ram Sanehi Singh86). It should
not proceed as if there are inflexible rules of natural justice of universal
application. Each case depends on its own circumstances. Rules of natural
justice vary with the rules prescribed by the legislature. (M/s. Chingleput
Bottlers78).
Rules of natural justice are not statutory rules. These rules are not cast in a
rigid mould nor can they be put in a legal strait-jacket. They are not immutable
but flexible. These rules can be adapted and modified by statutes and statutory
rules. (Union of India v. Tulsiram Patel87). Not only can the principles of
natural justice be modified but, in exceptional cases, they can even be excluded
where the nature of the action to be taken, its object and purpose and the
scheme of the relevant statutory provisions warrant its exclusion. (Tulsiram
Patel87; State of U.P. v. Sheo Shanker Lal Srivastava88). If a statutory
provision either specifically, or by necessary implication, excludes the
application of any or all the principles of natural justice then the court
cannot ignore the mandate of the Legislature or the statutory authority and read
into the concerned provision the principles of natural justice. (Union of India
v. Col. J.N. Sinha89; Tulsiram Patel87). The implication of natural justice
being presumptive, it may be excluded by express words of the statute or by
necessary intendment. (Swadeshi Cotton Mills v. Union of India90; Tulsiram
Patel87). The power conferred on the Commissioner, under the amended Rule 4, is
to relocate undisposed A-4 shops from any area/locality as he thinks fit. The
wide discretion conferred on the Commissioner neither explicitly, nor by
necessary implication, requires compliance with principles of natural justice
before its exercise.
Undisposed A-4 shops have been relocated by the Commissioner in the exercise of
his powers under Rule 4 of the amended 2012 Rules. Legislative action, plenary
or subordinate, is not subject to natural justice. Subordinate legislation
cannot be questioned on the ground of violation of principles of natural justice
on which administrative action may be questioned. (Tulsipur Sugar Co. Ltd. v.
Notified Area Committee, Tulsipur91 Rameshchandra Kachardas Porwal v. State of
Maharashtra92; Madras City Wine Merchants' Assn.76; Indian Express Newspapers
(Bombay) Pvt. Ltd. v. Union of India93 Bates v. Lord Hailsham of St
Marylebone94). Even otherwise the grant of licence to trade in liquor is the
grant of a "privilege". An authority or body need not observe the rules of
natural justice where its decision, although final, relates not to a 'right' but
to a 'privilege or licence'. All that is required, in such cases, is that the
applications must be considered fairly. (M/s. Chingleput Bottlers78). As has
been already held the decision, to relocate undisposed A-4 shops, is fair and
reasonable and is not in violation of Article 14 of the Constitution.
XVII. SCOPE OF INTERFERENCE IN POLICY DECISIONS OF GOVERNMENT:
The Excise Policy for the year 2012-13, notified in G.O.Ms. No.390 dated
18.06.2012 and published in the A.P. Gazette on 18.06.2012, stipulated that the
privilege of selling liquor through retail shops should be granted by collecting
a fixed licence fee based on the population (as per census) of the places
(municipality/town/village) where the shops were proposed to be established; the
method of selection, for grant of shop licences, was to be by drawal of lots;
the period of licence was for one year; and renewal for the second year 2013-14
was to be considered subject to payment of the licence fee to be fixed by the
Government for the second year (2013-14), and the licensee not incurring any
disqualification as per rules. The total number of A4 shops in the entire State
was fixed at the earlier stipulated number of 6596 shops. The licence fee, for
different population slabs, was prescribed in Para 8 of the said Excise Policy
i.e, for the population slab of upto 10,000, the licence fee was Rs.32.50 Lakhs.
It was Rs.34.00 Lakhs for the population slab between 10,000 and 50,000;
Rs.42.00 Lakhs for the population slab between 50,000 and 3 lakhs; Rs.46.00
Lakhs for the population slab between 3 lakhs and 5 lakhs; Rs.64.00 Lakhs for
the population slab between 5 lakhs and 20 lakhs; and Rs.104.00 Lakhs for the
population slab above 20 lakhs. In addition to the licence fee, the licensee
was required to pay a privilege fee at 8%, plus applicable VAT, on the invoice
value of the liquor purchased during the licence year in excess of 6 times the
annual licence fee.
The Excise Policy for the year 2013-14, as notified in G.O.Ms. No.358
dated 22.06.2013 and published in the A.P. Gazette on 24.06.2013, stipulated
that the privilege, of selling liquor through retail shops, should be renewed by
collecting a fixed licence fee based on the population, as per the 2011 Census,
of the places (Corporation/Municipality/Town/Village) for the year 2013-14.
Para 2 of the said Excise Policy, while permitting the Commissioner of
Prohibition and Excise to relocate un-disposed A-4 shops from any locality/area
as he thought fit, prohibited him from relocating such A-4 shops from a higher
licence fee slab to a lower licence fee slab. Para 3 prescribed the method of
selection, for grant of licences for the un-disposed shops, to be by drawal of
lots. Under Para 5, the total number of retail shops in the entire State was
retained at 6596. The licence fee, stipulated under para.8 of the Excise Policy
for the year 2013-14 for different population slabs, is the same as stipulated
in the earlier Excise Policy for the year 2012-13. However the privilege fee,
at the rate of 8% plus applicable VAT, was to be paid only where the invoice
value of the liquor purchased by a licensee, during the excise year, was in
excess of seven times the prescribed annual licence fee.
The Excise Policies for the years 2012-13 and 2013-14 have been made by the
Government to enhance State revenue. This Court would not, ordinarily, examine
in judicial review proceedings under Article 226 of the Constitution of India,
policy choices of the Executive. Policy is not static but is dynamic. (T.N.
Education Deptt. Ministerial & General Subordinate Services Assn. v. State of
T.N.95). If the policy cannot be faulted on grounds of malafide,
unreasonableness, arbitrariness or unfairness etc the mere fact that it would
hurt business interests does not justify invalidating the policy. In economic
regulation cases, there are good reasons for judicial restraint, if not judicial
deference, to the judgment of the executive. Courts should not express their
opinion whether, at a particular point of time or in a particular situation, any
such policy should have been adopted or not. It is best left to the discretion
of the State. (Ugar Sugar Works Ltd. v. Delhi Admn.96). Each State is empowered
to formulate its own liquor policy. No direction can be given or expected from
the Court regarding the "correctness" of an executive policy unless, while
implementing such policies, there is infringement or violation of any
constitutional or statutory provision. (Ugar Sugar Works Ltd.96). Public
authorities must have liberty in framing policies. If a decision has been taken
in a bonafide manner, although not strictly following the norms laid down by
Courts, such decisions are upheld on the principle that Courts, while judging
the validity of executive decisions, must grant certain measure of freedom of
"play in the joints" to the executive. (Sterling Computers Ltd.79). Judges
should exercise judicial self-restraint while exercising powers of judicial
review of administrative or legislative decisions. (Transport and Dock Workers
Union80).
Specific places were hitherto fixed by the Commissioner, in the exercise of his
powers under Rule 4 of the 2012 Rules and the earlier 2005 Rules, for locating
the total 6596 A-4 retail shops in different areas/localities of the State.
While the amended Rule 4, and para 2 of the Excise Policy for the year 2013-14,
enable the Commissioner to relocate un-disposed A-4 shops from any locality/area
as he thinks fit, he is disabled by Para.2 of the said Excise Policy, from
relocating un-disposed A-4 shops from a higher licence fee slab to a lower
licence fee slab. For example - the Commissioner is disabled from relocating an
un-disposed shop, fixed earlier in an area where the population was in excess of
20 Lakhs, to an area where the population is 10,000 or less. Save this
restriction the power conferred on the Commissioner, by the amended Rule 4 to
relocate un-disposed A-4 shops, is unfettered.
From the counter-affidavit filed on behalf of the respondents it is evident that
as many as 617 shops were not disposed of, inspite of repeated notifications,
during the Excise year 2012-13; a notification was issued for disposal of these
617 shops during the Excise year 2013-14; applications in respect of 76 shops
were received and disposed of, leaving 541 shops undisposed; as against 5979
shops, for which licenses were granted for the year 2012-13, licenses for only
4,986 shops were renewed for the year 2013-14; 993 shops were left unrenewed; at
the end of the first round of notifications for the year 2013-14, 1610 shops
remained undisposed; 215 shops were disposed of in the second round, leaving
1,395 shops undisposed for the year 2013-14; after repeated notifications,
another 225 shops were disposed of; and 1,170 shops are yet to be disposed off
even after seven rounds of notifications. The revenue which the State expected
to generate was by collection of the prescribed licence fee for all the 6596 A-4
shops. As 1610 A-4 shops remained undisposed for the Excise Year 2013-14,
before the impugned notifications were issued, there was a substantial shortfall
in the expected revenue generation. This necessitated relocation of undisposed
A-4 shops to other areas/localities where there was a greater demand for grant
of licences to establish A-4 shops. As the licence fee is fixed for a
population slab, relocation of an A-4 shop from a higher population slab to a
lower population slab would have resulted in collection of lower licence fees,
for grant of a licence for the A-4 shop, at the relocated place. This would, in
turn, have resulted in loss in collection of the estimated revenue, thereby
defeating the very object of relocating un-disposed A-4 shop in terms of the
amended Rules and the Excise Policy.
XVIII. LEGITIMATE EXPECTATION:
It is contended on behalf of the petitioners that, once a licence is granted
with specific conditions and the licence is renewed on those conditions, the
licensee has a legitimate expectation of carrying on business in the areas
earmarked in their favour when they were granted A-4 licences; and the
petitioners cannot be denied the opportunity of making reasonable profits.
Legitimate expectation may arise (a) if there is an express promise given by a
public authority; or (b) because of the existence of a regular practice which
the claimant can reasonably expect to continue. Such an expectation must be
reasonable. (Madras City Wine Merchants' Assn.76). A person may have a
legitimate expectation of being treated in a certain way by an administrative
authority even though he has no legal right in private law to receive such
treatment. (Jasbir Singh Chhabra v. State of Punjab97; Halsbury's Laws of
England, 4th Edn.). A decision taken in an arbitrary manner contradicts the
principle of legitimate expectation. An authority is under a legal obligation to
exercise power reasonably and in good faith to effectuate the purpose for which
the power stood conferred. In this context, "in good faith" means "for
legitimate reasons". It must be exercised bonafide for the purpose and for none
other. (Commr. of Police v. Gordhandas Bhanji98, Sirsi Municipality v. Cecelia
Kom Francis Tellis99, State of Punjab v. Gurdial Singh100, Collector (District
Magistrate) v. Raja Ram Jaiswal101, Delhi Admn. v. Manohar Lal102 and N.D. Jayal
v. Union of India103; NOIDA Entrepreneurs Assn. v. NOIDA104).
The Court can interfere only if the decision taken by the authority is found to
be arbitrary, unreasonable or in gross abuse of power or in violation of
principles of natural justice and is not taken in public interest. A claim based
on mere legitimate expectation, without anything more, cannot ipso facto give a
right to invoke these principles. (Jasbir Singh Chhabra97). The mere reasonable
or legitimate expectation of a citizen may not by itself be a distinct
enforceable right, but failure to consider and give due weight to it may render
the decision arbitrary, and this is how the requirement of due consideration of
a legitimate expectation forms part of the principle of non-arbitrariness, a
necessary concomitant of the rule of law. Every legitimate expectation is a
relevant factor requiring due consideration in a fair decision-making process.
Whether the expectation of the claimant is reasonable or legitimate in the
context is a question of fact in each case. Whenever the question arises, it is
to be determined not according to the claimant's perception but in larger public
interest wherein other more important considerations may outweigh what would
otherwise have been the legitimate expectation of the claimant. A bona fide
decision of the public authority reached in this manner would satisfy the
requirement of non-arbitrariness and withstand judicial scrutiny. (Food
Corporation of India v. Kamdhenu Cattle Feed Industries105; Jasbir Singh
Chhabra97).
Legitimate expectation cannot be upgraded to a legally enforceable right which
it is not, as it is merely a part of the rule of non-arbitrariness to ensure
procedural fairness of the decision. The requirement of public interest can
outweigh the legitimate expectation of private persons and the decision of a
public body on that basis is not assailable. (Ghaziabad Development Authority v.
Delhi Auto & General Finance (P) Ltd.,106). As the decision of the Commissioner,
in relocating un-disposed A-4 shops to areas wherein the petitioners A-4 shops
are located, does not suffer from arbitrariness, is not in violation of Article
14 of the Constitution of India, and is taken in the larger public interest of
enhancing public revenue, the doctrine of legitimate expectation has no
application.
There is a distinction between a mere hope and a legitimate expectation. (R.
Selvaraj68; Madras City Wine Merchants Association's76). For legal purposes, the
expectation cannot be the same as anticipation. It is different from a wish, a
desire or a hope. It cannot amount to a claim or demand on the ground of a
right. However earnest and sincere a wish, a desire or a hope may be and however
confidently one may look to them to be fulfilled, they by themselves cannot
amount to an assertable expectation and a mere disappointment does not attract
legal consequences. A pious hope, even leading to a moral obligation, is not a
legitimate expectation. The legitimacy of an expectation can be inferred only if
it is founded on the sanction of law or custom or an established procedure
followed in regular and natural sequence. Again it is distinguishable from a
genuine expectation. Such expectation should be justifiably legitimate and
protectable. Every such legitimate expectation does not by itself fructify into
a right and, therefore, does not amount to a right in the conventional sense.
(Punjab Communications Ltd. v. Union of India107, Chanchal Goyal (Dr.) v. State
of Rajasthan108, J.P. Bansal v. State of Rajasthan109, State of Karnataka v.
Umadevi110, Kuldeep Singh v. Govt. of NCT of Delhi111, Ram Pravesh Singh v.
State of Bihar112 and Sethi Auto Service Station v. DDA113; Union of India v.
Hindustan Development Corpn114; Jasbir Singh Chhabra97). Neither the Government
nor the Commissioner have promised the petitioners that they would make profits
from their business, of trading in liquor, for the Excise Year 2013-14.
The doctrine of legitimate expectation arises only in the field of
administrative decisions. If the plea of legitimate expectation relates to
procedural fairness there is no possibility of invoking the doctrine as against
legislation - plenary or subordinate. If there is a change in policy, or in
public interest the position is altered by a rule or legislation, no question of
legitimate expectation would arise. (Madras City Wine Merchants' Assn.76). The
doctrine of legitimate expectation plays no role when the appropriate authority
is empowered to take a decision by an executive policy or under law. The court
leaves the authority to decide its full range of choices within the executive or
legislative power. In matters of economic policy, the court gives a large leeway
to the executive and the legislature. Granting licences is either by way of
executive or legislative policy. (Bajaj Hindustan Ltd. v. Sir Shadi Lal
Enterprises Ltd.,115). The decision taken by the Commissioner, to relocate some
of the un-disposed A-4 shops, is in the exercise of the powers conferred under
the amended Rule 4 of the 2012 Rules, which has the force of law. It is also in
accordance with the Excise Policy framed by the Government for the Excise Year
2013-14 which was notified in G.O.Ms.No.358 dated 22.06.2013 and was published
in the A.P. Gazette on 24.06.2013. The contention that the petitioners'
legitimate expectation is violated thereby does not, therefore, merit
acceptance.
XIX. IS FAILURE TO IDENTIFY AREAS, AT WHICH THE UNDISPOSED A-4 SHOPS
SHOULD BE RELOCATED, BEFORE THE COMMENCEMENT OF THE EXCISE YEAR
2013-14, FATAL?
Learned Counsel for the petitioners would contend that, if the shops had been
identified in June, 2013 itself, the exercise of issuing a notification
undertaken in the beginning of the year, and the proposal to relocate undisposed
A-4 shops had been brought to their notice, the petitioners would not have
sought renewal; and, if another shop is now located in their area, the
petitioners would not only suffer huge loss but their bank guarantees and
licence fees would be forfeited in terms of Rule 16(8).
As both the amended 2012 Rules, and the Excise policy for the year 2013-14, were
published in the A.P. Gazette before the commencement of the Excise year 2013-
14, the licensees cannot claim ignorance thereof before they participated in the
selection process for grant of licenses. They had the option to opt out if the
conditions were detrimental to their interest or were to their disadvantage.
Having participated in the selection process, based on the extant rules and the
Excise policy, it is not open to them to now turn around and contend that
exercise of power, strictly in terms thereof, is illegal. (Devans Modern
Breweries Ltd.,2). Neither the Act nor the Rules obligated the petitioners to
seek renewal of their licences, and they did so on their own volition. The State
has not guaranteed the petitioners, either under the Act or the amended 2012
Rules or the Excise Policy for the year 2013-14, a specified sum as profit or a
fixed return on their investment. In contracts entered into between the State
and its citizens, pursuant to an auction, the State does not guarantee a profit
to the licensees. There is no compulsion on anyone to enter into these
contracts. It is voluntary on both sides. There is no warranty against incurring
losses. It is a business for the licensees. Whether they make profit or incur
loss is no concern of the State. In law, it is entitled to its money under the
contract. It is not as if the licensees are going to pay more to the State in
case they make substantial profits. (Asstt. Excise Commr. v. Issac Peter116;
Devans Modern Breweries Ltd.,2). The right to carry on business, more so in the
sale of liquor which is Res extra commercium, does not carry with it any
obligation on the State to guarantee the licensees a particular rate of return
on their investment. Any person carrying on business may earn huge profits, or
may suffer extensive losses. Neither does the State promise a businessman that
it would make good the losses suffered by him nor would the businessman share
his profits with the State if it is in excess of what he had earlier envisaged.
Maybe the licensees were not wise in offering their bids. Many an unexpected
development may occur which may either cause loss to the contractor or result in
large profit. Such contracts do not imply a warranty - or a guarantee - of
profit to the contractor. It is a business for him - profit and loss being
normal incidents thereof. (Asstt. Excise Commr.116).
Relocation of undisposed shops does not deprive the licensees of their right to
carry on the trade in intoxicants for the duration of the licence period. This
right to trade, during the period of the excise year, should not be confused
with the right to make profits. Even assuming that, by reason of the new shops,
the licensees may suffer in sales, it would not result in discrimination. The
licensees were well aware that there may be an increase of shops in their area,
on undisposed shops being relocated thereat, and that their sales may get
reduced thereby. Neither the viability of liquor trade nor the profit or loss
of the liquor vendor is of any concern of the State, and it confers privilege on
fixed terms for a fixed period. It is for the participant to plan and
participate in the purchase of the privilege. (R. Selvaraj68; Issac Peter116).
It is not open to the petitioners to now turn around and contend that un-
disposed A-4 shops should not be relocated in their areas as they may suffer
losses thereby.
XX. HAS THE COMMISSIONER ABDICATED HIS POWERS UNDER RULE 4 AND
SURRENDERED HIS DISCRETION TO HIS SUBORDINATES?
It is contended, on behalf of the petitioners, that the Commissioner could not
have called for proposals from the Deputy Commissioners of Prohibition and
Excise, who have no role to play under the Act and the Rules, for the purpose of
issuing licences; and, from the counter-affidavit, it is clear that the
Commissioner has merely accorded permission and has not take an independent
decision under Rule 4.
The principles of administrative law, such as surrender of discretion and
abdication of duty vitiating the decision, would apply in the case of exercise
of power conferred by a statute or rules made thereunder or instruments which
are statutory in character. (Irrigation Development Employees Association v.
Govt. of A.P.117). Exercise of statutory power partakes a quasi-judicial
complexion. In the exercise of such power, the authority cannot permit its
decision to be influenced by the dictation of others as this would amount to
abdication and surrender of its discretion. It would then not be the authority's
discretion that is exercised, but someone else's. If an authority "hands over
its discretion" to another body it acts ultra vires. Such interference by a
person or body extraneous to the power is contrary to the nature of the power
conferred on the authority. (State of U.P. v. Dharmander Prasad Singh118).
In the counter-affidavit filed on behalf of the respondents it is stated that,
after 21.08.2013, the respondents had issued four notifications notifying the
un-disposed A-4 shops at their original places during which 89 shops were
disposed; 1170 A-4 shops still remained un-disposed; in order to dispose of
these un-disposed shops, a decision was taken to relocate the A-4 shops in a
phased manner at places where the turnover of the existing A-4 shops was more
than 14 times the licence fee; mandals, where there were no A-4 shops, were
notified; all the Deputy Commissioners of Prohibition and Excise were asked to
submit proposals for relocation of shops wherever the turnover of the A-4 shops
were 14 times and above the license fee; a meeting was convened on 06.11.2013
wherein all the Deputy Commissioners sought permission to relocate A-4 shops in
17 mandals which did not have a single A-4 shop; they also submitted proposals
in respect of 106 shops where the turnover was 14 times and above the license
fee; after thoroughly examining the proposals, the Commissioner of Prohibition
and Excise had again convened a meeting on 29.11.2013 with the Deputy
Commissioners of Prohibition and Excise, and had accorded permission to relocate
104 A-4 shops at those areas/localities where the turnover was 14 times or more;
in addition, taking into consideration Rules 4 and 17, A-4 shops were sought to
be relocated in those mandals which did not have any A-4 shop at all; and the
Commissioner had accorded permission to relocate 69 A-4 shops from one location
to another within the district, 15 A-4 shops from one district to another within
the zone, and 37 A-4 shops from one district to another within the multi-zone
within the same licence fee slabs. In calling for proposals, and in seeking
information, from his subordinates the Commissioner has neither surrendered his
discretion nor has he abdicated his duties. It is evident that it is the
Commissioner who has exercised the powers conferred on him under the amended
Rule 4, and not the Deputy Commissioners who, as his subordinates, had merely
submitted proposals to, and had furnished the information sought for by, him.
XXI. ARE DISTRICT COLLECTORS EMPOWERED TO ISSUE THE NOTIFICATION UNDER
RULE 5(1) OF THE RULES?
It is contended on behalf of the petitioners that the impugned notifications,
issued by District Collectors, are ultra-vires Rule 5 as the competent authority
is the licensing authority i.e., the Excise Superintendent; if a thing has to be
done in a certain way, it must be done in that way only; merely because they
were also granted licences, pursuant to notifications issued by District
Collectors in July, 2012, does not disable the petitioners from questioning the
impugned notifications issued by the District Collector as the "cause" is
different; the earlier "cause", whereby the petitioners were granted licences in
July, 2012, is not before the court; no fresh notification was issued for the
petitioners' areas in the year 2013-14 as it is only a renewal; the petitioners
cannot be precluded from questioning the jurisdiction of the District Collector
merely because they were granted a similar benefit in the earlier year 2012-13;
and the impugned notifications were issued by the District Collector, for re-
location of the shops, without guidelines or norms or in accordance with the
power contemplated under the Excise Act or the Rules.
A. THE PROCEDURE PRESCRIBED BY STATUTORY RULES MUST BE STRICTLY ADHERED TO:
When a procedure has been laid down, the authority must act strictly in terms
thereof. (Taylor v. Taylor119). If a statute has conferred a power to do an
act, and has laid down the method in which that power has to be exercised, it
necessarily prohibits the doing of the act in any other manner than that which
has been prescribed. The principle behind the rule is that if this were not so,
the statutory provision might as well not have been enacted. (State of U.P. v.
Singhara Singh120; Dhanajaya Reddy v. State of Karnataka121; Ramchandra
Murarilal Bhattad v. State of Maharashtra122; State of Gujarat v. Shantilal
Mangaldas123). Rule 5(1) of the 2012 Rules requires the notification in the
District Gazette, inviting applications for grant of licences in the
area/locality, to be issued by the licencing authority. Rule 2(L) of the 2012
Rules defines "licensing authority" to mean the Prohibition & Excise
Superintendent of the concerned place in which the licenced shop is located. As
the licencing authority is the Prohibition & Excise Superintendent, the impugned
notifications issued by the District Collectors do not accord with Rule 5(1) of
the 2012 Rules.
The contention of the Learned Government Pleader that the District Collector is
the selection authority under Rule 11, and is entitled to issue the notification
under Rule 5(1), is not tenable. Rule 3(1) stipulates that, subject to the
provisions of the Rules, the right to sell IMFL and FL in retail by shops shall,
ordinarily, be granted by way of a licence issued after publishing a
notification and inviting applications from the public. Rule 12 relates to
submission of applications, and selection of applicants for the grant of
licences. While Rule 12(1) requires applications, along with the prescribed
enclosures, to be addressed to the licencing authority, the selection procedure,
detailed in Rule 12(6) of the Rules, makes it clear that the District Collector
is the selection authority.
On a conjoint reading of Rules 5 and 12, it is evident that, while the
notification under Rule 5(1) is to be issued by, and the applications addressed
to, the Prohibition & Excise Superintendent as the licencing authority, the
selection process is conducted under the aegis of the District Collector on whom
power is conferred to select the successful applicant. After the applicant is
selected by the District Collector for grant of the licence, it is the
Prohibition & Excise Superintendent who, as the licensing authority, is
competent to issue the licence under Rule 24. The District Collectors were,
therefore, not entitled to issue the impugned notifications under Rule 5(1) of
the Rules.
B. PETITIONERS CANNOT BLOW HOT AND COLD AT THE SAME TIME:
This, by itself, may not justify setting aside the impugned notifications as the
petitioners are themselves beneficiaries of licences, granted to them for the
Excise year 2012-13, on similar notifications being issued under Rule 5(1) by
the District Collectors. A party cannot be permitted to "blow hot-blow cold",
"fast and loose" or "approbate and reprobate". Where one knowingly accepts the
benefits of an order, he is estopped from denying the validity of, or the
binding effect of, such an order upon himself. (Nagubai Ammal v. B. Shama
Rao124; CIT v. V. MR. P. Firm Muar125; Ramesh Chandra Sankla v. Vikram
Cement126; Pradeep Oil Corpn. v. MCD127; Cauvery Coffee Traders v. Hornor
Resources (International) Co. Ltd.128; V. Chandrasekaran v. Administrative
Officer129; and Rajasthan State Industrial Development & Investment Corpn. v.
Diamond & Gem Development Corpn. Ltd.,130). A person cannot say at one time
that a transaction is valid and thereby obtain some advantage, to which he could
only be entitled on the footing that it is valid, and then turn around and say
it is void for the purpose of securing some other advantage. (Verschures
Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd131; Halsbury's Laws of
England, 4th Edn., Vol. 16; R.N. Gosain v. Yashpal Dhir132; P.R. Deshpande v.
Maruti Balaram Haibatti133). Since the petitioners are themselves beneficiaries
of the notifications issued earlier by District Collectors, and are being
permitted to trade in liquor, criticism by such beneficiaries of the impugned
notifications, also issued by the District Collectors, is not justified. (K.
Muthusamy55).
C. DISCRETIONARY JURISDICTION, UNDER ARTICLE 226 OF THE CONSTITUTION, IS NOT
TO BE EXERCISED FOR THE MERE ASKING.
The contention that the notifications issued under Rule 5(1), inviting
applications for the Excise year 2012-13, are not under challenge in these writ
proceedings and this Court should not examine the validity of such
notifications, but should set aside the impugned notifications issued by the
District Collectors under Rule 5(1) for the Excise Year 2013-14, does not merit
acceptance. A writ of mandamus is designed to promote justice (ex debito
justitiae). The grant or refusal of the writ is at the discretion of the Court.
While dealing with a writ petition, the court must exercise discretion taking
into consideration a wide variety of circumstances, inter alia, the facts of the
case, the exigency that warrants such exercise of discretion, the consequences
of grant or refusal of the writ, and the nature and extent of injury that is
likely to ensue by such grant or refusal. (Rajasthan State Industrial
Development & Investment Corpn.130). The power conferred on the High Court,
under Article 226 of the Constitution, is to advance justice and not to thwart
it. The lookout of the High Court is, therefore, not merely to pick out any
error of law through an academic angle but to see whether injustice has resulted
on account of any erroneous interpretation of the law. If justice became the by-
product of an erroneous view of law the High Court is not expected to erase such
justice in the name of correcting the error of law. (Roshan Deen v. Preeti
Lal134; Ramesh Chandra Sankla126; State of U.P. v. District Judge, Unnao135).
While examining the contention that the impugned notifications, issued by the
District Collectors, must be set aside on the ground that no such power is
conferred on them under Rule 5(1), it does not stand to reason that this Court
should ignore or turn a blind eye to the fact that similar notifications were
issued, for the Excise Year 2012-13, by District Collectors whereby A-4 shop
licences were granted to the petitioners, and were renewed for the Excise Year
2013-14.
In the exercise of its discretionary jurisdiction under Article 226, it is open
to the High Court to decline relief if the grant of relief would defeat the
interests of justice or where the petitioner seeks to secure a dishonest
advantage or perpetuate an unjust gain. (M.P. Mittal v. State of Haryana136;
Andhra Pradesh Wine Dealers Association v. Deputy Director of Income Tax
(Investigation)137). Permitting the petitioners, who are beneficiaries of
similar notifications issued by District Collectors in the Excise Year 2012-13,
to run A-4 shops for the Excise Year 2013-14, while at the same time setting
aside the impugned notifications whereby others were granted licences for the
relocated shops, would not only result in a premium being placed on the earlier
illegal acts of the District Collectors but would also be against larger public
interest.
The jurisdiction of the High Court, under Article 226 of the Constitution, is
extraordinary, equitable and discretionary, (K.D. Sharma v. Steel Authority of
India Ltd138), and should be exercised in the larger interest of justice. While
granting relief in favour of the applicant, the court must balance interests and
equities. It can pass an appropriate order which justice may demand and equities
may project. Courts of equity should go much further both to give and refuse
relief in furtherance of public interest. Granting or withholding of relief may
properly be dependent upon considerations of justice, equity and good
conscience. (Ramesh Chandra Sankla126; Shiv Shankar Dal Mills v. State of
Haryana139). As the entire exercise of relocation of un-disposed shops is to
enable the Government to augment its revenue, I see no reason to exercise
discretion, under Article 226 of the Constitution of India, to set aside the
impugned notifications while at the same time permitting the petitioners to
continue to carry on trade in IMFL and FL and reap the benefits of the earlier
notifications issued, under Rule 5(1) by the District Collectors, for the Excise
year 2012-13.
XXII. IS THE STATE, BY RELOCATING UNDISPOSED A-4 SHOPS, ENCOURAGING
CONSUMPTION OF LIQUOR?
It is contended, on behalf of the petitioners, that liquor is not an essential
commodity, and grant of privilege fee by the State is only a revenue generating
exercise; the very fact that A-4 shops, in some districts, could not be disposed
shows that the people in those districts do not wish to consume IMFL; a welfare
State should not dispose of A-4 shops which could not be relocated; and
relocation of shops, from one district to another, falls foul of the government
policy for the year 2013-14 as it would amount to encouraging people in that
district to consume more IMFL.
The power of the State to raise revenue by levying taxes and fees should not be
confused with the power of the State to regulate trade or business in liquor.
The State exercises two different powers on such occasions. The mere fact that
the State levies taxes and fees on trade or business in liquor or derives income
from it, does not make the right to carry on trade or business in liquor a
fundamental right. (R. Selvaraj68).
Whether or not the undisposed A-4 shop should be relocated are matters of
legislative or executive policy and this Court would not sit in judgment over
the policy decisions of the State. The Excise Policy for the year 2014, while
permitting the Commissioner to relocate undisposed shops, requires an intensive
campaign to be undertaken to educate the public about the evil effects of
drinking and for steps to be taken to initiate establishment of de-addiction
centres in each district. The manner in which the revenue needs of the State
should be balanced with the need to educate the public of the evil effects of
drinking are also not for this Court to adjudicate in proceedings under Article
226 of the Constitution of India. This contention urged by the petitioners, who
are carrying on trade in the sale of IMFL and FL in retail shops, is akin
to the devil quoting the scriptures, and does not merit acceptance.
XXIII: CONCLUSION:
Viewed from any angle, I see no reason to exercise discretion, under
Article 226 of the Constitution of India, to interfere. The Writ Petitions fail
and are, accordingly, dismissed. The miscellaneous petitions pending, if any,
shall also stand dismissed. No costs.
_______________________________
RAMESH RANGANATHAN, J
Date: 05.03.2014.
the policy decisions of the State. and dismissed the writ petitions =
The notifications issued by District Collectors, inviting applications for grant
of licences for the relocated A-4 excise shops, is questioned in these Writ
Petitions as being arbitrary, illegal and contrary to the A.P. Excise (Grant of
licence of selling by shops and conditions of licence) Rules, 2012 (hereinafter
called the "2012 Rules").=
The State exercises two different powers on such occasions. The mere fact that
the State levies taxes and fees on trade or business in liquor or derives income
from it, does not make the right to carry on trade or business in liquor a
fundamental right. (R. Selvaraj68).
Whether or not the undisposed A-4 shop should be relocated are matters of
legislative or executive policy and this Court would not sit in judgment over
the policy decisions of the State.
The Excise Policy for the year 2014, while
permitting the Commissioner to relocate undisposed shops, requires an intensive
campaign to be undertaken to educate the public about the evil effects of
drinking and for steps to be taken to initiate establishment of de-addiction
centres in each district.
The manner in which the revenue needs of the State
should be balanced with the need to educate the public of the evil effects of
drinking are also not for this Court to adjudicate in proceedings under Article
226 of the Constitution of India.
This contention urged by the petitioners, who
are carrying on trade in the sale of IMFL and FL in retail shops, is akin
to the devil quoting the scriptures, and does not merit acceptance.
XXIII: CONCLUSION:
Viewed from any angle, I see no reason to exercise discretion, under
Article 226 of the Constitution of India, to interfere. The Writ Petitions fail
and are, accordingly, dismissed. The miscellaneous petitions pending, if any,
shall also stand dismissed. No costs.
2014( March. Part ) judis.nic.in/judis_andhra/filename=10965
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NOs.35116 OF 2013
05-03-2014
B. Venkateswarlu and two others.....Petitioners
Government of A.P. Revenue (Excise) Department, rep., by its Prl. Secretary to
Govt. Secretariat, Hyderabad and three others.....Respondents
Counsel for the petitioners: Sri K. Ramakrishna Reddy, Learned Senior
Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy, Sri I.
Chandrasekhar, Sri P. Nagendra Reddy, Sri P.V. Ramana, Sri C. Damodar Reddy, Sri
B. Vijaysen Reddy and Sri S. Rajasekhar Rao, Learned Counsel appearing on behalf
of the petitioners.
Counsel for respondents: Learned Government Pleader for Prohibition and Excise
<GIST:
>HEAD NOTE:
?Citations:
1) AIR 1980 SC 1502: 1980 Supp SCC 81
2) (2004) 11 SCC 26
3) 2005(6) ALD 514
4) (2007 (3) ALT 678 = (2007) 2 ALD 830
5) AIR 1961 SC 1170 : (1961) 3 SCR 185
6) AIR 1997 SC 2239
7) AIR 1990 SC 1747
8) AIR 1966 SC 1678
9) (1984 (2) SCC 500
10) (2001)8 SCC 61
11) (2003)5 SCC 134
12) (2005)10 SCC 437
13) (2004)11 SCC 625
14) (2001) 8 SCC 540
15) (1995) 1 SCC 351
16) (1974) 2 SCC 579 = AIR 1974 SC 1905
17) (1969) 1 AnWR 77
18) AIR 1951 SC 467
19) (2010) 6 SCC 545
20) 2012 (6) ALD 98 (DB
21) (1987) 1 SCC 658
22) AIR 1986 SC 1518
23) (1994) 5 SCC 198
24) (1980) 2 SCC 752
25) AIR 1965 SC 722
26) (2003) 1 SCC 506 : AIR 2003 SC 269
27) 2012 (6) ALD 390
28) (1985) 3 SCC 360
29) AIR 1982 SC 33: (1982) 1 SCC 39
30) AIR 1967 SC 1170
31) AIR 1967 SC 1836
32) AIR 1975 SC 2299
33) (1995) 1 SCC 574
34) (2006) 4 SCC 327
35) (2001) 9 SCC 432
36) 1999 American Law Reports 1137
37) 1978 (2) SCC 213
38) 1990 (3) SCC 447
39) 1993 Supp.(3) SCC 716
40) 1999 (4) SCC 135
41) 1999 (6) SCC 275
42) (1964) 4 SCR 280
43) (1986) 4 SCC 447
44) AIR 1958 Allahabad 692
45) AIR 1994 SC 813 = 1994 Supp (1) SCC 8
46) (2008) 5 SCC 33
47) 2008 28 JT 639
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50) AIR 1959 SC 942
51) AIR 1968 SC 1
52) AIR 1964 SC 1135
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54) (1988) 3 SCC 382
55) LAWS -TLMAD 2003-0-582: MANU/TN/0192/2003
56) (2013) 5 SCC 427
57) (2011) 7 SCC 639
58) (1966) 5 SCC 125
59) (2013) 2 SCC 772
60) (2013) 8 SCC 519
61) (1974) 1 SCC 19
62) AIR 1955 SC 191
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66) (2003) 7 SCC 83
67) (2013) 8 SCC 154
68) 2002 (1) MLJ 627
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82) (2008) 1 SCC 683
83) (1989) 1 SCC 89
84) AIR 1978 SC 597
85) AIR 1969 SC 198(1969)1 SCR 315
86) (1971) 3 SCC 864 = AIR 1973 SC 205
87) (1985) 3 SCC 398
88) (2006) 3 SCC 276
89) (1970) 2 SCC 458
90) (1981) 1 SCC 664
91) (1980) 2 SCC 295
92) (1981) 2 SCC 722
93) (1985) 1 SCC 641
94) (1972) 1 WLR 1373
95) (1980) 3 SCC 97
96) (2001) 3 SCC 635
97) (2010) 4 SCC 192
98) AIR 1952 SC 16
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100) (1980) 2 SC 471
101) (1985) 3 SCC 1
102) (2002) 7 SCC 222
103) (2004) 9 SCC 362
104) (2011) 6 SCC 508
105) (1993) 1 SCC 71
106) (1994) 4 SCC 42
107) (1999) 4 SCC 727
108) (2003) 3 SCC 485
109) (2003) 5 SCC 134
110) (2006) 4 SCC 1
111) (2006) 5 SCC 702
112) (2006) 8 SCC 381
113) (2009) 1 SCC 180
114) (1993) 3 SCC 499
115) (2011) 1 SCC 640
116) (1994) 4 SCC 104
117) 2004(2) ALD 599 (DB
118) AIR 1989 SC 997
119) (1875) Ch.D.426)
120) AIR 1964 SC 35
121) (2001) 4 SCC 9
122) (2007) 2 SCC 588
123) AIR 1969 SC 634
124) AIR 1956 SC 593
125) AIR 1965 SC 1216
126) AIR 2009 SC 713
127) AIR 2011 SC 1869
128) (2011) 10 SCC 420
129) (20120 12 SCC 133
130) (2013) 5 SCC 470
131) (1921) 2 KB 608
132) (1992) 4 SCC 683
133) (1998) 6 SCC 507
134) (2002) 1 SCC 100
135) AIR 1984 SC 1401
136) (1984) 4 SCC 371
137) 2005(4) Laws (APHC) 106
138) (2008) 12 SCC 481
139) (1980) 2 SCC 437
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NOs.35116, 35260, 35286, 35294, 35298, 35299, 35303, 35304, 35405,
35475, 35488, 35496, 35500, 35535, 35548, 35610, 35648, 35745, AND 35750 OF 2013
COMMON ORDER:
The notifications issued by District Collectors, inviting applications for grant
of licences for the relocated A-4 excise shops, is questioned in these Writ
Petitions as being arbitrary, illegal and contrary to the A.P. Excise (Grant of
licence of selling by shops and conditions of licence) Rules, 2012 (hereinafter
called the "2012 Rules").
It would suffice, for the disposal of this batch of Writ Petitions, if the facts
in W.P. No.35116 of 2013 are noted. The petitioners were allotted A-4 shops at
Konijerla and other villages for the licence period 01.07.2012 to 30.06.2013.
They paid the licence fee of Rs.32.5 lakhs per annum. The licence was renewed,
on completion of one year, in accordance with Rule 8 of the Rules. In the
notification dated 30.11.2013, published in the District Gazette, the District
Collector stated that the licence for the right of selling by shop was to be
granted for the licence period from 01.07.2013 to 30.06.2014; the Commissioner
of Prohibition & Excise had fixed 153 A-4 shops to be licensed in the
areas/localities by proceedings dated 12.07.2012; among the 153 notified shops,
147 shops, which were disposed and established for the year 2012-13, were being
renewed for the year 2013-14; in addition thereto, two new shops were allotted
by the Commissioner of Prohibition & Excise by proceedings dated 29.11.2013;
consequently he was issuing a notification for the A-4 shops which were either
not disposed or had been cancelled or withdrawn for the year 2012-13; and,
consequently, seven A-4 shops were being relocated under Rule 4 for drawal of
lots.
The petitioners are aggrieved by the said notification of the District
Collector, informing the public and intending applicants, that A-4 shops were
being relocated from one area to another either within or beyond the District.
It is the petitioner's case that a similar attempt to relocate shops, by
issuance of a notification, was under challenge in W.P. No.21377 of 2013 and
batch; during the pendency of the Writ Petitions, the said notifications were
withdrawn by the Government; and, consequently, the Writ Petitions were disposed
of by order dated 21.08.2013.
In the counter-affidavit filed on behalf of the Commissioner of Prohibition &
Excise it is stated, among others, that the Commissioner had granted permission
to relocate only 314 of the 1311 undisposed shops after considering all relevant
factors; accordingly notifications dated 15.07.2013 were issued inviting
applications for 300 shops at the proposed places; 810 applications were
received for 127 A-4 shops; W.P. No.21474 of 2013 and batch was filed
challenging the notification dated 15.07.2013; this Court had, by order dated
22.07.2013, permitted the authorities to proceed with the process of receipt of
applications and drawal of lots, but had directed that no licenses shall be
issued for any of the relocated shops; when the matter was being heard, the
respondents withdrew the notifications with liberty to issue notifications
afresh for relocation of the A-4 shops at all places where the turnover of the
existing shops exceeded seven times the licence fee; as the cause in the Writ
Petition did not survive, necessitating adjudication by this Court, the Writ
Petitions were closed by order dated 21.08.2013; 60 A-4 shops, notified at their
original places in the third round of notification, were confirmed;
notifications dated 03.11.2013 were issued by the District Collectors inviting
applications for establishing A-4 shops at the notified places; 547 applications
were received pursuant to these notifications; among the 547 applications, 14
were received for the 12 A-4 shops notified in their original locations; as
against the 121 A-4 shops sought to be relocated, 533 applications were received
for 72 A-4 shops; lots were drawn on 07.12.2013 by the District Collectors, and
successful applicants were declared; the Prohibition and Excise Superintendents
had issued provisional licences to the successful applicants, except in
Doulatabad of Medak district where the successful applicant did not pay the
license fee; the Government had increased the price of liquor on more than three
occasions without changing the percentage of margin allowed to the retailer on
the purchases made from Andhra Pradesh Beverages Corporation Limited ('APBCL'
for short); as the margin was fixed on the issue price, there would be no change
in the profit margin of the licensees; because of the increase in price, the
margin for the retailer had automatically increased, though there may not be a
proportionate increase in sales; and, in such circumstances, it cannot be said
that the gazette notification issued by the respective District Collectors are
illegal, arbitrary and contrary to the provisions of the A.P. Excise Act; and,
in similar circumstances, this Court had, by its order in W.P.No.22095 of 2013
dated 25.09.2013, held that relocation of an A-4 shop, at a place where the
turnover is 14 times, cannot be said to be arbitrary or in violation of Article
14 of the Constitution of India.
In the additional counter-affidavit, filed on behalf of the Commissioner, it is
stated that 110 A-4 shops had crossed the turnover of 14 times and above
throughout the State; two of such A-4 shops were disposed of at the relocated
places in the second round of notification; the three A-4 shops, proposed in
scheduled areas, were not notified for want of Gram Sabha resolution; of the
remaining 104 A-4 shops, notified at places where the turnover was 14 times and
more, 17 A-4 shops have been notified for relocation at places where there is
not even a single A-4 shop for the entire mandal; from out of these 104 A-4
shops, 61 were disposed of; out of 17 A-4 shops, notified at places where there
is not even a single shop in the entire Mandal, 11 shops have been disposed of;
in all 72 A-4 shops have been disposed of under the present notifications; in
all these cases, the licensees were granted A-4 licences for the excise year
2012-13; in accordance with Rule 21, the licences of all A-4 licensees were
renewed for a further period of one year from 01.07.2013 to 30.06.2014, wherever
the licensees had sought renewal; the 7 times turnover, prescribed under Rule
16(9), is for each licence year; in the present notification a fixed licence fee
is notified, in proportion to the period for which a licence was issued, in
terms of Rule 16(9); if the licensee's turnover crosses 7 times the licence fee,
or the proportionate licence fee, in that excise year such licensees are liable
to pay privilege fee; the petitioners' contention that they would be put to loss
if licences are issued to prospective applicants is not tenable; under Section 3
of the Act and Rule 11 of the Rules, the District Collector is the selection
authority to conduct the process of selection of applicants for grant of
licences, which includes the power to issue a notification duly inviting
applications for grant of licences; at the time of selection of the applicants,
the Commissioner had informed all the District Collectors, through D.O. letters,
to issue notifications inviting applications for grant of licences; and as many
as 5510 A-4 shops have been allotted to the successful applicants for the year
2013-14 as per the notification issued, in the District Gazettes, by the
District Collectors concerned.
Oral submissions were put forth by Sri K. Ramakrishna Reddy, Learned Senior
Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy, Sri I.
Chandrasekhar, Sri P. Nagendra Reddy, Sri P.V. Ramana, Sri C. Damodar Reddy, Sri
B. Vijaysen Reddy and Sri S. Rajasekhar Rao, Learned Counsel appearing on behalf
of the petitioners. Learned Government Pleader for Prohibition and Excise
presented his arguments on behalf of the State Government. Written arguments
have also been filed. The rival contentions, urged by Counsel on either side,
are dealt with hereinafter under different heads.
I. RULE 4 AS AMENDED AND NOTIFIED IN G.O.MS. NO.357 DATED 22.06.2013 : ITS
SCOPE:
It is contended on behalf of the petitioners that the 2012 Rules do not confer
any power on the Commissioner to transfer A-4 shops fixed for a particular
area/locality to another; no material has been placed before the Court to show
whether the "public order" requirement of Rule 4 is satisfied; and opening new
shops would create law and order problems.
The Andhra Pradesh Excise Act is an Act intended to raise and secure revenue to
the State without, at the same time, sacrificing the public interest involved in
the regulation of trade in intoxicants. Administration of the Act is,
therefore, vested primarily and centrally in the Commissioner of Excise. The
fixation of the number of shops, their location, and grouping are considered by
the legislative delegate to be matters of such vital importance in Excise
administration that the power in this regard is vested in the Excise
Commissioner. (Rajamallaiah v. Anil Kishore1). The provisions confer ample
regulatory power upon the Excise Authority to regulate, several activities
related to liquor, in any reasonable manner. (State of Punjab v. Devans Modern
Breweries Ltd.,2).
The 2012 Rules were amended by the Government in the exercise of the powers
conferred by Section 72 r/w. Sections 17, 28, and 29 of the Act. The amendments
were notified in G.O.Ms. No.357 dated 22.06.2013, and were published in the A.P.
Gazette on 24.06.2013. Rule 4, after its amendment, reads as under:
"Rule 4. Establishment of Shops:- Subject to such directions, which the
Government may issue in this regard from time to time, the Commissioner of
Prohibition and Excise, having due regard to the requirement, public order,
health, safety and other factors as he thinks fit, may fix the number of shops
to be established in an area/ locality before the publication of notification
under Rule 5, and may relocate any un-disposed shops from any area/locality as
he thinks fit."
The word "un-disposed", in amended Rule 4, disables the Commissioner from
relocating any A-4 shop, and his power to relocate A-4 shops is confined only to
those which remained undisposed for the Excise Year 2013-14. The un-disposed
A-4 shops are those for which either no licence was granted in the Excise Year
2012-13 or for which the licensees chose not to renew their licences for the
Excise Year 2013-14. As against the stipulated 6596 shops for the entire State,
the number of A-4 shops for which licences were renewed for the Excise Year
2013-14 were 4986. Around 1610 A-4 shops remained un-disposed, and were sought
to be sold to augment State revenue. It is only these un-disposed A-4 shops
which the amended Rule 4 empowered the Commissioner to relocate for augmenting
State revenue through collection of licence fees.
Reliance placed on behalf of the petitioners, on the judgments in Arji Sankara
Rao v. Government of Andhra Pradesh3, and G. Venkatesh v. Commissioner of
Prohibition and Excise4, is misplaced. In Arji Sankara Rao3, this Court held
that, before issuing the auction notice, the Commissioner is required to fix the
number of shops to be established in an area/locality; and, on a combined
reading of Rules 3, 4 and 5, it was clear that the lease of the right to sell
Indian Liquor and Foreign Liquor by shop by way of public auction can be granted
only in respect of the shops fixed by the Commissioner in the particular
area/locality identified by him, and in no other area/ locality. In G.
Venkatesh4, this Court held that there is no provision under the Shop Rules
permitting shifting of the shop even by the Commissioner from one
mandal/municipality to another; if any of the shops are not disposed of, it is
for the APBCL to sell liquor at the said outlet in the notified area; if the
respondents are permitted to relocate the shop it would result in unhealthy
competition as a result of the shops being relocated from an area where there
are lesser sales to another area where there are higher sales; the location and
upset price has been notified so as to enable the auction purchasers to take
into account all relevant factors and offer their bids; and there is no
justification in relocating un-disposed shops to some other mandal or locality.
Both in Arji Sankara Rao3, and in G. Venkatesh4, the rules under consideration
were the A.P. Excise (Lease of Right of selling by Shop and Conditions of
Licence) Rules, 2005 (hereinafter called the "2005 Rules"). These Rules did not
confer any power on the Commissioner of Excise to relocate un-disposed A-4
retail shops from an area/locality. The 2012 Rules were published in the A.P.
Gazette on 18.06.2012. The power conferred on the Commissioner under Rule 4 of
the 2012 Rules (before its amendment) was also limited to fixing the number of
shops to be established in an area/locality before publication of the
notification under Rule 5. It is only under the amended Rule 4 of the 2012 Rules
that power has been conferred on the Commissioner to relocate an undisposed A-4
shop from an area/locality.
II. AMENDED RULE 4 - CONSTRUCTION TO BE PLACED THEREON:
The contention that the addition to Rule 4, by amendment of the rules, does not
carry any meaning, does not merit acceptance. In the interpretation of
statutes, the court always presumes that the legislature has inserted every part
thereof for a purpose, and the legislative intent is that every part of the
statute should have effect. These presumptions will have to be made in the case
of the rule-making authority also. (J.K. Cotton Spinning & Weaving Mills Co.
Ltd. v. State of U.P.5). It is a cardinal principle of construction of a
statute or a statutory rule that effort should be made in construing the
different provisions so that each provision will have its play. A statute, or
rules made thereunder, should be read as a whole and one provision should be
construed with reference to the other so as to make the rules consistent. Any
construction which would bring any inconsistency or repugnancy between one
provision and the other should be avoided. A construction that reduces one of
the provisions to a 'dead letter' is not a harmonious construction as one part
is being destroyed. (Jagdish Singh v. Lt. Governor Delhi6). To harmonise is
not to destroy.
Relocation of an A4 shop is permissible only if it was not disposed of at the
beginning of the Excise Year 2013-14. Accepting the contention that the number
of shops fixed in an area/locality, when the notifications were issued for the
Excise Year 2012-13, cannot be increased subsequently, under the guise of
relocation, would mean that an un-disposed shop can only be relocated to an area
where no licence was either granted or renewed for an A-4 shop in the Excise
year 2013-14. Undertaking such an exercise would be futile. As no one had
sought licences in such areas/location in the first place, they are not likely
to seek licences for the undisposed shops relocated to the same area/locality.
The construction sought to be placed by the petitioner would render the very
amendment of Rule 4 meaningless. Reading any limitation on the power conferred
by the amended Rule 4, to relocate an un-disposed A-4 shop only within the
district in which it was originally fixed, would also require this Court to read
the words "to an area/locality within the district" into the amended Rule 4. A
construction which requires, for its support, addition or substitution of words,
or which results in rejection of words, has to be avoided. (Gwalior Rayons Silk
Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests7, Shyam Kishori Devi v.
Patna Municipal Corpn8, A. R. Antulay v. Ramdas Sriniwas Nayak9, Dental Council
of India v. Hari Prakash10, J. P. Bansal v. State of Rajasthan11 and State of
Jharkhand v. Govind Singh12). Courts should not, ordinarily, add words to a
statute or read words into it which are not there, especially when a literal
reading thereof produces an intelligible result. (Delhi Financial Corpn v. Rajiv
Anand13). Effect should be given to all the provisions and a construction that
reduces one of the provisions to a "dead letter" must be avoided. (Anwar Hasan
Khan v. Mohd. Shafi14).
The contentions that the Commissioner lacks the power to relocate an undisposed
shop from any area as he thinks fit under the amended Rule 4 "to any area at any
time as he thinks fit", as it would amount to adding words, which were omitted
in the Rule, by the Rule making authority; and no words which are omitted can be
read into the Rule (casus omissus); are not tenable as no words have been
omitted from Rule 4. On the contrary the words "and may relocate any undisposed
shops from any area/locality as he thinks fit" has been inserted thereto.
On a plain and literal reading, it is evident that the amended Rule 4 is open
ended, and leaves it to the discretion of the Commissioner to decide the place
where an undisposed A-4 shop should be relocated. No words need be added
thereto. On the other hand reading any limitation in the amended Rule 4,
regarding the areas/locality to which it should be relocated, would require
addition of words thereto which is impermissible in law.
III. ARE THE FACTORS ENUMERATED IN RULE 4 REQUIRED TO BE TAKEN INTO
CONSIDERATION EVEN WHILE RELOCATING UNDISPOSED A-4 SHOPS?
It is contended on behalf of the petitioners that, even while relocating
A-4 shops, the factors enumerated in Rule 4 should be taken into consideration
as fixation of the number of shops is at a micro level. The prescription in Rule
4, of having due regard to the requirement of public order, health, safety and
other factors, is before the Commissioner fixes the number of shops to be
established in an area/locality. Such an exercise has already been undertaken
and completed in the previous Excise Years. On a plain and literal reading of
the amended Rule 4 it is evident that the Commissioner is not obligated to again
have due regard to these factors while relocating an un-disposed shop from an
area/locality.
It is unnecessary to delve further on this aspect as the counter-affidavit
filed by the respondents discloses that, after permission was given by the
Government, the Commissioner had requested the Deputy Commissioners of
Prohibition & Excise, vide letter dated 08.07.2013, to provide information for
relocation of the undisposed A-4 shops; a meeting with all the Deputy
Commissioners were held on 11.07.2013 exclusively for the purpose of relocating
the undisposed shops; the respective supervisory officers, monitoring affairs in
the allotted districts, held deliberations with the respective Deputy
Commissioners to decide about relocation of the undisposed shops strictly in
accordance with Rule 4; during these discussions all the factors, envisaged
under Rule 4, were considered; ultimately the field level officers had
identified only 314 shops, from out of 1311 undisposed shops, for relocation all
over the State; the Deputy Commissioners had submitted their proposals with
specific remarks for relocation of the A-4 shops which were not disposed off;
their proposals contained specific remarks with regards spatial gaps, to
overcome the disqualifications under Rule 25, plugging unauthorised sale of I.D.
liquor and to streamline the number of shops in a particular area/locality; they
had pointed out that the shops had not been evenly distributed among the
mandals/municipalities; there were some mandals where not even a single shop is
located; in certain mandals there was only one A-4 shop in the entire mandal;
in some municipalities there were only one or two shops; as A-4 shops were not
rationally distributed earlier, there were excess shops in some areas, and no
shops at other places; while there was no requirement of A-4 shops in certain
areas, there was a requirement in others; in order to curb the menace of I.D.
liquor, the field level officers had proposed some places for relocation; by
virtue of the powers conferred under Rule 4 the Commissioner, after taking into
consideration the requirement, public order, health, safety and other factors
before relocating the A-4 shops, had accorded permission for relocation of
shops; and, taking into consideration all relevant factors and the proposals
submitted by the Deputy Commissioners, he had granted permission for relocation
of 314 shops from out 1,311 undisposed shops. From the aforesaid averments in
the counter-affidavit, it is evident that the Commissioner had again taken into
consideration the factors enumerated in Rule 4 before relocating undisposed A-4
shops.
IV. CAN SHOPS, HITHERTO FIXED FOR AN AREA/LOCALITY WITHIN A DISTRICT, BE
RELOCATED TO ANOTHER AREA/LOCALITY IN ANOTHER DISTRICT OF THE STATE?
It is contended on behalf of the petitioners that there are six zones in the
State which are divided into two multi-zones; in the absence of any definition
in the rules, and as the Licensing Authority (Excise Superintendent) is in-
charge of an excise district, the word "area" can only mean a part of a district
and not beyond; a "locality" is similar to an "area"; the words "area/locality"
should be read ejusdem generis, and cannot travel beyond the district; the words
"any area" must be read to mean a locality within the same mandal; the entire
State cannot be taken as one area; the contemporaneous understanding of the
Commissioner, in the impugned notification dated 30.11.2013, is that the word
"area/locality" means a "district"; from the Excise Policy, notified in G.O.Ms.
No.358 dated 22.06.2013, it is clear that the government understood "district"
to be the "area"; as a result of the impugned notifications the number of shops,
already fixed at the time of starting of the Excise Year, in an area has
increased; the amended portion of Rule 4 does not confer power to relocate
undisposed shops from one district to another after the number of shops, for
each district, has been fixed on the basis of the criteria laid down in Rule 4;
no power is conferred on the authority to enhance the number of shops in the
transferee district; transfer of a shop from one district to another defeats the
population ratio, falls foul of Rule 16(1), and adversely affects the licensee
as there cannot be more than one shop for the same population; and the number of
shops, fixed in an area / locality at the time of the notification, cannot be
increased subsequently under the guise of relocation.
It is no doubt true that Rule 4 of the 2012 Rules confers power on the
Commissioner to fix the number of shops to be established in an area/locality,
and it is in exercise of this power that the Commissioner had, hitherto, fixed
the number of shops in different areas/localities in the State. The relocation,
sought to be made by way of the impugned notifications, is of undisposed shops
hitherto fixed in a particular area/locality. As the power of the Commissioner
to relocate an undisposed shop, from an area/locality to another, is not
fettered by village/municipal/municipal corporation/mandal/district level
restrictions, it is open to him, for just and valid reasons, to relocate
undisposed shops from an area/locality in a district/zone/multi-zone to another
area/locality in a different district/zone/multi-zone.
Reference made in the impugned notifications, issued by the District Collectors,
is to the initial fixation of shops, by the Commissioner on 12.07.2012, in an
area/locality. The distinction, between fixation of shops in an area/locality
and relocation of an undisposed shop, must be borne in mind. While the initial
exercise undertaken by the Commissioner under Rule 4 is to fix the total number
of 6596 shops, stipulated in the Excise Policy of the Government for the entire
State, in different areas/localities of the State, the exercise of power to
relocate undisposed shops is restricted only to those shops for which no
licences were renewed/granted for the Excise Year 2013-14. It is only because
the shops, hitherto fixed in an area/locality, were not disposed of (for which
either no licences were granted or renewed) are they now sought to be relocated.
In Shaktikumar M. Sancheti v. State of Maharashtra15, the Supreme Court
considered the scope of the words "local area" under the Motor Vehicles Taxation
Act and observed that the expression "local area" must be understood in the
sense of any area administered by a local body. In C.P. Sikh Regular Motor
Service v. State of Maharashtra16, the observations of the Supreme court were in
the context of Section 2(1) of the Motor Vehicles Act, 1939 as inserted by Act
56 of 1969 whereby 'area', in relation to any provision of said Act, was defined
to mean such area as the State Government may, having regard to the requirements
of that provision, specify by notification in the Official Gazette. The
definition of "local area" under the Motor Vehicles Taxation Act, and "area"
under the Motor Vehicles Act, cannot be extrapolated to the 2012 Rules. The
amended Rule 4 refers merely to the area/locality where the un-disposed shop was
hitherto located. It does not specify the area/locality to which the un-
disposed A-4 shop should be relocated. Even if the words "area" or "locality"
is read to mean a town/village or a part thereof, the amended Rule 4 does not
prohibit relocation of an un-disposed A-4 shop to an area/locality where an A-4
shop licence has already been granted. The meaning to be given to the words
"area" or "locality" is, therefore, of no consequence.
While the Excise Policy for 2013-14 places restrictions on relocation of an
undisposed shop, from a higher population slab to a lower population slab, it
does not prohibit an undisposed shop from being re-located in an area/locality
where an A-4 shop is in operation. The population ratio of a
village/municipality/municipal corporation is relevant only for fixation of the
licence fee, and has no bearing on the relocation of an undisposed shop. The
petitioners' contention that the number of shops fixed in an area/locality, when
the notifications were issued in July, 2012, cannot be increased subsequently is
not tenable as such a power inheres, under the amended Rule 4 of the 2012 Rules,
in the Commissioner.
V. DISTINCTION BETWEEN THE EXERCISE OF POWER UNDER THE AMENDED RULE 4 AND
RULE 18:
It is contended on behalf of the petitioners that the rule making authority was
conscious of the difference between an "area" or "locality" as referred to in
Rule 18(1), and the words "any where in the State" as referred to in Rule 18(2);
an area/locality is the basis for fixation of shops, and power must be exercised
under Rule 4 for each area; and the very fact that the words "anywhere in the
state" has not been used in the amended Rule 4 goes to show that undisposed A-4
shops can only be relocated within the same district, and not beyond.
The power of the District Collector, under Rule 18(1) of the Rules, to permit
APBCL to open outlets to sell IMFL and FL is circumscribed by the requirement of
obtaining approval of the Commissioner. Exercise of such a power is limited
only to such areas/localities where (i) the privilege of sale of shops could not
be disposed of through selection; or (2) when a licence already granted is
cancelled and the said shop could not be re-allotted for any reason. As the
jurisdiction of the District Collector is confined to a "district" and not
beyond, his power to permit APBCL to open outlets is not only confined to the
district of which he is the Collector but also, as is clear from the use of the
word "such", to the very same area where the licence granted earlier was
cancelled, or no licence was granted, that too only with the approval of the
Commissioner. On the other hand the Commissioner's power under Rule 18(2), to
permit APBCL to open outlets, is neither limited by any area/locality
restrictions nor is his power confined only to grant of permission in such
places where an A-4 shop licence could not be disposed of or where a cancelled
licence could not be re-allotted. The only limitation on his power is his
satisfaction that granting such permission is in public interest. The words
"anywhere in the State" were used in Rule 18(2) only to distinguish the powers
conferred on the District Collector and the Commissioner. While the power of
the District Collector under Rule 18(1) is confined to the area/locality in the
District, the power of the Commissioner under Rule 18(2) is not.
Unlike Rule 18(1) which is confined to outlets being opened by the APBCL, no
power is conferred under the 2012 Rules on the District Collector to relocate an
un-disposed A-4 shop by grant of a licence. While Rule 18(2) enabled him to
permit APBCL to open outlets anywhere in the State, the Commissioner, hitherto,
lacked the power to relocate un-disposed A-4 shops from a certain area/locality
to another. Such a power is now conferred on the Commissioner by the amended
Rule 4. Consequent to Rule 4 being amended, the Commissioner not only has the
power to permit APBCL to open outlets anywhere in the State, he also has the
power to relocate un-disposed A-4 shops from any area/locality as he thinks fit
to another.
VI. DISTINCTION BETWEEN SHIFTING OF AN A-4 SHOP IN TERMS OF RULE 28 AND
RELOCATION OF AN UNDISPOSED A-4 SHOP IN TERMS OF THE AMENDED RULE
4:
It is contended on behalf of the petitioners that the words "shifting" and
"relocating" mean the same; relocation of shops under Rule 4 can only be in
accordance with the proviso to Rule 28(3); and the very fact that the rule
making authority has neither amended Rule 28(3), nor has the word "district"
been used in Rule 4, can only mean that the words "area/locality" in Rule 4
covers an area within the same mandal, and not beyond.
Rule 28 of the 2012 Rules empowers the Commissioner to permit a licensed
premises to be shifted either within a notified area or beyond a notified area
but within the same Mandal or Municipality or Municipal Corporation. Unlike
Rule 28, which relates to a licensed premises (ie an A-4 shop for which the
licence has been renewed for the Excise Year 2013-14), power is conferred under
the amended Rule 4 only to relocate those A-4 shops for which licences have not
been granted or renewed for the Excise Year 2013-14. The power conferred under
the amended Rule 4 to relocate an un-disposed shop is not fettered, unlike under
Rule 28, by any "area" restrictions. The distinction between the amended Rule 4
and Rule 28 can be explained by way of an illustration. Let us say, for example,
two A4 shops were fixed for grant of licences in "X" municipality. However
licence was granted only in respect of one shop, and the other shop remained un-
disposed. While a request made by a licensee, for shifting the shop for which a
licence was granted in his favour, can be considered in terms of Rule 28 only
within the area limits of "X" Municipality, the power to relocate the other A-4
shop, which remained un-disposed, is not confined to the area limits of "X"
Municipality. The only limitation placed by the Excise Policy for the year 2013-
14, on relocation of an un-disposed A-4 shop, is that it should be from an area
to another within the same population slab or from a lower population slab to a
higher population slab.
VII. POWER OF THE COMMISSIONER TO RELOCATE AN UNDISPOSED A-4 SHOP,
HITHERTO FIXED IN A SCHEDULE AREA, TO A NON-SCHEDULE AREA:
It is contended, on behalf of the petitioners, that Rule 4 does not empower the
Commissioner to relocate shops, situated in scheduled areas, to non-scheduled
areas; under Rule 5(1)(i) shops to be located in scheduled areas are separately
listed and serially numbered; and shops in the scheduled areas cannot be
relocated to non-scheduled areas unless the Commissioner deletes it from the
said list, and includes it in the list of "plain areas".
Rule 2(t) of the 2012 Rules defines "Scheduled Area" to mean the Scheduled Areas
notified under para 6 of the V Schedule to the Constitution. Rule 3(2)
stipulates that, in the case of shops located in scheduled areas, the right to
sell IMFL and FL in retail shops shall be granted to local scheduled tribe
candidates; in case there is no such applicant available, it should be granted
to any other scheduled tribe candidate; and, if not available, to any other
candidate. The notification, under Rule 5(1), is required to separately list the
shops to be located in scheduled areas, and for their being serially numbered,
to make the applicants aware that licences, to sell IMFL and FL in such shops,
would be granted only to the local scheduled tribes.
Section 4 of the Panchayats (Extension to the Scheduled Areas) Act, 1996
stipulates that, notwithstanding anything contained under Part IX of the
Constitution, the Legislature of a State shall not make any law under that Part
which is inconsistent with any of the features mentioned in the clauses
thereunder. Clause [c] of Section 4 requires every village to have a Gram Sabha
consisting of persons whose names are included in the electoral rolls for the
Panchayat at the village level. Clause (d) provides that every Gram Sabha shall
be competent to safeguard and preserve the traditions and customs of the people,
their cultural identity, community resources and the customary mode of dispute
resolution. Clause (m) (i) stipulates that, while endowing Panchayats in the
Scheduled Areas with such powers and authority as may be necessary to enable
them to function as institutions of self government, a State Legislature shall
ensure that the Panchayats, at the appropriate level, and the Gram Sabhas are
endowed specifically with the power to enforce prohibition or to regulate or
restrict the sale and consumption of any intoxicant.
The Andhra Pradesh Panchayat Raj Act, 1994 was amended by the Andhra Pradesh
Panchayat Raj (Amendment) Act, 1998. Section (2A), inserted thereto, stipulates
that in their application to the Scheduled Areas in the State, as referred to in
clause (1) of Article 244 of the Constitution of India, the remaining provisions
of the Act shall apply subject to the provisions of Part VI-A of the Act. Part
VI-A contains special provisions relating to the Panchayats, Mandal Parishads
and Zilla Parishads located in the Scheduled Areas. Under Section 242-C (1),
every Gram Sabha shall be competent to safeguard and preserve the traditions and
customs of the people, their cultural identity, community resources and, without
detriment to any law for the time being in force, the customary mode of dispute
resolution. Section 242-I(1)(a) stipulates that the Gram Panchayat or, as the
case may be, the Gram Sabha shall exercise such powers and perform such
functions in such manner and to such extent as may be prescribed in respect of
the enforcement of prohibition or regulation or restriction of the sale and
consumption of any intoxicant.
In the exercise of the powers conferred under Section 268(1) r/w. Sections
242-A to 242-I under Part VI-A of the Act, the Andhra Pradesh Panchayats
Extension to Scheduled Areas (PESA) Rules, 2011 were made and notified in
G.O.Ms. No.66 dated 24.03.2011. Rule 8(I)(b) requires the Gram Sabha to be
consulted before the grant of any licence to open liquor shop in the village;
for the Gram Sabha to convey its opinion, in the form of a resolution, within
four weeks; and for licences to be granted only to the local Scheduled Tribes.
Rule 8(I)(c) requires the department to issue a speaking order for granting or
not granting any licence to open liquor shop/bar in the village under intimation
to the concerned Gram Sabha, and that the Gram Sabha resolution shall be binding
and final. In view of the aforesaid provisions, it is only if the Gram Sabha
passes a resolution, permitting grant of a licence to open an A-4 to sell IMFL
and FL in scheduled areas, can such licenses be granted.
While the aforesaid provisions restrict opening of A-4 shops in schedule areas,
and for relocation of an A-4 shop from a non-scheduled area to a scheduled area,
neither the aforesaid provisions nor Rule 5(1)(i) of the Rules prohibit
relocation of an un-disposed shop from a scheduled area to a non-scheduled area.
VIII. THE AMENDED 2012 RULES CAME INTO FORCE ON ITS PUBLICATION IN THE
A.P. GAZETTE ON 24.06.2013:
Section 72(1) of the Act enables the Government, by notification, to make rules
for carrying out all or any of the purposes of the Act. Section 2(23) of the Act
defines "notification" to mean a notification published in the A.P. Gazette.
There is no presumption that the public would be aware of subordinate
legislation as soon as it is made. The principle that there can be no law that
is not published or promulgated is as true a principle of justice and fair play
as principles of natural justice. The idea that a person may be governed by a
law that cannot be known by him because it is not published or promulgated is
revolting to judicial conscience and civilised thought. (R. Narayana Reddy v.
The State of A.P. by the Secretary, Home17). Before a law can become operative,
it must be promulgated or published. It must be broadcast in some recognisable
way so that all men may know what it is or, at the very least, there must be
some special rule or regulation or customary channel by or through which such
knowledge can be acquired with the exercise of due and reasonable diligence.
Promulgation or publication of some reasonable sort is essential. (Harla v.
State of Rajasthan18; T. Narasimhulu v. State of A.P.,19). The object of
publication is to enable the public to acquire knowledge. (Tirumala Devi Eada v.
State of Andhra Pradesh20; B.K. Srinivasan v. State of Karnataka21; Sonic
Industries, Rajkot v. Municipal Corporation of the city of Rajkot22; Harla18).
Where a law, whether parliamentary or subordinate, demands compliance, those
that are governed must be notified of the law and all changes and additions made
to it by various processes. Whether law is viewed from the standpoint of the
'conscientious good man' seeking to abide by the law or from the standpoint of
Justice Holmes 'unconscientious bad man' seeking to avoid the law, the law must
be known, that is to say it must be so made that it can be known. Subordinate
legislation, in order to take effect, must be published or promulgated in some
suitable manner, whether such publication or promulgation is prescribed by the
parent statute or not. It will then take effect from the date of such
publication or promulgation. (B.K. Srinivasan21; Pankaj Jain Agencies v. Union
of India23; Sonic Industries22; Harla18).
When a statute vests a public power and conditions the manner of exercise of
that power then the law insists on that mode of exercise alone. (Charles K.
Skaria v. C. Mathew (Dr)24). Where the law prescribes the mode of publication
of the law to become operative, the law must be published in that mode only.
Where the statutory requirement of the mode or form of publication is mandatory,
a failure to comply with those requirements might result in there being no
effective order or rule, but where the mode of publication of the law is not
prescribed by the law, such law should be published in some usual or recognised
mode to bring it to the knowledge of all persons concerned. (State of
Maharashtra v. Mayer Hans George25; T. Narasimhulu19).
The mode of publication, prescribed under Section 72(1) of the A.P. Excise Act,
is by way of a notification in the A.P. Gazette. "Notification", in common
english acceptation, means and implies the formal announcement of a legally
relevant fact and in the event of a statute speaking of a notification being
published in the official gazette, it cannot but mean a notification published
by authority of law in the official gazette. Once the Rules are published in
the Official Gazette they shall be deemed to have been published, and to be
effective. (Subhash Ramkumar Bind v State of Maharashtra26; M.K. Rajasekhar v.
Government of A.P.27). The amendment to the 2012 Rules, notified in G.O.Ms.
No.357 dated 22.06.2013, was published in the A.P. Gazette on 24.06.2013 and, on
such publication, the general public has been made aware of these Rules having
been made. The amended 2012 Rules thus came into force on 24.06.2013.
IX. HAS THE AMENDED RULE 4 BEEN GIVEN RETROSPECTIVE EFFECT?
It is contended on behalf of the petitioners that, when licences were granted to
them in the year 2012, there was no statutory rule or provision for relocation
of an undisposed shop; even the renewal endorsement in the year 2013-14 does not
refer to the possibility of relocation of other shops; licenses granted to the
petitioners for the Excise year 2012-13, following the policy then in existence,
cannot be changed as the licences were merely renewed and not issued afresh; the
amended Rule 4 cannot be made applicable retrospectively to licences granted on
01.07.2012; and the exercise of relocation of undisposed shops should have been
undertaken, if at all, before the licences were renewed and not thereafter.
Para 4 of the 2012-13 Excise Policy stipulates that the period of licence shall
be for one year. The one year period, for which the licence was originally
granted, was from 1st July 2012 till 30.06.2013. For the second year 2013-14 the
licensee was only entitled to have his request for renewal of the licence
considered in terms of the Excise policies for the years 2012-13 and 2013-14.
Rule 21 of the 2012 Rules provides that a licence granted under the Rules, for
the period from 1st July, 2012 to 30th June, 2013 or part thereof, shall be
considered for renewal for the period 1st July, 2013 to 30th June, 2014 subject
to the applicant completing all formalities stipulated thereunder. The
amendment made, by G.O.Ms. No.357 dated 22.06.2013, is to the 2012 Rules and, on
its coming into force, forms part of the 2012 Rules which, in terms of Rule 21,
necessitate compliance for grant of renewal of a licence. The original licence
for the Excise Year 2012-13, which is a binding contract between the petitioners
and the State, is only for one year and came to an end on 30th June, 2013. The
renewed A-4 licence is a fresh contract between the petitioners and the State
for a period of one year from 01.07.2013 till 30.06.2014. The licences for the
Excise year 2013-14 were renewed, and a new contract was entered into between
the petitioners and the State on or after 01.07.2013, in accordance with the
amended Rules which came into force on 24.06.2013 prior to the commencement of
the Excise Year 2013-14 on 01.07.2013. Neither the Act nor the Rules stipulate
that the amended Rules would come into force only on each licensee being
intimated thereof. The mere fact that the renewal endorsement on the petitioners
licence does not refer to the amended rule is of no consequence, as the
licensees are presumed to have knowledge of the Rules which were notified and
published in accordance with law. As the amended rules have been made applicable
only for renewal of licences for the Excise Year 2013-14, the contention that
the amended Rule 4 has been applied retrospectively is not tenable.
Reliance placed, on behalf of the petitioners, on State of A.P. v. Guntakal
Toddy Tappers Coop. Society28 is misplaced. In Guntakal Toddy Tappers Co-op
Society28, the Supreme Court held:-
".....The net position, therefore, is that upto September 30, 1982, under the
original Rule 3 annual leases were being granted following public auction. A
five year basis was adopted under the newly introduced proviso to Rule 3 in
respect of Tappers Cooperative Societies but at the end of one year out of the
term of five years, there was a reversal of the policy and annual settlements
were again adopted. That again was changed and a three year basis was adopted at
the end of the year. It gives us a very uneasy feeling that the State has dealt
with the Tappers Cooperative Societies, with whom contracts had been entered
into, in such a cavalier fashion. If the State's intention was really to earn
more revenue and, with a view to protecting the interests of the State
Exchequer, there was a deviation from the policy of settlement for five years
with the Tappers Societies to the old scheme of one year, there could be no
warrant for the adoption of a three year basis. At this juncture, counsel for
respondents readily agreed to increase of the fee payable by each of them under
the contracts entered into in 1982 valid for five years taking into
consideration the general rise in prices and the corresponding rise in auction
money fetched in other districts in respect of settlement of excise shops. It
was also pointed out to us by counsel for respondents that in respect of three
of the Tappers Societies out of four - exception being the Society in Guntakal
District, the Societies have been running the shops not as lessees but as agents
of the State. Learned counsel for the State told us that in regard to Guntakal
no arrangement at all has been made during the current excise year.
We are of the view that the State should not have interfered with the existing
rights of the Tappers Societies and if it wanted to bring in a change, effect
should have been given to such change only after the existing contracts with the
respondent Societies came to terminate by efflux of time.......".
(emphasis supplied)
Unlike in Guntakal Toddy Tappers Co-op Society28, where the Rule was
amended when the five year license period was in operation, Rule 4 has been
amended and applied for the Excise year 2013-14 (i.e., from 01.07.2013 to
30.06.2014) only after the one year license, granted for the Excise year 2012-
13, expired on 30.06.2013.
X. CAN RESTRICTIONS BE PLACED, ON A LICENCE GRANTED TO CARRY ON TRADE IN
LIQUOR, ONLY BY PLENARY LEGISLATION AND NOT SUBORDINATE:
It is contended, on behalf of the petitioners, that a property right cannot be
affected by way of Rules and Executive Instructions; the authority of law,
within the meaning of Article 300-A, is a law made by legislative authority; the
word 'law', in the context of Article 300-A, must mean an Act of Parliament or
of a State Legislature; the State or its Executive Officers cannot interfere
with the rights of others unless a specific rule of law authorizes their acts;
"Every act done by the Government or by its officers must, if it has to operate
to the prejudice of any person, be supported by legislative authority"; the
respondents have usurped power not vested in them under the Act and the Rules;
the power so usurped will militate against the very scheme and intendment of the
Excise statute, interfering and even destroying the existing legitimate
contractual rights with the State, without compensation; and this would result
in violation of Articles 14, 300-A and 19(1)(g) of the Constitution of India as
it would be in violation of Sections 17, 23, 28, 32 and 33 of the Act.
Reliance placed, on behalf of the petitioners, on Bishambhar Dayal Chandra Mohan
v. State of U.P.,29; State of M.P. v. Thakur Bharat Singh30; Satwant Singh
Sawhney v. Ramarathnam, Assistant Passport Officer, Government of India, New
Delhi31 and Smt Indira Nehru Gandhi v. Raj Narain32, to contend that the State
or its executive officers cannot interfere with the rights of others unless they
can point to some specific rule of law which authorises their acts; the State or
its officers may not, in the exercise of executive authority, without any
legislation in support thereof, infringe the rights of citizens merely because
the legislature of the State has the power to legislate in regard to the subject
on which the executive order is issued; and every act done by the Government or
by its officers must, if it is to operate to the prejudice of any person, be
supported by some legislative authority; is misplaced.
In Bishambhar Dayal Chandra Mohan29 the scope and extent of the executive power
of the State, under Article 162 of the Constitution of India, in relation to
trade and commerce in, and the production, supply and distribution of, food
stuffs arose for consideration. In Smt. Indira Nehru Gandhi32, the validity of
Article 329-A of the Constitution of India, and certain provisions of the
Representation of the People Act, 1951, were in issue. In Thakur Bharat Singh30,
the validity of an order, made in the exercise of the powers conferred by
Section 3 of the Madhya Pradesh Security Act, 1959, was under challenge. In
Satwant Singh Sawhney31, the validity of the action of the Regional Passport
Officer, in calling upon the petitioner to surrender both his passports to the
Government, was under examination.
None of these judgements relate to the executive power of the State to control
and regulate trade in liquor. Even if the "license" granted in the petitioners
favour is presumed to be a proprietary right, restrictions on the right of a
licensee to carry on trade in liquor can be imposed by subordinate legislation
or even executive instructions. There is nothing in clauses (2) to (6) of
Article 19 which makes it imperative to impose restrictions on trade or business
in potable liquor only by a law enacted by the legislature. Restrictions can
also be imposed by subordinate legislation as long as it is not violative of any
provisions of the Constitution. The trade or business in potable liquor is a
trade or business in res extra commercium and, hence, can be regulated and
restricted even by an executive order. (Khoday Distilleries Ltd. v. State of
Karnataka33). The contention that the power to relocate undisposed A-4 shops,
from an area/locality to another, can only be conferred by plenary legislation,
and not subordinate, does not, therefore, merit acceptance.
XI. IS THE PETITIONERS RIGHT OF EXCLUSIVE PRIVILEGE, TO SELL IMFL AND FL
IN AN AREA, VIOLATED ON RELOCATION OF UNDISPOSED A-4 SHOPS TO THESE
AREAS?
Learned Counsel for the petitioners would contend that, Section 17 to 23 and 28
deals with parting of exclusive privilege vested in State; the distinction
between "privilege to sell" and "exclusive privilege to sell in an area" in
Sections 13 and 17 should be borne in mind; once the right to carry on business
has been conferred by the State, after collecting the prescribed licence fee, no
fetters can be placed, or an embargo imposed, on the privilege conferred on the
licencees; the parting of exclusive privilege for consideration in such
area/locality as the Commissioner may fix for sale by notification, and the
licence granted over such an area, is an exclusive privilege granted to the
contractor to the debarment of others from articulation in the said area, as a
particular right or favour by law contrary to the general law, or else it is not
a privilege much less an exclusive privilege granted under the Act; the State
cannot claim a right over such an area/locality for granting further licences
until the existing contract is terminated or expires by efflux of time; grant of
exclusive privilege for an area creates a binding contract and a vested right in
a licensee, to the exclusion of all others in the licensed area, for the excise
year; the substantive right conferred on the petitioners under Section 17, on
licenses being granted in their favour, was renewed during the current year
under Rule 21; this substantive right is affected, in terms of sales, on
undisposed shops being relocated in their area, causing them considerable
prejudice; new conditions cannot be imposed varying the subsisting contract with
the petitioners who were granted exclusive privilege under Section 17; once
areas/localities are demarcated by the Commissioner under Rule 4, sold to
bidders for a consideration, and licenses are granted, there is a "concluded
contract" between the State and the citizen/contractor; the statutory right of a
licensee, under Section 23 of the Act, cannot be undermined; a shop can be
relocated only to an area where no shops were licensed earlier; there was no
provision in the Act or the Rules earlier for shifting or relocating an A-4 shop
to an area in which exclusive privilege was already conferred; and the impugned
action of the Commissioner, to relocate undisposed shops from other areas into
the petitioners' area over which they have exclusive privilege, is contrary to
law, illegal and without jurisdiction.
Trade in liquor is not a fundamental right. It is a privilege of the State. The
State parts with this privilege for revenue considerations. (Devans Modern
Breweries Ltd2; Kerala Samsthana Chethu Thozhilali Union v. State of Kerala34).
The State can impose limitations and restrictions on the trade or business in
potable liquor as a beverage which restrictions are in nature different from
those imposed on the trade or business in legitimate activities and goods and
articles which are res commercium. When the State permits trade or business
in potable liquor with or without limitation, the citizen has the right to carry
on trade or business subject to the limitations, if any. (Khoday Distilleries
Ltd.33). Section 17(1)(v) of the Act enables the Government, subject to the
provisions of Sections 28 and any rules made in this behalf and subject to such
conditions as they may deem fit to impose, to grant for a fixed period, to any
person at any place, a lease/licence for the exclusive privilege of selling
Indian Made Foreign Liquor (IMFL) and Foreign Liquor (FL) by shop. Section
17(2) empowers the Government to prescribe, from time to time, different methods
of selection for grant of exclusive privilege for different purposes under
Section 17(1). Section 17(3) stipulates that, notwithstanding anything
contained in sub-section (1), a lease/licence in respect of a shop may be
granted for a period not exceeding two years at a time.
What do the words "Exclusive Privilege", used in Section 17(1) of the Act, mean?
The word "Exclusive" is defined in "Law Lexicon of Ramanatha Iyer" to mean
possessed and enjoyed to the exclusion of others; debarred from participation or
enjoyment, undivided, sole(as exclusive) possession; not including, admitting or
pertaining to any other; opposed to inclusive, not to be taken in to account.
In Blacks Law Dictionary, the word "exclusively" is shown to have multiple
nuances or shades of meanings such as only or solely or substantially all or for
the greater part. It also means to the exclusion of all others. (CBI v. Braj
Bhushan Prasad35; Anoka County v. City of St. Paul36). The word "Privilege", as
commonly used in its broad and commonly accepted sense, means a particular
advantage or a personal benefit or favour and a private or personal favour
enjoyed. It also means a particular and peculiar benefit or advantage enjoyed by
a person beyond the common advantage of other citizens; and some particular
right or favour granted by law contrary to the general rule.
The doctrine of Noscitur a sociis (meaning of a word should be known from its
accompanying or associating words) has relevance in understanding the import of
words in a statutory provision. (Bangalore Water Supply & Sewerage Board v. A
Rajappa37; Rohit Pulp and Paper Mills Ltd. vs. CCE38; Oswal Agro Mills Ltd. vs.
CCE39; K. Bhagirathi G. Shenoy v. K.P. Ballakuraya40; Lokmat Newspapers (P) Ltd.
v. Shankarprasad41; Braj Bhushan Prasad35). On application of the said doctrine,
and reading both the words "Exclusive" and "privilege" together, the term
"exclusive privilege" can only mean a privilege granted to a person to the
exclusion of all others. However a lease/licence for such "exclusive privilege"
is, by Section 17(1) itself, made subject to Section 28 of the Act, the Rules
made thereunder and the conditions which the Government may deem fit to impose.
The expression "subject to" conveys the idea of a provision yielding place to
another provision or other provisions to which it is made subject. (South India
Corpn. (P) Ltd. v. Secy., Board of Revenue, Trivandrum42; Chandavarkar Sita
Ratna Rao v. Ashalata S. Guram43). The operative part of Section 17(1) is
prefaced by the words "subject to the provisions of Section 28, any rules made
in this behalf and such conditions as the government may deem fit to impose",
which means that the exclusive privilege granted by the State must yield to the
provisions of Section 28 of the Act, any rules made in this behalf, and such
conditions as the government may deem fit to impose. (Indian Minerals Co. v.
N.I.L.M. Assos.44).
The power conferred on the Government, under Section 17(1)(v) of the Act, to
grant an exclusive privilege to any person to sell IMFL and FL in a shop is
subject to (1) the provisions of Section 28 of the Act; (2) any Rules made in
this behalf; and (3) any conditions which the Government may deem fit to impose.
Section 28(1) requires every permit/licence to be issued or granted on payment
of such fees, for such period, subject to such restrictions and conditions, to
be in such form and to contain such particulars as may be prescribed. Section
2(26) of the Act defines 'prescribed' to mean prescribed by Rules made under the
Act. The 2012 Rules were made in the exercise of the powers conferred by
Section 72 r/w. Sections 17, 28 and 29 of the Act. Rule 1(4) of the 2012 Rules
makes these rules applicable for grant of licence for selling IMFL and FL in
retail by shop, the conditions governing such licence, and the transport of IMFL
and FL by such licence holders.
The Rules, subject to which exclusive privilege was granted to the petitioners
for the Excise Year 2013-14 (i.e, from 01.07.2013 to 30.06.2014), are the 2012
Rules as amended by G.O.Ms.No.357 dated 22.06.2013. The conditions imposed by
the Government, to which the exclusive privilege granted to the petitioners are
subject to, are those stipulated in the Excise Policy for the year 2012-13 as
notified in G.O.Ms.No.390 dated 18.06.2012, and for the Excise Year 2013-14 as
notified in G.O.Ms.No.358 dated 22.06.2013. The power conferred on the
Commissioner, under Rule 4 of the Rules, is subject to such directions which the
Government may issue from time to time. Para 5 of the Excise Policy, formulated
by the Government for the Excise year 2012-13, stipulates that the number of
retail shops shall be retained at the present level i.e., 6596. The
Commissioner was, therefore, not entitled to increase the total number of retail
shops in the State beyond the 6596 shops fixed by the Government.
The State can adopt any reasonable mode of selling licences for trade or
business with a view to maximise its revenue. (Khoday Distilleries Ltd.33). The
State Government's exclusive privilege, or right to carry on certain activities
in liquor, are given or sold by it to a private person under a licence for the
amount receivable under the Act and the Rules. Such an amount constitutes the
consideration for the licence and is termed as a 'licence fee'. The term
'licence fee' connotes the idea of it being the consideration in money
receivable by the Government from a private person by grant of a licence, for
parting in such person's favour, its exclusive privilege or right of carrying on
certain activities in respect of liquor. (State of U.P. v. Sheopat Rai45). The
issuance of a liquor licence constitutes a contract between the parties i.e.
between Excise Authorities on the one hand and the individual applicant-
contractor on the other. (Devans Modern Breweries Ltd.,2). However the said
contract has, by law, been made subject to the amended 2012 Rules and the Excise
Policy of the year 2013-14. Notwithstanding the exclusive privilege granted to
the petitioners, to sell IMFL and FL in the stipulated areas/localities, un-
disposed A-4 shops can be relocted in accordance with the amended 2012 Rules and
the Excise Policy for the year 2013-14.
Reliance placed by the petitioners on Sections 13 and 21 to 23 of the Act is
misplaced. Section 13 of the Act relates to manufacture and bottling of liquor
for sale and has no application to sale of IMFL and FL in an A-4 shop. Section
21 enables the Government to levy excise duty or/and a countervailing duty on
any excisable article manufactured or produced in the State, and Section 22
prescribes the modes in which excise duty and countervailing duty may be levied
on any excisable article. Section 23(1) stipulates that, instead of or in
addition to any excise duty or fees leviable under Sections 21 and 22, the
Commissioner may accept payment of a sum in consideration of the grant of
licence or both for the exclusive privilege in respect of liquor or any other
intoxicant under Section 17. Section 23 relates merely to the consideration for
the lease or licence for grant of exclusive privilege under Section 17 and, as
Section 17 itself makes the lease/licence for grant of exclusive privilege
subject to Section 28, the Rules made in this behalf and the conditions which
the Government may deem fit to impose, the petitioners cannot claim exclusive
privilege either under Section 17 or Section 23 of the Act contrary to the
amended 2012 Rules and the Excise Policy for the year 2013-14.
XII. STATUTORY RULES ARE PRESUMED TO BE CONSTITUTIONALLY VALID:
It is contended, on behalf of the petitioners, that the power to make rules can
only be exercised to make rules consistent with the Act and not contrary
thereto; relocation of shops from one district to another, and from one zone to
another, is ultra-vires Rule 4 as it is not in relation to an "area" or a
"locality"; and any unreasonable rule or condition, in the excise contract
licence, is ultra vires the Act.
It is no doubt true that the power of delegated legislation can be exercised to
give effect to, and must be in conformity with, the provisions of the Act.
(Kerala Samsthana Chethu Thozhilali Union34). The vires of the amended Rule 4
of the 2012 Rules has not been subjected to challenge in this batch of Writ
Petitions. Judicial restraint is in order while judging the constitutional
validity of statutes and delegated legislation. There is a presumption in favour
of the constitutionality of both statutes and delegated legislation, and it is
only when there is a clear violation of a constitutional provision (or of the
parent statute, in the case of delegated legislation) beyond reasonable doubt
that the court should declare it to be unconstitutional. (Hinsa Virodhak Sangh
v. Mirzapur Moti Kuresh Jamat46; Govt. of A.P. v. P. Laxmi Devi47). The Courts
must presume that the legislature understands and correctly appreciates the
needs of its own people, that its laws are directed to problems made manifest by
experience, that its discriminations are based on adequate grounds, and that the
legislature is free to recognise degrees of harm, and confine its restrictions
to those cases where the need is deemed to be the clearest. (Mohd. Hanif
Quareshi v. State of Bihar48; Nagaland Senior Govt. Employees Welfare Assn. v.
State of Nagaland49; Mahant Moti Das v. S.P. Sahi50; A.C. Aggarwal, Sub-
Divisional Magistrate, Delhi v. Ram Kali51). The statutory provision must be
interpreted and read broadly, and not narrowly. The approach must be to uphold
the validity of the impugned delegated legislation by a process of fair and
broad reading of the statutory mandate. (Devans Modern Breweries Ltd.,2). It
would be wholly inappropriate for this Court, therefore, to examine the validity
of the amended Rule 4 on the basis of submissions made across the bar.
XIII. BURDEN LIES HEAVILY ON THE PERSON, WHO SEEKS TO IMPEACH THE RULE,
TO PLEAD AND PROVE THAT IT IS UNCONSTITUTIONAL:
The contention that Rule 4 is ultra vires the Act, and Article 14 of the
Constitution, is without support of any pleadings in the Writ Petitions. It is
well settled that, even in cases where there is a challenge to the validity of a
statutory rule, the burden is on the party, who seeks to impeach the validity of
a rule made by a competent authority on the ground that the rules offend Article
14, to plead and prove that there has been a clear violation of the
constitutional principles. If the validity of the rule is challenged on the
ground either of its unreasonableness or its discriminatory nature, the
petitioners ought to have laid a foundation for it by setting out the facts
necessary to sustain such a plea and adduce cogent and convincing evidence, for
there is a presumption that every factor which is relevant or material has been
taken into account in formulating the classification. (State of U.P. v. Kartar
Singh52; K.B. Nagur v. Union of India53; Nagaland Senior Govt. Employees Welfare
Assn.49). The action of governmental authorities must be presumed to be
reasonable and in public interest and the person assailing it must plead and
prove the contrary. (Fertilisers and Chemicals Travancore Ltd. v. Kerala SEB54;
Nagaland Senior Govt. Employees Welfare Assn.49). Courts must be slow to embark
upon an unnecessary, wide or general enquiry, and confine their decision within
the narrow limits required on the facts of a case. Decisions, on questions of
constitutionality, should not be taken unless such adjudication is unavoidable;
and the policy of strict necessity must be followed in disposing of a
constitutional issue. (K.B. Nagur53).
XIV. IS THE ACTION OF THE COMMISSIONER, IN RELOCATING UNDISPOSED A-4
SHOPS TO AREAS WHERE THE PETITIONERS SHOPS ARE LOCATED,
DISCRIMINATORY?
It is contended that the petitioners have been discriminated against as the A-4
shops in other districts, and in scheduled areas, are now being relocated to
areas/localities where they are running their A-4 shops; the turnover in each A-
4 shop for the year 2012-13 was taken into consideration to determine the
areas/localities where undisposed A-4 shops should be relocated; under Rule
16(1), the license fees are proportionality reduced for new entrants; no shop
has been relocated in areas where the turnover of the A-4 shop is 13 times or
below; on shops being relocated, the turnover of the existing licensees would
fall below the turnover of the A-4 shops whose turnover is 13 times the license
fee; failure to relocate undisposed shops, in areas where the turnover is 13
times, would also result in discrimination; and a new A-4 shop should not be
established in their area, in the middle of an excise year, more so as the
Government would not get any extra monetary benefit.
Article 14 forbids class legislation, and not a reasonable classification. What
is forbidden is discrimination. Persons similarly situated must be similarly
treated. Where, however, the persons are not similarly situated, there is no
prohibition to treat them separately, provided of course there is a reasonable
nexus between the basis of classification and the object to be achieved. (K.
Muthusamy v. Government of Tamilnadu55). Every instance of discrimination does
not necessarily fall within the ambit of Article 14 of the Constitution.
Discrimination means an unjust and unfair action in favour of one and against
another. It involves an element of intentional and purposeful differentiation
and unfavourable bias; an unfair classification. (Rajasthan State Industrial
Development & Investment Corporation v. Subhash Sindhi Coop. Hs. Society56; The
State of M.P. v. Narmada Bachao Andolan57; Madhu Kishwar v. State of Bihar58).
A valid classification based on a just objective is truly a valid
discrimination. The result to be achieved by the just objective presupposes the
choice of some for differential consideration/treatment over others.
Legalistically, the test for a valid classification may be summarized as a
distinction, based on a classification founded on an intelligible differentia,
which has a rational relationship with the object sought to be achieved.
(Kallakkurichi Taluk Retired Officials Assn. v. State of T.N.59).
Classification must be truly founded on substantial differences which
distinguish persons grouped together from those left out of the group and such
differential attributes must bear a just and rational relation to the object
sought to be achieved. (State of Maharashtra v. Indian Hotel & Restaurants
Assn.60; State of Jammu and Kashmir v. Shri Triloki Nath Khosa61). To pass the
test of permissible classification two conditions must be fulfilled, namely, (i)
the classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others left out
of the group, and (ii) the differentia must have a rational relation to the
object sought to be achieved by the statute in question. The classification may
be founded on different bases. What is necessary is that there must be a nexus
between the basis of classification and the object of the provision under
consideration. (Indian Hotel & Restaurants Assn.60; Budhan Choudhry v. State of
Bihar62).
Rule 16(9) of the 2012 Rules required a licensee to pay privilege fee at 8%,
plus applicable Value Added Tax (VAT) thereon, on the sale price of IMFL and FL
purchased from APBCL where the cumulative value of purchases, during the licence
period, exceeded six times the annual licence fee. The "six times", prescribed
under the 2012 Rules, was enhanced to "seven times" on Rule 16(9) being amended
by G.O.Ms. No.357 dated 22.06.2013. While all licencees are required to pay the
annual licence fee or the proportionate licence fee as stipulated in Rule 16(1)
and its proviso, a privilege fee is levied only when the cumulative purchases of
IMFL and FL by the licensee, during the Excise Year, exceeds seven times the
annual licence fee. If his cumulative purchases for the Excise Year are less
than seven times the annual licence fee, the licensee is not required to pay the
privilege fee. Implicit in Rule 16(9) is that the Rule making authority
considered the profit earned on cumulative purchases of IMFL and FL by the
licensee, upto seven times the annual licence fee, as a reasonable return on
their investment. By the impugned notifications, undisposed A-4 shops were
sought to be relocated only to areas/localities where the cumulative purchases
of each A-4 shop, during the Excise year 2012-13, exceeded fourteen times their
licence fee. The licensees, whose turnover exceeded fourteen times the annual
licence fee in the previous Excise Year 2012-13, form a distinct class,
different from those who did not achieve a turnover of fourteen times the
licence fee. The object sought to be achieved by relocation of shops only to
such areas is two fold. Firstly, to generate more revenue for the State and,
secondly, to ensure that, even after relocation, both the existing and the
relocated A-4 shops achieve, on an average, a turnover of seven times the annual
licence fee and, thereby, achieve a reasonable return on their investment.
The contentions that, as the turnover is not uniform throughout the year, the
monthly turnover should have been taken as the basis; the turnover from 1st July
to 30th November, 2013 should also have been taken into consideration before
deciding on which shop should be relocated; as the licence fee is correlated to
population, the population figures should have been factored, while identifying
areas/localities for relocation of undisputed A-4 shops; all shops, whose
turnover exceeds 14 times, should have been arranged in a descending order, and
notified in seriatum; a chronological order should have been followed, and shops
should have firstly been relocated in areas where the turnover is the highest;
leaving big mandals, and proceeding against smaller ones, violates Article 14 of
the Constitution of India; and if the State intends to raise revenue, and
dispose of un-disposed shops, they should reduce the basis of the number of
times turnover; are not tenable. Classification, to be valid under Article 14,
need not necessarily fall within an exact or a scientific formula for exclusion
or inclusion of persons or things. There is no requirement of mathematical
exactness or for doctrinaire tests to be applied for determining the validity,
as long as it is not palpably arbitrary. (Indian Hotel & Restaurants Assn.60;
Ram Krishna Dalmia v. S.R. Tendolkar63; Welfare Association, A.R.P. v. Ranjit
Pl.Gohili64; Shashikant Laxman Kale v. Union of India65). So long as there is a
nexus between the basis of classification and the object sought to be achieved,
the classification is valid. (The State of Madhya Pradesh v. Gopal D.
Tirthani66). The test ought not to be what would be a 'better' basis for the
categorization for that would introduce subjectivity in the process. The test
is whether categorization, on the basis adopted, results in hostile
discrimination and adoption of the criteria has no reasonable nexus with the
object sought to be achieved. (Samaj Parivartana Samudaya v. State of
Karnataka67). It is no doubt true that, on another shop being established in
his area/locality, the licensee, who had earlier achieved a turnover of
fourteen times the licence fee in the Excise Year 2012-13, may achieve a
turnover less than a licensee who had achieved a turnover of thirteen times the
licence fee in the earlier Excise year 2012-13. However relocating an undisposed
shop to an area, where the turnover achieved in the Excise Year 2012-13 was
thirteen times or below the licence fee, would have resulted in each of the two
licencees not being able to achieve a turnover of seven times the annual licence
fee, which Rule 16(9) presumes to be a reasonable return on their investment.
The licence fee is fixed for a population slab. It is the very same licence
fee, fixed in terms of Rule 16(1) on the basis of population, that is levied
even on relocation of an un-disposed A-4 shop. Where an un-disposed A-4 shop is
relocated after 31st July, the licence fee is required to be reduced
proportionately in terms of the proviso to Rule 16(1). While the licence fee,
even for the relocated A-4 shop, would be the licence fee prescribed under Rule
16(1), the proviso to Rule 16(1) would require a proportionate reduction of such
licence fee, if a licence is granted to the relocated un-disposed shop after
31st July, 2013. The privilege fee, of 8% plus VAT, is required to be paid by
the licensees of the relocated undisposed A-4 shops as soon as their purchases
exceeed seven times the proportionate licence fee paid by them, and not the
prescribed annual licence fee.
It is not even the petitioners' case that any area/location, where an A-4 shop
had achieved a turnover of less than fourteen times the licence fee in the
Excise Year 2012-13, has been identified for relocation of un-disposed A-4
shops. Even with regards the new shops, in the relocated areas, there is no
discrimination shown by the State as the existing licensees are not being
deprived of their rights to vend liquor in retail. (R. Selvaraj v. Government
of TN rep. by its Secretary, P & E Dept.68). In the additional counter-
affidavit, the allegation that the respondents had not notified some places
where the cumulative value of purchases is more than that of the place of the
petitioners is denied. The respondents state that at Munugodu the two A-4
shops, notified and disposed of for the year, had recorded a turnover of 18.5
and 7.14 times respectively on their licence fee for the year 2012-13; the
average turnover of Munugodu village was 12.93 times and, as such, no shop was
proposed for relocation at Munugodu; in Valigonda the two A-4 shops had
recorded an average turnover of 23.36 times during 2012-13, and hence one more
A-4 shop was notified thereat to which as many as 33 applications had been
received, and the said shop has been disposed of in the present notification.
XV. IS EXERCISE OF POWER BY THE COMMISSIONER, TO RELOCATE UNDISPOSED A-4
SHOPS TO PLACES WHERE THE PETITIONERS SHOPS ARE SITUATED, SO
UNREASONABLE AND ARBITRARY AS TO VIOLATE ARTICLE 14 OF THE CONSTITUTION?
It is contended, on behalf of the petitioners, that "requirement" under Rule 4
can be assessed only after taking sales into consideration; the impugned
decision to relocate undisposed A-4 shops, by the notifications dated
30.11.2013, was taken in the latter half of the excise licence year 2013-14; by
this time some of the petitioners had lifted more than 7 times the licence fee,
and were paying privilege fee of 8% plus VAT; as the rival competitor is not
liable to pay privilege fee or VAT, the competitive edge of the petitioner in
the market would be adversely affected; the impugned action would result in a
difference in the sale price, as additional tax need not be paid by the new
entrants; payment of additional tax at 13.5% by the existing licensees is almost
equal to the licence fee; treating unequals as equals is in violation of Article
14 of the Constitution of India; the Commissioner cannot relocate shops from one
district to another at his whims and fancies; he must take viability, under Rule
16(9), into consideration; except collection of the licence fee, no other object
is achieved in establishing another shop in the same area; a new shop being
established in the area will only result in dispersal of customers, and creation
of unhealthy competition; there is no transparency as state-wide statistical
data has not been published; the counter-affidavit is also silent whether the
Commissioner was appraised of the statistical details of the entire State; shops
with higher turnover have not been notified; exercise of power, to relocate
shops from one district to another, is unwarranted and unreasonable; and,
instead, the power under Rule 18 should have been exercised, and APBCL ought to
have been permitted to open outlets in the localities/areas where shops could
not be disposed or could not be allotted for any other reason.
Article 19 (1) (g) of the Indian Constitution confers a fundamental right to
trade subject to reasonable restrictions. However, liquor trade is viewed
differently on the premise that there is no fundamental right to trade in
intoxicants. (R. Selvaraj68; Cooverjee v. Excise Commissioner, Ajmer69; State
of Orissa v. Harinarayan70; Nashirwar v. State of M.P.71, Harishankar v. Dy.
Excise and Taxation Commissioner72 and Lakhanlal v. State of Orissa73). The
State can create a monopoly, either in itself or in the agency created by it,
for the sale and distribution of liquor as a beverage. It can also sell the
licence to the citizens, for the said purpose, by charging fees. This can be
done under Article 19(6), or even otherwise, as the State can impose limitations
and restrictions, on the trade or business in potable liquor as a beverage,
which are in their nature different from those imposed on the trade or business
in goods and articles which are res commercium. (R. Selvaraj68; Khoday
Distilleries Ltd33). Privilege can be claimed by a State in a "no-right"
situation, namely, when a citizen is not permitted to carry on trade. However
persons in whose favour licences have been granted, in terms of a statutory
enactment, derive a right to deal in liquor. (Devans Modern Breweries Ltd.,2).
While the power to relocate an un-disposed shop may well be unfettered save
population - slab restrictions, it cannot be exercised by the Commissioner at
his mere whim or fancy. The power conferred by legislation - plenary or
subordinate - must be exercised reasonably and should be informed by reason.
Article 14 of the Constitution would be attracted even in the matter of trade in
liquor. (Kerala Samsthana Chethu Thozhilali Union34; V.K. Ashokan v. Assistant
Excise Commissioner74). The State can, for the purpose of selling the licence,
adopt any mode with a view to maximise its revenues but, while doing so, must
conform to the equality clause enshrined in Article 14 of the Constitution.
(Devans Modern Breweries Ltd.,2). When the State decides to grant such a right
or a privilege to carry on trade or business in liquor to others, it cannot
escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will.
It must comply with the equality clause while granting the exclusive right or
privilege of selling liquor. The State cannot ride roughshod over the
requirement of that Article. (State of M.P. v. Nandlal Jaiswal75; Devans Modern
Breweries Ltd.,2). The State, while parting with its exclusive privilege or a
part thereof, may impose conditions but, once such terms and conditions are laid
down by reason of a statute, the same cannot be deviated from. (Kerala Samsthana
Chethu Thozhilali Union34).
The power conferred on the Commissioner, to relocate undisposed A-4 shops, is by
subordinate legislation (amendment of Rule 4 of the 2012 Rules) and by Executive
Policy (para 2 of G.O.Ms. No.358 dated 22.06.2013). The principle of non-
arbitrariness cannot apply to a change of policy by legislation. (Madras City
Wine Merchants' Assn. v. State of T.N.,76). As the vires of the amended Rule 4
is not under challenge in these Writ Petitions, this Court is only required to
examine whether exercise of power, under the said Rule, by the Commissioner is
in violation of Article 14 of the Constitution. While considering the
applicability of Article 14 to liquor trade, the Court would be slow to
interfere with the policy laid down by the State Government, for the sale of
liquor, having regard to the nature of the trade or business. The Court would,
in view of the inherently pernicious nature of the commodity, allow a large
measure of latitude to the State Government in determining its policy of
regulating trade in liquor. The grant of licence for the sale of liquor would
essentially be a matter of economic policy where the Court would hesitate to
intervene and strike down what the State Government has done unless it appears
to be plainly arbitrary, irrational or malafide. What can be said in regard to
legislation relating to economic matters must apply equally in regard to
executive action in the field of economic activities'. (Nandlal Jaiswal75; R.
Selvaraj68).
While the Excise policy for 2013-14 prohibits relocation of an undisposed A-4
shop from a higher population slab to a lower population slab, the Commissioner
has confined exercise of his power under the amended Rule 4, to relocate A-4
shops which remained undisposed in an area/locality, only to those
areas/localities where the existing A-4 shops achieved a turnover of 14 times or
more the annual license fee in the earlier Excise year 2012-13 thereby striking
a balance between augmenting State revenue and ensuring a reasonable return on
investment for both the existing A-4 shop and the relocated undisposed A-4 shop.
The amended Rule 16(9), in levying privilege fee at 8% plus VAT only on
purchases from APBCL in excess of seven times the annual license fee, presumes
that a turnover of seven times the annual license fee is a reasonable return on
investment.
It is only if this Court were to be satisfied that the exercise of power by the
Commissioner is so unreasonable, as to violate Article 14, would interference be
justified. The concept of 'reasonableness' defies definition. The functional and
conceptual implication of the term 'reasonableness' is that it is essentially
another word used for public policy. (Om Prakash v. State Of Uttar Pradesh77;
Friedmann: 'Legal Theory, 4th Ed., at pages 83-85'). The authority must, by the
use of his reason, ascertain and follow the course which reason dictates. He
must act reasonably. The word 'unreasonable' is frequently used as a general
description of the things that must not be done. A person entrusted with a
discretion must direct himself properly in law. He must call his own attention
to the matters which he is bound to consider. He must exclude from his
consideration matters which are irrelevant to what he has to consider. If he
does not obey those rules, he may truly be said, and often is said, to be acting
'unreasonably'. Similarly, there may be something so absurd that no sensible
person could ever dream that it lay within the powers of the authority. The
rule of reason has thus become a generalized rubric covering not only sheer
absurdity or caprice, but merging into illegitimate motives and purposes, a wide
category of errors commonly described as 'irrelevant considerations', and
mistakes and misunderstandings which can be classed as self-misdirection.
(Administrative Law: HWR Wade & C.F. Forsyth - Tenth Edition).
Can exercise of power, to relocate undisposed A-4 shops to areas where the
existing shops achieved a turnover exceeding fourteen times the annual licence
fee in the previous Excise Year 2012-13, be said to be so arbitrary and
unreasonable as to violate Article 14 of the Constitution of India? The grant
of a liquor licence does not involve any right or expectation but is a matter of
privilege. All that is required is that the Commissioner should act fairly, and
deal with the applications without any bias, and not in an arbitrary or
capricious manner. (M/s. Chingleput Bottlers v. M/s. Majestic Bottling Co.78).
The doctrine that powers must be exercised reasonably has to be reconciled with
the no less important doctrine that the court must not usurp the discretion of
the public authority appointed to take the decision. Within the bounds of legal
reasonableness is the area in which the deciding authority has genuinely free
discretion. If it passes those bounds, it acts ultra vires. The court must,
therefore, resist the temptation to draw the bounds too tightly, merely
according to its own opinion. It must strive to apply an objective standard
which leaves to the deciding authority the full range of choices which the
legislature is presumed to have intended. If the decision is within the
confines of reasonableness, it is no part of the court's function to look
further into its merits. 'With the question whether a particular policy is wise
or foolish the court is not concerned; it can only interfere if to pursue it is
beyond the powers of the authority." (Sterling Computers Ltd. v. M & N
Publications Ltd.79; Administrative Law, Prof. Wade). Article 14 cannot be
interpreted in a doctrinaire or dogmatic manner. Excessive interference by the
judiciary in the functions of the executive is not proper. In view of the
inherent complexities involved in modern society, some free play must be given
to the executive. (Transport and Dock Workers Union v. Mumbai Port Trust80;
Missouri, Kansas and Texas Railway Co. v. May81; Aravali Golf Club v. Chander
Hass82). While fair play in action is an essential requirement, "free play in
the joints" is also a necessary concomitant for an administrative body
functioning in an administrative sphere. (Fasih Chaudhary v. D.G.,
Doordarshan83).
It is un-understandable as to how, in the instant case, the action of the
State and the Commissioner can be termed arbitrary as their endeavour is only to
sell as many of the remaining undisposed A-4 shops as is possible and, thereby,
augment State revenue. The exercise undertaken by the Commissioner is merely to
relocate undisposed A-4 shops within the maximum number of shops fixed by the
Government. The State can always re-locate undisposed shops, for augmenting
public revenue, as long as the existing licensees are not deprived of their
privilege of carrying on their business. (R. Selvaraj68). It is not even the
petitioners' case that they are prevented from trading in liquor as a result of
relocation of an undisposed shop in their area. It does not stand to reason
that the power to relocate an undisposed shop should be exercised only at the
beginning of the Excise year, and not thereafter. If the respondents could have
exercised the power under the amended Rule 4 at the inception, without any
demur, there is no reason to contend that the respondents cannot take any steps
subsequently to settle such vacant shops in accordance with the Rules. (K.
Muthusamy55).
The undisposed shops, which have been relocated consequent to the impugned
notifications, are required, in terms of the proviso to Rule 16(1), only to pay
the proportionate licence fee, and not the annual licence fee in its entirety.
Privilege fee, under Rule 16(9), would be levied on these shops the moment they
achieve a turnover of seven times the proportional licence fee paid by them.
The decision of the Commissioner , to relocate undisposed A-4 shop only to those
areas where the existing licensees had achieved twice the purchases prescribed
in Rule 16(9), is informed by reason and has not been exercised at his whim or
fancy. As licensees who achieved a turnover of 14 times the annual licence fee,
in the Excise Year 2012-13, constitute a distinct class, it cannot be said that
unequals have been treated equally. No material has been placed by the
petitioners to even show, let alone establish, that relocation of undisposed A-4
shops would either create a law and order problem or unhealthy competition.
Those A-4 shops, which have already achieved a turnover of seven times or more
the annual licence fee for the Excise Year 2013-14, cannot be heard to complain
of loss of competitive edge as they have already earned a reasonable return on
their investment, in terms of Rule 16(9), even before completion of 3/4th of the
said Excise Year.
Any reduction in the price, at which the relocated A-4 shops would sell IMFL and
FL till they achieve a turnover of seven times the proportionate license fees
paid by them, would only benefit consumers. Permitting APBCL to open outlets,
in areas where the A-4 shops could not disposed of, may not help the State in
enhancing its revenues as the very fact that no one came forward to seek
licences in such areas reflects low consumption of IMFL and FL thereat. The
contention that the decision of the Commissioner, to relocate undisposed A-4
shops to areas/localities in which the petitioners were granted renewal of their
licences, is arbitrary and in violation of Article 14 must therefore fail.
XVI. DOES PRINCIPLES OF NATURAL JUSTICE NECESSITATE COMPLIANCE BEFORE AN
UNDISPOSED A-4 SHOP IS RELOCATED?
It is contended, on behalf of the petitioners, that the decision of
Commissioner, to relocate some other undisposed shop into the area of the
petitioners shops, was taken without notice to them, and without giving them an
opportunity of being heard; and the administrative decision of the Commissioner,
affecting the exclusive privilege of the petitioner to sell IMFL & FL in their
licenced area, infringes their right, results in civil consequences, and is in
violation of principles of natural justice.
The rules of natural justice are not embodied rules. What particular rule of
natural justice should apply to a given case must depend to a great extent on
the facts and circumstances of that case and the framework of the law under
which the enquiry is held. Whenever a complaint is made before a Court that some
principle of natural justice has been contravened, the Court has to decide
whether observance of that rule was necessary for a just decision on the facts
of the case. (Maneka Gandhi v. Union of India84; Suresh Koshy George v.
University of Kerala85; D.F.O., South Kheri v. Ram Sanehi Singh86). It should
not proceed as if there are inflexible rules of natural justice of universal
application. Each case depends on its own circumstances. Rules of natural
justice vary with the rules prescribed by the legislature. (M/s. Chingleput
Bottlers78).
Rules of natural justice are not statutory rules. These rules are not cast in a
rigid mould nor can they be put in a legal strait-jacket. They are not immutable
but flexible. These rules can be adapted and modified by statutes and statutory
rules. (Union of India v. Tulsiram Patel87). Not only can the principles of
natural justice be modified but, in exceptional cases, they can even be excluded
where the nature of the action to be taken, its object and purpose and the
scheme of the relevant statutory provisions warrant its exclusion. (Tulsiram
Patel87; State of U.P. v. Sheo Shanker Lal Srivastava88). If a statutory
provision either specifically, or by necessary implication, excludes the
application of any or all the principles of natural justice then the court
cannot ignore the mandate of the Legislature or the statutory authority and read
into the concerned provision the principles of natural justice. (Union of India
v. Col. J.N. Sinha89; Tulsiram Patel87). The implication of natural justice
being presumptive, it may be excluded by express words of the statute or by
necessary intendment. (Swadeshi Cotton Mills v. Union of India90; Tulsiram
Patel87). The power conferred on the Commissioner, under the amended Rule 4, is
to relocate undisposed A-4 shops from any area/locality as he thinks fit. The
wide discretion conferred on the Commissioner neither explicitly, nor by
necessary implication, requires compliance with principles of natural justice
before its exercise.
Undisposed A-4 shops have been relocated by the Commissioner in the exercise of
his powers under Rule 4 of the amended 2012 Rules. Legislative action, plenary
or subordinate, is not subject to natural justice. Subordinate legislation
cannot be questioned on the ground of violation of principles of natural justice
on which administrative action may be questioned. (Tulsipur Sugar Co. Ltd. v.
Notified Area Committee, Tulsipur91 Rameshchandra Kachardas Porwal v. State of
Maharashtra92; Madras City Wine Merchants' Assn.76; Indian Express Newspapers
(Bombay) Pvt. Ltd. v. Union of India93 Bates v. Lord Hailsham of St
Marylebone94). Even otherwise the grant of licence to trade in liquor is the
grant of a "privilege". An authority or body need not observe the rules of
natural justice where its decision, although final, relates not to a 'right' but
to a 'privilege or licence'. All that is required, in such cases, is that the
applications must be considered fairly. (M/s. Chingleput Bottlers78). As has
been already held the decision, to relocate undisposed A-4 shops, is fair and
reasonable and is not in violation of Article 14 of the Constitution.
XVII. SCOPE OF INTERFERENCE IN POLICY DECISIONS OF GOVERNMENT:
The Excise Policy for the year 2012-13, notified in G.O.Ms. No.390 dated
18.06.2012 and published in the A.P. Gazette on 18.06.2012, stipulated that the
privilege of selling liquor through retail shops should be granted by collecting
a fixed licence fee based on the population (as per census) of the places
(municipality/town/village) where the shops were proposed to be established; the
method of selection, for grant of shop licences, was to be by drawal of lots;
the period of licence was for one year; and renewal for the second year 2013-14
was to be considered subject to payment of the licence fee to be fixed by the
Government for the second year (2013-14), and the licensee not incurring any
disqualification as per rules. The total number of A4 shops in the entire State
was fixed at the earlier stipulated number of 6596 shops. The licence fee, for
different population slabs, was prescribed in Para 8 of the said Excise Policy
i.e, for the population slab of upto 10,000, the licence fee was Rs.32.50 Lakhs.
It was Rs.34.00 Lakhs for the population slab between 10,000 and 50,000;
Rs.42.00 Lakhs for the population slab between 50,000 and 3 lakhs; Rs.46.00
Lakhs for the population slab between 3 lakhs and 5 lakhs; Rs.64.00 Lakhs for
the population slab between 5 lakhs and 20 lakhs; and Rs.104.00 Lakhs for the
population slab above 20 lakhs. In addition to the licence fee, the licensee
was required to pay a privilege fee at 8%, plus applicable VAT, on the invoice
value of the liquor purchased during the licence year in excess of 6 times the
annual licence fee.
The Excise Policy for the year 2013-14, as notified in G.O.Ms. No.358
dated 22.06.2013 and published in the A.P. Gazette on 24.06.2013, stipulated
that the privilege, of selling liquor through retail shops, should be renewed by
collecting a fixed licence fee based on the population, as per the 2011 Census,
of the places (Corporation/Municipality/Town/Village) for the year 2013-14.
Para 2 of the said Excise Policy, while permitting the Commissioner of
Prohibition and Excise to relocate un-disposed A-4 shops from any locality/area
as he thought fit, prohibited him from relocating such A-4 shops from a higher
licence fee slab to a lower licence fee slab. Para 3 prescribed the method of
selection, for grant of licences for the un-disposed shops, to be by drawal of
lots. Under Para 5, the total number of retail shops in the entire State was
retained at 6596. The licence fee, stipulated under para.8 of the Excise Policy
for the year 2013-14 for different population slabs, is the same as stipulated
in the earlier Excise Policy for the year 2012-13. However the privilege fee,
at the rate of 8% plus applicable VAT, was to be paid only where the invoice
value of the liquor purchased by a licensee, during the excise year, was in
excess of seven times the prescribed annual licence fee.
The Excise Policies for the years 2012-13 and 2013-14 have been made by the
Government to enhance State revenue. This Court would not, ordinarily, examine
in judicial review proceedings under Article 226 of the Constitution of India,
policy choices of the Executive. Policy is not static but is dynamic. (T.N.
Education Deptt. Ministerial & General Subordinate Services Assn. v. State of
T.N.95). If the policy cannot be faulted on grounds of malafide,
unreasonableness, arbitrariness or unfairness etc the mere fact that it would
hurt business interests does not justify invalidating the policy. In economic
regulation cases, there are good reasons for judicial restraint, if not judicial
deference, to the judgment of the executive. Courts should not express their
opinion whether, at a particular point of time or in a particular situation, any
such policy should have been adopted or not. It is best left to the discretion
of the State. (Ugar Sugar Works Ltd. v. Delhi Admn.96). Each State is empowered
to formulate its own liquor policy. No direction can be given or expected from
the Court regarding the "correctness" of an executive policy unless, while
implementing such policies, there is infringement or violation of any
constitutional or statutory provision. (Ugar Sugar Works Ltd.96). Public
authorities must have liberty in framing policies. If a decision has been taken
in a bonafide manner, although not strictly following the norms laid down by
Courts, such decisions are upheld on the principle that Courts, while judging
the validity of executive decisions, must grant certain measure of freedom of
"play in the joints" to the executive. (Sterling Computers Ltd.79). Judges
should exercise judicial self-restraint while exercising powers of judicial
review of administrative or legislative decisions. (Transport and Dock Workers
Union80).
Specific places were hitherto fixed by the Commissioner, in the exercise of his
powers under Rule 4 of the 2012 Rules and the earlier 2005 Rules, for locating
the total 6596 A-4 retail shops in different areas/localities of the State.
While the amended Rule 4, and para 2 of the Excise Policy for the year 2013-14,
enable the Commissioner to relocate un-disposed A-4 shops from any locality/area
as he thinks fit, he is disabled by Para.2 of the said Excise Policy, from
relocating un-disposed A-4 shops from a higher licence fee slab to a lower
licence fee slab. For example - the Commissioner is disabled from relocating an
un-disposed shop, fixed earlier in an area where the population was in excess of
20 Lakhs, to an area where the population is 10,000 or less. Save this
restriction the power conferred on the Commissioner, by the amended Rule 4 to
relocate un-disposed A-4 shops, is unfettered.
From the counter-affidavit filed on behalf of the respondents it is evident that
as many as 617 shops were not disposed of, inspite of repeated notifications,
during the Excise year 2012-13; a notification was issued for disposal of these
617 shops during the Excise year 2013-14; applications in respect of 76 shops
were received and disposed of, leaving 541 shops undisposed; as against 5979
shops, for which licenses were granted for the year 2012-13, licenses for only
4,986 shops were renewed for the year 2013-14; 993 shops were left unrenewed; at
the end of the first round of notifications for the year 2013-14, 1610 shops
remained undisposed; 215 shops were disposed of in the second round, leaving
1,395 shops undisposed for the year 2013-14; after repeated notifications,
another 225 shops were disposed of; and 1,170 shops are yet to be disposed off
even after seven rounds of notifications. The revenue which the State expected
to generate was by collection of the prescribed licence fee for all the 6596 A-4
shops. As 1610 A-4 shops remained undisposed for the Excise Year 2013-14,
before the impugned notifications were issued, there was a substantial shortfall
in the expected revenue generation. This necessitated relocation of undisposed
A-4 shops to other areas/localities where there was a greater demand for grant
of licences to establish A-4 shops. As the licence fee is fixed for a
population slab, relocation of an A-4 shop from a higher population slab to a
lower population slab would have resulted in collection of lower licence fees,
for grant of a licence for the A-4 shop, at the relocated place. This would, in
turn, have resulted in loss in collection of the estimated revenue, thereby
defeating the very object of relocating un-disposed A-4 shop in terms of the
amended Rules and the Excise Policy.
XVIII. LEGITIMATE EXPECTATION:
It is contended on behalf of the petitioners that, once a licence is granted
with specific conditions and the licence is renewed on those conditions, the
licensee has a legitimate expectation of carrying on business in the areas
earmarked in their favour when they were granted A-4 licences; and the
petitioners cannot be denied the opportunity of making reasonable profits.
Legitimate expectation may arise (a) if there is an express promise given by a
public authority; or (b) because of the existence of a regular practice which
the claimant can reasonably expect to continue. Such an expectation must be
reasonable. (Madras City Wine Merchants' Assn.76). A person may have a
legitimate expectation of being treated in a certain way by an administrative
authority even though he has no legal right in private law to receive such
treatment. (Jasbir Singh Chhabra v. State of Punjab97; Halsbury's Laws of
England, 4th Edn.). A decision taken in an arbitrary manner contradicts the
principle of legitimate expectation. An authority is under a legal obligation to
exercise power reasonably and in good faith to effectuate the purpose for which
the power stood conferred. In this context, "in good faith" means "for
legitimate reasons". It must be exercised bonafide for the purpose and for none
other. (Commr. of Police v. Gordhandas Bhanji98, Sirsi Municipality v. Cecelia
Kom Francis Tellis99, State of Punjab v. Gurdial Singh100, Collector (District
Magistrate) v. Raja Ram Jaiswal101, Delhi Admn. v. Manohar Lal102 and N.D. Jayal
v. Union of India103; NOIDA Entrepreneurs Assn. v. NOIDA104).
The Court can interfere only if the decision taken by the authority is found to
be arbitrary, unreasonable or in gross abuse of power or in violation of
principles of natural justice and is not taken in public interest. A claim based
on mere legitimate expectation, without anything more, cannot ipso facto give a
right to invoke these principles. (Jasbir Singh Chhabra97). The mere reasonable
or legitimate expectation of a citizen may not by itself be a distinct
enforceable right, but failure to consider and give due weight to it may render
the decision arbitrary, and this is how the requirement of due consideration of
a legitimate expectation forms part of the principle of non-arbitrariness, a
necessary concomitant of the rule of law. Every legitimate expectation is a
relevant factor requiring due consideration in a fair decision-making process.
Whether the expectation of the claimant is reasonable or legitimate in the
context is a question of fact in each case. Whenever the question arises, it is
to be determined not according to the claimant's perception but in larger public
interest wherein other more important considerations may outweigh what would
otherwise have been the legitimate expectation of the claimant. A bona fide
decision of the public authority reached in this manner would satisfy the
requirement of non-arbitrariness and withstand judicial scrutiny. (Food
Corporation of India v. Kamdhenu Cattle Feed Industries105; Jasbir Singh
Chhabra97).
Legitimate expectation cannot be upgraded to a legally enforceable right which
it is not, as it is merely a part of the rule of non-arbitrariness to ensure
procedural fairness of the decision. The requirement of public interest can
outweigh the legitimate expectation of private persons and the decision of a
public body on that basis is not assailable. (Ghaziabad Development Authority v.
Delhi Auto & General Finance (P) Ltd.,106). As the decision of the Commissioner,
in relocating un-disposed A-4 shops to areas wherein the petitioners A-4 shops
are located, does not suffer from arbitrariness, is not in violation of Article
14 of the Constitution of India, and is taken in the larger public interest of
enhancing public revenue, the doctrine of legitimate expectation has no
application.
There is a distinction between a mere hope and a legitimate expectation. (R.
Selvaraj68; Madras City Wine Merchants Association's76). For legal purposes, the
expectation cannot be the same as anticipation. It is different from a wish, a
desire or a hope. It cannot amount to a claim or demand on the ground of a
right. However earnest and sincere a wish, a desire or a hope may be and however
confidently one may look to them to be fulfilled, they by themselves cannot
amount to an assertable expectation and a mere disappointment does not attract
legal consequences. A pious hope, even leading to a moral obligation, is not a
legitimate expectation. The legitimacy of an expectation can be inferred only if
it is founded on the sanction of law or custom or an established procedure
followed in regular and natural sequence. Again it is distinguishable from a
genuine expectation. Such expectation should be justifiably legitimate and
protectable. Every such legitimate expectation does not by itself fructify into
a right and, therefore, does not amount to a right in the conventional sense.
(Punjab Communications Ltd. v. Union of India107, Chanchal Goyal (Dr.) v. State
of Rajasthan108, J.P. Bansal v. State of Rajasthan109, State of Karnataka v.
Umadevi110, Kuldeep Singh v. Govt. of NCT of Delhi111, Ram Pravesh Singh v.
State of Bihar112 and Sethi Auto Service Station v. DDA113; Union of India v.
Hindustan Development Corpn114; Jasbir Singh Chhabra97). Neither the Government
nor the Commissioner have promised the petitioners that they would make profits
from their business, of trading in liquor, for the Excise Year 2013-14.
The doctrine of legitimate expectation arises only in the field of
administrative decisions. If the plea of legitimate expectation relates to
procedural fairness there is no possibility of invoking the doctrine as against
legislation - plenary or subordinate. If there is a change in policy, or in
public interest the position is altered by a rule or legislation, no question of
legitimate expectation would arise. (Madras City Wine Merchants' Assn.76). The
doctrine of legitimate expectation plays no role when the appropriate authority
is empowered to take a decision by an executive policy or under law. The court
leaves the authority to decide its full range of choices within the executive or
legislative power. In matters of economic policy, the court gives a large leeway
to the executive and the legislature. Granting licences is either by way of
executive or legislative policy. (Bajaj Hindustan Ltd. v. Sir Shadi Lal
Enterprises Ltd.,115). The decision taken by the Commissioner, to relocate some
of the un-disposed A-4 shops, is in the exercise of the powers conferred under
the amended Rule 4 of the 2012 Rules, which has the force of law. It is also in
accordance with the Excise Policy framed by the Government for the Excise Year
2013-14 which was notified in G.O.Ms.No.358 dated 22.06.2013 and was published
in the A.P. Gazette on 24.06.2013. The contention that the petitioners'
legitimate expectation is violated thereby does not, therefore, merit
acceptance.
XIX. IS FAILURE TO IDENTIFY AREAS, AT WHICH THE UNDISPOSED A-4 SHOPS
SHOULD BE RELOCATED, BEFORE THE COMMENCEMENT OF THE EXCISE YEAR
2013-14, FATAL?
Learned Counsel for the petitioners would contend that, if the shops had been
identified in June, 2013 itself, the exercise of issuing a notification
undertaken in the beginning of the year, and the proposal to relocate undisposed
A-4 shops had been brought to their notice, the petitioners would not have
sought renewal; and, if another shop is now located in their area, the
petitioners would not only suffer huge loss but their bank guarantees and
licence fees would be forfeited in terms of Rule 16(8).
As both the amended 2012 Rules, and the Excise policy for the year 2013-14, were
published in the A.P. Gazette before the commencement of the Excise year 2013-
14, the licensees cannot claim ignorance thereof before they participated in the
selection process for grant of licenses. They had the option to opt out if the
conditions were detrimental to their interest or were to their disadvantage.
Having participated in the selection process, based on the extant rules and the
Excise policy, it is not open to them to now turn around and contend that
exercise of power, strictly in terms thereof, is illegal. (Devans Modern
Breweries Ltd.,2). Neither the Act nor the Rules obligated the petitioners to
seek renewal of their licences, and they did so on their own volition. The State
has not guaranteed the petitioners, either under the Act or the amended 2012
Rules or the Excise Policy for the year 2013-14, a specified sum as profit or a
fixed return on their investment. In contracts entered into between the State
and its citizens, pursuant to an auction, the State does not guarantee a profit
to the licensees. There is no compulsion on anyone to enter into these
contracts. It is voluntary on both sides. There is no warranty against incurring
losses. It is a business for the licensees. Whether they make profit or incur
loss is no concern of the State. In law, it is entitled to its money under the
contract. It is not as if the licensees are going to pay more to the State in
case they make substantial profits. (Asstt. Excise Commr. v. Issac Peter116;
Devans Modern Breweries Ltd.,2). The right to carry on business, more so in the
sale of liquor which is Res extra commercium, does not carry with it any
obligation on the State to guarantee the licensees a particular rate of return
on their investment. Any person carrying on business may earn huge profits, or
may suffer extensive losses. Neither does the State promise a businessman that
it would make good the losses suffered by him nor would the businessman share
his profits with the State if it is in excess of what he had earlier envisaged.
Maybe the licensees were not wise in offering their bids. Many an unexpected
development may occur which may either cause loss to the contractor or result in
large profit. Such contracts do not imply a warranty - or a guarantee - of
profit to the contractor. It is a business for him - profit and loss being
normal incidents thereof. (Asstt. Excise Commr.116).
Relocation of undisposed shops does not deprive the licensees of their right to
carry on the trade in intoxicants for the duration of the licence period. This
right to trade, during the period of the excise year, should not be confused
with the right to make profits. Even assuming that, by reason of the new shops,
the licensees may suffer in sales, it would not result in discrimination. The
licensees were well aware that there may be an increase of shops in their area,
on undisposed shops being relocated thereat, and that their sales may get
reduced thereby. Neither the viability of liquor trade nor the profit or loss
of the liquor vendor is of any concern of the State, and it confers privilege on
fixed terms for a fixed period. It is for the participant to plan and
participate in the purchase of the privilege. (R. Selvaraj68; Issac Peter116).
It is not open to the petitioners to now turn around and contend that un-
disposed A-4 shops should not be relocated in their areas as they may suffer
losses thereby.
XX. HAS THE COMMISSIONER ABDICATED HIS POWERS UNDER RULE 4 AND
SURRENDERED HIS DISCRETION TO HIS SUBORDINATES?
It is contended, on behalf of the petitioners, that the Commissioner could not
have called for proposals from the Deputy Commissioners of Prohibition and
Excise, who have no role to play under the Act and the Rules, for the purpose of
issuing licences; and, from the counter-affidavit, it is clear that the
Commissioner has merely accorded permission and has not take an independent
decision under Rule 4.
The principles of administrative law, such as surrender of discretion and
abdication of duty vitiating the decision, would apply in the case of exercise
of power conferred by a statute or rules made thereunder or instruments which
are statutory in character. (Irrigation Development Employees Association v.
Govt. of A.P.117). Exercise of statutory power partakes a quasi-judicial
complexion. In the exercise of such power, the authority cannot permit its
decision to be influenced by the dictation of others as this would amount to
abdication and surrender of its discretion. It would then not be the authority's
discretion that is exercised, but someone else's. If an authority "hands over
its discretion" to another body it acts ultra vires. Such interference by a
person or body extraneous to the power is contrary to the nature of the power
conferred on the authority. (State of U.P. v. Dharmander Prasad Singh118).
In the counter-affidavit filed on behalf of the respondents it is stated that,
after 21.08.2013, the respondents had issued four notifications notifying the
un-disposed A-4 shops at their original places during which 89 shops were
disposed; 1170 A-4 shops still remained un-disposed; in order to dispose of
these un-disposed shops, a decision was taken to relocate the A-4 shops in a
phased manner at places where the turnover of the existing A-4 shops was more
than 14 times the licence fee; mandals, where there were no A-4 shops, were
notified; all the Deputy Commissioners of Prohibition and Excise were asked to
submit proposals for relocation of shops wherever the turnover of the A-4 shops
were 14 times and above the license fee; a meeting was convened on 06.11.2013
wherein all the Deputy Commissioners sought permission to relocate A-4 shops in
17 mandals which did not have a single A-4 shop; they also submitted proposals
in respect of 106 shops where the turnover was 14 times and above the license
fee; after thoroughly examining the proposals, the Commissioner of Prohibition
and Excise had again convened a meeting on 29.11.2013 with the Deputy
Commissioners of Prohibition and Excise, and had accorded permission to relocate
104 A-4 shops at those areas/localities where the turnover was 14 times or more;
in addition, taking into consideration Rules 4 and 17, A-4 shops were sought to
be relocated in those mandals which did not have any A-4 shop at all; and the
Commissioner had accorded permission to relocate 69 A-4 shops from one location
to another within the district, 15 A-4 shops from one district to another within
the zone, and 37 A-4 shops from one district to another within the multi-zone
within the same licence fee slabs. In calling for proposals, and in seeking
information, from his subordinates the Commissioner has neither surrendered his
discretion nor has he abdicated his duties. It is evident that it is the
Commissioner who has exercised the powers conferred on him under the amended
Rule 4, and not the Deputy Commissioners who, as his subordinates, had merely
submitted proposals to, and had furnished the information sought for by, him.
XXI. ARE DISTRICT COLLECTORS EMPOWERED TO ISSUE THE NOTIFICATION UNDER
RULE 5(1) OF THE RULES?
It is contended on behalf of the petitioners that the impugned notifications,
issued by District Collectors, are ultra-vires Rule 5 as the competent authority
is the licensing authority i.e., the Excise Superintendent; if a thing has to be
done in a certain way, it must be done in that way only; merely because they
were also granted licences, pursuant to notifications issued by District
Collectors in July, 2012, does not disable the petitioners from questioning the
impugned notifications issued by the District Collector as the "cause" is
different; the earlier "cause", whereby the petitioners were granted licences in
July, 2012, is not before the court; no fresh notification was issued for the
petitioners' areas in the year 2013-14 as it is only a renewal; the petitioners
cannot be precluded from questioning the jurisdiction of the District Collector
merely because they were granted a similar benefit in the earlier year 2012-13;
and the impugned notifications were issued by the District Collector, for re-
location of the shops, without guidelines or norms or in accordance with the
power contemplated under the Excise Act or the Rules.
A. THE PROCEDURE PRESCRIBED BY STATUTORY RULES MUST BE STRICTLY ADHERED TO:
When a procedure has been laid down, the authority must act strictly in terms
thereof. (Taylor v. Taylor119). If a statute has conferred a power to do an
act, and has laid down the method in which that power has to be exercised, it
necessarily prohibits the doing of the act in any other manner than that which
has been prescribed. The principle behind the rule is that if this were not so,
the statutory provision might as well not have been enacted. (State of U.P. v.
Singhara Singh120; Dhanajaya Reddy v. State of Karnataka121; Ramchandra
Murarilal Bhattad v. State of Maharashtra122; State of Gujarat v. Shantilal
Mangaldas123). Rule 5(1) of the 2012 Rules requires the notification in the
District Gazette, inviting applications for grant of licences in the
area/locality, to be issued by the licencing authority. Rule 2(L) of the 2012
Rules defines "licensing authority" to mean the Prohibition & Excise
Superintendent of the concerned place in which the licenced shop is located. As
the licencing authority is the Prohibition & Excise Superintendent, the impugned
notifications issued by the District Collectors do not accord with Rule 5(1) of
the 2012 Rules.
The contention of the Learned Government Pleader that the District Collector is
the selection authority under Rule 11, and is entitled to issue the notification
under Rule 5(1), is not tenable. Rule 3(1) stipulates that, subject to the
provisions of the Rules, the right to sell IMFL and FL in retail by shops shall,
ordinarily, be granted by way of a licence issued after publishing a
notification and inviting applications from the public. Rule 12 relates to
submission of applications, and selection of applicants for the grant of
licences. While Rule 12(1) requires applications, along with the prescribed
enclosures, to be addressed to the licencing authority, the selection procedure,
detailed in Rule 12(6) of the Rules, makes it clear that the District Collector
is the selection authority.
On a conjoint reading of Rules 5 and 12, it is evident that, while the
notification under Rule 5(1) is to be issued by, and the applications addressed
to, the Prohibition & Excise Superintendent as the licencing authority, the
selection process is conducted under the aegis of the District Collector on whom
power is conferred to select the successful applicant. After the applicant is
selected by the District Collector for grant of the licence, it is the
Prohibition & Excise Superintendent who, as the licensing authority, is
competent to issue the licence under Rule 24. The District Collectors were,
therefore, not entitled to issue the impugned notifications under Rule 5(1) of
the Rules.
B. PETITIONERS CANNOT BLOW HOT AND COLD AT THE SAME TIME:
This, by itself, may not justify setting aside the impugned notifications as the
petitioners are themselves beneficiaries of licences, granted to them for the
Excise year 2012-13, on similar notifications being issued under Rule 5(1) by
the District Collectors. A party cannot be permitted to "blow hot-blow cold",
"fast and loose" or "approbate and reprobate". Where one knowingly accepts the
benefits of an order, he is estopped from denying the validity of, or the
binding effect of, such an order upon himself. (Nagubai Ammal v. B. Shama
Rao124; CIT v. V. MR. P. Firm Muar125; Ramesh Chandra Sankla v. Vikram
Cement126; Pradeep Oil Corpn. v. MCD127; Cauvery Coffee Traders v. Hornor
Resources (International) Co. Ltd.128; V. Chandrasekaran v. Administrative
Officer129; and Rajasthan State Industrial Development & Investment Corpn. v.
Diamond & Gem Development Corpn. Ltd.,130). A person cannot say at one time
that a transaction is valid and thereby obtain some advantage, to which he could
only be entitled on the footing that it is valid, and then turn around and say
it is void for the purpose of securing some other advantage. (Verschures
Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd131; Halsbury's Laws of
England, 4th Edn., Vol. 16; R.N. Gosain v. Yashpal Dhir132; P.R. Deshpande v.
Maruti Balaram Haibatti133). Since the petitioners are themselves beneficiaries
of the notifications issued earlier by District Collectors, and are being
permitted to trade in liquor, criticism by such beneficiaries of the impugned
notifications, also issued by the District Collectors, is not justified. (K.
Muthusamy55).
C. DISCRETIONARY JURISDICTION, UNDER ARTICLE 226 OF THE CONSTITUTION, IS NOT
TO BE EXERCISED FOR THE MERE ASKING.
The contention that the notifications issued under Rule 5(1), inviting
applications for the Excise year 2012-13, are not under challenge in these writ
proceedings and this Court should not examine the validity of such
notifications, but should set aside the impugned notifications issued by the
District Collectors under Rule 5(1) for the Excise Year 2013-14, does not merit
acceptance. A writ of mandamus is designed to promote justice (ex debito
justitiae). The grant or refusal of the writ is at the discretion of the Court.
While dealing with a writ petition, the court must exercise discretion taking
into consideration a wide variety of circumstances, inter alia, the facts of the
case, the exigency that warrants such exercise of discretion, the consequences
of grant or refusal of the writ, and the nature and extent of injury that is
likely to ensue by such grant or refusal. (Rajasthan State Industrial
Development & Investment Corpn.130). The power conferred on the High Court,
under Article 226 of the Constitution, is to advance justice and not to thwart
it. The lookout of the High Court is, therefore, not merely to pick out any
error of law through an academic angle but to see whether injustice has resulted
on account of any erroneous interpretation of the law. If justice became the by-
product of an erroneous view of law the High Court is not expected to erase such
justice in the name of correcting the error of law. (Roshan Deen v. Preeti
Lal134; Ramesh Chandra Sankla126; State of U.P. v. District Judge, Unnao135).
While examining the contention that the impugned notifications, issued by the
District Collectors, must be set aside on the ground that no such power is
conferred on them under Rule 5(1), it does not stand to reason that this Court
should ignore or turn a blind eye to the fact that similar notifications were
issued, for the Excise Year 2012-13, by District Collectors whereby A-4 shop
licences were granted to the petitioners, and were renewed for the Excise Year
2013-14.
In the exercise of its discretionary jurisdiction under Article 226, it is open
to the High Court to decline relief if the grant of relief would defeat the
interests of justice or where the petitioner seeks to secure a dishonest
advantage or perpetuate an unjust gain. (M.P. Mittal v. State of Haryana136;
Andhra Pradesh Wine Dealers Association v. Deputy Director of Income Tax
(Investigation)137). Permitting the petitioners, who are beneficiaries of
similar notifications issued by District Collectors in the Excise Year 2012-13,
to run A-4 shops for the Excise Year 2013-14, while at the same time setting
aside the impugned notifications whereby others were granted licences for the
relocated shops, would not only result in a premium being placed on the earlier
illegal acts of the District Collectors but would also be against larger public
interest.
The jurisdiction of the High Court, under Article 226 of the Constitution, is
extraordinary, equitable and discretionary, (K.D. Sharma v. Steel Authority of
India Ltd138), and should be exercised in the larger interest of justice. While
granting relief in favour of the applicant, the court must balance interests and
equities. It can pass an appropriate order which justice may demand and equities
may project. Courts of equity should go much further both to give and refuse
relief in furtherance of public interest. Granting or withholding of relief may
properly be dependent upon considerations of justice, equity and good
conscience. (Ramesh Chandra Sankla126; Shiv Shankar Dal Mills v. State of
Haryana139). As the entire exercise of relocation of un-disposed shops is to
enable the Government to augment its revenue, I see no reason to exercise
discretion, under Article 226 of the Constitution of India, to set aside the
impugned notifications while at the same time permitting the petitioners to
continue to carry on trade in IMFL and FL and reap the benefits of the earlier
notifications issued, under Rule 5(1) by the District Collectors, for the Excise
year 2012-13.
XXII. IS THE STATE, BY RELOCATING UNDISPOSED A-4 SHOPS, ENCOURAGING
CONSUMPTION OF LIQUOR?
It is contended, on behalf of the petitioners, that liquor is not an essential
commodity, and grant of privilege fee by the State is only a revenue generating
exercise; the very fact that A-4 shops, in some districts, could not be disposed
shows that the people in those districts do not wish to consume IMFL; a welfare
State should not dispose of A-4 shops which could not be relocated; and
relocation of shops, from one district to another, falls foul of the government
policy for the year 2013-14 as it would amount to encouraging people in that
district to consume more IMFL.
The power of the State to raise revenue by levying taxes and fees should not be
confused with the power of the State to regulate trade or business in liquor.
The State exercises two different powers on such occasions. The mere fact that
the State levies taxes and fees on trade or business in liquor or derives income
from it, does not make the right to carry on trade or business in liquor a
fundamental right. (R. Selvaraj68).
Whether or not the undisposed A-4 shop should be relocated are matters of
legislative or executive policy and this Court would not sit in judgment over
the policy decisions of the State. The Excise Policy for the year 2014, while
permitting the Commissioner to relocate undisposed shops, requires an intensive
campaign to be undertaken to educate the public about the evil effects of
drinking and for steps to be taken to initiate establishment of de-addiction
centres in each district. The manner in which the revenue needs of the State
should be balanced with the need to educate the public of the evil effects of
drinking are also not for this Court to adjudicate in proceedings under Article
226 of the Constitution of India. This contention urged by the petitioners, who
are carrying on trade in the sale of IMFL and FL in retail shops, is akin
to the devil quoting the scriptures, and does not merit acceptance.
XXIII: CONCLUSION:
Viewed from any angle, I see no reason to exercise discretion, under
Article 226 of the Constitution of India, to interfere. The Writ Petitions fail
and are, accordingly, dismissed. The miscellaneous petitions pending, if any,
shall also stand dismissed. No costs.
_______________________________
RAMESH RANGANATHAN, J
Date: 05.03.2014.
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