Krishna Kumar Narula Vs. The State of
Jammu and Kashmir & Ors  INSC 52 (1 March 1967)
01/03/1967 RAO, K. SUBBA (CJ) RAO, K. SUBBA
(CJ) SHAH, J.C.
CITATION: 1967 AIR 1368 1967 SCR (3) 50
CITATOR INFO :
R 1972 SC1816 (16) RF 1972 SC1863 (13) E 1975
SC 360 (12,17,19,21,22) R 1975 SC1121 (51,52,53,54,67) R 1977 SC 722 (9,17,29)
RF 1978 SC1457 (42) R 1985 SC1676 (2) RF 1990 SC1927 (75)
Constitution of India, 1950, Art.
19(1)(g)-Right to carry on business in liquor-If fundamental right.
The jammu and Kashmir Excise Act, 1958, s.
20-Licence for carrying an business in liquor-Objections by inhabitants of
location of bar--Applicant asked to shift premises as condition for issue of
licence-Validity of order under Art.
19(6) of the Constitution.
The appellant, who was carrying on business
in liquor in his hotel under an annual licence issued by the Excise and
Taxation Commissioner under s. 20 of the Jammu and Kashmir Excise Act, 1958,
had applied for a fresh licence for another year. Meanwhile, the Excise
Department received complaints from the inhabitants of the locality objecting
to the location of the bar in that locality. The complaints were inquired into
and the appellant was informed by the Commissioner that the licence would not
be issued unless he shifted the premises of his hotel to some other approved
locality. A writ petition filed by the appellant for quashing the order was
dismissed by the High Court.
In appeal to this Court.,
HELD : (i) Dealing in liquor is business, and
a citizen has a fundamental right to do that business under Art. 19(1)(g) of
the Constitution. But the State can make a law imposing reasonable restrictions
on the right, in public interests, under Art. 19(6). (57 D-E] Dealing in
noxious and dangerous goods does not cease to be business, though the nature of
the goods may be a ground for imposing a restriction on the activity. [53 F; 54
C] T. B. Ibrahim v. Regional Transport Authority, Tanjore,  S.C.R. 290,
Cooverjee B. Bharucha v. The Excise Commissioner and the Chief Commissioner,
Ajmer,  S.C.R. 873, State of Assam v. A. N. Kidwai, Commissioner of HillsDivision
and Appeals, Shillong,  S.C.R. 295, Nagendra Nath v. Commissioner of
Hills Division and Appeals, Assam,  S.C.R. 1240, explained.
Narain Swadesh Weaving Mills v. The
Commissioner of Excess Profits 'Fax,  1 S.C.R. 952, State of Bombay v. R.
M. D. Chamarbaugwala,  S.C.R. 874 and Ranchhorlalji v. Revenue Divisional
Commissioner, Northern Division, Sambalpur, A.I.R. 1960 Orissa 88, referred to.
Since the instant case was one of issuing a
licence, s. 20 of the Excise Act applies. As the Excise and Taxation
Commissioner had made a bona fide enquiry and came to the conclusion that the
locality was not suitable far carrying on business in liquor, for relevant
reasons, it could not he said that his order was arbitrary or unreasonable. [58
B] (ii) Section 22 of the Act deals with cancellation of a licence and does not
control s. 20. [58 C] K.K.NARULA V. J. & K. STATE (Subba Rao, C.J.) 51
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 65 and 66 of 1967.
Appeals from the judgment and order dated
September 16, 1966 of the Jammu and Kashmir High Court in Writ Petitions Nos. 2
and 4 of 1966.
S. T. Desai, S. K. Dholakia, Vineet Kumar and
Inder Das Grover, for the appellants (in both the appeals).
Raja Jaswant Singh, Advocate-General, Jammu
and Kashmir, R. N. Sachthev for S. P. Nayyar, for the respondents (in both the
The Judgment of the Court was delivered by
Subba Rao, C.J. These two appeals arise out of a common judgment of a Division
Bench of the High Court of Jammu & Kashmir dismissing the two petitions
filed by the appellants for the issuance of a writ quashing the order passed by
the Taxing and Excise Officer, Jammu, refusing to renew their licences for the
year 1966-67 in respect of their liquor shops.
The facts giving rise to these two appeals
may be briefly and separately stated.
Civil Appeal No. 65 of 1967 relates to Glory
Restaurant situated in Moti Bazaar, Jammu. The appellant in the said appeal,
who is the proprietor of the said restaurant, after taking the requisite
licence from the Government, had been carrying on for the last 7 years the
business of retail sale of country and foreign liquor in the said restaurant.
The licence was an annual licence and it was being renewed from year to year.
On December 11, 1965, the Deputy Excise and Taxation Commissioner, Jammu,
issued a notice to the appellant ordering the shifting of the premises of the
said restaurant to some other locality on the ground that the inhabitants of
the locality had complained against the location of the appellant's bar and
restaurant there. As the licence for 1965-66 would expire on March 31, 1966,
the appellant applied for a fresh licence for 1966-67 and deposited the
prescribed licence fee in the Government treasury.
The appellant in Civil Appeal No. 66 of 1967
was carrying on business in liquor in his hotel, named Bliss Hotel and Bar,
situated in Parade Ground, Jammu, under a licence issued by the Government of
the said State. He obtained a licence for the first time in 1964. After
obtaining the licence, it is alleged, he had spent about Rs. 70,000/in
furnishing the Hotel and Bar, but for unavoidable reasons he could not do
business during the financial year 1964-65. For the year 1965-66 he made an
application for the renewal of the licence and on December 11, 1965, he
received a letter from the Deputy Excise and Taxation Commissioner, Jammu,
desiring the appellant to shift the premises of his 52 Hotel and Bar to some
other suitable place after getting it approved by the Department on the ground
that he had received complaints from the inhabitants of the locality against
the location of the bar there. At the instance of the 2nd respondent, the
Excise and Taxation Commissioner, Jammu, his licence, along with those of other
licensees, was collected by the 3rd respondent. As he was not given a licence
to do business in liquor in the same locality, this appellant also filed a writ
petition in the High Court for a relief similar to that claimed by the
appellant in Civil Appeal No. 65 of 1967.
To both the petitions, the State of Jammu and
Kashmir, through its Chief Secretary, the Excise and Taxation Commissioner.
Jammu & Kashmir, and the Deputy Excise and Taxation Commissioner, Jammu,
were made respondents 1, 2 and 3 respectively.
The respondents opposed the petitions and
pleaded, inter alia, that the localities wherein the petitioners were carrying
on the business were the most congested and frequented parts of the city and
that, as complaints were made against their carrying on the business in the
said localities, the respondents refused to renew their licences to carry on
the said business in the said localities. They also pleaded that under The
Excise Act, 1958, hereinafter called the Act, the issuing of licence was at the
discretion of the Excise Commissioner and he had, having regard to the
complaints received, bona fide, in exercise of his discretion, refused to give
licence to the appellants to carry on business in the said localities.
In the High Court the Writ petitions, along
with others, were decided by a Division Bench consisting of Chief Justice and
Justice Syed Murtaza Fazl Ali. They gave concurrent but separate judgments.
Both the Judges agreed on merits in dismissing the petitions, but expressed
different views on the question whether the petitioners had fundamental right
to do business in liquor. Hence the appeals.
Mr. Desai, learned counsel for the
appellants, contended as follows :-(1) If s. 20 of the Act was construed as
conferring an absolute discretion on the Commissioner of Excise and Taxation to
issue or not to issue a licence to do business in liquor, it would be void on
the ground that it infringed Art. 19 of the Constitution. (2) The licence being
renewable as a matter of course, the Commissioner of Excise and Taxation could
not refuse to renew the same on a ground other than those similar to the
grounds contained in s. 22, cls. (a), (b), (c) and (d) of the Act. (3) In any
case, as the licences were renewable as a matter of course, the appellants were
entitled to notice and an opportunity to explain why the licence should be
renewed. (4) The ground relating to objections as to locality was not in
substance accepted by the High Court.
53 The first point, namely, the
constitutional validity of S. 20 of the Act was not raised in the High Court.
We cannot permit the appellant to raise that question for the first time before
us. But we should not be understood to have expressed our view one way or other
on the said question.
As we have pointed out earlier, the learned
Chief Justice and Ali, J., expressed different views on the question whether
the appellants had a fundamental right to do business in liquor. To avoid
further confusion in the matter it is necessary to make the position clear.
Article 19 of the Constitution qua the right to do business reads thus :
(i) All citizens shall have the right(g) to
practice any profession, or to carry on any occupation, trade or business.
(6) Nothing in sub-clause (g) of the said
clause shall affect the operation of any existing law in so far as it imposes,
or prevent the State from making any law imposing, in the interests of the
general public, reasonable restrictions on the exercise of the right conferred
by the said sub-clause.........
A combined reading of cls. (1) and (6) of
Art. 19 makes it clear that a citizen has a fundamental right to carry on any
trade or business, and the State can make a law imposing reasonable
restrictions on the said right in the interests of the general public. It is
therefore, obvious that unless dealing in liquor is not trade or business, a
citizen has a fundamental right to deal in that commodity. The learned Advocate
General contended that dealing in liquor was not business or trade, as the
dealing in noxious and dangerous goods like liquor was dangerous to the
community and subversive of its morals. The acceptance of this broad argument
involves the position that the meaning of the exparticular point of time in our
country. Such an approach leads general acceptance of the standards of morality
obtaining at a particular point of time in our country.
Such an approach leads to incoherence in thought
and expression. Standards of morality can afford a guidance to impose
restrictions, but cannot limit the scope of the right. So too, a Legislature
can impose restrictions on, or even prohibit the carrying on of a particular
trade or business and the Court, having regard to the circumstances obtaining
at a particular time or place may hold the restrictions or prohibition
reasonable. The question, therefore, is, what is trade or business ? Though the
word "business" is ordinarily more co in prehensive than the word
"trade", one is used as synonymous with the other. It is not
necessary to bring out the finer points of distinction between the said two
concepts in this case. In the words of S.R. Das, J., as he then was, in Narain
Swadeshi Weaving Mills v. The Commissioner of Excess Profits Tax(1), the word
"business" connotes some real, substantial and systematic or
organised course of activity or conduct with a set purpose. Even accepting this
test, if the activity of a dealer, say, in ghee is business, then how does it
cease to be business if it is in liquor ? Liquor can be manufactured, brought
or sold like any other commodity It is consumed throughout the world, though
some countries restrict or prohibit the same on economic or moral ,,rounds. The
morality or otherwise of a deal does not affect the quality of the activity
though it may be a ground for imposing a restriction on the said activity. The
illegality of an activity does not affect the character of the activity but
operates as a restriction on it. If a law prohibits dealing in liquor, the
dealing does not cease to be business, but the said law imposes a restriction
on the said dealing. But it is said that the decisions of this Court have held
that dealing in liquor is not a business or trade within the meaning of Art. 19
of the Constitution. In T. B. Ibrahim v. Regional Transport Authority, Tanjore
(2) it was held that restriction placed upon the use of the busstand for the
purpose of picking up or setting down passengers to or from outward journeys
could not be considered to be an unreasonable restriction on the right to carry
on. any profession, trade or business of the appellant and, therefore, Art. 268
was not in any way repugnant to Art. 19 (1) (g) of the Constitution. In that
context, Chulam Hasan, J., speaking for the Court, observed:
"There is no fundamental right in a
citizen to carry on business wherever he chooses and his right must be subject
to any reasonable restriction imposed by the executive authority in the
interest of public convenience." This Court did not say that there was no
fundamental right to do business but only held that a citizen could not claim
that his fundamental right could not be restricted in public interests. Nor did
the decision in Cooverjee B. Bharucha v. The Excise Commissioner and the Chief
Ajmer(3) lay down any such proposition. There
the question was whether the Excise Regulation 1 of 1915 imposed a reasonable
restriction within the meaning of Art. 19(6) of the Constitution on the right given
under Art. 1 9 (1 ) (g) thereof to carry on the business in intoxicating
This Court. held that the said Regulation was
a reasonable restriction within the meaning of Art. 19(6) of the (1)  1
S.C.R.952,961. (2)  S.C.R. 290, 299.
(3)  S.C.R. 873,880.
55 Constitution. But in the course of tile
C. J., who spoke for the Court, gave an
extract from the judgment of Field, J., in Crowley v. Christensen(1). In that
extract the following passage is found :"The police power of the State is
fully competent to regulate the business to mitigate its evils or to suppress
it entirely. There is no inherent right in a citizen to thus sell intoxicating
liquors by retail; it is not a privilege of a citizen of the State or of a
citizen of the United States. As it is a business attended with danger to the
community, it may, as already said, be entirely prohibited, or be permitted
under such conditions as will limit to the utmost its evil." After citing
the entire passage, this Court concluded thus "These observations have our
entire concurrence and they completely negative the contention raised on behalf
of the petitioner.
The provisions of the regulation purport to
regulate trade in liquor in all its different spheres and are valid." It
will be seen that the said passage from the judgment of Field. J., has nothing
to do with the construction of Art.
19 (1) (g) of the Constitution of India. The
learned Judge was considering the scope of the "police power" and in
that context the said observations were made. This Court applied those
observations in considering the reasonableness of the restrictions imposed on
the fundamental rights. Indeed, a perusal of the entire judgment shows that the
Court conceded the fundamental right but held that the said regulation operated
as a reasonable restriction on the said right. The decision of this Court in
The State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals,
Shillong (2) has no relevance to the present enquiry. The following passage
from the said judgment is relied upon "A perusal of the Act and rules will
make it clear that no person has any absolute right to sell liquor and that the
purpose of the Act and the rules is to control and restrict the consumption of
intoxicating liquors, such control and restriction being obviously necessary
for the preservation of public health and morals, and to raise revenue."
This Court only said that on the provisions of the Act no absolute right to
sell liquor was given to any person and that the said right was controlled by
the provisions of the said Act. These observations have nothing to do with the
question whether a person has a fundamental right to do business in liquor. Nor
can the (2)  S.C.R. 295, 301.
(1) 34 L.E.D. 620, 623.
56 respondents draw any support from the
decision of this Court in Nagendra Nath v. Commissioner of Hills Division and
Appeals, Assam(1). There, the question was in regard to the scope of Arts. 226
and 227 of the Constitution vis-a-vis the orders passed by the appropriate
authorities under the East Bengal and Assam Excise Act, 1910. There
incidentally two decisions of this Court, namely, Cooveriee B. Bharucha v. The
Excise Commissioner and the Chief Commissioner, Ajmer(2) and The State of Assam
v. A. N. Kidwai, Commissioner of Hills Division and Appeals,Shillong (3) were
noticed and it was observed that there was no inherent right to the settlement
of liquor shops. No question of fundamental right under Art. 19(1) arose in
that case. This Court in The State of Bombay v. R. M. D. Chamarbaugwala(4)
upheld the validity of the Bombay Lotteries and Prize Competition Control and
Tax Act, 1948 (Bom. LIV of 1948), as amended by the Bombay Lotteries and Prize
Competition Control and Tax (Amendment) Act (Bombay Act XXX of 1952). One of
the questions raised was whether gambling was business or trade or commerce
within the meaning of Art. 19 (1) (g) of the Constitution or Art. 301 thereof.
Das, C. J., after considering the various decisions, observed thus :
"We find it difficult to accept the
contention that those activities which encourage a spirit of reckless
propensity for making easy gain by lot or chance, which lead to the loss of the
hard earned money of the undiscerning and improvident common man and thereby
lower his standard of living and drive him into a chronic state of indebtedness
and eventually disrupt the peace and happiness of his humble home could
possibly have been intended by our Constitution makers to be raised to the
status of trade, commerce or intercourse and to be made the subject-matter of a
fundamental right guaranteed by Art. 19(1) (g)." This decision only lays
down that gambling is not business or trade. We are not concerned in this case
A division Bench of the Orissa High Court in
Ranchhorlalji v. Revenue Divisional Commissioner, Northern Division,
Sambalpur(5) maintained the validity of the provisions of the Orissa Cinema
(Regulation) Act, 1954, on the ground that it did not infringe the fundamental
right guaranteed under Art. 19 (1) (g), read with Art. 19(6) of the
The learned Judges observed :
"It is only when no policy or principle
has been laid down either in the Preamble or in the other provi(1) 
S.C.R.1240. (2)  S.C.R. 873, (3)  S.C.R. 295. (5) A.I.R. 1960 Orisa
(4)  S.C. R. 874, 925.
57 sions of the statute or statutory rules,
and the impugned provision confers arbitrary or excessive powers on the
authority, that it is liable to be struck down. The nature of the restrictions
imposed will necessarily vary with the nature of the business. Restrictions on
the carrying on of business in respect of 'normally available' commodities
should not be as drastic as those in respect of a business or occupation which
is likely to cause nuisance or danger to the public." This decision also
does not say that there is no fundamental right to do business which is likely
to cause nuisance or danger to the public, but stated that the nature of the
restrictions would depend upon the nature of the trade.
A scrutiny of these decisions does not
support the contention that the courts held that dealing in liquor was not
business or trade. They were only considering the provisions of the various
Acts which conferred a restricted right to do business. None of them held that
a right to do business in liquor was not a fundamental right.
We, therefore, hold that dealing in liquor is
business and a citizen has a right to do business in that commodity; but the
State can make a law imposing reasonable restrictions on the said right, in
The next question is whether s. 20 of the Act
infringes the fundamental right under Art. 19 of the Constitution. This
question, as we have said earlier, was not raised before the High Court. We do
not, therefore, allow the learned counsel to raise this question before us for
the first time. We assume, therefore, without deciding that s. 20 of the Act
does not infringe Art. 19 (1 ) (g) of the Constitution.
Even so it was contended that the order of
the Commissioner of Excise and Taxation was arbitrary and in violation of the
principles of natural justice and, therefore, it operated as an unreasonable
restriction on the appellant's fundamental right to do business.
This argument was sought to be sustained on
the following grounds : _(1) Though under the Act yearly leases were issued, in
practice renewal was a matter of course. (2) On the basis of the issuance of a
licence heavy expenditure had been incurred by the appellants. (3) No
opportunity was given to the appellants to establish that the locality was
suitable for carrying on the said business and that the complaints made against
them were false. And (4) Even the High Court held that in regard to licensees
against whom there were no complaints a further inquiry should M4 Sup.Cl/67-5
58 be held. In support of the contention we were taken through all the
necessary correspondence. The learned Judges on a consideration of the entire
material placed before them, held that the Commissioner of Excise and Taxation
made a bona fide enquiry and found that the locality was not suitable for
carrying on business in liquor in view of thevarious circumstances mentioned in
We do not think we are justified in
interfering with the finding of fact arrived at by the High Court on the
material placed before it. On the said finding it cannot be held that the order
of the Commissioner was arbitrary or unreasonable.
We cannot agree with the learned counsel that
S. 22 controls s. 20 of the Act for the former deals with the cancellation of a
licence and the latter with the issuance of a fresh licence : they deal with
two different subject-matters.
Lastly, the learned counsel for the
appellants contended that the order was mala fide. But this point was not
pressed before the High Court and we cannot allow it to be raised for the first
time before us.
In the result the appeals fall and are
dismissed with costs.