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S.K. Mukherejee Vs. Union of India [1994] INSC 412 (3 August 1994)

Ahmadi, A.M. (J) Ahmadi, A.M. (J) Bharucha S.P. (J)

CITATION: 1994 AIR 2485 1994 SCC (5) 498 JT 1994 (5) 19 1994 SCALE (3)646

ACT:

HEAD NOTE:

The Judgment of the Court was delivered by AHMADI, J.- The Director of Civil Defence, West Bengal, by Order No. 4729-HCD dated 24-7-1965 appointed the petitioner on a temporary basis on the post of Staff Officer-cum- Instructor in the Directorate of Civil Defence, West Bengal in the scale of Rs 175-325 plus usual allowances. The petitioner claims to be a member of the Civil Defence Corps.

On this premise he contends that his case is governed by the Civil Defence Act, 1968 (Act No. 27 of 1968), hereinafter called 'the Act'. The said Act was brought into force with effect from 10-7-1968. It may be advantageous to notice the relevant provisions of the said Act at this stage.

2.The Act was enacted to make provision for civil defence and for matters connected therewith. It extends to the whole of India. The expression "Civil Defence Corps" has been defined to mean the corps formed wholly or mainly to meet the needs of civil defence, including an organisation deemed to be a corps under Section 4(1). That sub-section provides for the constitution of a Civil Defence Corps. It reads as under:

"4. (1) The State Government may constitute, for any area within the State, a body of persons to be called the Civil Defence Corps (hereinafter 500 referred to as the 'Corps') and may appoint a person, not being, in its opinion, below the rank of a District Magistrate (to be known as the 'Controller') to command such Corps:

Provided that if there is in existence in any area in a State, immediately before the commencement of this Act in that area, an organisation which, in the opinion of the State Government, may be entrusted with the functions of the Corps, the State Government may, instead of constituting a separate Corps for such area, call upon that organisation to take over or discharge the functions of the Corps in that area, and thereupon such organisation shall be deemed, for the purposes of this Act, to be the Corps for the area.

(2)The State Government may, for the purpose of coordinating the activities of the Controllers within the State, appoint a Director of Civil Defence and every Controller shall comply with the directions given by such Director." 3.Section 5 empowers the State Government to appoint members and officers of the Corps. Sub-section (2) of Section 5 provides that every person appointed to be a member of the Corps shall be given a certificate of membership. Section 6 provides for the dismissal of a member of Civil Defence Corps while Section 7 provides for an appeal to the State Government against an order made under Section 6. Section 8 enumerates the functions of members of the Corps while Section 9 empowers the Central Government to make regulations. As the petitioner has sought directions in regard to the making of regulations we may reproduce the section for ready reference. It reads thus:

"9. (1) The Central Government may, by notification make regulations for carrying out the purposes of this Chapter.

(2)In particular, and without prejudice to the generality of the foregoing power, such regulations may (a) prescribe the functions of the members of the Corps and regulate the manner in which they may be called out for service;

(b) regulate the organisation, appointment, conditions of service, discipline, accoutrement and clothing of members of any or all of the Corps;

(c) prescribe the form of certificates of membership of any or all of the Corps."

4. Lastly Section 20 provides that every rule made under Section 3 and every regulation made under Section 9 by the Central Government shall be laid before each House of Parliament while in session for thirty days. Admittedly the Central Government has made rules in exercise of power conferred by Section 3 called the Civil Defence Rules, 1968.

So also in exercise of power under Section 9 the Central Government made regulations called the Civil Defence Regulations, 1968. Regulation 4 lays down the manner of applying for appointment to the Corps and Regulation 7 501 prescribes the form of certificate to be given on appointment. Regulation 8 sets out the conditions of service as under:

"8. Conditions of Service.- (1) The members of the Corps shall ordinarily serve in a voluntary and honorary capacity:

Provided that the State Government may, by order, authorise payment of duty allowance (at such scales as may be prescribed by it from time to time in consultation with the Central Government) to a member of the Corps when called on duty.

(2) Notwithstanding anything contained in clause (1), the Central Government may declare any appointment or class of appointments as paid appointments. A person appointed on the basis of payment shall be entitled to such conditions of service as regards pay, leave and other benefits as the State Government may , by order, prescribe." Regulation 13 provides for maintenance of service records whereas Regulation 14 provides for resignation from the Corps. These, in brief, are the relevant legal provisions.

It will thus be seen that the rules and regulations can be made by the Central Government only.

5. We may now briefly state the petitioner's case. The Civil Defence Organisation was set up in India in 1965 under the Defence of India Act and was later converted into a Civil Defence Corps under the Civil Defence Act, 1968.

Accordingly the Civil Defence Organisation of West Bengal was converted into a Civil Defence Corps by notification dated 10-7-1968 and thereupon the petitioner became a member of the said Corps. He also claims to be the Secretary- General of the Civil Defence Officers' Guild, India, a society registered under the West Bengal Societies Registration Act, 1961. The petitioner points out that the Central Government in compliance with the Calcutta High Court's Order in Civil Rule No. 6221 (W) of 1983 took over complete control of the Mobile Civil Emergency Force (MCEF) with effect from 1-4-1992 under office order dated 26-2-1992 whereby existing employees of MCEF, Calcutta became holders of civil posts under the Government of India and delivered all the benefits admissible to such employees. Since the petitioner and others did not receive the same benefit as they were not covered under the said order there was hostile discrimination between two groups of the same organisation in total violation of the equality clause in Article 14 of the Constitution. According to the petitioner since the Civil Defence Act, 1968, is a Central Act and extends to the whole of India including West Bengal, it is incumbent on the Central Government to regulate the recruitment and conditions of service of persons appointed in the Civil Defence organisation all over the country by making appropriate provisions in the rules or regulations so that every employee is governed by a uniform set of service conditions. Since the State Governments are laying down service conditions dehors the rules and regulations under the Act there is total lack of uniformity which has resulted in the petitioner being discriminated in matters of pay, promotion, transfer, etc. Being aware that it has no power to frame regulations, the State of West 502 Bengal resorted to obtaining undertakings from employees who desired to avail of the benefit of its regulations and those who were not prepared to furnish such undertakings were denied the benefits which introduced two sets of service conditions for employees working in the same organisation.

It is said that members of the guild like the petitioner are being victimised for their refusal to sign the undertaking.

Thus the situation is that employees governed by State regulations on the strength of undertakings stand on a different footing from those who have refused to give such undertakings and both these classes taken together stand on a different footing from MCEF employees within the organisation governed by Central Government regulations.

This, contends the petitioner, is clearly violative of Articles 14, 16 and 21 of the Constitution. The petitioner, therefore, seeks in the main the following two reliefs:

"(A) Issue an appropriate writ upon Respondent 1 to frame service rules governing service condition of members of Civil Defence Corps under the Civil Defence Act and take over administrative, financial and operational control of Civil Defence from State Government.

(B) Issue of an appropriate writ prohibiting the respondents from subjecting the petitioner and members of the guild to any rules and regulations outside the provisions of Section 9(2)(b) of Civil Defence Act."

6.In the counter-affidavit filed on behalf of the Union of India it is averred that under the regulations made under Section 9(2)(b), a member of the Civil Defence Corps has to apply in Forms A and B for enrolment and on being enrolled he would receive a certificate in Form C and a service record would be maintained in Form D. The petitioner should have produced some such documentary evidence to prove his say that he was a member of the Corps. On the contrary the petitioner is a full-time paid employee of the State Government appointed under notification dated 28-2-1973.

Thus he is an employee of the State Government governed by the State service conditions. Therefore, the petitioner cannot claim to be governed by rules and regulations made by the Central Government. While conceding that the State Government cannot make rules and regulations under the Act, it is alleged that he would be governed by executive directions of the State Government issued in this behalf.

Therefore, he cannot secure the reliefs sought.

7.The State of West Bengal also denies the petitioner's claim that he is a member of the Civil Defence Corps. On the contrary it contends that the petitioner is in State service covered by the rules of the State Government. He cannot, therefore, invoke Section 20 of the Act. It is lastly said that the petitioner can base no case on the administrative set up of MCEF nor can he complain of discrimination on that basis. The petitioner's petition is, therefore, liable to be dismissed.

8.In his rejoinder to the aforesaid counters the petitioner has reiterated his stand and contended that the factum of his suspension on the allegation 503 that he made baseless allegations in his letter of 7-5-1991 in his capacity as the office-bearer of the guild and the failure of the Government to enquire into the matter has been deliberately suppressed. It is also not stated that in the writ petition filed by the petitioner questioning the suspension, the State Government had made a statement that the action was in exercise of the employer's general power to refuse to take work and had, therefore, agreed to pay full wages during suspension. Therefore, contends the petitioner, it is evident from the counters that the only point surviving for adjudication is whether he is entitled to the benefits under the Act as a full-time salaried officer.

9.From the abridged facts it is evident that rules and regulations can be framed by the Central Government alone under the provisions of the Act. Such regulations under Section 9(2)(b) can inter alia relate to conditions of service. But there is no dispute that the Act could be brought into force by different States from different dates, so however, that such date shall not be earlier to the date on which the Defence of India Act, 1962 would expire. Even according to the petitioner the Act was brought into effect from 10-7-1968. However, the Order No. 4729-HCD dated 24-7- 1965 appointing the petitioner to the temporary post of Staff Officer-cum-Instructor in the Directorate of Civil Defence, West Bengal, being earlier to 10-7-1968, there can be no doubt that the petitioner's appointment was dehors the Act. Section 4(1) provides for the constitution of the Civil Defence Corps by the State concerned but the proviso to that sub-section says that if in any State there is in existence an organisation which can be entrusted the functions of the Corps, the State Government may instead of constituting a separate Corps, call upon the said organisation to take over and discharge the functions of the Corps whereupon such organisation shall be deemed to be the Corps for the area. Section 4(2) empowers the State Government to appoint a Director of Civil Defence to coordinate the activities of the Controllers within the State. Under Section 5(1) it is the State Government which is empowered to appoint members of the Corps. Thus the constitution of the Civil Defence Corps, the appointment of the Controller and the appointments of members/officers of the Corps is with the State Government. Section 17 provides for the delegation of the powers of the State Government/Controller to an officer of the State Government of the rank specified in the said provision. Even so, it is indeed true that the rules and regulations have to be made by the Central Government in view of the clear language of Sections 3 and 9 of the Act. The regulations may inter alia regulate the conditions of service of members of any or all the Corps. Regulation 8 of the Civil Defence Regulations, 1968, extracted earlier, bear on the service conditions of the members of the Corps. On a plain reading of this regulation it becomes immediately obvious that members of the Corps are expected to render service in a voluntary and honorary capacity but if the State Government so desires it may authorise payment of duty allowance in consultation with the Central Government to a member of the Corps called on duty. Clause (2) which begins with a non obstante clause empowers the 504 Central Government to declare any appointment or class of appointments as paid appointments whereupon the incumbent shall be entitled to the conditions of service as regards pay, leave, etc., as the State Government may by order, prescribe. Here again the power of prescribing the service conditions as to pay, leave, etc., rests with the State Government and not the Central Government. Therefore, the petitioner's contention that the service conditions as to pay, leave, etc., cannot be stipulated by the State Government is clearly misconceived. That function has clearly been entrusted to the State Government on a plain reading of Regulation 8 extracted hereinabove. If that be so, and we think it is so, no writ can issue (assuming there is jurisdiction to issue such a writ) to the Central Government as prayed in prayer (A) nor can a prohibitory order of the type prayed in prayer (B) issue to the State of West Bengal. We are afraid the petitioner has been labouring under a misconception that it is only the Central Government and not the State Government which can prescribe the salary, allowances, leave, etc., in view of Section 9(2), but in so thinking he has totally overlooked Regulation 8. We say so because in his petition, affidavits as well as written submissions, no emphasis is laid on Regulation 8. The Central Government's action in complying with court's orders in relation to MCEF can never offer a ground for contending that there has been discrimination and a violation of the equality clause in Article 14 of the Constitution.

10.For the above reasons we are convinced that the present petition is wholly misconceived and the petitioner cannot be granted either or both of the reliefs claimed by him. His petition, therefore, fails and is dismissed. Having regard to the fact that the petitioner is in dire circumstances since he is under suspension, we order to bear their own costs. Rule discharged. No order on IA.

505

SWAROOP N. SRIVASTAVA v. IVTH ADDL.DISTT.JUDGE (Venkattachala. J.) The Judgment of the Court was delivered by VENKATACHALA, J.- Special leave sought for in this petition is granted and we have heard learned counsel for the parties on the merits of the appeal.

2.For a residential building fallen vacant under sub- sections (3) and (4) of Section 12 of the U.P. Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972 ('the Act') if under sub-section (1) of Section 16 of the Act, an application is received from the landlord of that vacant building for its release in his favour and another application is received from the former tenant of that building for its reallotment in his favour, which of those two applications require priority in the matter of their disposal by the District Magistrate concerned, is the question arising for our consideration in this appeal.

3. As it would be advantageous to refer to the facts which have given rise to the said question, brief mention of those facts could be made before its consideration.

4.Shri Swaroop Narain Srivastava, the appellant in this appeal, is the landlord of House No. 395/3 1, Raj Bhawan, Kashmiri Mohalla, Lucknow 'the disputed house'. By an allotment order made under the Act, that disputed house had been allotted in favour of one Sita Ram Shakya and he became its tenant.

506

5.Since Sita Ram Shakya, the tenant of the disputed house, died on 18-5-1973, Respondent 2, the wife of the deceased, Respondents 3 and 4, the sons of the deceased and Dr R.R.P. Singh, another son of the deceased, became the joint tenants of the disputed house as the heirs of the deceased living with him. However, when one of the said tenants of the disputed house Dr R.R.P. Singh, by an allotment order made under the Act in his favour on 30-3- 1975, got allotted another house in the same locality, a question arose whether the disputed house had fallen vacant by operation of sub-sections (3) and (4) of Section 12 of the Act. That question ultimately came up for consideration before a Full Bench of the Allahabad High Court on a reference made to it in a writ petition before that High Court. It was held by its order dated 12-3-1981 that the disputed house had fallen vacant under sub-sections (3) and (4) of Section 12 of the Act, when one of the joint tenants of the disputed house was allotted a separate residential house in the same locality under the provisions of the Act.

Subsequently, the writ petition which had been filed in the High Court disputing the decision of the revisional authority that the disputed house had fallen vacant, was dismissed by an order made by the High Court on 23-4-1981.

As a result of the dismissal of the said writ petition, an application which had been made by the appellant under Section 16(1)(b) of the Act for release of the disputed house in his favour and an application which had been made under Section 16(1)(a) of the Act by Respondents 2 to 4 for reallotment of the disputed house in their favour came up for consideration before the Additional District Magistrate (City) Lucknow in Case No. 62/193 of 1982. That Additional District Magistrate considered the said application made by the appellant for release of the disputed house in preference to the other application made by Respondents 2 to 4 for reallotment of the disputed house in their favour and granted the application made by the appellant for release of the disputed house in his favour, as in his view, when there was an application for release of the vacant building made by the landlord and when there was an application made by the former tenants for reallotment of the vacant building, the consideration of the application of the landlord had to be done on a preferential basis. On such consideration of the application for release of the disputed house made by the appellant, the Additional District Magistrate found on the basis of evidence placed before him that the appellant- landlord required the disputed house for his bona fide use and occupation. Consequently, he made a release order in respect of the disputed house in favour of the appellant on 24-8-1982. However, he allowed one month's time to Respondents 2 to 4 to vacate the disputed premises so as to enable the appellant to occupy it. The litigation did not come to an end there. Respondents 2 to 4 questioned the correctness of the order of the Additional District Magistrate by filing a Revision Petition RR. No. 111 of 1982 in the Court of the District Judge, Lucknow. The lvth Additional District Judge, Lucknow, who heard that revision petition allowed it by setting aside the order of Additional District Magistrate, Lucknow dated 24-8-1982 and remitting the case to Additional District Magistrate (City), Lucknow with a 507 direction to him to decide the reallotment application made by Respondents 2 to 4 in preference to the application made by the appellant for release of the disputed house in his favour. When the appellant filed a writ petition WP No. 6189 of 1982 against the said order of the court of the Ivth Additional District Judge in the High Court of Judicature at Allahabad, that High Court dismissed the writ petition upholding the impugned order of the Ivth Additional District Judge, Lucknow. The said orders of the Ivth Additional District Judge, Lucknow and of the High Court are appealed against by the appellant in the present appeal by special leave.

6.The disputed house, a residential building, of which the appellant was the landlord, had fallen vacant under sub- sections (3) and (4) of Section 12 of the Act, as is held by the Full Bench of the Allahabad High Court in its judgment dated 12-3-1981. This aspect of the case was not disputed before us. Therefore, the only question which requires our consideration in this appeal is whether the application for release of the vacant disputed house was rightly decided by the Additional District Magistrate in preference to the application for reallotment of that vacant disputed house made by Respondents 2 to 4, or whether the application for reallotment of the vacant disputed house made by Respondents 2 to 4 alone required to be considered on preferential basis as is held by the district court in a revision petition before it and the High Court in the writ petition before it.

The district court and the High Court as seen from their judgments have taken the view that the application for reallotment made by Respondents 2 to 4 required prior consideration and disposal as against the application for release made by the appellant because proviso (b) of sub- rule (6) of Rule 20 when enabled Respondents 2 to 4 to seek reallotment of the disputed house which had fallen vacant according to sub-section (3) of Section 12 of the Act, that application for reallotment of the disputed house made by Respondents 2 to 4 required to be considered on a preferential basis. According to them, such preferential consideration of reallotment application made by Respondents 2 to 4 would be necessary to obviate the hardship which they may have to suffer in the event of the vacant disputed house, is not allotted in their favour. In our view, the district court as well as the High Court had fallen into a grave error in thinking that the hardship to which the former tenants could be put could be obviated in the event the building which had become vacant on account of its falling vacant under sub-sections (3) and (4) of Section 12 of the Act is allotted to them, when such view cannot receive support either from the provisions of the Act or from the provisions of the U.P. Urban Buildings (Letting, Rent and Eviction) Rules, 1972 ('the Rules'. All that has happened is when sub-rule (6) of Rule 10 of the Rules prohibited the making of the application by certain persons, proviso (2) thereto enables persons like Respondents 2 to 4 who must be deemed to have vacated the residential building to make an application for reallotment of such building. If that be so, permissibility to make an application for reallotment by 7 Respondents 2 to 4, cannot entitle them for prior consideration and disposal of their application for reallotment by the District Magistrate in preference to 508 the application for release made by the landlord, the appellant or any other applications of the persons who are given preferential claim for allotment of a vacant building under the provisions of the Act and the Rules. Sub-section (1) of Section 16 of the Act which permits the filing of applications before the District Magistrate by the landlord for release of the building fallen vacant and by others for reallotment of such building insofar as is material reads:

"16. Allotment and release of vacant building.- (i) Subject to the provisions of the Act, the District Magistrate may by order (a) require the landlord to let any building which is or has fallen vacant or is about to fall vacant, or a part of such building but not appurtenant land alone, to any person specified in the order (to be called an allotment order); or (b) release the whole or any part of such building, or any land appurtenant thereto, in favour of the landlord (to be called a release order):

Provided that in the case of vacancy referred to in sub-section (4) of Section 12, the District Magistrate shall give an opportunity to the landlord or the tenant, as the case may be, of showing that the said section is not attracted to his case before making an order under clause (a)-" Requirement of the proviso is admittedly fulfilled because of the holding of the Full Bench of the High Court that the disputed house had fallen vacant.

7.When Rule 10 of the Rules which provides for allotment procedure is seen, nowhere it is provided that an application for allotment of a vacant building should be considered in preference to the application made for release of the vacant building by the landlord. On the other hand, Rule 13 which provides the procedure for consideration of the application made for release of a vacant building by the landlord, by its sub-rule (4) requires that landlord's application for release under the rules shall, as far as possible, be decided within one month from the date of its presentation and no allotment in respect of a building covered by an application in that rule shall be made unless such application has been rejected. Thus, when sub-rule (4) of Rule 13 expressly states that unless an application made by the landlord for release of a vacant building is rejected, no allotment of the vacant building covered by that application could be made, it in terms requires consideration of the application for release of vacant building at the first instance in preference to other application for allotment. Therefore, it must be held that the rule requires the consideration of the application for release made by the landlord in respect of the vacant building and decision thereon in preference to consideration of any other application for allotment or reallotment made in respect of that vacant building. If that be our answer to the question under consideration the orders of the district court and the High Court appealed against in this appeal become unsustainable and require to be interfered with.

509

8. In the result, we allow this appeal, set aside the order dated 15-12-1982 of the Court of Additional District Judge made in Rent Revision No. 111 of 1982 and order dated 28-4- 1983 of the High Court made in WP No. 6189 of 1982 and restore the order dated 24-8-1982 of the Additional District Magistrate (City), Lucknow made in Case No. 62/193 of 1982 with the modification that Respondents 2 to 4 or any person claiming through them who may be in possession of the disputed house shall put the appellant in possession of the same forthwith. However, in the facts and circumstances of this civil appeal Respondents 2 to 4 shall pay to the appellant-landlord costs of this appeal which we quantify at Rs 20,000.

513

MADRAS CITY WINE MERCHANTS ASSN. V. STATE OF T. N.(Mohan, J.) The Judgment of the Court was delivered by MOHAN, J.- Leave granted.

2. The first appellant in CA No. 4981 of 1994 arising out of SLP (C) No. 9854 of 1993 is an Association registered under the Societies Registration Act. The members of the Association have been granted licences to carry on business in the retail vending of Indian-made foreign spirits (hereinafter referred to as 'I.M.F.S.').

3. The second appellant is a licensee of I.M.F.S. Shop No. 336 at No. 7, Thyagaraja Road, Madras-17 for the year 1992- 93.

4. The respondent, the Government of Tamil Nadu framed the Tamil Nadu Liquor (Licence and Permit) Rules, 1981. Under these Rules, Indianmade foreign spirit and foreign liquor was to be sold only by persons who are granted licence for personal consumption. In the year 1989, the Government of Tamil Nadu decided to grant the privilege of selling by retail of I.M.F.S. and beer through auction/tender system.

Accordingly, the Government framed Tamil Nadu Liquor (Retail Vending) Rules, 1989 by GOMs No. 506 Home (Prohibition) dated 15-4-1989. In the auction, the successful bidder was granted the licence to carry on the business of vending I.M.F.S. in retail in their respective shops. The licence was valid for a period of one year. Under the said rules, it was provided for a renewal of the licence for two successive years on the licensee offering to pay 15% and 10% respectively more than the privilege amount at which the sale was confirmed in his favour during the previous years.

Rule 13 contained all these clauses. Under Rule 14(3), a provision was made that it was open to the licensing authority to refuse the renewal by an order recording the reasons for refusal. However, before such refusal, the licensing authority was obligated to give a reasonable opportunity to the licensee of being heard.

5. The successful bidders obtained licences for the year 1989-90 and carried on the business. Most of them obtained renewal for the subsequent excise year 1991-92.

514 6.The Government issued orders in GOMs No. 90 Prohibition dated 21-4-1992 to the effect that fresh auction may be conducted for all the liquor retail vending shops whose licence period expires on or before 31-5-1992 as well as those whose licence period expires on or after 31-5-1992 by restricting the period of licence to 31-5-1992 and refunding the proportionate portion of the privilege amount. This course was adopted in order to facilitate the Government to evolve fresh scheme of upset price for auctioning of the liquor retail vending shops in the State.

7.The notification also provided that the licence to be issued for the year 1992-93 shall be renewed for the second and third years after collecting increased privilege fees.

The prescription relating to increased fees was provided under Rule 14(1) and (2) of the 1989 Rules made under the Tamil Nadu Prohibition Act, 1937. An ordinance was passed terminating the validity of licences which enured beyond 31- 5-1992 with the expiry of the said period. Subsequently, Tamil Nadu Act 42 of 1992 came into force with effect from 12-5-1992. By this Act Section 23(b) of the Tamil Nadu Prohibition Act, 1937 was substituted. In accordance with GOMs No. 90 Prohibition dated 21-4-1992, auctions came to be conducted. The successful bidders were issued the licences.

At that stage, the Government received representations from these dealers for the establishment of a bar within or adjoining licence premises. The Government forwarded these representations to the Commissioner of Prohibition and Excise and obtained necessary recommendations. Thereafter, the Government framed rules by GOMs No. 99, Prohibition, dated 26-5-1992 known as Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992. Those rules permitted to open a bar within or adjoining licence premises. These rules came into force on 1-6-1992. Rule 3 provides for grant of privilege by issue of licence to a person holding a licence granted under Rule 13 of the 1989 Rules for retail vending of liquor in the bar. The rules stated retail vending of liquor includes the vending of liquor in open bottles, glasses or pegs for consumption in the bar. Rule 4 required every person holding a licence granted under Rule 13 of 1989 Rules and who intends to obtain the privilege of retail vending of liquor in the bar shall make an application in the prescribed form to the licensing authority for the grant of privilege and issue of licence for retail vending of liquor in the bar. Every licensee of retail I.M.F.S. shop was entitled to apply for and obtain a bar licence on payment of a licence fee and the privilege amount ranging from Rs 18,750 to Rs 75,000 depending upon the area in which the shop was located.

8.The case of the appellant is, in order to obtain the privilege of vending I.M.F.S. in retail for the excise year 1992-93, the members of the first appellant-Association increased their offer. This huge offer was to enable them to have a bar attached and thereby increased the volume of sale of liquor. On obtaining licences under retail vending rules, the members of the appellant-Association spent considerable sums of money for acquiring the adjoining premises to locate the bar in accordance with the Bar Rules.

They 515 were carrying on business in accordance with the rules with the fond hope of making good the investment and also earn a profit during the period to come.

9. It appears that the Government received various complaints. The drinking in the Bars led to law and order problem. Therefore, by impugned GOMs No. 44, Prohibition and Excise dated 3-3-1993, the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 were rescinded with effect from 1-6-1993. The said GO was challenged before the High Court of Madras in WP No. 7776 of 1993. The writ petition was dismissed on the ground that the court could not interfere with the policy decisions taken by the State. Aggrieved by the same, Writ Appeal No. 658 of 1993 was preferred. By the impugned judgment dated 13-6-1993, the writ appeal was dismissed holding that the policy of the Government is one step marching towards the total prohibition. The appellants could not base their case on legitimate expectation, nor was there any violation of Article 14 of the Constitution.

Thus, the present civil appeals.

10. Ramanathapuram District Liquor Retail Sellers' Association has preferred Writ Petition (Civil) No. 648 of 1993 under Article 32 of the Constitution of India, challenging GOMs No. 44 dated 3-3-1993.

11. Mr K. Parasaran, learned Senior Counsel, appearing for the appellants in Civil Appeal No. 4981 of 1994 arising out of SLP (C) No. 9854 of 1993 submits that change of policy must pass muster of Article 14 of the Constitution of India.

When the State Government has permitted the sale of liquor, the change of policy can be tested on the touchstone of Article 14 of the Constitution of India. In Supreme Court Advocates-on-Record Assn. v. Union of India 1 (SCC p. 703), this Court has taken the view that due consideration of every legitimate expectation in the decision-making process is a requirement of the rule of non-arbitrariness. Again, in Kumari Shrilekha Vidyarthi v. State of U.p.2 this Court has taken the view, a change in policy should not be done arbitrarily.

12. In support of this submission, reliance is placed on Halsbury's Laws of England, Vol. 1(1), 4th Edn., para 81 at page 15 1.

13. In this background of law, the facts require to be analysed. By GOMs No. 90, Prohibition and Excise dated 21-4-1992 retail selling of liquor was permitted. Such licence-holders were entitled to renewal as well. On their representations the Bars came to be permitted. Thereafter GOMs No. 99 dated 26-5-1992 came to be passed enabling these licence-holders to open Bars. It is noteworthy that under both the sets of rules a provision is made for renewal. It was in the hope that bar licence will be renewed for the subsequent years as well, each licensee spent huge amounts in opening the Bars. In such a case, the plea of legitimate expectation certainly will come to the rescue of the appellants. No doubt, the State can change its policy but it cannot be done arbitrarily as held in the above cases.

Raising a hope in the 1 (1993) 4 SCC 441, 703 2 (1991) 1 SCC 212, 239-40: 1991 SCC (L&S) 742: 1990 Supp (1) SCR 625, 650 516 retail vendors that they would be allowed to carry on vending in Bars, renewal being a matter of course, suddenly to deny that privilege is arbitrary.

14. A privilege once accrued cannot be taken away. This is a clear implication of Section 8(3) of the Tamil Nadu General Clauses Act. More so, in a case like this where the rules are prospective in nature such a legitimate expectation cannot be denied. Section 4 of the Tamil Nadu General Clauses Act does not, in any way, militate against the operation of Section 8. If retail vending of liquor is permitted there cannot be anything wrong in selling the same liquor in the bar.

15. Lastly, the learned counsel cites R. Vijayakumar v.

Commissioner of Excise3 and submits that even in policy matters Article 14 of the Constitution will apply.

16.Mr R.K. Garg, learned counsel, appearing for the appellants in CA No. 4982 of 1994 arising out of SLP (C) No. 9957 of 1993 submits as follows.

17.The Prohibition Act provides for complete prohibition.

However, the Government has reserved to itself the power to grant exemption in order to augment financial resources.

The Government of Tamil Nadu in the year 1992-93 decided as a policy to provide for bar licence attached to the retail shops in order to augment revenue on auctions of retail shops. This change in policy was notified before the auction for the year 1992-93 stating only retail venders will be eligible for bar licences. Out of the successful retail shop vendors 300 and odd applied and secured bar licence in accordance with the definite condition of auction held in 1992-93 that licence for bar attached to the shop will be granted after application was received and the prescribed fee was paid. The State of Tamil Nadu has, by this integrated new policy, escalated the bid amounts, in addition earned bar licence fees. Thus, it is submitted that the rules relating to retail vending of IMFL and the rules for sale of liquor in Bars attached to the shop formed a single integrated scheme. Such a trade was to go on for a period of 3 years with automatic yearly renewal on terms specified without fresh auction. The Government cannot destroy the integrated character of trade. This arbitrary action has resulted in unjust enrichment on the part of the Government and breach of faith bordering on fraud. No demonstrable basis was disclosed for such an action.

18.The Government illegally and arbitrarily delinked the retail sale from sale in the Bars. Such an integrated policy could not be so changed as to impose unjust back- breaking burden's on the retail vendors. This amounts to destruction of fair play. It is also violative of Article 14 of the Constitution of India.

19.The impugned notification dated 3-3-1993 has to be tested on the following grounds:

1. Whether the Bar Rules could be rescinded arbitrarily? 3 1994 Supp (2) SCC 47 : JT (1993) 6 SC 325 517

2. Whether both the sets of Rules form integrated policy?

3. The State having made the retail vending licensees part with huge amount in the hope they could have Bars if not bound to honour its commitment.

A change in policy affects not merely legitimate expectations but also the credibility of State to act fairly and reasonably.

20. The impugned notification is also arbitrary because no examination was undertaken warranting change of policy. No committee was appointed. No report was received before the impugned notification was issued. The State has proceeded on unfounded apprehensions relating to law and order.

21. It is violative of Article 14 of the Constitution because:

(i) It is destructive of the principles of natural justice;

(ii) it is not based on relevant considerations and fair determination of changed circumstances justifying prejudice and injury to the lawful interest of the retail vendors;

(iii) no damage to public policy is established requiring all Bars had to be closed.

In support of the above submissions Mr R.K. Garg, learned counsel, cites State of M.P. v. Nandlal Jaiswal4. On the strength of this ruling it is submitted that an integrated policy cannot be broken.

22. On the question of legitimate expectation reliance is placed on Council of Civil Service Unions v. Minister for the Civil Service5.

23. Mr G.L. Sanghi, learned counsel, appearing for the State of Tamil Nadu traces the history relating to prohibition in Tamil Nadu. On 16-7-1991, the present Government, as a first step towards implementation of total prohibition policy in the State, brought complete prohibition in relation to manufacturing and trading of country liquor.

This was done because the State took note of the serious social evil uprooting the family life of very many poor people in the State. Thereafter GOMs 90 dated 21-4-1992 was passed enabling auction of liquor retail vending shops. At that point of time retail vending shops were not allowed to have bar attached to the licence shops. They were to sell the liquor only in bottles. In the earlier year the total number of retail vending shops was 3049 whereas in the year 1992-93 the number of shops increased to 4216. There was also an increase in the revenue from 32 crores to 98 crores.

This increase was due to the commercial expectation of the bidders and the heavy competition among them.

24.The Government also thought it fit that such shop owners who have licence might be allowed to have Bars attached to the shops. It was in this view the bar licence was granted to those persons who held the licence for shops under Tamil Nadu (Liquor Retail Vending) Rules, 1989. The 4 (1986) 4 SCC 566 5 (1984) 3 All ER 935 : 1985 AC 374: (1984) 3 WLR 1174, HL 518 Government received various representations that such running of Bars attached to retail vending shops had become nuisance to the public particularly to the womenfolk.

Therefore, the Governor of Tamil Nadu in his speech made in the Legislative Assembly on 4-2-1993 announced the policy decision of the Government to abolish Bars. It was under these circumstances, GOMs No. 44 dated 3-3-1993 came to be passed discontinuing both the grant and the renewal of bar licences. This GO was unsuccessfully challenged before the High Court. It is submitted that only under the authority of rules the vendor was empowered to sell liquor. There are two different sets of rules one of the year 1988 dealing with the retail vending of IMFS; 1992 Rules dealing with bar licences. There is no question of these two different sets of rules becoming an integrated scheme. That being so, the principle of Nandlal case4 cannot apply. In the case of a statutory rule, no question of arbitrariness would arise.

It is always open to a State to change its policy. If the contention of the appellants is accepted it would amount to fettering the State from repealing a law. This Court in Ghaziabad Development Authority v. Delhi Auto & General Finance Pvt. Ltd.6 has clearly pointed out the inapplicability of the doctrine of legitimate expectation.

The same is the position here.

25.As regards the principle that the Government cannot claim any immunity from the doctrine of promissory estoppel and there is no obligation to act fairly and justly, reliance is placed on Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay7.

26.The next submission of the learned counsel is, legislative action whether plenary or subordinate is not subject to natural justice. It has been so laid down in Union of India v. Cynamide India Ltd.8 To the same effect is Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India9. The principle that subordinate legislation cannot be questioned on the ground of violation of the principle of natural justice, has been reiterated. In the case of liquor vending licences one can expect to have renewal on payment of 15 per cent or 10 per cent, as the case may be. But in a bar licence there is no possibility of renewal of the privilege because Rule 6(1)(c) states: "A privilege amount as may be fixed by the Government in this behalf." If, therefore, it is a privilege no question of right to renewal arises. Lastly, it is submitted that no representation was made. Therefore, the question of promissory estoppel cannot arise.

27.Mr V.R. Reddy, learned Additional Solicitor General, submits that there is no scope in this case for contending that the principle of legitimate expectation would arise.

Union of India v. Hindustan Development Corpn. 10 is an authority for the proposition that this principle applies only to 6 (1994) 4 SCC 42: JT (1994) 3 SC 275 7 (1991) 1 SCC 761 8 (1987) 2 SCC 720: AIR 1987 SC 1802 9 (1985) 1 SCC 641, 691: 1985 SCC (Tax) 121 : (1985) 2 SCR 287, 347 10 (1993) 3 SCC 499: JT (1993) 3 SC 15, 50-51 519 administrative decisions. When the State completely prohibited the manufacture and sale of country liquor it brought a windfall to those selling IMFS. This accounts for the increase in the excise revenue.

28.Supporting the argument of Mr G.L. Sanghi that the principle of natural justice is not applicable to legislative acts H.S.S.K. Niyami v. Union of India11 is cited.

29.With regard to the applicability of Section 8 of the Tamil Nadu General Clauses Act it is submitted that the repeal shall not affect the previous operation of the repealed law, has no application to the present case. The citation in this behalf is Indira Sohanlal v. Custodian of Evacuee Property, Delhi12.

30. Before we go into the questions of law arising in this case, we will brieflytrace the legislative history leading to the impugned order.

31. Thanks to the courage and wisdom of Mr C. Rajagopalachari (Rajaji), prohibition came to be introduced in his own native district of Salem in the year 1937 by enacting Madras (later Tamil Nadu) Prohibition Act of 1937.

By stages it was extended throughout the State in 1948. So much so the Gandhian ideal of the abolition of evil of drinking was realised. To recall the Father of the Nation Mahatma Gandhi:

"Nothing but ruin stares a nation in the face that is prey to the drink habit." In this Act two important sections for our purposes are Sections 54 and 55. They are quoted in full:

"54. Power to make rules.- (1) The State Government may make rules for the purpose of carrying into effect the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing provision, the State Government may make rules- (a) for the issue of licences and permits and the enforcement of the conditions thereof;

(aa)*prescribing the penalty for wastage or shortage of spirits in excess of the prescribed limits at such rate not exceeding twice the normal rate of excise duty or fee that would be payable on the quantity of the spirits lost in excess of the prescribed limits;

(b) prescribing the powers to be exercised and the duties to be performed by paid and honorary Prohibition Officers in furtherance of the objects of the Act;

(bb) ** prescribing the ways in which the duty under Section 18-A may be levied;

11 (1990) 4 SCC 516: AIR 1990 SC 2128 12 (1955) 2 SCR 11 17 : AIR 1956 SC 77 * Clause (aa) inserted by Act 68 of 1986 ** Clause (bb) inserted by Act 19 of 1948 520

(c) determining the local jurisdiction of Police and Prohibition Officers in regard to inquiries and the exercise of preventive and investigating powers;

(d) authorizing any officer or person to exercise any power or perform any duty under this Act;

(e) prescribing the powers and duties of prohibition committees and the members thereof and the intervals at which the members of such committees shall make their reports;

(f) regulating the delegation by the Commissioner or by Collectors or other district officers of any powers conferred on them by or under this Act;

(g) regulating the cultivation of the hemp plant, the collection of those portions of such plant from which intoxicating drugs can be manufactured and the manufacture of such drugs therefrom;

(h) declaring how denatured spirit shall be manufactured;

(i) declaring in what cases or classes of cases and to what authorities appeals shall lie from orders, whether original or appellate, passed under this Act or under an y rule made thereunder, or by what authorities such orders may be revised, and prescribing the time and manner of presenting appeals, and the procedure for dealing therewith;

(j) for the grant of batta to witnesses, and of compensation for loss of time to persons released under sub-section (3) of Section 38 on the ground that they have been improperly arrested, and to persons charged before a Magistrate with offences under this Act and acquitted;

(k) regulating the power of Police and Prohibition Officers to summon witnesses from a distance under Section 42;

(1) for the disposal of articles confiscated and of the proceeds thereof;

(m)+ for the prevention of the use of medicinal or toilet preparations for any purpose other than medicinal or toilet purposes and for the regulation of the use of any liquor or drug exempted from all or any of the provisions of this Act;

(n)+ for the proper collection of duty on all kinds of liquor or drugs;

(nn)+ for exemption from, or suspension of the operation of any rule made under this Act;

(o)+ for all matters expressly required or allowed by this Act to be prescribed.

+ Clauses (m), (n), (o) inserted by Act 8 of 1958 and clause (nn) added by Act 1 of 1975 with effect from 1-9-1974 521 (2-A)++ A rule or notification under this Act may be made or issued so as to have retrospective effect on and from a date not earlier than,- (i) the 1st of September, 1973, insofar as it relates to toddy; and (ii) the 1st of September, 1974, insofar as it relates to any liquor other than toddy.

(iii)+++ the 1st of May, 1981, insofar as it relates to the matters dealt with in Sections 17-B, 17-C, 17-D, 17-E, 18-B and 18-C :

*Provided that a notification issued under sub-section (1) of Section 16 may have retrospective effect from a date not earlier than 1st November, 1972:

*Provided further that the retrospective operation of any rule made or notification issued under this Act shall not render any person guilty of any offence in regard to the contravention of such rule or the breach of any of the conditions subject to which the exemption is notified in such notification when such contravention or breach occurred before the date on which the rule or notification is published, as the case may be.

(3)** All rules made under this Act shall, as soon as possible after they are made, be placed on the table of the Legislative Assembly and shall be subject to such modifications by way of amendments or repeal as the Legislative Assembly may make within fourteen days on which the House actually sits either in the same session or in more than one session.

55. Publication of rules and notifications.- All rules made and notifications issued under this Act shall be published in the Official Gazette and upon such publication, shall have effect as it enacted in this Act." (emphasis supplied)

32. The operation of the Prohibition Act was temporarily suspended in August 1971. However, prohibition was reintroduced in August 1972 by abolition of toddy shops and in September 1974 by abolition of arrack shops. Even while the prohibition was enforced the sale of IMFS continued in licensed shops to permit-holders.

33. In May 1981, once again sale of toddy and arrack was permitted. The manufacture of IMFS was also permitted.

Concerning the sale of IMFS the Tamil Nadu Liquor (Licence and Permit) Rules, 1981 were framed. In the year 1989 the Tamil Nadu Liquor (Retail Vending) Rules, 1989 (for short, Retail Vending Rules) were framed by which the 1981 Rules were repealed insofar as they related to the retail vending of IMFS and beer. Rule 3 of these rules states the privilege of selling liquor in licence shops would be available to persons by auction. The privilege amount was determined in that ++ Sub-section (2-A) inserted by Act 1 of 1975 +++ Item (iii) added by Act 51 of 1981 * The provisos inserted by Act 68 of 1986 ** Sub-section (3) added by Act 8 of 1958 522 auction. The State was enabled under Rule 4(1) to fix the maximum number of shops to be established in the State.

34.Prior to the auction, notice of auction in Form No. 1 has to be published in Tamil and English dailies. As per rule any person intending to participate in the auction has to deposit an earnest money of Rs 10,000 in an area falling within the limits of the Municipal Corporation or Municipality; a sum of Rs 7500 in other areas. Rule 8 requires offer by tender in sealed cover as prescribed in Form IV. After the confirmation of sale of privilege the auction-purchaser has to make an application in Form VI for the grant of licence. The licensing authority after verifying various factors, as may be necessary for satisfying itself, as to the suitability of the auction- purchaser, grants a licence within three days of the order of confirmation of sale. The licence so granted shall remain valid for a period of one year ending with 31st May of succeeding year.

35. From the above procedure the following is clear:

1. Even if one happens to be the successful bidder in the auction, it does not automatically entitle him to a licence.

2. The licence once granted is valid for only one year ending with 31st of May of succeeding year.

In this regard Rule 14 of the Retail Vending Rules is relevant which is extracted below:

"Renewal of licence.- (1) If a licensee intends to renew the licence for the second year he shall apply at least 30 days before the date of expiry. of the licence for renewal in Form VIII after remitting- (i) an application fee of Rs 100 (Rupees one hundred only);

(ii)the licence fee of Rs 2500 (Rupees two thousand and five hundred only); and (iii)the privilege amount determined at fifteen per centum more than the privilege amount at which the sale of the privilege was confirmed in the previous year.

(2) If a licensee intends to renew the licence for the third year, he shall apply at least 30 days before the date of expiry of the licence for renewal in Form VII after remitting- (i) an application fee of Rs 100 (Rupees one hundred only);

(ii)the licence fee of Rs 2500 (Rupees two thousand and five hundred only) and (iii) the privilege amount determined at ten per centum more than the privilege amount at which the sale of the privilege was confirmed in the previous year.

Proviso omitted.

(3) If the licensing authority decides not to renew the licence, he may refuse renewal by an order recording the reasons for refusal:

(emphasis supplied) 523 Provided that the licensing authority shall give a reasonable opportunity of being heard to the licensee before such refusal.

(4)If a licence is not renewed, the licence fee remitted by the licensee shall be refunded to him." What is important to be noted here is, under Rule 14(3) of the said Rules the licensing authority is empowered either to renew or not to renew the licence. Therefore, there is -no automatic renewal. These rules were approved on 15-4- 1989 by GOMs No. 506, Home, Prohibition and Excise dated 15- 4-1989.

36. The present Government assumed office in June 1991. On 16-7-1991 complete prohibition of manufacture and trade in country liquor was imposed. Undoubtedly, this was a step in furtherance of Article 47 of the Constitution of India. On 21-4-1992, by GOMs No. 90 the Government ordered the auction of retail vending shops throughout the State. The sale of liquor was to be in bottles. At this stage, no bar was allowed to be attached to the licence shop of retail vending. For the excise year 1992-93 the number of shops increased and the excise revenue also correspondingly increased. As rightly urged by learned Additional Solicitor General this increase was due to the total prohibition of country liquor, namely, toddy and arrack. The retailers made a representation that they could be allowed to have bar attached to the shops. It was in these circumstances, GOMs No. 99, Prohibition and Excise Department dated 26-5-1992 came to be passed. It must be made clear at this stage that these Rules called Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 deal only with the bar regulating the issue of licence and the privilege of retail vending of liquor in the bar. The Rules came into force on 1-6-1992. Under Rule 4(a) it is only a person holding a licence granted under Rule 13 of Retail Vending Rules, 1989 who can make an application for the grant of privilege and issue of licence for retail vending of liquor in the bar.

37. The privilege amount varied from place to place from Rs 18,750 to Rs 75,000.

38. The period of licence was coterminous with the period of licence issued for vending liquor. Rule 6 dealing with renewal of licence is important. Clauses (1), (2) and (4) of Rule 6 are quoted hereunder:

"Renewal of licence.- (1) If the licensee intends to renew the licence for the second term he shall apply not later than thirty days before the date of expiry of the licence issued under Rule 4 in Form III together with the following amount- (a) an application for Rs 100 (Rupees One hundred only);

(b) a licence fee of Rs 500 (Rupees Five hundred only);

(c) a privilege amount as may be fixed by the State Government in this behalf.

(2) If the licensee intends to renew the licence for the third term, he shall apply not later than thirty days before the date of expiry of the licence renewed, in Form III.

524 (4) The licensing authority may refuse the renewal of a licence by an order in writing for reasons to be recorded therein :

Provided that the licensing authority shall give a reasonable opportunity of being heard to the licensee before such refusal."

39. It has to be carefully noticed that under Rule 6(1)(c) the privilege amount may be fixed by the State Government in that behalf. Further there is power to refuse renewal; of course, for valid reasons subject to right of appeal and revision under Rules 16 and 17. On 4-2-1993 the Governor of Tamil Nadu made the following address:

"Prohibition as a key issue of State Policy is a constitutional directive. Honourable Members of the House are aware that the Government, under the leadership of the Chief Minister, Dr J. Jayalalitha, implemented as its first decision the abolition of cheap liquor shops throughout the State, in keeping with its announced policy of prohibition, although this involved an annual loss of revenue of Rs 390 crores. The drive against bootlegging and illicit liquor was intensified with the formation of the Prohibition Enforcement Wing. The Chief Minister's drive against erring officials resulted in a noticeable reduction in the incidence of illicit liquor. A massive multi-media propaganda offensive against the evils of liquor has also been launched. We have decided to give a decisive edge to the offensive against illicit liquor by strengthening further the Prohibition Enforcement Wing at a cost of Rs 7 crores.

With one enforcement unit in each Police Sub- Division, the Enforcement Wing will act effectively against the antisocial elements engaged in the illicit liquor trade. This Government places the highest emphasis on the welfare of the people, revenue considerations yielding place to consideration of maximum social good. Members of the House will wholeheartedly welcome the decision of the Government to withdraw the licences for Bars attached to foreign spirit shops with effect from the excise year commencing from June, 1993." Pursuant to this, the impugned GOMs No. 44, Prohibition and Excise Department came to be passed on 3-3-1993. That reads as under:

"Prohibition and Excise (VI) Department GOMs No. 44 Dated:

3-3-1993 Read:

GOMs No. 99, Prohibition of Excise, dated 26-5-1992 ORDER The Government have decided to discontinue the granting/renewal of licences for bars attached to the Indian-made liquor retail vending shops under the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 with effect from the excise year commencing from the 1-6-1993.

525

2. The following notification will be published in the Tamil Nadu Government GaZette.

Notification In exercise of the powers conferred by Sections 17-C, 17-D, 21 and 54 of the Tamil Nadu Prohibition Act, 1937 (Tamil Nadu Act X of 1937). The Governor of Tamil Nadu hereby rescinds the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992, with effect on and from 1-6-1993.

(By Order of the Governor) K. Malaisamy Secretary to Govt."

40. The effect of the above GO is, on and from 1-6-1993 the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 came to be rescinded. Both the learned Single Judge and the Division Bench of the High Court under the impugned judgment have upheld the validity of GOMs No. 44 dated 3-3-1993. In the light of the above discussion the correctness of the following contentions may be examined:

1.Whether the Tamil Nadu Liquor (Retail Vending) Rules, 1989 (for short Retail Vending Rules) and Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 (for short Bar Rules) form an integral scheme?

2. Whether the appellants can claim the benefit of the doctrine of legitimate exception?

3. Whether under the impugned GO by rescinding of the Bar Rules-

(a) the State has not acted fairly;

(b) violation of Article 14, the action being arbitrary?

4. Whether the appellants could claim the benefit of Section 8 of the Tamil Nadu General Clauses Act? Question No. 1: Whether the Tamil Nadu Liquor (Retail Vending) Rules, 1989 (for short Retail Vending Rules) and Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 (for short Bar Rules) form an integral scheme?

41. In view of what is stated above, it is clear that privilege of retail vending could only be under licence.

Such a licence is obtained after a successful bid. The mere success in the bid does not ensure the privilege. Still, as seen above, even after the confirmation of sale the auction- purchaser will have to apply in Form No. VI to the licensing authority for the grant of licence along with the requisite fee. It is only after the licensing authority is satisfied as to the suitability of the auction procedure for the grant of licence, such a licence is granted. The period of licence is one year. No doubt, Rule 14 provides for renewal on payment of 15 per cent than the privilege amount for the first renewal and 10 per cent more for the second renewal.

Here again, there is no automatic renewal because of the power contained under Rule 14(3) enabling the licensing authority to refuse. Thus, the Liquor Vending Rules completely take care of vending providing for each detail.

526

42.The Bar Rules under Rule 4(a) lay down a qualification that only a person holding a vending licence could seek a bar licence. These rules also talk of renewal of licence under Rule 6. As seen above, such a renewal is not automatic for two reasons:

(1) The privilege amount is to be fixed by the State; and (2) under Rule 6(4) there is a power of refusal.

These are two sets of separate rules. One which deals with retail vending of IMFS the other with the bar. It is incorrect to contend that both these Rules form an integrated scheme. Merely because for obtaining the bar licence, one must be a holder of retail vending licence, they cannot become integrated scheme. Each set of rules take care of different situations. Therefore, we reject the argument of Mr R.K. Garg that they form integrated scheme.

Nandlal case4 has no application since that was a case of an integrated scheme which is not so here.

Question No. 2: Whether the appellants can claim the benefit of the doctrine of legitimate exception?

43. We will briefly deal with the doctrine of legitimate expectation. It is not necessary to refer to large number of cases excepting the following few. On this doctrine Clive Lewis in Judicial Remedies in Public Law at page 97 states thus:

"Decisions affecting legitimate expectations.- In the public law field, individuals may not have strictly enforceable rights but they may have legitimate expectations. Suc h expectations may stem either from a promise or a representation made by a public body, or from a previous practice of a public body.

The promise of a hearing before a decision is taken may give rise to a legitimate expectation that a hearing will be given. A past practice of consulting before a decision is taken may give rise to an expectation of consultation before any future decision is taken. A promise to confer, or past practice of conferring a substantive benefit, may give rise to an expectation that the individual will be given a bearing before a decision is taken not to confer the benefit. The actual enjoyment of a benefit may create a legitimate expectation that the benefit will not be removed without the individual being given a hearing. On occasions, individuals seek to enforce the promise or expectation itself, by claiming that the substantive benefit be conferred. Decisions affecting such legitimate expectations are subject to judicial review." 44. In Council of Civil Service Unions v. Minister for the Civil Service 5 it is stated thus: (All ER pp. 943-44).

"But even where a person claiming some benefit or privilege has no legal right to it, as a matter of private law, he may have a legitimate expectation of receiving the benefit or privilege, and, if so, the courts will protect his expectation by judicial review as a matter of public law.

This subject has been fully explained by Lord Diplock in O'Reilly v. 527 Mackman13 and I need not repeat what he has so recently said. Legitimate, or reasonable, expectation may arise either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue. Examples of the former type of expectation are Liverpool Taxi Owners' Assn., Re14 and A-G of Hong Kong v. Ng Yuen Shiul5. (I agree with Lord Diplock's view, expressed in the speech in this appeal, that 'legitimate' is to be preferred to 'reasonable' in this context. I was responsible for using the word 'reasonable' for the reason explained in Ng Yuen Shiu15, but it was intended only to be exegetical of 'legitimate'.) An example of the latter in R. v. Hull Prison Board of Visitors, ex p. St Germainl6, approved by this House in O'Reilly v. Mackman13."

45. In Halsbury's Laws of England, Vol. 1(1), 4th Edn., para 81 at pages 151-52 it is stated thus:

"81. Legitimate expectations.- 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.

(O'Reilly v. Mackman; A-G of Hong Kong v. Ng Yuen Shiu;

Council of Civil Service Unions v. Minister for the Civil Service5. The expectation must plainly be a reasonable one.

A-G of Hong Kong v. Ng Yuen Shiu15. It seems that a person's own conduct may deprive any expectations he may have of the necessary quality of legitimacy. Cinnamond v.

British Airports Authority17.

The expectation may arise either from a representation or promise made by the authority, (R.v. Liverpool Corpn., ex p Liverpool Taxi Fleet Operators' Assn. 14; A-G of Hong Kong v. Ng Yuen Shiul5; Council of Civil Service Unions v. Minister for the Civil Service5; R. v. Home Secretary, ex p Oloniluyi18; R. v. Brent London Borough Council, ex p MacDonaghl9. Although there is an obvious analogy between the doctrines of legitimate expectation and of estoppel, the two are distinct, and detrimental reliance upon the representation is not a necessary ingredient of a legitimate expectation. See R. v. Secretary of State for the Home Department, ex p Khan2O and see para 23 ante.

13 (1982) 3 All ER 1124,1126: (1983) 2 AC 237,274,275 :(1982) 3 WLR 1096, HL

14 (1972) 2 All ER 589 : (1972) 2 QB 299, CA, Sub nom. R. v. Liverpool Corpn., exp. Liverpool Taxi Fleet Operators'Assn.

15 (1983) 2 All ER 346: (1983) 2 AC 629, PC 16 (1979) 1 All ER 701 :1979 QB 425: (1979) 2 WLR 42 17 (1980) 2 All ER 368: (1980) 1 WLR 582, CA 18 (1988) Times, 26 Nov., CA 19 (1989) Times, 22 March 20 (1985) 1 All ER 40, 48, 52 : (1984) 1 WLR 1337, 1347, 1352, CA 528 In relation to Inland Revenue extrastatutory concessions and assurances, see R. v. A-G, ex p ICI plc21 ; R. v. HM Inspector of Taxes, Hull, ex p Brunfield22 and R. v. IRC, ex p MFK Underwriting Agencies Ltd.23; of Preston, Re,24.) including an implied representation, [R. v. Secretary of State for the Home Department, ex p Khan2O (setting out criteria for exercise of discretion in guidance letter given to prospective adoptive parents of children requiring entry clearance led to legitimate expectation that clearance would be granted where those criteria were satisfied).

See also R. v. Powys County Council, ex p Horner25 and R. v. Brent London Borough Council, ex p MacDonaghl9. In R. v. Brent London Borough Council, ex p. Gunning26 the court appears to have relied in part on what were in effect express or implied representations by the Secretary of State (contained in departmental circulars) that there would be consultation, although the dut y to consult was being imposed upon the local authority.] or from consistent past practice.

(O'Reilly v. Mackmanl3; Council of Civil Service Unions v. Minister for the Civil Service5; R. v. Brent London Borough Council, ex p Gunning26; R. v. Secretary of State for the Home Department, ex p Ruddock27.) It is not clear to what extent a legitimate expectation may arise other than by way of a representation or of past practice; neither factor would seem to have been present in R. v. Secretary of State for Transport, ex p Greater London CounCil28. See also note 8 infra. However, procedural duties imposed as a result of looking at all the surrounding circumstances will normally be treated as illustrations of the general duty to act fairly in all the circumstances (see para 84 post) rather than of a legitimate expectation; of R. v. Great Yarmouth Borough Council, ex p Botton Bros. Arcades Ltd.29 and see Westminster City Council, Re3O, per Lord Bridge of Harwich, dissenting on another point.

21 (1986) 60 TC 1 22 (1988) Times, 25 Nov.

23 (1989) Times, 17 July 24 1985 AC 835: (1985) 2 All ER 327, HL 25 (1988) Times, 28 May 26 (1986) 84 LGR 168 27 (1987) 2 All ER 518 : (1987) 1 WLR 1482 28 1986 QB 556: (1985) 3 All ER 300 29 (1988) 56 P & CR 99, 109 30 1986 AC 668, 692-693 : (1986) 2 All ER 278, 288-289, Sub nom. Westminster City Council v. Greater London Council 529 The existence of a legitimate expectation may have a number of different consequences: it may give focus standi to seek leave to apply for judicial review;

(O'Reilly v. Mackmanl3; Council of Civil Service Unions v. Minister for the Civil Service5, per Lord Diplock; Findlay, Re31 .) it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so;

(R. v. Liverpool Corpn., ex p Liverpool Taxi Fleet Operators' Assn. 14; R. v. Secretary of State for the Home Department, ex p Ruddock27 and cf HTV Ltd. v. Price Commission32. But where the expectation arises out of an administrative authority's existing policy, it can only be that the policy for the time being in existence will be fairly applied, and cannot be invoked to prevent a change of policy fairly carried out. Findlay, Re3 1; R. v. Secretary of State for the Environment, ex p Barratt (Guildford) Ltd.33 and see R. v. Secretary of State for the Home Department, ex p Ruddock27.) or it may mean that, if the authority proposes to defeat a person's legitimate expectation, it must afford him an opportunity to make representations on the matter.

(A-G of Hong Kong v. Ng Yuen Shiu15; Council of Civil Service Unions v. Minister for the Civil Service5; R. v. Secretary of State for the Home Department, ex p Khan2O. Sometimes the expectation will itself be of consultation or the opportunity to be heard. R. v.

Liverpool Corpn., ex p Liverpool Taxi Fleet Operators' Assn. 14; A-G of Hong Kong v. Ng Yuen Shiul5; Council of Civil Service Unions v. Minister for the Civil Service5 and see Lloyd v. McMahon34, per Lord Templeman (legitimate expectation is just a manifestation of the duty to act fairly). But the scope of the doctrine goes beyond the right to be heard. R. v. Secretary of State for the Home Department, ex p Ruddock27. See also R. v. Barnet London Borough Council, ex p Pardes House School Ltd. 35 and R. v. Powys County Council, ex p Horney25. There is, however, a legitimate expectation of reappointment to a public body. R. v. North East Thames Regional Health Authority, ex p De Groot36.) The courts also distinguish, for example in licensing cases, between original applications, applications to renew and revocations: a party who has been granted a licence may have a legitimate expectation that it will 31 1985 AC 318: (1984) 3 All ER 801, 830, HL, sub nom.

Findlay v. Secretary of State for Home Department 32 1976 ICR 170, CA 33 (1989) Times, 3 Apr.

34 1987 AC 625, 715 :(1987) 1 All ER 11 18, 1170-1171, HL 35 (1989) Independent, 4 May 36 (1988) Times, 16 Apr.

530 be renewed unless there is some good reason not to do so, and may therefore be entitled to greater procedural protection than a mere applicant for a grant.

(McInnes v. Onslow Fane37; Schmidt v. Secretary of State for Home Affairs38 (legitimate expectation of foreign alien that residence permit will not be revoked before expiry, but not of renewal); Breen v. Amalgamated Engineering Union39 (legitimate expectation that winner of trade union election would be confirmed in his post by relevant committee); R. v. Barnsley Metropolitan Borough Council, ex p Hook4O.

Where there has previously been no general system of control, an existing trader does not have a legitimate expectation of being granted a licence when such a system is introduced: R. v. Bristol City Council, ex p Pearce41 .)

46. Three cases of this Court may now be seen. In State of H.P. v. Kailash Chand Mahajan42 in a judgment to which one of us was a party it was stated thus: (SCC pp. 386-88, paras 86-87) "It might be urged by the tenure of appointment there is a right to continue; the legitimate expectation has come to be interfered with. In a matter of this kind, as to whether legitimate expectation could be pleaded is a moot point. However, we will now refer to Wade's Administrative Law (6th Edn.) wherein it is stated at pages 520-21, as under.

'Legitimate expectation: positive effect.- The classic situation in which the principles of natural justice apply is where some legal right, liberty or interest is affected, for instance where a building is demolished or an office-holder is dismissed or a trader's licence is revoked. But good administration demands their observance in other situations also, where the citizen may legitimately expect to be treated fairly. As Lord Bridge has explained* 37 (1978) 3 All ER 211, 218 :(1978) 1 WLR 1520,1529 38 (1969) 2 Ch 149: (1968) 3 All ER 795, CA 39 (1971) 2 QB 175 : (197 1) 1 All ER 1148, CA 40 (1976) 3 All ER 452: (1976) 1 WLR 1052 41 (1985) 83 LGR 711 42 1992 Supp (2) SCC 351 :1992 SCC (L&S) 874: (1992) 21 ATC 528 * Westminster CC, Re30. Lord Diplock made a formal statement in the Council of Civil Service Unions case5 (below) at 408, saying that the decision must affect some other person either- (a) by altering rights or obligations of that person which are enforceable by or against him in private law; or (b) by depriving him of some benefit or advantage which either (i) he had in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him more rational grounds for withdrawing it on which he has been given an opportunity to comment; or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn.

This analysis is "classical but certainly not exhaustive" :

R. v. Secretary of State for the Environment, ex p Nottinghamshire CC, 1986 AC 240, 249 (Lord Scarman). One case which does not seem to be covered is that of a first- time applicant for a licence (below, p. 559).

531 The courts have developed a relatively novel doctrine in public law that a duty of consultation may arise from a legitimate expectation of consultation aroused either by a promise or by an established practice of consultation.' In a recent case, in dealing with legitimate expectation in R. v. Ministry of Agriculture, Fisheries and Food, ex p Jaderow Ltd. 43, it has been observed at page 68:

'Question 11: Legitimate expectation:- It should be pointed out in this regard that, under the powers reserved to the member-States by Article 5(2) of Regulation 170 of 1983, fishing activities could be made subject to the grant of licences which, by their nature, are subject to temporal limits and to variou s conditions. Furthermore, the introduction of the quota system was only one event amongst others in the evolution of the fishing industry, which is characterised by instability and continuous changes in the situation due to a series of events such as the extensions, in 1976, of fishing areas to 200 miles from certain coasts of the Community, the necessity to adopt measures for the conservation of fishery resources, which was dealt with at the international level by the introduction of total allowable catches, the arguments about the distribution amongst the member States of the total allowable catches available to the Community, which were finally distributed on the basis of a reference period which ran from 1973 to 1978 but which is reconsidered every year.

In those circumstances, operators in the fishing industry were not justified in taking the view that the Community rules precluded the making of any changes to the conditions laid down by national legislation or practice for the grant of licences to fish against national quotas or the adoption of new conditions compatible with Community law.

Consequently, the answer to this question must be that Community law as it now does not preclude legislation or a practice of a member-State whereby a new condition not previously stipulated is laid down for the grant of licences to fish against national quotas." Thus, it will be clear even legitimate expectation cannot preclude legislation."

47. In Food Corpn. of India v. Kamdhenu Cattle Feed Industries44 this Court observed thus: (SCC p. 76, para 8) .

"The mere reasonable or legitimate expectation of a citizen, in such a situation, 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 43 (1991) 1 All ER 41 44 (1993) 1 SCC 71, 76: JT (1992) 6 SC 259, 264 532 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 interes t 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 matter would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent." 48.In Union of India v. Hindustan Development Corpn.10 this Court observed thus: (SCC pp.

540-41, para 29) "It has to be noticed that the concept of legitimate expectation in administrative law has now, undoubtedly, gained sufficient importance. It is stated that 'legitimate expectation' is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action and this creation takes its place beside such principles as the rules of natural justice, unreasonableness, the fiduciary duty of local authorities and 'in future, perhaps, the principle of proportionality'. A passage in Administrative Law, 6th Edn., by H.W.R. Wade page 424 reads thus:

'These are revealing decisions. They show that the courts now expect government departments to honour their published statements or else to treat the citizen with the fullest personal consideration.

Unfairness in the form of unreasonableness here comes close to unfairness in the form of violation of natural justice, and the doctrine of legitimate expectation can operate in both contexts. It is obvious, furthermore, that this principle of substantive, as opposed to procedural, fairness may undermine some of the established rules about estoppel and misleading advice, which tend to operate unfairly. Lord Scarman has stated emphatically that unfairness in the purported exercise of a power can amount to an abuse or excess of power, and this seems likely to develop into an important general doctrine.' Another passage at page 522 in the above book reads thus:

"It was in fact for the purpose of restricting the right to be heard that 'legitimate expectation' was introduced into the law. It made its first appearance in a case where alien students of 'scientology' were refused extension of their entry permits as an act of policy by the Home Secretary, who had announced that no discretionary benefits would be granted to this sect. The Court of Appeal held that they had no legitimate expectation of extension beyond the permitted time, and so no right to a hearing, though revocation of their permits within that time would have 533 been contrary to legitimate expectation.

Official statements of policy, therefore, may cancel legitimate expectation, just as they may create it, as seen above. In a different context where car-hire drivers had habitually offended against airport bye-laws, with many convictions and unpaid fines, it was held that they had no legitimate expectation of being heard before being banned by the airport authority.

There is some ambiguity in the dicta about legitimate expectation, which may mean either expectation of a fair hearing or expectation of the licence or other benefit which is being sought. But the result is the same in either case; absence of legitimate expectation will absolve the public authority from affording a hearing. (emphasis supplied) Again, at pages 56-57 it is observed thus:

(SCC p. 547, para 33) "A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision.

In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relief is again a matter which depends on several factors." (emphasis supplied) Again at pages 57-58 it is observed thus: (SCC pp. 548-49, para 35) "Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. They shift and change so fast that the start of our list would be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations.

For instance discretionary grant of licences, permits or the like, carry with it a reasonable expectation, though not a legal right to renewal or non-revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But 534 there again the court has to see whether it was done as a policy or in the public interest either by way of GO, rule or by way of a legislation. If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power.

Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence prefers an existing licence-holder to a new applicant, the decision cannot be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected.

In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attorney General for New South Wales case45:

'To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism.

Moreover, the notion of a legitimat e expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law.' If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles." (emphasis supplied) 45 Attorney General.for New South Wales v. Quin, (1990) 64 Aust LJR 327 535 From the above it is clear that 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;

(c) Such an expectation must be reasonable.

However, 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,

49. The licence under the Bar Rules of 1992 is for a period of one year. That could be renewed, as seen above only on a privilege amount, as may be fixed by the State Government, in this behalf. This is unlike the case of the retail vending licence wherein the renewal is contemplated on payment of 15 per cent more than the privilege amount at which the sale of the privilege was confirmed in the previous year. This is as regards the second year.

Likewise, 10 per cent more than the privilege amount for the third year. Therefore, the position is entirely different giving no room for any expectation. At best, it could be a hope. On this aspect we can usefully refer to Director of Public Works v. Ho Po Sang46. At (All ER) page 730 it was observed thus:

"It was submitted on behalf of the lessee that, after the director had given notice [see Section 3-A(2)] of his intention to give a re- building certificate, some kind of a right (even though one that might be defeated) to such a certificate was then acquired by the lessee. Their Lordships cannot accept this view. After the director gave notice of his intention to issue a certificate, there could have been no giving of it until certain conditions were satisfied. The lessee was under obligation to give notices as required by Section 3-B(1). Had there been no appeals by tenants and subtenants and had the time fo r appeals expired, the director would then have been in a position to give a certificate. Had those been the circumstances then, inasmuch as the director had indicated what his intention was, doubtless he would in fact have given his certificate. But the ordinance did not impose an obligation on the director to give a certificate in accordance with his declared intention; it merely provided that he could not follow up his declared intention unless and until certain conditions were satisfied.

Though, in the events that happened, this point does not call for decision, it would not seem that, in any circumstances, any right to a certificate could arise at least until, after notices given, the time for appeals by tenants and subtenants went by without there being any appeal. In a case, however, where (as in the present case) the giving of notices under Section 3-B(1) resulted in appeals by way of petition to the Governor, followed by a cross-petition to the Governor presented by the applicant, then any decision as to the giving of a re-building certificate no longer rested with the director. In the present case, the 46 (1961) 2 All ER 721 536 position on 9-4-1957, was that the lessee did not and could not know whether he would or would not be given a re-building certificate.

Had there been no repeal, the petitions and cross-petition would in due course have been taken into consideration by the Governor in Council. Thereafter there would have been an exercise of discretion. The Governor would have directed either that a certificate be given or be not given, and the decision of the Governor in Council would have been final. In these circumstances, their Lordships conclude that it could not properly be said that, on April 9, the lessee had an accrued right to be given a re-building certificate. It follows that he had no accrued right to vacant possession of the premises. It was said that there were accrued rights to a certificate, and, consequently, to possession, subject only to the risk that these rights might be defeated, and it was said that in the events that happened the rights were not defeated.

In their Lordships' view, such an approach is not warranted by the facts. On April 9, the lessee had no right. He had no more than a hope that the Governor in Council would give a favourable decision. So the first submission fails." (emphasis supplied)

50. It has already been seen that under Rule 4(a) of the Bar Rules the eligibility of such a licence is possession of a retail vending licence. The period of licence was for one year ending by 31-5-1992. The speech of the Governor which we have extracted above was made on 4-2-1993. The impugned GO had come to be passed on 3-3-1993. The important point to be noted here is, long before the bar licensee could apply for renewal (Rule 6 talks of 30 days before the expiry of the licence) the policy decision has been taken not to renew.

51. Having regard to what is stated above, it is clear that there was absolutely no promise of renewal at all.

52. It was by a rule (subordinate legislation) in exercise of the powers conferred by Sections 17-C, 17-D, 21 and 54 of the Tamil Nadu Prohibition Act, 1937 licences under Bar Rules came to be granted. Those Rules have been repealed by exercise of the same powers under Sections 17-C, 17-D, 21 and 54 of the Prohibition Act. Therefore, this is a case of legislation. 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 whatever of invoking the doctrine as against the legislation. However, Mr K. Parasaran, learned Senior Counsel relies on Supreme Court Advocates-on-Record Assn. v. Union of India. At page 703 what is stated is this: (SCC para 478).

"Due consideration of every legitimate expectation in the decisionmaking process is a requirement of the rule of non-arbitrariness and, therefore, this also is a norm to be observed by the Chief Justice of India in recommending appointments to the Supreme Court. Obviously, this factor applies only to those considered suitable and at least equally meritorious by the Chief Justice of India, for appointment to the Supreme Court." 537 This principle of non-arbitrariness cannot apply to a change of policy by legislation. Concerning the applicability of non-arbitrariness and change of policy learned counsel has cited R. Vijayakumar v. Commissioner of Excise3. That case dealt with discrimination between licensees. Hence, the same is not applicable. As a matter of fact in the affidavit filed on behalf of the State of Tamil Nadu dated 8-7-1993 it is inter alia stated thus:

"On complaints received from the public, some time in February 1993 itself the Government had decided not to renew the licences for bar attached to the retail vending shops. This was also announced in the Governor's speech and made public on 4-2-1993.

That on 3-3-1993 the Government by GOMs No. 44 announced that as a matter of policy the Government would not renew licences to the bar attached with the vending shop with effect from 1-6-1993." For all these reasons, we have no hesitation in coming to the conclusion that the doctrine of legitimate expectation cannot arise at all in this case.

53. The effect of accepting the argument of the appellants would be, as rightly urged by Mr G.L. Sanghi, learned counsel appearing for the State of Tamil Nadu the power of the State will be fettered not to repeal a particular law, however much public interest may require the repeal.

Question No. 3: Whether rescinding of the Bar Rules is arbitrary?

54. It is a settled principle that legislative action, plenary or subordinate, is not subject to natural justice.

In Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India9 it is stated thus: (SCR pp. 347-48 : SCC p. 691, para 78) " That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur47, Rameshchandra Kachardas Porwal v. State of Maharashtra48 and in Bates v. Lord Hailsham of St Marylebone49. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non-application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does 47 (1980) 2 SCC 295 : (1980) 2 SCR 1111 48 (1981)2 SCC 722:(1981) 2 SCR 866 49 (1972) 1 WLR 1373 : (1972) 3 All ER 1019 538 not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19(1)(a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant." The same principle is reiterated in Union of India v. Cynamide India Ltd.8 which is referred to with approval in H.S.S. K. Niyami v. Union of India11.

55. When the State has received complaints that the consumption of liquor in Bars resulted in law and order problems, womenfolk being harassed, certainly, in public interest it could take a decision to repeal the grant of bar licences. There is nothing unreasonable. It is not necessary as Mr Garg contends that a committee ought to have been appointed and a report obtained before such a repeal.

It is a matter of policy which the Government alone is competent to formulate. The State Government knows how best to augment its revenue.

56. As we have seen above, if there is no promise or right of renewal and if the policy decision has been taken under the impugned GO long before the licensee could apply for renewal what is the unfairness that could be complained of ? In our considered view, none. From this point of view, we find the ruling in Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay7 is not applicable to the present case.

Question No. 4: Benefit under Section 8 of the General Clauses Act?

57. We have already noted that Section 54 of the Prohibition Act is a rule-making section. The rules and the notification require to be published in the Official Gazette. Upon such publication, they shall have effect as if enacted in the parent Act. The High Court on the question of applicability of Section 8 of the Tamil Nadu General Clauses Act has stated thus:

"Section 4 of the Tamil Nadu General Clauses Act makes Chapter 11 applicable to all Tamil Nadu Acts after the commencement of the said Act unless a contrary intention appears in such Acts. Section 8 of the Tamil Nadu General Clauses Act is subject to Section 4 of that Act and the new enactment can expressly or by necessary implication exclude the operation of Section 8. Reading Sections 4 and 8 together, there can be no doubt that an enactment which repeals an earlier enactment can exclude any of the provisions of Chapter 11 of the Tamil Nadu General Clauses Act. The impugned GO has rescinded the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 with effect on and from 1-6-1993. Hence the repealed rules ceased to be in existence after 31-5-1993. The privilege and the licence granted to the petitioner were admittedly for one year ending with 31-5-1993. Under the repealed rules they were obliged to apply for renewal and the renewal was not automatic.

The application for renewal had to be considered under the rules by the concerned authority and appropriate orders should be passed. Once the rules are repealed, with the expiry of 31-5-1992, there could be no question of considering any application for renewal for a period 539 subsequent to that date. What all Section 8 of the Tamil Nadu General Clauses Act preserves or protects are the rights acquired under the repealed Act. In other words, the petitioner's licence for the period up to 31-5-1993 remained undisturbed or unaffected by the impugned GO. It is not as if the same right or privilege can operate beyond 31-5-1993 as though by an order of renewal. If the right or privileges cannot on its own force subsist when the impugned GO comes into force the provisions of Section 8 of the Tamil Nadu General Clauses Act cannot give a fresh lease of life to such right or privilege or alter the period of its validity. Hence, the contention based on the provisions of the General Clauses Act has to fail," We are in entire agreement with this line of reasoning.

58. In this connection, the reliance placed by the teamed Additional Solicitor General on Indira Sohanlal v. Custodian of Evacuee Property, Delhi 12 is fully justified. At (SCR) page 11 18 it is stated thus:

"(iv) that the scheme underlying Section 58(3) is that every matter to which the new Act applies has to be treated as arising, and to be dealt with, under the new law except insofar as certain consequences have already ensured or acts have been completed prior to the new Act, to which it is the old law that will apply." If, therefore, as pointed out above, no right or privilege could operate beyond 31-5-1993, the benefit of Section 8 of the Tamil Nadu General Clauses Act cannot be had.

59. Before we leave the case one post-scriptum:

"Intoxicating drinks have produced evils more deadly, because more continuous, than all those caused to mankind by the great historic scourges of war, famine, and pestilence combined." William Gladstone

60. In view of the foregoing discussion the appeals and writ petition deserve to be dismissed. Accordingly they are dismissed. However, in the circumstances of the case, there shall be no order as to costs.

540 SARDAR SINGH v. DIRECTOR OF CONSOLIDATION (Kuldip Singh,J.) ORDER

1. These matters relate to hearing by Single Member Benches of matters before the Central Administrative Tribunal and the State Administrative Tribunals constituted under the Administrative Tribunals Act, 1985. The power to constitute a Single Member Bench is traced to sub-section (6) of Section 5 of the said Act.

2. The appellants/petitioners have challenged the constitutional validity of sub-section (6) of Section 5 and have placed reliance on the observations of this Court in S.P. Sampath Kumar v. Union of India1. It appears that the matter came up before this Court in Amulya Chandra Kalita v. Union of India2 wherein a two-Judge Bench, after referring to the provisions contained in Section 5(2) and the observations in Sampath Kumar case1 has held that a Bench shall consist of one Judicial Member and an Administrative Member and an Administrative Member alone cannot hear and decide a matter. Thereafter in Mahabal Ram (Dr) v. Indian Council of Agricultural Research3 a three-Judge Bench, the earlier decision in Amulya Chandra Kalita case2 has been considered and the observations in Sampath Kumar case I have also been taken note of. This Court has, however, referred to sub-section (6) of Section 5 and has held that it may be permissible for a Single Member Bench of the Tribunal to hear matters subject to certain safeguards that have been provided with regard to exercise of the power under Section 5(6). In that case, however, it has been observed that the validity of sub-section (6) of Section 5 was not challenged.

It may also be stated that the said decision was rendered without hearing the counsel for the respondents.

3. Having heard counsel for both the parties, we consider it appropriate that the matters are heard by a three-Judge Bench of this Court because the validity of sub-section (6) of Section 5 has been challenged in these matters. The matter may be placed before Hon'ble the Chief Justice of India for appropriate directions.

1 (1987) 1 SCC 124: (1987) 2 ATC 82: (1987) 1 SCR 435: AIR 1987 SC 386 2 (1991) 1 SCC 181: 1991 SCC (L&S) 145: (1990) 14 ATC 911 3 (1994) 2 SCC 401: 1994 SCC (L&S) 642: (1994) 27 ATC 97 541 C.A. No. 4501 of 1989:

4. Shri K.V. Vishwanathan, learned counsel appearing on behalf of the appellant, states that he would like to avail the benefit of the observations in Mahabal Ram (Dr) case3.

The appeal is disposed of in terms of the observations made by this Court in Mahabal Ram (Dr) case3 and the appellant is permitted to move the Chairman, Central Administrative Tribunal for appropriate directions in the light of the said observations.

SARDAR SINGH v. DY. DIRECTOR F CONSOLIDATION (Kuldip Singh,J.) The Judgment of the Court was delivered by KULDIP SINGH, J.- Girwar Singh, a big zamindar, died on 24-5-1971. He left behind agricultural land as well as other property. After the death of Girwar Singh many persons claimed rights in the property left by him. Giriraj Kishore, Respondent 5 in the appeal herein, is also one of the claimants. Giriraj Kishore claims that his father was adopted as a son by + From the Judgment and Order dated 7-5-1985 of the Allahabad High Court in C.M.W.P. No. 560 of 1985 542 Girwar Singh's father. Appellant Sardar Singh claims to be a son of real sister of Girwar Singh. He further claims right in the property on the basis of a will dated 19-5- 1971. One Sharda Devi stakes her right claiming to be the real sister of Girwar Singh. One Narendra Pal Singh states that he is the adopted son of Girwar Singh and as such entitled to the property left by him. All these persons filed testamentary suits in respect of the property of Girwar Singh in the High Court. The Administrator General also filed a testamentary suit claiming letters of administration. All the suits were decided together by the judgment of the High Court dated 18-8-1977. The will set up by Sardar Singh was held to be fictitious. Except the suit filed by the Administrator General all the suits were dismissed. The High Court issued letters of administration to the Administrator General, U.P. with the direction that he would manage the property till the rights of the parties are determined by the civil court. A civil suit filed by Giriraj Kishore was pending at that time. Various appeals filed against the judgment of the High Court were dismissed by the Division Bench on 23-10-1981.

2. The civil suit filed by Giriraj Kishore is pending.

Sardar Singh and others who had filed testamentary suits have been arrayed as defendants in the suit. The suit was in respect of agricultural land and also in respect of other property left by Girwar Singh. While the suit was pending the consolidation operations commenced under the U.P.

Consolidation of Holdings Act, 1953 (the Act). Section 5(2) of the Act is as under:

"5. (2) Upon the said publication of the notification under sub-section (2) of Section 4 the following further consequences shall ensue in the area to which the notification relates, namely,- (a) every proceeding for the correction of records and every suit and proceeding in respect of declaration of rights or interest in any land lying in the area, or for declaration or adjudication of any other right in regard to which proceedings can or ought to be taken under this Act, pending before any court or authority whether of the first instance or of appeal, reference or revision, shall, on an order being passed in that behalf by the court or authority before whom such suit or proceeding is pending, stand abated:

Provided that no such order shall be passed without giving to the parties notice by post or in any other manner and after giving them an opportunity of being heard:

Provided further that on. the issue of a notification under sub-section (1) of Section 6 in respect of the said area or part thereof, every such order in relation to the land lying in such area or part, as the case may be, shall stand vacated;

(b) such abatement shall be without prejudice to the rights of the persons affected to agitate the right or interest in dispute in the said suits or proceedings before the appropriate consolidation authorities under and in accordance with the provisions of this Act and the rules made there under." 543

3. It is not disputed that the civil suit - in respect of agricultural land stoodabated under Section 5(2)(a) of the Act. The civil court is only proceeding in respect of the property other than the agricultural land. The question for our consideration is whether in the facts and circumstances of this case the proceedings before the consolidation authorities should be stayed till the rights of the parties are finally adjudicated by the civil court. The High Court has answered the question in the affirmative and against the appellant. This appeal by Sardar Singh is against the judgment of the High Court.

4. On an application filed by Respondent 5 the Consolidation Officer framed the following preliminary issue:

"Whether consolidation proceedings before the Consolidation Officer will remain stayed as civil suit is pending before the civil court."

5. The issue was decided against Respondent 5 and it was held that the consolidation proceedings could not be stayed.

Appeal filed against the said order was dismissed by the Assistant Settlement Officer and a further revision filed before the Deputy Director of Consolidation was also dismissed on 27-11-1984. Respondent 5 thereafter filed writ petition before the Allahabad High Court which was allowed and the proceedings before the consolidation authorities have been stayed till the final disposal of the civil suit.

As stated above this appeal by Sardar Singh is against the judgment of the High Court.

6. The High Court allowed the writ petition on the following reasoning:

"In the instant case as the litigation was brought before this court in testamentary suits and thereafter in special appeals and thereafter civil suit for declaration was filed which was already pending between the parties and the evidence on behalf of the plaintiff has been led and the evidence on behalf of the defendant was being continued meanwhile consolidation operations started.

There was possibility of conflicting judgments if the plaintiff is held to be the heir in the civil suit and not as an heir in the consolidation proceedings. Further the powers under Section 48 of the Act are much wider, even propriety and incorrectness of an order can be gone into. In the circumstances of the case the orders passed by the Consolidation Officer and the Assistant Settlement Officer (Consolidation) were not proper under the circumstances of the case.... In the instant case the facts of the case are so unique and I am sure that it is very rare to find such chequered litigation as earlier litigation wa s fought in the High Court and thereafter a civil suit was filed and in the meanwhile the consolidation operations commenced. It is not for his own sake that the plaintiff (the petitioner) had made an application and got an issue framed on the point as to whether the consolidation proceedings may be stayed under the facts and the circumstances of the case, rather it was for the benefit of the contesting respondent also that they may first devote their energy fully in the civil litigation and thereafter the consolidation authorities may decide the case in pursuance 544 of the order of the civil court. It is on account of all those insurmountable difficulties that the application was moved for staying the proceedings before the consolidation authorities till the civil suit was decided.

In view of the discussions made hereinbefore I am of the opinion that in view of the wide and comprehensive powers conferred on the Deputy Director of Consolidation his decision was manifestly erroneous in law that the proceedings before the consolidation authorities cannot be stayed. Therefore, the impugned orders passed by the consolidation authorities being manifestly erroneous deserved to be quashed.... The proceedings before the Consolidation Officer between the parties in case in 683/684 Sardar Singh v. Administrators are directed to remain stayed till the civil suit between the parties is decided finally."

7. It is no doubt correct that the issues, on the merit of the controversy between the parties, before the civil court and the consolidation authorities are by and large the same.

The consolidation proceedings under the Act are in respect of the agricultural land whereas the civil court is adjudicating the rights of the parties in respect of the property other than the agricultural land. We agree with the High Court that there is possibility of contradictory judgments between the civil court and the consolidation authorities. On the other hand keeping in view the nature of the consolidation operations the staying of the consolidation proceedings in respect of part of land may have an adverse effect on the consolidation operations in the whole of the area. The consolidation operations under the Act include the determination of an area for extension of abadi including the site for Harijans and landless persons, area for other public purposes and the preparation of the scheme. We are of the view that the consolidation operations under the Act would not be smoothly completed if the proceedings in respect of a part of the land are stayed.

Even the scheme of the Act makes it clear that the authorities under the Act have no power to stay the consolidation proceedings once the said proceedings are commenced by way of a notification under Section 4 of the Act. We are, therefore, of the view that the High Court fell into error in staying the consolidation proceedings to await the decision in the civil proceedings.

8. We are, however, of the view that the consolidation authorities must have an opportunity to take into consideration the findings of the civil courts. We, therefore, direct that on the final conclusion of the 'civil proceedings the judgment of the civil court which achieves finality may be placed before the Director of Consolidation who shall thereupon, if necessary, reopen the proceedings under Section 48 of the Act and pass a fresh order after taking into consideration the findings of the civil court.

9. We allow the appeal in the above terms, set aside the judgment of the High Court dated 7-5-1985 and dismiss the writ petition filed by Respondent 5 before the High Court.

No costs.

545 LAXMI DEVI v. SATYA NARAYAN (Mohan, J.) The Judgment of the Court was delivered by MOHAN, J.- The first respondent was charged for an offence under Section 494 IPC, Respondent 7 under Section 494 read with Section 109 of IPC and Respondents 2 to 6 and 8 and 9 under Section 494 read with Section 120-B of IPC. The trial took place before Judicial Magistrate No. 1, Bikaner. It was held that the prosecution had not proved through proper witnesses 'saptapadi' to establish the factum of second marriage of accused (Respondent 1). The High Court found that it was not a fit case for grant of leave to appeal.

Thus, the present criminal appeal against the impugned order dated 18-7-1978 was passed by High Court.

2. The only point urged before us is that though 'saptapadi' a fact has not been proved, there is enough evidence to establish the factum of second marriage. There are eyewitnesses who have seen the marriage. That is enough to bring out the charge. The principle relating to 'saptapadi' taking of seven steps before the sacred fire cannot be insisted upon if as of fact marriage is established.

Therefore, the courts below are wrong.

3. The learned counsel for the respondents would urge that the courts below have correctly appreciated the legal position. It is 'saptapadi' which establishes the factum of marriage, being an essential ceremony. Without proof of such a ceremony, a case for bigamy cannot arise.

+From the Judgment and Order dated 18-7-1978 of the Rajasthan High Court in S.B. Cri. Leave to Appeal No. 107 of 1978 546

4. We have carefully gone through the evidence. The evidence of PW 2 to PW 5 does not establish the essential ceremony of marriage viz. saptapadi'.

5. This Court in Kanwal Ram v. H.P.

Administration1 has held as under:

"It was contended for the appellants that this evidence was not enough to show that the marriage of Kubja and Kanwal Ram can be said to have been performed. We think this contention is justified. In Bhaurao Shankar Lokhande v. State of Maharashtra2, this Court held that a marriage is not proved unless the essential ceremonies required for its solemnisation are proved to have been performed. The evidence of the witness called to prove the marriage ceremonies, showed that the essential ceremonies had not been performed.. So that evidence cannot justify the conviction. The trial court also took the same view. The learned Judicial Commissioner does not seem to have taken a different view.

The learned Judicial Commissioner, however, thought that apart from the evidence about the marriage ceremonies earlier mentioned there was other evidence which would prove the second marriage. He first referred to a statement by the appellant Kanwal Ram that he had sexual relationship with Kubja." 6. The same principle is reiterated in Priya Bala Ghosh v. Suresh Chandra Ghosh3 as under: (SCC pp. 867-68, 872, paras 10, 25) "According to Mr Majumdar, when once the priest has given evidence to the effect that the marriage between the respondent and Sandhya Rani has been performed, it follows that all the essential ceremonies that are necessary to constitute a valid marriage must be presumed to have been performed. In any event, when there is evidence to show that the marriage as a fact has taken place, the presumption is that it has taken place according to law. In this connection Mr Majumdar referred us to various English decisions where on the basis of certain evidence regarding the taking place of marriage between the parties a presumption has been drawn that the marriage must have been solemnized according to law. In our opinion, it is unnecessary to refer to those cases cited by the learned counsel as the position is concluded against the appellant by the decisions of this Court on both points.

Section 5 of the Act lays down conditions for a Hindu marriage. It will be seen that one of the conditions is that referred to in clause (i), namely, that neither of the parties has a spouse living at the time of the marriage.

Section 7 dealing with the ceremonies for Hindu marriage is as follows:

1 AIR 1966 SC 614 :(1966) 1 SCR 539: 1966 Cri LJ 472 2 AIR 1965 SC 1564 : (1965) 2 SCR 837 : (1965) 2 Cri LJ 544 3 (1971) 1 SCC 864 : 1971 SCC (Cri) 362: AIR 1971 SC 11 53 547 '7. Ceremonies for a Hindu marriage.- (1) A Hindu marriage may be solemnized in accordance with the customary rites and ceremonies of either party thereto.

(2)Where such rites and ceremonies include the Saptapadi (that is, the taking of seven steps by the bridegroom and the bride jointly before the sacred fire), the marriage becomes complete and binding when the seventh step is taken.' We have pointed out that in the case before us both sides were agreed that according to the law prevalent amongst them Homa and Saptapadi were essential rites to be performed for solemnization of the marriage and there is no specific evidence regarding the performance of these essential rites.

The parties have also not proved that they are governed by any custom under which these essential ceremonies need not be performed.

To conclude, we have already referred to the fact that both the learned Sessions Judge and the High Court have categorically found that the Homa and Saptapadi are the essential rites for a marriage according to the law governing the parties and that there is no evidence that these two essential ceremonies have been performed when the respondent is stated to have married Sandhya Rani." (emphasis supplied)

7. The position is similar in this case. In the absence of proof of such a ceremony the factum of second marriage cannot be held to have been made out.

8. Though we have come to the above conclusion, the first respondent is undoubtedly living with Bimla, Respondent 4 as husband and wife. Merely because the appellant is not in a position to prove the factum of second marriage punishable under Section 494 of the Indian Penal Code that does not mean the appellant should be left in the lurch. Exercising our powers under Article 142 of the Constitution of India we think appellant should be awarded compensation which will bring some solace when her life is dismally dark.

Therefore, we quantify the compensation at Rs 25,000 which shall be paid by the first respondent to the appellant within eight weeks from today.

9. In the result, the criminal appeal is disposed of in the above terms.

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