Secretary
to Govt., Tamil Nadu & Anr Vs. K.Vinayagamurthy [2002] Insc 362 (26 August 2002)
G.B.
Pattanaik, Ruma Pal & K.G. Balakrishnan. Pattanaik,J.
WITH SLP
[c] Nos. 15724, 15725, 15726, 15727 and 15728 of 2002.
This
batch of Special Leave Petitions are by the State of Tamil Nadu, directed
against the Judgment of the Division Bench of Madras High Court, dealing with
the licensing system for retail vending of Indian made foreign liquor. The
Excise Year is for the period of 1st of August of the year in question till the
31st of July of the next year. In June, 2001, the Government of Tamil Nadu came
forward with a Policy to be adopted for licensing of the Indian made foreign
liquor retail vending shops for the block period 2001- 2004. The said Policy
was issued under G.O.Ms. No. 113.
For
the aforesaid block period, it was decided that the retail vending shops for
the entire State should be fixed at 6000 and the privilege fee shall be worked
out on the notified area basis, taking the average privilege fee of the last
three years and providing for some suitable increase. It was also stipulated
that the licensee should lift the minimum off-take fixed for the shop by the
licensing authority and in case of failure to lift the same, the licensee will
be liable to pay a penalty in proportion to the loss of revenue due to
non-lifting of stocks and if there is still further default, then the licence
would be liable to be cancelled. In accordance with the aforesaid policy
decision, amendments to the Tamil Nadu Liquor (Retail Vending) Rules, 1989 were
made, which were issued under G.O.Ms. No. 115 dated 22nd of June, 2001. The
Prohibition Commissioner also recommended a new licensing system for grant of licences
to the Indian made foreign liquor retail vending shops for the block year 2001-
2004, which was accepted by the State Government and the necessary amendments
to the Retail Vending Rules were made. Under Rule 13 of the amended rules, when
the number of eligible applications does not exceed the number of shops notified
for an area, then all applicants shall be selected for the grant of privilege.
But when the number of applications in respect of the shops in a notified area
is more then the number of shops in that area, the selection of applicant for
grant of privilege shall be decided by drawal of lot by the licensing authority
in the presence of the Collector and the applicants who prefer to be present.
Rule 14 of the amended rules provided that privilege amount be fixed by the
Commissioner, on the basis of the guidelines approved by the Government. Rule
30(2) provides for the lifting of the minimum off-take of the liquor fixed for
the shops by the licensing authority based on the guidelines issued by the
Government and the consequences to follow, in case the licensee fails to lift
the minimum off-take. Sub-rule (7) of Rule 30 provides that the applicant on
being granted licence, shall abide by the provisions of the Tamil Nadu
Prohibition Act, 1937, as wall as the Tamil Nadu Liquor (Retail Vending) Rules,
1989, as amended from time to time and the terms and conditions of the licence
granted thereunder.
In
accordance with the aforesaid Excise Policy and the provisions of the Act and
the Rules, the exclusive privilege in respect of different retail vending shops
of Indian made foreign liquor were settled with the applicants and licences
were also issued by the licensing authority in favour of them for carrying on
the business. Even though the policy was for the block period of 2001-2004 and
an existing licensee could apply for renewal of his licence, for the excise
year 2002- 2003, the Government of Tamil Nadu changed the policy by issuance of
three G.O.Ms. of the same date being G.O.Ms. Nos. 128, 129 and 130. The
aforesaid three G.O.Ms. indicate that the Government felt that there is a need
for increasing the number of shops in unserved areas that are not notified and
also in the existing notified areas where there is further potential and demand
identified by the Collectors. It was also indicated that the privilege amount in
respect of the shops located in areas adjoining the Corporations and
Municipalities could be enhanced and as such there is a need to re-categorise
the shops and to re-fix the privilege amount.
The
Commissioner of Prohibition and Excise also suggested that along with the
increase in the number of notified shops and re-fixation of the privilege
amount for the shops located in peripheral areas of
Corporations/Municipalities, as well as the revision of privilege amount for
augmenting the excise revenue, the Government should consider whether instead
of renewing the licences of the existing licensees, all the shops may be
allotted afresh in accordance with earlier G.O.Ms. No. 115 dated 22nd of June,
2001. In other words, it suggested to have a fresh draw of lot. In accordance
with the aforesaid recommendations contained in G.O.Ms. No. 128, the State
Government passed the necessary orders, directing that the provision for
renewal of licences prescribed in Rule 14 of the Tamil Nadu Liquor (Retail
Vending) Rules, 1989 be repealed and all the 7000 shops including the re- categorised
shops shall be disposed of, as per the procedures laid down in G.O.Ms. No. 115
dated 22nd June, 2001.
Consequential
amendments of certain rules were also made.
The
existing holders of the privilege in question who had obtained licences for
carrying on the business for the excise year 2001-2002, approached the High
Court of Madras by filing writ petitions, challenging the validity of the
Government Order Nos. 128, 129 and 130. The Learned Single Judge, on
entertaining the writ petitions, granted interim orders on 16th of July, 2002,
directing ad hoc renewal of licences for a period of three months in respect of
the petitioners who had approached the Court. The State preferred the appeal to
the Division Bench against the aforesaid interim order of the learned Single
Judge and the Division Bench while being in seisin of appeal against the
interim order, passed by the Single Judge, brought before it the writ petitions
which were pending before the Single Judge and disposed them of together by the
impugned judgment dated 24th of July, 2002. On considering the submissions made
at the Bar as well as the new excise policy and introduction of G.O.Ms. Nos.
128, 129 and 130, the Division Bench of the High Court came to the conclusion
that though the excise policy is a subject of the policy-maker and it relates
to a trade, which cannot be claimed as a matter of right by any citizen, but
the Court would be entitled to probe into the reasonableness or otherwise of
the Governmental orders and examine whether they can be sustained on the
touchstone of the arbitrariness. The Division Bench sustained the Government
orders, so far as they relate to the fiscal policy of the government and the
provisions made therein for augmentation of the excise revenue. It rejected the
contention of the privilege holders and held that doctrine of promissory estoppel
and legitimate expectation will have no application. But so far as the
provisions dealing with the abolition of the renewal of the existing licence
holders and to follow the procedure in respect of the shops by a fresh lot, the
Court came to the conclusion that the aforesaid provision has absolutely no
nexus with the object of augmentation of excise revenue and it was only meant
to disable the existing licensees from opting for the renewal notwithstanding
that the excise policy as enunciated in June, 2001 was for the block period
2001- 2004. The Court held the aforesaid revised excise policy to be wholly
unreasonable and arbitrary, having no nexus at all with the object of
augmentation of excise revenue for which purpose the new policy was introduced.
The Court finally disposed of the matter with the following directions:
"(i)
The Government is at liberty to go ahead with the grant of privilege of retail
vending of Indian Made Foreign Liquor to the extent of 7,000 shops as decided.
(ii)But
the Government shall adhere to the places of retail vending which have been licenced
for the excise year 2001-2002 and held by the petitioners and renew the licence
of the petitioners for the excise year 2002-2003 on the petitioners' remittance
of the privilege amount on the basis of the amount fixed in G.O.Ms. No. 129
dated 8.7.2002 and also taking into account the re- categorisation of the shops
for the purpose of levy of the privilege amount.
(iii)The
above facility of renewal to the petitioners shall be made available if the
petitioners remit the requisite amounts on or before 31st of July, 2002.
(iv)For
any reason, if there is a delay in renewal, the petitioners shall be entitled
to vend the Indian Made Foreign Liquor in retail on payment of the
proportionate privilege amount till the grant of licence.
(v)The
Government, the Commissioner and all the District Collectors shall be entitled
to re-locate the shops out of 7,000 at the places they feel expedient, but only
after safeguarding the shops which are being run by the petitioners." It
is this order of the Division Bench of the Madras High Court, which is the
subject matter of challenge in all the special leave petitions.
After
hearing Mr. K.K. Venugopal, the learned senior counsel, appearing for the State
of Tamil Nadu at great length and Mr. P. Chidambaram, the learned senior
counsel, appearing for the respondents, though we did not find any infirmity
with the impugned judgment of the Division Bench of Madras High Court and would
have normally dismissed the special leave petitions, but since Mr. Venugopal
had advanced a lengthy argument and certain directions given in the impugned
judgment require modulation, we thought it appropriate to notice and answer the
same, while dismissing the special leave petitions.
Mr.
K.K. Venugopal, the learned senior counsel, appearing for the State contended
that there is no inherent right in a citizen to sell intoxicating liquor by
retail and it is not a privilege of a citizen. As it is a business attended
with danger to the community, it may be entirely prohibited or be permitted
under such conditions as will limit to the utmost its evils. The legislature of
a state or the executive government is fully competent to regulate the business
of vending intoxicating liquor to mitigate its evils or to suppress it
entirely. That being the right of a citizen to deal with the liquor and by the
impugned orders the State Government having altered the existing policy for
augmentation of excise revenue, the same could not have been interfered with by
the High Court. Mr. Venugopal also further contended that there is no right of
renewal of the licences with the grantee of the privilege and the amended
provisions having been engrafted for the new excise year, the High Court
committed error in holding the same to be arbitrary. In support of this
contention, reliance was placed on the decision of this Court in the case of Madras
City Wine Merchants' Association and another vs. State of Tamil Nadu and Anr.,
1994(5) SCC 509. According to Mr. Venugopal, in accordance with the Rules in
force, the existing licensees having failed to lift the minimum off-take
quantity of liquor, the State has suffered a loss in excise revenue and,
therefore, for augmentation of the excise revenue, a new set of policy having
been formulated in respect of a trade over which no citizen can claim a
fundamental right, the Court was not justified in interfering with the same on
the ground that the decision to have a fresh lot for all the shops is arbitrary
and unreasonable.
Mr.
Chidambaram, the learned senior counsel appearing for the existing licensees,
on the other hand contended that the High Court was fully justified in striking
down only that part of the government order which was held to have no nexus
with the object of augmentation of excise revenue. He further contended that
the licensees are agreeable to pay the privilege fee as decided by the Government
and also would be bound by the limit of off-take of liquor to be decided by the
excise authorities. According to Mr. Chidambaram, there is no error in the
impugned judgment, which requires any interference by this Court in exercise of
powers under Article 136 of the Constitution.
We
have carefully considered the rival submissions at the Bar as well as the
decision cited in support of the contention raised. So far as the trade in
noxious or dangerous goods are concerned, no citizen can claim to have trade in
the same and the intoxicating liquor being a noxious material, no citizen can
claim any inherent right to sell intoxicating liquor by retail. It cannot be
claimed as a privilege of a citizen of a State. That being the position, any
restriction which the State brings forth, must be a reasonable restriction
within the meaning of Article 19(6) and reasonableness of the restriction would
differ from trade to trade and no hard and fast rule concerning all trades can
be laid down. The Government of Tamil Nadu does not purport to abolish the
trade in intoxicating liquor and what it purports to do is to change its policy
intended for augmentation of excise revenue. With that end in view under the
new set of Government orders, there have been large number of shops to deal
with retail vending of Indian made foreign liquor, there has been re-categorisation
of the shops, there has been re- adjustment and relocation of the retail shops,
there has been increase in the amount of privilege fee and the High Court has
upheld all these conditions on the ground that they relate to the augmentation
of excise revenue. But so far as the right of renewal is concerned, the same
having been unequivocally indicated in the excise policy of 2001-2002, as
reflected in G.O.Ms. No. 115 for the block period of 2001-2004, the State
Government could not have annulled the same and directing afresh the self same
procedure to be adopted again by drawal of lots for settling of the privileges
in respect of 7,000 shops inasmuch as that has nothing to do with the
augmentation of excise revenue. To our query, as to how this should be helpful
in achieving the augmentation of excise revenue, Mr. Venugopal was not able to
satisfy us and in our view, the High Court rightly came to the conclusion that
the aforesaid decision was nothing but an arbitrary and whimsical one taken by
the State Government, only to replace the existing licensees by a fresh set of
persons by a fresh drawal of lot.
Even
though the licensees under the earlier policy may not claim an absolute right
of renewal but it cannot be denied that under G.O.Ms. No. 115 read with the
excise policy evolved for the block period 2001-2004 and the relevant
provisions of the Act and Rules, contemplate a case of renewal and this is also
apparent from the recommendations of the Excise Commissioner himself on the
basis of which the State Government came forward with the revised policy and a
new set of rules by enacting G.O.Ms. Nos. 128, 129 and 130. We have, therefore,
no hesitation in affirming the conclusion of the Division Bench of the Madras
High Court that the portions of G.O.Ms. dealing with the non-renewal of the
privileges granted to the existing licensees subject to their fulfilling the
other conditions of the provisions of the Act and the rules to be arbitrary. We
are, therefore, not persuaded to interfere with the conclusion of the High
Court, so far as it deals with the dispensing with the right of renewal of the
existing licensees under the present set of G.O.Ms. which fell before the High
Court for consideration. Necessarily, therefore, the appropriate excise
authority will have to decide the case of the applicants for renewal of the licences
in accordance with the Rules as well as the other conditions of the licences.
Mr. Chidambaram very fairly stated that none of the respondents have any
grievances to be governed by the rules and conditions of licence including the
conditions providing for a minimum off-take. But the manner in which the High
Court has issued the directions, appears to us not to be in conformity with the
rules for issuance of a mandamus.
Once
the court comes to the conclusion that certain provisions of the Act or the
Rules of the Government order is arbitrary, then the Court would strike down
the same, leaving the matter for the appropriate authority under the statute to
deal with the cases of the applicants. In that view of the matter, the
directions contained in Clause (ii), Clause (iii) and Clause (iv) require
modulation. We, therefore, substitute the aforesaid clauses of the impugned
judgment by the following directions:
The
competent authority/the State Government shall consider the application for
renewal of the licence in accordance with law and would be entitled to include
all conditions in the licence, including the condition of minimum off-take.
Needless to mention that the licensees of the privileges would be bound by the
enhancement of the privilege amount as well as the re-categorisation of the
shops contained in the three G.O.Ms., referred to earlier. It is also made
clear that the facility of the renewal would be available to those of the
existing licensees, who had remitted the requisite amount on or before 31st of
July, 2002, as ordered by the High Court itself. We also further direct that
the privilege fee already paid by these licensees for the Excise Year 2002-2003
shall be duly adjusted. Clauses (i) and (v) of the directions contained in the
impugned judgment shall remain as it is.
Mr. Venugopal
had referred to an affidavit which had been filed in this Court by the
Secretary to the Government of Tamil Nadu, Prohibition and Excise Department,
wherein it had been stated that the State Government will be willing to
consider the grant of renewal in favour of the existing licensees, subject to
their giving an undertaking to this court that they would abide by the rules
and conditions relating to the minimum off-take during the current year as well
as previous excise year 2001-2002 and would withdraw the writ petitions filed
by them, which are pending in the High Court of Madras. So far as the minimum
off-take for the excise year 2002-2003 is concerned, Mr. Chidambaram, appearing
for the respondents, fairly stated that the respondents would abide by the
same. But so far as the minimum off-take for the previous excise year is
concerned, the same not having been there at the time of grant of the privilege
and issuance of licence, but having been introduced at a later point of time,
the legality of the same is the subject matter of consideration before the High
Court of Madras and we expres no opinion on the same.
These
special leave petitions are accordingly dismissed with the modulated
directions, as stated earlier.
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