Lanka & Anr Vs. Rishi Dixit & Ors  Insc 332 (11 May 2005)
Hegde & S.B. Sinha
NOS. 1 & 2 IN & [Arising out of SLP (Civil).of 2005 (CC No.4529] W I T
H CIVIL APPEAL NO. OF 2005 [Arising out of SLP.(Civil) . of 2005 (CC 4569)]
I.A. NO. 1 IN & C.A. NO OF 2005 [Arising out of SLP (Civil) .../2005 (CC
No.4571)] IA No.1 IN & C.A. No. OF
2005 [Arising out of SLP (Civil) /2005 (CC No.4579)] IA No. 1 IN & C.A. NO.
OF 2005 [Arising out SLP (Civil) /2005 (CC No.4598)] C.A. NO. OF 2005 [Arising
out SLP (Civil) No. 7802 of 2005] C.A. NO. OF 2005 [Arising out of SLP (Civil)
No.8575 of 2005] IA. NOS. 1 & 2 IN & C.A. NO. OF 2005 [Arising out of
SLP (Civil).../2005 (CC No.5051)] C.A.
NO. OF 2005 [Arising out of SLP(Civil) No.10422 of 2005] C.A NO. OF 2005
[Arising out of SLP (Civil) No.10457 of 2005] C.A. NO. OF 2005 [Arising out of
SLP (Civil) No.10652 of 2005] C.A. NO. OF 2005 [Arising out of SLP (Civil) No.
10653 of 2005] IA NO. 1 IN & C.A.
OF 2005 [Arising out of SLP (Civil)/2005 (CC No.5432)] IA NO.1 IN & C.A. OF
2005 [Arising out of SLP (Civil).../2005 (CC No.5433)] S.B. SINHA, J :
to file special leave petitions is granted.
granted in all the special leave petitions.
trade in country/foreign liquor is said to be res extra commercium. A citizen
does not have any fundamental right to deal therewith. The State alone has the
exclusive privilege to deal in liquor from manufacture to distribution and from
sale to consumption. It is for the State to part with its exclusive privilege
for a price which is loosely called as 'excise duty'. The power of the State to
control and regulate the trade in liquor is envisaged under Entry 8, List II of
the Seventh Schedule of the Constitution of India. It may also impose excise
duty as also countervailing duty in exercise of its legislative power under
Entry 51, List 2 of the Seventh Schedule of the Constitution.
AND THE RULES:
in Country/Foreign Liquor is governed by the Chhattisgarh Excise Act, 1915
('the Act', for short).
7(e) of the Act provides that the State Government may, by notification, for
the whole or for any specified part of the State, delegate to the Chief Revenue
authority or the Excise Commissioner all or any of its powers under the said
Act except the power conferred by Section 62 to make rules.
62 of the Act empowers the State to frame rules for the purpose of carrying out
the provisions thereof. Without prejudice to the generality of the said
provisions, the State Government, inter alia, however, may make rules :
regulating the periods and localities for which, and the persons or classes of
persons to whom, licences for the wholesale or retail vend of any intoxicant
may be granted, and regulating the number of such licences which may be granted
in any local area;
the procedure to be followed and the matters to be ascertained before any licence
for such vend is granted for any locality;
the amount, time, place and manner of payment of any duty or fee or tax or
the authority by, the form in which, and terms and conditions on and subject to
which any licence, permit or pass shall be granted, any by such rules, among
the period for which any licence, permit or pass shall continue in force,
the scale of fees or the manner of fixing the fees payable in respect of any
such licence, permit or pass.
the amount of security to be deposited by holders of any licence, permit or
pass for the performance of the conditions of the same,
the accounts to be maintained and the returns to be submitted by licence-
or regulate the partnership in, or the transfer of, licenses."
63 of the Act provides that all rules made and notifications issued thereunder
shall be published in the Official Gazette, and shall have effect from the date
of such publication or from such other date as may be specified in that behalf.
about 15.3.2002, the State Government in exercise of its aforementioned power
made rules known as 'Chhattisgarh Excise Settlement of Licences for Retail Sale
of Country/Foreign Liquor Rules, 2002' ('the Rules', for short). "Excise
Year" has been defined in the Rules to mean the financial year commencing
from 1st April to 31st March of the calendar year.
provides for formation of groups of liquor shops; clause (iii) whereof
prohibits an applicant/firm/company from obtaining licences for more than two
groups of shops. Rule 5 provides for the period of licence which would be for
an excise year or part thereof. Rule 8 provides for procedure for grant of licence,
which reads as under :
for grant of licence
Whenever a new licence is proposed to be granted in an area or locality, the
licensing authority shall invite the applications for this purpose after giving
wide publicity through daily newspapers having circulation in that area.
list of shops of country/foreign liquor for which the licensing authority
proposes to grant licence shall be exhibited along with shopwise licence fee
minimum monthwise guaranteed quantity, security amount, and annual quantity in
office of Collector, Tehsil, District Excise Officer/Asstt. Commissioner excise
and Deputy Commissioner Excise (Flying squad)
Application for grant of license with application fee shall be submitted in the
prescribed form as appended to these rules as annexure-4.
The last date to be fixed for the receipt of application shall not be earlier
than ten days with effect from the date of publication of the advertisement in
the newspapers." Eligibility conditions for applicant are laid down in
Rule 9 which read as follows :
conditions for applicant. The applicant has to fulfil the following conditions
for obtaining the licence for shop/Group of shops of Country/foreign liquor.
Should be a citizen of India or a partnership firm whose
partners are citizens of India. No change in partnership shall be allowed
after settlement of shop(s) /group of shops except with the permission of the
Should be above 21 years of age.
Should not be a defaulter/blacklisted or debarred from holding an excise licence
under the provisions of any rules made under the Act.
Has to submit an affidavit duly verified by public notary as proof of the
following namely :
That he possesses or has an arrangement for taking on rent suitable premises in
that locality for opening the shops in accordance with the rules.
That he possesses good moral character and have no criminal background and have
not been convicted of any offence punishable under the Act or Narcotic Drugs And
Psychotropic Substances Act, 1985 or any other law for the time being in force
or any other cognizable and non-bailable offence.
That in case he is selected as licensee he will furnish a certificate issued by
Superintendent of Police of the district of which he is the resident, showing
that he as well as his family members possess good moral character and have no
criminal background or criminal record, within thirty days of grant of licence.
That he shall not employ any salesman or representative who has criminal
background as mentioned in clause (iii) or who suffer from any infectious or
contagious disease or is below 21 years of age or a woman.
That no government dues are outstanding against him." Rule 10 envisages
formation of a District Level Committee; whereas Rule 11 provides for selection
of licensees, clauses (b) and (c) whereof read thus :
The said committee shall select licensees from the list of applicants. In case
more than one applicants are found suitable for any particular group of shops
the committee shall select the licensee for such group of shops by lottery. In
case the selected applicant does not deposit the required amount according to
rule 13 and does not fulfil the prescribed formalities or is unable to arrange
suitable premises for the shops within stipulated period, the licensing authority
shall cancel the allotment and take steps for resettlement of the shops/group
case thee is no application for a particular group of shops or no applicant is
found suitable for a group of shops the licensing authority shall take immediate
steps for resettlement as per procedure laid down in rule 8." Rule 13
provides for payment of licence fee and security amount, which reads as under :
of licence fee and security amount In case an applicant is selected as
licensee, he shall deposit one month's amount of license fee and the security
amount within three days of being informed of his selection. If he fails to
deposit the amount of one month licence fee and security amount within
prescribed period, his selection shall stand cancelled and the said licensee
shall be debarred from holding any excise licence in future, anywhere in the
State and his applications fee shall also stand forfeited. A consolidated list
of such defaulters under this rule, along with their complete addresses shall
be forwarded by the District Excise officer/Assistant Commissioner to the
Excise Commissioner, who will circulate the consolidated list of the State to
all the licensing authorities of the State." Rule 23 provides for
suspension and cancellation of the licence, in the event any of the conditions
laid down therein is violated; clause (c) whereof is as follows :
the affidavit submitted by the licensee at the time of application is found
incorrect and assertions made therein are found to be false.
terms of the provisions of the said Rules, a format in which an application is
to be filed is prescribed providing for filing of an affidavit duly verified by
a public notary.
IN THE RULES AND CIRCULARS ISSUED BY THE COMMISSONER OF EXCISE:
about 9.3.2004, clause (c) of Rule 8 of the Rules was amended in the following terms
the application form and affidavit as per format prescribed by the Excise
Commissioner, along with application fee fixed under Rule 6 shall be submitted to
the licensing authority of concerning district or grant of license for retail
shops/group of country/foreign liquor, within the stipulated date and
time." Pursuant to or in furtherance of the said power conferred upon him,
the Commissioner of Excise prescribed formats of application form and affidavit
to be furnished with the application for country/foreign liquor shops/groups.
about 14.2.2004, a circular came to be issued by the Commissioner of Excise
whereby and whereunder it was directed that the applicants were not required to
file affidavits along with their applications as was laid down in the Rules;
but such affidavits may be filed after their selection was made. Sub-clauses
(1), (2) of clause 8 and clause 22 of the said circular read as follows :
APPLICATION FOR ALLOTMENT OF COUNTRY/FOEIGN LIQUOR SHOP/GROUP:
Application form for the year 2005-06 for country/foreign liquor retail
shops/groups which has been amended and published in notification issued by
this office is being enclosed and sent. Application for country/foreign liquor
retail shop can be made by any applicant in the specified enclosed format only.
Separate applications will be accepted for every group.
fee in accordance with the cost price of the concerned group should be in the
form of bank draft/bankers cheque/bank's cash order form a nationalized
bank/scheduled commercial bank or challan received after submitting the cash in
the treasury is mandatory to be produced in original with the application.
Applicant should not make any change or amendment in the format of application
form and application form will be accepted in prescribed format only.
For the year 2005-06, the Select Committee will make a draw using a computer
and select first, second and third applicant. It will be mandatory for those
selected first, second and third applicants to immediately produce an affidavit
duly verified by a notary. Selected applicants should not make any changes or
amendments to the format of the affidavit and the affidavit will be accepted in
the specified format only.
of the affidavit will be in accordance with the known format of 2004-05."
"22. AMENDMENT IN THE CHHATTISGARH EXCISE SETTLEMENT OF LICENCES FOR
RETAIL SALE OF COUNTRY/FOREIGN LIQUOR RULES,
settlement of retail shops/groups of country/foreign liquor for the year
2005-06, under application system, aforesaid directions are being issued and
accordingly proceedings shall be ascertained, even then where amendment is to
be done in the Chhattisgarh Excise Settlement of Licences for retail sale of
country/foreign liquor Rules, 2002, for that notification shall be sent
severally. Similarly, for licence fees prescribed for the year 2005-06 for licence
of F.L. 2 & F.L. 3, notification shall be sent separately."
notice inviting applications for grant of licence under the Act and the Rules
was issued on 14.2.2005, clauses (2), (3), (4), (5) and (9) whereof are as
As per the above programme, the Collector concerned shall publish the notice in
his district on the date fixed, wherein in respect of retail country/foreign
liquor shop/group, the minimum surety amount, duty amount, amount of licence
fee annual revenue, 1/12th part of licence fee and 1/12th part of the duty amount
on minimum surety amount and one month licence fee shall be mentioned.
allotment of the country/foreign liquor retail shops/groups, only those
persons/firms/companies shall submit the applications who are entitled for
getting the excise licence under the C.G. Excise Act, 1915.
applicants for allotment of country/foreign liquor retail shops/groups for the
year 2005-06 shall get the prescribed proforma from the office of Assistant
Excise Commissioner/District Excise Officer. On the prescribed proforma only,
the applicant by typing or handwriting regarding the country/foreign liquor
retail shop of the concerned district shall apply. For each group, the separate
application will be accepted. Along with the application form, as per the cost,
the application fees through the Draft/Bankers cheque/Cash Order of Bank of Nationalised
Bank/Scheduled Commercial Bank or by cash, shall be submitted in the Treasury
through original challan. The applicant shall not make any change or amendment
in the prescribed proforma and the applications in prescribed form will be
the year 2005-06, the selection of first, second and third candidates will be
made by computer through lottery system and they have to submit immediately the
affidavit certified by the notary. The selected candidate shall not make any
change or amendment in the affidavit and the affidavit will only be accepted in
the prescribed form.
allotment of shops/groups and their running for the year 20065-06 shall govern
as per the C.G. Excise Act, 1915 and the rules framed thereunder and the Chhattisgarh
Excise Settlement of Licences for retail sale of country/foreign liquor Rules,
2002 and the amended terms and conditions and the orders of the State Govt./Commissioner,
Excise/Collector/Assistant Excise Commissioner/District Excise Officer."
Pursuant to or in furtherance of the said notice inviting applications, about 2,64,703,.
applications were filed out of which about 3000 applications were rejected.
Selection process began in different districts by the District Level Committees
between the period from 9.3.2005 and 16.3.2005.
Excise Rules were further amended on or about 22.3.2005 in the following terms
the 22nd March, 2005 NOTIFICATION No.F-10/6/2005/CT/V(4).-In exercise of the
powers conferred under Section (d), (e), (f), (g) and (h) of sub- clause(2) of
sub-clause (3) of clause 62 of the Chhattisgarh Excise Act, 1915 (No.II of
1915), the State Government hereby makes the following amendment in the Chhattisgarh
Excise Settlement of Licenses for retail sale of Country/Foreign Liquor Rules,
2002, namely :
In the said rules, in rule 8, -
The existing clause (C) shall be substituted by the following clause (C), namely
The application form under rule-6 along with prescribed application fee shall
be submitted to the Licensing Authority of the concerned district within
prescribed date & time for grant of licence for retail shop/group of
country/foreign liquor in the proforma prescribed by the Excise Commissioner.
After clause (C) the following clause (C-1) shall be added, namely :
The first, second & third applicant selected for retail shop/group of
country/foreign liquor by the selection committee after lottery drawn by computer
must submit affidavit verified by the Notary in the prescribed proforma the
next day during office hours.
This amendment shall be effective for the settlement of Licenses for retail
sale shops of Country/Foreign liquor for the year 2005-06."
instant case originally arose out of a public interest litigation in Jitendra Pali
vs. State of Chhattisgarh (WP No.706 of 2005). Subsequently,
the other petitions came to be filed by candidates including Rishi Dixit vs.
State of Chhattisgarh (WP No. 956 of 2005). Both the writ
petitions were heard together and separate judgments were delivered in each of
them. The judgment in WP No.956 of 2005 came to be passed by the High Court on
31.5.2005, which is the subject matter of appeal arising out of SLP (Civil) CC
No 4529; while the judgment and order in WP No. 706 of 2005 came to be passed
by the High Court on 8.4.2005 which is the subject matter of appeal arising out
of SLP (Civil) No.8575 of 2005.
in the said writ application the changes made in the selection process, namely,
from manual to computer was in question; but an application for amendment of
the writ petition was made on 9.3.2005 wherein it was contended that the
selection process adopted by the State was vitiated, inter alia, on the premise
that no affidavit was filed by the applicants as was mandatorily required by
Rule 9 of the Rules.
contention raised on behalf of the State after the amendment dated 22.3.2005
before the High Court was that Rule 9 was directory in nature and not mandatory
and in any event, as the said rule was amended in consonance with the powers of
the State regarding retrospective amendment of the Rules, the selection process
was not vitiated. Now, this amendment validates with retrospective effect, the
filing of affidavits after the selections are made.
we consider the judgment passed by the High Court, we may notice that an
interim order was passed in the writ petition on 3.3.2005. On or about
7.3.2005, however, the said interim order was modified by the High Court directing
mentioned above, in view of the return has been filed and the matter is to be
heard and disposed of finally, we modify the earlier order of M.W.P. No.
593/2005, to the extent that the respondents may continue with the process of
selecting the licensees, however, if before the disposal of this writ petition
the process of selection of the licensees is completed, the respondents should
not communicate the order of their selection to the selected licensees."
With a view to complete the narration of facts, we may also mention that
several intervention applications were also filed by the alleged successful
High Court upon analyzing the provisions of the Act and the Rules framed thereunder
was of the opinion that the State was entitled to make the selection of the
eligible candidates through computer. It was, however, opined that the District
Level Committees did not make any scrutiny whatsoever to find out as to whether
the applicants concerned satisfied the eligibility conditions laid down in Rule
9 or not, as no information was required to be furnished in the format
prescribed by the Commissioner of Excise in that behalf. The High Court was
further of the opinion that the disclosure of such information by the
applicants even before the submission of applications were necessary so as to
enable the authorities to satisfy themselves about the fulfillment of different
eligibility conditions mentioned in Rule 9. Consequently, it was directed that
a fresh selection be made in terms of the extant rules.
High Court while rejecting the wider challenge on the legal policy, held :
The circular letter dated 14.2.2005 issued by the Commissioner of Excise was
contrary to the Rules insofar as eligibility criteria laid down in Rule 9
thereof were dispensed with.
The applications filed by the applicants were not properly scrutinized, except
the requirement of Rule 9(c), namely, whether the applicants were black-listed
or otherwise not eligible.
While holding that the application fees to the extent of 77 crores earned by
the State need not be refunded, it directed scrutiny of about 2.65 lakhs
applications by the respective District Level Committees for their satisfaction
that all eligibility requirements stand satisfied whereafter only the draw of
lottery may take place.
High Court, however, for the reasons stated in its judgment although not
directed for calling for fresh applications but mandated the State to consider
the necessary informations required from the applicants by way of affidavit
before the candidates are selected for grant of liquor licence.
BEFORE THIS COURT:
for grant of special leave to appeal have been filed by the State of Chhattisgarh as also by several selected
candidates. By an order dated 8.4.2005, this Court stayed the operation of the
impugned order subject to the condition that if the Government desires to award
the contract as an interim arrangement to the successful bidders, it shall do
so only after obtaining the necessary approval of the Committee already
constituted for consideration of these applications.
said order was communicated on 9.4.2005. The applications of the selected
candidates were scrutinized on 10.4.2005 and 11.4.2005 and licences were
granted to the so-called successful bidders on 11.4.2005 and 12.4.2005.
Desai, the learned Senior Counsel appearing on behalf of the State, would
submit that the High Court fell in grave error in interpretation/construction
of Rule 9 of the Rules inasmuch as it failed to take into consideration that
whereas clauses (a) to (c) contained therein are mandatory in nature, clause
(d) is directory in nature as the same was required to be fulfilled only upon
the selection of the candidates concerned.
learned counsel placed strong reliance, in this behalf, on a decision of this
Court in Dr. Mahachandra Prasad Singh etc. vs. Chairman, Bihar Legislative
Council and Others [(2004) 8 SCC 747]. According to the learned counsel, the
State, having the requisite power to amend the Rules with retrospective effect,
issued the Notification dated 22.3.2005 which was retrospective in nature.
[Reliance, in this connection, has been placed on The State of Madhya Pradesh
and Others vs. Tikamdas (1975) 2 SCC 100].
contended that the High Court also failed to construe properly the effect of
amended Rule 8 (c) in terms whereof affidavit to be verified before the public
notary in the prescribed format was required to be filed on the day following
the selection and, thus, the requirement of filing the affidavit along with
application in terms of the said rule was dispensed with. In any view of the
matter, the learned counsel would urge that having regard to the fact that all
candidates including the writ petitioners before the High Court understood the
rule in the same manner, namely, the affidavits were required to be filed after
the selection process was over and, thus, did not choose to file any affidavit
whatsoever and, thus, the rules should have been construed in such a manner.
The learned counsel placed on strong reliance, in this connection, on G.J.
Fernandez vs. State of Karnataka and Others [(1990) 2 SCC 488). In any event,
the same would amount to acquiescence on the part the writ petitioners. Strong
reliance in this behalf has been placed on Nain Sukh Das and Another vs. The
State of Uttar Pradesh and Others [(1953) SCR 1184]. It was submitted that the
validity of the rules/circulars having not been challenged by the writ
petitioners, the High Court fell in error in passing the impugned judgment. The
learned counsel would argue that one of the applicants was a lawyer and others
being interested persons, the writ petition in the nature of public interest
litigation was not maintainable. The learned counsel would submit that having
regard to the well-settled principles of law that the State despite Article 14
of the Constitution of India has a greater play in the joints while parting
with its exclusive privilege, non-compliance of Rule 9 could not be held to
have vitiated the entire selection process. Reliance, in his behalf, has been
placed on State of M.P. and Others vs. Nandlad Jaiswal and Others [(1986) 4 SCC
view of the matter, Mr. Desai, would argue that it is not a fit case where the
court should grant any relief in favour of the writ petitioners.
reliance, in this connection, has been placed on K.N. Guruswamy vs. The State
of Mysore and Another [(1955) 1 SCR 305].
A. Dave, learned Senior Counsel appearing on behalf of the Appellants in Civil
Appeal arising out S.L.P. (CC No. 4571), while supplementing the arguments of
Mr. Desai, pointed out that the amending rules having not been challenged and
having regard to the fact that the requirement of filing an affidavit has not
been given up, the High Court fell in error in holding Rule 9 as mandatory,
despite the fact that the said requirement was to be complied with only at a
Shanker Prasad, the learned Senior Counsel appearing on behalf of the
Appellants in Civil Appeal arising out of SLP No. 10653 of 2005 would contend
that even the unamended Rule 9 envisaged filing of an affidavit at a post
selection stage as would appear from the language used in clauses (a), (b) and
(c) as contrasted from clause (d) thereof. The amendment in the rules, the
learned counsel would contend, made the position patent when it was latent.
Rule 9, as Mr. Prasad would argue, was required to be read with Rule 13 and so
read it would be evident that the nature of requirement for filing an affidavit
was only post selection.
our attention to the fact that the mode of selection through lottery is
permissible in view of the decision of this Court in Rajendra Singh vs. State
of M.P. and Others [(1996) 5 SCC 460], Mr. Prasad would contend that the
requirement to comply with the rules should have been considered having regard
to the changed mode of selection in terms of Rule 11(b).
Interest Litigation, Mr. Prasad would urge, should not be entertained whereby
the economic policy adopted by the State in the matter of vending liquor is
challenged. Reliance, in this connection, has been placed on Nandlal Jaiswal
(supra). Mr. Prasad also placed strong reliance upon Balco Employees' Union (Regd.)
vs. Union of India and Others [(2002) 2 SCC 333] in support of his contention
that if the petitioner was not aggrieved, he cannot have locus standi to
maintain a writ petition.
C.S. Vaidyanathan, the learned Senior Counsel appearing on behalf of the
Appellants in Civil Appeal arising out of SLP (CC No.4579), would submit that
the object of the Act and the rules framed thereunder being to augment the
revenue and preventing adulteration of liquor; the state action can be
challenged only if it is unfair in the sense that nobody was given an
opportunity to participate in the auction. As in this case all persons were
treated similarly in pursuance of or in furtherance of the advertisement,
insofar as no applicant had filed any affidavit, it cannot be said that anybody
was prejudiced by reason of non-compliance of Rule 9.
learned counsel would also contend that the writ petitioner having himself not
filed any affidavit, he is estopped and precluded from questioning the alleged
violation of Rule 9, which only provides for compliance of a procedural
Rohtagi, the learned Senior Counsel appearing on behalf of the Appellants in
Civil Appeal arising out of SLP (CC No.4569) would also contend that
requirement of Rule 9(d) was only post selection.
J. Sorabjee, the learned Senior Counsel appearing on behalf of the Respondents,
on the other hand, would take us through various documents with a view to show
that the District Level Committees after passing of this Court's order dated
8.4.2005 proceeded to consider the applications filed by the successful
candidates in a post haste manner which would clearly demonstrate
non-application of mind on their part. The learned counsel pointed out that in
many cases there had been hardly any deliberation amongst the members of the
committee; while in some cases even affidavits were not filed. Drawing our
attention to Rule 11, the learned counsel would submit that in no case a
summary report was prepared so as to enable the Scrutiny Committee to scrutinize
the eligibility conditions. Mr. Sorabjee would argue that Rule 9 is mandatory
in nature and, thus, all applications for grant of liquor licence would call
for scrutiny. Even if such a consideration is read to be directory, no
substantial compliance thereof having been made, it was argued, the entire
selection process must be held to be vitiated in law. The learned counsel would
contend that from the affidavit filed by the State, it would appear that the
contents of the affidavits had not been verified in accordance with law and the
contents thereof had ex-facie been accepted on a pre-supposition that they were
correct although there exists no statutory rule empowering the Committee to
raise such a presumption.
A.M. Singhvi, the learned Senior Counsel appearing on behalf of the some of the
Respondents would urge that the functionaries of the State and/or the Selection
Committees, having regard to the nature of transaction were required to verify
the applications before selection. It was pointed out that despite the fact
that the High Court by an order dated 7.3.2004 prohibited the State from
disclosing the list of selected candidates, the so- called selected candidates
filed applications for grant of special leave to appeal before this Court on
the premise that they had been selected. It was submitted that the amendment
carried out in Rule 9 on or about 9.3.2004 was wholly irrelevant. Drawing our
attention to the judgment of the High Court, the learned counsel would submit
that it has rightly been found that sub-rule (3) of Rule 9 compared to the old
provisions contained therein in view of the language thereof clearly
demonstrates that Rule 9 is mandatory in nature. The amendment made in Rule 9
by reason of the notification dated 22.3.2005, Dr. Singhvi would argue, cannot
put the clock back as the entire selection process was completed by then.
G.L. Sanghi, the learned Senior Counsel appearing on behalf of some of the
Respondents would submit that keeping in view the fact that while exercising
its jurisdiction under the Act, the State is concerned with the maintenance of
public health and, thus, Rule 9 should be held to be mandatory particularly
having regard to the fact that such affidavit is also necessary for the purpose
of exercise of power by the State for suspension and cancellation of licence in
terms of Rule 23(1) (c) of the Rules.
conceived in Rule 9 being in public interest, Mr. Sanghi would contend, are
mandatory in character. It was pointed out that whereas in terms of amendment
dated 9.3.2004, the Commissioner of Excise had been empowered to prescribe the
format, he had no jurisdiction to do away with or dilute the statutory
requirements to file an affidavit as required by Rule 9 of the Rules.
Shrivastava, the learned Senior Counsel appearing for the some of the
respondents, would urge that the eligibility clauses contained in the Rules
must be held to be mandatory in nature and in support thereof reliance has been
placed on Ramana Dayaram Shetty vs. The International Airport Authority of
India and Others [(1979) 3 SCR 1014] and R. Prabha Devi and Others vs.
Government of India, Through Secretary, Ministry of Personnel and Training,
Administrative Reforms and Others [(1988) 2 SCC 233].
Dhawan, the learned Senior Counsel appearing on behalf of the writ
petitioners/Appellants, would, inter alia, submit that the interpretation
and/or construction of the rules must be made having regard to Article 47 of
the Constitution of India vis-`-vis the doctrine of 'res extra commercium'. The
learned counsel would contend that before the High Court a contention was
raised that a solvency certificate should be directed to be filed along with
the application for grant of licence as it would help in prevention of
investment of black money in the trade. The learned counsel would urge that the
courts in a situation of this nature will apply cautionary principles having
regard to the fact that the activities of the State must be responsible in
nature. Dr. Dhawan would submit that the rules have to be read as a whole and
not in a manner which would give undue advantage to persons who were not fit to
carry on the trade in liquor keeping in view the obnoxious nature thereof. The
rules were required to be applied from stage to stage, it was argued, having
regard to the purport and object thereof so that effective step may be taken by
the Committee to weed out the unwanted applicants.
not be necessary for us to consider as to whether the public interest
litigation should have been entertained by the High Court or not. The High
Court did entertain the public interest litigation without any objection and
ultimately allowed the same. Furthermore it is well settled that even in a case
where a petitioner might have moved the court in his private interest and for redressal
of personal grievances, the court in furtherance of the public interest may
treat it necessary to enquire into the state of affairs of the subject of
litigation in the interest of justice. [See Guruyayoor Devaswom 546 para 50]
and Prahlad Singh vs. Col. Sukhdev Singh (1987) 1 SCC 727]
public interest litigation was entertained the individual conduct of the writ
petitioners would take a backseat. There cannot be any doubt whatsoever that in
a given case a party may waive his legal right. In an appropriate case, the
doctrine of acquiescence or acceptance sub silentio may also be invoked. [See Haryana
State Coop. Land Dev. Bank vs. Neelam [2005 (2) SCALE 434], but the High Court,
in the instant case, has gone into the question with a wider perspective. This
Court is not only required to construe the provisions of the statute but also
to take into consideration the subsequent events which took place vis-a-vis the
action on the part of the State after passing of the interim order. The issue
as regard application of acquiescence or waiver. therefore in our opinion has
OF THE RULES:
Excise Act, 1915 and the rules framed thereunder are regulatory in nature. They
are being so enacted so as to ensure public health as trade in liquor is
considered to be obnoxious one. The State has a duty to see that its people do
not consume spurious or adulterated liquor.
Act and the rules no doubt contain provisions for cancellation and/or
suspension of the licence in the event the conditions laid down therein are
violated, but it is beyond any cavil that before a licence is granted, the
applicant must satisfy all the statutory conditions and meet the eligibility
requirements. [See Ramana Dayaram Shetty (supra) and R. Prabha Devi (supra).
Rule 8(e) provided for a requirement to furnish a bank draft from a
nationalized bank as earnest money. Rule 9 of the Rules preserves all other
eligibility requirements. The Circular dated 15.3.2003 dispensed with the
requirements as contained in Rule 8(e) of the Rules. The number of outlets were
increased by 92 from 812 to 904. The High Court has noticed that none of the
eligibility requirements except those as contained in Rule 9(c) of the Rules
had been observed by the Committee. The State has earned Rs. 77 crores from
2.65 lakhs applicants whose eligibilities were not verified.
the State while granting a licence in favour of a person dealing in liquor
should ensure that the same is granted to a person who would be otherwise
eligible to deal therewith.
provisions of the Act and the Rules framed thereunder contain several
restrictions and limitations which are imposed upon the applicants.
for selection must be fair and in consonance with the provisions of the Act and
persons who fulfill the said eligibility criteria and satisfy the requirements
laid down under the Act and the Rules only could file such applications which
required scrutiny thereof so as to enable the statutory authorities to consider
their cases for grant of licence. The advertisement issued by the State calls
upon only such persons to file applications who are suitable therefor, which in
turn would mean that the applicants must satisfy the authorities that they are
eligible for grant of licence. The applicants must also demonstrate that they
are suitable for grant of licence as in the event of their being found
unsuitable, steps are required to be taken by the committee for resettlement of
the shops, wherefor procedures laid down in Rule 8 were required to be complied
restriction is contemplated in the matter of compliance of the terms and
conditions of the licence. Rule 4 of the Rules permits not more than two groups
to a single licensee.
provides that the eligibility conditions should be scrutinized before an
application is made. Rule 9 is in two parts. It deals with the eligibility
conditions of the applicant. It does not make any exception as regard fulfilment
of different clauses inasmuch as the said rules begin with the expression
"the applicant has to fulfil the following conditions". Such
conditions are required to be fulfilled for obtaining the licence. Whereas clauses
(a), (b) and (c) thereof are essential conditions which would debar a person
from filing an application and if such an application is filed, the same would
be liable to be rejected at the outset. An applicant having regard to the
expressions used in clause (d) has to file an affidavit. Filing of such
affidavit, therefore, is mandatory. However, affidavit is required to be filed
by the applicant to show that :
possesses or may arrange for taking on rent suitable premises;
possesses good moral character and has no criminal background and has not been
convicted of any offence punishable under the Act or Narcotic Drugs and
Psychotropic Substances Act, 1985 or any other law for the time being in force
or any other cognizable and non- bailable offence.
(3) of sub-rule (d) of Rule 9 enjoins a duty upon the authorities to get the
same verified whereupon only a certificate is required to be issued by the
Superintendent of Police of the district of which he is the resident in the
event his selection as a licensee showing that he as well as his family members
possess good moral character and there is no criminal background or criminal
record against them. Such certificate is required to be filed within thirty
days from the grant of licence. He also in terms of the said clause (5) of
sub-rule (d) of Rule 9 is to state that no government dues are outstanding
in view that a large number of applications are required to be dealt with, the
rules contemplate constitution of a committee comprising the Collector of the
District and the District Excise Officer/Assistant Commissioner of the
District, who would be the enforcing agency. Rule 11 provides for the mode and
manner in which selection is to take place.
(a) thereof provides for preparation of a summary report by the Member
Secretary for the purpose of placing it before the District Level Committee.
Clause (b) thereof provides that in the event the Committee selects licensees
from the list of the applicants and in the event more than one applicants are
found suitable for any particular group of shops, the Committee shall select
the licensee for such group of shops by lottery, in which event the selected
applicant has to deposit the required amount according to Rule 13 and fulfill
the other prescribed formalities including the requirement to comply with the
provisions of clause (1) of sub-rule (d) of Rule 9. Clause (b) of Rule 11,
therefore, presupposes that before a licence is granted the requirements
contemplated therein should be complied with. A candidate before selection must
be found to be eligible therefor. It postulates that before the actual licence
is granted, the conditions precedents as contained therein are required to be
fulfilled, failing which the Committee must take steps for resettlement of
shops or group of shops. The question of payment of licence fee or security
amount arises when an applicant is selected for grant of licence in terms of
Scrutiny Committee is also enjoined with a duty to see as to whether a person
was a defaulter or not.
9, as it originally stood, thus, on proper construction must be held to have
laid down that an affidavit was required to be filed by the applicant which is
fortified by the fact that Rule 23(1)(c) contemplates that if the affidavit
submitted by the licensees at the time of application is found incorrect and
assertions made therein are found to be false, the Licensing Authority would be
empowered to suspend or cancel the licence. The rule read as a whole,
therefore, provided for filing of an affidavit at the time of grant of licence.
Furthermore the vary fact that a circular was issued by the Commissioner of
Excise asking the applicants to file an affidavit after the selection process
is over itself is a pointer to the fact that filing of such an affidavit along
with the application was considered by all concerned to be necessary. The
advertisement was also required to be issued in consonance with the rules and
not in derogation thereof. It would, therefore, be not correct to contend that
whereas clauses (a) to (c) of Rule 9 postulates compliance thereof at a
pre-selection stage, clause (d) postulates compliance at the post-selection
stage. The distinction between compliance of requirements at pre-selection and
post-selection is also evident from reading Rule 9(d)(1)(2) and Rule 9(d)(3)
separately, inasmuch whereas the former clearly postulates compliance at
pre-selection stage, the latter deals with a situation which is post-selection.
expression "has to submit an affidavit" ex facie is mandatory in
nature and such affidavit necessarily has to deal with the requirements
contained in clauses (1) and (2). If the rule making authority was of the
opinion that such an affidavit was required to be filed at a later date and not
with an application, it could have said so in express terms; as has been done
in the case of sub-rule (3) of Rule 9. In fact, all the sub clauses were to be
a part of affidavit as clauses (3), (4) and (5) would be only by way of undertaking,
although the requirements of clauses (3) and (4) can be fulfilled after the
grant of licence. The same should appear from the format of the affidavit
question as to whether a statute is mandatory or directory would depend upon
the statutory scheme. It is now well known that use of the expression
"shall" or "may" by itself is not decisive. The court while
construing a statute must consider all relevant factors including the purpose
and Anr. (2004) 8 SCC 402.
filing of an affidavit in the prescribed format is a statutory requirement
under the Rules. Filing of such an affidavit is necessary as in the event the
same on verification is found to be incorrect, not only the deponent can be
proceeded against but his licence would also be liable to be cancelled. Filing
of an affidavit under the Rules is, therefore, mandatory in character.
Commissioner of Excise issued a circular letter dated 14.2.2005 which power
evidently he did not possess in terms of Section 7 of the Act.
the State may delegate its power to the Commissioner of Excise, such a
delegation cannot be made in relation to the matters contained in the rule
making power of the State. The matters which are, therefore, outside the
purview of the rules only could be the subject-matter of delegation in favour
of the Commissioner of Execise. The Commissioner of Excise is a statutory
authority. He is bound to exercise his power only within the four- corners of
the Act or the rules framed thereunder and not de' hors the same.
Desai is also not correct in his submission that clause 22 of the said circular
contemplates a future amendment in the rules. Even if the same contemplates a
future amendment, the same would not sub-serve the statutory requirements
inasmuch as the Commissioner of Excise was not supposed to know as to how the
existing rules would be amended and whether the same would be applied
prospectively or retrospectively. The Court cannot draw a presumption that the
Commissioner of Excise could proceed on a pre-supposition that his action in
issuing a circular contrary to rules would stand ratified by retrospective
operation of the rules. A statutory authority, it is trite, must exercise his
jurisdiction with the four-corners of the statute and cannot deviate or depart therefrom.
interesting to note that the Rules were amended only for one excise year. The
rule making power should be exercised having regard to the policy to be adopted
by the State. Such a policy may vary from time to time. Having regard to the
exigency for the situation, rule may also be amended but we do snot see any
reason as to why an attempt should be made to amend the rule only with a view
to justify an illegal action on the part of the Commissioner of Excise for the
year 2005-06. Although the validity of the rules have not been challenged, the
court cannot shut its eyes from considering this aspect of the matter. We are
not oblivious of the fact that framing of rules is not an executive act but a
legislative act; but there cannot be any doubt whatsoever that such subordinate
legislation must be framed strictly in consonance with the legislative intent
as reflected in the rule making power contained in Section 62 of the Act.
reason of the amendment carried out in the rules in terms of the notification
dated 9.3.2004, the Commissioner of Excise was empowered to prescribe a format
of the application form and affidavit. Such an application or affidavit could
be filed within the date and time stipulated by him but the same would not mean
that while prescribing a format in respect of an application form or affidavit,
he became authorized to dilute the statutory requirements or dispense with the
same. No exception can although be taken as regard the format relating to the
applications, strong exception has to taken as regard the format of the
affidavit. Clauses 5 and (6) of the affidavit are as under :
That the Deponent neither owes any dues to the government or public works nor
his name exists in the black list and neither he has been debarred to acquire
excise licence under Chhattisgarh Excise Act, 1915 and rules made thereunder
and amended Chhattisgarh Excise Settlement for License for Retail Sale of
Country/Foreign Liquor Rules, 2002."
That the Deponent bears good moral character. He has not been held guilty of
non-bailable offence under Chhattisgarh Excise Act, 1915 or Narcotics Drugs and
Psychotropic Substances Act, 1985 or any other procedure or law promulgated
that time." A bare comparison of the said clauses with Rule 9 would
demonstrate that the same do not satisfy the statutory requirements ARE THE
AMENDING RULES RETROSPECTIVE :
this juncture, we may notice the effect of the amendment effected in terms of
the notification dated 22.3.2005. But before we proceed to do so, it may be
noticed that indisputably the entire selection process was over by 16.3.2005.
reason of the said notification, clause (c) of Rule 8(1) was substituted. The
substituted provisions lay down that the application form prescribed in terms
of Rule 6 together with the prescribed application fee shall be submitted in
the proforma prescribed by the Commissioner of Excise.
again clause (C-1) was added after clause (c) providing that the first, second
and third applicants selected must submit an affidavit duly verified by the
public notary in the prescribed proforma next day during office hours. The
notification does not state that the amendment will have a retrospective
effect. In absence of any express provisions contained in the notification, the
court will not ordinarily presume the same to be retrospective in nature.
statute must be read reasonably. A statute should not read in such a manner
which results in absurdity. A statute, on its plain language, although
postulates a prospective operation, it cannot be held to be retrospective only
because it would apply for the excise year for which applications were invited
despite the fact that the selection process made thereunder is over. The State
is bound by the terms of the advertisement and the rules existing at that time.
The statutory authorities and the applicants are expected to follow the law as
it stood thence. No step could be taken on the pre-supposition that the rule
would be amended. It is also not a case where draft rules were already in
existence and such draft rules had been applied, which could otherwise be
permissible in law. But a situation of this nature is not contemplated in law.
Desai would argue that as amendment has to be effective for the settlement of licence
for country/foreign liquor retail shops for the year 2005-06, the same may be
held to be retrospective in nature. Even for the said purpose, it was expected
of the rule making authority to say so expressly.
may not be challenged as ultra vires the Act, but its interpretation can
certainly be an issue. The rule if given retrospective effect would become
unworkable and would not capable of being given effect to.
cannot be framed keeping in view that the Commissioner has issued certain
circular which is illegal. By reason of a rule making power, an invalid action
on the part of the Commissioner of Excise cannot be validated.
selection process is over upon following a procedure which is illegal, by
reason of a rule making power the same cannot be rendered valid simply by
directing that the same shall govern the selection of applicants for grant of licence
under the Act for the year 2005-06.
question as to whether it can be given effect to or not is, thus, required to
be judged on its own without reference to the circular issued by the
Commissioner of Excise. Cassus Omissus, it is well known, cannot be supplied by
the court. [See P.T. Rajan vs. T.P.M. Sahir and Others (2003) 8 SCC 498] We
have noticed hereinbefore that despite the fact that the order of injunction
was issued by the High Court while modifying the interim order on 7.3.2005, the
State was asked not to publish the selection list. The contentions raised in
the petitions for grant of special leave to appeal, however, leave no manner of
doubt that such selection list whether in violation of the order of the High
Court or otherwise had been published. If the said rules are considered to be
retrospective, admittedly, the affidavits had not been filed on the next day of
such selection and, thus, the rules are not capable of being implemented.
situations may arise in different cases in the matter of grant of injunction as
was noticed by this Court in Deoraj vs. State of Maharashtra and Others [(2004)
4 SCC 697] stating :
Situations emerge where the granting of an interim relief would tantamount to
granting the final relief itself.
then there may be converse cases where withholding of an interim relief would
tantamount to dismissal of the main petition itself; for, by the time the main
matter comes up for hearing there would be nothing left to be allowed as relief
to the petitioner though all the findings may be in his favour. In such cases
the availability of a very strong prima facie case of a standard much higher
than just prima facie case, the considerations of balance of convenience and
irreparable injury forcefully tilting the balance of the case totally in favour
of the applicant may persuade the court to grant an interim relief though it
amounts to granting the final relief itself.
course, such would be rare and exceptional cases. The court would grant such an
interim relief only if satisfied that withholding of it would prick the
conscience of the court and do violence to the sense of justice, resulting in
injustice being perpetuated throughout the hearing, and at the end the court
would not be able to vindicate the cause of justice. Obviously such would be
rare cases accompanied by compelling circumstances, where the injury complained
of is immediate and pressing and would cause extreme hardship. The conduct of
the parties shall also have to be seen and the court may put the parties on
such terms as may be prudent." Even the manner in which the interim order
of this Court is given effect leaves a lot to be desired. It is not in dispute
that the order of this Court dated 8.4.2005 was communicated on 9.4.2005.
10.4.2005 was a Sunday and, therefore, it was not expected that the services of
the public notary would be available, or the stamp would be available on that
day for affirming affidavits. The affidavit filed on behalf of the State
clearly shows that on 09.04.2005 itself , that is the day on which the order by
this Court was communicated, the concerned persons were informed as regard
their selection, if not prior thereto. The State's letter dated 9.4.2005
relating to Application No.01010140 shows that thereby one Ramesh Prasad Dheemar
was informed that he had been selected for Desi/English wine shop/Circle Tikrapara
Circle as a first licensee. Even the unnecessary stipulations had not been
scored out therefrom. He was not asked to file an affidavit by 10.4.2005. He
was merely asked to deposit 1/12th part of the payable duty as yearly security
within three days and 1/12th part of yearly licence fee by 30.4.2005, whereafter
licence was to be granted to him. We fail to understand as to how without
making a scrutiny as regard compliance of conditions, licences were granted on
11.4.2005 and 12.4.2005. The affidavit of the State reveals :
the process of selection of Applicants under the Circular dated 14.2.2005 had
already been completed on 16.3.2005 and a list of the Applicants selected after
the draw of lotteries had been submitted before the Hon'ble Chhattisgarh High
Court on 22.3.2005. A typed copy of the list of successful Applicants as
submitted before the Hon'ble Chhattisgarh High Court is annexed hereto and
marked as Annexure "RCG-2".
accordingly based on the result of the selection process, the Collectors of all
Districts in the State called upon the selected Applicants to submit affidavit
in the prescribed format. The affidavits submitted were duly processed/scrutinized
by the District Level Committee constituted in each district as per Rule 10 of
the 2002 Rules (comprising of the Collector as the Chairman and Assistant
Commissioner/District Excise Officer as the Member Secretary). The licences
were thereafter granted on 11.4.2005/12.4.2005 subject to the condition that
the same were only temporary and were granted under an interim arrangement and
were subject to further orders to be passed by this Hon'ble Court. Thus, the
temporary licences for the year 2005-06 for running country/foreign liquor
retail shops in the State have been issued after following the process
prescribed in the 2002 Rules and after scrutiny of affidavits and consequent
approval by the Committee already formed under the Rules, as had been directed
by this Hon'ble Court. An English translated copies of the information received
from each of the 16 districts in the State granting temporary licences to the
successful Applicants is enclosed hereto and filed as Annexure "RCG-3 (Colly.)".
have noticed hereinbefore that even in the notice, the selected candidates had
not been asked to submit affidavits in the prescribed format.
not expected of the statutory functionaries to ask the selected candidates to
comply with the requirements orally. It is beyond our comprehension as to why
such a post haste action was taken by the State.
attention has been drawn to the following charts prepared by the Respondents :
OF SAME ADDRESS OF DIFFERENT FAKE SELECTED APPLICANTS OF RAIGARH, CHAMPA
JANJGIR AND KAWARDHA DISTRICTS 3, Shankar Nagar Raipur Near Dr Anoop Verma, Katora
Talab, Civil Lines, Raipur Behind Prince Hotel, Katora Talab, Civil Lines Raipur
27, Kholi Vikas Nagar, Bilaspur H. No.15/262 Near Chandnia Para, Canal, Janjgir
Pg Names Pg Names Pg Names Pg Names Pg Names 77 Raj Kr. Singh 79 Rajendra Prajapati
222 Vikas Jaiswal 82 Rakesh Singh 86 Ram Bachan Yadav 78 Munna Gupta 84 Surendra
Lal 87 Jitendra Singh 82 Babloo Kr. Rai 88 Santosh Kumar 78 Jai Prakash Singh
90 Shiv Narayan Jaiswal 259 Urmila Devi 220 Jitendr Singh 80 Guddu Moar 260 Satish
Singh 222 Vinay Gupta 81 Raghven dra Kumar Singh 258 Vinod Pandey 258 Avadh Narayan
Shukla 258 Shyam Lal Gupta 259 Jagdish Yadav 259 Bunty Singh Jamat Mandir Para,
Kavardha 30, Block B, Quarter Mohalla, RSB Tower, Taarbahar, Bilaspur Lochan Nagar,
P.S. Chakradhar Nagar, Dist.
Punjabi Colony, Dayal Band, Bilaspur Nehru Nagar, Bilaspur Pg Names Pg Names Pg
Names Pg Names Pg Names 79 Pramod Singh 91 Parikha Paswan 92 Ashok Kumar Singh
93 Surjit Singh Bhatia 80 Sushil Kumar 83 Shailend ra Singh 222 Stayend er
Singh 92 Lakshmi Prasad 94 Ravindr Nath Upadhy a 80 Manoj Singh 85 Santosh
Kumar Shiv Narayan Jaiswal 227 Umesh Singh 258 Dharme mdra Singh 223 Munna
Singh H.No.7/279 Pursuram Ward FCI Gowdown Bhatapara, Raipur Shankar Nagar,
Dist. Janjgir 1/73, Near Ranjit Singh Dhaba, Shivrinarayan, Tehsil Navagarh,
5/12, Bazar Para, Dhara Dwar, Dist. Janjgir Chanpa H. No.190 Pratap Ganj Thana Sarngarh,
Raigarh Pg Names Pg Names Pg Names Pg Names Pg Names 85 Sanjiv Kumar Gupta 83
Raja Piyush Narayan 83 Mahendr a Singh 228 Parmesh war Singh 228 Santosh Kr.
Singh 87 Dashrat Yadav 92 Kamakh ya Narayan Singh 91 Arvind Singh 228 Santu
Singh 229 Dilipdas 222 Sanjiv Kr. 90 84 Lakshmi Pd Gupta 224 Vishnu Singh 226 Uday
Singh 227 Abhima nu Gupta From a perusal of the aforementioned charts, it would
appear that different persons belonging to different communities had filed
different applications showing the same address. Even persons having the same
name had filed more than one application.
Desai submitted that these allegations give rise to separate cause of actions.
We do not agree.
we do not intend to put a seal of finality on the said issue, we are
constrained to observe that having regard to the actions of the statutory
functionaries, the entire exercise of the scrutiny as regard ascertainment of
the eligibility of the candidates vis-`-vis selection process is required to be
undertaken again by the Selection Committee.
this Court is entitled to take into consideration subsequent events so as to do
the complete justice to the parties. [See Board of Control 121]. When this
Court passed an interim order it was expected that the statutory requirements
therefore, shall be complied with. Even if Rule 9 is held to be directory,
substantial compliance thereof was necessary. A mandatory statute requires
strict compliance whereas a directory statute requires substantial compliance.
Even if a statute is directory, the State cannot say that the requirements
contained therein do not envisage compliance thereof. The authorities of the
State cannot raise a plea that they would not even notice the inherent defects
contained in the application.
could not proceed on a presupposition, for which there is no legal sanction,
that contents of the affidavit would be correct. No summary report required to
be prepared by the Member Secretary for its placement before the Committee
appears to have not been prepared. The Rules postulate that each and every
application must be examined carefully. Mere fact that a large number of
applications have been filed, as a result whereof the State had been able to
obtain crores and crores of rupees by itself did not entitle the State to
dispense with the statutory requirements. The application fees were not meant
to be utilized for the purpose of earning revenue but to meet the administrative
charges required therefore. Application fees cannot be equated with tax.
the state has the exclusive privilege to deal in liquor but it has also to be
borne in mind that it has a constitutional and legal duty to safeguard the
public interest and public health. The conditions for grant of licence as laid
down in the statute are required to be observed only with a view to sub serve
the constitutional goal and not to subverse the same.
affidavit required to be filed in whatever format it may be must disclose all
the informations required under the law which would enable the statutory
authorities to verify the same. Licences to deal in liquor cannot be granted on
mere asking by a person and only because he is in a position to fulfil the
requirements as regard deposit of licence fee and other charges.
the State is entitled to raise its revenue but it is also obligated to fulfil
its constitutional and statutory duties.
RELIED UPON ON BEHALF OF THE APPELLANTS:
Nandlal Jaiswal (supra), whereupon Mr. Desai placed strong reliance, this Court
was concerned with grant of licences for running distilleries. Therein, this
Court observed that the legislature should be allowed some play in the joints
because it has to deal with complex problems but it did not say that a
statutory authority while exercising its statutory functions may do away with
or dilute the statutory mandates.
G.J. Fernandez (supra), again this Court was interpreting the conditions of NIT
and not the statutory rules. It is only in the fact situation obtaining therein
it was observed that the way in which the tender documents issued by it had
been understood and implemented by the KPC had been explained in its 'note',
which sets out the general procedure which the KPC was following in regard to NITs
issued by it from time to time.
said decision has no application in a case requiring compliance of statutory
Mahachandra Prasad Singh (supra), this Court was concerned with interpretation
of an election of the Bihar Legislative Council Members (Disqualification on
Ground of Defection) Rules, 1994. While considering the submission that an
affidavit which is required to be filed in terms of sub- rule (6) of Rule 6 of
the Rules, the Court held that the provisions thereof are not so mandatory in
nature that even a slight infraction of the Rules would render the entire
proceedings initiated by the Chairman invalid or without jurisdiction. It was
in that sense the provisions were held to be directory in nature. We may notice
that in terms of the Civil Procedure (Amendment) Act, 2002, a plaint must be
verified by an affidavit, which is mandatory in nature.
Sukh Das (supra) this Court was concerned with a case where the election of the
municipal member was sought to be set aside on the ground of alleged violation
of Article 15(1) of the Constitution. In that case it was held that the
petitioners therein never asserted their rights by taking appropriate
proceedings to get the bar under Article 15(1) removed and in that situation,
this the Court did not exercise its jurisdiction under Article 32 of the
may be, as we have already remarked, that the petitioners could claim such
relief as rate-payers of the Municipality in appropriately framed proceedings,
but there is not question of enforcing petitioners' fundamental right under
article 15(1) or article 14 in such claim. There is still less ground for
seeking relief on that basis against respondent 3 who is only a nominated
member" The said decision has no application in the instant case.
K.N. Guruswamy (supra), the appellant therein sought to enforce his right in
obtaining a contract to which he was entitled to but no relief was granted as
the excise year had already expired. Issuance of such a writ was found to be
resulting in futility. Such is not the case herein.
Singh (supra), this Court held that the jurisdiction of the High Court under
Article 226 is not intended to facilitate avoidance of obligations voluntarily
incurred, though the licensees are not precluded from seeking to enforce the
statutory provisions governing the contract.
writ petitioners herein filed a writ at a pre-selection stage and furthermore
have not sought for enforcement of the contract.
Employees' Union (supra), this Court was concerned with an economic policy of
the State which is not the case herein.
it is now beyond any cavil that economic policies of the State although
ordinarily would not be interfered with, but the same is not beyond the pale of
judicial review. [See Cellular Operators Association of India and Others vs.
Union of India & Others (2003) 3 SCC 186] It is also not a case where no
relief can be granted to the writ petitioners, as was done in the case of K.N. Guruswamy
(supra), having regard to the fact situation obtaining therein.
WE ISSUE GUIDELINES:
parting, we make it clear that in these appeals we did not go into the larger
question raised by Dr. Dhawan that the State must insist for a solvency
certificate keeping in view the similar provisions contained in the statutes
enacted by the other States, nor this Court, as at present advised, is inclined
to issue the requisite guidelines therefor.
cannot, however, be any doubt or dispute that having regard to the several
decisions of this Court, e.g. The State of Bombay vs. R.M.D. Chamarbaugwala
[(1957) SCR 874], M/s Fatehchand Himmatlal and Others etc. vs. State of Maharashtra
etc. [(1977) 2 SCC 670], Khoday Distilleries Ltd. and Others vs. State of
Karnataka and Others [(1995) 1 SCC 574], B.R. Enterprises etc. vs. State of
U.P. and Others etc. [(1999) 9 SCC 700], State of A.P. and Others vs. Mcdowell
& Company and Others [(1996) 3 SCC 709], State of Punjab and Another vs. Devans
Modern Breweries Ltd. and Another [(2004) 11 SCC 26], trade in liquor is
considered to be res extra commercium although tobacco produce has not been
declared so. [See Godawat Pan Masala Products I.P. Ltd. and Another vs. Union
of India and Others [(2004) 7 SCC 68]. The State while exercising its power of
parting with its exclusive privilege to deal in liquor has a positive
obligation that any activity therein strictly conforms to the public interest
and ensures public health, welfare and safety. Strict adherence to the
requirement to comply with the statutory provisions must be considered from
question, however, which now falls for consideration is as to what order should
be passed in the peculiar facts and circumstances of this case.
this case the mode of selection is in question. All the parties participated in
the selection process. Some of them became successful. They had not complied
with the statutory requirements not because they were not willing to do so but
because the statutory authorities were not correctly advised. The conduct of
the statutory authorities although must be deprecated but that by itself, in
our opinion, may not come in the way of the successful candidates in getting
the just relief.
in view the peculiar facts and circumstances of this case, we intend to issue
the following directions :
Member Secretary shall scrutinize all the applications of the successful
candidates afresh and prepare a summary report within one week from date.
Irrespective of the format prescribed by the Commissioner of Excise, each of
the selected candidates must file an appropriate affidavit, which would be in
strict compliance of the requirement of Rule 9.
Such affidavits must be filed before the respective committees within one week
from date, the contents whereof would be verified in terms of Order 6 Rule 15
of the Civil Procedure Code. The said affidavits shall be scrutinized by the
Committee so as to enable them to arrive at a finding as to whether the
applicants fulfil the eligibility criteria and are otherwise suitable for grant
of licence under the Act and the rules.
The writ petitioners or any other person in the locality may file appropriate
applications before the said Committee with a view to show that the selected
candidates do not fulfill the eligibility criteria or are debarred or are
otherwise unsuitable from obtaining a licence under the Act.
Such objections may also be filed within two weeks from date. The Committee may
consider the said objections and, if necessary, may call for further or better
particulars from the selected candidates so as to satisfy themselves about
their eligibility etc.
The respective District Level Committees shall strictly verify and scrutinize
the affidavits as also other documents furnished by the said applicants so as
to arrive at a decision that the statutory requirements have been complied with
upon application of their mind.
The members of the Committee are made personally liable to see that all
statutory requirements are complied with. They would strictly apply the
statutory provisions as regard eligibility and suitability of the candidates.
The aforementioned exercise by the Committee should be completed within one
month. In the event, any affidavit filed by a selected candidate either
pursuant to this order or filed earlier in the format prescribed by the
Commissioner of Excise is found to be incorrect, strict action in accordance
with law shall be taken against him
The Superintendent of Police of each district within whose jurisdiction the
selected candidates ordinarily reside shall verify the antecedents and other
relevant particulars of the selected candidates vis-`-vis their
eligibility/suitability to obtain a licence and submit a report to the
Committee by 12.6.2005 which would be strictly in terms of sub-rule (3) of Rule
9. While issuing such a certificate in favour of the selected candidates by
12.6.2005, he shall also file a copy of the report before the Committee.
direct the Chief Secretary of the State and Commissioner of Excise to act
strictly in accordance with law and oversee the functioning of the Scrutiny
the State and the Commissioner of Excise come across misconduct on the part of
any of the officers including the members of the Committee, strict action must
be taken against the concerned officer.
The selected candidates in the meanwhile may carry on the trade in liquor
pursuant to the licence granted in their favour but the same shall be subject
to this order as also the decision of the Scrutiny Committee.
Writ Petitioners and the Respondents shall be at liberty to mention before the
High Court for appropriate order(s).
appeals are disposed of on the aforementioned terms. No costs.