TMI Blog2013 (10) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... of liquor is with the State and it is only a privilege that a licensee has in the matter of manufacturing and vending in liquor - It is trite law that a Court of Law is not expected to propel into “the unchartered ocean” of State’s Policies - State has the power to frame and reframe, change and re-change, adjust and readjust policy, which cannot be declared as illegal or arbitrary on the ground that the earlier policy was a better and suited to the prevailing situations. Situation which exited in the year 1998 had its natural death and cannot be revised in the year 2013, when there is total ban. DISCRETION AND DUTY - The powers, conferred on the Commissioner as well as the Government, have to be understood in the light of the Constitutional scheme bearing in mind the fact that the trade or business which is inherently harmful can always be restricted, curtailed or prohibited by the State, since it is the exclusive privilege of the State - State can always adopt a “restrictive policy”, even in cases where the applicants have satisfied all the conditions stipulated in the rules and the policy permits granting of licences - the satisfaction of the conditions laid down in 1975 Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt with its exclusive privilege, in the matter of granting licence for establishing distilleries under the Foreign Liquor (Compounding, Blending and Bottling) Rules, 1975 (for short 1975 Rules ) read with Section 14 of the Abkari Act (for short the Act ). 3. M/s Kandath Distilleries, respondent herein, claimed to have submitted an application dated 12.1.1987 before the Commissioner of Excise for a licence to establish a compounding, blending and bottling unit in the Palakkad District. Few others had also filed similar applications for licence for setting up distillery units in the State of Kerala. All of them were directed to first obtain the approval of the Government of India for the setting up of new blending and bottling units and, thereafter, to approach the State Government. This Court, however, vide its judgment dated 29.1.1997 in Writ Petition No. 322 of 1996 (Bihar Distillery and Another v. Union of India and Others) took the view that the power to permit the establishment of any industry engaged in the manufacture of portable liquors, including Indian Made Foreign Liquors (IMFLs), beer, country liquor and other intoxicating drinks is exclusively vested in the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year 1998 and prior to that, large number of applications for licences for establishing distillery units in various districts in the State of Kerala. The Government, therefore, constituted a Scrutiny/Selection Committee to shortlist the applications received for setting up of IMFL Units, as per G.O. (Rt.) No. 157/99/TD dated 3.3.1999. The Government considered the recommendations of the Committee in detail and, vide G.O. (Rt.)/689/99/TD dated 29.9.1999, took a policy decision not to grant any more licences for setting up the distillery units in any part of the State. The order was communicated to the respondent by the Joint Excise Commissioner vide his letter dated 11.11.1999. 7. Respondent then preferred O.P. No. 7727 of 2000 before the High Court to quash the above mentioned Government order dated 11.11.1999 contending that its application also should have been considered along with the applications submitted by M/s Amrut Distilleries, Bangalore, M/s. Empee Distilleries, Madras, M/s. K. S. Distillery, Kannur and M/s. Elite Group of Companies, Thrissur, in the year 1998. Respondent, however, did not challenge the licences granted for establishing the units in the Pala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Bottling) units are received, they are processed separately. The decision taken in each application may be based on the facts the circumstances akin to the individual application and may not be a common decision. Licenses were given on the applications of M/s Amrut Distillery, Palakkad, Empee Distillery, Palakkad, Elite Distillery, Trissur KS Distilery, Kannur during the period as alleged by the petitioner. At the same time applications from Kandath Distillery, S.R. Distillery, Sree Chakra Distillery, Rajadhani Distilleries etc. were rejected. Government cannot grant the privilege to all those who had applied for such licence, for a host of reasons. Restrictions have to be imposed, which is permissible under the Constitution. The Government has with effect from 29/9/99 issued Government Order deciding not to grant fresh licenses for Distillery and Compounding (Blending bolting) unit. The granting of licence for the Distillery Compounding (blending bottling) units is a prerogative of the Government and not the right of the petitioner. The directions and the communications from the offices to the petitioner are only the statutory requirements for processing the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended that in the year 1998, four licenses were granted on 20.5.1998, 06.08.1998 and 20.09.1998 respectively. From the files it is seen that the above licences were granted on applications which were submitted during 1995, 1996 and 1997 respectively. From 3.2.1998 to 21.11.1998 Government received 52 applications for establishing compounding, blending and bottling units of Indian made foreign liquor. The Excise Commissioner as per letter No. XC3-15555/98 dated 25.11.1998 reported that there was an unprecedented flow of application and the Government constituted a scrutiny committee as per GO (Rt) No. 157/99/TD dated 3.3.1999 to shortlist the application. As on 21.11.1998 the date on which the petitioner made the application for compounding blending and bottling licence there were other 52 applications and Government have not considered any one of them. Moreover, the application put in by the partnership firm byname M/s. Kandath Distilleries on 12.1.1987 cannot be treated as an application put in by the firm based on a partnership deed which came into existence on 10.4.1991 as per Clause 3 of the Partnership Deed. In the above circumstances the application put in by M/s Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusive domain of the State. Learned senior counsel submitted that if the State has the right to adopt a policy decision and, indisputably, it has the right to vary, amend or rescind the same. Further, it was also submitted that the application submitted by the respondent was a defective application and, therefore, the Government was justified in not entertaining that application. Learned senior counsel submitted that cogent reasons have been stated by the Government vide its order dated 11.10.2006 rejecting the application submitted by the respondent and the High Court was not right in issuing a Writ of Mandamus directing the State Government to grant the licence applied for. 17. Shri Giri, learned senior counsel and Shri George Ponthottam, learned counsel appearing for the respondent, traced the entire history of the case starting from 1987 till the Government passed the order dated 11.10.2006. Learned counsel submitted that there was a concerted effort on the part of the State not to consider the application of the respondent for licence for starting the distillery unit in the Palakkad District. At the same time, on the basis of Policy which was in force in the year 1998, fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of its powers conferred by Section 29 of the Act framed the 1975 Rules. Rule 3 deals with the application for licence, which requires a person who desires to carry on operations of compounding, blending and bottling of foreign liquor to apply in writing to the Commissioner and furnish the necessary details as required under the Rule. Rule 3 is given below for easy reference: 3. Application for Licence.- Any person who desires to carry on operations of compounding, blending and bottling of foreign liquor shall apply in writing to the Commissioner. Every application for a lilcence shall give details of the operation desires to perform and shall be accompanied by (i) description and plan of the building in which the operations are to be carried out in triplicate, drawn on scale in tracing cloth; (ii) statement specifying the number, size and descriptions of the permanent apparatus, if any, which are proposed to be used; (iii) details regarding the maximum quantity in proof litres of spirits expected to be in the store or in the process of compounding, blending or bottling; and (iv) a treasury receipt for the deposit of an earnest money of one hundred rupees. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizen has, therefore, no fundamental right to trade or business in liquor as a beverage and the activities, which are res extra commercium, cannot be carried on by any citizen and the State can prohibit completely trade or business in portable liquor and the State can also create a monopoly in itself for the trade or business in such liquor. This legal position is well settled. State can also impose restrictions and limitations on the trade or business in liquor as a beverage, which restrictions are in nature different from those imposed on trade or business in legitimate activities and goods and articles which are res commercium. Reference may be made to the judgments of this Court in Vithal Dattatraya Kulkarni and Others v. Shamrao Tukaram Power SMT and Others (1979) 3 SCC 212, P. N. Kaushal Others v. Union of India Others (1978) 3 SCC 558, Krishna Kumar Narula etc. v. State of Jammu Kashmir Others AIR 1967 SC 1368, Nashirwar and Others v. State of Madhya Pradesh Others (1975) 1 SCC 29, State of A. P. Others v. McDowell Co and Others (1996) 3 SCC 709 and Khoday Distilleries Ltd. Others v. State of Karnataka Others (1995) 1 SCC 574. 22. Legislature, in its w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter on which State has exclusive privilege. Permissive language used by the Statute in Section 14 and the rule making authority in Rule 4 gives the State Government and the Commissioner, no mandatory duty or obligation to grant the licence except perhaps to consider the application, if the liquor policy permits so. 26. Section 14 uses the expression Commissioner may , with the approval of the Government so also Rule 4 uses the expressions Commissioner may , if he is satisfied after making such enquiries as he may consider necessary licence may be issued . All those expressions used in Section 14 and Rule 4 confer discretionary powers on the Commissioner as well as the State Government, not a discretionary power coupled with duty. The powers, conferred on the Commissioner as well as the Government, have to be understood in the light of the Constitutional scheme bearing in mind the fact that the trade or business which is inherently harmful can always be restricted, curtailed or prohibited by the State, since it is the exclusive privilege of the State. No duty is, therefore, cast on the Commissioner to grant a licence for establishing a distillery unit and no rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. and not to be carried away by the idiosyncrasies or the ipse dixit of an officer who authored the order challenged. Majesty of law is to be upheld not by bending or breaking the law but by strengthening the law. 28. Respondent-applicant, in the instant case, in our view, has failed to establish a legal right or to show that there is a legal duty on the Commissioner or the Government to issue a distillery licence. DISCRETIONARY ORDER ARTICLE 14 29. Discretionary power leaves the donee of the power free to use or not to use it at his discretion. (refer Rani Drig Raj Kuer v. Raja Sri Amar Krishna Narain Singh AIR 1960 SC 444). Law is well settled that the exercise of statutory discretion must be based on reasonable grounds and cannot lapse into the arbitrariness or caprice anathema to the rule of law envisaged in Article 14 of the Constitution. It is trite law that, though, no citizen has a legal right to claim a distillery licence as a matter of right and the Commissioner or the State Government is entitled to either not to entertain or reject the application, they cannot enter into a relationship by arbitrarily choosing any person they like or discriminate between persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alore and M/s. Empee Distilleries, Madras while granting licences for establishing the respective distillery units in the Palakkad District on the ground of discrimination violating Article 14 of the Constitution of India. Respondent has never challenged the distillery licences granted to them, but only prayed for another licence for it as well which, in our view, cannot be claimed as a matter of right. Citizens cannot have a fundamental right to trade or carry on business in the properties or rights belonging to the State nor can there be any infringement of Article 14, if the State prefers other applicants for the grant of licence, during the pendency of some other applications, unless an applicant establishes a better claim over others. 33. We have gone through the Government Order dated 11.10.2006 in extenso and we are not prepared to say that the application of the respondent was rejected solely on the ground that the application dated 12.1.1987 could not be treated as an application put forward by a firm based on a partnership deed, which came into existence on 10.4.1991, as per Clause 3 of the Partnership Deed but on various other grounds as well. The State Government, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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