TMI Blog2005 (5) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... candidates must file an appropriate affidavit, which would be in strict compliance of the requirement of Rule 9. iii) 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. iv) 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. v) 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. vi) The respective District Level Committees shall strictly verify and scrutinize the affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. ACT AND THE RULES : Trade in Country/Foreign Liquor is governed by the Chhattisgarh Excise Act, 1915 ( the Act , for short). Section 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. Section 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 : (e) regulating the periods and localities for which, and the persons or classes of persons to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquor 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) (c) Application for grant of license with application fee shall be submitted in the prescribed form as appended to these rules as annexure-4. (d) 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 : "Eligibility conditions for applicant. The applicant has to fulfil the following conditions for obtaining the licence for shop/Group of shops of Country/foreign liquor. (a) 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 Excise Commissioner. (b) Should be above 21 years of age. (c) S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 : "If the affidavit submitted by the licensee at the time of application is found incorrect and assertions made therein are found to be false. In terms of the provisions of the said Rules, a format in which an application is to be filed is prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny changes or amendments to the format of the affidavit and the affidavit will be accepted in the specified format only. Format 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, 2002 : For 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." TENDER PROCESS : A 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 under : "2. As per the above programme, the Collector concerned shall publish the notice in his district on the date fixed, wherein in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.2005 in the following terms : "Raipur, 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 subclause(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 : AMENDMENT In the said rules, in rule 8, - (i) The existing clause (C) shall be substituted by the following clause (C), namely :- (C) 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. (ii) After clause (C) the following clause (C-1) shall be added, namely : (C-I) 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 prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 bidders. HIGH COURT JUDGMENT : The 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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]. It was 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 man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Drawing 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). Public 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. Mr. C.S. Vaidyanathan, the learned Senior Counsel appearing on behalf of the Appellants in Civil Appeal arising out of SLP (CC No.4579 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory rule empowering the Committee to raise such a presumption. Dr. 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 socalled 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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. PUBLIC INTEREST LITIGATION : It may 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 Managing Committee and Anr. Vs. C.K. Rajan and Others [(2003) 7 SCC 546 para 50] and Prahlad Singh vs. Col. Sukhdev Singh (1987) 1 SCC 727] ACQUIESCENE : When a public interest litigation was entertained the individual conduct of the writ petitioners would take a backseat. There cannot be any do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Rules. The 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 with again. Stricter 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. Rule 9 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rule 13. The Scrutiny Committee is also enjoined with a duty to see as to whether a person was a defaulter or not. Rule 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furthermore, 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. The 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. Although 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 fourcorners of the Act or the rules framed thereunder and not de hors the same. Mr. Desai is also not correct in his submission that clause 22 of the said circular contemplates a future amendment in the rules. Even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lack 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." (6) 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 : At 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. By 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. Yet ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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. Different 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 : "12. Situations emerge where the granting of an interim relief would tantamount to granting the final relief itself. And then there may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 : "That 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". That, 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 11.4.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory, 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. They 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. Undoubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvalid 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. In Nain 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 Constitution stating: "It 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 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 that angle. CONCLUSION : The question, however, which now falls for consideration is as to what order should be passed in the peculiar facts and circumstances of this case. In 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. Keeping in view the peculiar facts and circumstances of this case, we inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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