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TMI Blog1986 (4) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... nataka and the order of the State Government was struck down on the ground that it was 'unlawful', 'arbitrary', 'capricious', 'in flagrant violation of the rule of law' and as 'shocking the judicial conscience'. Some of the persons, to whom the bottling contracts had been awarded by the Government, have preferred these appeals under Article 136 of the Constitution. By general concurrence of opinion since days of yore, manufacture and sale of intoxicating liquor has always been considered to be a dangerous and obnoxious trade requiring the strictest vigilance and supervision and even prohibition. It is now firmly established that the Government is the exclusive owner of the privilege of manufacturing and selling intoxicating liquor and that the Government may farm out these privileges for the purpose of raising revenue. The legislatures of the various States in India have enacted excise laws which enable them to raise public revenue by farming out these privileges and further to regulate and supervise the manufacture and sale of intoxicating liquor. The Karnataka Excise Act, 1965 is one such law. The Preamble to the Act states that it is enacted "to provide for a uniform law relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be bottled except at a warehouse. Provided that arrack may also be bottled in an arrack deport licensed under the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968. (2) No person shall be granted a licence to bottle liquor (unless he is a lessee of the right of retail vend of arrack or he holds a licence) for the distillation or manufacture of liquor or trade and import licence or a licence for compounding, blending or reducing of liquors or any other licence which requires possession of bottle licence. 4. Application for licence - A lessee of the right of retail vend of liquor or a person holding any of the licences specified in rule 3 and desirous of obtaining a licence to bottle liquor may make an application specifying the warehouse in which the operation of bottling of liquors is to be carried on together with the detailed plan thereof. 5. Grant of licence - If, after making such enquiries as he may deem necessary, the Excise Commissioner is satisfied that the applicant is a fit person to hold a licence and that the warehouse in which he proposes to carry on bottling operation is suitable, he shall, subject to the conditions hereinafter provided grant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, it was also realised that supply of loose arrack was unhygienic and, therefore, it was necessary that arrack it should be sold in sealed bottles. The decision of the Government was announced in the budget speech of the Chief Minister and instructions were given to the Excise Commissioner to issue necessary notification inviting applications for bottling arrack. Pursuant to the decision of the Government to supply liquor in sealed bottles the Excise Commissioner by a notification published in the Karnataka Gazette dated April 11, 1984 invited applications from "intending persons/firms for bottling arrack" in 18 places in Karnataka State specified in the r notification. me price payable for each bottle of different size was determined and mentioned in the notification. We were told at the hearing that even at a modest estimate the turnover could be expected to be in the neighbourhood of Rs.50 crores and that the prices were so determined that the margin of profit would be in the region of about 10 per cent. It appears that the Government had the cost structure worked out by a firm of Chartered Accountants who recommended a margin of profit of 17 per cent but the Government decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails are as under : Sl. Nos. 25, 35, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 63, 64, 78, 85, 86, 89, 95 and 122 are distillers and hence they need not be considered. Sl.Nos. 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 37, 56, 57, 58, 59, 60, 61, 62, 65, 66, 67, 68, 69, 70, 71, 72, 73, 75, 76, 77, 79, 80, 81, 82, 83, 84, 87, 88, 89, 90, 91, 92, 93, 94, 96, 97, 98, 99, 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113, 115, 116, 117, 118, 123, 124, 125, 126, 128, 129, are connected with the trade of arrack and among them Sl. Nos. 9 to 12, 13 to 20 have no base in Karnataka and they are said to be trading in bottling, blending etc., of arrack in Tamil Nadu and Kerala. Similarly Sl. Nos. 1, 114, 119, 120, and 127 are outsiders who have not shown any proof of base in Karnataka. These also need not be considered. In the result others, namely Sl. Nos. 5, 23, 74, 102, 112, 121, 130, 131 who have got background of trade in bottling and blending and also financially sound and are found to be capable of handling the work if entrusted to them may be considered for bottling work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd who, therefore, was ineligible from being considered on the very principles enunciated by the Excise Commissioner in his recommendation. In fact, 10 applications (Nos. 58, 59 and 60 to 67) submitted by this very gentleman, T.V. Sarangadharan, were rejected by the Excise Commissioner by the application of that principle. It is strange that while 10 applications by the same person were rejected on the ground that he was connected with the liquor trade, the 11th application by that very person should have been granted without a word to indicate the sudden departure from the principle or the reason for the departure. An attempt was made to explain the choice made in favour of Sarangadharan on the ground that he had an existing bottling unit and that he had been voluntarily bottling arrack in the previous years. Apart from the fact that this ground was not mentioned in the report of the Excise Commissioner, it does not explain why then the ten other applications of Sarangadharan were rejected, nor does it explain why the application of the Mysore Sugar Company (a public sector undertaking) was rejected on the ground that it was connected with the liquor trade despite the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s we shall presently point out it was only subsequent to the award of the bottling contracts that it was thought necessary to amend the Karnataka Excise (Bottling of Liquor) Rules. It looks to us that the so- called policy decision was only an after-thought tailored to meet the situation and the principle purported to be enunciated by the Excise Commissioner was a mere pretext designed to eliminate all except the chosen. The correspondence which followed between the Excise A Commissioner and the Government is also revealing. On receipt of the letter of the Excise Commissioner containing his recommendation, the Secretary to the Government wrote to the Excise Commissioner a letter in which he stated : "The process of establishing bottling plants at different places would inevitably involve financial outlays and time. m ere are no details forthcoming regarding the credit worthiness of these individuals who are to be entrusted with the bottling work. No information is forthcoming regarding the infrastructural facilities available with them and the time frame within which they can set up the bottling plants. m e same may kindly be furnished." Instead of placing before the Government t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l arm of the Executive prevailed over the bureaucratic arm of the Executive, as it always happens when the question is of distribution of Government patronage, and the impugned order of the Government was issued on September 27, 1984 allotting the bottling contracts to the eight persons recommended by the Excise Commissioner. On October 26, 1984, M/s. Pramila Plastics filed a writ petition (No. 17011 of 1984) in the Karnataka High Court questioning the G.O. Some other persons already engaged in the liquor trade whose applications had been rejected by the Excise Commissioner also filed writ petitions questioning the G.O. in November, 1984. At that stage it appears to have dawned on the powers that it was necessary to amend the Karnataka Excise (Bottling of Liquor) Rules. So the Excise Commissioner wrote to the Government on November 6, 1984 a letter in the following terms: "I write to state that Government have approved in their G.O. No. H.D.24EAA.84 dated 29.9.84 for the sale of arrack in sealed bottles. In order to implement the orders of Government contained in the above Government Order, the amendments for the above r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous executive actions which have been so exposed. When arbitrariness and perversion are writ large and brought out clearly, the court cannot shirk its duty and refuse its writ. Advancement of the public interest and avoidance of the public mischief are the paramount considerations. As always, the court is concerned with the balancing of interests, and we are satisfied that in the present case the High Court had little option but to act as it did and it would have failed in its duty had it acted otherwise and refused to issue a writ on the ground that the allegation of personal bias against the Chief Minister was false. Had that been done the public mischief perpetrated would have been perpetuated. That is not what courts are for. To continue, two of the Writ Petitions filed by rival applicants were settled between the parties at the time of the preliminary hearing and were so disposed of. After the cases were partly argued at the final hearing, permission was sought to withdraw three other writ petitions filed by rival applicants. The result was that only two Writ Petitions were effectively argued and they were allowed by the High Court on the ground that the order of the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom the bottling contracts had been awarded was also realised by the Government and it was for that reason that Rule 3 came to be amended. We are unable to understand how despite the prohibition contained in s.13(1)(e) anyone can engage himself in the business of bottling liquor without obtaining a licence under the Rules. It is true that s.13(1)(e) uses the expression 'bottling liquor for sale' and the expression 'to bottle' is itself defined to mean 'the transfer of liquor from a cask or other vessle to a bottle for the purpose of sale'. But there is no justification for the implication sought to be read into section 13(1)(e) read with the definition of 'to bottle' that only a bottler who himself sells the liquor bottled by him is subject to and governed by s.13(1)(e) and the Rules and not a bottler who merely bottles liquor for others. Bottling liquor for sale may be for selling the liquor by the bottler himself or by someone else for whom the bottling has been done by the bottler. In either case it is bottling liquor for sale. ALL that is necessary is that the liquor must be meant for sale. It may be that occasionally liquor may be bottled not for sale but for private cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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