TMI Blog1986 (4) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 consumption. Manufacture of liquor for private or domestic consumption may be permitted under the Excise Laws and where so permitted, the liquor may be bottled without obtaining a separate bottling licence but where the liquor which is bottled is intended to be sold whether by the bottler or by someone else at whose instance the bottling is done, the bottler must necessarily have a bottling licence without which he cannot engage himself in the business of bottling liquor meant for sale. Bottling of liquor meant for sale by whosoever is without doubt regulated by the Bottling of Liquor Rules. Though considerable argument appears to have been advanced before the High Court on the question of locus standi, the question was rightly not raised before us. Appeal dismissed. - Civil Appeal Nos. 634-45 of 1986 - - - Dated:- 9-4-1986 - REDDY, O. CHINNAPPA AND SINGH, K.N., JJ. For the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 'Indian liquor', 'intoxicant', 'liquor' and 'manufacture'. Section 2(25) defines 'sale or selling' as including 'any transfer otherwise than by way of gift'. Section 2(2) defines "to bottle" as meaning "to transfer liquor from a cask or other vessle to a bottle, whether any process of manufacture be employed or not, and includes re- bottling". Sections 3, 4 and 5 provide for the appointment of Excise Commissioner, Deputy Commissioner and Superintendents and Deputy Superintendents of Excise. Chapter III (secs. 8 to 12) deals with import, export and transport of intoxicants while Chapter IV (secs. 13 to 21) deals with their manufacture, possession and sale. Section 13(1)(e) prescribes that 'no person shall bottle liquor for sale except under the authority and subject to the terms and conditions of a licence granted by the Deputy Commissioner in that behalf or under the provisions of section 18'. Section 16 provides for the establishment of distilleries and warehouses. Section 17 authorises the Government to lease to any person, on such conditions and for such periods as it may think fit the exclusive or other right - (a) of manufacturing or supplying by wholesale or of both; or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not directly concerned now. on November 30, 1984, subsequent to the filing of some of the writ petitions in the High Court, rule 3(2) was amended by the addition of the words "or to persons entrusted with the bottling of arrack by the Government" after the words "reducing of liquors". Later still rule 4 was also amended to bring it in line with the amended rule 3. In the scheme of things that prevailed before 1984, bottling of liquor was not obligatory. But if liquor was in fact bottled, it had to be done under the authority of and subject to the terms and conditions of a licence and in accordance with the requirements of the Karnataka Excise (Bottling of Liquor) Rules. Under the rules no person was entitled to the grant of licence to bottle liquor unless 'he was a lessee of the right to retail vend of arrack or he held a licence for the distillation or manufacture of liquor or trade and import licence or a licence for the compounding, blending or reducing of liquors or any other licence which requires possession of bottling licence.' In substance it meant that only those persons who were connected with the liquor trade were entitled to apply for the grant of licence to bott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and it was stipulated that the working of the blending units would be governed by the provisions of the Karnataka Excise Act and Rules. It was mentioned that the provisions of the Karnataka Excise (General Conditions) Rules would also apply. The period for which the arrangement would be in force was stated to be four years, that is, July 1, 1984 to June 30, 1988, in the first instance. Every application was required to be accompanied by a draft of Rs.10,OOO and it was further made a condition that successful applicants would have to make a cash deposit of Rs.50,OOO within five days of the date of acceptance of his offer. The successful applicant would be issued a bottling licence according to the rules on payment of the prescribed licence fee. April 21, 1984 was prescribed as the last date for receipt of applications. One of the very curious features of the advertisement which attracts immediate attention is that the applications for bottling arrack were invited from all "intending persons/ firms" without any restriction whatsoever. Though under the Karnataka Excise (Bottling of Liquor) Rules, as they stood at the relevant time, bottling licences could only be granted to pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... base in Karnataka. Eight applications remained and they were recommended to be chosen for the award of the bottling contracts. Earlier we remarked that things were to become "curiouser and curiouser". They did. Under the Karnataka Excise (Bottling of Liquor) Rules, distillers and persons connected with the liquor trade were those that were eligible for the grant of bottling licences and strangers to the liquor trade were not eligible for the grant of bottling licences. But there the Excise Commissioner was, excluding from consideration for the award of the bottling contracts those persons who were eligible for the grant of bottling licences and recommending such persons as were not eligible for the grant of bottling licences under the rules, an unusual, wilful and perverse way of exercising the power of distributing State largesse. It was suggested before us that the public exchequer would not suffer in any way since the bottling charges were to be borne by the arrack contractors and not by the State. So were the huge profits to be made by the contractors. It would make no difference that the bottling charges were to be borne by the contractors since the award of bottling contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bottling contracts to persons unconnected with the manufacture and sale of arrack as that would prevent the possibility of adulteration and short measurement. In their own words, they have stated in their counter before the High Court as follows : "It is felt that as far as possible, the work of bottling of arrack should be entrusted to an India agency which is not connected with the manufacture of arrack or rectified spirit to avoid any possibility of adulteration and short measurement. It was thought that if the work of bottling of arrack is entrusted to a third person unconnected with the manufacture of arrack or sale of the same, it would be far easy to check short measurement, adulteration and also prevent evasion of excise duty". It would be possible to appreciate and commend the stand taken by the Government of Karnataka if such a policy decision had been taken by the Government before inviting applications for the bottling contracts and the rules had been suitably amended. Apart from the statement in the counter, no such decision was brought to our notice. Whether such a decision was taken by way of a resolution of the Cabinet or by the issue of a G.O. Or by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery etc. Before finalising these proposals I called all the applicants for discussions in my office to find out their credit worthiness and capability for doing the work. me proposals sent by me to the Government are on the basis of my assessment of the credit worthiness and capacity of the individuals to provide the infrastructural facilities required for taking up bottling of arrack without undue delay." The Secretary was obviously dissatisfied with the reply of the Commissioner. So, in his note to the Excise Minister he stated : "There is hardly any data on record either regarding the credit worthiness of the individuals/firms companies recommended by the Excise Commissioner or their capabilities to undertake a job of the magnitude and the proportions in question. No information is also forthcoming on the infrastructural facilities at their disposal. As the entire arrack is to be sold in bottles, their operational efficiency would have a very significant bearing on the excise revenues of the State. In the absence of data, it is difficult to come to any conclusion on this issue." Despite the note of the Secretary, the Minister accepted the recommendation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is some controversy as to the date on which notification dated November 23, 1984 was published in the Gazette, that is, whether it was published on 23rd itself or on 29th, that is, after the prescribed date for filing of objections. Even if it was published on 23rd, there was hardly any time for anyone to make any objections since only five days' time was given. me draft rule was finalised and the amended rule was published on November 30, 1984. Later it was discovered that an amendment of rule 4 was also necessary and that rule was accordingly amended in April, 1985. The almost surreptitious manner in which rule 3 was amended subsequent to the filing of some of the writ petitions also appears to give an indication regarding the anxiety of the Government to favour the chosen ones with the bottling contracts. More writ petitions were thereafter filed, some by rival applicants for the bottling contracts and some by public spirited citizens determined to expose Governmental misconduct. We were told by Shri Venugopal that the preliminary hearing of the writ petitions was postponed twice and that a rule Nisi was issued only after an amendment of one of the writ petitions by the incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hitale and Shri G.L. Sanghi learned counsel for the appellants submitted that the "bottling scheme" introduced by the Government in 1984 was entirely outside the Karnataka Excise (Bottling of Liquor) rules, and that Rule 3 had no application to the persons seeking or obtaining bottling contracts under the scheme. They argued that the Bottling of Liquor Rules as they stood before October, 1984 were applicable only to those who were engaged in the manufacture and sale of liquor and who desired to bottle such liquor for sale. They were not applicable and Rule 3 was not attracted to the case of persons who were merely engaged in the business of bottling liquor, having nothing whatever to do with the manufacture or sale of liquor. It was said that those who were engaged in the manufacture and sale of liquor had the option to bottle or not to bottle the liquor manufactured or sold by them and if they preferred to bottle the liquor they were obliged to observe the rules but others who neither manufactured nor sold liquor had not to observe the rules. It was also submitted that the persons who merely bottled liquor at the instance of the Government were no more than the agents of the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quor meant for sale. Bottling of liquor meant for sale by whosoever is without doubt regulated by the Bottling of Liquor Rules. Nor is there the slightest substance in the submission that the persons who have been awarded the bottling contracts are mere agents of the government and so they are not required in law to take out licences under the Rules. They are not 'instrumentalities' of the Government; they are independent contractors who deal with the Government at arm's length. They are as much agents of the Government as contractors of the Public Works Department who build roads and bridges or for that matter, the arrack vendors in whose favour the Government parts with its exclusive privilege of selling liquor. Though considerable argument appears to have been advanced before the High Court on the question of locus standi, the question was rightly not raised before us. Shri Venugopal however argued that Public Interest Litigation ceased to be in the public interest as soon as the relator willfully indulged in false allegations and that should be a sufficient ground not to warrant the exercise of the extraordinary jurisdiction of the High Court under Art. 226 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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