TMI Blog2014 (3) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicate in proceedings under Article 226 of the Constitution of India. This contention urged by the petitioners, who are carrying on trade in the sale of IMFL and FL in retail shops, is akin to the devil quoting the scriptures, and does not merit acceptance. - Writ petition dismissed. - Writ Petition Nos. 35116 of 2013, , 35260, 35286, 35294, 35298, 35299, 35303, 35304, 35405, 35475, 35488, 35496, 35500, 35535, 35548, 35610, 35648, 35745, And 35750 of 2013 05-03-2014 - - - Dated:- 5-3-2014 - Sri Justice Ramesh Ranganathan,JJ. For the Petitioners : Sri K. Ramakrishna Reddy, Learned Senior Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy For the Respondents : Learned Government Pleader for Prohibition and Excise ORDER The notifications issued by District Collectors, inviting applications for grant of licences for the relocated A-4 excise shops, is questioned in these Writ Petitions as being arbitrary, illegal and contrary to the A.P. Excise (Grant of licence of selling by shops and conditions of licence) Rules, 2012 (hereinafter called the 2012 Rules ). It would suffice, for the disposal of this batch of Writ Petitions, if the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed that no licenses shall be issued for any of the relocated shops; when the matter was being heard, the respondents withdrew the notifications with liberty to issue notifications afresh for relocation of the A-4 shops at all places where the turnover of the existing shops exceeded seven times the licence fee; as the cause in the Writ Petition did not survive, necessitating adjudication by this Court, the Writ Petitions were closed by order dated 21.08.2013; 60 A-4 shops, notified at their original places in the third round of notification, were confirmed; notifications dated 03.11.2013 were issued by the District Collectors inviting applications for establishing A-4 shops at the notified places; 547 applications were received pursuant to these notifications; among the 547 applications, 14 were received for the 12 A-4 shops notified in their original locations; as against the 121 A-4 shops sought to be relocated, 533 applications were received for 72 A-4 shops; lots were drawn on 07.12.2013 by the District Collectors, and successful applicants were declared; the Prohibition and Excise Superintendents had issued provisional licences to the successful applicants, except in Dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 16(9); if the licensee's turnover crosses 7 times the licence fee, or the proportionate licence fee, in that excise year such licensees are liable to pay privilege fee; the petitioners' contention that they would be put to loss if licences are issued to prospective applicants is not tenable; under Section 3 of the Act and Rule 11 of the Rules, the District Collector is the selection authority to conduct the process of selection of applicants for grant of licences, which includes the power to issue a notification duly inviting applications for grant of licences; at the time of selection of the applicants, the Commissioner had informed all the District Collectors, through D.O. letters, to issue notifications inviting applications for grant of licences; and as many as 5510 A-4 shops have been allotted to the successful applicants for the year 2013-14 as per the notification issued, in the District Gazettes, by the District Collectors concerned. Oral submissions were put forth by Sri K. Ramakrishna Reddy, Learned Senior Counsel, Sri N. Subba Rao, Sri S. Lakshma Reddy, Sri S. Rahul Reddy, Sri I. Chandrasekhar, Sri P. Nagendra Reddy, Sri P.V. Ramana, Sri C. Damodar Reddy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity as he thinks fit. The word un-disposed , in amended Rule 4, disables the Commissioner from relocating any A-4 shop, and his power to relocate A-4 shops is confined only to those which remained undisposed for the Excise Year 2013-14. The un-disposed A-4 shops are those for which either no licence was granted in the Excise Year 2012-13 or for which the licensees chose not to renew their licences for the Excise Year 2013-14. As against the stipulated 6596 shops for the entire State, the number of A-4 shops for which licences were renewed for the Excise Year 2013-14 were 4986. Around 1610 A-4 shops remained un-disposed, and were sought to be sold to augment State revenue. It is only these un-disposed A-4 shops which the amended Rule 4 empowered the Commissioner to relocate for augmenting State revenue through collection of licence fees. Reliance placed on behalf of the petitioners, on the judgments in Arji Sankara Rao v. Government of Andhra Pradesh 2005(6) ALD 514, and G. Venkatesh v. Commissioner of Prohibition and Excise 2005(6) ALD 514, is misplaced. In Arji Sankara Rao3, this Court held that, before issuing the auction notice, the Commissioner is required to fix the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the rule-making authority also. (J.K. Cotton Spinning Weaving Mills Co. Ltd. v. State of U.P. AIR 1961 SC 1170 : (1961) 3 SCR 185). It is a cardinal principle of construction of a statute or a statutory rule that effort should be made in construing the different provisions so that each provision will have its play. A statute, or rules made thereunder, should be read as a whole and one provision should be construed with reference to the other so as to make the rules consistent. Any construction which would bring any inconsistency or repugnancy between one provision and the other should be avoided. A construction that reduces one of the provisions to a 'dead letter' is not a harmonious construction as one part is being destroyed. (Jagdish Singh v. Lt. Governor Delhi AIR 1997 SC 2239). To harmonise is not to destroy. Relocation of an A4 shop is permissible only if it was not disposed of at the beginning of the Excise Year 2013-14. Accepting the contention that the number of shops fixed in an area/locality, when the notifications were issued for the Excise Year 2012-13, cannot be increased subsequently, under the guise of relocation, would mean that an un-disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisposed A-4 shop should be relocated. No words need be added thereto. On the other hand reading any limitation in the amended Rule 4, regarding the areas/locality to which it should be relocated, would require addition of words thereto which is impermissible in law. III. ARE THE FACTORS ENUMERATED IN RULE 4 REQUIRED TO BE TAKEN INTO CONSIDERATION EVEN WHILE RELOCATING UNDISPOSED A-4 SHOPS? It is contended on behalf of the petitioners that, even while relocating A-4 shops, the factors enumerated in Rule 4 should be taken into consideration as fixation of the number of shops is at a micro level. The prescription in Rule 4, of having due regard to the requirement of public order, health, safety and other factors, is before the Commissioner fixes the number of shops to be established in an area/locality. Such an exercise has already been undertaken and completed in the previous Excise Years. On a plain and literal reading of the amended Rule 4 it is evident that the Commissioner is not obligated to again have due regard to these factors while relocating an un-disposed shop from an area/locality. It is unnecessary to delve further on this aspect as the counter-affidavit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the factors enumerated in Rule 4 before relocating undisposed A-4 shops. IV. CAN SHOPS, HITHERTO FIXED FOR AN AREA/LOCALITY WITHIN A DISTRICT, BE RELOCATED TO ANOTHER AREA/LOCALITY IN ANOTHER DISTRICT OF THE STATE? It is contended on behalf of the petitioners that there are six zones in the State which are divided into two multi-zones; in the absence of any definition in the rules, and as the Licensing Authority (Excise Superintendent) is in- charge of an excise district, the word area can only mean a part of a district and not beyond; a locality is similar to an area ; the words area/locality should be read ejusdem generis, and cannot travel beyond the district; the words any area must be read to mean a locality within the same mandal; the entire State cannot be taken as one area; the contemporaneous understanding of the Commissioner, in the impugned notification dated 30.11.2013, is that the word area/locality means a district ; from the Excise Policy, notified in G.O.Ms. No.358 dated 22.06.2013, it is clear that the government understood district to be the area ; as a result of the impugned notifications the number of shops, already fixed at the time of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relocated. In Shaktikumar M. Sancheti v. State of Maharashtra (1995) 1 SCC 351, the Supreme Court considered the scope of the words local area under the Motor Vehicles Taxation Act and observed that the expression local area must be understood in the sense of any area administered by a local body. In C.P. Sikh Regular Motor Service v. State of Maharashtra (1974) 2 SCC 579 = AIR 1974 SC 1905, the observations of the Supreme court were in the context of Section 2(1) of the Motor Vehicles Act, 1939 as inserted by Act 56 of 1969 whereby 'area', in relation to any provision of said Act, was defined to mean such area as the State Government may, having regard to the requirements of that provision, specify by notification in the Official Gazette. The definition of local area under the Motor Vehicles Taxation Act, and area under the Motor Vehicles Act, cannot be extrapolated to the 2012 Rules. The amended Rule 4 refers merely to the area/locality where the un-disposed shop was hitherto located. It does not specify the area/locality to which the un- disposed A-4 shop should be relocated. Even if the words area or locality is read to mean a town/village or a part thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was granted, that too only with the approval of the Commissioner. On the other hand the Commissioner's power under Rule 18(2), to permit APBCL to open outlets, is neither limited by any area/locality restrictions nor is his power confined only to grant of permission in such places where an A-4 shop licence could not be disposed of or where a cancelled licence could not be re-allotted. The only limitation on his power is his satisfaction that granting such permission is in public interest. The words anywhere in the State were used in Rule 18(2) only to distinguish the powers conferred on the District Collector and the Commissioner. While the power of the District Collector under Rule 18(1) is confined to the area/locality in the District, the power of the Commissioner under Rule 18(2) is not. Unlike Rule 18(1) which is confined to outlets being opened by the APBCL, no power is conferred under the 2012 Rules on the District Collector to relocate an un-disposed A-4 shop by grant of a licence. While Rule 18(2) enabled him to permit APBCL to open outlets anywhere in the State, the Commissioner, hitherto, lacked the power to relocate un-disposed A-4 shops from a certain area/local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab to a higher population slab. VII. POWER OF THE COMMISSIONER TO RELOCATE AN UNDISPOSED A-4 SHOP, HITHERTO FIXED IN A SCHEDULE AREA, TO A NON-SCHEDULE AREA: It is contended, on behalf of the petitioners, that Rule 4 does not empower the Commissioner to relocate shops, situated in scheduled areas, to non-scheduled areas; under Rule 5(1)(i) shops to be located in scheduled areas are separately listed and serially numbered; and shops in the scheduled areas cannot be relocated to non-scheduled areas unless the Commissioner deletes it from the said list, and includes it in the list of plain areas . Rule 2(t) of the 2012 Rules defines Scheduled Area to mean the Scheduled Areas notified under para 6 of the V Schedule to the Constitution. Rule 3(2) stipulates that, in the case of shops located in scheduled areas, the right to sell IMFL and FL in retail shops shall be granted to local scheduled tribe candidates; in case there is no such applicant available, it should be granted to any other scheduled tribe candidate; and, if not available, to any other candidate. The notification, under Rule 5(1), is required to separately list the shops to be located in scheduled areas, and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale and consumption of any intoxicant. In the exercise of the powers conferred under Section 268(1) r/w. Sections 242-A to 242-I under Part VI-A of the Act, the Andhra Pradesh Panchayats Extension to Scheduled Areas (PESA) Rules, 2011 were made and notified in G.O.Ms. No.66 dated 24.03.2011. Rule 8(I)(b) requires the Gram Sabha to be consulted before the grant of any licence to open liquor shop in the village; for the Gram Sabha to convey its opinion, in the form of a resolution, within four weeks; and for licences to be granted only to the local Scheduled Tribes. Rule 8(I)(c) requires the department to issue a speaking order for granting or not granting any licence to open liquor shop/bar in the village under intimation to the concerned Gram Sabha, and that the Gram Sabha resolution shall be binding and final. In view of the aforesaid provisions, it is only if the Gram Sabha passes a resolution, permitting grant of a licence to open an A-4 to sell IMFL and FL in scheduled areas, can such licenses be granted. While the aforesaid provisions restrict opening of A-4 shops in schedule areas, and for relocation of an A-4 shop from a non-scheduled area to a scheduled area, neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. (B.K. Srinivasan21; Pankaj Jain Agencies v. Union of India (1994) 5 SCC 198; Sonic Industries22; Harla18). When a statute vests a public power and conditions the manner of exercise of that power then the law insists on that mode of exercise alone. (Charles K. Skaria v. C. Mathew (Dr) (1980) 2 SCC 752). Where the law prescribes the mode of publication of the law to become operative, the law must be published in that mode only. Where the statutory requirement of the mode or form of publication is mandatory, a failure to comply with those requirements might result in there being no effective order or rule, but where the mode of publication of the law is not prescribed by the law, such law should be published in some usual or recognised mode to bring it to the knowledge of all persons concerned. (State of Maharashtra v. Mayer Hans George AIR 1965 SC 722; T. Narasimhulu19). The mode of publication, prescribed under Section 72(1) of the A.P. Excise Act, is by way of a notification in the A.P. Gazette. Notification , in common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms part of the 2012 Rules which, in terms of Rule 21, necessitate compliance for grant of renewal of a licence. The original licence for the Excise Year 2012-13, which is a binding contract between the petitioners and the State, is only for one year and came to an end on 30th June, 2013. The renewed A-4 licence is a fresh contract between the petitioners and the State for a period of one year from 01.07.2013 till 30.06.2014. The licences for the Excise year 2013-14 were renewed, and a new contract was entered into between the petitioners and the State on or after 01.07.2013, in accordance with the amended Rules which came into force on 24.06.2013 prior to the commencement of the Excise Year 2013-14 on 01.07.2013. Neither the Act nor the Rules stipulate that the amended Rules would come into force only on each licensee being intimated thereof. The mere fact that the renewal endorsement on the petitioners licence does not refer to the amended rule is of no consequence, as the licensees are presumed to have knowledge of the Rules which were notified and published in accordance with law. As the amended rules have been made applicable only for renewal of licences for the Excise Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85) 3 SCC 360, where the Rule was amended when the five year license period was in operation, Rule 4 has been amended and applied for the Excise year 2013-14 (i.e., from 01.07.2013 to 30.06.2014) only after the one year license, granted for the Excise year 2012- 13, expired on 30.06.2013. X. CAN RESTRICTIONS BE PLACED, ON A LICENCE GRANTED TO CARRY ON TRADE IN LIQUOR, ONLY BY PLENARY LEGISLATION AND NOT SUBORDINATE: It is contended, on behalf of the petitioners, that a property right cannot be affected by way of Rules and Executive Instructions; the authority of law, within the meaning of Article 300-A, is a law made by legislative authority; the word 'law', in the context of Article 300-A, must mean an Act of Parliament or of a State Legislature; the State or its Executive Officers cannot interfere with the rights of others unless a specific rule of law authorizes their acts; Every act done by the Government or by its officers must, if it has to operate to the prejudice of any person, be supported by legislative authority ; the respondents have usurped power not vested in them under the Act and the Rules; the power so usurped will militate against the very scheme an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be imposed by subordinate legislation or even executive instructions. There is nothing in clauses (2) to (6) of Article 19 which makes it imperative to impose restrictions on trade or business in potable liquor only by a law enacted by the legislature. Restrictions can also be imposed by subordinate legislation as long as it is not violative of any provisions of the Constitution. The trade or business in potable liquor is a trade or business in res extra commercium and, hence, can be regulated and restricted even by an executive order. (Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574). The contention that the power to relocate undisposed A-4 shops, from an area/locality to another, can only be conferred by plenary legislation, and not subordinate, does not, therefore, merit acceptance. XI. IS THE PETITIONERS RIGHT OF EXCLUSIVE PRIVILEGE, TO SELL IMFL AND FL IN AN AREA, VIOLATED ON RELOCATION OF UNDISPOSED A-4 SHOPS TO THESE AREAS? Learned Counsel for the petitioners would contend that, Section 17 to 23 and 28 deals with parting of exclusive privilege vested in State; the distinction between privilege to sell and exclusive privilege to sell in an area in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Samsthana Chethu Thozhilali Union v. State of Kerala (2006) 4 SCC 327). The State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. When the State permits trade or business in potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any. (Khoday Distilleries Ltd.33). Section 17(1)(v) of the Act enables the Government, subject to the provisions of Sections 28 and any rules made in this behalf and subject to such conditions as they may deem fit to impose, to grant for a fixed period, to any person at any place, a lease/licence for the exclusive privilege of selling Indian Made Foreign Liquor (IMFL) and Foreign Liquor (FL) by shop. Section 17(2) empowers the Government to prescribe, from time to time, different methods of selection for grant of exclusive privilege for different purposes under Section 17(1). Section 17(3) stipulates that, notwithstanding anything contained in sub-section (1), a leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndavarkar Sita Ratna Rao v. Ashalata S. Guram (1986) 4 SCC 447). The operative part of Section 17(1) is prefaced by the words subject to the provisions of Section 28, any rules made in this behalf and such conditions as the government may deem fit to impose , which means that the exclusive privilege granted by the State must yield to the provisions of Section 28 of the Act, any rules made in this behalf, and such conditions as the government may deem fit to impose. (Indian Minerals Co. v. N.I.L.M. Assos. AIR 1958 Allahabad 692). The power conferred on the Government, under Section 17(1)(v) of the Act, to grant an exclusive privilege to any person to sell IMFL and FL in a shop is subject to (1) the provisions of Section 28 of the Act; (2) any Rules made in this behalf; and (3) any conditions which the Government may deem fit to impose. Section 28(1) requires every permit/licence to be issued or granted on payment of such fees, for such period, subject to such restrictions and conditions, to be in such form and to contain such particulars as may be prescribed. Section 2(26) of the Act defines 'prescribed' to mean prescribed by Rules made under the Act. The 2012 Rules were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made subject to the amended 2012 Rules and the Excise Policy of the year 2013-14. Notwithstanding the exclusive privilege granted to the petitioners, to sell IMFL and FL in the stipulated areas/localities, un- disposed A-4 shops can be relocted in accordance with the amended 2012 Rules and the Excise Policy for the year 2013-14. Reliance placed by the petitioners on Sections 13 and 21 to 23 of the Act is misplaced. Section 13 of the Act relates to manufacture and bottling of liquor for sale and has no application to sale of IMFL and FL in an A-4 shop. Section 21 enables the Government to levy excise duty or/and a countervailing duty on any excisable article manufactured or produced in the State, and Section 22 prescribes the modes in which excise duty and countervailing duty may be levied on any excisable article. Section 23(1) stipulates that, instead of or in addition to any excise duty or fees leviable under Sections 21 and 22, the Commissioner may accept payment of a sum in consideration of the grant of licence or both for the exclusive privilege in respect of liquor or any other intoxicant under Section 17. Section 23 relates merely to the consideration for the lease or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Magistrate, Delhi v. Ram Kali AIR 1968 SC 1). The statutory provision must be interpreted and read broadly, and not narrowly. The approach must be to uphold the validity of the impugned delegated legislation by a process of fair and broad reading of the statutory mandate. (Devans Modern Breweries Ltd.,2). It would be wholly inappropriate for this Court, therefore, to examine the validity of the amended Rule 4 on the basis of submissions made across the bar. XIII. BURDEN LIES HEAVILY ON THE PERSON, WHO SEEKS TO IMPEACH THE RULE, TO PLEAD AND PROVE THAT IT IS UNCONSTITUTIONAL: The contention that Rule 4 is ultra vires the Act, and Article 14 of the Constitution, is without support of any pleadings in the Writ Petitions. It is well settled that, even in cases where there is a challenge to the validity of a statutory rule, the burden is on the party, who seeks to impeach the validity of a rule made by a competent authority on the ground that the rules offend Article 14, to plead and prove that there has been a clear violation of the constitutional principles. If the validity of the rule is challenged on the ground either of its unreasonableness or its discriminatory nature, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, however, the persons are not similarly situated, there is no prohibition to treat them separately, provided of course there is a reasonable nexus between the basis of classification and the object to be achieved. (K. Muthusamy v. Government of Tamilnadu LAWS -TLMAD 2003-0-582: MANU/TN/0192/2003). Every instance of discrimination does not necessarily fall within the ambit of Article 14 of the Constitution. Discrimination means an unjust and unfair action in favour of one and against another. It involves an element of intentional and purposeful differentiation and unfavourable bias; an unfair classification. (Rajasthan State Industrial Development Investment Corporation v. Subhash Sindhi Coop. Hs. Society (2013) 5 SCC 427; The State of M.P. v. Narmada Bachao Andolan (2011) 7 SCC 639; Madhu Kishwar v. State of Bihar (1966) 5 SCC 125). A valid classification based on a just objective is truly a valid discrimination. The result to be achieved by the just objective presupposes the choice of some for differential consideration/treatment over others. Legalistically, the test for a valid classification may be summarized as a distinction, based on a classification founded on an intel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sought to be relocated only to areas/localities where the cumulative purchases of each A-4 shop, during the Excise year 2012-13, exceeded fourteen times their licence fee. The licensees, whose turnover exceeded fourteen times the annual licence fee in the previous Excise Year 2012-13, form a distinct class, different from those who did not achieve a turnover of fourteen times the licence fee. The object sought to be achieved by relocation of shops only to such areas is two fold. Firstly, to generate more revenue for the State and, secondly, to ensure that, even after relocation, both the existing and the relocated A-4 shops achieve, on an average, a turnover of seven times the annual licence fee and, thereby, achieve a reasonable return on their investment. The contentions that, as the turnover is not uniform throughout the year, the monthly turnover should have been taken as the basis; the turnover from 1st July to 30th November, 2013 should also have been taken into consideration before deciding on which shop should be relocated; as the licence fee is correlated to population, the population figures should have been factored, while identifying areas/localities for relocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation slab. It is the very same licence fee, fixed in terms of Rule 16(1) on the basis of population, that is levied even on relocation of an un-disposed A-4 shop. Where an un-disposed A-4 shop is relocated after 31st July, the licence fee is required to be reduced proportionately in terms of the proviso to Rule 16(1). While the licence fee, even for the relocated A-4 shop, would be the licence fee prescribed under Rule 16(1), the proviso to Rule 16(1) would require a proportionate reduction of such licence fee, if a licence is granted to the relocated un-disposed shop after 31st July, 2013. The privilege fee, of 8% plus VAT, is required to be paid by the licensees of the relocated undisposed A-4 shops as soon as their purchases exceeed seven times the proportionate licence fee paid by them, and not the prescribed annual licence fee. It is not even the petitioners' case that any area/location, where an A-4 shop had achieved a turnover of less than fourteen times the licence fee in the Excise Year 2012-13, has been identified for relocation of un-disposed A-4 shops. Even with regards the new shops, in the relocated areas, there is no discrimination shown by the State as the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of customers, and creation of unhealthy competition; there is no transparency as state-wide statistical data has not been published; the counter-affidavit is also silent whether the Commissioner was appraised of the statistical details of the entire State; shops with higher turnover have not been notified; exercise of power, to relocate shops from one district to another, is unwarranted and unreasonable; and, instead, the power under Rule 18 should have been exercised, and APBCL ought to have been permitted to open outlets in the localities/areas where shops could not be disposed or could not be allotted for any other reason. Article 19 (1) (g) of the Indian Constitution confers a fundamental right to trade subject to reasonable restrictions. However, liquor trade is viewed differently on the premise that there is no fundamental right to trade in intoxicants. (R. Selvaraj68; Cooverjee v. Excise Commissioner, Ajmer AIR 1954 S.C. 220; State of Orissa v. Harinarayan AIR 1972 S.C 1816; Nashirwar v. State of M.P. AIR 1975 S.C. 360, Harishankar v. Dy. Excise and Taxation Commissioner AIR 1975 S.C. 1121 and Lakhanlal v. State of Orissa AIR 1977 S.C. 722). The State can create a monopoly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the 2012 Rules) and by Executive Policy (para 2 of G.O.Ms. No.358 dated 22.06.2013). The principle of non- arbitrariness cannot apply to a change of policy by legislation. (Madras City Wine Merchants' Assn. v. State of T.N., (1994) 5 SCC 509). As the vires of the amended Rule 4 is not under challenge in these Writ Petitions, this Court is only required to examine whether exercise of power, under the said Rule, by the Commissioner is in violation of Article 14 of the Constitution. While considering the applicability of Article 14 to liquor trade, the Court would be slow to interfere with the policy laid down by the State Government, for the sale of liquor, having regard to the nature of the trade or business. The Court would, in view of the inherently pernicious nature of the commodity, allow a large measure of latitude to the State Government in determining its policy of regulating trade in liquor. The grant of licence for the sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government has done unless it appears to be plainly arbitrary, irrational or malafide. What can be said in reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives and purposes, a wide category of errors commonly described as 'irrelevant considerations', and mistakes and misunderstandings which can be classed as self-misdirection. (Administrative Law: HWR Wade C.F. Forsyth - Tenth Edition). Can exercise of power, to relocate undisposed A-4 shops to areas where the existing shops achieved a turnover exceeding fourteen times the annual licence fee in the previous Excise Year 2012-13, be said to be so arbitrary and unreasonable as to violate Article 14 of the Constitution of India? The grant of a liquor licence does not involve any right or expectation but is a matter of privilege. All that is required is that the Commissioner should act fairly, and deal with the applications without any bias, and not in an arbitrary or capricious manner. (M/s. Chingleput Bottlers v. M/s. Majestic Bottling Co. AIR 1984 S.C. 1030). The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power under the amended Rule 4 at the inception, without any demur, there is no reason to contend that the respondents cannot take any steps subsequently to settle such vacant shops in accordance with the Rules. (K. Muthusamy55). The undisposed shops, which have been relocated consequent to the impugned notifications, are required, in terms of the proviso to Rule 16(1), only to pay the proportionate licence fee, and not the annual licence fee in its entirety. Privilege fee, under Rule 16(9), would be levied on these shops the moment they achieve a turnover of seven times the proportional licence fee paid by them. The decision of the Commissioner , to relocate undisposed A-4 shop only to those areas where the existing licensees had achieved twice the purchases prescribed in Rule 16(9), is informed by reason and has not been exercised at his whim or fancy. As licensees who achieved a turnover of 14 times the annual licence fee, in the Excise Year 2012-13, constitute a distinct class, it cannot be said that unequals have been treated equally. No material has been placed by the petitioners to even show, let alone establish, that relocation of undisposed A-4 shops would either cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not proceed as if there are inflexible rules of natural justice of universal application. Each case depends on its own circumstances. Rules of natural justice vary with the rules prescribed by the legislature. (M/s. Chingleput Bottlers78). Rules of natural justice are not statutory rules. These rules are not cast in a rigid mould nor can they be put in a legal strait-jacket. They are not immutable but flexible. These rules can be adapted and modified by statutes and statutory rules. (Union of India v. Tulsiram Patel (1985) 3 SCC 398). Not only can the principles of natural justice be modified but, in exceptional cases, they can even be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion. (Tulsiram Patel87; State of U.P. v. Sheo Shanker Lal Srivastava (2006) 3 SCC 276). If a statutory provision either specifically, or by necessary implication, excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the Legislature or the statutory authority and read into the concerned provision the principles of natural justice. (Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year; and renewal for the second year 2013-14 was to be considered subject to payment of the licence fee to be fixed by the Government for the second year (2013-14), and the licensee not incurring any disqualification as per rules. The total number of A4 shops in the entire State was fixed at the earlier stipulated number of 6596 shops. The licence fee, for different population slabs, was prescribed in Para 8 of the said Excise Policy i.e, for the population slab of upto 10,000, the licence fee was Rs.32.50 Lakhs. It was Rs.34.00 Lakhs for the population slab between 10,000 and 50,000; Rs.42.00 Lakhs for the population slab between 50,000 and 3 lakhs; Rs.46.00 Lakhs for the population slab between 3 lakhs and 5 lakhs; Rs.64.00 Lakhs for the population slab between 5 lakhs and 20 lakhs; and Rs.104.00 Lakhs for the population slab above 20 lakhs. In addition to the licence fee, the licensee was required to pay a privilege fee at 8%, plus applicable VAT, on the invoice value of the liquor purchased during the licence year in excess of 6 times the annual licence fee. The Excise Policy for the year 2013-14, as notified in G.O.Ms. No.358 dated 22.06.2013 and published in the A.P. Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is infringement or violation of any constitutional or statutory provision. (Ugar Sugar Works Ltd.96). Public authorities must have liberty in framing policies. If a decision has been taken in a bonafide manner, although not strictly following the norms laid down by Courts, such decisions are upheld on the principle that Courts, while judging the validity of executive decisions, must grant certain measure of freedom of play in the joints to the executive. (Sterling Computers Ltd.79). Judges should exercise judicial self-restraint while exercising powers of judicial review of administrative or legislative decisions. (Transport and Dock Workers Union80). Specific places were hitherto fixed by the Commissioner, in the exercise of his powers under Rule 4 of the 2012 Rules and the earlier 2005 Rules, for locating the total 6596 A-4 retail shops in different areas/localities of the State. While the amended Rule 4, and para 2 of the Excise Policy for the year 2013-14, enable the Commissioner to relocate un-disposed A-4 shops from any locality/area as he thinks fit, he is disabled by Para.2 of the said Excise Policy, from relocating un-disposed A-4 shops from a higher licence fee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has a legitimate expectation of carrying on business in the areas earmarked in their favour when they were granted A-4 licences; and the petitioners cannot be denied the opportunity of making reasonable profits. Legitimate expectation may arise (a) if there is an express promise given by a public authority; or (b) because of the existence of a regular practice which the claimant can reasonably expect to continue. Such an expectation must be reasonable. (Madras City Wine Merchants' Assn.76). A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. (Jasbir Singh Chhabra v. State of Punjab (2010) 4 SCC 192; Halsbury's Laws of England, 4th Edn.). A decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise power reasonably and in good faith to effectuate the purpose for which the power stood conferred. In this context, in good faith means for legitimate reasons . It must be exercised bonafide for the purpose and for none other. (Commr. of Police v. Gordhandas Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners A-4 shops are located, does not suffer from arbitrariness, is not in violation of Article 14 of the Constitution of India, and is taken in the larger public interest of enhancing public revenue, the doctrine of legitimate expectation has no application. There is a distinction between a mere hope and a legitimate expectation. (R. Selvaraj68; Madras City Wine Merchants Association's76). For legal purposes, the expectation cannot be the same as anticipation. It is different from a wish, a desire or a hope. It cannot amount to a claim or demand on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious hope, even leading to a moral obligation, is not a legitimate expectation. The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a genuine expectation. Such expectation should be justifiably legitimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RELOCATED, BEFORE THE COMMENCEMENT OF THE EXCISE YEAR 2013-14, FATAL? Learned Counsel for the petitioners would contend that, if the shops had been identified in June, 2013 itself, the exercise of issuing a notification undertaken in the beginning of the year, and the proposal to relocate undisposed A-4 shops had been brought to their notice, the petitioners would not have sought renewal; and, if another shop is now located in their area, the petitioners would not only suffer huge loss but their bank guarantees and licence fees would be forfeited in terms of Rule 16(8). As both the amended 2012 Rules, and the Excise policy for the year 2013-14, were published in the A.P. Gazette before the commencement of the Excise year 2013- 14, the licensees cannot claim ignorance thereof before they participated in the selection process for grant of licenses. They had the option to opt out if the conditions were detrimental to their interest or were to their disadvantage. Having participated in the selection process, based on the extant rules and the Excise policy, it is not open to them to now turn around and contend that exercise of power, strictly in terms thereof, is illegal. (Devans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir sales may get reduced thereby. Neither the viability of liquor trade nor the profit or loss of the liquor vendor is of any concern of the State, and it confers privilege on fixed terms for a fixed period. It is for the participant to plan and participate in the purchase of the privilege. (R. Selvaraj68; Issac Peter116). It is not open to the petitioners to now turn around and contend that un- disposed A-4 shops should not be relocated in their areas as they may suffer losses thereby. XX. HAS THE COMMISSIONER ABDICATED HIS POWERS UNDER RULE 4 AND SURRENDERED HIS DISCRETION TO HIS SUBORDINATES? It is contended, on behalf of the petitioners, that the Commissioner could not have called for proposals from the Deputy Commissioners of Prohibition and Excise, who have no role to play under the Act and the Rules, for the purpose of issuing licences; and, from the counter-affidavit, it is clear that the Commissioner has merely accorded permission and has not take an independent decision under Rule 4. The principles of administrative law, such as surrender of discretion and abdication of duty vitiating the decision, would apply in the case of exercise of power conferred by a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to another within the zone, and 37 A-4 shops from one district to another within the multi-zone within the same licence fee slabs. In calling for proposals, and in seeking information, from his subordinates the Commissioner has neither surrendered his discretion nor has he abdicated his duties. It is evident that it is the Commissioner who has exercised the powers conferred on him under the amended Rule 4, and not the Deputy Commissioners who, as his subordinates, had merely submitted proposals to, and had furnished the information sought for by, him. XXI. ARE DISTRICT COLLECTORS EMPOWERED TO ISSUE THE NOTIFICATION UNDER RULE 5(1) OF THE RULES? It is contended on behalf of the petitioners that the impugned notifications, issued by District Collectors, are ultra-vires Rule 5 as the competent authority is the licensing authority i.e., the Excise Superintendent; if a thing has to be done in a certain way, it must be done in that way only; merely because they were also granted licences, pursuant to notifications issued by District Collectors in July, 2012, does not disable the petitioners from questioning the impugned notifications issued by the District Collector as the caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of applications, and selection of applicants for the grant of licences. While Rule 12(1) requires applications, along with the prescribed enclosures, to be addressed to the licencing authority, the selection procedure, detailed in Rule 12(6) of the Rules, makes it clear that the District Collector is the selection authority. On a conjoint reading of Rules 5 and 12, it is evident that, while the notification under Rule 5(1) is to be issued by, and the applications addressed to, the Prohibition Excise Superintendent as the licencing authority, the selection process is conducted under the aegis of the District Collector on whom power is conferred to select the successful applicant. After the applicant is selected by the District Collector for grant of the licence, it is the Prohibition Excise Superintendent who, as the licensing authority, is competent to issue the licence under Rule 24. The District Collectors were, therefore, not entitled to issue the impugned notifications under Rule 5(1) of the Rules. B. PETITIONERS CANNOT BLOW HOT AND COLD AT THE SAME TIME: This, by itself, may not justify setting aside the impugned notifications as the petitioners are themsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion taking into consideration a wide variety of circumstances, inter alia, the facts of the case, the exigency that warrants such exercise of discretion, the consequences of grant or refusal of the writ, and the nature and extent of injury that is likely to ensue by such grant or refusal. (Rajasthan State Industrial Development Investment Corpn.130). The power conferred on the High Court, under Article 226 of the Constitution, is to advance justice and not to thwart it. The lookout of the High Court is, therefore, not merely to pick out any error of law through an academic angle but to see whether injustice has resulted on account of any erroneous interpretation of the law. If justice became the by- product of an erroneous view of law the High Court is not expected to erase such justice in the name of correcting the error of law. (Roshan Deen v. Preeti Lal1 ; Ramesh Chandra Sankla126; State of U.P. v. District Judge, Unnao AIR 1984 SC 1401). While examining the contention that the impugned notifications, issued by the District Collectors, must be set aside on the ground that no such power is conferred on them under Rule 5(1), it does not stand to reason that this Court shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PS, ENCOURAGING CONSUMPTION OF LIQUOR? It is contended, on behalf of the petitioners, that liquor is not an essential commodity, and grant of privilege fee by the State is only a revenue generating exercise; the very fact that A-4 shops, in some districts, could not be disposed shows that the people in those districts do not wish to consume IMFL; a welfare State should not dispose of A-4 shops which could not be relocated; and relocation of shops, from one district to another, falls foul of the government policy for the year 2013-14 as it would amount to encouraging people in that district to consume more IMFL. The power of the State to raise revenue by levying taxes and fees should not be confused with the power of the State to regulate trade or business in liquor. The State exercises two different powers on such occasions. The mere fact that the State levies taxes and fees on trade or business in liquor or derives income from it, does not make the right to carry on trade or business in liquor a fundamental right. (R. Selvaraj68). Whether or not the undisposed A-4 shop should be relocated are matters of legislative or executive policy and this Court would not sit in judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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