P. Ramachandran v. State of Kerala — 1967 DIGILAW 246 (KER)

JUDGMENT P. Govindan Nair, J. 1. These writ appeals arise from an order dismissing O.P. Nos. 2059, 2177 and 2184 of 1967 by a common judgment delivered by Justice M. U. Isaac. Writ Appeal 160 is from the order dismissing O.P. 2184, Writ Appeal 161 from the order dismissing O.P. 2059 and Writ Appeal 162 from the decision in O.P. 2177. The petitioners in all these original petitions are holders of what are termed F.L. 2 licences issued under the provisions of the Abkari Act, I of 1077. The petitioner in O.P. 2184 has challenged the grant of an F.L. 1. licence to the 4th respondent in that case and the petitioner in O.P. 2059 has challenged the grant of F.L. 1 licences to each of the respondents 3 and 4 in that O.P., and the petitioner in O.P. 2177 has challenged the grant of F.L. 1 licences to respondents 3 and 4 therein. 2. We may now briefly indicate the grounds on which these grants have been challenged. In O.P. 2184, the contention has been raised that the fundamental right of the petitioner to carry on the business of trading in liquor and intoxicating drugs have been infringed. It is averred that the infringement has been made possible by the provisions in sections 18-A and 24 of the Abkari Act I of 1077 and so these provisions, it is urged, must be declared to be ultra vires the Constitution. Further, in all these petitions it is alleged that the provisions in the Act read with the rules framed indicate that uncanalised, unguided and arbitrary power has been conferred on the Commissioner of Excise in the matter of the grantor refusal of F.L. 1 licences and it is argued that this naked power so conferred on the Commissioner is capable of interfering with and has in fact interfered with the rights conferred on the petitioners by Articles 19 and 14 of the Constitution of India. 3. Before we deal with these aspects, we may refer to the relevant provisions in the statute. 3. Before we deal with these aspects, we may refer to the relevant provisions in the statute. Section 18-A which runs thus: "18-A. Grant of exclusive or other privilege of manufacture, etc., on payment of rentals.” (1) It shall be lawful for the Government to grant to any person or persons, on such condition and for such period as they may deem fit, the exclusive or other privilege” (i) of manufacturing or supplying by wholesale; or (ii) of selling by retail, or (iii) of manufacturing or supplying by wholesale and selling by retail any liquor or intoxicating drugs within any local area on his or their payment to the Government of an amount as rental in consideration of the grant of such privilege. The amount of rental may be settled by auction, negotiation or any other method as may be determined by the Government, from time to time, and may be collected to the exclusion of, or in addition, to the duty or tax leviable under sections 17 and 18. (2) No grantee of any privilege under sub-section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner. (3) In such cases, if the Government shall by notification so direct, the provisions of section 12 relating to toddy and toddy producing trees shall not apply. " talks of the privilege of manufacturing or supplying by wholesale or of selling by retail or of manufacturing or supplying by wholesale and selling by retail any liquor or intoxicating drugs within any local area on his or their payment to the Government of an amount as rental in consideration of the grant of such privilege. It is further provided that the amount of rental may be settled by auction, negotiation or by any other method as may be determined by the Government from time to time and may be collected to the exclusion of, or in addition, to the duty or tax leviable under sections 17 and 18. 4. It is further provided that the amount of rental may be settled by auction, negotiation or by any other method as may be determined by the Government from time to time and may be collected to the exclusion of, or in addition, to the duty or tax leviable under sections 17 and 18. 4. We are not concerned with section 17 in this case but we may refer to section 18 and the relevant part of that section, sub-section (2) thereof, provides: "The luxury tax on liquor or intoxicating drugs shall be levied,” (i) in the case of any liquor, in the form of a fee for licence for the sale of the liquor of in the form of a gallon-age fee or vending fee; and (ii) in the case of an intoxicating drug, in the form of a fee for licence for the sale of the intoxicating drug. " Sub-section (3) of section 18 fixes the limits of the duty of excise that can be imposed under sub-section (1) and the luxury tax under sub-section (2). The rules framed under this Act were published on 1st April 1953 and it is admitted on all hands that these rules as amended on the 10th March 1954, are the rules that are applicable. They provide for the grant of six types of licences of which we are concerned in this case only with two. These are provided for in rule 13 the relevant part of which we may extract: "13. Licences for sale.-Licences for the sale of foreign liquor shall be of the following descriptions and in the forms appended hereto. (1) Foreign Liquor 1 Wholesale Licence. This may be issued by the Excise Commissioner for an annual fee of Rs. 4,000 subject to such instructions as may be issued by Government from time to time. Under this licence the sale of liquor in any quantity less than one gallon at a time to one person is prohibited. Liquor sold under this licence shall not be consumed on the premises. (2) Foreign Liquor 2 Retail (Tavern) Licence. The privilege of sale under this licence will be sold in public auction subject to the conditions of the sale Notification, published by Government from time to time. The form of licence will be prescribed by the Excise Commissioner. " 5. Liquor sold under this licence shall not be consumed on the premises. (2) Foreign Liquor 2 Retail (Tavern) Licence. The privilege of sale under this licence will be sold in public auction subject to the conditions of the sale Notification, published by Government from time to time. The form of licence will be prescribed by the Excise Commissioner. " 5. It was pursuant to sub-rule (2) of rule 13 for granting the privilege of vending by retail liquor and intoxicating drugs that auctions were held pursuant to which F.L. 2 licences were issued to the petitioners in the original petitions. It is unnecessary to refer to the details regarding these licences. 6. Section 15 of the Abkari Act I of 1077 enacts that no liquor or intoxicating drugs shall be sold without a licence from the Commissioner. 7. So it was that applications were made for the grant of F.L. 1 licences for which the only insistence by the Act and or the rules is the condition provided in rule 13(1) that there should be a payment of Rs. 4,000 as licence fee. It is said that there were a large number of applications and that the Commissioner considered these applications and deemed it fit to grant licences to 37 persons. The petitioner in O.P. 2184 had also applied for an F.L. 1 licence on the 8th May, 1957. His application it is suggested in the counter affidavit was also considered by the Commissioner though no licence had been granted to the petitioner. The petitioners in O.P. Nos. 2059 and 2177 were holders of F.L. 1 licences, which were issued to them before they bid in the auctions that were held for the grant of F.L. 2 licences. They however did not apply for any fresh or more F.L. 1 licences. They nevertheless complain about the grant of F.L.1 licences to respondents 3 and 4 in their respective original petitions. 8. The learned Judge considered the arguments relating to sections 18-A and 24 and for the reasons stated in the judgment held that the validity of these sections cannot be challenged by the writ applicants. They nevertheless complain about the grant of F.L.1 licences to respondents 3 and 4 in their respective original petitions. 8. The learned Judge considered the arguments relating to sections 18-A and 24 and for the reasons stated in the judgment held that the validity of these sections cannot be challenged by the writ applicants. It appears to us that considering the fact that all these petitioners being persons who had applied and obtained licences issued pursuant to these very same provisions cannot be heard to contend that sections 18-A and 24 of the Abkari Act I of 1077 are violative either of Article 19 and or 14 of the Constitution. These aspects can only be considered in other and appropriate cases if and when they arise. 9. We shall therefore confine our attention to the arguments that have been advanced about the validity of rule 13 (1) which is the only relevant rule regarding the grant of F.L. 1 licences. The form of this licence is prescribed in the rules. There is also a section, which we have already adverted to, section 15. It is very clear from a reference to these provisions that there is nothing to indicate so far as the regulatory aspect of the grant of this type of licences are concerned as to whom such licences should be granted and for what reason. Based on the lack of any guiding principle discernible from these provisions it has been argued that the provision in rule 13 (1) is capable of serious misuse which would affect the fundamental right of the petitioner in carrying on his business and therefore the rule may be struck down. Reference was made to the decision of the. Supreme Court in Krishan Kumar v. J. and K. State A.I.R.1967 S.C.1368 and it was emphasised that dealing in liquor is a business and that the petitioners have the fundamental right to carry on business by virtue of Article 19 of the Constitution. This aspect is not challenged by the respondents in these appeals and seems to be clear from the ruling relied on. We have therefore to proceed on the basis that all the petitioners have a fundamental right to carry on the business of dealing in liquor. This aspect is not challenged by the respondents in these appeals and seems to be clear from the ruling relied on. We have therefore to proceed on the basis that all the petitioners have a fundamental right to carry on the business of dealing in liquor. Then the question is whether because of the existence of such fundamental right they can challenge the issue of F. L. 1 licences to the respondents in the original petitions, namely, 4th respondent in O.P. 2184, and respondents 3 and 4 in the other original petitions. If there is a fundamental right to carry on the business of dealing in liquor and intoxicating drugs, every person who complied with the conditions imposed which may be either fiscal or regulatory must be entitled to carry on such business. The only condition imposed by this rule is the payment of Rs. 4,000 and the respondents concerned have apparently paid this fees and it will not be proper for us to annul the grant of licences to these respondents at the instance of the petitioners. The petitioners in O.P. Nos. 2059 and 2177 had not applied for F.L. 1 licences. And we do not think that they can be said to be persons aggrieved by the grant of F.L. 1 licences to respondents 3 and 4 in these original petitions. We have of course noted the contention that grant of the licences have affected the businesses of the petitioners. We will assume without deciding that it is so. If there is a fundamental right to carry on the business of dealing in liquor and intoxicating drugs the fact that the exercise of such right has affected the petitioners is not a ground which would enable this Court to say that the grant of licences to the persons which enable them to exercise that fundamental right, is wrong. 10. There is a difference in this regard between the petitioner in O.P. 2184 on the one hand and the petitioners in the other original petitions, on the other. As we indicated, the petitioner in O.P. 2184 was himself an applicant, having applied on the 8th May, 1967 for the grant of an F.L. 1 licence to him. The petitioners in the other original petitions had not made any such applications. As we indicated, the petitioner in O.P. 2184 was himself an applicant, having applied on the 8th May, 1967 for the grant of an F.L. 1 licence to him. The petitioners in the other original petitions had not made any such applications. So in the light of what we have stated, namely, that every person who is willing to comply with all the conditions imposed by the Act and the rules are entitled to carry on the business of dealing in liquor and intoxicating drugs, we are unable to see how a licence could be refused to the petitioner in O.P. 2184. Thus while declining to interfere with the grant of F.L. 1 licence to respondents 3 and 4 respectively in O.P. 2059 and O.P. 2177 we make it clear that if the petitioner in O.P. 2184 presses the claim for the grant of an F.L. 1 licence that should be granted to the petitioner therein, of course, subject to his payment of Rs. 4,000 licence fee. 11. Before leaving this aspect of the case, dealing with the wide powers alleged to have been conferred by rule 13 (1) we wish to make it clear that nothing said in this judgment would preclude the State Government from ' either amending the existing rules or making fresh rules providing for regulatory measures for affording guidance in the matter of the grant or refusal of F.L. 1 licences. 12. We shall also add that the Abkari Act I of 1077 is a relic of the past, framed at a time when the Cochin State was ruled by a sovereign who had absolute powers of legislation. It seems to us that the provision for the purchase of the privilege of dealing in intoxicating drugs and liquor made in the statute is in keeping with this concept. Such a provision prima facie appears to be opposed to the Constitution in the light of the ruling of the Supreme Court in Krishan Kumar v. J. and K. State A.I.R. 1967 S.C. 1368 We may even add that the whole statute and the rules framed there under require careful examination. The result of the above discussion is that the judgment appealed against calls for no interference except in the following regard. The result of the above discussion is that the judgment appealed against calls for no interference except in the following regard. The petitioner in O.P. No. 2184 will be entitled to a F.L.1 licence if he presses his claim for the grant of one on payment of the licence fee of Rs. 4,000. Subject to the above clarification in Writ Appeal 160 of 1967 pertaining to O.P. 2184 of 1967 we dismiss all these appeals but without any order as to costs.