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Madhya Pradesh High Court · body

1972 DIGILAW 39 (MP)

GAYAPRASAD v. EXCISE COMMISSIONER

1972-03-01

G.L.OZA, S.R.VYAS

body1972
JUDGMENT : ( 1. ) THIS is a petition filed by the petitioner, who claims to be carrying on the business of an Excise Contractor in the territory of Madhya Pradesh. ( 2. ) IN this petition, the petitioner has challenged a notification fixing the programme of an auction of licence for the sale of country liquor in the Indore district. This programme was published in daily newspapers of 17th November 1971. It is alleged in the petition that this auction was to take place on 31st January 1972 and 1st February 1972. ( 3. ) ACCORDING to the petitioner, there are nine shops for the sale of country liquor in the city itself, and ten in the area surrounding Indore City. It is contended that since 1964 these shops have been collectively auctioned, and this method of collectively auctioning the shops creates monopoly in the business. The petitioner contended that by this process his fundamental right is affected. He contended that in the notification it was made clear that auction may be done separately or in groups. According to the petitioner, auction of the shops in groups is not justified under the provisions of the madhya Pradesh Excise Act, 1915 (hereinafter called the Act ). After the filing of this petition, the auction has taken place and it appears that these shops have been collectively auctioned. ( 4. ) IN the return filed by the respondent No. 1, it was admitted that a notification was issued for an auction of the shops and that it was indicated in the notification that the shops may be auctioned jointly or separately. It was contended that auction of the shops in groups does rot create any monopoly and is not in contravention of any of the provisions of the Act and does not also affect any fundamental right of the petitioner. It was further contended that when the shops are auctioned separately the Government gets less, whereas if they are auctioned in groups the State gets a substantial sum. It is stated that in the present auction when the shops were separately auctioned the highest bid was of Rs. 12,36,000 whereas when they were auctioned in groups the highest bid was of Rs. 25 lakhs and it was in these circumstances that the authorities chose to auction the shops in groups. It is stated that in the present auction when the shops were separately auctioned the highest bid was of Rs. 12,36,000 whereas when they were auctioned in groups the highest bid was of Rs. 25 lakhs and it was in these circumstances that the authorities chose to auction the shops in groups. It was also contended that at the auction held on 31st January 1972 and 1st February 1972, the petitioner did not comply with the conditions and was not entitled to bid at these auctions, and consequently he has no locus standi to file the present petition. ( 5. ) SHRI Newaskar, learned counsel for the petitioner, contended that it is well settled that dealing in liquor is a right of a citizen guaranteed under Article 19 of the Constitution, although this right can be curtailed by reasonable restrictions imposed in the interest of general public, and that, therefore, although the licensing of the shops for sale of country liquor may be justified, still the sale of a number of shops in groups cannot be justified as it results in a monopoly and cannot be called a reasonable restriction in the interest of general public. He contended that the creation of such a monopoly runs counter to the accepted policies of the Government. Although the learned counsel conceded that there is no provision in the Act which prohibits the auction of a number of shops grouped together, still he contended that the scheme of the Act indicates that there should be a separate licence for each shop. He referred to section 28 of the Act and rule V (d) of the Rules of general Application given in the Excise Rules (hereinafter called the Rules ). According to him, rule V (d) clearly indicates that a person holding one licence cannot hold any interest in more shops in the adjoining area without the sanction of the Collector. On this basis, learned counsel contended that the auction of the shops in groups runs contrary to the scheme of the Act. He further contended that there is no provision in the Act or the Rules for auctioning of the licence of these shops, although he did not challenge the system. On this basis, learned counsel contended that the auction of the shops in groups runs contrary to the scheme of the Act. He further contended that there is no provision in the Act or the Rules for auctioning of the licence of these shops, although he did not challenge the system. In support of his contention that the sale of liquor is a fundamental right, learned counsel referred to Mineral Development Ltd v. State of Bihar (AIR I960 S C 468.)Pannalal Binjraj v. Union of India ( 1957 SCR 233 .) and sukhlal Sen v. Collector, Satra (1969 U P L J 516.) He also contended that auction in a group will ultimately result in a monopoly where there is no competition and, therefore, the licensee will be free to sell liquor at any price which will run contrary to the interest of general public. ( 6. ) LEARNED Government Advocate for the State contended that the provisions of the Act and the Rules nowhere prohibit auction of the shops in groups. He submitted that the experience of the authorities, as demonstrated by the figures filed along with the return, is that when the shops are separately auctioned they fetch very little revenue as compared to the revenue received when they are auctioned in groups. He, therefore, contended that this system was accepted as one of the purposes of the Excise Act is to collect revenue for the public exchequer and, therefore, it cannot be said that it is not in the interest of general public. Learned counsel conceded that the sale of liquor is a fundamental right. But he contended that it is well settled that the Government ran regulate it by introducing a system of licence, and this has been accepted as a reasonable restriction in the interest of general public. According to the learned counsel, the petitioner had not even deposited the requisite sum to qualify himself for the auction at Indore and, therefore, there is nothing to indicate that the petitioner was in any manner affected and so he cannot maintain a petition challenging the scheme of the auction. Learned counsel relied on Pritpal Singh v. Chief Commr. , Delhi ( AIR 1966 Punjab.) and Manhibai v. Excise Commr. Learned counsel relied on Pritpal Singh v. Chief Commr. , Delhi ( AIR 1966 Punjab.) and Manhibai v. Excise Commr. , state of M P (1963 M P L J 526=a I R 1963 M P 352)and Ram Autar v District Excise Officer, Lucknow (I L R 1962 (2) All. 409.) ( 7. ) SHRI M. A. Khan appearing for the respondent No. 4, while supporting the contentions raised by the learned Government Advocate, further contended that the question of fundamental right and reasonable restriction has now been well settled by a series of decisions of the Supreme Court. He also referred to a Full Bench decision of the Kerala High Court in P. Ramchandran v. State (AIR 1971 Kerala 146.) Learned counsel contended that rule V (d) of the Rules, where it has been provided that a person holding interest in one shop will not hold interest in two or more shops which are adjoining without the sanction of the collector, is of no help to the petitioner as auction in groups is itself held by the Collector and, therefore, there is no question of any prohibition. He contended that this rule will not be applicable when groups of shops themselves are auctioned. According to the learned counsel the rules provided for fixing of maximum and minimum price and so the apprehension of the petitioner is of no substance. ( 8. ) IT is now well settled that sale of liquor is as good a business as any other business, and it is a fundamental right guaranteed under Article 19 (6) of the Constitution. It is also well settled that when Government puts restrictions on sale by way of providing licences and fixing the number of shops, it cannot be said that it is not a reasonable restriction. In P. Ramchandran v. State, a Full Bench of the Kerala High Court, after reviewing all the decisions of the Supreme Court on the question, held that it does not create a monopoly in favour of the State or any person within the meaning of Entry 21 of List III of Schedule VII to the Constitution. In P. Ramchandran v. State, a Full Bench of the Kerala High Court, after reviewing all the decisions of the Supreme Court on the question, held that it does not create a monopoly in favour of the State or any person within the meaning of Entry 21 of List III of Schedule VII to the Constitution. While considering the question of the interest of general public, it was observed that: "the words in the interests of general public in Article 19 (6) are of wide import comprehending public order, public health, public security, public morals, economic welfare of the community, and the objects mentioned in Part IV of the Constitution. " On that basis, it was held that such a restriction cannot be said to be against the interests of general public. This being well settled, it was not in fact seriously contested before us by the learned counsel for the petitioner. ( 9. ) THE main grievance of the petitioner appears to be that the auction of shops in groups is not justified under the scheme of the Act, and that such an auction in groups runs contrary to the interests of general public. So far as the scheme of the Act is concerned, there is nothing in the provisions of the act to indicate that a group of shops cannot be auctioned. Section 17 of the act provides for a licence, and it reads thus: "17. (1) No intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf; provided that- (a) a person having the right to the tari drawn from any trees may sell such tari without a licence to a person licenced to manufacture or sell tari under this act; (b) a person licenced under section 13 to cultivate the hemp plant may sell without a licence those portions of the plant from which the intoxicating drug is manufactured or produced to any same, or to any officer whom the Excise Commissioner may prescribe; and (c) Nothing in this section shall apply to the sale of any foreign liquor lawfully procured by any person for his private use and sold by him or on his behalf or on behalf of his representatives in interest upon his quitting a station or after his deceased. On such conditions as the Excise Commissioner may determine, a licence for sale under the Excise law for the time being in force in other States or Union territories maybe deemed to be a licence granted in that behalf under this Act." This provision clearly provides for a licence for the sale of liquor. Section 28 provides for a licence being granted on certain conditions Section 62 (2) (f) and (h) empowers the State Government to frame rules for grant of licence and regulate the number of such licences in any local area. It also empowers the State Government to make rules prescribing the procedure to be followed in the matter of granting licences. Under these powers, rules have been framed by the Government and rule 5 of the Rules, to which a reference has been made by the learned counsel for the petitioner, provides certain restrictions on a person bidding at an auction. Clause (d) of this rule reads thus: "without the sanction of the Collector, no person shall hold or possess any interest in two or more adjoining shops for the retail sale of the same intoxicant in the same town or village area. " It was on the basis of this rule that it was contended that the intention of the legislature appears to be that one person should not be permitted to hold more than one licence and, therefore, auction in groups runs contrary to this rule is not disputed that the auction of shops is conducted by the Collector and, therefore, where a group of shops is being auctioned, it cannot be said that such an auction would run contrary to this rule. There is nothing else in the Act or the rules to indicate that an auction in groups is not justified. A question similar to this came up for consideration in Ram Autar v. District excise Officer, Lucknow, where a Division Bench of the Allahabad High Court held that the rules under the LLP. Excise Act provided for auction separately, and the rules indicated that this should be done ordinarily. It was also held that there is nothing on the basis of which it can be said that auction of shops in groups was contrary to the rules. Excise Act provided for auction separately, and the rules indicated that this should be done ordinarily. It was also held that there is nothing on the basis of which it can be said that auction of shops in groups was contrary to the rules. The learned Judges of the Division Bench ultimately held that: "the Excise Manual does not lay down any rule indicating as to what should be the criteria for determining special cases in which ordinary system of selling shops separately need not be followed. The matter is left to the discretion of the Excise authorities. On behalf of the State, the contention is that, in view of the serious loss that the State was suffering as a result of individual auctioning of toddy shops, it was decided to lump together the shops. There being nothing in the Excise Manual prohibiting such a method altogether, we find it difficult to hold that the method adopted was against any mandatory provision of law. In the same decision, the question of monopoly was also considered, and it was observed that: "the learned counsel for the appellant has argued that the creation of monopoly is forbidden by rule 358 (9) of the Excise Manual. We, however, find that all that this sub-rule lays down is that the creation of a monopoly should be an important consideration before the Excise authorities in determining whether the highest bid should be accepted. It is further stated in this rule that it is necessary to guard against the acceptance of bids which may have the effect of constituting an overt or covert monopoly. In the present case it is difficult to hold that a monopoly was created. " This view was expressed in this decision in the face of a rule which laid down that ordinarily auction would be separate for each shop and when there was also a rule about monopoly. So far as our Act is concerned, as also the rules made thereunder, there is no such provision prohibiting auction in groups. Consequently it cannot be contended that auction of a group of shops is in any manner contrary to the provisions of the Act or the rules. ( 10. So far as our Act is concerned, as also the rules made thereunder, there is no such provision prohibiting auction in groups. Consequently it cannot be contended that auction of a group of shops is in any manner contrary to the provisions of the Act or the rules. ( 10. ) AS regards the question that auction of a group of shops may result in a situation which cannot be said to be in the interests of general public, the main argument of the learned counsel for the petitioner appears to be that this would result in absence of competition and so the licensee may be in a position to sell liquor at a very high price which would not be in the interests of general public, at least in the interests of those indulging in the use of liquor. It appears that what the learned counsel apprehended is that the licensee shall be free to sell liquor at any high price and the Excise authorities would be helpless in the matter. But this apprehension of the learned counsel does not appear to be justified. Rule XVI of the rules regarding general Licence conditions provides as follows : "liquor or intoxicating drugs shall not be sold below such minimum and above such maximum price, if any, as is, or may from time to time be, fixed by the Collector with the previous approval of the Government. " It cannot, therefore, be doubted that if a licencee chooses to misuse his licence obtained by him for a group of shops in a locality, the authorities can stop him from doing so and from selling the liquor at a very high price. Although there is nothing on record to indicate whether any price has been fixed under the licence which may be granted in pursuance of the auction that has taken place on 31st January 1972 and 1st February 1972, still it cannot be said that the licencee has a free hand. The apprehension of the learned counsel for the petitioner does not, therefore, appear to be justified. There is also a rule providing for maintaining a signboard where rates have to be notified. This rule apparently is provided to meet such a contingency as has been suggested by the learned counsel. The apprehension of the learned counsel for the petitioner does not, therefore, appear to be justified. There is also a rule providing for maintaining a signboard where rates have to be notified. This rule apparently is provided to meet such a contingency as has been suggested by the learned counsel. It cannot also be doubted that the Excise authorities have chosen to auction the shops in groups in view of the revenue that this fetches. There is no other motive which can be attributed to the authorities. It cannot also be doubted that while doing this, there is nothing on the basis of which it can be said that this will not be in the interest of general public. ( 11. ) AS regards the contention of the respondents about the right of the petitioner to maintain this petition, it is no doubt true that for the collective auctioning of shops the conditions require a substantial sum to be deposited before a person can offer a bid, and it is also not in dispute that the petitioner might not have deposited that amount. In fact, this petition was filed before the auction actually took place. But as the petitioner claims to be an excise contractor or a person carrying on the business of sale of liquor, it cannot be said that he had no interest in the auction of the shops at Indore. Consequently it cannot be held that the petitioner had no interest in filing this petition. ( 12. ) IN the light of the discussion above, there is no substance in this petition. It is, therefore, dismissed. The respondent-State and the respondent no. 4 shall be entitled to costs of this petition. Counsels fee Rs. 100 for each of the counsel appearing for the said respondents. The outstanding amount of security deposit, if any after deduction of costs, shall be refunded to the petitioner. Petition dismissed.