BHAGYALAKSHMI WINE STORES v. STATE OF KARNATAKA — 1989 DIGILAW 144 (KAR)

SWAMI J. ( 1 ) IN all these petitions under Article 226 of the Constitution, the petitioners have sought lor quashing sub-para (c) of para 3 of the standing Circular No. 141 bearing No. EC1 96/iml/88 dated 19. 3. 1988 issued by the Excise commissioner in Karnataka (Respondent 2 ). ( 2 ) THE petitioners are holders of C. L. 2 licence. The contention of the petitioners is that as per the conditions of C. L. 2 licence and also as per the provisions contained in the Karnataka Excise Act, 1965 (hereinafter referred to as the Act) and the Karnataka excise (sale of Indian and Foreign Liquors) rules, 1968 (hereinafter referred to as the rules), there is no Rule prohibiting the petitioners to purchase liquor for sale under c. L. 2 licence from the wholesale dealer in the other District. Such a condition can only be imposed by the Rules framed by the State government, but the Excise Commissioner has no power to frame the Rules. Sub- para (c) of Para 3 of the Standing Circular no. 141 imposes an additional restriction on a c. L. 2. licence holder that he shall draw his entire supplies from the wholesalers located within the District and such a restriction having not been imposed by R. ules, is without the authority of law. ( 3 ) ON the contrary, it is contended on behalf of the respondents that the matter is no more resintegra in as much as this Court in w. Ps. 531 to 536/89 (Sri Srinivasa Wines, tumkur and Others v Commissioner and secretary to Govt. and Others) decided on 25-1-1989 has held that sub-para (c) of para 3 of the Standing Circular No. 141 dated 19-3-1988 in question is valid and it does not impose any additional restriction. In addition to this it is contended on behalf of the respondents that the Act vests with the Excise commissioner with all the powers and makes him Chief Controlling Authority in all matters connected with the administration of the Act. Therefore subject to General and special Orders of the State Government it becomes the duty of the Excise Commissioner to administer the Act and to see that the objects of the Act are not defeated and the revenue of the State under the Act is also not affected in any manner. Therefore subject to General and special Orders of the State Government it becomes the duty of the Excise Commissioner to administer the Act and to see that the objects of the Act are not defeated and the revenue of the State under the Act is also not affected in any manner. ( 4 ) THIS Court in the aforesaid Srinivasa wines Case has, on consideration of sub- rules (1) and (2) of old Rule 3 and New Rule 3 of the Rules and also the conditions imposed on a holder of C. L. I licence, held that the holder of C. L. I licence is not entitled to sell liquor outside the areas specified in the licence i. e. the areas specified in the C. L. I licence is the area of the District. Therefore no C. L. 2 licence holder of another district is entitled to purchase from the holder of C. L. I licence of another District, as there is a restriction imposed on the C. L. I licence holder to sell the liquor only within the areas specified in the licence meaning thereby to C. L. 2 licence holders of the District only. The relevant portion of the judgment is as follows: "as per provisions extracted above and terms and conditions incorporated in a licence, the wholesale dealer is required to carry on the business within the area specified (within the district) and is permitted to purchase liquor only from licenced distillery/brewery/winery/located within the State and/or from a licenced distributor having C. L. I licence. As per clause 2 of the conditions, he can sell approved brands of liquor only within the specified area in the licence. As a necessary concomitant a retail vendor within the district can only purchase required IML from a wholesale licensee within the district. ( 5 ) HAVING regard to these provisions, question of permitting the retail vendors to purchase their requirement outside the district will not arise. So long as vend of indian Liquor within the District is tied over by grant of wholesale licence and a retail licence, stipulating to carry on the business within the specified area i. e. within a district, question of creating a monopoly in favour of an individual will not arise. This measure not merely serves the object of restrictions imposed on transits vide Sections 10,11,15 and 17, but also prevents hazardous. This measure not merely serves the object of restrictions imposed on transits vide Sections 10,11,15 and 17, but also prevents hazardous. The circular except intending to implement the Rules referred to above, does not run counter to it. The petitioners instead of seeking remedial measures for uneven distribution of sale by a wholesaler, if any, I feel, the challenge made to the circular which "intends to give effect to the Rules extracted above is in vain. Therefore, it is not possible to accept the plea that it ultra vires the power of Commissioner or run counter to the scheme of object of the Act of Rules. ( 6 ) SRI A. Jagannatha Shetty, Sri N. Y. Hanumanthappa and Sri Guruve Gowda, learned Advocates appearing for petitioners, submitted as similar matters are admitted and interim orders are made, these matters also require admission and grant of interim relief on like terms. The thrust of argument appears to maintain judicial discipline. Normally, 1 would not have deviated if only learned advocates had disclosed the point which required consideration or merit consideration. Learned Government advocate, who was directed to take notice in these series, submitted that, challenge made to the circular is devoid of merit, having regard to the scheme of the Act, rules and conditions of licence. Undisputedly there is no fundamental right to deal in liquor and the exclusive privilege of vend of liquor is parted subject to certain terms and conditions. The right that flows from such a licence must necessarily be governed by terms and conditions as are imposed, unless otherwise invalid viz. , opposed to the statute governing grant of licence or abnoxious or unconscious or wholly opposed to well established principles. Unless petitioners make out a prima facie "case either revealing the point or issue which merit consideration, I am unable to persuade myself to transform my judicial function to that of ministerial. ( 7 ) HENCE, I find these petitions are devoid of merit and are accordingly dismissed. " ( 8 ) HOWEVER Sri Vasudevareddy, learned counsel appearing for the petitioners has tried to putforth the contentions which, according to the learned counsel are not considered in the aforesaid judgment. ( 7 ) HENCE, I find these petitions are devoid of merit and are accordingly dismissed. " ( 8 ) HOWEVER Sri Vasudevareddy, learned counsel appearing for the petitioners has tried to putforth the contentions which, according to the learned counsel are not considered in the aforesaid judgment. It is contended on behalf of the petitioners that the petitioners being the C. L. 2 licence holders and there being no condition imposed on the C. L. 2 licence holders that they should purchase the liquor from the C. L. I licence holders of the District in which the c. L. 2 licence shop is situated, it is open to the petitioners to purchase the liquor according to their convenience and the nearness of the place where the C. L. I licence holder is located. It is further contended that there are Rules framed under the Act regulating the possession, transport, import and export of the intoxicants known as the karnataka Excise (Possession, Transport, import and Export of Intoxicants) Rules, 1967 (hereinafter referred to as the transport of Intoxicants Rules ). All that c. L. 2 licence holder is required to do is to obtain permission under the Transport of Intoxicants rules from the Deputy Commissioner of the District and transport the liquor. Therefore it is contended that sub-para (c) of para 3 of the Standing Circular no. 141 dated 19. 3. 1988 operates as an unreasonable restriction on the rights of the petitioners to purchase the liquor from any of the C. L. I licence holders and is also not prescribed under the Rules as such that apart from the fact that it is without the authority of law as it has been issued by the commissioner for Excise and as such it is also hit by Article 14 of the Constitution. ( 9 ) IT appears to me that it is not possible to accept this contention. First of all to carry on trade in liquor is not a fundamental right. The State has the exclusive right to deal in liquor. If the private individuals are pero it, it is only by the concession granted by the State. Similar matter came up for consideration before the Supreme Court in Har Shankar and Others v The Deputy Excise and Taxation Commissioner and Others (AIR 1975 S. C. 1121 ). The relevant portion of the Judgment is as follows:"53. If the private individuals are pero it, it is only by the concession granted by the State. Similar matter came up for consideration before the Supreme Court in Har Shankar and Others v The Deputy Excise and Taxation Commissioner and Others (AIR 1975 S. C. 1121 ). The relevant portion of the Judgment is as follows:"53. In our opinion, the true position governing dealings in intoxicants is as stated and reflected in the Constitution bench decisions of this Court in balasara's case 1951 SCR 682 = (AIR 1951 s. C. 318); Cooverjee's case 1954 SCR 873 = AIR 1954 SC 220 ; Kidwai's case 1957 SCR 295 = AIR 1957 SC 414 ; nagendranath's case 1958 SCR 1240 = AIR 1958 SC 398 ; Amarchakrabharathy's case (1973)1 SCR 533 = AIR 1972 SC 1863 and the R. M. D. C. case 1957 scr 874 = ( AIR 1957 SC 699 ) as interpreted in Harinarayan Jaiswal's case (1972) 3 SCR 784 = ( AIR 1972 SC 1816 ) and Nashirwar's case AIR 1975 SC 360 . There is no fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to prohibit absolutely every form of activity in relation to intoxicants - its manufacture, storage, export, import, sale and possession. In all their manifestions, these rights are vested in the State and indeed without such vesting there can be on effective regulation of various forms of activities In relation to intoxicants. In "american Jurisprudence", Volume 30 it is stated that while engaging in liquor traffic is not inherently unlayful, nevertheless it is a privilege and not a right, subject to governmental control. This power of control is an incident of the society 's right to self protection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime. It is significant that the judgment Krishna kumar Narula's case does not negate the right of the State to prohibit absolutely all forms of activities in relation to intoxicants. The wider right to prohibit absolutely would include the narrower right to permit dealings in intoxicants on such terms of general application as the State deems expedient. It is significant that the judgment Krishna kumar Narula's case does not negate the right of the State to prohibit absolutely all forms of activities in relation to intoxicants. The wider right to prohibit absolutely would include the narrower right to permit dealings in intoxicants on such terms of general application as the State deems expedient. " it is also further stated by the Supreme court that "since rights in regard to intoxicants belong to the State, it is open to the government to part with those rights for a consideration. " ( 10 ) THEREFORE, it is now settled position of law that it is the exclusive right of the State to deal in intoxicants and no person or a citizen has a right to carry on trade or business in intoxicants. 6. 1 It is true that the Rules and the Act do not impose a condition on a C. L. 2 licence holder that he should purchase liquor only from the C. L. 1 licence holder of the District in which C. L. 2 licence holder's shop is located. But the conditions of C. L. 2 licence and conditions of C. L. I licence are correlated. In as much as the C. L. 2 licence holder is required to purchase liquor only from C. L. 1 licence holder, therefore, they will have to be read harmoneously. That is what has been done in Sri Srinivasa Wines case. Therefore as interpreted by this Court, c. L. 1 licence holder cannot sell the liquor to a C. L. 2 licence holder of another District, it naturally follows that C. L. 2 licence holder will have to purchase only from the C. L. 1 licence holder of his District. Thus, in substance the Circular in question gives effect to and effectuates the true intendment of, the rules. Hence it is neither violative of the rules nor it imposes any restriction. 6. 2 In addition to this, I am also of the view that Section 3 of the Act enables the Excise Commissioner to issue such circulars as are necessary for the purpose of proper administration of the Act. The Excise Commissioner is made responsible for the administration of the Act. 6. 2 In addition to this, I am also of the view that Section 3 of the Act enables the Excise Commissioner to issue such circulars as are necessary for the purpose of proper administration of the Act. The Excise Commissioner is made responsible for the administration of the Act. Therefore if any difficulty is noticed in the administratior, of the Act or any loopholes are noticed which make it impossible for the authorities to check and verify the sale of liquor in the state, in such a situation it is open to the Excise Commissioner to issue the circulars. Of course, such circulars are subject to the general or special orders of the State government and are also required to be in conformity with the provisions of the Act and the Rules framed thereunder. It is contended by Sri Vasudeva Reddy, learned counsel for the petitioners that sub-para (c) of para 3 of the Standing Circular No. 141 dated 19. 3. 1988 is opposed to the Rules, because no such condition is imposed in the rules, nor the Rules enable the Excise Commissioner to impose such a condition. The question for consideration is as to whether sub-para (c) of para 3 of the Standing Circular No. 141 dated 19. 3. 1988 is opposed to the provisions of the Act and the Rules. As long as supply of liquor to the C. L. 2 licence holder is not affected and there is a restriction imposed upon the C. L. 1 licence holder that he should sell liquor in the area of his operation which, as interpreted by this Court in Srinivasa Wines's case means Sale of liquor to the c. L. 2 licence holders of the District, the Circular as already pointed out is intended to effectuate the true intendment of the Rules. The Circular enables the Excise authorities to backcheek each invoice with the wholesaler so as to ensure that no mischief is committed either by a C. L. 2 licence holder or by a C. L. 1 licence holder. It appears to me that in fact that such a condition is applicable to all C. L. 2 licence holders cannot be held to be a restriction. It is only a regulatory measure. It appears to me that in fact that such a condition is applicable to all C. L. 2 licence holders cannot be held to be a restriction. It is only a regulatory measure. In addition to this as already pointed out, when there is no fundamental right to carry on trade or business in intoxicants, the question of, the Circular imposing unreasonable restriction docs not arise. It is also not possible to hold that sub- para (c) of para 3 of the Standing Circular in question is opposed to the provisions of the rules and the Act. The Circular squarely falls within the power of the Excise Commissioner under Section 3 of the Act. ( 11 ) IN fact another Circular issued by the excise Commissioner for grant of C. L. 2 licence imposing certain condition that C. L. 2 licence granted should be 100 metres away from the place of worship came up for consideration in Krishnappa v Excise Commissioner (ILR 1986 (1) Kar. 186 ). This Courl upheld the Circular and held thai such a orcular had force of law. The decision was taken up in writ Appeal No. 560/1985. A division Bench of this Court by the order dated 29. 3. 1985 dismissed the appeal and held thus:"we see no good reason to interfere with the order of the learned Single Judge. However the appellant has some difficulty in securing alternate place for shifting his business, we grant six weeks time from today as a finally time for shifting his business. Subject to the time granting, this appeal stands disposed of. No costs. " ( 12 ) THEREFORE it is clear that it is open to the Excise Commissioner to issue Standing circulars which are not in consistent with the provisions of the Act and the Rules and necessary for proper administration of the act. ( 13 ) FOR the reasons stated above these writ petitions fail and the same are dismissed. Sri Rajasekharappa, learned Government pleader is permitted to file his memo of appearance for the respondents in all these cases in six weeks. --- *** --- .