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1991 DIGILAW 464 (KER)

Jose v. Asst. Excise Commissioner

1991-10-29

SANKARAN NAIR

body1991
Judgment :- Petitioner challenges Ext.P6 order of first respondent, cancelling Ext.P1 bar licence issued to him. On the strength of the said licence which is valid till 1-4-1992, petitioner had been running a bar at 'Hotel Mayura', Mannuthy, Thrissur. Petitioner was not granted necessary permits for drawing supplies of foreign liquor, for use in the bar since sometime in August, 1991. Upon that, petitioner moved this court by OP 8938/ 91. Meanwhile, a Memo was issued to the petitioner, alleging violation of S.56(b) & (c) of the Abkari Act On 9-9-1991, an interim direction was issued in that petition, directing firs; respondent to enquire into certain allegations, take a decision and submit a report by 12-9-1991. On 12-9-1991, the Addition Advocate General appearing for respondents, submitted that petitioner had violated conditions of the licence, and that action was contemplated against him for that reason. After hearing both sides, an order was passed: "The Assistant Excise Commissioner will pass such orders as he is entitled to, on 13-9-1991 and communicate the same to the petitioner. I do not indicate the nature of the order to be passed. But, an order will be passed in accordance with law." 2. The direction was to pass such orders as the Assistant Excise Commissioner "is entitled to". Ext.P6 order followed, cancelling Ext.P1 licence and imposing a fine. The reasons stated for this is that, petitioner had allowed one K.P. John to run the bar since 10-7-1991, violating rule 19 of the Foreign Liquor Rules and condition No. 13 of Ext.P1 licence. Enquiries made by the Department and admissions made by K.P. John and one O.J. Emmanual, regarding transfer of business, persuaded first respondent to cancel the licence. 3. Learned counsel for petitioner challenged Ext.P6 order on grounds of malafide and as violative of principles of natural justice, in that it did not adhere to requirements of notice postulated by S.67A of the Abkari Act. It is also alleged that rule 34 of the Foreign Liquor Rules (hereinafter referred as "the rules"), conferring powers on the first respondent to cancel a licence, was ultravires. 4. Learned Advocate General submitted that the licence to vend foreign liquor was granted to Mayura Hotel, ad that after the Mayura Hotel was transferred to K.P. John, the bar had no independent existence. 4. Learned Advocate General submitted that the licence to vend foreign liquor was granted to Mayura Hotel, ad that after the Mayura Hotel was transferred to K.P. John, the bar had no independent existence. Referring to rule 13(3) of the Rules, the Advocate General submitted that the bar is intended for the needs of the hotel, that certain requirements regarding number of rooms and nature of rooms, etc. are prescribed and that dehors a hotel, a bar cannot be run. At any rate, even the licence to vend foreign liquor was transferred by petitioner to K.P. John by an agreement dated 10-7-1991 (Ext.P5), and that is a clear violation of R.19 of the Rules and condition 13 of Ext.P1 licence, according to the Advocate General. He submitted further thatR.34 contained a power independent of S.26, and in addition to that. 5. The first contention that Ext.P6 was issued by first respondent, for extraneous reasons at the instance of the Inspector General of Police (Headquarters), cannot be countenanced. It is not stated in what manner the said officer influenced the decision of first respondent. More importantly, that Officer is not a respondent, and allegations made against a party without notice to him cannot be acted upon. 6. The next contention is that the power of cancellation of licence can be exercised only by the Commissioner of Excise, and not by a subordinate authority, in the light of S.26 of the Abkari Act. That Section reserves the power to cancel a licence in the Commissioner of Excise, while conferring power to impose lesser punishments on subordinate officers. R.34 which enables the Assistant Excise Commissioner to exercise the same power, is therefore ultravires - submits counsel. Rule making power under S.29 cannot be exercised to enlarge powers available to an Assistant Commissioner, according to counsel. He referred to condition 16 of Ext.P1 licence, to reinforce the contention that the power of cancellation is available only to the Commissioner of Excise. Reference was also made to Rr. 31, 32, 40 of the Rules and S.67F of Abkari Act, to highlight the same theme. Counsel relied on the decisions in State of Punjab & Ann v. Hari Kishan Sharma (AIR 1966 SC 1081), Bar Council of Delhi & Ann v. Surjeet Singh & Ors. (AIR 1980 SC 1612), Board of Directors of Andhra Pradesh Co-op. Central Land Mortgage Bank Ltd. v. Chittor Primary Co-op. Counsel relied on the decisions in State of Punjab & Ann v. Hari Kishan Sharma (AIR 1966 SC 1081), Bar Council of Delhi & Ann v. Surjeet Singh & Ors. (AIR 1980 SC 1612), Board of Directors of Andhra Pradesh Co-op. Central Land Mortgage Bank Ltd. v. Chittor Primary Co-op. Land Mortgage Bank Ltd. (AIR 1974 SC 1692), Abraham v. The Sales Tax Officer (1964 KLT2IFB- affirmed in Sales Tax Officer, Ponkunnam v. KJAbraham - AIR 1967 SC 1823) and Powell v. May (1946 (1) K.B. 330) to support his contention that R.34 is ultravires. 7. In answer, the Advocate General submitted that the question of ultravires does not arise in the circumstances, as the power under R.34 is a power independent of S.26. According to him, the field officers know the local conditions better, and they cannot wait for the Commissioner to act, as a measure of expedition may be necessary in certain situations. He relied on the decision in M.P. Sahadevan v. Excise Inspector (1991 (1) KLJ 145) and P.J. Varkey v. State of Kerala & Ors. (1972 KLT 815), to submit that Rules have the same force of law, and that conditions in the licence bind the licensee. The submission is beyond reproach. Relying on State of M.P. v. Mandlal Jaiswal & Ors. (AIR 1987 SC 251), R.K. Garg & Ors. v. Union of India & Ors. (AIR 1981 SC 2138) and the State of Gujarat v. Shri Ambica Mills Ltd. (AIR 1974 SC 1300), the Advocate General further submitted that the Rules embody matters of policy, and that interference may not be made with matters of policy. A question of policy, does not arise for consideration. 8. The question that comes into sharp focus, is whether R.34 and Ext.P6 order which was issued under that rule, are ultravires. An act or an order, or a rule is ultravires, if it is outside the authority conferred by law. To quote H.W.R. Wade: "An act which is for any reason in excess of power (ultravire) is often described as being outside jurisdiction. 'Jurisdiction' in this contect means simply 'power', though sometimes it bears the slightly narrower sense of 'power to decide', eg. if applied to a statutory tribunal It is a word to which the Courts have given different meanings in different contexts .... 'Jurisdiction' in this contect means simply 'power', though sometimes it bears the slightly narrower sense of 'power to decide', eg. if applied to a statutory tribunal It is a word to which the Courts have given different meanings in different contexts .... An administrative act or Order which is ultravires or outside jurisdiction, is void in law." 9. S.26 enumerates the powers conferred on different authorities. The power of cancellation of a licence is conferred on the Commissioner, and power to impose other punishments is conferred on authorities subordinate to the Commissioner. I understand the conferment of power of cancellation on the Commissioner, as an exclusion of that power from authorities subordinate to him. Rule 34 cannot confer on the Assistant Commissioner, a power larger than the power conferred by S.26 itself. Otherwise put, what the Section has denied to the Assistant Commissioner, cannot be granted to him by the rule. The rule making power under S.29 cannot be exercised to enlarge or modify or annul the contents of S.26 itself. The argument advanced by the Advocate General that rule 34 confers a power independent of S.26, cannot commend acceptance. Besides, the rule making power under S.29 is for limited and enumerated purposes, and conferment of penal powers is not one of the purposes contemplated by that Section. A power of delegation is not envisioned by the Rules, either. It may be, as the Advocate General submitted that the conditions in the licence bind the licensee. But, a power of cancellation by the Assistant Excise Commissioner is not visualised by the conditions in Ext.P1 licence. On the contrary, the power of cancellation inheres only in the Commissioner of Excise, in the light of condition No. 16. That condition incorporates in the licence, the powers under S.26. 10. In the decision in Bar Council of Delhi v. Surjeet Singh (AIR 1980 SC 1612) the Supreme Court considered the vires of rules framed by the State Bar Council, laying down conditions of eligibility. S.3(4) of the Bar Councils Act empowered the Central Bar Council to prescribe such conditions. The rules made by the State Bar Council, prescribing conditions were found to be ultravires. S.3(4) of the Bar Councils Act empowered the Central Bar Council to prescribe such conditions. The rules made by the State Bar Council, prescribing conditions were found to be ultravires. Likewise, in Bimal Chandra Banerjee v. State of Madhya Pradesh (AIR 1971 SC 517), the Supreme Court held that a levy cannot be imposed under a bye law or rule, unless the Statute empowered to do so, and that the rule making authority cannot exceed its mandate. It is useful to refer to the decision in Powell v. May (1945 (1) K.B. 330). The King's Bench held that it was beyond the power of a Country Council to make a byelaw relating to gambling, contrary tot the conditions in the Act of Parliament. The byelaw was held void. 11. As observed by H.W.R. Wade, rules and regulations not duly made under the Act of Parliament, are legally ineffective. Courts must determine validity of delegated legislations, by applying the test of ultravires, just as they do in other contexts. Acts of Parliament have sovereign force, but legislations made under delegated power can be valid, only if they conform exactly to the power granted. This is the view in Hoffman La Rocha & Co. v. Secretary of State (1975 Appeal Cases 295), Laker Airways v. Department of Trade (1977 Q.B. 643) and a catena of other decisions. The Supreme Court has approved this view, as seen from the decisions cited. 12. The clear import of S.26 is that the power of cancellation is reserved for the Commissioner of Excise, while other powers are conceded to subordinate authorities. The enumeration under S.26 implies an exclusion. What is excluded by the Statute, cannot be conferred by the Rules and the rule making authority cannot do, what the Act does not enable it to do. Precisely that was done in the instant case, the conferment under rule 34 is also beyond the rule making power under S.29. The rule, to the extent of conferring the power of cancellation on an Assistant Commissioner of Excise, is therefore ultravires and unenforceable. Ext. P6 made in exercise of a power not available to first respondent, is without authority. 13. The Advocate General contended that the circumstances clearly show that petitioner had violated a condition of the licence, by transferring the privilege to vend foreign liquor to K.P.John. Ext. P6 made in exercise of a power not available to first respondent, is without authority. 13. The Advocate General contended that the circumstances clearly show that petitioner had violated a condition of the licence, by transferring the privilege to vend foreign liquor to K.P.John. The fact that a daily rent of Rs.900/- is payable by K.P. John to petitioner, in addition to a security deposit of Rs.1.5 lakhs, is suggestive that the right conferred on John was not merely the right to run the hotel, submits Advocate General. The argument though attractive, need not be considered, as no power is available to the first respondent to cancel the licence. It is equally unnecessary to consider the argument of petitioner relating to principles of natural justice. 14. Since no power of cancellation is available to the Assistant Commissioner - first respondent, to cancel a licence, as rule 34 is ultravires of the Act, Ext.P6 has to be quashed and is accordingly quashed. It is also declared that rule 34(ii) & (iii) of the Foreign Liquor Rules is ultravires. I do not think it necessary to grant any other relief. Original Petition is allowed. Parties will suffer their costs.