JUDGEMENT KOSHY, J. 1. This writ petition was filed for setting aside the Liquor Sourcing Policy (CS/SCS) 2008-09 (in short, the liquor policy), by which the Bihar State Beverage Corporation Limited (hereinafter referred to as the Corporation) has laid down terms and conditions for purchase of country liquor and spiced country liquor from manufacturers of country/spiced country liquor. According to the petitioner, the liquor policy is against the provisions of the Bihar Excise Act, 1915 (in short, the Act) and the rules made thereunder. It is also contrary to, the terms and conditions of the licence issued by the State Government. It is further contended that the Corporation has no authority or jurisdiction to prescribe such terms and conditions which are against the statutory rules and that the above conditions are onerous, unilateral and arbitrary and thus amount to abrogation of the terms and conditions of the licence. It is also submitted that the Corporation having monopoly to deal with wholesale purchase and supply, it has no authority to impose such conditions taking undue advantage of that position and, therefore, the conditions are unilateral and arbitrary and it alters and the terms and conditions under which the parties are required to deal with liquor. Further, it is contended that it is violative of Articles 14 and 19 of the Constitution of India. Even though one of the prayers in the writ petition was for restraining the Corporation from coercing the petitioner to execute an agreement as stipulated in the Policy, after the filing of the petition, the petitioner, out of compulsion and necessity, signed the agreement under protest. 2. The petitioner is a company registered under the Companies Act, 1956 . It is engaged in the manufacture and supply of country liquor. There is no dispute with regard to the fact that only the State Government has got exclusive privilege to deal with manufacture and sale of country liquor in the State. Section 22 of the Act, as amended, provides that the State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege of manufacturing or supplying of liquor. Section 22 of the Act, as amended, provides that the State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege of manufacturing or supplying of liquor. Section 22 of the Act reads as follows: "Grant of exclusive privilege of manufacture and sale of country liquor or intoxicating drugs or denatured spirit or any other intoxicant- (1) The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege - (a) (i) of manufacturing or supplying wholesale, or (ii) of manufacturing and supplying wholesale, or (iii) of selling wholesale or retail, or (iv) of manufacturing or supplying wholesale and selling retail, or (v) of manufacturing and supplying wholesale and selling retail, any country liquor or intoxicating drug within any specified local, or (b) of manufacturing, storing using, possessing, exporting, importing including wholesale or retail sale of liquor which after manufacture is denatured to render it unfit for human consumption and is thereby termed as denatured spirit, and any other intoxicant; Provided that public notice shall be given of the intention to grant any such exclusive privilege, and that any objection made by any person residing within the area affected shall be considered before an exclusive privilege is granted. (2) No grantee of any privilege under sub-section (1) shall exercise the same unless or until he has received a license in that behalf from the Collector or the Excise Commission". Section 91 of the Act deals with the power of the Board of Revenue to make rules. Section 38 of the Act also authorises the Board to make rules and such restrictions regarding manufacture, etc. of the liquor. The Supreme Court in M.R Patel V/s. State of Bihar ( AIR 1966 SC 343 ) also held that the Board of Revenue, in exercise of the powers conferred on it by Sections 38 and 91 of the Act, can issue general instructions with regard to the conditions of any licence granted under the Excise Act. Section 92 of the Act provides that all rules made, and notifications issued under the Act shall be published in the official gazette and on such publication it shall have the effect as if enacted under the Act. Section 92 of the Act provides that all rules made, and notifications issued under the Act shall be published in the official gazette and on such publication it shall have the effect as if enacted under the Act. Therefore, only the Board can issue notifications regarding the conditions of licence and other restrictions on the licensees regarding manufacture and supply of liquor and that too by rules, notifications, etc published in the official gazette. Since only the State is authorised to grant the exclusive privilege of manufacture and supply of liquor, it invited tenders from interested parties to grant the exclusive privilege of manufacture and wholesale supply of country liquor in the Saran Zone comprising of the districts of Saran, Siwan and Gopalganj for the period from 1.6.2005 to 31.3.2008 by notice dated 18.8.2004 (published on 19.10.2004). The petitioner responded to the tender notice and was granted the exclusive privilege of manufacture and wholesale supply of country liquor in the Saran Zone comprising of the districts of Saran, Siwan and Gopalganj, as could be seen from Annexure 2 dated 31.5.2005. It was issued licence in Form 27 for the manufacture and wholesale supply of country liquor in Saran Zone comprising of the districts of Saran, Siwan and Gopalganj. Meanwhile, the State has taken a policy decision to handover the responsibility of wholesale supply of all kinds of liquor to the Corporation with effect from 1.10.2006. Accordingly, the rules were amended, as can be seen from Annexure 3 dated 12.8.2006. Even though the said decision was challenged by some of the parties, that was upheld by the Court as the State has got the exclusive right to deal with foreign liquor and there is no fundamental right for any party to deal in liquor. But, at the same time, the State has a duty to act fairly without any discrimination. Even though licence was granted to the petitioner for manufacture and wholesale supply of country liquor, the second part of the licence was withdrawn as the wholesale supply was handed over to the Corporation. But, at the same time, the State has a duty to act fairly without any discrimination. Even though licence was granted to the petitioner for manufacture and wholesale supply of country liquor, the second part of the licence was withdrawn as the wholesale supply was handed over to the Corporation. The respondents, by letter dated 27.9.2006, issued guidelines stating that with effect from 1.10.2006, the licence granted to the manufacturers in Form 27 was changed and vide notification dated 21.9.2006, a new licence in From 27(C) was granted to the Corporation enabling it to do the wholesale supply of the country liquor and the manufacturers were required to pay the licence fee of Rs.1,50,000/- annually and the licence fee for the Corporation was fixed at Rs.2/- per L.P litre on the MGQ fixed for the area. Consequently, the condition for supply of country liquor was re-determined and the manufacturer has to supply liquor to the Corporation only. The State Government modified the licence granted to the petitioner and the petitioner is still doing the business on the strength of the licence issued in Form 27 as the Board of Revenue has extended the period of contract as prescribed under Clause 19 of the licence. 3. Now we will see the conditions of licence issued to the petitioner. Clause 4 of the licence reads as follows: "4. The licence shall be bound by the Bihar Excise (Fee) Act, 1915 and by the rules framed under the Act so far as these may relate to him. He shall deposit a sum of Rs.1.50.000/- (one lac and fifty thousand) in advance in a lump sum as licence fee at the annual rate for each manufactory situated in the area where he wants to sell the country-made liquor after manufacturing." Clause 7 shows that the licensee has to sell the liquor to the Corporation. It is an outright sale. Clause 7 reads as under: "7. The sale of liquor under this licence shall be made, from time to time, only to the persons (specified as wholesale licensed vendor) producing passes in prescribed form authorizing the sale to them of the same type/types and quantity." Clause 16 provides that the manufacturer shall supply country-made liquor to the Corporation only after receiving bank draft of the cost of country-made liquor. After payment of price by bank draft, on delivery of the article to the designated godown, sale is complete. Clause 16 reads thus: "16. The manufacturer licensee shall supply the country-made liquor in bottles after receiving bank draft of the cost of country-made liquor from the wholesale licensee. The manufacturer licensee shall give separate receipt of the said received amount to the wholesale licensee. The counterfoil of which shall be kept in safe custody in the guard file of the warehouses." Clause 25 also provides that if the contractor or his representative violates the conditions of the licence, it shall be cancelled or suspended under Section 42 and liable to penalty under Section 57 of the Act. Form 27(C) is the licence to supply, in wholesale, country/spiced country spirit, wherein it is specified under clause (2) that the Corporation is also bound by the provisions of the Act and the Rules and it is also liable to pay licence fee. Clause (2) reads as under: "The licensee shall be bound by the provisions of the Bihar Excise Act, 1915 and the rules framed thereunder so far as these may relate to him. He shal deposit licence fees at the rate of Rs.2 per L.P liter on guaranteed quantity of the area where he wants to sell the country-made liquor/spiced country-made spirit in wholesale; if supply is more that the guaranteed quantity in a financial year, more licence fee shall be payable for that much quantity". It also provides that it can sell/supply the country liquor to the retailers only after receiving the price inclusive of tax by bank draft. A provision for penalty is also incorporated under Clause 7. The above conditions are imposed under the licence on the basis of the notification published by the Board of Revenue. 4. While the dealings were continuing on the terms of the amended licence, the Corporation published a new liquor policy for 2008-09. It is contended by the petitioner that some of the provisions of the liquor policy are contrary to the conditions of licence and the rules. The policy also compels the manufacturers to execute an agreement accepting the conditions in the liquor policy, which, according to the petitioner, is against the terms of the licence. 5. It is contended by the petitioner that some of the provisions of the liquor policy are contrary to the conditions of licence and the rules. The policy also compels the manufacturers to execute an agreement accepting the conditions in the liquor policy, which, according to the petitioner, is against the terms of the licence. 5. The main objections of the petitioner are directed against Clauses 2(iv), 2(viii), 5.1, 5.5, 9.1, 9.2, 9.3, 9.4, 9.6, 9.7, 10, 10.2, 11 and 15 of the Policy. "2(iv) - An agreement as in the format at Annexure 4 (page 17 duly executed by the authorised signatory of the manufacturers on a stamp paper of the denomination of Rs.100/- (One hundred) only." "2(viii) - Security Deposit of Rupees 50,000 (Fifty thousand) only in the form of Bank Guarantee." "5.1 - Supply of liquor (Country liquor/Spiced Country liquor) by manufacturers to the Corporation shall be based on the O.F.S issued by the Corporation on request of supplier. The Corporation shall issue O.F.S based on the stock requirements of depots after duly considering the quantity held, the sales trend and requests of the manufacturer, if any. To facilitate the process, the manufacturers may indicate the requirement of the type and pack sizes of liquor in various depots. However, the Corporation reserves its right to decide the quantity for which O.F.S may be issued. O.F.S for Spiced Country Liquor (SCL) will be issued from the Corporation Headquarters whereas O.F.S for Country Liquor (CL) will be issued by concerning depot manager." "5.5. The O.F.S would indicate the validity date within which the manufacturers should complete the delivery. If a manufacturer does not honour the quantity indicated in the O.F.S within the validity period, then the order for the remaining quantity shall lapse automatically. The Corporation may, at its discretion, extend the validity of the O.F.S and the manufacturer shall honour the O.F.S within the extended validity period without fail. If a manufacturer does not honour the quantity indicated in the O.F.S within the validity period, then the order for the remaining quantity shall lapse automatically. The Corporation may, at its discretion, extend the validity of the O.F.S and the manufacturer shall honour the O.F.S within the extended validity period without fail. However, the Corporation shall charge a fee for extending validity of each O.F.S for CL/ SCL as under: (i) For first 3 days or part thereof - Rs.500 per O.F.S. (ii) For every next 3 days or part thereof - Rs.1000/- per O.F.S. However, these rates may be revised by the MD, BSBCL from time to time for valid reason." "9 - Stocks held for sale: 9.1 - Manufacturers may note that supply of liquor to the Corporation against orders for supply shall be construed as an agreement to sell under sub-section 3 of Section 4 of the Sale Goods Act, 1930. The sale shall be concluded only when the liquor is delivered to retailers/buyers by the Corporation.The Corporation would take necessary care of the stored stock as is reasonably possible and expected of it." "9.2 - Damage to stocks of liquor held for sale as a result of any negligence on the part of the manufacturer/ manufacturers or the transporter, would be to the account of the manufacturer concerned. Instances of sachets having perforation/bottles having hairline cracks resulting in steady evaporation or leakage of the contents, quantity filled being less than the declared quantity, damage due to weak carton-boxes, etc., which are controllable by the manufacturer cannot be treated as storage losses attributable to the Corporation. Such or other similar losses whenever detected shall be treated as transit losses and the concerned manufacturer debited accordingly. Any decision of the Corporation as regards the nature and quantum of such losses shall be final. Manufacturers may, if they so desire, depute their representatives to verify such sachets/bottles and satisfy themselves." "9.3 - Manufacturers may appreciate that storage-space as a resource has to be optimally utilised and slow moving/ non-moving stocks of any manufacturer/ manufacturers should not result in limiting market-access of other manufacturers. It is, therefore, necessary that stocks move regularly and non-moving/slow moving stocks are weeded out. It is, therefore, necessary that stocks move regularly and non-moving/slow moving stocks are weeded out. The stocks held by the Corporation would therefore be categorised as under:- (a) Active stocks - Stocks that are upto 21 days old in case of country liquor and 60 days old in case of spiced country liquor, would be treated as active stocks. (b) Inactive stocks - Any stock stored for a period more than 21 days in case of country liquor and 60 days in case of spiced country liquor will be treated as Inactive stock. (c) Inactive stocks as aforesaid shall be charged a demurrage of Rs.2/- per case/per crate per day. The demurrage shall be computed on the basis of carton box/days (i.e. one carton box of an inactive item stored for one day is termed as a carton box/day and would attract a demurrage of Rs.2/-) and adjusted against the payments due to the manufacturer/ manufacturers of such stocks." "9.4 - In the beginning of the month, the Corporation would view details of inactive stocks (items) as at the end of the previous month, with a request to the manufacturer to liquidate them within thirty days. If the manufacturer does not take necessary action to liquidate such stocks within the period aforesaid, the Corporation would dispose of the inactive stocks in any manner as may be appropriate and the difference between the price of delivery of liquor and the amount realised shall be borne by the manufacturer concerned. Such manufacturer shall not have any further claim against the Corporation in respect of such stocks. 9.5 In case manufacturers make a written request to the Corporation about their intention to withdraw stocks of CL/ SCL from depots for re-processing in view of their non-movement, deterioration in their quality and packing etc., the BSBCL will recommend to the Excise Commissioner to permit them to take back the stocks for re-processing in the manner to be prescribed by the Excise Department. Corporation margin plus demurrage shall be recovered from the manufacturers in case of taken back stocks for reprocessing, just like other stocks. 9.6 - However, any stock of CL/ SCL lying unsold for a period of over six months from the date of bottling/ satcheting or stocks declared unfit for human consumption while lying at the depot shall be drained out by the Corporation. 9.6 - However, any stock of CL/ SCL lying unsold for a period of over six months from the date of bottling/ satcheting or stocks declared unfit for human consumption while lying at the depot shall be drained out by the Corporation. Any expenditure incurred by the Corporation towards this shall be recovered from the manufacturer. No compensation shall be payable in respect of such stock. Corporation margin plus demurrage shall be recovered from the manufacturers in case of such stocks also, just like other stocks. 9.7 - The warehouse/depot losses due to breakages and other reasons will be wholly borne by the manufacturer who will participate in joint verification at least once every quarter.? "10 - Inter-Depot Transfers 10.1- The Corporation shall have the liberty to effect inter-depot transfer of stocks for quick and easy disposal. Manufacturers may also request for such transfers, if in their opinion, such transfers would facilitate disposal of stocks. However, the decision of the Corporation in this regard shall be final. 10.2 - Manufacturers shall bear all expenses towards inter depot transfers. If for any reason, the Corporation expends any amount towards the transfer, like permit fees, such amounts shall be immediately debited to the account of the manufacturers. Transit losses due to the transfer shall be borne by the manufacturers. 10.3 - Where any application is presented for issue of inter depot transport order the manufacturers shall be required to deposit fee @ Re.1/- per CB (case- box)/per crate subject to minimum of Rs.50/- per T.0.0 (transfer-out order) or as decided by M.D, BSBCL from time to time. However, as regards extension and cancellation of T.O.O, the fees prescribed for extension/cancellation of O.F.S (Order for Supply), as mentioned in relevant clauses shall be applicable." "11 - Payment of stocks sold 11.1 -The Corporation shall pay the manufacturers only for the stocks sold. Unsold stock shall not be eligible for any payment by the Corporation. 11.2 - It is the responsibility of the manufacturers and not the Corporation to effect the sales. The role of the Corporation shall be that of a facilitator only. 11.3 - The amount payable to manufacturers for the sales provisionally recorded within the week ending every Saturday shall be computed and paid on the following Wednesday. Any amounts to be recovered from the manufacturer due to demurrage, interest, etc. shall be recovered out of the amounts payable. The role of the Corporation shall be that of a facilitator only. 11.3 - The amount payable to manufacturers for the sales provisionally recorded within the week ending every Saturday shall be computed and paid on the following Wednesday. Any amounts to be recovered from the manufacturer due to demurrage, interest, etc. shall be recovered out of the amounts payable. The Corporation would provide a statement of provisional sales recorded to facilitate reconciliation. Any missing data due to delays/failures in electronic transfer of data shall be reckoned in the succeeding week, and adjusted. 11.4 - The Corporation prefers to transfer the amounts due to the manufacturer directly to their bank accounts. To facilitate such transfer, manufacturers may open their accounts with any one of the bankers to the Corporation. 11.5 - The Corporation would not be a party to any bill discounting arrangement that the manufacturer may enter into with his bank. 11.6 - Once in three months, the Corporation would verify un-audited sales data and rework the payment due to the manufacturer. Any adjustment necessary would be made after such verification. 11.7 - The Corporation would provide an extract (statement) of all transactions of the manufacturer concerned before the 10th of the succeeding month. Manufacturers may verify the statements and point out instances of differences, if any, within the next two months. The Corporation would, after confirmation, initiate corrective action. However, the Corporation shall entertain no such difference after two months of the close of the financial year. 11.8 -The Managing Director, M/s. Bihar State Beverages Corporation Ltd., Patna reserves the right to modify the terms of payments with the consent of the manufacturers. The Corporation would, after confirmation, initiate corrective action. However, the Corporation shall entertain no such difference after two months of the close of the financial year. 11.8 -The Managing Director, M/s. Bihar State Beverages Corporation Ltd., Patna reserves the right to modify the terms of payments with the consent of the manufacturers. 11.9 - The manufacturers shall be liable to pay VAT as per provisions of the law, and at rates applicable in the Bihar VAT Act." "15 - Prejudicial act: If during the currency of the contract, the manufacturers or any of their representatives, workers or agents are found indulging in any activity, which directly or indirectly, is prejudicial to the interest of the Corporation or the Government of Bihar, or are found of - (a) offering illegal gratification of any kind including a bribe, reward or advantage, etc., pecuniary or otherwise, to any officer or employee of the Corporation, or (b) indulging in any malpractice, such as, forgery, falsification or fabrication of any documents, bills, vouchers, delivery challans, etc., or introducing any liability in connection with the supply of CL/SCL which amounts to an offence punishable under the Indian Penal Code or any other law in force; the Corporation, without prejudice to other legal rights, shall have the right to terminate the contract forthwith, blacklist the manufacturer/concerned and forfeit its amounts as may be lying with the Corporation besides initiating other appropriate action. All losses that may be incurred by the Corporation in this regard shall be recoverable from the manufacturer. 15.1 - The Corporation reserves the right to terminate any contract with any manufacturer with one months notice without assigning any reason. The manufacturers should abide by the provisions of the Bihar Excise Act, 1915 , and the rules made thereunder in force from time to time and any other relevant enactment like the Standards of Weights & Measures Act, 1976, and Packaged Commodities Regulations, 1975, etc.The manufacturer is solely and individually responsible for all the consequences arising out of any violation in this regard. Any legal complications arising out of failure to comply with various rules shall be the liability of the manufacturers concerned. Any losses/damages suffered by the Corporation due to any lapse on the part of the manufacturers in not complying with any of the rules will be made good by the manufacturers concerned. Any legal complications arising out of failure to comply with various rules shall be the liability of the manufacturers concerned. Any losses/damages suffered by the Corporation due to any lapse on the part of the manufacturers in not complying with any of the rules will be made good by the manufacturers concerned. 15.2 - Dues recovery process:- Any outstanding liabilities or dues since the inception of BSBCL, not honoured by the manufacturer/suppliers shall henceforth be treated as Public Demand under the Bihar and Orissa Public Demand Recovery Act 1913 and it shall be recovered by the procedure laid down for the same in the aforesaid Act". 6 The petitioner wrote Annexure 8 letter of objection to various authorities including the respondents questioning the liquor policy and against the execution of such agreement. Questioning the liquor policy, he filed this writ petition on 6.12.2008. But, in view of the compulsion and necessity, he signed the agreement on 15.12.2008 with a specific endorsement, which reads as follows: "Note: The above agreement is without prejudice to our right and contention as raised in writ petition already filed, copy whereof has been served on the BSBCL and the conditions contained in the agreement hereby executed which are contrary to or modify the provisions of the New License conferred or the scope of the Govt, resolution dated 12.8.2006 shall not be binding on us". It is also followed by another letter of protest dated 15/18.12.2008. 7 The learned Advocate General submitted that the writ petition itself is not maintainable because (i) the liquor policy is only for 2008-09 and that period is over; (ii) even though the petitioner was granted licence in Form 27, its term expired, and he is continuing now only on ad hoc extension granted and, therefore, he has no locus standi to challenge the same; (iii) since he has already executed the agreement, it is a contract in nature and in contractual matters, Courts cannot interfere; and (iv) liquor policy is the policy of the State and, therefore, the power of the Court to interfere is very limited especially when supply, sale, etc of liquor are under the exclusive jurisdiction of the State Government and there is no fundamental right to carry liquor business. It is also submitted that the Corporation is a Government owned company and is manned by Government officers and the policy was framed by the Corporation which was subsequently approved by the State as its policy. If the petitioner is not willing to accept the terms and conditions, according to the learned Advocate General, it can relinquish the licence. Further, it is submitted that there is no violation of the Act or Rules or the conditions of the policy. 8. Even though the liquor policy is framed for 2008-09, after the expiry of the financial year, no new liquor policy was framed and the same arrangement is being continued and the Corporation still insists that unless conditions of liquor policy are complied with, they need not receive liquor from the licensed manufacturer. The petitioner is still holding the licence in Form 27 as a manufacturer on the basis of renewal by the Board of Revenue as prescribed under the Rules and Clause 19 of the licence and if the conditions in the liquor policy are not observed it would not be able to do business. Further, even after the period is over, the question of financial obligation and liability to pay will continue on the basis of the terms of the policy. Therefore, merely because the liquor policy of the Corporation was framed for 2008-09 alone, is not a ground for dismissing the writ petition in limine. Even according to the Corporation, the conditions of the liquor policy are still binding on the petitioner and similar manufacturer licensees. Therefore, the petitioner cannot be thrown out only because the liquor policy is only for the financial year 2008-09 or because the agreement term of the petitioner expired. The petitioner has locus standi to question the same. Even before executing the agreement, the petitioner questioned the policy, by writing letters to all the respondents separately, copies of which are produced as annexure to the writ petition. The petitioner also challenged the same by filing a writ petition, though out of compulsion and necessity it accepted the policy under protest. Therefore, merely because the petitioner has signed the agreement on the basis of the liquor policy, it cannot be contended that the petitioner cannot question the terms of the liquor policy on the ground of violation of the statutory provisions or arbitrary. 9. Therefore, merely because the petitioner has signed the agreement on the basis of the liquor policy, it cannot be contended that the petitioner cannot question the terms of the liquor policy on the ground of violation of the statutory provisions or arbitrary. 9. Now we have to consider whether it is a pure contractual matter. After the acceptance of the tender, the petitioner was issued licence in Form 27 and the State granted the exclusive privilege of manufacturing liquor only in three districts. The conditions of the licence are binding on it. The petitioner cannot contend that it is not accepting the conditions of the licence. It is a statutory contract. If the conditions of licence are violated, he would be liable for penalty and other consequences. Similarly, the Corporation is also a licensee and it was given licence in Form 27(C). Therefore, both the petitioner and the Corporation are bound by the rules and the terms of the licence. The liquor policy was issued against the original contractual terms and unless the agreement is executed accepting the conditions in the liquor policy, the Corporation would not accept the supply and the petitioner, being the licensee, cannot sell liquor to anybody since the Corporation is given monopoly right to supply liquor and the manufacturer is bound to supply liquor only to it. Therefore, under protest, the petitioner signed the agreement in distress and the writ petition cannot be dismissed because the petitioner has signed the agreement accepting the liquor policy of the Corporation. 10. The public policy of the State is contained in the Statute as well as the Rules. The conditions of licence incorporated in the Rules also show the policy of the State. As soon as there is change in policy, the Board of Revenue has to publish the new rules and the general conditions in the official gazette as provided under Section 92 of the Act. Once the policy is framed and published in the gazette in the form of Rules, notification and general directions, it cannot be changed by a decision of a company registered under the Companies Act even though it is a Government company and the directors of the board are Government officers. The board of directors of the respondent-Company cannot amend the State policy or the statutory rules. It has no authority or jurisdiction to do the same. The board of directors of the respondent-Company cannot amend the State policy or the statutory rules. It has no authority or jurisdiction to do the same. The learned Advocate General was not able to show any legal authority to prove that the board of directors of a Government company can declare public policy of the State. Such a power of rule making cannot be delegated to the directors of a registered company. 11. It is true that the Courts should not examine the merits and demerits of the policy laid down by regulations. Any drawbacks in the policy incorporated under the Rules and Regulations will not render it ultra vires, as held by the Supreme Court in Maharashtra State Board of Secondary and Higher Secondary Education and another V/s. Paritosh Bhupesh Kurmarsheth ( AIR 1984 SC 1543 ). It was further held by the Supreme Court that even if the policy is a foolish one, the Courts have no power to set aside the same and that the Courts need only three aspects viz. (1) Whether the provisions of the regulations fall within the scope and ambit of the power conferred by the Statute; (2) Whether the regulations/rules framed by the delegate are to any extent inconsistent with the provisions of the parent enactment; and (3) Whether they infringe any of the fundamental rights or other restrictions imposed by the Constitution. It was further held by the Supreme Court that the right of the State to change its policy from time to time under the changed circumstances cannot be questioned. Even though the State has discretionary powers, it cannot act arbitrarily. It is bound by the Rules and the conditions framed by it statutorily and once the licence is granted, it will become a statutory contract. Neither in the Act nor in the Rules, there is no provision which enables the Corporation to frame rules that is contrary to the statute or rule, making them as conditions of licence therewith. 12. In Bombay Dyeing & Mfg. Co. Ltd. V/s. Bombay Environmental Action Group ((2006) 3 SCC 434), the Supreme Court held as follows: "A policy decision, as is well known, should not be lightly interfered with but it is difficult to accept the submissions made on behalf of the learned counsel appearing on behalf of the appellants that the courts cannot exercise their power of judicial review at all. By reason of any legislation, whether enacted by the legislature or by way of subordinate legislation, the State gives effect to its legislative policy. Such legislation, however, must not be ultra vires the Constitution. A subordinate legislation apart from being intra vires the Constitution should not also be ultra vires the parent Act under which it has been made. A subordinate legislation, it is trite, must be reasonable and in consonance with the legislative policy as also give effect to the purport and object of the Act and in good faith." in State of Rajasthan V/s. Basant Nahata ((2005) 12 SCC 77), it was observed by the Supreme Court as follows: The contention raised to the effect that this Court would not interfere with the policy decision is again devoid of any merit. A legislative policy must conform to the provisions of the constitutional mandates. Even otherwise a policy decision can be subjected to judicial review." In Clariant International Ltd V/s. Securities & Exchange Board of India ( (2004) 8 SCC 524 ), following observations in Secretary, Ministry of Chemicals & Fertilizers, Govt, of India V/s. Cipla Ltd ( (2003) 7 SCC 1 ), the Supreme Court has held as follows: "When any criterion is fixed by a statute or by a policy, an attempt should be made by the authority making the delegated legislation to follow the policy formulation broadly and substantially and in conformity therewith." 13. It is true that normally the Courts will not interfere with the policy decision of the State unless the State policy is demonstrably arbitrary, capricious, irrational, discriminatory or violative of the constitutional or statutory provisions, it cannot be struck down by the Courts. Wisdom of the public policy is irrelevant (Krishnan Kakkanth V/s. Government of Kerala and others - (1997) 9 SCC 495 ). In Kanhaiya Lal Sethia and another V/s. Union of India and another ( (1997) 6 SCC 573 ), it was held by the Supreme Court that Courts do not, in exercise of their power of judicial review, interfere in policy matters of the State unless the policy so formulated either violates the mandate of the Constitution or any statutory provision or is otherwise actuated by mala fides. To say that the Government policy is irrational, one should find Wednesbury on unreasonableness. To say that the Government policy is irrational, one should find Wednesbury on unreasonableness. It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at and another ground for striking down a policy incorporated in the rules is the procedural impropriety. The modern trend points to judicial restraint in administrative action. Even though the Courts should not examine the merit and demerit of the policy laid down by the rule making authority, the Courts can consider the question whether the regulation falls within the scope of regulation making power. Here the unfortunate part is that the rules were not amended and no State policy was introduced by the Government or its delegate Board of Revenue by any rules or regulations and some of the provisions in the liquor policy framed by the Corporation are contrary to the rules in terms of the licence (statutory clause). As per Section 32, 91 and 92, only the Board of Revenue can issue notification, rules, directions, etc that too by publication in the official gazette incorporating the policy. When monopoly right of supply of liquor is given to the Corporation as a result of change in public policy, the Board of Revenue published notification in the official gazette incorporating the changes in the policy and amended licence was also issued incorporating new policy. A company registered under the Companies Act, even if it is owned by the Government, cannot declare the State policy and it has no power to amend the statutory rules and the licence conditions. By no stretch of imagination, it can be found that statutory rules can be framed by a company even in violation of the statutory regulations. Even though it was argued by the learned Advocate General that the policy was approved by the Government, there is no such averment in the counter affidavit filed by the State. No document was also produced to show that the policy was approved by the State as per the rules of procedure. Further, when the policy is incorporated in a rule or notification or regulation, the same can be changed only by amendment of the rules or the notification by publication in the official gazette as prescribed under the parent Act. No document was also produced to show that the policy was approved by the State as per the rules of procedure. Further, when the policy is incorporated in a rule or notification or regulation, the same can be changed only by amendment of the rules or the notification by publication in the official gazette as prescribed under the parent Act. Here no such amendments were made and the licence conditions were not changed. Both the State and the petitioner are bound by the licence conditions in Form 27 and the conditions in the licence in Form 27(C) as prescribed in the Rules. The Corporation, a company registered under the Companies Act, cannot change the above conditions. The liquor policy is only a policy of the Corporation and it is not a State policy or public policy. The conditions in the policy which are against the Act, Rules, valid notifications or licence are illegal and are liable to be set aside. 14. With regard to the contention that if the petitioner is not willing to accept the terms and conditions it can leave, we are of the view that in view of the monopoly right given to the Corporation, the bargaining power is unequal and, therefore, such a contention cannot hold good; In Hindustan Times V/s. State of U.P ( (2003) 1 SCC 591 ), while repelling such a contention, the Supreme Court observed thus: "The respondents being a State cannot in view of the equality doctrine contained in Article 14 of the Constitution, resort to the theory of take it or leave it. The bargaining power of the State and the newspapers in matters of release of advertisement is unequal. Any unjust condition thrust upon the petitioners by the State in such matters, in our considered opinion, would attract the wrath of Article 14 of the Constitution as also Section 23 of the Indian Contract Act - see Central Inland Water Transport Corpn. Ltd V/s. Brojo Nath Ganguly ( (1986) 3 SCC 156 ) and Delhi Transport Corpn. V/s. D.T.C Mazdoor Congress - (1991 Supp (1) SCC 600. It is trite that the State in all its activities must not act arbitrarily. Equity and good conscience should be at the core of all governmental functions. It is now well settled that every executive action which operates to the prejudice of any person must have the sanction of law. V/s. D.T.C Mazdoor Congress - (1991 Supp (1) SCC 600. It is trite that the State in all its activities must not act arbitrarily. Equity and good conscience should be at the core of all governmental functions. It is now well settled that every executive action which operates to the prejudice of any person must have the sanction of law. The executive cannot interfere with the rights and liabilities of any person unless the legality thereof is supportable in any court of law. The impugned action of the State does not fulfil the aforementioned criteria." The Supreme Court again considered the matter in Kerala Samsthana Chethu Thozhilali Union V/s. State of Kerala and others ( (2006) 4 SCC 327 ) and held as follows: "Take it or leave it argument advanced by Mr. Chacko is stated to be rejected. The State while parting with its exclusive privilege cannot take recourse to the said doctrine having regard to the equity clause enshrined under Article 14 of the Constitution. The State in its dealings must act fairly and reasonably. The bargaining power of the State does not entitle it to impose any condition it desires." In view of the exclusive privilege, we cannot accept the contention of the learned Advocate General in this regard. 15 With regard to the contention that the State has the exclusive right to deal with liquor and that a citizen does not have the fundamental right to deal with liquor and, therefore, the Court cannot interfere with the matter and it should be left to the State alone, we are of the view that liquor policy is not a policy of the State. It is not a rule or valid order. In State of M.P V/s. Nandlal Jaiswal ( (1986) 4 SCC 566 ), the Supreme Court held that: "The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicantsits manufacture, storage, export, import, sale and possession. No one can claim as against the State the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It is, therefore, not possible to uphold the contention of the State Government and respondents 5 to 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. The State cannot ride roughshod over the requirement of that article." In Khoday Distilleries Ltd V/s. State of Karnataka ( (1995) 1 SCC 574 ), a Constitution Bench of the Supreme Court held that the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor and restrictions can be imposed on trade or business in the potable liquor with or without limitation. In this case, more limitations than what is mentioned in the Act, Rules and the Liquor Policy were imposed on the petitioner by a Government company by framing liquor policy of that company which is contrary to the legislative policy. Here the liquor policy, which has the effect of a statutory rule, is not a statutory rule. Therefore, it cannot be implemented as statutory rule. 16. In Assistant Excise Commissioner and others V/s. Issac Peter and others ( (1994) 4 SCC 104 ), the Supreme Court observed that even though the State has exclusive privilege to grant licence, once it is granted, the contract between the parties will be governed by the statutory provisions i.e. provisions of the Act, Rules, the conditions of licence and the counterpart agreement. They are binding both upon the Government and the licensee. Neither of them can depart from them. It is not open to any officer of the Government to modify, amend or alter the said terms and conditions, not even to the Minister for Excise. In any event, a company registered under the Companies Act has no power to alter the terms of the licence and merely because it has got monopoly over purchase, supply and distribution of liquor, using that advantageous position, it cannot compel the parties to violate the terms of the licence and impose more onerous conditions. 17. In any event, a company registered under the Companies Act has no power to alter the terms of the licence and merely because it has got monopoly over purchase, supply and distribution of liquor, using that advantageous position, it cannot compel the parties to violate the terms of the licence and impose more onerous conditions. 17. Now we may consider some of the decisions of this Court, which are affirmed by the Supreme Court. In M/s. Sheo Narain Jaiswal Pvt. Ltd and another V/s. State of Bihar and others (1997 (1) BLJ 107), a Division Bench held as follows: "4. It is by now well settled that no citizen has a fundamental right to carry on business in country liquor. All rights in regard to manufacture and sale of intoxicants vest in the State. It is open to the State to part with these rights for a consideration. This consideration amount is neither an excise duty nor a licence fee. It is the price of privilege of the State. The concept of exclusive privilege envisages a peculiar benefit granted by the State to a particular person to the exclusion of others in a specified local area. Since the licence fee is the price of consideration which the government charges from the licensee for parting with its exclusive privilege, it is a normal incident of a trading or business transaction. Terms and conditions of licence are not open to challenge on grounds of harshness or inconvenience......." "5. While it is sell settled that a citizen has no fundamental right to carry on trade or business in intoxicants, and no one can claim the grant of such privilege, as a matter of right, it is equally well settled that in the exercise of its statutory authority, if the State wishes to part with its exclusive privilege in favour of private individuals, it can do so by following a procedure which is fair and not arbitrary. If the grant is made on certain terms and conditions, those terms and conditions have to be adhered to by the State as much as by the grantees of such privilege. There can be no arbitrariness even in the distribution of larges by the State. A fair procedure, free of arbitrariness, is a sine quo non for the proper exercise of power even in the administrative field. ...,.....". But, it was. There can be no arbitrariness even in the distribution of larges by the State. A fair procedure, free of arbitrariness, is a sine quo non for the proper exercise of power even in the administrative field. ...,.....". But, it was. held that the State and its officers cannot demand in excess of the amount mentioned in the licence. When the State had taken the matter in appeal, the Supreme Court while dismissing the appeal directed to refund the amount collected in excess of the fees mentioned in the licence. In M/s. SCI (India) Ltd and another V/s. State of Bihar ( 1997(1) PLJR 459 (SC)), it was held that the State is not only a promisor but has also granted exclusive privilege in terms of Section 22 followed by issuance of licence under Section 22(2). The action of the authorities in patent disregard of a binding contract is quite unreasonable and arbitrary and violative of the constitutional guarantee under Article 14 of the Constitution. 18 We agree with the learned Advocate General that when the Corporation has the monopoly in distribution of liquor, all manufacturers are bound to supply liquor to the Corporation. The Corporation can make some procedural arrangement regarding purchase and storing of the liquor and for that it can frarhe its own procedures. But such arrangements cannot change the conditions in the licence or the provisions of the Act or the Rules. 19. The Corporation itself is a licensee under Form 27(C). If either the petitioner or the Corporation violates any of the conditions contained in the licence, it will be liable for penalty. Further, the Corporation cannot incorporate arbitrary rules and more onerous conditions on a licence merely because of its monopoly over wholesale supply or distribution of liquor. One sided terms cannot be made by the Corporation. Merely because a Joint Commissioner of Excise has written a letter to the petitioner to comply with the policy will not make the policy a public policy of the State. Change in the regulation can be made only by the Board of Revenue. Statutory power given to the Board of Revenue cannot be usurped by the board of directors. Merely because a Joint Commissioner of Excise has written a letter to the petitioner to comply with the policy will not make the policy a public policy of the State. Change in the regulation can be made only by the Board of Revenue. Statutory power given to the Board of Revenue cannot be usurped by the board of directors. The board of directors can make its own procedure while purchasing liquor from the manufacturers in wholesale, but that should be in accordance with the terms of the conditions of the licence and such procedure shall not affect the substantial rights of the parties concerned. In this case, it is manifest that under the provisions of the Act, only the State Government and the Board of Revenue are empowered to frame terms and conditions for manufacture, wholesale and retail sale of any form of intoxicant and of course the Corporation, which is a grantee of licence, is not empowered to provide for any terms and conditions contrary to the licence conditions on the manufacturer. The Bihar Liquor Policy contains mainly procedures to be followed by the manufacturer licensees in the manufacture and supply of liquor and it contained more onerous conditions. 20. Now we may consider some of the clauses objected to by the petitioner. The provision under Clause 2(iv) to execute an agreement accepting the procedural law in an agreement on a stamp paper is not as such illegal. The agreement cannot contain provisions against the conditions of the licence. The sole question is whether any of the conditions in the policy or agreement are bad and oppressive in nature and against the provisions of the Rules. As per Clause 2(viii), a security deposit of Rs.50,000/- is to be paid in the form of bank guarantee to the Corporation. As per the conditions of the licence, the licensees have to make a deposit of Rs.1,50,000/- in lumpsum as licence fee. It was already deposited. Nowhere in the Act or the Regulation the Corporation has been authorised to obtain bank guarantee of Rs.50,000/- and so long as the Act, Rules and the licence conditions are silent regarding fresh bank guarantee, we are of the view that Clause 2.8 of the liquor policy and the corresponding provision in the agreement are unsustainable. It was already deposited. Nowhere in the Act or the Regulation the Corporation has been authorised to obtain bank guarantee of Rs.50,000/- and so long as the Act, Rules and the licence conditions are silent regarding fresh bank guarantee, we are of the view that Clause 2.8 of the liquor policy and the corresponding provision in the agreement are unsustainable. The condition in Clause 5.1 that supply of liquor by the manufacturers to the Corporation shall be based on the O.F.S issued by the Corporation cannot be stated to be illegal as the manufacturer cannot compel that all the liquor manufactured by it irrespective of need should be accepted by the Corporation. So it needs no interference. 21. Clause 5.2 states that the Corporation will be under no obligation to procure any specified minimum quantities of country liquor during the currency of the contract as the quantity to be procured from time to time shall depend upon the demand for the product. The petitioner is the only licensed manufacturer for the three districts under Saran Zone. With regard to the condition that the Corporation would be under no obligation to procure minimum quantity of liquor from the petitioner, we are of the view that since the petitioner is the only licensed manufacturer for the three districts under Saran Zone, whenever there is demand, the Corporation is bound to accept liquor from the petitioner and there cannot be any discrimination between the petitioner and other manufacturers. It is stated in Clause 5.5 that the O.F.S would indicate the validity date within which the manufacturers should complete the delivery and if there is delay in delivery, provision for imposition of fee is incorporated. The O.F.S can be changed depending upon the nature of the product before its supply. There is nothing wrong in the Corporation insisting that the stock shall be delivered at the depot of the Corporation and it shall conform to the quality, quantity and pack size as indicated in the O.F.S. This clause cannot be questioned as it is not violative of any provisions of the licence conditions. There is also nothing wrong in stipulating condition that the Corporation can cancel the O.F.S if the liquor is not supplied in time. Clause 7 deals with quality control and such procedure can be fixed by the wholesale dealer. 22. There is also nothing wrong in stipulating condition that the Corporation can cancel the O.F.S if the liquor is not supplied in time. Clause 7 deals with quality control and such procedure can be fixed by the wholesale dealer. 22. Clause 8.1 states that any risk during transit of liquor from the premises of the manufacturer till the stocks are unloaded and stacked in the deposit shall be borne by the manufacturer. There is no need for interference with that clause. We also see no reason to interfere with clause 8. We are of the view that the condition under Clause 9.1 that the sale shall be concluded only when the liquor is delivered to retailers/ buyers by the Corporation is contrary to the terms of the licence. The licence condition contemplates actual sale of liquor to the Corporation. As soon as the goods are delivered at the designated godown of the Corporation, the price shall be paid and thereafter the products become the property of the Corporation. Therefore it cannot be said that the sale concludes only when the liquor is delivered to retailers/buyers by the Corporation and this clause is against the terms of the contract. 23. With regard to Clause 9.2, only if damage to stocks of liquor held for sale as a result of any negligence on the part of the manufacturer/manufacturers or the transporter is caused, they could be made responsible. But after the delivery of the stocks if any damage is caused, the manufacturers cannot be made liable. Therefore, Clause 9.2 is totally against the terms of the licence. Clause 9.3 is only one-sided. In contractual terms, the Corporation cannot impose statutory onerous conditions on the buyers. The conditions in Clauses 9.5 and 9.6 are also unreasonable, unilateral and beyond the licence conditions. If there is any defect in manufacture, the Corporation could, of course, return the goods to the manufacturer and the cost incurred by it could be recovered. But merely because the stock lay unsold for six months or the stock declared unfit for human consumption while lying at the depot, no demurrage can be recovered from the manufacturers. The clause regarding inter- depot transfers also appears to be contrary to the rules. But merely because the stock lay unsold for six months or the stock declared unfit for human consumption while lying at the depot, no demurrage can be recovered from the manufacturers. The clause regarding inter- depot transfers also appears to be contrary to the rules. Once the goods reached the designated godown and accepted by the Corporation, it is the property of the Corporation and, therefore, the petitioner cannot be burdened with inter-depot transfer charges, handling charges, etc. 24. With regard to the clause relating to inter-depot transfer, we do not find anything wrong with it. But when the stock purchased are forwarded for inter-depot transfer, it is the sole responsibility of the Corporation and the conditions under Clauses 10.2 and 10.3 imposing such liability on the manufacture are totally against the conditions of the licence and more onerous than what is prescribed under the Rules. Inter-depot transfers are at the discretion of the Corporation after the purchase of goods and after delivery of the goods at the designated godown, it is for the Corporation to undertake the risk for inter-depot transfer and the manufacturers cannot be made liable. It is a totally unilateral and one-sided clause. The further condition that the Corporation shall pay the manufacturers only for the stock sold and they are not eligible for payment for the unsold stock also cannot be accepted since it is against the terms and conditions of the licence. Similar is the case with Clause 11. The licence condition is that the manufacturer/licensee shall sell the goods to the Corporation and the Corporation shall pay the sale price by bank draft. Therefore, in the absence of a provision in the licence or the Rules that the Corporation shall pay the manufacturers only for the stocks sold by retailers, that condition will not stand. The stipulation regarding payment against the provisions of the licence conditions in Clause 11 are to be held as invalid and such clauses are not binding on the licensees. As per Clause 12.1, if the offer is withdrawn within one year of the contract, the Corporation shall be at liberty to cancel the contract, forfeit the security deposit and also recover from the manufacturer extra loss incidental to the breach of the contract on the part of the manufacturer. The Corporation cannot cancel the licence issued by the Government. As per Clause 12.1, if the offer is withdrawn within one year of the contract, the Corporation shall be at liberty to cancel the contract, forfeit the security deposit and also recover from the manufacturer extra loss incidental to the breach of the contract on the part of the manufacturer. The Corporation cannot cancel the licence issued by the Government. The manufacturers can supply the liquor manufactured by it only to the Corporation and if the Corporation refuses to buy the liquor, the petitioner cannot sell the liquor to others as it amounts to cancellation of the licence. The licence can be cancelled only as per the Rules. 25. We see no objection against Clause 15. Clause 15.1 provides that the Corporation reserves the right to terminate any contract with any manufacturer with one months notice without assigning any reason. Such a clause is arbitrary. The Corporation has no authority to cancel the contract unless ordered by the Government or the Board of Revenue, as the case may be. As regards Clause 15.2, the Corporation suo motu cannot say that if any outstanding liability or dues since the inception of BSBCL not honoured by the manufacturers/suppliers shall henceforth be treated as public demand under the Bihar and Orissa Public Demand Recovery Act 1913 and it shall be recovered by the procedure laid down for the same in the aforesaid Act is also against the provisions of the parent Statute. Admittedly if any amount is due to the Corporation, being a Government company, it shall automatically become a public demand. A provision in the Act or Rules or at least a notification has to be issued by the Government as provided under the parent Act. Either by an agreement or by a policy decision of the board of directors of the company, such clauses cannot be incorporated. 26. We are of the view that then clauses stated above are against the provisions of the statutory rules and violative of the conditions of the licence (statutory conditions). In view of the above, the agreement incorporating objectionable conditions, signed under protest due to coercion, is invalid and cannot be acted upon. With the above observation, the writ petition is partly allowed. RAVI RANJAN, J. 26 I agree.