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2010 DIGILAW 1872 (MAD)

The Pondicherry F. L. Ii Wine Merchants Association, Puducherry v. Union of India Rep By The Chief Secretary Government of Puducherry

2010-04-20

CHITRA VENKATARAMAN

body2010
Judgment :- The writ petitioner in W.P.No.6977 of 2010 seeks a writ of Certiorari to quash the notification dated 29.3.2010 published in the Government Extraordinary Gazette No.12 dated 30.3.2010 on the file of the second respondent therein. 2. The petitioner in W.P.No.6977 of 2010 is Pondicherry F.L. II Wine Merchants Association, stated to have been constituted for the purpose of safeguarding the rights and interest of its members besides the public. The members of the petitioner Association are the licensees granted with FL 2 Licence by the Excise Authorities in the Government of Puducherry in terms of the Pondicherry Excise Act, 1970. 3. The members of the petitioner Association draw IMFL products from the FC 1 Licensees. Under Section 70 of the Pondicherry Excise Act, 1970, the Government is empowered to make Rules to carry out the purposes of the Act by issuing notification. Sub Section (2) lists out the areas pertaining to which Rules can be framed by the Government. Sub Section (3) states that every Rule made under the Act shall be laid before the Legislative Assembly, Pondicherry, while is in session, for a total period of fourteen days which may be comprised in one session or in two or more successive sessions. If the Legislative Assembly makes any modification in the Rule or decides that the Rule should not be made or issued, the Rule shall thereafter have effect only in such modified form or will have no effect, as the case may be. However, such modification or annulment would be without prejudice to the validity of anything done previously under the said Rule. 4. Rule 118 of the Pondicherry Excise Rules, 1970 deals with licence fee payable by the licensees falling under different heads of licence. Rule 118(a) of the said Rules provides for licence fee payable by holders of FL 1 Licence. Rule 118(b) provides for licence fee in respect of FL 2 Licence with permission to serve liquor for consumption within the licensed premises. Rule 119(bb) provides for FL 2 Licence without permission to serve liquor for consumption within the licensed premises. Rule 118(c) provides for FL 3 Licence – one day licence and Rule 118(d) provides for Additional licence to the bar licence holders for pub centres. 5. The grievance of the petitioner herein relates to the enhancement of licence fee. Rule 119(bb) provides for FL 2 Licence without permission to serve liquor for consumption within the licensed premises. Rule 118(c) provides for FL 3 Licence – one day licence and Rule 118(d) provides for Additional licence to the bar licence holders for pub centres. 5. The grievance of the petitioner herein relates to the enhancement of licence fee. It is seen that under Notification No.15306/DC(E)/S1/2009 dated 22.2.2010, the Government of Puducherry published a draft of the amendment proposed, modifying the licence fee fixed under Rule 118 of the Pondicherry Excise Rules, 1970. As far as FL 1 licence is concerned, the licence fee at Rs.3,00,000/- was raised to Rs.6,00,000/-. As regards FL 2 licence with permission to serve liquor for consumption within the licensed premises, the licence fee at Rs.2,00,000/- was raised to Rs.4,00,000/-. As regards FL 2 licence without permission to serve liquor for consumption within the licensed premises, the licence fee at Rs.1,75,000/- was raised to Rs.3,00,000/-. The notification was to be effected from 1st April 2010. The notification provides that any objection or suggestion on this revision sent by any person to the Government of Pondicherry within a period of ten days from the date of publication of the notification would be considered by the Government. 6. Admittedly, the petitioner filed their objections before the Government. After considering the same, a final notification No.15306/DC(E)/ S1/2009 dated 29th March 2010 was issued on 29th March 2010, amending the Rule for licensees. 7. The grievance of the petitioner herein is that the enhancement of the licence fee by 100% on the existing fee structure is arbitrary in so far as no reasons are assigned for the enhancement. The petitioner further states that the petitioner Association filed a writ petition before this Court challenging the notification in W.P.No.5771 of 2010. While the writ petition was pending, the subsequent notification had been made on 29.3.2010 on the enhancement of the fee. The petitioner states that apart from reasons not given, the enhancement suffers from arbitrariness and violation of principles of natural justice; that there was no fair opportunity granted to the petitioner. Quite apart from that, the petitioner submits that the amendment is writ with mala fides and vindictive in character. The petitioner states that apart from reasons not given, the enhancement suffers from arbitrariness and violation of principles of natural justice; that there was no fair opportunity granted to the petitioner. Quite apart from that, the petitioner submits that the amendment is writ with mala fides and vindictive in character. Learned counsel appearing for the petitioner submitted that the notification is a nonspeaking one as to the enhancement made and hence, liable to be declared as unconstitutional, violative of Article 14 of the Constitution of India. 8. Learned counsel appearing for the petitioner submitted that because of the non-fixation of maximum and minimum retail prices in terms of Rule 123 of the Pondicherry Excise Rules, 1970, by reason of the unlawful trade by FL 1 licensees, the members of the petitioner Association dealing in IMFL trade are facing serious hardship, apart from unhealthy competition from FL 1 Licensees. 9. The petitioner further states that the Excise Authorities should have taken action against the FL 1 licensees who are illegally occupying the field of FL 1 licensees. The passing of the notification and the consequent amendment raising the licence fee are only a ritual and that the objections have not been considered. In the circumstances, the petitioner seeks to quash the notification. 10. On notice, the respondents have filed the counter affidavit. Learned counsel appearing for the petitioner pointed out to the attitude of the respondents, particularly to the averments in paragraph 15 of the counter affidavit, taking a stand that it is open to the petitioner to quit the business if the business is not found to be viable due to the increase in the licence fee. Citing the decision of the Apex Court reported in (2006) 4 SCC 327 (Kerala Samasthana Chethu Thozhilali Union Vs. State of Kerala), he submitted that the attitude "take or leave" the business is an arbitrary and vindictive attitude and hence, following the said decision, the notification has to be set aside. He also referred to the decision reported in 2008 (2) CTC 555 Balamani, P. Vs. The District Magistrate and District Collector, Coimbatore District) as to the violation of the principles of natural justice. He also pointed out to the decision of the Apex Court reported in 2009-2-L.W. 435 (M/s.Nagarjuna Construction Co. Ltd.Vs. Govt. He also referred to the decision reported in 2008 (2) CTC 555 Balamani, P. Vs. The District Magistrate and District Collector, Coimbatore District) as to the violation of the principles of natural justice. He also pointed out to the decision of the Apex Court reported in 2009-2-L.W. 435 (M/s.Nagarjuna Construction Co. Ltd.Vs. Govt. of Andhra Pradesh and Others) that even an adminsitrative order which involves civil consequences must be consistent with the rules of natural justice and any violation would result in quashing of the proceedings. 11. W.P.No.7769 of 2010 is a similar writ petition, wherein, the petitioner has sought for a writ of Certiorari to quash the notification dated 29.3.2010 made pursuant to the Gazette notification dated 22.2.2010, leading to the memorandum dated 30.3.2008. The petitioner herein runs a hotel business. Based on the policy of the Government to develop tourism infrastructure, the petitioner had gone in for this business and had obtained the necessary liquor FL 2 licence. 12. The petitioner received a notice on 04.02.2010 calling upon the petitioner to pay renewal fee of Rs.2,00,000/- as applicable to his hotel, on or before 28.2.2010. The petitioner remitted the fee and renewed the licence for the year 2010-11. The petitioner has challenged the notification raising the licence fee to Rs.4,00,000/-. 13. Unlike in the other writ petitions viz., W.P.Nos.5771 and 6977 of 2010, the petitioner in W.P.No.7769 of 2010 does not challenge the validity of the notification. The challenge herein in this writ petition is as to the compliance of Section 70(3) of the Pondicherry Excise Act, 1970. The petitioner challenges as to the power of the Government to issue the amendment without following in letter and spirit the provisions under Section Section 70(3) of the Pondicherry Excise Act, 1970. The petitioner further states that the amendment had not been laid before the Legislative Assembly in compliance of Section 70(3) while it is in session; consequently, the same is liable to be quashed. 14. Learned Government Advocate, while supporting the notification, submitted that the Rule framed had been placed before the Legislative Assembly on 31.3.2010 and the same had been passed after discussion and given effect to. Having regard to the above fact, the objection taken by the writ petitioner in W.P.No.7769 of 2010 does not survive. 15. 14. Learned Government Advocate, while supporting the notification, submitted that the Rule framed had been placed before the Legislative Assembly on 31.3.2010 and the same had been passed after discussion and given effect to. Having regard to the above fact, the objection taken by the writ petitioner in W.P.No.7769 of 2010 does not survive. 15. The counter affidavit states that as per Rule 115B of the Puducherry Excise Rules 1970, the increased licence fee shall be paid within thirty days from the date of publication of the notification in the Official Gazette. Since the notification had been published in the Gazette on 30.3.2010, the increased licence fee applicable for the year 2010-2011 in respect of FL 1 and FL 2 licence had to be paid on or before 29.4.2010. Accordingly, around 60 licensees having FL 1 and FL 2 licences had paid the increased licence fees in compliance of the final notification. 16. Learned Government Advocate appearing for the respondents also placed before me the decision of a Division Bench of this Court dated 13.12.2002 in W.P.No.23041 of 2002 etc. (M.K.Elangovan and others Vs. Union of India & others) in the earlier round of litigation, wherein, the challenge to the enhancement of licence fee in respect of FL 1 licence, FL 2 Licence with bar and FL 2 Licence without bar was rejected, taking the view that enhancement is a matter of policy. Consequently, this Court rejected the plea of the petitioner on the enhancement of licence fee. In the circumstances, the question as regards the enhancement of licence fee is no longer res integra and hence, prayed for dismissal of the writ petition. 17. A perusal of Section 70 of the Pondicherry Excise Act, 1970 shows that the State is given the authority to make Rules as regards matters specified therein to effectuate the object of the Act. One such topic is fixing of licence fee. Pursuant to the above said provision, as per Section 70(3), any Rule made by the State has to be laid before the Assembly and if and when the Assembly approves of the notification, it comes into effect from the notified date or where the Assembly modifies the Rules, with modification, it shall be brought into force effective from the date thereon. In any event, if the Assembly withdraws such notification, then the notification has no effect in the eye of law. In any event, if the Assembly withdraws such notification, then the notification has no effect in the eye of law. However, the modification or annulment shall be without prejudice to the validity of anything previously done under that Rule. The provision further states that the Rule made shall be placed before the Assembly for a period of fourteen days, while it is in session, which may be comprised in one session or more successive sessions. Pursuant to the said authority, the Pondicherry Excise Rules, 1970 have been introduced. Rule 118 of the said Rules deals with the licence fee payable for several kinds of licences. Thus given the delegated power to make the Rules to carry out the purpose of the Act, it is difficult for this Court to accept the plea of the petitioner, particularly that of the writ petitioner in W.P.No.7769 of 2010, that Sub Section (3) to Section 70 of the Act stands violated in the matter of passing of the notification. Once the amended Rule passes the test prescribed under Section 70(3), it goes beyond the pale of controversy, except on grounds which are otherwise open to an aggrieved party to challenge the same before a Court of law. So too as regards the contention of the writ petitioner in W.P.Nos.5771 and 6977 of 2010, that with the State having the powers to frame, amend, and modify the Rules, it is difficult to accept the plea of the writ petitioner in W.P.Nos.5771 and 6977 of 2010 that the amendment is arbitrary and illegal. 18. Learned counsel appearing for the petitioner in W.P.Nos.5771 and 6977 of 2010 submitted that there was hardly any discussion on the notification or the objections filed, nor is there any indication as to the discussion that had taken place on the floors of the Assembly as regards the passing of the notification. I do not agree with such a submission. The level of discussion that had gone on the floors of the Assembly is not a subject matter of review which this Court can enter into, more so when the notification amending the Rule had been validly made by the respondent in exercise of its authority under Section 70(1) and had been laid before the Assembly in terms of Section 70(3) of the Pondicherry Excise Act, 1970. The discussions or the policy behind the amendment to the Rule are all matters purely within the domain of the Legislature and it is not for the Court to examine the discussion or the sufficiency thereof on the floors of the legislature, and pass judgment thereon. Consequently, I reject the writ petition filed by the petitioner in W.P.No.7769 of 2010 as well as that of the writ petitioners in W.P.Nos.5771 and 6977 of 2010. 19. Barring the plea based on Section 70(3), learned counsel appearing for the petitioner in W.P.Nos.7769 of 2010 fairly submitted that the authority of the Government to make the Rules is not questioned by the writ petitioner. 20. As regards the writ petitions filed by the Association in W.P.Nos.5771 and 6977 of 2010, learned counsel appearing for the petitioner submitted that the amendment brought forth under the notification hardly contains any reason for bringing out the amendment enhancing the licence fee. In the face of the Division Bench decision of this Court dated 13.12.2002 in W.P.No.23041 of 2002 etc. M.K.Elangovan and others Vs. Union of India & others), the contention of the petitioner has to be straight away rejected in limine. Placing reliance on the decision reported in (2006) 4 SCC 327 (Kerala Samasthana Chethu Thozhilali Union Vs. State of Kerala), the petitioner raised an objection as regards the statement in the counter affidavit that if the petitioner is not in a position to make the payment of the enhanced fee, it is open to them to quit the business. The enhancement of licence fee being a matter purely of a policy within the domain of the State, the said decision has no application to the facts of the present writ petitions. In any event, the contention in this counter does not, in any manner, offer the ground for either accepting or rejecting the notification on enhancement, particularly when the source of power is traceable to the provision in a statute. The decision relied on relates to the Government of Kerala taking a policy decision directing that one arrack worker each must be employed in all toddy shops. The said amendment came in the wake of making a Rule, banning the sale of arrack. The Labour and Rehabilitation Department of the State took a decision to rehabilitate the workers who had been engaged in the manufacture, import, export, transport and sale of arrack. The said amendment came in the wake of making a Rule, banning the sale of arrack. The Labour and Rehabilitation Department of the State took a decision to rehabilitate the workers who had been engaged in the manufacture, import, export, transport and sale of arrack. In the face of the directions thus made through amendment of the Rules, challenge was made before the High Court by the licence holders as well as toddy workers. The Kerala High Court held that the source of power of the State to frame Rules could be traced to Entries 23 and 24 of List III of Schedule VII to the Constitution. Thereafter, the Federation of Trade Unions of Toddy Tappers and Workers in Toddy Shops preferred an appeal before the Apex Court, contending that the State, in making the Rules, transgressed its power of delegated legislation, since the Act did not contain any provision regarding adoption of welfare measures by the State and that the State had no power to make the impugned Rules. The Supreme Court allowed the appeals and pointed out that the Rules to be made under the Kerala Abkari Act must be one framed to carry out the purposes of the Act. Pointing out to the common law principle that no person can be thrust upon an unwilling employer except in accordance with the provisons of the special statute operating in the field, the Supreme Court pointed out that a rule is not only required to be made in conformity with the provisions of the Act, but the same must be in conformity with the provisions of any other Act, as the subordinate legislation cannot be violative of any plenary legislation made by the Parliament or by the State Legislature. Hence, while parting with the exclusive privilege or part thereof, it may impose conditions as laid down by the reason of a statute. However, the same cannot be deviated or contrary to the legislative policy and the provisions of the Act. The Apex Court pointed out that the right of a workman in case of any industry closed is covered by Section 25FFF and/or Section 25J of the Industrial disputes Act. Hence, while pursuing the social object or policy to do something to rehabilitate the workers affected by the ban, the State cannot thrust such employee upon an unwilling employer. The Apex Court pointed out that the right of a workman in case of any industry closed is covered by Section 25FFF and/or Section 25J of the Industrial disputes Act. Hence, while pursuing the social object or policy to do something to rehabilitate the workers affected by the ban, the State cannot thrust such employee upon an unwilling employer. Pointing out to the argument of the intervenor, supporting the privilege of the State to impose conditions the Supreme Court pointed out: " 58. "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 entitled it to impose any condition it desires. " The said decision has no relevance as far as the present case is concerned. Given the fact that the State has the authority to increase the licence fee as contemplated under the Act, so long as the notification complies with the provisions of the Act, no exception could be taken to the amendment made in respect of the licence fee. Hence, the reliance placed on the above decision has to be rejected, it having no relevance to the case on hand. 21. As regards the violation of the principles of natural justice, learned counsel appearing for the petitioners placed reliance on the decision reported in 2009-2-L.W. 435 (M/s.Nagarjuna Construction Co. Ltd.Vs. Govt. of Andhra Pradesh and Others). The said decision is distinguishable on the facts of the present case. The licensing authority has passed the notification in terms of the authority reserved under Section 70 of the Pondicherry Excise Act, 1970 read with Rule 118 of the Pondicherry Excise Rules, 1970. When the legislative competence of the rule framing authority is not in question, the mere fact that there is a personal rivalry between the licensees holding FL 1 and FL 2 licences, is not a ground to read an element of arbitrariness in the notification issued by the State enhancing the licence fee. When the legislative competence of the rule framing authority is not in question, the mere fact that there is a personal rivalry between the licensees holding FL 1 and FL 2 licences, is not a ground to read an element of arbitrariness in the notification issued by the State enhancing the licence fee. So long as there is a reasonable classification in respect of the FL 1 and FL 2 licensees giving different fee structure based on considerations as per law, the question of reading any arbitrariness into this solely on the assumptions of business rivalry does not arise and the petitioners had not, in any manner, substantiated their case on this aspect. 22. The contention of the learned counsel appearing for the petitioners that the notification did not disclose any reason and the decision taken on the objection does not merit any acceptance, since the policy of the State to raise the licence fee is, pure and simple, exclusively in the domain of the State and the mere fact that the State had called for an objection, does not entitle the petitioners to have the notification nullified on the ground that the notification does not discuss the merits of the objection. 23. Demands of administrative exigencies and policy matters on administration are all matters concerning the State on which the Court cannot pass any decision to substitute its views or subjective satisfication over the decision taken by the State. In the decision reported in (2005) 4 MLJ 524 (Aminjikarai Lorry Owners Welfare Association, rep. by its President V.S. Yuvaraj and V.S. Yuvaraj Vs. The State of Tamil Nadu, rep. by its Secretary to Government, Public Works Department and Ors.), this Court pointed out that in policy matters and administrative decisions, this Court will not interfere, unless the decisions or policy are in violation of statutory or constitutional provision or is shockingly arbitrary in the Wednesbury sense. This Court also referred to the decision of the Supreme Court reported in 2002 (1) SCR 621 Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Another), that the Court cannot substitute its judgment for the judgment of administrative authorities. Only when the action of the administrative authority is unreasonable that the Court could intervene. This Court also referred to the decision of the Supreme Court reported in 2002 (1) SCR 621 Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Another), that the Court cannot substitute its judgment for the judgment of administrative authorities. Only when the action of the administrative authority is unreasonable that the Court could intervene. This Court further pointed to the decision of the Supreme Court reported in AIR 1996 SC 11 (Tata Cellular v. Union of India) that the scope of review is limited to seeing the decision making process alone and not the merits of a decision. Hence, this Court held: " 39. In administrative matters the Court should therefore ordinarily defer to the judgment of the administrators unless the decision is clearly illegal or shockingly arbitrary. " In the light of the clear pronounciation of this Court as to its jurisdiction on matters of this nature, I do not find any ground to accept the plea of the petitioner to interfere with the policy decision of the State to enhance the licence fee. Consequently, I do not find any ground to accept the plea of the petitioners on the aspect of increase in the licence fee as violative of any constitutional or statutory provisions. Consequently, these writ petitions stand dismissed. No costs. Connected M.P.Nos.1, 1 and 1 of 2010 stand closed and M.P.Nos., 2, 2 and 2 of 2010 stand dismissed.