M/S. New Modern Restaurant And Bar vs The State Of Andhra Pradesh
2023 Latest Caselaw 4285 AP

     IN THE HIGH COURT OF ANDHRA PRADESH:: AMARAVATHI

            HON'BLE SRI JUSTICE NINALA JAYASURYA

                  WRIT PETITION No.20356 OF 2023

M/s.New Modern Restaurant and Bar,
Rep.by its Licensee, Kamineni Srinivasa Rao & Another. ... Petitioners

       Versus

The State of Andhra Pradesh,
Rep.by its Principal Secretary,
Prohibition & Excise Department,
Velagapudi, Amaravathi,
Guntur District & Others.                                 ..... Respondents

Counsel for the petitioner      : Mr.P.Veera Reddy, Senior Counsel
                                  Ms.Sodum Anvesha

Counsel for the respondents     : G.P. for Prohibition & Excise
                                  Mr.O.Manohar Reddy,
                                  Senior Counsel
ORDER:

The present Writ Petition is filed seeking to declare the

Proceedings dated 07.08.2023 of the 2nd respondent/Commissioner of

Prohibition and Excise and the consequential proceedings dated

08.08.2023 of the 4th respondent/District Prohibition and Excise Officer,

Guntur, as illegal, irregular, arbitrary etc., on various grounds and to set

aside the same.

2. The 2nd respondent vide Proceedings dated 07.08.2023 in exercise

of powers under Rule 29(c) of A.P.Excise (Lease of Right of Selling By

Bar, Grant and Conditions of Licence) Rules, 2022(for short 'the Rules'), 2 NJS,J W_P_20356_2023

accorded permission for shifting of the licensed premises of the 5 th

respondent from Bekar Compound, Brodipet Main Road, Guntur to a

premises situated opposite to RTC Bus Stand, Guntur vari Thota, Guntur,

subject to payment of requisite shifting fees as per the Rules. As

mentioned in the said proceedings dated 07.08.2023 "the reason for

shifting is the licensee stated that the Bar at the existing premises is not

potential and incurring losses and not able to pay the salaries to the

employees."

3. Mr.P.Veera Reddy, learned Senior Counsel appearing for the writ

petitioners contended that the proceedings referred to above are not

sustainable as the same are not in tune with the statutory provisions i.e.,

Rule 29(c) of the Rules. Emphasizing much on the said Rule, the learned

Senior Counsel would contend that no shifting of the licensed premises

shall ordinarily be permitted, except for "valid reasons" by the

Commissioner of Prohibition and Excise/2nd respondent. The learned

Senior Counsel submits that before according permission for shifting the

premises of the 5th respondent, objections were called for and the

petitioners submitted detailed objections opposing the grant of

permission and the 2nd respondent, without examining the same, had

issued the impugned proceedings on the basis of the reports submitted

by the respondents 3 and 4. He submits that the 2nd respondent should

have scrupulously examined the matter, verified the records like Stock 3 NJS,J W_P_20356_2023

Registers etc., personally but without following such a procedure, simply

accepted the proposals/recommendations of the lower authorities and

the impugned proceedings cannot be stated to be on the basis of

subjective satisfaction of the 2nd respondent.

4. Further, the learned Senior Counsel while referring to Rule 24 of

the Rules which deals with the Restriction on the grant of Bar licence and

the requirements with regard to the premises, where a Bar is sought to

be set up, contends that the said Rule is indispensible. Drawing the

attention of this Court to a report dated 28.07.2023 of the 4 th

respondent, the learned counsel submits that the subject matter

premises to which the existing Bar of the 5th respondent is sought to be

relocated is not meeting the requirements, more specifically with

reference to provision for A.C. Halls and parking space. He submits that

as is evident from the said report, the parking space is 11.52 sq.mts.,

which would hardly be sufficient to park 4 two wheelers. The learned

Senior Counsel also states that as seen from the said report, the

Prohibition and Excise Inspector, A.P.State Beverages Corporation

Limited, IML Depot, Guntur, submitted a report and the respondents 3

and 4 have not undertaken any personal inspection. Be that as it may.

The learned Senior Counsel contends that it is only with a view to

facilitate shifting of the 5th respondent's Bar, the said reports were

obtained. He also submits that in fact, the petitioners participated in the 4 NJS,J W_P_20356_2023

open auction by submitting applications as per Rule 15(B), paid highest

bid amounts for running a Bar and Restaurant in the present locality,

established the same by incurring huge expenditure. Likewise, the 5 th

respondent participated in the auction in respect of the area, where it

established the Bar and Restaurant on its volition and in such

circumstances, it cannot be permitted to shift the business to the locality,

where the petitioners are running the Bar and Restaurant, more

particularly on the premise that the 5th respondent is incurring losses. He

submits that it would not amount to a 'valid reason' for granting

permission for shifting. He contends that 'valid reasons' does not mean

'any reason' and there should be justifiable reasons. Stating that if the 5 th

respondent is prevented or is not in a position to carry on its business in

the earlier premises due to acquisition of land/premises or by virtue of a

Court decree, it may amount to 'valid reasons', but the reasons assigned

by the 2nd respondent in the proceedings dated 07.08.2023 would not

amount to a valid reason. The learned Senior Counsel also refers to the

dictionary meaning of valid reasons as contained in Law Lexicon. He

submits that the statute does not confer unfettered power on the 2 nd

respondent to pass any order as he thinks fit in an arbitrary manner.

According to him, acceptance of reasons of the lower authorities without

application of mind or assigning cogent reasons amounts to a rubber

stamp approval and is not tenable in Law.

                                                5                                      NJS,J
                                                                            W_P_20356_2023

5. Placing reliance on the decisions reported in Mohindhar Singh Gill

v. Chief Election Commissioner, New Delhi 1, State of Orissa v. Dhaniram

Luhar2, Kranti Associates Private Limited & Another v. Masood Ahmed

Khan & Others3, M.S.Jayaraj V. Commissioner of Excise, Kerala & Others4

etc., the learned Senior Counsel contends that the impugned

proceedings are liable to be set aside.

6. Mr.O.Manohar Reddy, learned Senior Counsel appearing for the 5 th

respondent, on the other hand, made submissions to sustain the

proceedings of the 2nd respondent. He submits that the Commissioner

on taking various factors into consideration including the loss of business

of the 5th respondent had issued the impugned proceedings. He submits

that the Commissioner's decision was based on the reports submitted by

the concerned authorities and in such circumstances, it cannot be said

that the impugned proceedings are without any valid basis. Insofar as

the establishment of Bar is concerned, the learned Senior Counsel

submits that the entire Municipal Corporation Area will be taken as one

unit and all Bars can be situated in one street and there is no restriction

with regard to maintaining distance also. He submits that if two traders

select one premises, the highest bidder will have a right. The learned

(1978) 1 SCC 405

(2004) 5 SCC 568

(2010) 9 SCC 496

(2000) 7 SCC 552 6 NJS,J W_P_20356_2023

Senior Counsel also submits that various grounds raised in the Writ

Petition are without any substance. He submits that when the power is

conferred on the 2nd respondent under Rule 29(c) of the Rules and when

the relevant reports submitted by the concerned officials on the basis of

material/documents were taken into consideration, the decision of the

2nd respondent cannot be treated as devoid of reasons, much less valid

reasons as sought to be projected. While contending that the Court has

to see the decision making process only, he submits that the scope of

judicial review in matters of this nature is very limited and the Court

cannot examine the reasonableness of the reasons, in exercise of powers

under Article 226 of the Constitution of India.

7. Relying on the decision in Venkata Ramana Agencies v.

District Collector5, the learned Senior Counsel submits that the

petitioners being the rival traders have no locus to question the

proceedings of the 2nd respondent. The learned Senior Counsel submits

that the contention to the effect that as the 2nd respondent has not

personally examined the matter by visiting the premises of the 5 th

respondent and verifying the records, the impugned proceedings is not

sustainable, merits no acceptance. He submits that there is no such

requirement or Rule contemplating such an exercise by the 2nd

2008(1) ALD 138 7 NJS,J W_P_20356_2023

respondent. The learned Senior Counsel also refuted the contentions

with regard to inadequacy of parking and the required A.C.Halls and

submits that there is no infraction of any of the statutory provisions.

8. The learned Senior Counsel also states that, in fact, as on the date

of passing of the interim order, the respondent No.5 had already

relocated the Bar and Restaurant as permitted by the 2nd respondent and

by virtue of the orders granted by this Court, it is disabled from carrying

on its business activities. He also relies on the decision in Jasbhai

Motibhai Desai v. Roshan Kumar6 and reiterates his contention that

as the proceedings of the 2nd respondent is based on relevant material

and contains cogent reasons, the same warrants no interference by this

Court in exercise of its discretionary jurisdiction under Article 226 of the

Constitution of India. Accordingly, he seeks dismissal of the Writ Petition.

9. The learned Government Pleader for Excise made his submissions

with reference to the averments made in the counter-affidavit and the

material filed along with the same. He submits that the authorities

concerned, pursuant to the instructions of the 2 nd respondent submitted

the reports, that too by due verification of the records and taking the

relevant factors into consideration, the 2nd respondent issued the

impugned proceedings. He submits that in fact, earlier seven Bars and

AIR 1976 SC 578 8 NJS,J W_P_20356_2023

Restaurants were running/carrying on business in the area opposite to

RTC bus stand and at present only four are existing. Further, the figures

furnished in the counter-affidavit would disclose that the 5 th respondent

is incurring loss and in the facts and circumstances, the discretion

exercised by the 2nd respondent on the basis of the reports for granting

permission to shift the premises cannot be found fault with. He submits

that there is no violation of any of the Rules and in the absence of which,

the Writ Petition at the instance of the petitioners/rival traders is not

sustainable in Law. Making the said submissions, the learned

Government Pleader urges for dismissal of the Writ Petition.

10. This Court has considered the submissions made and perused the

material on record. On an appreciation of rival contentions, the points

that arise for consideration by this Court are:

1. Whether the petitioners being rival traders have the locus to file the Writ Petition?

2. Whether this Court can examine the validity or otherwise of the reasons as assigned by the 2nd respondent for granting permission to the 5th respondent to relocate it's Bar and Restaurant?

3. Whether the proceedings impugned are not sustainable as the reasons assigned for according permission to the 5th respondent to relocate its business premises are not valid and the proceedings impugned are vitiated by arbitrary exercise of power?

                                       9                                    NJS,J
                                                                 W_P_20356_2023



Point No.1:

11. Insofar as the Point No.1 is concerned, the counsel for the 5th

respondent on the basis of the decision in Venkata Ramana Agencies

and the judgment of Hon'ble Supreme Court in Jasbhai Motibhai

Desai referred to supra contended that the Writ Petition is not

maintainable at the instance of rival traders i.e., petitioners herein.

12. In Jasbhai Motibhai Desai, the Hon'ble Supreme Court was

dealing with a matter which arose under the provisions of Bombay

Cinema Rules, 1954. The respondents before the Hon'ble Supreme

Court made an application under Rule 3 of the said Rules to the District

Magistrate for grant of a Certificate/No Objection to the location of a

cinema theatre at the particular site. The District Magistrate therefore

invited the objections to the grant of NOC. Several persons submitted

their objections, but the appellants before the Hon'ble Supreme Court

have not submitted any objections. The District Magistrate visited the

proposed site and submitted a report to the State Government that it is

not fit for location of a cinema house and NOC was not granted.

However, the State Government did not agree with the recommendation

of the District Magistrate and directed him to grant the Certificate,

pursuant to which, NOC was granted. Challenging the same, the

appellants before the Hon'ble Supreme Court initially filed a Writ Petition

which was dismissed on the ground that no right vested in the appellant 10 NJS,J W_P_20356_2023

was infringed and he was not an aggrieved person having a locus standi

in the matter. Aggrieved by the orders of the High Court, the matter

was carried in appeal to the Apex Court and the Hon'ble Court was not

inclined to interfere with the decision of the High Court.

13. The learned Senior Counsel for the writ petitioners herein

distinguished the said judgment of the Hon'ble Supreme Court with

reference to the facts of the present case. He submits that in the said

case, the appellant has not submitted the objections called for to the

grant of NOC. Whereas, in the present case, the petitioners have

submitted their objections and the same were not considered by the 2nd

respondent. Further, the decision relied on by him in M.S.Jayaraj, is a

case arising under the provisions of Kerala Abkari Shops (Disposal in

Auction) Rules, 1974. As per the facts of the said case, a bidder in an

auction for the privilege of bending foreign liquor within a circumscribed

range was permitted by the Excise Commissioner to have his domain

shifted to another range. Though the said judgment was rendered by a

two member Bench of the Hon'ble Supreme Court, after referring to the

various judgments including the decision in Jasbhai Motibhai Desai, at

Para No.14, they opined as follows :

"14. In the light of the expanded concept of the locus standi and also in view of the finding of the Division Bench of the High Court that the order of the Excise Commissioner was passed in violation of law, we do not wish to nip the motion out solely on the ground of 11 NJS,J W_P_20356_2023

locus standi. If the Excise Commissioner has no authority to permit a liquor shop owner to move out of the range (for which auction was held) and have his business in another range it would be improper to allow such an order to remain alive and operative on the sole ground that the person who filed the writ petition has strictly no locus standi. So we proceed to consider the contentions on merits."

14. After referring to the relevant Auction Rules, the Hon'ble Supreme

Court upheld the decision of the Division Bench of Kerala High Court,

setting aside the order passed by the Excise Commissioner permitting

shifting of a foreign liquor shop from one range to a totally different

range. In the considered opinion of this Court, the said judgment of the

Hon'ble Supreme Court arising under the provisions of the Excise Act is

applicable to the instant case. Therefore, this Court is not in agreement

with the contention that the Writ Petition at the instance of the rival

trader is not maintainable. Further, the very fact that objections are

called for granting permission to shift the location would clearly indicate

that the rival traders have 'a say' in the matter and calling for objections

is not a empty formality. Since the issue in the present case is related to

Rule 29(c) of the Rules, permitting the relocation of business by the 5 th

respondent to the area where the petitioners obtained licence to run

their Bar and Restaurants, as to whether the reasons assigned for

granting permission are valid, the petitioners have locus to question the

same. Accordingly, the Point No.1 is answered.

                                         12                                   NJS,J
                                                                   W_P_20356_2023



Point No.2:

15. Assailing the order of the 2nd respondent, as noted earlier, it was

contended on behalf of the petitioners that the impugned proceedings

are based on the reports of the lower authorities, the 2 nd respondent had

not undertaken personal inspection of the premises or verification of the

relevant records like Stock Registers etc. On the other hand, it was

contended by the learned Senior Counsel for the 5 th respondent that on

the basis of the reports submitted with reference to the field inspection,

relevant material and by taking the relevant factors into consideration,

the 2nd respondent in his discretion, granted permission for

shifting/relocation of the 5th respondent's Bar and Restaurant, that in

such circumstances, this Court cannot undertake the exercise of

examining the reasonableness of the decision of the 2nd respondent

much less in exercise of its powers of judicial review. No doubt as

contended by the learned counsel for the 5th respondent that it is not as

if the 2nd respondent had issued the impugned proceedings, without any

basis. Reference to the reports of the respondents 3 and 4 in the

impugned proceedings makes this aspect clear and the same would be

sufficient for considering the request/application for shifting of the

premises as sought for by the 5th respondent. Therefore, the

submissions made by the learned Senior Counsel insofar as the personal 13 NJS,J W_P_20356_2023

inspection of the premises, verification of records by the 2 nd respondent

himself merits no acceptance.

16. However, insofar as the objections submitted by the petitioners

are concerned which are required to be considered by the 2 nd

respondent, as seen from the material on record, it would appear that

the same were referred to the 4th respondent through communication

dated 28.07.2023, except that there was no consideration of the same

by the 2nd respondent. Be that as it may. It is trite Law that the

reasonableness of the reasons cannot be examined as contended by the

learned Senior Counsel for the 5th respondent. However, in the facts of

the present case, this Court is examining the matter with reference to

the statutory provisions i.e., Rule 29(c) vis-a-vis the validity of reason

i.e., whether the losses incurred by a licensee constitutes a "valid

reason" to allow shifting/re-location of the license granted to the

licensee. Therefore, this Court is of the opinion that the consideration of

correctness or otherwise of the impugned proceedings from that

perspective is permissible in exercise of its powers under Article 226 of

the Constitution of India. Therefore, the Point No.2 is answered

accordingly.

                                          14                                      NJS,J
                                                                       W_P_20356_2023



Point No.3:

17. Before considering this point, it would be appropriate to refer to

the reason for granting permission of reallocation of 5 th respondent's Bar

& Restaurant, which is reproduced hereunder:

"The reason for shifting is the licensee stated that the Bar at the existing premises is not potential and incurring loss and not able to pay the salaries to the employees."

18. Rule 29 (c) which empowers shifting of licenced premises is

extracted hereunder for ready reference:

"29. Sale permitted at the licensed premises only:- a...

b...

c. No shifting of the licensed premises shall ordinarily be permitted during the licence period from one location to another. However, shifting of the licensed premises may be considered by the Commissioner of Prohibition & Excise for valid reasons within the same Nagar Panchayat, Municipality including its 3 KM belt area from the periphery or Municipal Corporation including its 10 KM belt area from the periphery, as the case may be, subject to payment of 1% of the non-refundable registration charge and licence fee or Rs.50,000/-, whichever is higher, as shifting fee and on production of trade licence granted by the local authority concerned."

19. From a reading of the said Rule, it is clear that shifting of licensed

premises shall not ordinarily be permitted, except for valid reasons.

What amounts to a valid reason is not defined or provided in the statute.

                                             15                                      NJS,J
                                                                          W_P_20356_2023

In Kranti Associates Private Limited v. Masood Ahmed Khan7, the

Hon'ble Supreme Court after referring to a catena of decisions at Para 47

inter alia held as follows:

"47. Summarising the above discussion, this Court holds:

(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

(b).........

(c).........

(d).........

(e).........

(f)..........

(g)..........

(h)..........

(i)...........

(j)...........

(k)...........

(l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process.

(m)......

(n)........

(o)........."

20. At this juncture, it may be appropriate to state here that there is

no dispute that the establishment of Bar and Restaurant in a particular

area would be by way of participation in tender and auction process and

the writ petitioners were the highest bidders in respect of the area in

question. Likewise, the 5th respondent was the highest bidder in respect

(2010) 9 SCC 496 16 NJS,J W_P_20356_2023

of the area, where it established the Bar and Restaurant initially. It is, as

rightly contended by the learned Senior Counsel for the petitioners, at it's

choice and for running the Bar & Restaurant at that particular location, it

paid the license fee also. During the course of its business, if losses are

incurred that cannot be a "valid reason" to allow/grant permission for

relocating its business activities. Profit or loss in any business are natural

corollaries and the same depends upon various factors. In the present

case, the loss of business as sought to be projected by the 5th

respondent is not attributable to any factor, which is beyond its control,

which virtually disabled it to continue its business from the existing

premises. Be that as it may. The role of the authorities under the Excise

Act is to discharge functions, within the frame work of the provisions of

the Act and the Rules framed thereunder and not to assess the profits

and losses of a particular licensee and consider their grievances with

reference to the same in respect of a licensed premises. Once, the

licence is granted, it is for the concerned licensee to carry on its business

and in the process of the same, he may gain profits or suffer loss.

Further, if a particular licensee is allowed to shift his location to another

area, it may cause loss to the licensee, who has already established its

business operations.

21. The expression in Rule 29(c) makes it imperative on the part of

the 2nd respondent to examine the matter with due application of mind 17 NJS,J W_P_20356_2023

and assign cogent reasons, but not mere approval of the reports of the

lower authorities and rubber stamp reasons. Rule 29(c) as framed would

indicate that the Legislature in its wisdom has left no much room to

grant permission to shift/relocate the licenced premises, but for "valid

reasons" which should be, exceptional or extraordinary. Else, it would

lead to arbitrary exercise of power conferred on the 2 nd respondent. In

the considered opinion of this Court, incurring of losses, a risk involved in

a business, therefore cannot be treated as a "valid reason" for granting

permission to shift/relocate 5th respondent's Bar and Restaurant.

Acceptance of the said reason, more particularly, without considering the

specific objections by the 2nd respondent, constitutes arbitrary exercise of

power and warrants interference by this Court. Accordingly, the Point

No.3 is answered.

22. In so far as the contentions regarding Rule 24, this Court deems it

not necessary to examine the matter in detail. Suffice to state that no

satisfactory explanation is forthcoming from the respondents in respect

of parking area and surprisingly the counter-affidavit filed by the 2 nd

respondent refers to a report stated to have been submitted by the 6th

respondent with reference to an inspection of the new premises on

14.08.2023, which is much subsequent to the proceedings impugned in

the Writ Petition. Further, the existence of Seven Bar & Restaurants

previously in the locality/area to which the 5th respondent is permitted to 18 NJS,J W_P_20356_2023

shift the Bar and that at present, only four Bar and Restaurants apart

from one(1) APSBCL Retail Outlet are functioning, that the said area is

potential and commercial cannot be a justification or a factor to favour/

facilitate shifting/relocation of the 5th respondent's Bar and Restaurant.

23. For the aforegoing conclusions, the orders impugned in the Writ

Petition are not sustainable and the same are therefore set aside.

Accordingly, the Writ Petition is allowed. No order as to costs.

As a sequel, pending miscellaneous petitions, if any, shall stand closed.

_____________________ NINALA JAYASURYA, J Date: 15.09.2023 Note: Furnish C.C. in three (3) days.

B/o.

      BLV
                                         19                    NJS,J
                                                    W_P_20356_2023



           THE HON'BLE SRI JUSTICE NINALA JAYASURYA




                            W.P.No.20356 of 2023

                                 Date: 15.09.2023


Note: Furnish C.C. in three (3) days.
      B/o.
      BLV