B.D. Mittal vs Govt. Of Nct Of Delhi And Ors.
2004 Latest Caselaw 1341 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner is aggrieved by the public notice issued by the Excise Commissioner of the Government of National Capital Territory of Delhi in respect of the terms and conditions for grant of license in form L-52 for the year 2002-2003 in terms whereof only residents of Delhi were liable to be considered for the grant of such licenses.

2. The relevant financial year has, however, passed but the policy remains the same in respect of L-52 licenses.

3. The petitioner claims to be proprietor and partner of various firms engaged in the business of wholesale and retail trade of intoxicating liquors in the State of Haryana and Punjab.

4. The Govt. of NCT of Delhi comes out with the policy for grant of various categories of licenses and the retail vending of the intoxicating liquors were being entirely managed, operated and controlled by the Government owned agencies. However, for the year 2002-2003, this area of business was sought to be opened for the first time to private enterprise.

5. The legislative competence is derived for the regulation of trade under The Punjab Excise Act, 1914 ( hereinafter to be referred to as, 'the said Act' ) and the Delhi Liquor license Rules, 1976 ( hereinafter to be referred to as, 'the said Rules ). Section 5 of the said Act deals with the power of Lieutenant Governor to declare limits of sale by retail and by wholesale and Section 26 provides that no sale shall be made except under the authority and subject to the terms and conditions of the license granted in that behalf. Section 35(1) of the said Act provides for the grant of license for sale subject to the rules made by the Excise Commissioner under the powers conferred by the said Act.

6. The power to make rules is governed by Sections 58 and 59 of the said Act. Section 58 deals with the power of Lieutenant Governor to make rules in particular relating to subject matters specified in sub-section (2) thereof. Section 59 deals with the power of Excise Commissioner to make rules in respect of the items mentioned in the said Act.

7. The said Rules provide for different categories of licenses. Rule 34 of the said Rules provides for the special conditions of various categories of licenses. In view of the permission for private enterprise to enter into the trade, sub-rule 20 to sub-rule 22 were incorporated in Rule 34. Sub-rule 20 provides for the conditions for grant of L-52 license, which is the license in issue. The sub-rules incorporated, however, do not contain any condition or requirement of domicile in Delhi.

8. The submission of learned counsel for the petitioner is that the impugned public notice is without any authority of law in as much as the said Rules do not provide for any such condition of residence in Delhi, but it is only through this public notice issued by the Excise Commissioner setting out the terms and conditions for the grant of L-52 license that in para 1.5 of the eligibility conditions, the requirement of residence at Delhi has been included. The procedure to apply provided for in para 2 of the said public notice stipulates in 2.2(g) that a domicile certificate / proof of registered office being in Delhi should be submitted with the application for grant of such a license. Learned counsel emphasised that both Sections 58 and 59 of the said Act provide for the rules to be brought in force through the process of notification and in the absence of any notification or amendment to the said Rules stipulating such condition of domicile, the same is without authority of law.

9. The additional plea advanced by learned counsel for the petitioner is that such restriction of domicile amounts to 100% reservation for grant of L-52 license to only residents of Delhi and discriminates between the citizens of this country and is, thus violative of Article 14 of the Constitution of India.

10. Learned counsel for the petitioner referred to judgment of the Punjab and Haryana High Court in The Union of India v. S. Narain Singh, which considered the ambit of Section 58 of the said Act and observed that the rules made under therein must be notified in the official gazette.

11. Learned counsel also referred to the Division Bench judgment of the Punjab and Haryana High Court in Lumeden Club, Rambagh Gardens, Amritsar v. Punjab State through Excise and Taxation Commissioner, where it was held that though there was no fundamental right to trade in liquor, there should be no discrimination in issuance of license.

12. In this behalf, learned counsel also relied upon judgments of the Supreme Court in Khoday Distilleries Ltd. and Ors. v. State of Karnataka and Ors., B.R. Enterprises v. State of U.P. and Ors., to emphasise that the State must act on a non-discriminatory basis while granting permits for sale of alcohol through private parties, even though it was open to the State to adopt any mode of selling licenses for trade or business with a view to maximize its revenue.

13. Learned counsel for the respondents, on the other hand, opposed the writ petition and submitted that Excise Policy is declared every year by the State Government and all licenses are given under the said policy, which has force of law. L-52 licenses were introduced by amendment to the said Rules, but it was open to provide for the mode and manner of issuance of such licenses through the executive decision as issued in the public advertisement. Learned counsel also submitted by reference to the averments made in the counter affidavit that the object behind such restriction to residents of Delhi was to stop the supply of illicit / unauthorised liquor from across the border by mafia groups operating across the border. It is stated that this is a problem, which was facing Delhi from the neighbouring States and it was deemed expedient to prevent such liquor mafia and boot-leggers of the neighbouring States from gaining entry to Delhi through L-52 licenses. Thus, in the wisdom of the competent authority and for a larger public good, such restriction was placed.

14. Learned counsel for the respondents further submitted that these issues have been dealt with comprehensively in the judgment of the Supreme Court in Ugar Sugar Works Ltd. v. Delhi Administration and Ors., 2001 (58) DRJ 453 (SC), which considered the parameters of Sections 5, 26 and 35 of the said Act. It was held that in respect of regulation of trade in liquor, the Delhi Administration was competent to provide for the modes for determining the quota of liquor and ancillary matters and the scope of judicial review in such matters is limited. It is also submitted that it is no one's case that there is a fundamental right to trade in liquor and, in fact, that is not even a plea advanced by learned counsel for the petitioner. In the said judgment, the Supreme Court observed as under:

'' 21. In the present case the executive policy regulating the sale of liquor in the territory of Delhi is sought to be challenged by the petitioner on the ground that it is `unfair' and `unreasonable' besides being `arbitrary' and has no nexus with the object sought to be achieved. We are unable to agree.

22. The State has every right to regulate the supply of liquor within its territorial jurisdiction to ensure that what is supplied is `liquor of goods quality' in the interest of health, morals and welfare of the people. One of the modes for determining that the quality of liquor is good is to ascertain whether that particular brand of liquor has been tested and tried extensively elsewhere and has found its acceptability in other State. The manner in which the Government chooses to ascertain the factor of higher acceptability, must in the very nature of tings, fall within the discretion of the Government so long as the discretion is not exercised mala fide, unreasonably or arbitrarily. The allegations of mala fide made in the writ petition are totally bereft of any factual matrix and we, therefore, do not detain ourselves at all to consider challenge on that ground. In fairness to learned counsel for the petitioner we may record that challenge to notification on grounds of mala fide was not pressed during arguments. Laying down requirement of achieving minimum sale figures of a particular brand of liquor in other States, as a mode for determination of the ''acceptability'' of that brand of liquor, is neither irrelevant, nor irrational or unreasonable. It appears that prescription of MSF requirement is aimed at allowing sale of only such brands of liquor which have been tested, tried and found acceptable at large in other parts of the country.

23. The policy objective as reflected in the impugned notification is to provide liquor of good quality in Delhi. The executive policy to determine whether a particular brand of liquor is of good quality or not, on the basis of larger acceptability of the particular brand in other parts of the country, appears to us to be a fair and relevant mode. The manner for determining whether a particular brand of liquor has acquired larger acceptability or not so as to qualify for it being ''liquor of good qualit '' has to be decided by the State in its discretion so long as the manner adopted by the State is ''just, fair and reasonable''. It is not in dispute that the criteria of MSF is being uniformly applied and no pick and choose policy has been adopted by the tate in that behalf. Learned counsel for the petitioners has been unable to convince us that fixation of MSF requirements as a criteria for such determination is in any manner ''unfair, irrational or unreasonable''.

24. The amount that since MSF laid down for the year 1994-95 were not changed till 1998-99, there was no need to increase MSF requirements in 1999-2000 or to further increase the same in the year 2000-2001 for the lowest price tag brand of liquor from 60,000 cases (7.2 lac bottles) to 75,000 cases (9 lac bottles) for the current year, suffers from the basic infirmity that it invites the court to enter into an area of testing the executive policy, not on grounds whether it is ''just, fair and reasonable'', but whether the object could not have been achieved by fixing a lower MSF requirement. In other words Court is being invited to prescribe MSF requirements in exercise of its power of judicial review. That is not permissible and we must decline the invitation to enter that area. It is not within the province of this Court to lay down that the executive policy must always remain static, even if it is revision is ''just, fair and unreasonable''. What is relevant is to find out whether the executive action is mala fide, unreasonable or irrational as a criterion. As already observed the Court, in exercise of its power of judicial review cannot sit in judgment over the policy of Administration except on the limited grounds already noted. Each State is empowered to formulate its own liquor policy keeping in view the interest of its citizens. Determination of wide scale accept ability of a particular brand of liquor, on the basis of national sales figures, does not strike us as being unreasonable, much less irrational. The basis for determination is not only relevant but also fair. No direction can be given or expected from the Court regarding the `correctness' of an executive policy unless while implementing such policies, there is infringement or violation of any constitutional or statutory provision. In the present case, not only there is no such violation but on the other hand, the State in formulating its policy has exercised its statutory powers and applied them uniformly.''

15. I have considered the submissions advanced by learned counsel for the parties.

16. In my considered view, the scope of controversy is narrow since in view of the pronouncements of the Supreme Court, it is no one's case that there is a fundamental right to trade in liquor. The only issue is as raised by learned counsel for the petitioner about the authority in law to prescribe such requirement of domicile in Delhi through the executive action and whether the same amounts to any discriminatory treatment against the citizens who are not residents of Delhi.

17. The observations of the Supreme Court in Ugar Sugar Works Ltd.'s case (supra), in my considered view, would squarely apply to the matter in issue in the present case.

18. The Supreme Court in the said case was seized with the issue in respect of a similar executive policy regulating the sale of liquor, though the impugned notification was laying down the terms and conditions for registration of different brands. The Supreme Court was of the view that the State has every right to regulate the supply of liquor within its territorial jurisdiction to ensure good supply. There was no allegation of mala fide in the said case nor is there one in the present case. The reason has been given by the respondents for restricting the trade to the residents of Delhi in order to better control the trade.

19. It has to be appreciated that the trade was totally controlled in the hands of the State and its authorities and for the first time private enterprise was permitted in the liquor trade. Since this was the initial opening for the trade, it has been considered necessary to provide for certain restrictions at the initial stage. The idea behind restricting it to the residents of Delhi is to apparently prevent the entry of spurious liquor dealers where it may be difficult to control persons who are not within Delhi. This is a matter of executive discretion and policy formulation and it is not for the Court to substitute its mind with that of the concerned authority or to act as an appellate authority for the said decision. The Supreme Court had, thus, observed in Ugar Sugar Works Ltd.'s case (supra) that no direction can be given or expected from the Court regarding the correctness of an executive policy unless while implementing such policy, there is infringement or violation of any constitutional or statutory provisions. In such matter of liquor trade, the scope of enquiry is even more restrictive there being no fundamental right to carry on the business and trade in liquor.

20. The respondents were, thus, well within their authority to issue the impugned public notice.

21. The said Rules were amended to incorporate the grant of L-52 licenses, since such license was not originally envisaged and certain specifications were provided for the same. This does not imply that the State Government cannot, under the liquor police, provide for such regulation restricting the grant of license to the residents of Delhi.

22. It may also be observed that in so far as the plea of discrimination is concerned, the same can arise only in case of similarly-situated persons. The restriction has been placed in respect of all persons, who are not residents of Delhi and since the atter in issue relates to liquor trade in Delhi and the control thereof by the State authorities, the residents of Delhi dealing with the trade would form a category by themselves. The plea of discrimination is, thus, not sustainable.

23. In view of all the aforesaid reasons, I find no merit in the writ petition and the same is dismissed leaving the parties to bear their own costs.