Delhi High Court
Udi Departmental Store vs Govt Of Nct Of Delhi & Anr. on 15 September, 2020
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserved: 19.08.2020
Date of Decision : 15.09.2020
+ W.P.(C) 3494/2020 & CM No.12431/2020 (Stay)
UDI DEPARTMENTAL STORE ..... Petitioner
Through: Mr.Rushab Aggarwal,
Mr.Tejasvi Chaudhary,
Ms.Aayushi Jain, Advs.
versus
GOVT OF NCT OF DELHI & ANR. ..... Respondents
Through: Mr.Ramesh Singh, SC/GNCTD
with Mr.Dhananjaya Mishra,
Panel Counsel and Ms.Bhawna
Kataria, Adv.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. This petition has been filed by the petitioner praying for the
following reliefs:-
" (a) Issue any appropriate writ, order or
directions including a writ of certiorari thereby quashing
the impugned Cabinet Decision No.2790 dated
11.12.2019 issued by the Respondent No.1 insofar as it
directs across the board penal action against all
Licensees of the L-12/L-12F category, and especially
against the Petitioner who has not committed any
violation in the relevant year i.e. 2019-2020.
WP(C) No.3494/2020 Page 1
(b) Issue appropriate writ, order or direction including
a writ of prohibition restraining the Respondent No.1,
from implementing the impugned Cabinet Decision
bearing No.2790 dated 11.12.2019;
(c) Issue any appropriate writ, order or directions
including a writ of certiorari thereby quashing/setting
aside the impugned Circular dated 05.02.2020 issued by
the Respondent No.2 insofar as it illegally & arbitrarily,
excludes L-12/L-12F licensees from the purview of the
renewal of their licenses for the year 2020-21 in terms of
the Delhi Excise Act and the rules framed thereunder.
Or in the alternative to prayer (c), as above,
Issue any appropriate writ, order or directions
including a writ of mandamus thereby directing the
Respondent No.2 to follow the procedure for renewal of
existing L-12/L-12F Licensees, and further renew them in
terms of the Delhi Excise Rules, 2010 for the year 2020-
21.
(d) Issue any appropriate writ, order or direction
including a writ of mandamus directing the respondents
to renew the L-12/L-12F licenses of the petitioner from
the date of the order/interim orders passed by this
Hon' ble Court till 31.03.2021 and continue to renew the
same in terms of the Delhi Excise Act, Rules, Regulations
and Directions."
2. It is the case of the petitioner that the petitioner was granted a
License dated 19.04.2011 by the Delhi Excise Department in the L-
12/L-12F category for the retail sale of beer and wine in its
departmental store. The license was renewed on a year-to-year basis
and was last valid till 31.03.2020. There were approximately 125 such
licenses issued by the respondents to various licensees in Delhi. The
WP(C) No.3494/2020 Page 2
respondents, in September-October, 2019, carried out a check and 41
of such licensees were found to be in violation of the license terms.
Importantly, no violation was found in the case of the petitioner or
other similarly situated licensees, who were in the majority. Inspite of
the same, the respondent no.1 passed a Cabinet Decision No.2790
dated 11.12.2019, impugned in the present petition, directing as under:
"The Council of Ministers considered the note of Pr.
Secretary (Finance) and decided as follows:
1. L-12/L-12F license of all departmental stores to be
closed w.e.f.20.12.2019 and the license fee shall be
refunded as per section 16(2) of the Delhi Excise Act,
2009.
2. Revised terms and conditions for grant of new L-
12/L-12F licenses to be framed by the Excise
Department in the next Excise Policy."
3. Based on the above decision, the respondent no.2 issued an
order dated 19.12.2019 against the petitioner, purportedly exercising
its power under Section 16(1) of the Delhi Excise Act, 2009
(hereinafter referred to as the ' Act' ), withdrawing the L-12/L-12F
license of the petitioner forthwith. The said order reads as under:
" Whereas, M/s UDI DEPARTMENTAL STORE was
granted L-12/L-12F license bearing License ID L-
12/2011/137 for sale of Beer and Wine in the
Departmental Store.
And Whereas the Council of Ministers, GNCTD vide
Cabinet Decision No.2790 dated 11.12.2019 conveyed
vide letter No.F.3/3/2018/GAD/CN/dsgadiii/5232-42
WP(C) No.3494/2020 Page 3
dated 12.12.2019 has decided to withdraw all L-12/L-
12F Licenses with effect from 20.12.2019.
Therefore, I, Deputy Commissioner (Excise)/Licensing
Authority, in exercise of the powers conferred upon me
under the provisions of Section 16(1) of the Delhi Excise
Act, 2009,hereby withdraw the L-12/L-12F License in
respect of the above mentioned licensee/Departmental
Store forthwith. The licensee shall be eligible for refund
of fee paid in advance after deducting the amount
recoverable by the Government under Section 16(2) of
the Delhi Excise Act, 2009."
4. The petitioner challenged the above order before this Court by
way of a writ petition, being W.P.(C) 13729/2019. This Court by its
order dated 24.12.2019 was pleased to stay the operation of the order
dated 19.12.2019, subject to the condition that the petitioner shall
strictly comply with the terms and conditions of its license. There is
no allegation that the petitioner has thereafter violated any term of the
license in any manner.
5. The respondent no.2, thereafter, issued a Circular dated
05.02.2020, impugned in the present petition, inviting applications for
renewal of the licenses for all categories of retail vends for the year
2020-21 except L-12/L-12F license categories. The petitioner has
challenged the said Circular to the limited extent that it excludes the
L-12/L-12F license category from the scope of renewal.
6. As the petitioner was not allowed to operate the liquor vend
after lifting of the Lockdown, the petitioner filed an application, being
CM No.11282/2020 in W.P.(C) 13729/2019, praying for a direction to
WP(C) No.3494/2020 Page 4
the respondents to consider the renewal of its license and allow the
petitioner to run its retail liquor vend till the new terms and conditions
of the L-12/L-12F licenses are framed by the respondents.
7. This Court, noting that the license had otherwise expired on
31.03.2020, allowed the petition and the said application to be
withdrawn, granting liberty to the petitioner to file an appropriate Writ
Petition. The present petition was filed thereafter by the petitioner.
8. This Court vide its order dated 12.06.2020, adjourned the
hearing of the petition to enable the learned counsel for the
respondents to seek instructions on whether the respondents are in the
process of releasing a policy for grant of L-12/L-12F license
categories. On 22.06.2020, the learned Standing Counsel for the
respondents submitted that presently there is no intention of the
respondents to roll out the new policy for grant of such licenses.
9. The respondents thereafter filed a counter affidavit before this
Court, clarifying their stand in relation to the Cabinet Decision dated
11.12.2019 and the policy with respect to the renewal of such licenses
as under:
" 11.1 That there were 125 L-12/L-12F licensees in
Delhi. In September 2019, the Respondent Department
had inspected 41 such departmental stores possessing
such licenses, and it was found that there were large
scale violations by such licensees to the extent that the
said departmental stores were virtually operating as
liquor vends by failing fully to comply with the Terms
and Conditions of the license, in particular the
stipulation that only 10% of the carpet area of the
WP(C) No.3494/2020 Page 5
departmental store, separately earmarked, was to be
used for the sale of Beer/ Wine.
11.2 The desired objective of the L-12/L-12F was
promotion of soft liquor in place of hard liquor and
improving customer satisfaction and experience at the
vend level. Owing to these large scale violations, it was
felt that the desired objective behind the L- 12/L- 12F
licenses was not being met.
11.3 The Council of Ministers vide Cabinet decision No.
2790 dated 11.12.2019 decided to withdraw L-12/L-12F
licenses w.e.f 20.12.2019.
xxx
5. That during the pendency of the said Writ Petition,
the Respondent No. 2 issued Circular dated 05.02.2020
in relation to renewal of liquor licenses for the year
2020-21. In the said Circular, the category of L-12/L-
12F licenses was consciously excluded in view of the
Cabinet Decision dated 11.12.2019 wherein the
Government had decided to withdraw the existing L-
12/L-12F license policy and subsequently bring a
revamped scheme with necessary modifications to plug
all loopholes based on the Government's experience and
the ground reality.
6. That in view of the outbreak of the Covid-19
Pandemic and associated lockdown restrictions, the
Government has been taking every possible effort to
tackle the unprecedented situation, and would consider
framing a new policy for the L-12/L-12F licenses when
the circumstances are more favorable.
7. That it is therefore submitted that the decision to
exclude L-12/L-12F licenses, which were granted in
terms of the earlier policy, from the purview of renewal
for the year 2020-21, is a consequence of the above
policy decision of replacement of the old policy with the
a new one, and it is well-settled that matters in the realm
WP(C) No.3494/2020 Page 6
of pure policy may not be subject to judicial review,
especially in the context of trade in liquor."
10. The learned counsel for the petitioner has placed reliance on
Rule 32 and Rule 42 of the Delhi Excise Rules, 2010 (hereinafter
referred to as the ' Rules' ) to contend that in terms of the said Rules,
the licenses are to be automatically renewed and such renewal of
license can be refused only after issuance of a notice to the holder of
such license and passing an order in writing, recording the objections
of the licensee thereto. He submits that in the present case, no such
order has been passed by the respondents denying the renewal of the
license of the petitioner.
11. The learned counsel for the petitioner further submits that the
Cabinet Decision dated 11.12.2019 and the pursuant order dated
19.12.2019 cannot be sustained as the same suffer from legal malice,
having been passed in colorable exercise of power. He submits that
the power to suspend or cancel the license has been granted to the
respondents under Section 17 of the Act, however, the same is
circumscribed inasmuch as before such action of suspension or
cancellation of license is taken, the respondents have to grant a
reasonable opportunity of hearing to the licensee. In the present case,
the entire action was based on the alleged violation found in the case
of 41 licensees, however, instead of issuing notice of such violations
to such licensees and taking action against them under Section 17 of
the Act, the respondents decided to exercise the powers under Section
WP(C) No.3494/2020 Page 7
16 of the Act, even against the licensees against whom no violation
was found. He submits that such exercise of power would clearly be
arbitrary and unreasonable. He places reliance on the judgment of the
Supreme Court in State of Punjab & Anr. v. Gurdial Singh & Ors.,
(1980) 2 SCC 471.
12. Placing reliance on the judgment of the Supreme Court in
Kerala Bar Hotels Association & Anr. v. State of Kerala & Ors.,
(2015) 16 SCC 421, the learned counsel for the petitioner submits that
a Fundamental Right under Article 19(1)(g) of the Constitution of
India to trade in liquor does exist, provided the State permits any
person to undertake this business. Though such right can be restricted
under Article 19(6), such restriction has to be reasonable. The learned
counsel for the petitioner submits that the exercise of powers by the
respondents in the present case cannot be termed as reasonable and is
therefore liable to be set aside by this Court.
13. Placing reliance on Rule 40 of the Rules, the learned counsel for
the petitioner submits that even where the respondents are to frame a
new policy, the existing license has to be allowed to continue on the
same terms and conditions and on payment of the same license fee.
14. He submits that even otherwise, the petitioner had a legitimate
expectation of renewal of such license and the same cannot be
defeated only because the respondents are reconsidering the policy for
such licenses.
WP(C) No.3494/2020 Page 8
15. On the other hand, the learned Standing Counsel for the
respondents has submitted that there is no Fundamental Right to trade
in liquor since liquor is an article which is res extra commercium. He
submits that the grant of a license to trade in liquor is not a matter of
right but a privilege and therefore, can be curtailed by the State, even
without giving any reasons.
16. On the facts of the case, he submits that the reason for
withdrawal of the earlier policy of grant of L-12/L-12F licenses was
on account of large-scale violations of the policy being observed,
wherein several departmental stores holding such licenses were
brazenly found operating as de facto liquor vends. He submits that the
exercise of power and the resultant decision dated 11.12.2019 was
therefore, on valid grounds, which cannot be interfered with by this
Court. He places reliance on the judgment of the Supreme Court in
Ugar Sugar Works Ltd. v. Delhi Administration & Ors.,(2001) 3
SCC 635 and of the Bombay High Court in Dhariwal Industries Ltd.
v. State of Maharashtra, (2013) 1 Mah LJ 41(Bom).
17. He further submits that this Court also cannot direct the
respondents to frame such a policy for the current year or fix a
timeframe for the same. In support of his submission, he places
reliance on the judgment of the Supreme Court in State of Kerala &
Ors. v. Kandath Distilleries, (2013) 6 SCC 573.
18. Placing reliance on the judgment of this Court in M/s Gidney
Club & Anr. v. Union of India & Ors., AIR 1980 Delhi 33, the
learned Standing Counsel for the respondents submits that partial
WP(C) No.3494/2020 Page 9
prohibition in respect of one complete and distinct category of licenses
across the board is permissible and valid; the same does not require
any notice to be issued to the affected licensee.
19. Relying upon Section 18 of the Act, he submits that no licensee
can claim any right to the renewal of the license. He submits that
therefore, the reliance of the petitioner on Rules 32, 40 and 42 of the
Rules is totally unfounded inasmuch they would become applicable
only where such renewal is otherwise permitted. He submits that
Section 18 of the Act would also negate the case of the petitioner
based on the alleged legitimate expectation. In this regard, he places
reliance on the judgment of the Supreme Court in Shree Sidhbali
Steels Limited & Ors. v. State of Uttar Pradesh & Ors., (2011) 3 SCC
193.
20. I have considered the submissions made by the learned counsels
for the parties. At the outset, reference needs to be drawn to the
judgment of the Supreme Court in Khoday Distilleries Ltd. & Ors. v.
State of Karnataka & Ors., (1995) 1 SCC 574, wherein the Supreme
Court summarized the law on the subject relating to the right to carry
on trade and business in potable liquor, as under:
"60. We may now summarise the law on the subject as
culled from the aforesaid decisions.
(a) The rights protected by Article 19(1) are not
absolute but qualified. The qualifications are stated
in clauses (2) to (6) of Article 19. The fundamental
rights guaranteed in Article 19(1)(a) to (g) are,
therefore, to be read along with the said
WP(C) No.3494/2020 Page 10
qualifications. Even the rights guaranteed under the
Constitutions of the other civilized countries are not
absolute but are read subject to the implied
limitations on them. Those implied limitations are
made explicit by clauses (2) to (6) of Article 19 of
our Constitution.
(b) The right to practise any profession or to carry
on any occupation, trade or business does not
extend to practising a profession or carrying on an
occupation, trade or business which is inherently
vicious and pernicious, and is condemned by all
civilised societies. It does not entitle citizens to
carry on trade or business in activities which are
immoral and criminal and in articles or goods
which are obnoxious and injurious to health, safety
and welfare of the general public, i.e., res extra
commercium, (outside commerce). There cannot be
business in crime.
(c) Potable liquor as a beverage is an intoxicating
and depressant drink which is dangerous and
injurious to health and is, therefore, an article
which is res extra commercium being inherently
harmful. A citizen has, therefore, no fundamental
right to do trade or business in liquor. Hence the
trade or business in liquor can be completely
prohibited.
(d) Article 47 of the Constitution considers
intoxicating drinks and drugs as injurious to health
and impeding the raising of level of nutrition and
the standard of living of the people and
improvement of the public health. It, therefore,
ordains the State to bring about prohibition of the
consumption of intoxicating drinks which obviously
include liquor, except for medicinal
purposes. Article 47 is one of the directive
principles which is fundamental in the governance
of the country. The State has, therefore, the power to
WP(C) No.3494/2020 Page 11
completely prohibit the manufacture, sale,
possession, distribution and consumption of potable
liquor as a beverage, both because it is inherently a
dangerous article of consumption and also because
of the directive principle contained in Article 47,
except when it is used and consumed for medicinal
purposes.
(e) For the same reason, 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 as a beverage and also sell
the licences to the citizens for the said purpose by
charging fees. This can be done under Article
19(6) or even otherwise.
(f)For the same reason, again, the State can impose
limitations and restrictions on the trade or business
in potable liquor as a beverage which restrictions
are in nature different from those imposed on the
trade or business in legitimate activities and goods
and articles which are res commercium. The
restrictions and limitations on the trade or business
in potable liquor can again be both under Article
19(6) or otherwise. The restrictions and limitations
can extend to the State carrying on the trade or
business itself to the exclusion of and elimination of
others and/or to preserving to itself the right to sell
licences to do trade or business in the same, to
others.
(g) When the State permits trade or business in the
potable liquor with or without limitation, the citizen
has the right to carry on trade or business subject to
the limitations, if any, and the State cannot make
discrimination between the citizens who are
qualified to carry on the trade or business.
(h) The State can adopt any mode of selling the
licences for trade or business with a view to
WP(C) No.3494/2020 Page 12
maximise its revenue so long as the method adopted
is not discriminatory.
(i) The State can carry on trade or business in
potable liquor notwithstanding that it is an
intoxicating drink and Article 47 enjoins it to
prohibit its consumption. When the State carries on
such business, it does so to restrict and regulate
production, supply and consumption of liquor which
is also an aspect of reasonable restriction in the
interest of general public. The State cannot on that
account be said to be carrying on an illegitimate
business.
(j)The mere fact that the State levies taxes or fees on
the production, sale and income derived from
potable liquor whether the production, sale or
income is legitimate or illegitimate, does not make
the State a party to the said activities. The power of
the State to raise revenue by levying taxes and fees
should not be confused with the power of the State to
prohibit or regulate the trade or business in
question. The State exercises its two different
powers on such occasions. Hence the mere fact that
the State levies taxes and fees on trade or business
in liquor or income derived from it, does not make
the right to carry on trade or business in liquor a
fundamental right, or even a legal right when such
trade or business is completely prohibited.
(k) The State cannot prohibit trade or business in
medicinal and toilet preparations containing liquor
or alcohol. The State can, however, under Article
19(6) place reasonable restrictions on the right to
trade or business in the same in the interests of
general public.
(l) Likewise, the State cannot prohibit trade or
business in industrial alcohol which is not used as a
beverage but used legitimately for industrial
WP(C) No.3494/2020 Page 13
purposes. The State, however, can place reasonable
restrictions on the said trade or business in the
interests of the general public under Article 19(6) of
the Constitution.
(m) The restrictions placed on the trade or business
in industrial alcohol or in medicinal and toilet
preparations containing liquor or alcohol may also
be for the purposes of preventing their abuse or
diversion for use as or in beverage."
21. A reading of the above would clearly show that the trade in
liquor has been held to be res extra commercium, authorizing the State
to impose limitations and restrictions, which may be different in
nature from those imposed on trade and business in legitimate
activities or goods and articles which are res commercium. The
limitations and restrictions placed on trade and business in potable
liquor can be imposed both under Article 19(6) or otherwise. The
restrictions and limitations can extend to the State carrying on the
trade or business itself, to the exclusion of and elimination of others
and/or to preserving to itself the right to sell licences to do trade or
business in the same, to others. However, when the State permits the
trade and business in liquor, with or without limitations, the citizen
has a right to carry on such trade, subject to limitations, if any, and the
State cannot discriminate between the citizens.
22. In State of Kerala v. Kandath Distilleries (supra), the Supreme
Court reiterated the law as under:
WP(C) No.3494/2020 Page 14
"24. Article 47 is one of the directive principles of State
policy which is fundamental in the governance of the
country and the State has the power to completely prohibit
the manufacture, sale, possession, distribution and
consumption of liquor as a beverage because it is
inherently dangerous to human health. Consequently, it is
the privilege of the State and it is for the State to decide
whether it should part with that privilege, which depends
upon the liquor policy of the State. The State has,
therefore, the exclusive right or privilege in respect of
potable liquor. A citizen has, therefore, no fundamental
right to trade or business in liquor as a beverage and the
activities, which are res extra commercium, cannot be
carried on by any citizen and the State can prohibit
completely trade or business in potable liquor and the
State can also create a monopoly in itself for the trade or
business in such liquor. This legal position is well settled.
The State can also impose restrictions and limitations on
the trade or business in liquor as a beverage, which
restrictions are in nature different from those imposed on
trade or business in legitimate activities and goods and
articles which are res commercium. Reference may be
made to the judgments of this Court in Vithal Dattatraya
Kulkarni v. Shamrao Tukaram Power, P. N. Kaushal &
Others v. Union of India & Others, Krishan Kumar Narula
etc. v. State of Jammu & Kashmir & Others, Nashirwar
and Others v. State of Madhya Pradesh & Others, State of
A. P. & Others v. McDowell & Co and Others and Khoday
Distilleries Ltd. & Others v. State of Karnataka &
Others."
23. It was further held as under:
"27. Liquor policy of the State is synonymous or always
closely associated with the policy of the statute dealing
with liquor or such obnoxious subjects. Monopoly in the
trade of liquor is with the State and it is only a privilege
that a licensee has in the matter of manufacturing and
vending in liquor, so held, by this Court in State of
WP(C) No.3494/2020 Page 15
Maharashtra v. Nagpur Distilleries (2006) 5 SCC 112.
The courts are also not expected to express their opinion
as to whether at a particular point of time or in a
particular situation, any such policy should have been
adopted or not. The 1998 policy has life only in that year
and if any rights have accrued to any party, that have to
be adjudicated then and there. The writ petition was
moved only in the year 2000, by then, policy had been
changed because the 1999 liquor policy was total ban, so
also subsequent liquor policies. It is trite law that a court
of law is not expected to propel into " the unchartered
ocean" of State' s policies. The State has the power to
frame and reframe, change and rechange, adjust and
readjust policy, which cannot be declared as illegal or
arbitrary on the ground that the earlier policy was better
and suited to the prevailing situations. The situation
which exited in the year 1998 had its natural death and
cannot be revived in the year 2013, when there is total
ban."
24. In Kerala Bar Hotels Association (supra), the Supreme Court,
while dismissing the challenge to the Abkari Policy for the year 2014-
2015 of the State of Kerala, observed as under regarding the nature of
the right to trade in liquor:-
"32. We disagree with the submissions of the
respondents that there is no right to trade in liquor
because it is res extra commercium. The interpretation
of Khoday [Khoday Distilleries Ltd. & Ors. v. State of
Karnataka & Ors., (1995) 1 SCC 574] put forward by
Mr Sundaram is, in our opinion, more acceptable. A
right under Article 19(1)(g) to trade in liquor does exist
provided the State permits any person to undertake this
business. It is further qualified by Articles 19(6) and 47.
WP(C) No.3494/2020 Page 16
The question, then, is whether the restrictions imposed
on the appellants are reasonable.
33. We have had the privilege and indeed the pleasure
hearing the extremely erudite arguments of a galaxy of
Senior Counsel on both propositions on the
interpretation of our Constitution and the laws
pertaining to the right to carry on trade or business in
potable liquor by this Court. In Krishan Kumar
Narula [Krishan Kumar Narula v. State of J&K, AIR
1967 SC 1368] , the Constitution Bench was of the
opinion that dealing in liquor is a legitimate business,
although the State can impose reasonable restrictions. A
few years later, however, in Khoday [Khoday
Distilleries Ltd. & Ors. v. State of Karnataka & Ors.,
(1995) 1 SCC 574] , the concept of res extra
commercium came to be accepted and applied to the
business of manufacture and trade in potable liquor.
This Court, however, did not place any embargo or
constraints on the State to transact this business.
History has painstakingly made it abundantly clear that
prohibition has not succeeded. Therefore, strict State
regulation is imperative. The State of Kerala had in the
past forayed into prohibition, but found it to be
unimplementable. Thereafter, keeping in mind the heavy
consumption of alcohol within the territory, it has
experimented with other measures to user temperance if
not abstemiousness. So far as this trade is concerned,
Article 47 of the Constitution places a responsibility on
every State Government to at least contain if not curtail
consumption of alcohol. The impugned policy, therefore,
is to be encouraged and is certainly not to be struck
down or discouraged by the courts. How this policy is to
be implemented, modified, adapted or restructured is the
province of the State Government and not of the
judiciary. The consumption of tobacco as well as liquor
is now undeniably deleterious to the health of
humankind. Advertising either of these intoxicants has
been banned in most parts of the world, the avowed
WP(C) No.3494/2020 Page 17
purpose being to insulate persons who may not have
partaken of this habit from being seduced to start.
Banning public consumption of either of these inebriants
cannot be constrained as not being connected in any
manner with the effort to control consumption of
tobacco, or as we are presently concerned, with alcohol.
Vulnerable persons, either because of age or proclivity
towards intoxication or as a feature of peer pressure,
more often than not, succumb to this temptation.
Banning public consumption of alcohol, therefore, in
our considered opinion, cannot but be seen as a positive
step towards bringing down the consumption of alcohol,
or as preparatory to prohibition.
xxx
38. We now move to the arguments predicated on Article
19 of the Constitution. We have already noted that the
business in potable liquor is in the nature of res extra
commercium and would, therefore, be subject to more
stringent restrictions than any other trade or business.
Thus, while the ground of Article 19(1)(g) can be raised,
in light of the arguments discussed with regard to
Article 14, it cannot be said that the qualification on
that right is unreasonable."
25. This now brings this Court to the provisions of the Delhi Excise
Act, 2009. Section 11 of the Act contains provisions on prohibition to
trade in liquor, except in accordance with the terms and conditions of
a license or letter of intent or permit granted under the Act and the
Rules framed thereunder. The State having decided, as a matter of
policy, that it would not be issuing any license under the L-12/L-12F
categories, as of now, applying the ratio of the above judgments, the
petitioner cannot claim grant of such license as a matter of right.
WP(C) No.3494/2020 Page 18
26. This Court in exercise of its powers of judicial review cannot
interfere with the policy decisions of the State, unless the same can be
faulted on grounds of mala fide, unreasonableness, arbitrariness or
unfairness. As held by the Supreme Court in Ugar Sugar Works Ltd.
(supra), "The courts are not expected to express their opinion as to
whether at a particular point of time or in a particular situation any
such policy should have been adopted or not. It is best left to the
discretion of the State."
27. In State of M.P. & Ors. v. Nandlal Jaiswal & Ors., (1986) 4
SCC 566, the Supreme Court, in relation to the liquor policy of the
State, had observed as under:-
"34. But, while considering the applicability of Article
14 in such a case, we must bear in mind that, having
regard to the nature of the trade or business, the Court
would be slow to interfere with the policy laid down by
the State Government for grant of licences for
manufacture and sale of liquor. The Court would, in
view of the inherently pernicious nature of the
commodity allow a large measure of latitude to the
State Government in determining its policy of
regulating, manufacture and trade in liquor. Moreover,
the grant of licences for manufacture and sale of liquor
would essentially be a matter of economic policy where
the Court would hesitate to intervene and strike down
what the State Government has done, unless it appears
to be plainly arbitrary, irrational or mala fide. We had
occasion to consider the scope of interference by the
Court under Article 14 while dealing with laws
relating to economic activities in R.K. Garg v. Union of
India [(1981) 4 SCC 675 : 1982 SCC (Tax) 30 : AIR
WP(C) No.3494/2020 Page 19
1981 SC 2138 : (1982) 1 SCR 947] . We pointed out in
that case that laws relating to economic activities
should be viewed with greater latitude than laws
touching civil rights such as freedom of speech,
religion, etc. We observed that the legislature should
be allowed some play in the joints because it has to
deal with complex problems which do not admit of
solution through any doctrinaire or strait-jacket
formula and this is particularly true in case of
legislation dealing with economic matters, where,
having regard to the nature of the problems required to
be dealt with, greater play in the joints has to be
allowed to the legislature. We quoted with approval the
following admonition given by Frankfurter, J.
in Morey v. Dond [354 US 457] :
" In the utilities, tax and economic regulation
cases, there are good reasons for judicial self-restraint
if not judicial deference to legislative judgment. The
legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to
reconstruct. When these are added to the complexity of
economic regulation, the uncertainty, the liability to
error, the bewildering conflict of the experts, and the
number of times the judges have been overruled by
events -- self-limitation can be seen to be the path to
judicial wisdom and institutional prestige and
stability."
What we said in that case in regard to legislation
relating to economic matters must apply equally in
regard to executive action in the field of economic
activities, though the executive decision may not be
placed on as high a pedestal as legislative judgment
insofar as judicial deference is concerned. We must not
forget that in complex economic matters every decision
is necessarily empiric and it is based on
experimentation or what one may call ' trial and error
method' and, therefore, its validity cannot be tested
WP(C) No.3494/2020 Page 20
on any rigid „a priori‟ considerations or on the
application of any strait-jacket formula. The Court
must while adjudging the constitutional validity of an
executive decision relating to economic matters grant a
certain measure of freedom or ' play in the joints' to
the executive. " The problem of government" as
pointed out by the Supreme Court of the United States
in Metropolis Theatre Co. v. State of Chicago [57 L Ed
730] "
" are practical ones and may justify, if they do not
require, rough accommodations, illogical, it may
be, and unscientific. But even such criticism
should not be hastily expressed. What is best is
not discernible, the wisdom of any choice may be
disputed or condemned. Mere errors of
government are not subject to our judicial review.
It is only its palpably arbitrary exercises which
can be declared void."
The Government, as was said in Permian Basin Area
Rate cases [20 L Ed (2d) 312], is entitled to make
pragmatic adjustments which may be called for by
particular circumstances. The Court cannot strike
down a policy decision taken by the State Government
merely because it feels that another policy decision
would have been fairer or wiser or more scientific or
logical. The Court can interfere only if the policy
decision is patently arbitrary, discriminatory or mala
fide. It is against the background of these observations
and keeping them in mind that we must now proceed to
deal with the contention of the petitioners based on
Article 14 of the Constitution."
WP(C) No.3494/2020 Page 21
28. In Kerala Bar Hotels Association (supra), the Supreme Court,
while testing the policy of grant of licenses only to five-star hotels in
the State of Kerala, observed as under:-
"41. There has been abundance of litigation on the
question of the courts' interference in State policy.
Judicial review is justified only if the policy is arbitrary,
unfair or violative of fundamental rights. Courts must be
loathe to venture into an evaluation of State policy. It
must be given a reasonable time to pan out. If a policy
proves to be unwise, oppressive or mindless, the
electorate has been quick to make the Government
aware of its folly. As was recently held by a three-Judge
Bench of this Court in Census Commr. v. R.
Krishnamurthy [Census Commr. v. R. Krishnamurthy,
(2015) 2 SCC 796 : (2015) 1 SCC (L&S) 589] : (SCC p.
809, para 33)
"33. From the aforesaid pronouncement of law, it is
clear as noonday that it is not within the domain of
the courts to embark upon an enquiry as to whether
a particular public policy is wise and acceptable or
whether a better policy could be evolved. The court
can only interfere if the policy framed is absolutely
capricious or not informed by reasons or totally
arbitrary and founded ipse dixit offending the basic
requirement of Article 14 of the Constitution. In
certain matters, as often said, there can be opinions
and opinions but the court is not expected to sit as
an appellate authority on an opinion."
29. The respondents in their counter affidavit have asserted that in
September 2019, it had inspected 41 out of 125 L-12/L-12F
licensees/departmental stores, and it was found that there were large-
scale violations by such licensees, to the extent that the said
WP(C) No.3494/2020 Page 22
departmental stores were virtually operating as liquor vends by failing
wholly to comply with the terms and conditions of the license, in
particular the stipulation that only 10% of the carpet area of the
departmental store, separately earmarked, was to be used for the sale
of Beer/Wine. The Council of Ministers vide the Cabinet Decision
dated 11.12.2019 decided to close all L-12/L-12F licenses of the
departmental stores and issue " revised terms and conditions for grant
of new L-12/L-12F licenses to be framed by the Excise Department in
the next Excise Policy."
30. Based on the above decision, the license of the petitioner was
sought to be withdrawn vide order dated 19.12.2019. The said
decision was however, stayed by this court vide its order dated
24.12.2019 passed in W.P.(C) 13729/2019, filed by the petitioner, and
the petitioner was able to complete the full tenure of its license. The
question of whether the respondents, on the basis of the above
decision, could have taken recourse to the powers vested in it under
Section 16 of the Act, therefore, has been rendered academic in nature.
31. Even otherwise, I find no merit in the submission of the learned
counsel for the petitioner of this being a colorable exercise of power
by the respondents. Section 16 of the Act is reproduced hereunder:-
" 16. Power to withdraw licence and permit.-
(1) Whenever the authority which granted a licence or
permit under this Act, considers that such licence or permit
should be withdrawn for any reason, it may do so on
expiry of fifteen days‟ notice of its intention to do so or
forthwith for reasons to be recorded.
WP(C) No.3494/2020 Page 23
(2) If any licence or permit is withdrawn, the licensee or
the permit holder shall be refunded any fee paid in
advance or deposit made by the licensee or the permit
holder in respect thereof after deducting the amount
recoverable by the Government."
32. Section 17 of the Act, on the other hand, provides as under:-
" 17. Power to suspend or cancel licence and permit.-
(1) Subject to such restrictions as the Government may
prescribe, the authority granting any licence or permit
under this Act may suspend or cancel it in the following
circumstances after giving reasonable opportunity of being
heard -
(a) if the licence or permit is transferred or sublet by
the holder thereof without the permission of the licensing
authority;
(b) if any excise revenue payable by the holder thereof
is not duly paid;
(c) in the event of any breach by the holder of such
licence or permit or by his servant, or by any one acting on
his behalf, with his express or implied permission, of any
of the terms and conditions of such licence or permit;
(d) if the holder of licence or permit or his agent or
employee is convicted of an offence punishable under this
Act or any other law for the time being in force, relevant
and connected with excise matters relating to excise
revenue or of any cognizable and non-bailable offence
under any other relevant law;
(e) if the purpose for which the licence or permit was
granted ceases to exist;
WP(C) No.3494/2020 Page 24
(f) if the licence or permit has been obtained through
mis-representation or fraud.
(2) When a licence or permit is cancelled under sub-
section (1), the aforesaid authority may cancel any other
licence or permit granted to such person under this Act or
under any other law relating to excise revenue.
(3) In the case of cancellation or suspension of licence
under sub-section (1), the fee payable for the balance of
the period for which any licence would have been current
but for such cancellation or suspension, may be recovered
from the ex-licensee as excise revenue.
(4) The holder of a licence or permit shall neither be
entitled to any compensation for the cancellation or
suspension thereof nor to refund of any fee paid or deposit
made in respect thereof."
33. A conjoint reading of the above two provisions would show
that, while under Section 17 of the Act, action is contemplated and
provided for against a particular licensee or permit holder for the
circumstances provided in the said Section, Section 16 is not aimed
against a particular licensee or permit holder but a particular specie of
license or permit. Resort to Section 16 is taken when there is no
allegation of particular breach against a particular licensee or permit
holder. It is for this reason that under sub-section (2) of Section 16, the
licensee or permit holder is to be refunded the fee paid in advance or
deposit made. Action under Section 17 being on default of the license
or permit holder and being in personam, not only is hearing to be
granted to such license holder before suspension or cancellation of the
licence, but on such cancellation or suspension of license, the licensee
WP(C) No.3494/2020 Page 25
is not entitled to any refund of fee paid or deposit made in respect of
such license.
34. In the present case, though the Cabinet Decision was based on
an inspection and alleged violations found only in respect of 41
licensees, it was also observed by the respondents that there were
serious flaws in the terms and conditions of the license itself and that
the same needed to be reframed. A decision was therefore taken to
cancel all L-12/L-12F licences and not grant the same till such terms
and conditions are redrafted. This would be a decision falling within
the ambit and scope of Section 16 of the Act, as it is not aimed at any
individual defaulter but is a policy decision.
35. As far as the failure of the respondents to issue or renew the
L-12/L-12F licenses for the year 2020-21 is concerned, the
respondents in their counter affidavit have stated that such licenses
were consciously excluded in view of the Cabinet Decision dated
11.12.2019, wherein it had been decided to " bring a revamped
scheme with necessary modifications to plug all loopholes based on
Government' s experience and the ground reality" . It was further
asserted that in view of the outbreak of the COVID-19 pandemic and
the associated Lockdown restrictions, the Government has been
taking every possible effort to tackle the unprecedented situation and
would consider framing a new policy for the L-12/L-12F licenses
when the circumstances were more favorable.
36. The decision of the respondents not to issue/renew L-12/L-12F
licenses for now in absence of formulation of the revised terms and
WP(C) No.3494/2020 Page 26
conditions and the earlier terms and conditions of L-12/L-12F licenses
being found lacking in some manner, cannot be stated to be perverse
or so unreasonable so as to warrant any interference by this Court in
its exercise of powers of judicial review. As stated above, this would
be matter of policy decision, which is normally not to be interfered
with, unless found to be mala fide or wholly arbitrary. No such case
has been made out by the petitioner. In fact, the State would be failing
to discharge its duty under Article 47 of the Constitution if, without
addressing the shortcomings in its policy, it was to grant/renew such
licenses.
37. As far as the timing of such policy is concerned, again, keeping
in view that the case in hand relates to trade in liquor, it is not for this
Court to issue any direction to the respondents to expedite the process
of framing the revised terms and conditions for such licenses.
38. As far the plea of the petitioner based on a perceived vested
right of renewal is concerned, the same is stated to be rejected. Section
18 of the Act completely negates any such claim and is quoted
hereinunder:-
"18. Bar to the right of renewal and to compensation. -
No person to whom a licence or permit has been
granted, shall be entitled to claim any renewal thereof,
and no claim shall lie for damages or otherwise in
consequence of any refusal to renew a licence or permit
on the expiry of the period for which the same remains
in force."
WP(C) No.3494/2020 Page 27
39. The reliance of the petitioner on Rule 32 and 42 of the Rules is
also unfounded. The same are reproduced hereunder:-
" 32. Class of licences and authorities to grant and renew
licences.- (1) Subject to the provisions of sub-rule (2), the
following classes of licences may be granted and renewed by
authorities noted against each, on payment of prescribed fee:-
S.No Form Details of Authority Authority
Licenses empowered to empowered to
grant renew
xxx xxx xxx xxx xxx
17 L-12 Retail vend Deputy Deputy
of Beer and Commissioner Commissioner
Wine in
Department
al Store
18 L-12F Retail vend Deputy Deputy
of Foreign Commissioner Commissioner
Beer and
Wine in
Department
al Store to
the holder
of licence in
form L-12.
42. Notice to be issued when it is decided not to renew
licence or permit. - Whenever it is proposed not to renew a
licence or permit, which is renewable and granted on a
fixed fee, the authority competent to renew it shall give
notice to the holder of such licence or permit, record
objections, if any, put forward by the licensee or the permit
holder and pass an order in writing. The licensee or the
permit holder may be given, an authenticated copy of such
order free of cost."
WP(C) No.3494/2020 Page 28
40. Rule 32 of the Rules merely prescribes the Authority
empowered to grant or renew a license. It does not create a right to
renewal.
41. Similarly, Rule 42 of the Rules would be attracted only where
" a" particular license or permit, " which is renewable" , is proposed
not to be renewed. That is to say, where, though renewable under the
policy of the State and under the Rules, if a particular license of a
particular licensee is proposed not to be renewed, a notice shall be
issued to that particular license-holder and after considering his
objections, a decision in writing shall be taken by the Authority
competent to renew such license. It would have no application where
the category of licenses, as a class, is decided by the State not to be
renewed.
42. This Court in M/s Gidney Club (supra), rejected a similar
challenge, observing as under:-
"(2) The Delhi Liquor License Rules, 1976 were made
before the decision of the Delhi Administration was taken in
1977 to bring about prohibition in Delhi. Rule 13, therefore,
does not deal with non-renewal of the license on the ground
of the prohibition policy. In the absence of prohibition
policy, licensees whose licenses are not to be renewed have
to be individually noticed and heard before an order of
refusal to renew is passed. But this procedure has no
application when a general policy of prohibition is adopted
and the decision not to renew the licenses of the Club is not
based on any consideration relating to the particular Club,
but is based on a general policy. No question of giving
notice to the individual Clubs and hearing their objections
arises when a policy decision of general application is the
WP(C) No.3494/2020 Page 29
reason for non-renewal of L-19 licenses of all the Clubs.
The first answer to this contention is that Rule 13 has no
application when non-renewal is based on the policy of
prohibition."
43. The reliance of the petitioner on Rule 40 of the Rules is also
unfounded. Sub-Rule (1) of Rule 40, on which reliance has been
placed, is reproduced here-under:-
"40. Licence to continue after its expiry, provided licence
fee is paid. -
(1) Where a licence is granted otherwise than by auction
or tender it may be continued after the period of its expiry
in respect of the same premises, with the permission of the
licensing authority, provided that the requisite licence fee
has been paid by the licensee. However, when any such
licence has been determined by reason of surrender,
cancellation or order of non-renewal or other cause or
where it is proposed to issue licence in respect of the
premises to persons not previously licensed, a new licence
may be issued, provided --
(a) a new licence is not required on account of the addition
of or removal of a partner on the application of all the
partners or the change of a representative of a company or
society;
(b) a licence continued to the legal heirs of a deceased
licensee for the remaining period of the licence shall not
be deemed to be a new licence."
44. A reading of the above Rule would make it abundantly clear
that the license is to continue after the period of its expiry only with
the permission of the licensing Authority. In the present case, the
WP(C) No.3494/2020 Page 30
petitioner has no such permission and in fact, cannot have any such
permission because of the categorical stand of the respondents that till
issuance of the revised terms and conditions, no such license shall be
granted/renewed.
45. In view of the above, I find no merit in the present petition. The
same is dismissed. There shall be no order as to costs.
NAVIN CHAWLA, J
September 15, 2020/Arya
WP(C) No.3494/2020 Page 31
