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CASE NO.:

Appeal (civil) 3279 of 2005

PETITIONER:

Ashok Lanka & Anr.

RESPONDENT:

Rishi Dixit & Ors.

DATE OF JUDGMENT: 11/05/2005

BENCH:

N. Santosh Hegde & S.B. Sinha

JUDGMENT:

J U D G M E N T

I.A. NOS. 1 & 2

IN &

[Arising out of SLP (Civil)\005\005\005\005.of 2005 (CC No.4529]

W I T H

CIVIL APPEAL NO. OF 2005

[Arising out of SLP.(Civil) \005\005\005\005. of 2005 (CC 4569)]

I.A. NO. 1 IN & C.A. NO OF 2005

[Arising out of SLP (Civil) .\005\005\005../2005 (CC No.4571)]

IA No.1 IN & C.A. No. OF 2005

[Arising out of SLP (Civil)\005\005\005 \005/2005 (CC No.4579)]

IA No. 1 IN & C.A. NO. OF 2005

[Arising out SLP (Civil)\005\005\005 \005/2005 (CC No.4598)]

C.A. NO. OF 2005

[Arising out SLP (Civil) No. 7802 of 2005]

C.A. NO. OF 2005

[Arising out of SLP (Civil) No.8575 of 2005]

IA. NOS. 1 & 2 IN & C.A. NO. OF 2005

[Arising out of SLP (Civil)\005\005..\005./2005 (CC No.5051)]

C.A. NO. OF 2005

[Arising out of SLP(Civil) No.10422 of 2005]

C.A NO. OF 2005

[Arising out of SLP (Civil) No.10457 of 2005]

C.A. NO. OF 2005

[Arising out of SLP (Civil) No.10652 of 2005]

C.A. NO. OF 2005

[Arising out of SLP (Civil) No. 10653 of 2005]

IA NO. 1 IN & C.A. OF 2005

[Arising out of SLP (Civil)\005\005\005\005/2005 (CC No.5432)]

IA NO.1 IN & C.A. OF 2005

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[Arising out of SLP (Civil)\005..\005.\005/2005 (CC No.5433)]

S.B. SINHA, J :

Permission to file special leave petitions is granted.

Leave granted in all the special leave petitions.

INTRODUCTION

The trade in country/foreign liquor is said to be res extra

commercium. A citizen does not have any fundamental right to deal

therewith. The State alone has the exclusive privilege to deal in liquor from

manufacture to distribution and from sale to consumption. It is for the State

to part with its exclusive privilege for a price which is loosely called as

'excise duty'. The power of the State to control and regulate the trade in

liquor is envisaged under Entry 8, List II of the Seventh Schedule of the

Constitution of India. It may also impose excise duty as also countervailing

duty in exercise of its legislative power under Entry 51, List 2 of the Seventh

Schedule of the Constitution.

ACT AND THE RULES :

Trade in Country/Foreign Liquor is governed by the Chhattisgarh

Excise Act, 1915 ('the Act', for short).

Section 7(e) of the Act provides that the State Government may, by

notification, for the whole or for any specified part of the State, delegate to

the Chief Revenue authority or the Excise Commissioner all or any of its

powers under the said Act except the power conferred by Section 62 to make

rules.

Section 62 of the Act empowers the State to frame rules for the

purpose of carrying out the provisions thereof. Without prejudice to the

generality of the said provisions, the State Government, inter alia, however,

may make rules :

(e) regulating the periods and localities for which, and

the persons or classes of persons to whom, licences

for the wholesale or retail vend of any intoxicant

may be granted, and regulating the number of such

licences which may be granted in any local area;

(f) prescribing the procedure to be followed and the

matters to be ascertained before any licence for

such vend is granted for any locality;

(g) regulating the amount, time, place and manner of

payment of any duty or fee or tax or penalty;

(h) prescribing the authority by, the form in which,

and terms and conditions on and subject to which

any licence, permit or pass shall be granted, any by

such rules, among other matters \026

(i) fix the period for which any licence, permit

or pass shall continue in force,

(ii) prescribe the scale of fees or the manner of

fixing the fees payable in respect of any

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such licence, permit or pass.

(iii) prescribe the amount of security to be

deposited by holders of any licence, permit

or pass for the performance of the conditions

of the same,

(iv) prescribe the accounts to be maintained and

the returns to be submitted by licence-

holders, and

(v) prohibit or regulate the partnership in, or the

transfer of, licenses."

Section 63 of the Act provides that all rules made and notifications

issued thereunder shall be published in the Official Gazette, and shall have

effect from the date of such publication or from such other date as may be

specified in that behalf.

On or about 15.3.2002, the State Government in exercise of its

aforementioned power made rules known as 'Chhattisgarh Excise Settlement

of Licences for Retail Sale of Country/Foreign Liquor Rules, 2002' ('the

Rules', for short). "Excise Year" has been defined in the Rules to mean the

financial year commencing from 1st April to 31st March of the calendar year.

Rule 4 provides for formation of groups of liquor shops; clause (iii) whereof

prohibits an applicant/firm/company from obtaining licences for more than

two groups of shops. Rule 5 provides for the period of licence which would

be for an excise year or part thereof. Rule 8 provides for procedure for grant

of licence, which reads as under :

"Procedure for grant of licence \026

(a) Whenever a new licence is proposed to be granted

in an area or locality, the licensing authority shall

invite the applications for this purpose after giving

wide publicity through daily newspapers having

circulation in that area.

(b) A list of shops of country/foreign liquor for which

the licensing authority proposes to grant licence

shall be exhibited along with shopwise licence fee

minimum monthwise guaranteed quantity, security

amount, and annual quantity in office of Collector,

Tehsil, District Excise Officer/Asstt.

Commissioner excise and Deputy Commissioner

Excise (Flying squad)

(c) Application for grant of license with application

fee shall be submitted in the prescribed form as

appended to these rules as annexure-4.

(d) The last date to be fixed for the receipt of

application shall not be earlier than ten days with

effect from the date of publication of the

advertisement in the newspapers."

Eligibility conditions for applicant are laid down in Rule 9 which read

as follows :

"Eligibility conditions for applicant. \026 The applicant has

to fulfil the following conditions for obtaining the licence

for shop/Group of shops of Country/foreign liquor.

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(a) Should be a citizen of India or a partnership firm

whose partners are citizens of India. No change in

partnership shall be allowed after settlement of

shop(s) /group of shops except with the permission

of the Excise Commissioner.

(b) Should be above 21 years of age.

(c) Should not be a defaulter/blacklisted or debarred

from holding an excise licence under the

provisions of any rules made under the Act.

(d) Has to submit an affidavit duly verified by public

notary as proof of the following namely :

(1) That he possesses or has an arrangement for

taking on rent suitable premises in that

locality for opening the shops in accordance

with the rules.

(2) That he possesses good moral character and

have no criminal background and have not

been convicted of any offence punishable

under the Act or Narcotic Drugs And

Psychotropic Substances Act, 1985 or any

other law for the time being in force or any

other cognizable and non-bailable offence.

(3) That in case he is selected as licensee he will

furnish a certificate issued by

Superintendent of Police of the district of

which he is the resident, showing that he as

well as his family members possess good

moral character and have no criminal

background or criminal record, within thirty

days of grant of licence.

(4) That he shall not employ any salesman or

representative who has criminal background

as mentioned in clause (iii) or who suffer

from any infectious or contagious disease or

is below 21 years of age or a woman.

(5) That no government dues are outstanding

against him."

Rule 10 envisages formation of a District Level Committee; whereas

Rule 11 provides for selection of licensees, clauses (b) and (c) whereof read

thus :

"(b) The said committee shall select licensees from the

list of applicants. In case more than one applicants

are found suitable for any particular group of shops

the committee shall select the licensee for such

group of shops by lottery. In case the selected

applicant does not deposit the required amount

according to rule 13 and does not fulfil the

prescribed formalities or is unable to arrange

suitable premises for the shops within stipulated

period, the licensing authority shall cancel the

allotment and take steps for resettlement of the

shops/group of shops..

(c) In case thee is no application for a particular group

of shops or no applicant is found suitable for a

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group of shops the licensing authority shall take

immediate steps for resettlement as per procedure

laid down in rule 8."

Rule 13 provides for payment of licence fee and security amount,

which reads as under :

"Payment of licence fee and security amount \026 In case an

applicant is selected as licensee, he shall deposit one

month's amount of license fee and the security amount

within three days of being informed of his selection. If

he fails to deposit the amount of one month licence fee

and security amount within prescribed period, his

selection shall stand cancelled and the said licensee shall

be debarred from holding any excise licence in future,

anywhere in the State and his applications fee shall also

stand forfeited. A consolidated list of such defaulters

under this rule, along with their complete addresses shall

be forwarded by the District Excise officer/Assistant

Commissioner to the Excise Commissioner, who will

circulate the consolidated list of the State to all the

licensing authorities of the State."

Rule 23 provides for suspension and cancellation of the licence, in the

event any of the conditions laid down therein is violated; clause (c)

whereof is as follows :

"If the affidavit submitted by the licensee at the time of

application is found incorrect and assertions made therein

are found to be false.

In terms of the provisions of the said Rules, a format in which an

application is to be filed is prescribed providing for filing of an affidavit

duly verified by a public notary.

AMENDMENT IN THE RULES AND CIRCULARS ISSUED BY THE

COMMISSONER OF EXCISE :

On or about 9.3.2004, clause (c) of Rule 8 of the Rules was

amended in the following terms :

"(c) the application form and affidavit as per format

prescribed by the Excise Commissioner, along with

application fee fixed under Rule 6 shall be submitted to

the licensing authority of concerning district or grant of

license for retail shops/group of country/foreign liquor,

within the stipulated date and time."

Pursuant to or in furtherance of the said power conferred upon him,

the Commissioner of Excise prescribed formats of application form and

affidavit to be furnished with the application for country/foreign liquor

shops/groups.

On or about 14.2.2004, a circular came to be issued by the

Commissioner of Excise whereby and whereunder it was directed that the

applicants were not required to file affidavits along with their applications

as was laid down in the Rules; but such affidavits may be filed after their

selection was made. Sub-clauses (1), (2) of clause 8 and clause 22 of the

said circular read as follows :

"8. APPLICATION FOR ALLOTMENT OF

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COUNTRY/FOEIGN LIQUOR SHOP/GROUP :

(1) Application form for the year 2005-06 for

country/foreign liquor retail shops/groups which has been

amended and published in notification issued by this

office is being enclosed and sent. Application for

country/foreign liquor retail shop can be made by any

applicant in the specified enclosed format only. Separate

applications will be accepted for every group.

Application fee in accordance with the cost price of the

concerned group should be in the form of bank

draft/bankers cheque/bank's cash order form a

nationalized bank/scheduled commercial bank or challan

received after submitting the cash in the treasury is

mandatory to be produced in original with the

application. Applicant should not make any change or

amendment in the format of application form and

application form will be accepted in prescribed format

only.

(2) For the year 2005-06, the Select Committee

will make a draw using a computer and select first,

second and third applicant. It will be mandatory for

those selected first, second and third applicants to

immediately produce an affidavit duly verified by a

notary. Selected applicants should not make any changes

or amendments to the format of the affidavit and the

affidavit will be accepted in the specified format only.

Format of the affidavit will be in accordance with the

known format of 2004-05."

"22. AMENDMENT IN THE CHHATTISGARH

EXCISE SETTLEMENT OF LICENCES FOR RETAIL

SALE OF COUNTRY/FOREIGN LIQUOR RULES,

2002 :

For settlement of retail shops/groups of

country/foreign liquor for the year 2005-06, under

application system, aforesaid directions are being issued

and accordingly proceedings shall be ascertained, even

then where amendment is to be done in the Chhattisgarh

Excise Settlement of Licences for retail sale of

country/foreign liquor Rules, 2002, for that notification

shall be sent severally. Similarly, for licence fees

prescribed for the year 2005-06 for licence of F.L. 2 &

F.L. 3, notification shall be sent separately."

TENDER PROCESS :

A notice inviting applications for grant of licence under the Act and

the Rules was issued on 14.2.2005, clauses (2), (3), (4), (5) and (9) whereof

are as under :

"2. As per the above programme, the Collector concerned

shall publish the notice in his district on the date fixed,

wherein in respect of retail country/foreign liquor

shop/group, the minimum surety amount, duty amount,

amount of licence fee annual revenue, 1/12th part of

licence fee and 1/12th part of the duty amount on

minimum surety amount and one month licence fee shall

be mentioned.

3. For allotment of the country/foreign liquor retail

shops/groups, only those persons/firms/companies shall

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submit the applications who are entitled for getting the

excise licence under the C.G. Excise Act, 1915.

4. The applicants for allotment of country/foreign liquor

retail shops/groups for the year 2005-06 shall get the

prescribed proforma from the office of Assistant Excise

Commissioner/District Excise Officer. On the prescribed

proforma only, the applicant by typing or handwriting

regarding the country/foreign liquor retail shop of the

concerned district shall apply. For each group, the

separate application will be accepted. Along with the

application form, as per the cost, the application fees

through the Draft/Bankers cheque/Cash Order of Bank of

Nationalised Bank/Scheduled Commercial Bank or by

cash, shall be submitted in the Treasury through original

challan. The applicant shall not make any change or

amendment in the prescribed proforma and the

applications in prescribed form will be accepted only.

5. For the year 2005-06, the selection of first, second and

third candidates will be made by computer through

lottery system and they have to submit immediately the

affidavit certified by the notary. The selected candidate

shall not make any change or amendment in the affidavit

and the affidavit will only be accepted in the prescribed

form.

9. The allotment of shops/groups and their running for the

year 20065-06 shall govern as per the C.G. Excise Act,

1915 and the rules framed thereunder and the

Chhattisgarh Excise Settlement of Licences for retail sale

of country/foreign liquor Rules, 2002 and the amended

terms and conditions and the orders of the State

Govt./Commissioner, Excise/Collector/Assistant Excise

Commissioner/District Excise Officer."

Pursuant to or in furtherance of the said notice inviting applications,

about 2,64,703,. applications were filed out of which about 3000

applications were rejected. Selection process began in different districts by

the District Level Committees between the period from 9.3.2005 and

16.3.2005.

The Excise Rules were further amended on or about 22.3.2005 in the

following terms :

"Raipur, the 22nd March, 2005

NOTIFICATION

No.F-10/6/2005/CT/V(4).-In exercise of the powers

conferred under Section (d), (e), (f), (g) and (h) of sub-

clause(2) of sub-clause (3) of clause 62 of the

Chhattisgarh Excise Act, 1915 (No.II of 1915), the State

Government hereby makes the following amendment in

the Chhattisgarh Excise Settlement of Licenses for retail

sale of Country/Foreign Liquor Rules, 2002, namely :

AMENDMENT

In the said rules, in rule \026 8, -

(i) The existing clause (C) shall be substituted by the

following clause (C), namely :-

(C) The application form under rule-6 along

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with prescribed application fee shall be

submitted to the Licensing Authority of the

concerned district within prescribed date &

time for grant of licence for retail

shop/group of country/foreign liquor in the

proforma prescribed by the Excise

Commissioner.

(ii) After clause (C) the following clause (C-1) shall

be added, namely :

(C-I) The first, second & third applicant selected

for retail shop/group of country/foreign

liquor by the selection committee after

lottery drawn by computer must submit

affidavit verified by the Notary in the

prescribed proforma the next day during

office hours.

2. This amendment shall be effective for the

settlement of Licenses for retail sale shops of

Country/Foreign liquor for the year 2005-06."

WRIT PROCEEDINGS :

The instant case originally arose out of a public interest litigation in

Jitendra Pali vs. State of Chhattisgarh (WP No.706 of 2005). Subsequently,

the other petitions came to be filed by candidates including Rishi Dixit vs.

State of Chhattisgarh (WP No. 956 of 2005). Both the writ petitions were

heard together and separate judgments were delivered in each of them. The

judgment in WP No.956 of 2005 came to be passed by the High Court on

31.5.2005, which is the subject matter of appeal arising out of SLP (Civil)

CC No 4529; while the judgment and order in WP No. 706 of 2005 came to

be passed by the High Court on 8.4.2005 which is the subject matter of

appeal arising out of SLP (Civil) No.8575 of 2005.

Originally in the said writ application the changes made in the

selection process, namely, from manual to computer was in question; but an

application for amendment of the writ petition was made on 9.3.2005

wherein it was contended that the selection process adopted by the State was

vitiated, inter alia, on the premise that no affidavit was filed by the

applicants as was mandatorily required by Rule 9 of the Rules.

The contention raised on behalf of the State after the amendment

dated 22.3.2005 before the High Court was that Rule 9 was directory in

nature and not mandatory and in any event, as the said rule was amended in

consonance with the powers of the State regarding retrospective amendment

of the Rules, the selection process was not vitiated. Now, this amendment

validates with retrospective effect, the filing of affidavits after the selections

are made.

Before we consider the judgment passed by the High Court, we may

notice that an interim order was passed in the writ petition on 3.3.2005. On

or about 7.3.2005, however, the said interim order was modified by the High

Court directing :

"As mentioned above, in view of the return has

been filed and the matter is to be heard and disposed of

finally, we modify the earlier order of M.W.P. No.

593/2005, to the extent that the respondents may continue

with the process of selecting the licensees, however, if

before the disposal of this writ petition the process of

selection of the licensees is completed, the respondents

should not communicate the order of their selection to the

selected licensees."

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With a view to complete the narration of facts, we may also mention

that several intervention applications were also filed by the alleged

successful bidders.

HIGH COURT JUDGMENT :

The High Court upon analyzing the provisions of the Act and the

Rules framed thereunder was of the opinion that the State was entitled to

make the selection of the eligible candidates through computer. It was,

however, opined that the District Level Committees did not make any

scrutiny whatsoever to find out as to whether the applicants concerned

satisfied the eligibility conditions laid down in Rule 9 or not, as no

information was required to be furnished in the format prescribed by the

Commissioner of Excise in that behalf. The High Court was further of the

opinion that the disclosure of such information by the applicants even before

the submission of applications were necessary so as to enable the authorities

to satisfy themselves about the fulfillment of different eligibility conditions

mentioned in Rule 9. Consequently, it was directed that a fresh selection be

made in terms of the extant rules.

The High Court while rejecting the wider challenge on the legal

policy, held : (a) The circular letter dated 14.2.2005 issued by the

Commissioner of Excise was contrary to the Rules insofar as eligibility

criteria laid down in Rule 9 thereof were dispensed with. (b) The

applications filed by the applicants were not properly scrutinized, except the

requirement of Rule 9(c), namely, whether the applicants were black-listed

or otherwise not eligible. (c) While holding that the application fees to the

extent of 77 crores earned by the State need not be refunded, it directed

scrutiny of about 2.65 lakhs applications by the respective District Level

Committees for their satisfaction that all eligibility requirements stand

satisfied whereafter only the draw of lottery may take place.

The High Court, however, for the reasons stated in its judgment

although not directed for calling for fresh applications but mandated the

State to consider the necessary informations required from the applicants by

way of affidavit before the candidates are selected for grant of liquor licence.

PROCEEDINGS BEFORE THIS COURT :

Applications for grant of special leave to appeal have been filed by

the State of Chhattisgarh as also by several selected candidates. By an order

dated 8.4.2005, this Court stayed the operation of the impugned order

subject to the condition that if the Government desires to award the contract

as an interim arrangement to the successful bidders, it shall do so only after

obtaining the necessary approval of the Committee already constituted for

consideration of these applications.

The said order was communicated on 9.4.2005. The applications of

the selected candidates were scrutinized on 10.4.2005 and 11.4.2005 and

licences were granted to the so-called successful bidders on 11.4.2005 and

12.4.2005.

SUBMISSIONS :

Mr. Ashok Desai, the learned Senior Counsel appearing on behalf of

the State, would submit that the High Court fell in grave error in

interpretation/construction of Rule 9 of the Rules inasmuch as it failed to

take into consideration that whereas clauses (a) to (c) contained therein are

mandatory in nature, clause (d) is directory in nature as the same was

required to be fulfilled only upon the selection of the candidates concerned.

The learned counsel placed strong reliance, in this behalf, on a decision of

this Court in Dr. Mahachandra Prasad Singh etc. vs. Chairman, Bihar

Legislative Council and Others [(2004) 8 SCC 747]. According to the

learned counsel, the State, having the requisite power to amend the Rules

with retrospective effect, issued the Notification dated 22.3.2005 which was

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retrospective in nature. [Reliance, in this connection, has been placed on

The State of Madhya Pradesh and Others vs. Tikamdas (1975) 2 SCC 100].

It was contended that the High Court also failed to construe properly the

effect of amended Rule 8 (c) in terms whereof affidavit to be verified before

the public notary in the prescribed format was required to be filed on the day

following the selection and, thus, the requirement of filing the affidavit

along with application in terms of the said rule was dispensed with. In any

view of the matter, the learned counsel would urge that having regard to the

fact that all candidates including the writ petitioners before the High Court

understood the rule in the same manner, namely, the affidavits were required

to be filed after the selection process was over and, thus, did not choose to

file any affidavit whatsoever and, thus, the rules should have been construed

in such a manner. The learned counsel placed on strong reliance, in this

connection, on G.J. Fernandez vs. State of Karnataka and Others [(1990) 2

SCC 488). In any event, the same would amount to acquiescence on the

part the writ petitioners. Strong reliance in this behalf has been placed on

Nain Sukh Das and Another vs. The State of Uttar Pradesh and Others

[(1953) SCR 1184]. It was submitted that the validity of the rules/circulars

having not been challenged by the writ petitioners, the High Court fell in

error in passing the impugned judgment. The learned counsel would argue

that one of the applicants was a lawyer and others being interested persons,

the writ petition in the nature of public interest litigation was not

maintainable. The learned counsel would submit that having regard to the

well-settled principles of law that the State despite Article 14 of the

Constitution of India has a greater play in the joints while parting with its

exclusive privilege, non-compliance of Rule 9 could not be held to have

vitiated the entire selection process. Reliance, in his behalf, has been placed

on State of M.P. and Others vs. Nandlad Jaiswal and Others [(1986) 4 SCC

566].

In any view of the matter, Mr. Desai, would argue that it is not a fit

case where the court should grant any relief in favour of the writ petitioners.

Strong reliance, in this connection, has been placed on K.N. Guruswamy vs.

The State of Mysore and Another [(1955) 1 SCR 305].

Mr. Dushyant A. Dave, learned Senior Counsel appearing on behalf of

the Appellants in Civil Appeal arising out S.L.P. (CC No. 4571), while

supplementing the arguments of Mr. Desai, pointed out that the amending

rules having not been challenged and having regard to the fact that the

requirement of filing an affidavit has not been given up, the High Court fell

in error in holding Rule 9 as mandatory, despite the fact that the said

requirement was to be complied with only at a later stage.

Mr. Ravi Shanker Prasad, the learned Senior Counsel appearing on

behalf of the Appellants in Civil Appeal arising out of SLP No. 10653 of

2005 would contend that even the unamended Rule 9 envisaged filing of an

affidavit at a post selection stage as would appear from the language used in

clauses (a), (b) and (c) as contrasted from clause (d) thereof. The

amendment in the rules, the learned counsel would contend, made the

position patent when it was latent. Rule 9, as Mr. Prasad would argue, was

required to be read with Rule 13 and so read it would be evident that the

nature of requirement for filing an affidavit was only post selection.

Drawing our attention to the fact that the mode of selection through

lottery is permissible in view of the decision of this Court in Rajendra Singh

vs. State of M.P. and Others [(1996) 5 SCC 460], Mr. Prasad would contend

that the requirement to comply with the rules should have been considered

having regard to the changed mode of selection in terms of Rule 11(b).

Public Interest Litigation, Mr. Prasad would urge, should not be entertained

whereby the economic policy adopted by the State in the matter of vending

liquor is challenged. Reliance, in this connection, has been placed on

Nandlal Jaiswal (supra). Mr. Prasad also placed strong reliance upon Balco

Employees' Union (Regd.) vs. Union of India and Others [(2002) 2 SCC

333] in support of his contention that if the petitioner was not aggrieved, he

cannot have locus standi to maintain a writ petition.

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Mr. C.S. Vaidyanathan, the learned Senior Counsel appearing on

behalf of the Appellants in Civil Appeal arising out of SLP (CC No.4579),

would submit that the object of the Act and the rules framed thereunder

being to augment the revenue and preventing adulteration of liquor; the

state action can be challenged only if it is unfair in the sense that nobody

was given an opportunity to participate in the auction. As in this case all

persons were treated similarly in pursuance of or in furtherance of the

advertisement, insofar as no applicant had filed any affidavit, it cannot be

said that anybody was prejudiced by reason of non-compliance of Rule 9.

The learned counsel would also contend that the writ petitioner having

himself not filed any affidavit, he is estopped and precluded from

questioning the alleged violation of Rule 9, which only provides for

compliance of a procedural requirement.

Mr. Mukul Rohtagi, the learned Senior Counsel appearing on behalf

of the Appellants in Civil Appeal arising out of SLP (CC No.4569) would

also contend that requirement of Rule 9(d) was only post selection.

Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf

of the Respondents, on the other hand, would take us through various

documents with a view to show that the District Level Committees after

passing of this Court's order dated 8.4.2005 proceeded to consider the

applications filed by the successful candidates in a post haste manner which

would clearly demonstrate non-application of mind on their part. The

learned counsel pointed out that in many cases there had been hardly any

deliberation amongst the members of the committee; while in some cases

even affidavits were not filed. Drawing our attention to Rule 11, the learned

counsel would submit that in no case a summary report was prepared so as

to enable the Scrutiny Committee to scrutinize the eligibility conditions. Mr.

Sorabjee would argue that Rule 9 is mandatory in nature and, thus, all

applications for grant of liquor licence would call for scrutiny. Even if such

a consideration is read to be directory, no substantial compliance thereof

having been made, it was argued, the entire selection process must be held to

be vitiated in law. The learned counsel would contend that from the

affidavit filed by the State, it would appear that the contents of the affidavits

had not been verified in accordance with law and the contents thereof had

ex-facie been accepted on a pre-supposition that they were correct although

there exists no statutory rule empowering the Committee to raise such a

presumption.

Dr. A.M. Singhvi, the learned Senior Counsel appearing on behalf of

the some of the Respondents would urge that the functionaries of the State

and/or the Selection Committees, having regard to the nature of transaction

were required to verify the applications before selection. It was pointed out

that despite the fact that the High Court by an order dated 7.3.2004

prohibited the State from disclosing the list of selected candidates, the so-

called selected candidates filed applications for grant of special leave to

appeal before this Court on the premise that they had been selected. It was

submitted that the amendment carried out in Rule 9 on or about 9.3.2004

was wholly irrelevant. Drawing our attention to the judgment of the High

Court, the learned counsel would submit that it has rightly been found that

sub-rule (3) of Rule 9 compared to the old provisions contained therein in

view of the language thereof clearly demonstrates that Rule 9 is mandatory

in nature. The amendment made in Rule 9 by reason of the notification

dated 22.3.2005, Dr. Singhvi would argue, cannot put the clock back as the

entire selection process was completed by then.

Mr. G.L. Sanghi, the learned Senior Counsel appearing on behalf of

some of the Respondents would submit that keeping in view the fact that

while exercising its jurisdiction under the Act, the State is concerned with

the maintenance of public health and, thus, Rule 9 should be held to be

mandatory particularly having regard to the fact that such affidavit is also

necessary for the purpose of exercise of power by the State for suspension

and cancellation of licence in terms of Rule 23(1) (c) of the Rules.

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Conditions conceived in Rule 9 being in public interest, Mr. Sanghi

would contend, are mandatory in character. It was pointed out that whereas

in terms of amendment dated 9.3.2004, the Commissioner of Excise had

been empowered to prescribe the format, he had no jurisdiction to do away

with or dilute the statutory requirements to file an affidavit as required by

Rule 9 of the Rules.

Mr. Ravindra Shrivastava, the learned Senior Counsel appearing for

the some of the respondents, would urge that the eligibility clauses contained

in the Rules must be held to be mandatory in nature and in support thereof

reliance has been placed on Ramana Dayaram Shetty vs. The International

Airport Authority of India and Others [(1979) 3 SCR 1014] and R. Prabha

Devi and Others vs. Government of India, Through Secretary, Ministry of

Personnel and Training, Administrative Reforms and Others [(1988) 2 SCC

233].

Dr. Rajiv Dhawan, the learned Senior Counsel appearing on behalf of

the writ petitioners/Appellants, would, inter alia, submit that the

interpretation and/or construction of the rules must be made having regard to

Article 47 of the Constitution of India vis-`-vis the doctrine of 'res extra

commercium'. The learned counsel would contend that before the High

Court a contention was raised that a solvency certificate should be directed

to be filed along with the application for grant of licence as it would help in

prevention of investment of black money in the trade. The learned counsel

would urge that the courts in a situation of this nature will apply cautionary

principles having regard to the fact that the activities of the State must be

responsible in nature. Dr. Dhawan would submit that the rules have to be

read as a whole and not in a manner which would give undue advantage to

persons who were not fit to carry on the trade in liquor keeping in view the

obnoxious nature thereof. The rules were required to be applied from stage

to stage, it was argued, having regard to the purport and object thereof so

that effective step may be taken by the Committee to weed out the unwanted

applicants.

PUBLIC INTEREST LITIGATION :

It may not be necessary for us to consider as to whether the public

interest litigation should have been entertained by the High Court or not. The

High Court did entertain the public interest litigation without any objection

and ultimately allowed the same. Furthermore it is well settled that even in a

case where a petitioner might have moved the court in his private interest

and for redressal of personal grievances, the court in furtherance of the

public interest may treat it necessary to enquire into the state of affairs of the

subject of litigation in the interest of justice. [See Guruyayoor Devaswom

Managing Committee and Anr. Vs. C.K. Rajan and Others [(2003) 7 SCC

546 \026 para 50] and Prahlad Singh vs. Col. Sukhdev Singh (1987) 1 SCC

727]

ACQUIESCENE :

When a public interest litigation was entertained the individual

conduct of the writ petitioners would take a backseat. There cannot be any

doubt whatsoever that in a given case a party may waive his legal right. In

an appropriate case, the doctrine of acquiescence or acceptance sub silentio

may also be invoked. [See Haryana State Coop. Land Dev. Bank vs. Neelam

[2005 (2) SCALE 434], but the High Court, in the instant case, has gone

into the question with a wider perspective. This Court is not only required to

construe the provisions of the statute but also to take into consideration the

subsequent events which took place vis-a-vis the action on the part of the

State after passing of the interim order. The issue as regard application of

acquiescence or waiver. therefore in our opinion has become irrelevant.

ANALYSIS OF THE RULES :

The Chhattisgarh Excise Act, 1915 and the rules framed thereunder

are regulatory in nature. They are being so enacted so as to ensure public

health as trade in liquor is considered to be obnoxious one. The State has a

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duty to see that its people do not consume spurious or adulterated liquor.

The Act and the rules no doubt contain provisions for cancellation and/or

suspension of the licence in the event the conditions laid down therein are

violated, but it is beyond any cavil that before a licence is granted, the

applicant must satisfy all the statutory conditions and meet the eligibility

requirements. [See Ramana Dayaram Shetty (supra) and R. Prabha Devi

(supra). Rule 8(e) provided for a requirement to furnish a bank draft from a

nationalized bank as earnest money. Rule 9 of the Rules preserves all other

eligibility requirements. The Circular dated 15.3.2003 dispensed with the

requirements as contained in Rule 8(e) of the Rules. The number of outlets

were increased by 92 from 812 to 904. The High Court has noticed that

none of the eligibility requirements except those as contained in Rule 9(c) of

the Rules had been observed by the Committee. The State has earned Rs. 77

crores from 2.65 lakhs applicants whose eligibilities were not verified.

Indisputably, the State while granting a licence in favour of a person dealing

in liquor should ensure that the same is granted to a person who would be

otherwise eligible to deal therewith.

The provisions of the Act and the Rules framed thereunder contain

several restrictions and limitations which are imposed upon the applicants.

The procedures for selection must be fair and in consonance with the

provisions of the Act and the Rules.

The persons who fulfill the said eligibility criteria and satisfy the

requirements laid down under the Act and the Rules only could file such

applications which required scrutiny thereof so as to enable the statutory

authorities to consider their cases for grant of licence. The advertisement

issued by the State calls upon only such persons to file applications who are

suitable therefor, which in turn would mean that the applicants must satisfy

the authorities that they are eligible for grant of licence. The applicants must

also demonstrate that they are suitable for grant of licence as in the event of

their being found unsuitable, steps are required to be taken by the committee

for resettlement of the shops, wherefor procedures laid down in Rule 8 were

required to be complied with again.

Stricter restriction is contemplated in the matter of compliance of the

terms and conditions of the licence. Rule 4 of the Rules permits not more

than two groups to a single licensee.

Rule 9 provides that the eligibility conditions should be scrutinized

before an application is made. Rule 9 is in two parts. It deals with the

eligibility conditions of the applicant. It does not make any exception as

regard fulfilment of different clauses inasmuch as the said rules begin with

the expression "the applicant has to fulfil the following conditions". Such

conditions are required to be fulfilled for obtaining the licence. Whereas

clauses (a), (b) and (c) thereof are essential conditions which would debar a

person from filing an application and if such an application is filed, the same

would be liable to be rejected at the outset. An applicant having regard to

the expressions used in clause (d) has to file an affidavit. Filing of such

affidavit, therefore, is mandatory. However, affidavit is required to be filed

by the applicant to show that : (i) he possesses or may arrange for taking on

rent suitable premises; (ii) he possesses good moral character and has no

criminal background and has not been convicted of any offence punishable

under the Act or Narcotic Drugs and Psychotropic Substances Act, 1985 or

any other law for the time being in force or any other cognizable and non-

bailable offence. Clause (3) of sub-rule (d) of Rule 9 enjoins a duty upon

the authorities to get the same verified whereupon only a certificate is

required to be issued by the Superintendent of Police of the district of which

he is the resident in the event his selection as a licensee showing that he as

well as his family members possess good moral character and there is no

criminal background or criminal record against them. Such certificate is

required to be filed within thirty days from the grant of licence. He also in

terms of the said clause (5) of sub-rule (d) of Rule 9 is to state that no

government dues are outstanding against him.

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Keeping in view that a large number of applications are required to be

dealt with, the rules contemplate constitution of a committee comprising the

Collector of the District and the District Excise Officer/Assistant

Commissioner of the District, who would be the enforcing agency. Rule 11

provides for the mode and manner in which selection is to take place.

Clause (a) thereof provides for preparation of a summary report by the

Member Secretary for the purpose of placing it before the District Level

Committee. Clause (b) thereof provides that in the event the Committee

selects licensees from the list of the applicants and in the event more than

one applicants are found suitable for any particular group of shops, the

Committee shall select the licensee for such group of shops by lottery, in

which event the selected applicant has to deposit the required amount

according to Rule 13 and fulfill the other prescribed formalities including

the requirement to comply with the provisions of clause (1) of sub-rule (d) of

Rule 9. Clause (b) of Rule 11, therefore, presupposes that before a licence

is granted the requirements contemplated therein should be complied with. A

candidate before selection must be found to be eligible therefor. It postulates

that before the actual licence is granted, the conditions precedents as

contained therein are required to be fulfilled, failing which the Committee

must take steps for resettlement of shops or group of shops. The question of

payment of licence fee or security amount arises when an applicant is

selected for grant of licence in terms of Rule 13.

The Scrutiny Committee is also enjoined with a duty to see as to

whether a person was a defaulter or not.

Rule 9, as it originally stood, thus, on proper construction must be

held to have laid down that an affidavit was required to be filed by the

applicant which is fortified by the fact that Rule 23(1)(c) contemplates that if

the affidavit submitted by the licensees at the time of application is found

incorrect and assertions made therein are found to be false, the Licensing

Authority would be empowered to suspend or cancel the licence. The rule

read as a whole, therefore, provided for filing of an affidavit at the time of

grant of licence. Furthermore the vary fact that a circular was issued by the

Commissioner of Excise asking the applicants to file an affidavit after the

selection process is over itself is a pointer to the fact that filing of such an

affidavit along with the application was considered by all concerned to be

necessary. The advertisement was also required to be issued in consonance

with the rules and not in derogation thereof. It would, therefore, be not

correct to contend that whereas clauses (a) to (c) of Rule 9 postulates

compliance thereof at a pre-selection stage, clause (d) postulates compliance

at the post-selection stage. The distinction between compliance of

requirements at pre-selection and post-selection is also evident from reading

Rule 9(d)(1)(2) and Rule 9(d)(3) separately, inasmuch whereas the former

clearly postulates compliance at pre-selection stage, the latter deals with a

situation which is post-selection.

The expression "has to submit an affidavit" ex facie is mandatory in

nature and such affidavit necessarily has to deal with the requirements

contained in clauses (1) and (2). If the rule making authority was of the

opinion that such an affidavit was required to be filed at a later date and not

with an application, it could have said so in express terms; as has been done in

the case of sub-rule (3) of Rule 9. In fact, all the sub clauses were to be a part

of affidavit as clauses (3), (4) and (5) would be only by way of undertaking,

although the requirements of clauses (3) and (4) can be fulfilled after the grant

of licence. The same should appear from the format of the affidavit itself.

The question as to whether a statute is mandatory or directory would

depend upon the statutory scheme. It is now well known that use of the

expression "shall" or "may" by itself is not decisive. The court while

construing a statute must consider all relevant factors including the purpose

and object the statute seeks to achieve. [See P.T. Rajan Vs. T.P.M. Sahir

(2003) 8 SCC 498 and U.P. State Electricity Board Vs. Shiv Mohan Singh

and Anr. (2004) 8 SCC 402.

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Furthermore, filing of an affidavit in the prescribed format is a

statutory requirement under the Rules. Filing of such an affidavit is

necessary as in the event the same on verification is found to be incorrect,

not only the deponent can be proceeded against but his licence would also be

liable to be cancelled. Filing of an affidavit under the Rules is, therefore,

mandatory in character.

The Commissioner of Excise issued a circular letter dated 14.2.2005

which power evidently he did not possess in terms of Section 7 of the Act.

Although the State may delegate its power to the Commissioner of Excise,

such a delegation cannot be made in relation to the matters contained in the

rule making power of the State. The matters which are, therefore, outside

the purview of the rules only could be the subject-matter of delegation in

favour of the Commissioner of Execise. The Commissioner of Excise is a

statutory authority. He is bound to exercise his power only within the four-

corners of the Act or the rules framed thereunder and not de' hors the same.

Mr. Desai is also not correct in his submission that clause 22 of the

said circular contemplates a future amendment in the rules. Even if the same

contemplates a future amendment, the same would not sub-serve the

statutory requirements inasmuch as the Commissioner of Excise was not

supposed to know as to how the existing rules would be amended and

whether the same would be applied prospectively or retrospectively. The

Court cannot draw a presumption that the Commissioner of Excise could

proceed on a pre-supposition that his action in issuing a circular contrary to

rules would stand ratified by retrospective operation of the rules. A statutory

authority, it is trite, must exercise his jurisdiction with the four-corners of

the statute and cannot deviate or depart therefrom.

It is interesting to note that the Rules were amended only for one

excise year. The rule making power should be exercised having regard to

the policy to be adopted by the State. Such a policy may vary from time to

time. Having regard to the exigency for the situation, rule may also be

amended but we do snot see any reason as to why an attempt should be made

to amend the rule only with a view to justify an illegal action on the part of

the Commissioner of Excise for the year 2005-06. Although the validity of

the rules have not been challenged, the court cannot shut its eyes from

considering this aspect of the matter. We are not oblivious of the fact that

framing of rules is not an executive act but a legislative act; but there cannot

be any doubt whatsoever that such subordinate legislation must be framed

strictly in consonance with the legislative intent as reflected in the rule

making power contained in Section 62 of the Act.

By reason of the amendment carried out in the rules in terms of the

notification dated 9.3.2004, the Commissioner of Excise was empowered to

prescribe a format of the application form and affidavit. Such an application

or affidavit could be filed within the date and time stipulated by him but the

same would not mean that while prescribing a format in respect of an

application form or affidavit, he became authorized to dilute the statutory

requirements or dispense with the same. No exception can although be

taken as regard the format relating to the applications, strong exception has

to taken as regard the format of the affidavit. Clauses 5 and (6) of the

affidavit are as under :

"(5) That the Deponent neither owes any dues to the

government or public works nor his name exists in

the black list and neither he has been debarred to

acquire excise licence under Chhattisgarh Excise

Act, 1915 and rules made thereunder and amended

Chhattisgarh Excise Settlement for License for

Retail Sale of Country/Foreign Liquor Rules,

2002."

(6) That the Deponent bears good moral character. He

has not been held guilty of non-bailable offence

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under Chhattisgarh Excise Act, 1915 or Narcotics

Drugs and Psychotropic Substances Act, 1985 or

any other procedure or law promulgated that time."

A bare comparison of the said clauses with Rule 9 would demonstrate

that the same do not satisfy the statutory requirements

ARE THE AMENDING RULES \026 RETROSPECTIVE :

At this juncture, we may notice the effect of the amendment effected in

terms of the notification dated 22.3.2005. But before we proceed to do so, it

may be noticed that indisputably the entire selection process was over by

16.3.2005.

By reason of the said notification, clause (c) of Rule 8(1) was

substituted. The substituted provisions lay down that the application form

prescribed in terms of Rule 6 together with the prescribed application fee

shall be submitted in the proforma prescribed by the Commissioner of

Excise.

Yet again clause (C-1) was added after clause (c) providing that the

first, second and third applicants selected must submit an affidavit duly

verified by the public notary in the prescribed proforma next day during

office hours. The notification does not state that the amendment will have a

retrospective effect. In absence of any express provisions contained in the

notification, the court will not ordinarily presume the same to be

retrospective in nature.

A statute must be read reasonably. A statute should not read in such a

manner which results in absurdity. A statute, on its plain language,

although postulates a prospective operation, it cannot be held to be

retrospective only because it would apply for the excise year for which

applications were invited despite the fact that the selection process made

thereunder is over. The State is bound by the terms of the advertisement and

the rules existing at that time. The statutory authorities and the applicants

are expected to follow the law as it stood thence. No step could be taken on

the pre-supposition that the rule would be amended. It is also not a case

where draft rules were already in existence and such draft rules had been

applied, which could otherwise be permissible in law. But a situation of this

nature is not contemplated in law.

Mr. Desai would argue that as amendment has to be effective for the

settlement of licence for country/foreign liquor retail shops for the year

2005-06, the same may be held to be retrospective in nature. Even for the

said purpose, it was expected of the rule making authority to say so

expressly.

A rule may not be challenged as ultra vires the Act, but its

interpretation can certainly be an issue. The rule if given retrospective effect

would become unworkable and would not capable of being given effect to.

A rule cannot be framed keeping in view that the Commissioner has issued

certain circular which is illegal. By reason of a rule making power, an

invalid action on the part of the Commissioner of Excise cannot be

validated.

If a selection process is over upon following a procedure which is

illegal, by reason of a rule making power the same cannot be rendered valid

simply by directing that the same shall govern the selection of applicants for

grant of licence under the Act for the year 2005-06.

The question as to whether it can be given effect to or not is, thus,

required to be judged on its own without reference to the circular issued by

the Commissioner of Excise. Cassus Omissus, it is well known, cannot be

supplied by the court. [See P.T. Rajan vs. T.P.M. Sahir and Others \026 (2003)

8 SCC 498]

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We have noticed hereinbefore that despite the fact that the order of

injunction was issued by the High Court while modifying the interim order

on 7.3.2005, the State was asked not to publish the selection list. The

contentions raised in the petitions for grant of special leave to appeal,

however, leave no manner of doubt that such selection list whether in

violation of the order of the High Court or otherwise had been published. If

the said rules are considered to be retrospective, admittedly, the affidavits

had not been filed on the next day of such selection and, thus, the rules are

not capable of being implemented.

Different situations may arise in different cases in the matter of grant

of injunction as was noticed by this Court in Deoraj vs. State of

Maharashtra and Others [(2004) 4 SCC 697] stating :

"12. Situations emerge where the granting of an interim

relief would tantamount to granting the final relief itself.

And then there may be converse cases where withholding

of an interim relief would tantamount to dismissal of the

main petition itself; for, by the time the main matter

comes up for hearing there would be nothing left to be

allowed as relief to the petitioner though all the findings

may be in his favour. In such cases the availability of a

very strong prima facie case \027 of a standard much

higher than just prima facie case, the considerations of

balance of convenience and irreparable injury forcefully

tilting the balance of the case totally in favour of the

applicant may persuade the court to grant an interim

relief though it amounts to granting the final relief itself.

Of course, such would be rare and exceptional cases. The

court would grant such an interim relief only if satisfied

that withholding of it would prick the conscience of the

court and do violence to the sense of justice, resulting in

injustice being perpetuated throughout the hearing, and at

the end the court would not be able to vindicate the cause

of justice. Obviously such would be rare cases

accompanied by compelling circumstances, where the

injury complained of is immediate and pressing and

would cause extreme hardship. The conduct of the parties

shall also have to be seen and the court may put the

parties on such terms as may be prudent."

Even the manner in which the interim order of this Court is given

effect leaves a lot to be desired. It is not in dispute that the order of this

Court dated 8.4.2005 was communicated on 9.4.2005. 10.4.2005 was a

Sunday and, therefore, it was not expected that the services of the public

notary would be available, or the stamp would be available on that day for

affirming affidavits. The affidavit filed on behalf of the State clearly shows

that on 09.04.2005 itself , that is the day on which the order by this Court

was communicated, the concerned persons were informed as regard their

selection, if not prior thereto. The State's letter dated 9.4.2005 relating to

Application No.01010140 shows that thereby one Ramesh Prasad Dheemar

was informed that he had been selected for Desi/English wine shop/Circle

Tikrapara Circle as a first licensee. Even the unnecessary stipulations had

not been scored out therefrom. He was not asked to file an affidavit by

10.4.2005. He was merely asked to deposit 1/12th part of the payable duty as

yearly security within three days and 1/12th part of yearly licence fee by

30.4.2005, whereafter licence was to be granted to him. We fail to

understand as to how without making a scrutiny as regard compliance of

conditions, licences were granted on 11.4.2005 and 12.4.2005. The

affidavit of the State reveals :

"That the process of selection of Applicants under

the Circular dated 14.2.2005 had already been completed

on 16.3.2005 and a list of the Applicants selected after

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the draw of lotteries had been submitted before the

Hon'ble Chhattisgarh High Court on 22.3.2005. A typed

copy of the list of successful Applicants as submitted

before the Hon'ble Chhattisgarh High Court is annexed

hereto and marked as Annexure "RCG-2".

That, accordingly based on the result of the

selection process, the Collectors of all Districts in the

State called upon the selected Applicants to submit

affidavit in the prescribed format. The affidavits

submitted were duly processed/scrutinized by the District

Level Committee constituted in each district as per Rule

10 of the 2002 Rules (comprising of the Collector as the

Chairman and Assistant Commissioner/District Excise

Officer as the Member Secretary). The licences were

thereafter granted on 11.4.2005/12.4.2005 subject to the

condition that the same were only temporary and were

granted under an interim arrangement and were subject to

further orders to be passed by this Hon'ble Court. Thus,

the temporary licences for the year 2005-06 for running

country/foreign liquor retail shops in the State have been

issued after following the process prescribed in the 2002

Rules and after scrutiny of affidavits and consequent

approval by the Committee already formed under the

Rules, as had been directed by this Hon'ble Court. An

English translated copies of the information received

from each of the 16 districts in the State granting

temporary licences to the successful Applicants is

enclosed hereto and filed as Annexure "RCG-3 (Colly.)".

We have noticed hereinbefore that even in the notice, the selected

candidates had not been asked to submit affidavits in the prescribed format.

It is not expected of the statutory functionaries to ask the selected candidates

to comply with the requirements orally. It is beyond our comprehension as to

why such a post haste action was taken by the State.

Our attention has been drawn to the following charts prepared by the

Respondents :

"EXAMPLES OF SAME ADDRESS OF DIFFERENT FAKE

SELECTED APPLICANTS OF RAIGARH, CHAMPA JANJGIR AND

KAWARDHA DISTRICTS

3, Shankar Nagar

Raipur

Near Dr Anoop

Verma, Katora

Talab, Civil

Lines, Raipur

Behind Prince

Hotel, Katora

Talab, Civil

Lines Raipur

27, Kholi

Vikas

Nagar,

Bilaspur

H. No.15/262

Near Chandnia

Para, Canal,

Janjgir

Pg

Names

Pg

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Names

Pg

Names

Pg

Names

Pg

Names

77

Raj Kr.

Singh

79

Rajendra

Prajapati

222

Vikas

Jaiswal

82

Rakesh

Singh

86

Ram

Bachan

Yadav

78

Munna

Gupta

84

Surendra

Lal

87

Jitendra

Singh

82

Babloo

Kr. Rai

88

Santosh

Kumar

78

Jai

Prakash

Singh

90

Shiv

Narayan

Jaiswal

259

Urmila

Devi

220

Jitendr

Singh

80

Guddu

Moar

260

Satish

Singh

222

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Vinay

Gupta

81

Raghven

dra

Kumar

Singh

258

Vinod

Pandey

258

Avadh

Narayan

Shukla

258

Shyam

Lal

Gupta

259

Jagdish

Yadav

259

Bunty

Singh

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Jamat Mandir

Para,

Kavardha

30, Block B,

Quarter

Mohalla, RSB

Tower,

Taarbahar,

Bilaspur

Lochan Nagar,

P.S.

Chakradhar

Nagar, Dist.

Raigarh

Punjabi

Colony, Dayal

Band, Bilaspur

Nehru Nagar,

Bilaspur

Pg

Names

Pg

Names

Pg

Names

Pg

Names

Pg

Names

79

Pramod

Singh

91

Parikha

Paswan

92

Ashok

Kumar

Singh

93

Surjit

Singh

Bhatia

80

Sushil

Kumar

83

Shailend

ra Singh

222

Stayend

er Singh

92

Lakshmi

Prasad

94

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Ravindr

Nath

Upadhy

a

80

Manoj

Singh

85

Santosh

Kumar

Shiv

Narayan

Jaiswal

227

Umesh

Singh

258

Dharme

mdra

Singh

223

Munna

Singh

H.No.7/279

Pursuram Ward

FCI Gowdown

Bhatapara,

Raipur

Shankar Nagar,

Dist. Janjgir

1/73, Near

Ranjit Singh

Dhaba,

Shivrinarayan,

Tehsil

Navagarh, Dist.

Janjgir

5/12, Bazar

Para, Dhara

Dwar, Dist.

Janjgir Chanpa

H. No.190 Pratap

Ganj Thana

Sarngarh,

Raigarh

Pg

Names

Pg

Names

Pg

Names

Pg

Names

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Pg

Names

85

Sanjiv

Kumar

Gupta

83

Raja

Piyush

Narayan

83

Mahendr

a Singh

228

Parmesh

war

Singh

228

Santosh

Kr. Singh

87

Dashrat

Yadav

92

Kamakh

ya

Narayan

Singh

91

Arvind

Singh

228

Santu

Singh

229

Dilipdas

222

Sanjiv

Kr.

90

84

Lakshmi

Pd

Gupta

224

Vishnu

Singh

226

Uday

Singh

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227

Abhima

nu

Gupta

From a perusal of the aforementioned charts, it would appear that different persons

belonging to different communities had filed different applications showing the

same address. Even persons having the same name had filed more than one

application.

Mr. Desai submitted that these allegations give rise to separate cause of

actions. We do not agree.

Although we do not intend to put a seal of finality on the said issue,

we are constrained to observe that having regard to the actions of the

statutory functionaries, the entire exercise of the scrutiny as regard

ascertainment of the eligibility of the candidates vis-`-vis selection process

is required to be undertaken again by the Selection Committee.

Furthermore, this Court is entitled to take into consideration subsequent

events so as to do the complete justice to the parties. [See Board of Control

for Cricket, India & Anr. Vs. Netaji Cricket Club & Ors. [2005 (1) SCALE

121]. When this Court passed an interim order it was expected that the

statutory requirements therefore, shall be complied with. Even if Rule 9 is

held to be directory, substantial compliance thereof was necessary. A

mandatory statute requires strict compliance whereas a directory statute

requires substantial compliance. Even if a statute is directory, the State

cannot say that the requirements contained therein do not envisage

compliance thereof. The authorities of the State cannot raise a plea that they

would not even notice the inherent defects contained in the application.

They could not proceed on a presupposition, for which there is no legal

sanction, that contents of the affidavit would be correct. No summary report

required to be prepared by the Member Secretary for its placement before

the Committee appears to have not been prepared. The Rules postulate that

each and every application must be examined carefully. Mere fact that a

large number of applications have been filed, as a result whereof the State

had been able to obtain crores and crores of rupees by itself did not entitle

the State to dispense with the statutory requirements. The application fees

were not meant to be utilized for the purpose of earning revenue but to meet

the administrative charges required therefore. Application fees cannot be

equated with tax.

Undoubtedly, the state has the exclusive privilege to deal in liquor but

it has also to be borne in mind that it has a constitutional and legal duty to

safeguard the public interest and public health. The conditions for grant of

licence as laid down in the statute are required to be observed only with a

view to sub serve the constitutional goal and not to subverse the same.

An affidavit required to be filed in whatever format it may be must

disclose all the informations required under the law which would enable the

statutory authorities to verify the same. Licences to deal in liquor cannot be

granted on mere asking by a person and only because he is in a position to

fulfil the requirements as regard deposit of licence fee and other charges.

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Undoubtedly, the State is entitled to raise its revenue but it is also obligated

to fulfil its constitutional and statutory duties.

PRECEDENTS RELIED UPON ON BEHALF OF THE APPELLANTS :

In the Nandlal Jaiswal (supra), whereupon Mr. Desai placed strong

reliance, this Court was concerned with grant of licences for running

distilleries. Therein, this Court observed that the legislature should be

allowed some play in the joints because it has to deal with complex problems

but it did not say that a statutory authority while exercising its statutory

functions may do away with or dilute the statutory mandates.

In G.J. Fernandez (supra), again this Court was interpreting the

conditions of NIT and not the statutory rules. It is only in the fact situation

obtaining therein it was observed that the way in which the tender

documents issued by it had been understood and implemented by the KPC

had been explained in its 'note', which sets out the general procedure which

the KPC was following in regard to NITs issued by it from time to time.

The said decision has no application in a case requiring compliance of

statutory requirements.

In Dr. Mahachandra Prasad Singh (supra), this Court was concerned

with interpretation of an election of the Bihar Legislative Council Members

(Disqualification on Ground of Defection) Rules, 1994. While considering

the submission that an affidavit which is required to be filed in terms of sub-

rule (6) of Rule 6 of the Rules, the Court held that the provisions thereof are

not so mandatory in nature that even a slight infraction of the Rules would

render the entire proceedings initiated by the Chairman invalid or without

jurisdiction. It was in that sense the provisions were held to be directory in

nature. We may notice that in terms of the Civil Procedure (Amendment)

Act, 2002, a plaint must be verified by an affidavit, which is mandatory in

nature.

In Nain Sukh Das (supra) this Court was concerned with a case where

the election of the municipal member was sought to be set aside on the

ground of alleged violation of Article 15(1) of the Constitution. In that case

it was held that the petitioners therein never asserted their rights by taking

appropriate proceedings to get the bar under Article 15(1) removed and in

that situation, this the Court did not exercise its jurisdiction under Article 32

of the Constitution stating:

"\005It may be, as we have already remarked, that the

petitioners could claim such relief as rate-payers of the

Municipality in appropriately framed proceedings, but

there is not question of enforcing petitioners'

fundamental right under article 15(1) or article 14 in such

claim. There is still less ground for seeking relief on that

basis against respondent 3 who is only a nominated

member\005"

The said decision has no application in the instant case.

In K.N. Guruswamy (supra), the appellant therein sought to enforce

his right in obtaining a contract to which he was entitled to but no relief was

granted as the excise year had already expired. Issuance of such a writ was

found to be resulting in futility. Such is not the case herein.

In Rajendra Singh (supra), this Court held that the jurisdiction of the

High Court under Article 226 is not intended to facilitate avoidance of

obligations voluntarily incurred, though the licensees are not precluded from

seeking to enforce the statutory provisions governing the contract.

The writ petitioners herein filed a writ at a pre-selection stage and

furthermore have not sought for enforcement of the contract.

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In Balco Employees' Union (supra), this Court was concerned with

an economic policy of the State which is not the case herein.

Furthermore, it is now beyond any cavil that economic policies of the

State although ordinarily would not be interfered with, but the same is not

beyond the pale of judicial review. [See Cellular Operators Association of

India and Others vs. Union of India & Others \026 (2003) 3 SCC 186]

It is also not a case where no relief can be granted to the writ

petitioners, as was done in the case of K.N. Guruswamy (supra), having

regard to the fact situation obtaining therein.

SHOULD WE ISSUE GUIDELINES :

Before parting, we make it clear that in these appeals we did not go

into the larger question raised by Dr. Dhawan that the State must insist for a

solvency certificate keeping in view the similar provisions contained in the

statutes enacted by the other States, nor this Court, as at present advised, is

inclined to issue the requisite guidelines therefor.

There cannot, however, be any doubt or dispute that having regard to

the several decisions of this Court, e.g. The State of Bombay vs. R.M.D.

Chamarbaugwala [(1957) SCR 874], M/s Fatehchand Himmatlal and Others

etc. vs. State of Maharashtra etc. [(1977) 2 SCC 670], Khoday Distilleries

Ltd. and Others vs. State of Karnataka and Others [(1995) 1 SCC 574],

B.R. Enterprises etc. vs. State of U.P. and Others etc. [(1999) 9 SCC 700],

State of A.P. and Others vs. Mcdowell & Company and Others [(1996) 3

SCC 709], State of Punjab and Another vs. Devans Modern Breweries Ltd.

and Another [(2004) 11 SCC 26], trade in liquor is considered to be res extra

commercium although tobacco produce has not been declared so. [See

Godawat Pan Masala Products I.P. Ltd. and Another vs. Union of India and

Others [(2004) 7 SCC 68]. The State while exercising its power of parting

with its exclusive privilege to deal in liquor has a positive obligation that any

activity therein strictly conforms to the public interest and ensures public

health, welfare and safety. Strict adherence to the requirement to comply

with the statutory provisions must be considered from that angle.

CONCLUSION :

The question, however, which now falls for consideration is as to

what order should be passed in the peculiar facts and circumstances of this

case.

In this case the mode of selection is in question. All the parties

participated in the selection process. Some of them became successful. They

had not complied with the statutory requirements not because they were not

willing to do so but because the statutory authorities were not correctly

advised. The conduct of the statutory authorities although must be

deprecated but that by itself, in our opinion, may not come in the way of the

successful candidates in getting the just relief.

Keeping in view the peculiar facts and circumstances of this case, we

intend to issue the following directions :

i) The Member Secretary shall scrutinize all the applications of the

successful candidates afresh and prepare a summary report within one

week from date.

ii) Irrespective of the format prescribed by the Commissioner of Excise,

each of the selected candidates must file an appropriate affidavit,

which would be in strict compliance of the requirement of Rule 9.

iii) Such affidavits must be filed before the respective committees within

one week from date, the contents whereof would be verified in terms

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of Order 6 Rule 15 of the Civil Procedure Code. The said affidavits

shall be scrutinized by the Committee so as to enable them to arrive at

a finding as to whether the applicants fulfil the eligibility criteria and

are otherwise suitable for grant of licence under the Act and the rules.

iv) The writ petitioners or any other person in the locality may file

appropriate applications before the said Committee with a view to

show that the selected candidates do not fulfill the eligibility criteria

or are debarred or are otherwise unsuitable from obtaining a licence

under the Act.

v) Such objections may also be filed within two weeks from date. The

Committee may consider the said objections and, if necessary, may

call for further or better particulars from the selected candidates so as

to satisfy themselves about their eligibility etc.

vi) The respective District Level Committees shall strictly verify and

scrutinize the affidavits as also other documents furnished by the said

applicants so as to arrive at a decision that the statutory requirements

have been complied with upon application of their mind.

vii) The members of the Committee are made personally liable to see that

all statutory requirements are complied with. They would strictly

apply the statutory provisions as regard eligibility and suitability of

the candidates.

viii) The aforementioned exercise by the Committee should be completed

within one month. In the event, any affidavit filed by a selected

candidate either pursuant to this order or filed earlier in the format

prescribed by the Commissioner of Excise is found to be incorrect,

strict action in accordance with law shall be taken against him

ix) The Superintendent of Police of each district within whose

jurisdiction the selected candidates ordinarily reside shall verify the

antecedents and other relevant particulars of the selected candidates

vis-`-vis their eligibility/suitability to obtain a licence and submit a

report to the Committee by 12.6.2005 which would be strictly in

terms of sub-rule (3) of Rule 9. While issuing such a certificate in

favour of the selected candidates by 12.6.2005, he shall also file a

copy of the report before the Committee.

x) We direct the Chief Secretary of the State and Commissioner of

Excise to act strictly in accordance with law and oversee the

functioning of the Scrutiny Committees.

xi) If the State and the Commissioner of Excise come across

misconduct on the part of any of the officers including the members

of the Committee, strict action must be taken against the concerned

officer.

xii) The selected candidates in the meanwhile may carry on the trade in

liquor pursuant to the licence granted in their favour but the same

shall be subject to this order as also the decision of the Scrutiny

Committee.

The Writ Petitioners and the Respondents shall be at liberty to

mention before the High Court for appropriate order(s).

These appeals are disposed of on the aforementioned terms. No costs.