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PETITIONER:

M.S. JAYARAJ

Vs.

RESPONDENT:

COMMISSIONER OF EXCISE, KERALA AND OTHERS

DATE OF JUDGMENT: 28/09/2000

BENCH:

K.T. Thomas & R.P. Sethi

JUDGMENT:

THOMAS, J.

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Leave granted.

A bidder in auction for the privilege of vending foreign

liquor within a circumscribed range was permitted by the

Excise Commissioner to have his domain shifted to another

range. On hearing the said news a hotelier who is doing

business in the latter range was distressed and she quickly

approached the High Court for thwarting the said move. At

the first round the hotelier failed to checkmate the bidder

as a single judge of the High Court declined to grant the

relief prayed for by her. However, she succeeded on the

second round, when a Division Bench of the High Court, on

the appeal filed by her, quashed the order of the Excise

Commissioner. This appeal by special leave is by the

aforesaid bidder for restoration of the benefit which he

secured from the Excise Commissioner.

In the State of Kerala, the right to sell foreign liquor

is restricted by statutory provisions. The Government of

Kerala has formulated rules for it under the Kerala Abkari

Act and one set of such rules is called the Kerala Abkari

Shops (Disposal in Auction) Rules, 1974 (for convenience it

would be referred to as the Auction Rules). The

Government has the authority, under the said rules to notify

in the Gazette the limits of each area (range) wherein the

shop or shops could be located for vending such foreign

liquor. Officers are authorised by the Government to

auction the right to vend foreign liquor from each such shop

and for such period as may be fixed. Person who offers the

highest bid would normally be preferred for conferring the

privilege to vend foreign liquor and licence would be issued

to him for that purpose. Among the different types of

licence only two are relevant for the purpose of this case.

One is called Licence for the privilege of possession of

Indian made Foreign Liquor for sale to public in sealed

bottles without the privilege of consumption on the

premises. As the said licence is to be issued in Form FL-1

it can be termed as such hereinafter. The other is called

Hotel (Restaurant) Licence and it is to be issued in Form

FL-3. (It can be referred to as such hereinafter).

FL-3 licence consists of the privilege to sell foreign

liquor for consumption within a room specifically approved

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for the purpose to residents in the hotel or boarding

houses, including their guests. FL-1 licence is for the

privilege of selling foreign liquor in sealed bottles

containing a quantity above 180 ml.

For the facts in this case the following events are to

be narrated: On 13.3.2000 appellant participated in the

auction held in respect of a shop to be located within a

range called Changanassery Excise Range consisting of the

areas falling within the limits of Changanassery

Municipality. Appellant was the highest bidder and he

quoted above Rs.63 lakhs. On his being chosen for the

licence appellant remitted a portion of the bid amount on

the same day.

He failed to find out a suitable place to locate the

shop within the boundaries of Changanassery Excise Range.

Hence he applied to the first respondent (Commissioner of

Excise, Kerala) for permission to locate the shop outside

the said range. On the same day the application was

forwarded by the second respondent (Assistant Excise

Commissioner of the district) with a recommendatory note.

The Excise Commissioner granted permission to the appellant

on 12.4.2000 for shifting the shop to another range called

Karukachal which comprises of the areas falling within

Karukachal Panchayat. (That range is situate next to the

Changanassery range.) The third respondent, who is running

the hotel and restaurant at Karukachal and who obtained FL-

3 licence to supply foreign liquor in peg measurements to

patrons visiting the hotel, filed a writ petition before the

High Court under Article 226 of the Constitution for

quashing the aforesaid permission granted by the first

respondent. Third respondent contended mainly that the

Excise Commissioner had no authority to pass such an order.

In defence of the permission so granted the Excise

Commissioner and the second respondent relied on Rule 6(2)

of the Auction Rules.

Learned single judge of the High Court, while dismissing

the writ petition, held that Rule 6(2) of the Auction Rules

contains such powers for the Excise Commissioner to pass.

He also held that the order granting permission to locate

the shop outside the limit of the originally shown range is

not proved to have been vitiated by any mala fides.

Third respondent filed an appeal before the Division

Bench of the High Court and learned Judges of the Bench

reversed the order passed by the single judge holding that

the Commissioner of Excise has no power or jurisdiction

under Rule 6(2) to transfer an Abkari or foreign liquor shop

outside the limits notified in the Gazette under Rule 4 of

the Auction rules. The Division Bench did not seriously

take the objection raised by the present appellant that writ

petitioner had no locus standi to challenge the order of the

Excise Commissioner. However, learned Judges observed that

the writ petitioner is a licensee having FL-3 licence and

was running a hotel-cum- restaurant in Karukachal Panchayat

and hence the order permitting the appellant to shift the

shop to Karukachal Panchayat would affect her rights.

Resultantly the Division Bench quashed the order on the

Excise Commissioner though learned Judges granted two weeks

time to dispose of the stock of liquor acquired by the

appellant for the purpose of selling the same in exercise of

the licence granted to him.

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Shri P. Krishnamurthy, learned senior counsel, who

argued for the appellant, adopted a two-pronged onslaught on

the judgment of the Division Bench of the High Court. First

is that the High Court ought not to have entertained the

writ petition filed by the third respondent as she is a

rival businesswoman who cannot have locus standi to file the

petition. Second is that the Division Bench failed to trace

the power of the Excise Commissioner which power has been

conferred on him by the first proviso to Rule 6(2) of the

Auction Rules. Shri C.S. Vaidyanathan, learned senior

counsel who argued for the third respondent, contended that

the locus standi of the third respondent for moving the High

Court is no concern now as the learned single judge of the

High Court had already entertained the writ petition and

decided it on merits only. Alternatively, learned counsel

contended that the third respondent is not, in fact, a rival

businesswoman and she need be regarded only as a resident of

Karukachal Panchayat who is entitled to assail any order

passed by a statutory authority in violation of law.

Without prejudice to such contention learned counsel made an

endeavour to support the interpretation placed by the

Division Bench of the High Court on Rule 6(2) of the Auction

Rules.

Shri P. Krishnamurthy, learned senior counsel relied on

the decisions of this Court in the Nagar Rice & Flour Mills

and ors. vs. N. Teekappa Gowda & Bros. and ors.

{1970(1) SCC 575}; Jasbhai Motibhai Desai vs. Roshan Kumar

Haji Bashir Ahmed & ors. {1976(1) SCC 671}; Thammanna vs.

K. Veera Reddy and ors.{1980 (4) SCC 60}; Dr. Duryodhan

Sahu and ors. vs. Jitendra Kumar and ors. {1998(7) SCC

273} in order to bolster up his contention that the third

respondent had no locus standi to maintain a petition under

Article 226 of the Constitution in respect of the impugned

order passed by the Excise Commissioner.

It is not discernible from the Judgment of the learned

Single Judge whether appellant had raised the issue of locus

standi before him. But appellant did raise it before the

Division Bench. In this appeal also he endeavoured to

contend that the right of the third respondent is not

affected by the order passed by the Excise Commissioner as

the licence granted to her is only for selling liquor in

small quantity and that too only to those persons who visit

the hotel and restaurant, whereas the appellant is not

permitted to sell it like that. We too feel that if the

business of the third respondent is to be carried on in

accordance with the rules such business cannot affect the

business of the appellant. In that view of the matter

appellant would not be a rival trader or a rival business

contender for the third respondent. Perhaps bearing in mind

this aspect the third respondent maintained the stand in the

counter affidavit filed in this Court that her objection

against the order of the Excise Commissioner is as a citizen

of Karukachal Panchayat and she is entitled to raise such

objection.

In this context we noticed that this court has changed

from the earlier strict interpretation regarding locus

standi as adopted in Nagar Rice & Flour Mills and ors. vs.

N. Teekappa Gowda & Bros. and ors.{1970(1) SCC 575} and

Jasbhai Motibhai Desai vs. Roshan Kumar Haji Bashir Ahmed &

ors.{1976(1) SCC 671} and a much wider convass has been

adopted in later years regarding a persons entitlement to

move the High Court involving writ jurisdiction. A four

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Judge Bench in Jasbhai Motibhai Desai (supra) pointed out

three categories of persons vis-à-vis the locus standi: (1)

a person aggrieved; (2) a stranger; (3) a busybody or a

meddlesome interloper. Learned Judges in that decision

pointed out that any one belonging to the third category is

easily distinguishable and such person interferes in things

which do not concern him as he masquerades to be a crusader

of justice. The Judgment has cautioned that the High Court

should do well to reject the petitions of such busybody at

the threshold itself. Then their Lordships observed the

following: The distinction between the first and second

categories of applicants, though real, is not always well

demarcated. The first category has as it were, two

concentric zones; a solid central zone of certainty, and a

grey outer circle of lessening certainty in a sliding

centrifugal scale, with an outermost nebulous fringe of

uncertainty. Applicants falling within the central zone are

those whose legal rights have been infringed. Such

applicants undoubtedly stand in the category of persons

aggrieved. In the grey outer circle the bounds which

separate the first category from the second, intermix,

interfuse and overlap increasingly in a centrifugal

direction. All persons in this outer zone may not be

persons aggrieved.

A recent decision delivered by a two Judge Bench of this

Court (of which one of us is a party Sethi, J.) in

Chairman Railway Board & ors. vs. Chandrima Das & ors.

{2000 (2) SCC 465} after making a survey of the later

decisions held thus: In the context of public interest

litigation, however, the Court in its various judgments has

given the widest amplitude and meaning to the concept of

locus standi. In Peoples Union for Democratic Rights v.

Union of India {1982 (3) SCC 235} it was laid down that

public interest litigation could be initiated not only by

filing formal petitions in the High Court but even by

sending letters and telegrams so as to provide easy access

to court. [See also Bandhua Mukti Morcha v. Union of India

{1984 (3) SCC 161} and State of H.P. v. A Parent of a

Student of Medical College {1985 (3) SCC 169} on the right

to approach the court in the realm of public interest

litigation.] In Bangalore Medical Trust v. B.S. Muddappa

{1991(4) SCC 54} the Court held that the restricted meaning

of aggrieved person and the narrow outlook of a specific

injury has yielded in favour of a broad and wide

construction in the wake of public interest litigation. The

Court further observed that public spirited citizens having

faith in the rule of law are rendering great social and

legal service by espousing causes of public nature. They

cannot be ignored or overlooked on a technical or

conservative yardstick of the rule of locus standi of the

absence of personal loss or injury. There has, thus, been a

spectacular expansion of the concept of locus standi. The

concept is much wider and it takes in its stride anyone who

is not a mere busybody.

In the light of the expanded concept of the locus standi

and also in view of the finding of the Division Bench of the

High Court that the order of the Excise Commissioner was

passed in violation of law, we do not wish to nip the motion

out solely on the ground of locus standi. If the Excise

Commissioner has no authority to permit a liquor shop owner

to move out of the range (for which auction was held) and

have his business in another range it would be improper to

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allow such an order to remain alive and operative on the

sole ground that the person who filed the writ petition has

strictly no locus standi. So we proceed to consider the

contentions on merits.

Chapter 1 to 4 of the Auction Rules contain various

regulations regarding fixation of the limit of each range,

how to conduct the auction for each or lot of shops etc.

Chapter 5 of the Auction Rules contains two rules (Rule 6

and Rule 6A) under the title General Conditions applicable

to licensees of toddy, arrack or foreign liquor 1 shops.

Though Rule 6 consists of 39 sub-rules we are concerned only

with the first three of them. Hence those three sub- rules

are extracted herein: 6(1) No licensees of any toddy,

foreign liquor shop shall be permitted to sell or possess

toddy or foreign liquor or cocobrandy outside the local

limits specified in his licence. (2) No toddy or foreign

liquor shop notified in the Gazette under Rule 4, shall be

located outside the notified limits, but with the previous

sanction of the Assistant Excise Commissioner it may be

removed from one place to another within such limits.

However, no such shop shall be located in or removed to

place within an area declared as a project area. No toddy

shop shall be located within 400 meters and no Foreign

Liquor 1 shop shall be located within 200 meters from an

educational Institution, Temple, Church, Mosque, Burial

ground, Harijan Colonies or Tribal Colonies:

Provided the Excise Commissioner may for sufficient

reasons to be recorded in writing and subject to such

conditions as he may deem necessary to impose, order to

remove from any place, any toddy shop or Foreign Liquor 1

shop to a place outside the limits specified in this sub-

rule:

Provided further that if any educational institution,

Temple, Church, Mosque or burial ground comes into existence

subsequent to the grant of licence, it shall not disentitle

such shops for continuance:

(3) it shall be competent to the Board of Revenue to

order the transfer of shops from one site or locality to

another site or locality or to alter the specified limits of

any shop even during the currency of the contract or to

order any shop to be closed in the interest of public peace

or morality or on grounds of expediency and in such an event

of transfer, alteration or closure, the contractor shall

have no claim for compensation.

The repeated usage of the negative expression no in

sub-rules (1) and (2) looms large therein. By such usage

the legislature has imposed absolute ban on certain

activities e.g. no licensee shall be permitted to sell

foreign liquor outside the local limits specified in his

licence as in sub-rule (1) and no foreign liquor shop

shall be located outside the notified limits as in sub-

rule (2). Then again no foreign liquor shop shall be

located within the distance fixed as from certain

institutions. There is no proviso nor any explanation as

for sub-rule (1) but the proviso is placed only below sub-

rule (2). Therefore, sub-rule (1) must work out by itself

unexpanded or unrestricted by any other clause.

The first proviso to sub-rule (2) is intended to refer

to sub-rule (2) above. This can be discerned from two

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indications. One is the fact that the said proviso has been

placed in the said sub-rule only. Second is that its scope

is restricted to a place outside the limit specified in

this sub-rule. The contention of the appellant is that the

above words can have relation to the limits specified in

sub-rule (1) because the limit envisaged in the second

sub-rule is practically the same as the limit indicated in

sub-rule (2).

We have difficulty to accept the said contention for

more than one reason. If the rule making authority had

intended it to be so they would have effortlessly used the

words outside local limits specified in the licence in the

proviso because the same words have been used in sub- rule

(1). As the proviso gives powers to the Excise Commissioner

to order removal of a shop to a place outside the limits

specified in this sub-rule it can only refer to the limits

specified in that sub-rule and not elsewhere. It must be

noted in this context that sub-rule (2) specifies certain

limits such as within 400 meters (for toddy shops) and

within 200 meters (for FL-1 shops) from certain

institutions mentioned therein. It is with reference to

those limits which are specified in sub-rule (2) that the

proviso confers power on the Excise Commissioner to pass

order for removal.

Otherwise the absolute ban incorporated in sub-rule (1)

would become meaningless. It is also worthy to notice that

the only exception from the ban contained in sub-rule (1) is

provided in sub-rule (3), extracted above. A superior

authority like the Board of Revenue alone was vested with

that power in the interest of public peace or morality or

on grounds of expediency.

(Shri P. Krishnamurthy submitted that the Board of

Revenue in Kerala stood abolished in 1997 and in that place

Government is substituted in statutes.) If so, even for the

Government to order transfer of a shop from one locality to

another it cannot be done unless there is existence of the

exigency indicated in sub-rule (3). How could it be

conceived that a subordinate officer can do it without any

such exigency.

We, therefore, concur with the interpretation placed by

the Division Bench of the Kerala High Court on the scope of

the proviso to Rule 6(2) of the Auction Rules. It means

that Excise Commissioner has no authority to permit shifting

of a foreign liquor shop from one range to a totally

different range. Consequently the order passed by the first

respondent Excise Commissioner in favour of the appellant

is without authority of law and it has been rightly struck

down by the Division Bench of the High Court. Accordingly

we dismiss this appeal.

Learned counsel for the appellant lastly made a plea

that the amount deposited by him pursuant to the bid, should

be refunded to him as the appellant was not able to operate

the foreign liquor shop mainly on account of the

unauthorised order passed by the Excise Commissioner. It is

open to the appellant to make the application for such

refund. We direct the Government to pass orders thereon

within one month from the date of such application.

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