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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1642 OF 2013

[Arising out of SLP (Civil) No. 9098 of 2009]

State of Kerala and Others .. Appellants

Versus

Kandath Distilleries .. Respondent

J U D G M E N T

K. S. RADHAKRISHNAN, J.

1.Leave granted.

2.We are, in this appeal, concerned with the question whether

the High Court can issue a Writ of Mandamus under Article 226 of

the Constitution of India, directing the State to part with its

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exclusive privilege, in the matter of granting licence for

establishing distilleries under the Foreign Liquor (Compounding,

Blending and Bottling) Rules, 1975 (for short “1975 Rules”) read

with Section 14 of the Abkari Act (for short “the Act”).

3.M/s Kandath Distilleries, respondent herein, claimed to have

submitted an application dated 12.1.1987 before the

Commissioner of Excise for a licence to establish a compounding,

blending and bottling unit in the Palakkad District. Few others

had also filed similar applications for licence for setting up

distillery units in the State of Kerala. All of them were directed to

first obtain the approval of the Government of India for the setting

up of new blending and bottling units and, thereafter, to approach

the State Government. This Court, however, vide its judgment

dated 29.1.1997 in Writ Petition No. 322 of 1996 ( Bihar

Distillery and Another v. Union of India and Others ) took

the view that the power to permit the establishment of any

industry engaged in the manufacture of portable liquors, including

Indian Made Foreign Liquors (IMFLs), beer, country liquor and

other intoxicating drinks is exclusively vested in the respective

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State Governments. Further, it was also held that the power to

prohibit and/or regulate the manufacture, production, sale,

transport of consumption of such intoxicating liquors is equally

that of the States.

4.We notice, during the year 1998 and prior to that, the

Commissioner of Excise and the State Government had received

large number of applications for setting up of distillery units in

various parts of the State. The Commissioner of Excise or the

State could not have entertained all those applications and

granted the licences for the setting up of large number of

distillery units in the State. The State Government, however,

entertained four applications favourably and accorded its

approval under Section 14 of the Act. The State Government, vide

GO (Rt.) No. 291/98/TD dated 20.5.1998, examined the

application submitted by M/s Amrut Distilleries in detail and

granted approval for issuing a licence by the Excise Commissioner

for the establishment of a distillery unit for the manufacture of

IMFLs at Kanjkode village in the Palakkad District. The

Government also, vide its order dated 6.8.1998, examined the

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application of M/s Empee Distilleries, Madras, and accorded

approval for the grant of licence by the Excise Commissioner for

establishing a distillery unit at Kanjkode village in the Palakad

District. The application submitted by M/s K. S. Distilleries,

Kannur was also considered by the State Government and

granted permission to the Excise Commissioner to issue a licence

for a distillery unit to be established at Kannur, vide order dated

18.8.1998. The application of M/s Elite Group of Companies was

also favourably considered by the Government and accorded

permission to the Excise Commissioner for issuing the necessary

licence for establishing a distillery unit at Trichur.

5.M/s Kandath Distilleries (respondent) having noticed that its

application submitted in the year 1987 for setting up the unit in

the Palakkad District was not considered, filed a Revision Petition

before the Minister for Excise on 22.11.1998 to consider its

application as well for the grant of licence for establishing a

distillery unit in the Palakkad district, though it had not raised any

dispute with regard to the grant of other two distillery licences for

setting up the units in the Palakkad District.

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6.We notice that the Excise Commissioner/State Government

had received, during the year 1998 and prior to that, large

number of applications for licences for establishing distillery units

in various districts in the State of Kerala. The Government,

therefore, constituted a Scrutiny/Selection Committee to shortlist

the applications received for setting up of IMFL Units, as per G.O.

(Rt.) No. 157/99/TD dated 3.3.1999. The Government considered

the recommendations of the Committee in detail and, vide G.O.

(Rt.)/689/99/TD dated 29.9.1999, took a policy decision not to

grant any more licences for setting up the distillery units in any

part of the State. The order was communicated to the respondent

by the Joint Excise Commissioner vide his letter dated

11.11.1999.

7.Respondent then preferred O.P. No. 7727 of 2000 before the

High Court to quash the above mentioned Government order

dated 11.11.1999 contending that its application also should have

been considered along with the applications submitted by M/s

Amrut Distilleries, Bangalore, M/s. Empee Distilleries, Madras, M/s.

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K. S. Distillery, Kannur and M/s. Elite Group of Companies,

Thrissur, in the year 1998. Respondent, however, did not

challenge the licences granted for establishing the units in the

Palakkad District, the very same district where it had applied for a

licence. Learned single Judge quashed the letter dated

11.11.1999 issued by the Joint Excise Commissioner and directed

the State Government to consider the application submitted by

the respondent in the light of the conditions prevailing in the year

1998 vide his judgment dated 23.6.2004.

8.The Excise Commissioner heard the respondent’s

representative on 18.10.2004 and, after obtaining the views of

the State Government, rejected the application based on G.O.

(Rt.) No. 689/99/TD dated 29.9.1999. Aggrieved by the

communication received from the Excise Commissioner, the

respondent filed a Representation on 20.2.2005 before the State

Government, which was rejected by the Government vide its

communication No. 4493/G3/2005/TD dated 1.9.2005.

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9.Respondent then challenged the above mentioned orders by

filing a Writ Petition No. 29092 of 2005. Learned single Judge vide

his judgment dated 25.1.2006 quashed the above mentioned

orders and passed the following order:

“So, when this Court directed the Government to

consider the claim of the petitioner under Section 14 of

the Abkari Act, with reference to the conditions obtained

in 1998, the Government decided the matter on the basis

of the G.O. issued in 1999. So, the above quoted decision

of the Government under Section 14 is unsustainable. It

is declared so. Since Ext.P12 is passed, based on the

above quoted communication, it is quashed. Though the

petitioner raised several contentions in Ext.P13 appeal,

none of them was considered in Ext.P14. Accordingly,

Ext.P14 is also quashed. The Government is directed to

reconsider the matter concerning grant of sanction under

Section 14 of the Abkari Act in accordance with law in the

light of the directions in Ext.P11 judgment and also the

above observations contained in this Judgment, within

two months from the date of receipt of a copy of this

Judgment.”

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10.State Government, in pursuance to the directions given by

the learned single Judge in Writ Petition No. 29092 of 2005, again

considered the matter and took the view that the Government has

to make an “independent assessment of eligibility” of the

applicant for the grant of licence. Holding so, the Government

passed an order on 16.3.2006. The operative portion of the order

reads as under:

“Whenever, applications for Distillery &

Compounding (Blending & Bottling) units are received,

they are processed separately. The decision taken in

each application may be based on the facts & the

circumstances akin to the individual application and may

not be a common decision. Licenses were given on the

applications of M/s Amrut Distillery, Palakkad, Empee

Distillery, Palakkad, Elite Distillery, Trissur & KS Distilery,

Kannur during the period as alleged by the petitioner. At

the same time applications from Kandath Distillery, S.R.

Distillery, Sree Chakra Distillery, Rajadhani Distilleries etc.

were rejected. Government cannot grant the privilege to

all those who had applied for such licence, for a host of

reasons. Restrictions have to be imposed, which is

permissible under the Constitution. The Government has

with effect from 29/9/99 issued Government Order

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deciding not to grant fresh licenses for Distillery and

Compounding (Blending & bolting) unit. The granting of

licence for the Distillery & Compounding (blending &

bottling) units is a prerogative of the Government and not

the right of the petitioner. The directions and the

communications from the offices to the petitioner are only

the statutory requirements for processing the application

and do not cast any right or claim on the petitioner.

In the above circumstances, Government finds no

reasons to reconsider the request of the petitioner under

section 14 of the Abkari Act. Request of the petitioner is

settled accordingly, keeping in abeyance of the judgment

of the Hon’ble High Court read 5

th

paper.

The Excise Commissioner will pass fresh orders on

Ext.P1 within the time limit prescribed by the Hon’ble

High Court.”

11.Respondent, noticing that the Government had not followed

the directions given by the High Court while passing the order on

16.3.2006, filed Contempt Case (C) No. 521 of 2006 before the

High Court. Learned single Judge of the High Court felt that the

State Government should have considered, the claim for licence,

in the light of the conditions, which existed in the year 1998 and

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could have granted permission or rejected it, but referred to

irrelevant matters. Learned single Judge felt that the

Government had prima facie committed contempt of court by

ignoring the directions contained in its earlier judgment in O.P. No.

29092 of 2005 and passed an order on 29.6.2006, placing the

matter before the Division Bench of the High Court.

12.The Division Bench of the High Court directed personal

appearance of the Secretary to the Government who appeared

before the Court on 9.8.2006 and offered unconditional apology

and submitted that the order dated 16.3.2006 would be

withdrawn and fresh orders would be passed, in conformity with

the judgment in O.P. No. 29092 of 2005. The contempt case was

accordingly closed on 12.9.2006.

13.The Government, later, passed a detailed order dated

11.10.2006. The operative portion of the same reads as follows:

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“Government has examined the matter in detail

with all available records and filed in the light of

directions from the High Court of Kerala and it is found

that partnership came into existence only on 10.4.91 as

per clause no. 3 of the partnership deed. Therefore, the

application dated 12.11.87 cannot be treated as an

application submitted by the partnership firm. Further,

the alleged application dated 12.11.87 was already

disposed of by the Board of Revenue by letter No. XC3-

32739/93/L.Dis dated 28.6.1994. thereafter, it is stated

that the petitioner made an application on 21.11.1998

requesting to reconsider the application alleged to have

been submitted by them on 12.1.1987. It is contended

that in the year 1998, four licenses were granted on

20.5.1998, 06.08.1998 and 20.09.1998 respectively.

From the files it is seen that the above licences were

granted on applications which were submitted during

1995, 1996 and 1997 respectively.

From 3.2.1998 to 21.11.1998 Government received

52 applications for establishing compounding, blending

and bottling units of Indian made foreign liquor. The

Excise Commissioner as per letter No. XC3-15555/98

dated 25.11.1998 reported that there was an

unprecedented flow of application and the Government

constituted a scrutiny committee as per GO (Rt) No.

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157/99/TD dated 3.3.1999 to shortlist the application.

As on 21.11.1998 the date on which the petitioner

made the application for compounding blending and

bottling licence there were other 52 applications and

Government have not considered any one of them.

Moreover, the application put in by the partnership firm

byname M/s. Kandath Distilleries on 12.1.1987 cannot

be treated as an application put in by the firm based on

a partnership deed which came into existence on

10.4.1991 as per Clause 3 of the Partnership Deed.

In the above circumstances the application put in

by M/s Kandath Distilleries on 21.11.1998 does not

merit consideration for approval by Government based

on the factual conditions available as on 21.11.1998.”

14.M/s Kandath Distilleries then challenged the above

mentioned order by filing Writ Petition No. 2708 of 2007. Learned

single Judge took the view that no reason other than the

constitution of the firm and the date of its effect, was noticed in

the impugned order dated 11.10.2006 for refusing the licence and

that there was no other ground found by the Government to

refuse the licence. Consequently, learned single Judge quashed

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the Government order dated 11.10.2006 and directed the State

Government to grant licence applied for vide application dated

12.1.1987.

15.The State Government, aggrieved by the said judgment, filed

a Writ Appeal No. 716 of 2008. The Division Bench felt that the

State Government had ingenuously made a classification to weed

out respondent to the effect that, from 21.11.1998 onwards, State

had a different policy. The Division Bench noticed that the High

Court had directed the State Government to consider its

application submitted as early as in 1987. Further, it was also

pointed out that the State Government had no case that the

respondent applicant was not suitable, nor such contention had

ever been taken in the previous litigations. Further, it was also

held by the Division Bench that similarly situated persons had

already been granted licences long back. In such circumstances,

the Division Bench held that there was no illegality in the

directions given by the learned single Judge giving a positive

direction to grant the licence, which was necessary to uphold the

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majesty of rule of law. The appeal filed by the State Government

was accordingly dismissed. Aggrieved by the same, the State

Government has come up with appeal.

16.Shri C. S. Rajan, learned senior counsel appearing for the

State, submitted that the learned single Judge as well as the

Division Bench of the High Court has committed a grave error

while exercising their jurisdictions under Article 226 of the

Constitution of India in giving a positive direction to grant a

distillery licence to the respondent. Learned senior counsel

submitted that a citizen has no fundamental right to trade or

business in liquor and that the matter relating to grant of licence

for dealing in liquor or starting distillery unit is within the

exclusive domain of the State.

Learned senior counsel submitted that if the State has the right to

adopt a policy decision and, indisputably, it has the right to vary,

amend or rescind the same. Further, it was also submitted that

the application submitted by the respondent was a defective

application and, therefore, the Government was justified in not

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entertaining that application. Learned senior counsel submitted

that cogent reasons have been stated by the Government vide its

order dated 11.10.2006 rejecting the application submitted by the

respondent and the High Court was not right in issuing a Writ of

Mandamus directing the State Government to grant the licence

applied for.

17.Shri Giri, learned senior counsel and Shri George Ponthottam,

learned counsel appearing for the respondent, traced the entire

history of the case starting from 1987 till the Government passed

the order dated 11.10.2006. Learned counsel submitted that

there was a concerted effort on the part of the State not to

consider the application of the respondent for licence for starting

the distillery unit in the Palakkad District. At the same time, on

the basis of Policy which was in force in the year 1998, four

licences were granted and the respondent was discriminated.

Learned counsel submitted that, on non-compliance of the various

directions given by the High Court, the High Court found that the

Secretary to Government had committed contempt and the order

dated 11.10.2006 was nothing but a repetition of earlier orders

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and it is under those circumstances, the High Court gave a

positive direction to grant distillery licence to the respondent,

which shall not be interfered with by this Court under Article 136

of the Constitution. Learned counsel also referred the judgment

of this Court in Comptroller and Auditor-General of India and

Anr. v. K.S. Jagannathan and Anr. (1986) 2 SCC 679 and

submitted that in order to prevent injustice, this Court can always

give direction to compel performance of a discretion by an

authority in a proper and lawful manner. Reference was also

made to the judgment of this Court in Harigovind Yadav v.

Rewa Sidhi Gramin Bank and Ors (2006) 6 SCC 145 and RBF

Rig Corporation, Mumbai v. The Commissioner of Customs

(Imports), Mumbai (2011) 3 SCC 573 and submitted that in

appropriate cases under Article 226 of the Constitution, this Court

can always mould the reliefs.

18.We may, before examining the rival contentions, examine

the scheme of the Act as well as 1975 Rules. The Act was

enacted to consolidate and amend law relating to the import,

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export, transport, manufacture, sale and possession of

intoxicating liquor and of intoxicating drugs in the State of Kerala.

Section 14 of the Act deals with the establishment and control of

distilleries, breweries, warehouses, etc, which confers power on

the Commissioner to issue a licence with the previous approval of

the Government to establish public distilleries, breweries or

wineries, or authorize the establishment of private distilleries,

breweries, wineries or other manufactories in which liquor may be

manufactured. Section 14 is given below for easy reference:

“14. Establishment and control of distilleries,

breweries, warehouses, etc.- The Commissioner

may, with the previous approval of the Government,-

(a) Establish public distilleries, breweries or

wineries, or authorize the establishment of

private distilleries, breweries, wineries or other

manufactories in which liquor may be

manufactured under a licence granted under

this Act.

Xxx xxx xxx

xxx xxx xxx”

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19.The State Government, in exercise of its powers conferred by

Section 29 of the Act framed the 1975 Rules. Rule 3 deals with

the application for licence, which requires a person who desires to

carry on operations of compounding, blending and bottling of

foreign liquor to apply in writing to the Commissioner and furnish

the necessary details as required under the Rule. Rule 3 is given

below for easy reference:

3. Application for Licence.- Any person who

desires to carry on operations of compounding,

blending and bottling of foreign liquor shall apply in

writing to the Commissioner. Every application for a

lilcence shall give details of the operation desires to

perform and shall be accompanied by –

(i)description and plan of the building in which

the operations are to be carried out in triplicate, drawn

on scale in tracing cloth;

(ii)statement specifying the number, size and

descriptions of the permanent apparatus, if any, which

are proposed to be used;

(iii)details regarding the maximum quantity in

proof litres of spirits expected to be in the store or in

the process of compounding, blending or bottling; and

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(iv) a treasury receipt for the deposit of an earnest

money of one hundred rupees.”

Rule 4 deals with the grant and renewal of licence, which

empowers the Commissioner to issue the licence applied for.

Rule 4 reads as under:

“4. Grant and renewal of licence.- (1) The

Commissioner may, if he is satisfied after making such

enquiries as he may consider necessary that the

applicant is a person to whom licence may be issued,

grant to the applicant.-

(i)a compounding and blending licence in

Form 1 on payment of a fee of

Rs.2,00,000 (Rupees two lakhs only); and

(ii)a bottling licence in Form 2 on payment

of a fee of Rs.2,00,000 (Rupees two lakhs

only).

(2)The Commissioner shall retain the original of

the description of plan and forward the duplicate to the

officer-in-charge through the Assistant Excise

Commissioner and return the triplicate to the lilcensee.

(3)The earnest money deposit shall be adjusted

towards the fees of the licence. If the licence applied

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for is not granted, the earnest money deposit of Rs.100

shall be refunded to the applicant.

(4)The Commissioner may on application made

to him in this behalf and on payment of the fee

specified in rules renew a licence for a period of one

year at a time.”

(emphasis supplied)

Rule 5 deals with the requirements to be satisfied with regard to

building in which the compounding, blending and bottling

operations are to be carried out. Licence for compounding and

blending of foreign liquor is issued in Form No. 1 and the licence

for bottling of foreign liquor is issued in Form No. 2.

20.We may, before examining the scope of the above

mentioned provisions and the nature of jurisdiction or the powers

to be exercised by the Commissioner and the State Government,

examine the general purport of the Act in the light of Article 19(1)

(g) of the Constitution of India.

RIGHT TO CARRY ON TRADE OR BUSINESS IN LIQUOR

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21.Article 47 is one of the Directive Principles of State Policy

which is fundamental in the governance of the country and the

State has the power to completely prohibit the manufacture, sale,

possession, distribution and consumption of liquor as a beverage

because it is inherently dangerous to the human health.

Consequently, it is the privilege of the State and it is for the State

to decide whether it should part with that privilege, which

depends upon the liquor policy of the State. State has, therefore,

the exclusive right or privilege in respect of portable liquor. A

citizen has, therefore, no fundamental right to trade or business in

liquor as a beverage and the activities, which are res extra

commercium, cannot be carried on by any citizen and the State

can prohibit completely trade or business in portable liquor and

the State can also create a monopoly in itself for the trade or

business in such liquor. This legal position is well settled. State

can also impose restrictions and limitations on the trade or

business in liquor as a beverage, which restrictions are in nature

different from those imposed on trade or business in legitimate

activities and goods and articles which are res commercium.

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Reference may be made to the judgments of this Court in Vithal

Dattatraya Kulkarni and Others v. Shamrao Tukaram

Power SMT and Others (1979) 3 SCC 212, P. N. Kaushal &

Others v. Union of India & Others (1978) 3 SCC 558, Krishna

Kumar Narula etc. v. State of Jammu & Kashmir & Others

AIR 1967 SC 1368, Nashirwar and Others v. State of Madhya

Pradesh & Others (1975) 1 SCC 29, State of A. P. & Others v.

McDowell & Co and Others (1996) 3 SCC 709 and Khoday

Distilleries Ltd. & Others v. State of Karnataka & Others

(1995) 1 SCC 574.

22.Legislature, in its wisdom, has given considerable amount of

freedom to the decision makers, the Commissioner and the State

Government since they are conferred with the power to deal with

an article which is inherently injurious to human health.

23.Section 14 of the Act indicates that the Commissioner can

exercise his powers to grant licence only with the approval of the

State Government because the State has the exclusive privilege

in dealing with liquor. The powers conferred on the Commissioner

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and the State Government under Section 14 as well as Rule 4 are

discretionary in nature, which is discernible from the permissible

language used therein.

LIQUOR POLICY:

24.Liquor policy of State is synonymous or always closely

associated with the policy of the Statute dealing with liquor or

such obnoxious subjects. Monopoly in the trade of liquor is with

the State and it is only a privilege that a licensee has in the

matter of manufacturing and vending in liquor, so held, by this

Court in State of Maharashtra v. Nagpur Distilleries (2006) 5

SCC 112. Courts are also not expected to express their opinion as

to whether at a particular point of time or in a particular situation,

any such policy should have been adopted or not. 1998 Policy

has life only in that year and if any rights have accrued to any

party, that have to be adjudicated then and there. Writ Petition

was moved only in the year 2000, by then, policy had been

changed because 1999 liquor policy was total ban, so also

subsequent liquor policies. It is trite law that a Court of Law is

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not expected to propel into “the unchartered ocean” of State’s

Policies. State has the power to frame and reframe, change and

re-change, adjust and readjust policy, which cannot be declared

as illegal or arbitrary on the ground that the earlier policy was a

better and suited to the prevailing situations. Situation which

exited in the year 1998 had its natural death and cannot be

revised in the year 2013, when there is total ban.

DISCRETION AND DUTY:

25.Discretionary power implies freedom of choice, a competent

authority may decide whether or not to act. The legal concept of

discretion implies power to make a choice between alternative

courses of action (Discretionary Justice Davis 1969). Statute has

conferred discretionary power on the Commissioner and State

Government but not discretion coupled with duty because they

are dealing with a subject matter on which State has exclusive

privilege. Permissive language used by the Statute in Section 14

and the rule making authority in Rule 4 gives the State

Government and the Commissioner, no mandatory duty or

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obligation to grant the licence except perhaps to consider the

application, if the liquor policy permits so.

26.Section 14 uses the expression “Commissioner may”, “with

the approval of the Government” so also Rule 4 uses the

expressions “Commissioner may”, “if he is satisfied” after making

such enquiries as he may consider necessary “licence may be

issued”. All those expressions used in Section 14 and Rule 4

confer discretionary powers on the Commissioner as well as the

State Government, not a discretionary power coupled with duty.

The powers, conferred on the Commissioner as well as the

Government, have to be understood in the light of the

Constitutional scheme bearing in mind the fact that the trade or

business which is inherently harmful can always be restricted,

curtailed or prohibited by the State, since it is the exclusive

privilege of the State. No duty is, therefore, cast on the

Commissioner to grant a licence for establishing a distillery unit

and no right is conferred on any citizen to claim it as a matter of

right. State can always adopt a “restrictive policy”, e.g., reducing

the number of licences in a particular district or a particular area,

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or not to grant any licence at all in a particular district, even in

cases where the applicants have satisfied all the conditions

stipulated in the rules and the policy permits granting of licences.

In other words, the satisfaction of the conditions laid -down in

1975 Rules would not entitle an applicant as a matter of right to

claim a distillery licence which is within the exclusive privilege of

the State.

MANDAMUS – TO ISSUE LICENCE

27.Legislature when confers a discretionary power on an

authority, it has to be exercised by it in its discretion, the decision

ought to be that of the authority concerned and not that of the

Court. Court would not interfere with or probe into the merits of

the decision made by an authority in exercise of its discretion.

Court cannot impede the exercise of discretion of an authority

acting under the Statute by issuance of a Writ of Mandamus. A

Writ of Mandamus can be issued in favour of an applicant who

establishes a legal right in himself and is issued against an

authority which has a legal duty to perform, but has failed and/or

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neglected to do so, but such a legal duty should emanate either in

discharge of the public duty or operation of law. We have found

that there is no legal duty cast on the Commissioner or the State

Government exercising powers under Section 14 of the Act read

with Rule 4 of the 1975 Rules to grant the licence applied for. The

High Court, in our view, cannot direct the State Government to

part with its exclusive privilege. At best, it can direct

consideration of an application for licence. If the High Court feels,

in spite of its direction, the application has not been properly

considered or arbitrarily rejected, the High Court is not powerless

to deal with such a situation that does not mean that the High

Court can bend or break the law. Granting liquor licence is not

like granting licence to drive a cab or parking a vehicle or issuing

a municipal licence to set up a grocery or a fruit shop. Before

issuing a writ of mandamus, the High Court should have, at the

back of its mind, the legislative scheme, its object and purpose,

the subject matter, the evil sought to be remedied, State’s

exclusive privilege etc. and not to be carried away by the

idiosyncrasies or the ipse dixit of an officer who authored the

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order challenged. Majesty of law is to be upheld not by bending

or breaking the law but by strengthening the law.

28.Respondent-applicant, in the instant case, in our view, has

failed to establish a legal right or to show that there is a legal

duty on the Commissioner or the Government to issue a distillery

licence.

DISCRETIONARY ORDER – ARTICLE 14

29.Discretionary power leaves the donee of the power free to

use or not to use it at his discretion. (refer Rani Drig Raj Kuer

v. Raja Sri Amar Krishna Narain Singh AIR 1960 SC 444). Law

is well settled that the exercise of statutory discretion must be

based on reasonable grounds and cannot lapse into the

arbitrariness or caprice anathema to the rule of law envisaged in

Article 14 of the Constitution. It is trite law that, though, no

citizen has a legal right to claim a distillery licence as a matter of

right and the Commissioner or the State Government is entitled to

either not to entertain or reject the application, they cannot enter

into a relationship by arbitrarily choosing any person they like or

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discriminate between persons similarly circumscribed. The State

Government, when decides to grant the right or privilege to

others, of course, cannot escape of the rigor of Article 14, in the

sense that it can act arbitrarily. In such a situation, it is for the

party who complains to establish that a discriminatory treatment

has been meted out to him as against similarly placed persons

but cannot demand a licence for establishing a distillery unit, as a

matter of right.

30.In State of Madhya Pradesh v. Nandlal Jaiswal (1986) 4

SCC 566, this Court held that no one can claim as against the

State the right to carry on trade or business in liquor and the

State cannot be compelled to part with its exclusive privilege or

right of manufacturing and selling liquor. But, when the State

decides to grant such right or privilege to others the State cannot

escape from the rigor of Article 14 of the Constitution, it cannot

act arbitrarily or at its sweet will.

31.We have noticed that the application preferred by M/s

Kandath Distilleries (respondent herein) in the year 1987 was for

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establishing a distillery unit in the Palakkad District. So also the

applications submitted by M/s Amrut Distilleries, Bangalore and

M/s. Empee Distilleries, Madras and licences were granted to

them for establishing the distillery units in the Palakkad District.

However, the respondent’s application was not considered. The

Commissioner or the State Government has to take an

independent decision in each application based on its eligibility

and there cannot be any common decision. As held in Nandlal

Jaiswal (supra) when the State Government is granting licence

for putting up new industry, it is not necessary that it should

advertise and invite offers for putting up such industry. The State

Government is entitled to negotiate with those who have come up

with an offer to set up such industry. The State Government

cannot grant the privilege to all those who have applied for such a

licence in a particular district, for a host of reasons. The State

Government could restrict the number of distillery lincences in a

particular district by two and it can also grant a third licence in a

particular district as well, but an applicant cannot claim a licence

as a matter of right.

Page 31 31

32.The Respondent, in our view, could lay a claim only if it

establishes that a preferential treatment has been meted out to

M/s Amrut Distilleries, Bangalore and M/s. Empee Distilleries,

Madras while granting licences for establishing the respective

distillery units in the Palakkad District on the ground of

discrimination violating Article 14 of the Constitution of India.

Respondent has never challenged the distillery licences granted

to them, but only prayed for another licence for it as well which,

in our view, cannot be claimed as a matter of right. Citizens

cannot have a fundamental right to trade or carry on business in

the properties or rights belonging to the State nor can there be

any infringement of Article 14, if the State prefers other

applicants for the grant of licence, during the pendency of some

other applications, unless an applicant establishes a better claim

over others.

33.We have gone through the Government Order dated

11.10.2006 in extenso and we are not prepared to say that the

application of the respondent was rejected solely on the ground

Page 32 32

that the application dated 12.1.1987 could not be treated as an

application put forward by a firm based on a partnership deed,

which came into existence on 10.4.1991, as per Clause 3 of the

Partnership Deed but on various other grounds as well. The State

Government, in our view, has considered the respondent’s

application dated 12.1.1987 with regard to the conditions that

existed in the year 1998. The Government letter dated 28.6.1994

would indicate that, apart from the respondent, few other

applications were also pending prior to the year 1994. Over and

above, the State Government during the year 1998, from

3.2.1998 to 21.11.1998, had received 52 applications for

establishing compounding, blending and bottling units in IMFLs in

various parts of the State. The Excise Commissioner vide his

letter dated 25.11.1998 had reported that there was an

unprecedented flow of applications, that was the situation

prevailing in the year 1998, a factor which was taken note of in

not entertaining the respondent’s application, whether it was

submitted on 12.1.1987 or on 22.11.1998. We cannot, in any

Page 33 33

way, activate an out-modeled, outdated, forgotten liquor policy of

1998, in the year 2013, by a Writ of Mandamus.

34.We are, therefore, of the view that the learned single Judge

as well as the Division Bench of the High Court have overlooked

those vital factors while issuing a Writ of Mandamus directing the

State Government/Commissioner to grant distillery licence to the

respondent for setting up of a new distillery in the Palakkad

District, thinking that the impugned order is nothing but old wine

in new bottle. We are informed, after 1998, not even a single

licence has been granted by the State Government/Commissioner

for establishing distillery units anywhere in the State. That being

the factual and legal position, we are of the view that the learned

single Judge as well as the Division Bench of the High Court was

not justified in issuing a Writ of Mandamus directing the issuance

of a distillery licence to the respondent.

35.We are, therefore, inclined to allow this appeal and set aside

the judgment of the learned single Judge and affirmed by the

Division Bench of the High Court. Ordered accordingly.

Page 34 34

However, in the facts and circumstances of the case, there will be

no order as to costs.

............................................J.

(K. S. RADHAKRISHNAN)

............................................J.

(DIPAK MISRA)

New Delhi,

February 22, 2013.