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PETITIONER: KRISHNA KUMAR NARULA ETC.

       Vs.

RESPONDENT: THE STATE OF JAMMU AND KASHMIR & ORS.

DATE OF JUDGMENT: 01/03/1967

BENCH: RAO, K. SUBBA (CJ) BENCH: RAO, K. SUBBA (CJ) SHAH, J.C. SIKRI, S.M. RAMASWAMI, V. VAIDYIALINGAM, C.A.

CITATION:  1967 AIR 1368            1967 SCR  (3)  50  CITATOR INFO :  R          1972 SC1816  (16)  RF         1972 SC1863  (13)  E          1975 SC 360  (12,17,19,21,22)  R          1975 SC1121  (51,52,53,54,67)  R          1977 SC 722  (9,17,29)  RF         1978 SC1457  (42)  R          1985 SC1676  (2)  RF         1990 SC1927  (75)

ACT: Constitution of India, 1950, Art. 19(1)(g)-Right to carry on business in liquor-If fundamental right. The  jammu and Kashmir Excise Act, 1958, s.  20-Licence  for carrying an business in liquor-Objections by inhabitants  of location  of  bar--Applicant  asked  to  shift  premises  as condition for issue of licence-Validity of order under  Art. 19(6) of the Constitution.

HEADNOTE: The appellant, who was carrying on business in liquor in his hotel  under  an  annual licence issued by  the  Excise  and Taxation  Commissioner under s. 20 of the Jammu and  Kashmir Excise  Act,  1958,  had applied for  a  fresh  licence  for another  year.   Meanwhile, the Excise  Department  received complaints from the inhabitants of the locality objecting to the  location of the bar in that locality.   The  complaints were  inquired  into and the appellant was informed  by  the Commissioner that the licence would not be issued unless  he shifted  the  premises of his hotel to some  other  approved locality.  A writ petition filed by the appellant for quash- ing the order was dismissed by the High Court. In appeal to this Court., HELD : (i) Dealing in liquor is business, and a citizen  has a fundamental right to do that business under Art.  19(1)(g) of the Constitution.  But the State can make a law  imposing reasonable  restrictions on the right, in public  interests, under Art. 19(6). (57 D-E] Dealing in noxious and dangerous goods does not cease to  be business, though the nature of the goods may be a ground for

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imposing a restriction on the activity. [53 F; 54 C] T.   B.  Ibrahim v. Regional Transport  Authority,  Tanjore, [1953]  S.C.R.  290,  Cooverjee B. Bharucha  v.  The  Excise Commissioner  and  the  Chief  Commissioner,  Ajmer,  [1954] S.C.R. 873, State of Assam v. A. N. Kidwai, Commissioner  of Hills-  Division and Appeals, Shillong, [1957]  S.C.R.  295, Nagendra Nath v. Commissioner of Hills Division and Appeals, Assam, [1958] S.C.R. 1240, explained. Narain  Swadesh Weaving Mills v. The Commissioner of  Excess Profits ’Fax, [1955] 1 S.C.R. 952, State of Bombay v. R.  M. D.  Chamarbaugwala, [1957] S.C.R. 874 and  Ranchhorlalji  v. Revenue   Divisional   Commissioner,   Northern    Division, Sambalpur, A.I.R. 1960 Orissa 88, referred to. Since  the instant case was one of issuing a licence, s.  20 of  the  Excise  Act applies.  As the  Excise  and  Taxation Commissioner  had made a bona fide enquiry and came  to  the conclusion  that the locality was not suitable far  carrying on business in liquor, for relevant reasons, it could  not he said that his order was arbitrary or unreasonable. [58 B] (ii) Section  22  of the Act deals with  cancellation  of  a licence and does not     control s. 20. [58 C]        K.K.NARULA V. J. & K. STATE (Subba Rao, C.J.) 51

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 65 and  66 of 1967. Appeals from the judgment and order dated September 16, 1966 of the Jammu and Kashmir High Court in Writ Petitions Nos. 2 and 4 of 1966. S.   T.  Desai, S. K. Dholakia, Vineet Kumar and  Inder  Das Grover, for the appellants (in both the appeals). Raja Jaswant Singh, Advocate-General, Jammu and Kashmir,  R. N.  Sachthev for S. P. Nayyar, for the respondents (in  both the appeals). The Judgment of the Court was delivered by Subba  Rao,  C.J. These two appeals arise out  of  a  common judgment  of a Division Bench of the High Court of  Jammu  & Kashmir dismissing the two petitions filed by the appellants for the issuance of a writ quashing the order passed by  the Taxing  and Excise Officer, Jammu, refusing to  renew  their licences  for  the year 1966-67 in respect of  their  liquor shops. The  facts giving rise to these two appeals may  be  briefly and separately stated. Civil  Appeal  No. 65 of 1967 relates  to  Glory  Restaurant situated  in Moti Bazaar, Jammu.  The appellant in the  said appeal, who is the proprietor of the said restaurant,  after taking  the requisite licence from the Government, had  been carrying on for the last 7 years the business of retail sale of  country and foreign liquor in the said restaurant.   The licence was an annual licence and it was being renewed  from year  to year.  On December 11, 1965, the Deputy Excise  and Taxation  Commissioner,  Jammu,  issued  a  notice  to   the appellant ordering the shifting of the premises of the  said restaurant  to  some other locality on the ground  that  the inhabitants  of  the  locality had  complained  against  the location  of the appellant’s bar and restaurant  there.   As the licence for 1965-66 would expire on March 31, 1966,  the appellant  applied  for  a fresh  licence  for  1966-67  and deposited  the  prescribed  licence fee  in  the  Government treasury. The appellant in Civil Appeal No. 66 of 1967 was carrying on

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business in liquor in his hotel, named Bliss Hotel and  Bar, situated in Parade Ground, Jammu, under a licence issued  by the Government of the said State.  He obtained a licence for the first time in 1964.  After obtaining the licence, it  is alleged,  he had spent about Rs. 70,000/- in furnishing  the Hotel  and Bar, but for unavoidable reasons he could not  do business  during the financial year 1964-65.  For  the  year 1965-66  he  made  an application for  the  renewal  of  the licence and on December 11, 1965, he received a letter  from the Deputy Excise and Taxation Commissioner, Jammu, desiring the appellant to shift the premises of his 52 Hotel and Bar to some other suitable place after getting  it approved  by  the  Department  on the  ground  that  he  had received  complaints  from the inhabitants of  the  locality against  the location of the bar there.  At the instance  of the  2nd respondent, the Excise and  Taxation  Commissioner, Jammu, his licence, along with those of other licensees, was collected  by  the 3rd respondent.  As he was  not  given  a licence to do business in liquor in the same locality,  this appellant also filed a writ petition in the High Court for a relief  similar  to that claimed by the appellant  in  Civil Appeal No. 65 of 1967. To  both  the  petitions, the State of  Jammu  and  Kashmir, through  its  Chief  Secretary,  the  Excise  and   Taxation Commissioner.   Jammu & Kashmir, and the Deputy  Excise  and Taxation Commissioner, Jammu, were made respondents 1, 2 and 3 respectively. The  respondents  opposed the petitions and  pleaded,  inter alia,  that  the  localities wherein  the  petitioners  were carrying  on  the  business  were  the  most  congested  and frequented  parts of the city and that, as  complaints  were made  against  their carrying on the business  in  the  said localities, the respondents refused to renew their  licences to carry on the said business in the said localities.   They also  pleaded that under The Excise Act,  1958,  hereinafter called the Act, the issuing of licence was at the discretion of the Excise Commissioner and he had, having regard to  the complaints   received,  bona  fide,  in  exercise   of   his discretion,  refused  to give licence to the  appellants  to carry on business in the said localities. In  the  High Court the Writ petitions, along  with  others, were decided by a Division Bench consisting of Chief Justice and Justice Syed Murtaza Fazl Ali.  They gave concurrent but separate  judgments.   Both the Judges agreed on  merits  in dismissing  the petitions, but expressed different views  on the  question whether the petitioners had fundamental  right to do business in liquor.  Hence the appeals. Mr. Desai, learned counsel for the appellants, contended  as follows  :-(1)  If  s.  20  of  the  Act  was  construed  as conferring  an  absolute discretion on the  Commissioner  of Excise and Taxation to issue or not to issue a licence to do business  in liquor, it would be void on the ground that  it infringed Art. 19 of the Constitution. (2) The licence being renewable as a matter of course, the Commissioner of  Excise and Taxation could not refuse to renew the same on a  ground other than those similar to the grounds contained in s.  22, cls.  (a), (b), (c) and (d) of the Act. (3) In any case,  as the  licences  were  renewable as a matter  of  course,  the appellants  were  entitled to notice and an  opportunity  to explain  why the licence should be renewed. (4)  The  ground relating  to objections as to locality was not in  substance accepted by the High Court. 53 The  first point, namely, the constitutional validity of  S.

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20  of the Act was not raised in the High Court.  We  cannot permit  the appellant to raise that question for  the  first time  before  us.  But we should not be understood  to  have expressed our view one way or other on the said question. As  we have pointed out earlier, the learned  Chief  Justice and  Ali,  J.,  expressed different views  on  the  question whether  the  appellants  had  a  fundamental  right  to  do business  in  liquor.   To avoid further  confusion  in  the matter it is necessary to make the position clear.   Article 19  of the Constitution qua the right to do  business  reads thus :               (i)   All citizens shall have the right-               (g)   to practice any profession, or to  carry               on any occupation, trade or business.               (6)   Nothing  in sub-clause (g) of  the  said               clause  shall  affect  the  operation  of  any               existing  law  in  so far as  it  imposes,  or               prevent the State from making any law               imposing,  in  the interests  of  the  general               public,   reasonable   restrictions   on   the               exercise  of the right conferred by  the  said               sub-clause......... A  combined reading of cls. (1) and (6) of Art. 19 makes  it clear that a citizen has a fundamental right to carry on any trade  or  business, and the State can make a  law  imposing reasonable  restrictions on the said right in the  interests of the general public.  It is therefore, obvious that unless dealing in liquor is not trade or business, a citizen has  a fundamental  right to deal in that commodity.   The  learned Advocate  General contended that dealing in liquor  was  not business  or trade, as the dealing in noxious and  dangerous goods  like  liquor  was  dangerous  to  the  community  and subversive  of  its morals.  The acceptance  of  this  broad argument  involves the position that the meaning of the  ex- particular  point of time in our country.  Such an  approach leads  general  acceptance  of  the  standards  of  morality obtaining  at  a particular point of time  in  our  country. Such  an  approach  leads  to  incoherence  in  thought  and expression.  Standards of morality can afford a guidance  to impose  restrictions,  but  cannot limit the  scope  of  the right.  So too, a Legislature can impose restrictions on, or even prohibit the carrying on of a particular trade or busi- ness  and  the  Court, having regard  to  the  circumstances obtaining  at  a  particular  time or  place  may  hold  the restrictions  or  prohibition  reasonable.   The   question, therefore,  is, what is trade or business ? Though the  word "business" is ordinarily more coin- 54 prehensive than the word "trade", one is used as  synonymous with  the other.It is not necessary to bring out  the  finer points of distinction    between  the said two  concepts  in this case.  In the words of S.R. Das, J., as he then was, in Narain Swadeshi Weaving Mills v. The Commissioner of  Excess Profits  Tax(1),  the word "business"  connotes  some  real, substantial  and systematic or organised course of  activity or conduct with a set purpose.  Even accepting this test, if the activity of a dealer, say, in ghee is business, then how does  it cease to be business if it is in liquor  ?   Liquor can  be manufactured, brought or sold like any  other  corn- modity.   It is consumed throughout the world,  though  some countries restrict or prohibit the same on economic or moral ,,rounds.   The  morality or otherwise of a  deal  does  not affect the quality of the activity though it may be a ground for  imposing  a  restriction on  the  said  activity.   The illegality  of an activity does not affect the character  of

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the activity but operates as a restriction on it.  If a  law prohibits  dealing in liquor, the dealing does not cease  to be  business, but the said law imposes a restriction on  the said  dealing.   But it is said that the decisions  of  this Court have held that dealing in liquor is not a business  or trade within the meaning of Art. 19 of the Constitution.  In T.  B. Ibrahim v. Regional Transport Authority, Tanjore  (2) it was held that restriction placed upon the use of the bus- stand  for  the  purpose  of  picking  up  or  setting  down passengers  to  or  from  outward  journeys  could  not   be considered to be an unreasonable restriction on the right to carry on. any profession, trade or business of the appellant and,  therefore,  Art. 268 was not in any way  repugnant  to Art.  19  (1)  (g) of the Constitution.   In  that  context, Chulam Hasan, J., speaking for the Court, observed:               "There is no fundamental right in a citizen to               carry on business wherever he chooses and  his               right  must  be  subject  to  any   reasonable               restriction imposed by the executive authority               in the interest of public convenience." This  Court did not say that there was no fundamental  right to do business but only held that a citizen could not  claim that his fundamental right could not be restricted in public interests.  Nor did the decision in Cooverjee B. Bharucha v. The   Excise  Commissioner  and  the   Chief   Commissioner. Ajmer(3) lay down any such proposition.  There the  question was  whether  the  Excise Regulation 1  of  1915  imposed  a reasonable  restriction within the meaning of Art. 19(6)  of the Constitution on the right given under Art. 1 9 (1 )  (g) thereof  to carry on the business in  intoxicating  liquors. This  Court. held that the said Regulation was a  reasonable restriction within the meaning of Art. 19(6) of the (1) [1955] 1 S.C.R.952,961. (2) [1953] S.C.R. 290, 299. (3) [1954] S.C.R. 873,880. 55 Constitution.   But in the course of tile judgment  Mahajan. C.  J.,  who spoke for the Court, gave an extract  from  the judgment  of  Field, J., in Crowley v.  Christensen(1).   In that extract the following passage is found :-               "The  police  power  of  the  State  is  fully               competent to regulate the business to mitigate               its  evils or to suppress it entirely.   There               is no inherent right in a citizen to thus sell               intoxicating  liquors by retail; it is  not  a                             privilege  of  a citizen of the State or  of  a               citizen  of  the United States.  As  it  is  a               business  attended with danger to  the  commu-               nity,  it  may, as already said,  be  entirely               prohibited,   or  be  permitted   under   such               conditions  as  will limit to the  utmost  its               evil."               After  citing the entire passage,  this  Court               concluded thus               "These    observations   have    our    entire               concurrence  and they completely negative  the               contention raised on behalf of the petitioner.               The  provisions- of the regulation purport  to               regulate trade in liquor in all its  different               spheres and are valid." It  will be seen that the said passage from the judgment  of Field.  J., has nothing to do with the construction of  Art. 19 (1) (g) of the Constitution of India.  The learned  Judge was considering the scope of the "police power" and in  that context the said observations were made.  This Court applied

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those observations in considering the reasonableness of  the restrictions  imposed on the fundamental rights.  Indeed,  a perusal of the entire judgment shows that the Court conceded the  fundamental  right but held that  the  said  regulation operated as a reasonable restriction on the said right.  The decision  of  this  Court in The State of  Assam  v.  A.  N. Kidwai,   Commissioner  of  Hills  Division   and   Appeals, Shillong(2)  has no relevance to the present  enquiry.   The following- passage from the said judgment is relied upon               "A  perusal of the Act and rules will make  it               clear that no person has any absolute right to               sell  liquor and that the purpose of  the  Act               and  the rules is to control and restrict  the               consumption  of  intoxicating  liquors,   such               control   and  restriction   being   obviously               necessary  for  the  preservation  of   public               health and morals, and to raise revenue." This  Court only said that on the provisions of the  Act  no absolute  right to sell liquor was given to any  person  and that the said right was controlled by the provisions of  the said  Act.  These observations have nothing to do  with  the question  whether  a person has a fundamental  right  to  do business in liquor.  Nor can the (2)  [1957] S.C.R. 295, 301. (1)  34 L.E.D. 620, 623. 56 respondents draw any support from the decision of this Court in  Nagendra  Nath  v. Commissioner of  Hills  Division  and Appeals, Assam(1).  There, the question was in regard to the scope of Arts. 226 and 227 of the Constitution vis-a-vis the orders passed by the appropriate authorities under the  East Bengal  and Assam Excise Act, 1910.  There incidentally  two decisions  of this Court, namely, Cooveriee B.  Bharucha  v. The Excise Commissioner and the Chief Commissioner, Ajmer(2) and  The  State of Assam v. A. N.  Kidwai,  Commissioner  of Hills Division and Appeals,Shillong (3) were noticed and  it was  observed  that  there  was no  inherent  right  to  the settlement  of  liquor shops.  No  question  of  fundamental right  under Art. 19(1) arose in that case.  This  Court  in The State of Bombay v. R. M. D. Chamarbaugwala(4) upheld the validity  of  the  Bombay Lotteries  and  Prize  Competition Control and Tax Act, 1948 (Bom.  LIV of 1948), as amended by the  Bombay Lotteries and Prize Competition Control and  Tax (Amendment)  Act  (Bombay  Act XXX of  1952).   One  of  the questions raised was whether gambling was business or  trade or  commerce  within the meaning of Art. 19 (1) (g)  of  the Constitution  or  Art.  301  thereof.   Das,  C.  J.,  after considering the various decisions, observed thus :               "We find it difficult to accept the contention               that those activities which encourage a spirit               of reckless propensity for making easy gain by               lot  or chance, which lead to the loss of  the               hard  earned  money of  the  undiscerning  and               improvident  common man and thereby lower  his               standard  of  living  and  drive  him  into  a               chronic  state of indebtedness and  eventually               disrupt the peace and happiness of his  humble               home could possibly have been intended by  our               Constitution makers to be raised to the status               of  trade, commerce or intercourse and  to  be               made the subject-matter of a fundamental right               guaranteed by Art. 19(1) (g)." This  decision only lays down that gambling is not  business or trade.  We are not concerned in this case with gambling. A  division Bench of the Orissa High Court in  Ranchhorlalji

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v.  Revenue  Divisional  Commissioner,  Northern   Division, Sambalpur(5)  maintained the validity of the  provisions  of the Orissa Cinema (Regulation) Act, 1954, on the ground that it  did not infringe the fundamental right guaranteed  under Art.  19 (1) (g), read with Art. 19(6) of the  Constitution. The learned Judges observed :               "It  is only when no policy or  principle  has               been  laid down either in the Preamble  or  in               the other provi- (1) [1958] S.C.R.1240.   (2) [1954] S.C.R. 873, (3) [1957] S.C.R. 295.   (5) A.I.R. 1960 Orisa 88, 92. (4)  [1957] S.C. R. 874, 925. 57               sions  of the statute or statutory rules,  and               the  impugned provision confers  arbitrary  or               excessive powers on the authority, that it  is               liable  to be struck down.  The nature of  the               restrictions  imposed  will  necessarily  vary               with the nature of the business.  Restrictions               on  the carrying on of business in respect  of               ’normally available’ commodities should not be               as  drastic as those in respect of a  business               or   occupation  which  is  likely  to   cause               nuisance or danger to the public." This decision also does not say that there is no fundamental right  to do business which is likely to cause  nuisance  or danger  to  the public, but stated that the  nature  of  the restrictions would depend upon the nature of the trade. A   scrutiny  of  these  decisions  does  not  support   the contention  that the courts held that dealing in liquor  was not  business  or  trade.  They were  only  considering  the provisions of the various Acts which conferred a  restricted right to do business.  None of them held that a right to  do business in liquor was not a fundamental right. We, therefore, hold that dealing in liquor is business and a citizen  has a right to do business in that  commodity;  but the State can make a law imposing reasonable restrictions on the said right, in public interests. The next question is whether s. 20 of the Act infringes  the fundamental  right under Art. 19 of the Constitution.   This question, as we have said earlier, was not raised before the High Court.  We do not, therefore, allow the learned counsel to  raise  this question before us for the first  time.   We assume,  therefore, without deciding that s. 20 of  the  Act does not infringe Art. 19 (1 ) (g) of the Constitution. Even so it was contended that the order of the  Commissioner of Excise and Taxation was arbitrary and in violation of the principles of natural justice and, therefore, it operated as an  unreasonable restriction on the appellant’s  fundamental right to do business. This  argument was sought to be sustained on  the  following grounds  :  _(1)  Though under the Act  yearly  leases  were issued,  in practice renewal was a matter of course. (2)  On the basis of the issuance of a licence heavy expenditure had been  incurred  by the appellants. (3)  No  opportunity  was given  to the appellants to establish that the locality  was suitable  for  carrying on the said business  and  that  the complaints  made against them were false.  And (4) Even  the High  Court  held that in regard to licensees  against  whom there were no complaints a further inquiry should M4 Sup.Cl/67-5 58 be held.  In support of the contention we were taken through all  the necessary correspondence.  The learned Judges on  a consideration  of  the entire material placed  before  them,

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held  that  the Commissioner of Excise and Taxation  made  a bona  fide  enquiry  and found that  the  locality  was  not suitable for carrying on business in liquor in view of  the- various  circumstances mentioned in  the  counter-affidavit. We  do  not think we are justified in interfering  with  the finding of fact arrived at by the High Court on the material placed  before  it.  On the said finding it cannot  be  held that  the  order  of  the  Commissioner  was  arbitrary   or unreasonable. We cannot agree with the learned counsel that S. 22 controls s. 20 of the Act for the former deals with the  cancellation of  a  licence and the latter with the issuance of  a  fresh licence : they deal with two different subject-matters. Lastly,  the  learned counsel for the  appellants  contended that  the  order  was mala fide.  But  this  point  was  not pressed  before the High Court and we cannot allow it to  be raised for the first time before us. In the result the appeals fall and are dismissed with costs. V.P.S.                                        Appeal dismissed. 59