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CASE NO.: Appeal (civil)  2802 of 2006

PETITIONER: Kuldeep Singh

RESPONDENT: Govt. of NCT of Delhi

DATE OF JUDGMENT: 06/07/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T

[Arising out of S.L.P. (Civil) Nos. 24704-24705 of 2005] WITH CIVIL APPEAL NO.           2803            OF 2006 [Arising out of S.L.P. (Civil) No. 2523 of 2006] AND CIVIL APPEAL NO.           2804          OF 2006 [Arising out of S.L.P. (Civil) No. 5428 of 2006]

S.B. SINHA, J :

       Leave granted.

       The Government of National Capital Territory of Delhi formulated an  excise policy in 2002 permitting sale of Indian Made Foreign Liquor (IMFL)  through private parties upon issuance of L-52 licences.   

       Upto the year 1979, prohibition was in force in the State.  From 1979  to 2003, IMFL and Country Liquor were being sold exclusively through  public sector undertakings.  Pursuant to or in furtherance of the said  purported policy, however, an advertisement was issued inviting  applications for grant of L-52 licences for retail sale of IMFL for the  licencing year 2004-05 in commercial areas subject to the following  conditions:

(i)     No fresh L-52 licence in the private sector would be granted if the  location of the proposed vend was within 250 meters of an existing  retail vend.

(ii)    The applicant should be in actual physical possession of a shop  admeasuring 500 sq. ft. in an approved and recognized commercial  complex.

(iii)   Proposed vend should not be within 75 meters of : (a) major  educational institutions; (b) religious places; and (c) hospitals with  50 beds and above.

(iv)    The grant of L-52 licence shall be subject to the acceptance of the  application by the competent authority who may accept or reject  any application without assigning any reasons.  Further, the  licensing authority was under no obligation to grant any licence for  which application had been made.

(v)     The licence was to be subject to the general conditions in Rule 33  and special conditions in Rule 34 of the Delhi Liquor License  Rules, 1976.

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       Relevant clauses of the L-52 licence may also be noticed.  Clause 12  provides for actual physical possession of covered shop admeasuring 500 sq.  ft. in an approved commercial complex/area recognized by the local bodies  such as DDA, MCD, NDMC, etc.  No licence was to be issued for a liquor  vend within 75 meters of : (a) major educational institutions (b) religious  places (c) hospitals with fifty beds and above.  ’Major educational  institutions’ were defined to mean "middle and higher secondary schools,  colleges and other institution of higher learning recognized by the  Government of NCT of Delhi or Government of India".  No licence was to  be issued where the proposed premises was located within 250 meters from  an existing L-2/L-52 vend of foreign liquor.  The licences were to be granted  upon consideration of the applications on case to case basis.  Such  applications were subject to acceptance by the competent authority who may  accept or reject any application without assigning any reason and that the  licensing authority would be under no obligation to grant any licence for  which an application has been made.  A time schedule, however, was fixed  therefor to the effect that the licence was to be granted within 30 days from  the grant of approval therefor.

       Pursuant to or in furtherance of the said advertisement, the Appellants  herein filed their respective applications for grant of licences.  In view of the  fact that large number of applications were filed, the State issued a public  notice on or about 7.2.2005 notifying closure of the scheme.  It was,  however, clarified that pending applications would be considered as per the  rules and terms and conditions of the Scheme and no new application would  be accepted.   

        Whereas in the case of Kuldeep Singh, his application was rejected, in  the case of Surinder Katiyal, the Appellant withdrew his application so as to  enable him to file another application at a different site.

       Kuldeep Singh preferred an appeal against the order rejecting his  application before the Excise Commissioner.  It was allowed by an order  dated 11.5.2005 and the matter was remitted to the Collector, Excise with a  direction to conduct a fresh inspection to ascertain the facts on a finding that  the earlier inspection had not been carried out properly.  Pursuant thereto a  fresh inspection of the premises was carried out in May, 2005.

       The Appellants herein filed writ petitions before the High Court inter  alia alleging that their applications had not been considered in terms of the  excise policy of the State.  Directions had been issued in the case of Sadaram  Gupta to the Respondents herein to dispose of his application for grant of L- 52 licence for running a retail liquor vend on the same terms and conditions  as well as the policy existing on or before 16.9.2005.   

        In or about the month of March, however, there was a huge public  outcry in regard to the excise policy of the State.  Resident Welfare  Associations and elected representatives also lodged protests.  The matter  was referred to the Cabinet for a decision whether or not the State would   continue with the said policy.  On or about 9th March, 2005,  a decision was  taken that no fresh licence would be issued by the Department.  Surprisingly  despite the same, applications were processed on the purported ground that  in the event, the State was to direct approval in regard to continuation of its  liquor policy, the licences could be issued immediately thereafter.            However, the matter was placed before the competent authority of the  State, whereupon the following decision was taken :

(i)     "The exercise for grant of licence was stopped in the month of  March, 2005\005"

(ii)    "Since the opening of shops is a matter of Govt. Policy, decided on  a year to year basis, it has been decided to review the last year’s

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policy and not consider granting any more L-52 Licences."

(iii)   "For the all above said retail vends, wholesale bonds and licensed  premises of various categories, effective and efficient enforcement  is required to ensure implementation of the provisions of the  Excise Law and detection/ prevention of revenue evasion.  As  against the requirement of 115 Inspectors and Sub-Inspectors to  cover the given number of licensed premises, the Department has  only a skeletal inspectorate staff of 51 to discharge its statutory  functions.  In the considered view of the Department, it will not be  appropriate to open any new L-52 vend\005"

(iv)    "The above said proposal is all the more pertinent keeping in view  the prohibition policy of the Government which is aimed at  discouraging drinking.  The Directorate of Prohibition, Govt. of  NCT of Delhi educates the people, especially the youth and socio- economically weaker sections, about the ill effects of alcohol by  various means and the message of prohibition is conveyed by  spending money from the exchequer.  In this backdrop, the  uncontrolled proliferation of liquor shops would be against the  overall objective of the Government as stated in Article 47 of the  Constitution of India." (v)     "At the time of inviting applications, the number of shops required  or the areas in which they were to be opened was not mentioned.   The tremendous wave of public resentment against the opening of  such shops, in keeping with the decided policy and norms, resulted  in the need to stop the process midway and to keep the pending  applications in abeyance."

(vi)    "In view of the above and the fact that an order of rejection is  necessitated by the policy directions of the Government, a suitable  and reasoned order may be passed by the Collector (Excise) in the  instant case."

       The said proposal was approved by the Finance Minister who was  competent therefor under the Rules of Executive Business.  The said  decision of the Finance Minister was ratified by the Council of Ministers.   The High Court, however, in the writ applications pending before it directed  that the decision of the competent authority may be placed on record within  three days.  The Collector, Excise rejected all the applications received  pursuant to the advertisement dated 22.11.2004 relying on or on the basis of  the purported policy decision of the Government taken on 16.9.2005 by an  order dated 20th September, 2005.   

However, having regard to the earlier orders passed in the writ  petitions, a learned Single Judge of the High Court allowed the writ petitions  directing the State to grant licences to the Petitioners within one month in  the event the writ petitioners have fulfilled all the requirements therefor,  before 16.9.2005.  Letters Patent Appeals filed thereagainst have been  allowed by reason of the impugned judgment.

       The learned counsel appearing on behalf of the Appellants contended:

(i)     The State acted illegally and without jurisdiction in rejecting the  applications for grant of L-52 licences to the Appellants in so far as  not only the cases of others had been considered even after 9th  March, 2005 but licences had also been granted during the period  11.3.2005 and 28.4.2005.

(ii)    The State adopted a pick and choose method ignoring the fact that  the licence was to be granted on first-cum-first-serve basis.   

(iii)   The State itself having given the date of grant of licence stating  that the licence would be issued on 10.1.2005, the Appellants  derived an accrued right in relation thereto.

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(iv)    The High Court having directed the State to consider the  applications filed by the Appellants herein on the same terms and  conditions, the State could not have ignored the same.  The  applicants had a legitimate expectation to obtain licences in view  of the policy decision of the State and, thus, it could not have  refused to grant such licences.   

(v)     The State having adopted particular procedures for disposal of the  applications for grant of liquor licenses were bound thereby.

       Mr. Gopal Subramanaium, learned Additional Solicitor General  appearing on behalf of the Respondent, on the other hand, submitted:

(i)     The Appellants do not have any fundamental right to trade in  liquor.

(ii)    The State having adopted a policy decision, this Court should not  exercise its power of judicial review interfering therewith. In any  event, no case that the policy decision suffers from any illegality,  irrationality or procedural impropriety having been made out nor  any malice having been attributed in regard to the policy decision,  this Court should not interfere with the judgment of the High  Court.

(iii)   The parties in whose favour licenses have been granted were  necessary parties to the writ petitions and in their absence the writ  petitions could not have been entertained.

       The Appellants filed applications for grant of licence pursuant to the  policy decision adopted by the State.  They might have invested a huge  amount, but did not thereby derive any accrued or vested right.  The matter  relating to grant of licence for dealing in liquor is within the exclusive  domain of the State.  If the State had the right to adopt a policy decision,  they indisputably had a right to vary, amend or rescind the same.  The effect  of a policy decision taken by the State is to be considered having regard to  the provisions contained in Article 47 of the Constitution of India as also its  power of regulation and control in respect of the trade in terms of the  provisions of the Excise Act.   

       We, however, must express our dissatisfaction as regards the manner  in which the cases have been dealt with.  If a policy decision had been taken  by a competent authority, viz., the Finance Minister as far back on 9th  March, 2005, we fail to see any reason as to how the officials of the State  could proceed with the processing of the applications filed by the applicants   even thereafter.  The explanation sought to be offered that the same was  done on the premise that the Cabinet may not approve the same, in our  opinion, is an after-thought.  Although, other applications were processed,  the applications filed by the Appellants who had filed writ applications  before the Delhi High Court were not considered.  It is beyond any cavil that  the cases of the applicants were required to receive due consideration at the  hands of the competent authority along with those who were similarly  situated.   

       So far as the case of Kuldeep Singh is concerned, his application was  required to be considered afresh in view of the order passed by the Excise  Commissioner.  Insofar as the case of Sadaram Gupta is concerned, the same  was required to be considered in terms of the interim order passed by the  High Court.  In the case of Surinder Katiyal although he had withdrawn his  earlier application and filed a fresh application for grant of a licence at a  different place, his contention for shifting was accepted by the Respondent  as would appear from the letter dated 6.5.2005 wherein it was stated:

"With reference to your letter dated 2.2.2005 and  8.2.2005 you are hereby informed that your  request for shifting of the proposed liquor from

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UG-1,2,3, Road No. 44, Plot No. 27, Sagar Plaza \026  II, Pitampura, Community Center, New Delhi to  G-11-12, Vardhman Western Plaza, Behera  Enclave, Paschin Vihar, Delhi \026 63 has been  accepted by the Competent Authority.

       You are therefore directed to submit the all  requisite documents i.e. Commercial Proof, Rent  Agreement, NOC for running liquor shop,  ownership proof, Affidavits, Site Plan for your  new proposed premises."

       For the purpose of consideration of the applications filed by the  applicants, the following time frame was specified:

Scrutiny of Application No. of Days Cumulative  Total Issue of deficiency memo, if  any/ Approval for site  inspection 10 days 10 days Site Inspection Report 10 days 20 days Approval for grant of Licence 04 days 24 days Issue of offer letter 06 days 30 days

       Although it was not imperative on the part of the Respondents herein  to adhere thereto, as the same was directory in nature, it was required to be  substantially complied with.  [See P.T. Rajan v. T.P.M. Sahir and Others,  (2003) 8 SCC 498 and Punjab State Electricity Board Ltd. v. Zora Singh and  Others, (2005) 6 SCC 776].

       Here, however, the State had made a change in its policy decision of  opening the doors to the private entrepreneurs evidently with a view to earn  more revenue.  It represented to the applicants that their cases would be  considered on their own merits.  Such consideration was, thus, required to be  fair and reasonable.  Although dealing in liquor as has rightly been  submitted by the learned Additional Solicitor General is not a fundamental  right, but indisputably the equality clause contained in Article 14 of the  Constitution of India would apply.   

       In State of M.P. and Others v. Nandlal Jaiswal and Others [(1986) 4  SCC 566] whereupon the learned Additional Solicitor General himself relied  upon, this Court stated:

"\005No 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 right  or privilege of manufacturing and selling liquor.  But when the State decides to grant such right or  privilege to others the State cannot escape the  rigour of Article 14\005"           [See also Ashok Lenka v. Rishi Dikshit & Ors. 2006 (4) SCALE 519.]

       Moreover, if the equality clause applied, the State could not have

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adopted different procedures for different applicants.  [See Ramana  Dayaram Shetty v. International Airport Authority of India and Others  (1979) 3 SCC 489, para 10]

       The learned Additional Solicitor General furthermore failed to give  any satisfactory answer to a query made by us as to how on the face of such  policy decision which according to the State was strictly adhered to, licences  had been granted to six other persons.  We would, however, like to place on  record the statements made by the learned Additional Solicitor General that  the State would take action for cancellation of the licences of the said  licensees.   

       The State had adopted a policy to grant licence on first-cum-first- serve basis.   It had in terms of the public notice dated 7.2.2005, intended to  grant licences for 70 vends.  Not only the terms and conditions for grant of  such licences have been specified, the mode and manner in which such  applications were to be filed had also been specified.  As noticed  hereinbefore, even time frame therefor was fixed.         It is, however, difficult for us to accept the contention of the learned  Senior Counsel, Mr. Soli J. Sorabjee that the doctrine of ’legitimate  expectation’ is attracted in the instant case.  Indisputably, the said doctrine is  a source of procedural or substantive right. [See R. v. North and East Devon  Health Authority, ex parte Coughlan 2001 Q.B. 213]  But, however, the  relevance of application of the said doctrine is as to whether the expectation  was legitimate.  Such legitimate expectation was also required to be  determined keeping in view the larger public interest.  Claimants’  perceptions would not be relevant therefor.  The State actions indisputably  must be fair and reasonable.  Non - arbitrariness on its part is a significant  facet in the field of good governance.  The discretion conferred upon the  State yet again cannot be exercised whimsically or capriciously.  But where  a change in the policy decision is valid in law, any action taken pursuant  thereto or in furtherance thereof, cannot be invalidated.   

       The State in its advertisement clearly stated:

"The grant of L-52 licence shall be subject to the  acceptance of the application by the specified  competent authority who may accept or reject any  application without assigning any reason.  The  licensing authority shall be under no obligation to  grant any licence for which application has been  made."

       In view of clear stipulation made in the advertisement therefor, the  Appellants could not have had any legitimate expectation that they would  invariably be granted a licence to deal in liquor.  A date for grant of licence,  however, was put in the case of Surinder Katiyal.  The said date has been  given evidently having regard to the time frame made in the advertisement.   It must have been done under a misconception.  Such a clear mistake on the  part of the authorities would not clothe them with any legal right.  His  application was received on 10.12.2004 while acknowledging receipt of the  said application, it was stated that the licence will be issued on 10.1.2005.   The same, however, would not mean that the contents of his application  were not required to be verified in the light of the statutory requirements.   Furthermore, he withdrew his application so as to enable him to apply for  another vend.  He filed such an application only on 8.2.2005 which was  acknowledged, as noticed hereinbefore, by the State in terms of its letter  dated 6.5.2005.  The said letter dated 6.5.2005 did not contain any promise  that the licence would be granted by a particular date.  Even otherwise, it  was impermissible for the Respondents to specify a date on which the  licence shall be granted keeping in view the fact that it was required to  process a large number of applications.  It is, thus, not a case where the  doctrine of legitimate expectation would be attracted.   

       The State issued a public notice on 7.2.2005.  Even prior thereto, the

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State notified that only those applications which had been received by the  Department would be considered and no more.  The Appellant, Surinder  Katiyal evidently filed his application on 8.2.2005.  Still his application had  been processed.  Some correspondences had been entered into in relation  thereto.

       It is not in dispute that the State received a large number of  applications.  It was required to process all the applications.  While  processing such applications, inspections of the proposed sites were to be  carried out and the contents thereof were required to be verified.  For the  said purpose, the applications were required to be strictly scrutinized.  [See  Ashok Lenka (supra)]

       Unless, therefore, an accrued or vested right had been derived by the  Appellants, the policy decision could have been changed.   

What would be an acquired or accrued right in the present situation is  the question.

       In Director of Public Works and Another v. HO PO Sang and Others  [(1961) AC 901], the Privy Council considered the said question having  regard to the repealing provisions of Landlord and Tenant Ordinance, 1947  as amended on 9th April, 1957.  It was held that having regard to the repeal  of Sections 3A to 3E, when applications remained pending, no accrued or  vested right was derived stating:

"In summary, the application of the second  appellant for a rebuilding certificate conferred no  right on him which was preserved after the repeal  of sections 3A-E, but merely conferred hope or  expectation that the Governor in Council would  exercise his executive or ministerial discretion in  his favour and the first appellant would thereafter  issue a certificate.  Similarly, the issue by the first  appellant of notice of intention to grant a  rebuilding certificate conferred no right on the  second appellant which was preserved after the  repeal, but merely instituted a procedure whereby  the matter could be referred to the Governor in  Council.  The repeal disentitled the first appellant  from thereafter issuing any rebuilding certificate  where the matter had been referred by petition to  the Governor in Council but had not been  determined by the Governor."

       [See also Lakshmi Amma alias Echuma Amma v. Devassy 1970 KLT  204.]

       The question again came up for consideration in Howrah Municipal  Corpn. and Others v. Ganges Rope Co. Ltd. and Others [(2004) 1 SCC 663]  wherein this Court categorically held:

"\005The context in which the respondent Company  claims a vested right for sanction and which has  been accepted by the Division Bench of the High  Court, is not a right in relation to "ownership or  possession of any property" for which the  expression "vest" is generally used. What we can  understand from the claim of a "vested right" set  up by the respondent Company is that on the basis  of the Building Rules, as applicable to their case  on the date of making an application for sanction  and the fixed period allotted by the Court for its  consideration, it had a "legitimate" or "settled  expectation" to obtain the sanction. In our

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considered opinion, such "settled expectation", if  any, did not create any vested right to obtain  sanction. True it is, that the respondent Company  which can have no control over the manner of  processing of application for sanction by the  Corporation cannot be blamed for delay but during  pendency of its application for sanction, if the  State Government, in exercise of its rule-making  power, amended the Building Rules and imposed  restrictions on the heights of buildings on G.T.  Road and other wards, such "settled expectation"  has been rendered impossible of fulfilment due to  change in law. The claim based on the alleged  "vested right" or "settled expectation" cannot be  set up against statutory provisions which were  brought into force by the State Government by  amending the Building Rules and not by the  Corporation against whom such "vested right" or  "settled expectation" is being sought to be  enforced. The "vested right" or "settled  expectation" has been nullified not only by the  Corporation but also by the State by amending the  Building Rules. Besides this, such a "settled  expectation" or the so-called "vested right" cannot  be countenanced against public interest and  convenience which are sought to be served by  amendment of the Building Rules and the  resolution of the Corporation issued thereupon."

       In Union of India and Others v. Indian Charge Chrome and Another  [(1999) 7 SCC 314], again this Court emphasized:

"\005The application has to be decided in  accordance with the law applicable on the date on  which the authority granting the registration is  called upon to apply its mind to the prayer for  registration\005"   

       In S.B. International Ltd. and Others v. Asstt. Director General of  Foreign Trade and Others [(1996) 2 SCC 439], this Court repelled a  contention that the authorities cannot take advantage of their own wrong,  viz., delay in issuing the advance licence stating:

"\005We have mentioned hereinbefore that issuance  of these licences is not a formality nor a mere  ministerial function but that it requires due  verification and formation of satisfaction as to  compliance with all the relevant provisions\005"          In a case of this nature where the State has the exclusive privilege and  the citizen has no fundamental right to carry on  business in liquor, in our  opinion, the policy which would be applicable is the one which is prevalent  on the date of grant and not the one, on which the application had been filed.   If a policy decision had been taken on 16.9.2005 not to grant L-52 licence,  no licence could have been granted after the said date.   

In any event the period for which licences could be directed to the  appellants has since expired.  This Court, thus, cannot direct grant of licence  for the next year only because some licences had been granted after 9th  March, 2005.  Article 14 of the Constitution of India carries with it a  positive concept.  Equality cannot be claimed in illegalities.  [See State of  U.P. v. Raj Kumar Sharma, (2006) 3 SCJ 713]   We have moreover noticed  hereinbefore, the statement  made by the learned Additional Solicitor

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General that steps would be taken for cancellation of licences of those  licensees who had been granted licence after the said date.  We do not intend  to make any further observation in regard thereto.

It is true that some licences had been granted, but the same cannot by  itself be a ground to issue a writ of mandamus, particularly in view of the  fact that the appellants have no legal right in respect thereof.           For the reasons aforementioned, we do not find any merit in these  appeals.  Moreover the period for which the applications for grant of  licences had been granted has also expired.  We dismiss these appeals.  No  costs.