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PETITIONER: DOONGAJI AND CO.

       Vs.

RESPONDENT: STATE OF M.P. AND ORS.

DATE OF JUDGMENT09/08/1991

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. KASLIWAL, N.M. (J)

CITATION:  1992 AIR  488            1991 SCR  (3) 492  1991 SCC  Supl.  (2) 324 JT 1991 (3)   356  1991 SCALE  (2)288

ACT:     Madhya  Pradesh  Excise  Act, 1915  and  Madhya  Pradesh Distilleries,  Breweries and Warehouses Rules--Order  refus- ing  to  grant  licence  under sections 13  and  14  of  the Act--Whether valid.

HEADNOTE:     The  petitioner  and its predecessors  had  licence  for distillery at Ujjain to manufacture rectified spirit and the last  of  such licence held by the petitioner  was  for  the period  1.4.1976  to  31.3.1981. For  the  licensing  period commencing  from 1.4.1981 to 31.3.1986, the  petitioner  was unsuccessful and the licence was granted in favour of  Rajd- hani  Distillery  Corporation. The petitioner  impugned  the same  but failed both before the High Court as  also  before the Court. Thereafter, the petitioner filed a writ  petition in the High Court claiming restitution of the distillery but failed  and  an appeal against the High  Court’s  order  was preferred  before  this Court, which has  been  disposed  of whereby  this  Court has declined to grant  restitution  but directed  that  the petitioner should  move  an  application before the State Government to have the value of the  plants JUDGMENT: licence  on February 19,1982 and reiterated his  request  by number  of reminders including the one in November 3,  1986. In  the interregnum, the Government policy was changed by  a cabinet  sub-committe  policy  decision  dated   30.12.1984, whereby they decided to grant licence to the existing licen- sees of the distilleries and that they should construct  the factories  at  their expenses on the land  allotted  by  the State  Government  or  acquired and allotted  by  the  State Government and that they shift the business to new factories and the licence would be for a period of five years. Several writ  petitions  including the one by  the  petitioner  were filed  in  the High Court challenging the policy.  The  High Court  quashed  part of the policy  decision.  Against  that order, petitions were filed by the State and the  unsuccess- ful  petitioners  including the petitioner  in  this  Court. Those petitions were disposed of by this Court by its  judg- ment  in  the case of State of M.P.v.  Nandlal  Jaiswal  and Ors., [1987] 1, SCR 1. The court upheld the validity of  the

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Government  policy. During the course of the arguments,  the Attorney  General of India conceded that if  the  petitioner makes  an  application  for grant of licence,  it  would  be considered by the Govern- 493 ment and disposed of quickly. Pursuant thereto the petition- er  made  an  application on December 25,  1987.  The  State Government rejected the application by letter dated February 8, 1988, which among other things is impugned in this  peti- tion under Article 32 of the Constitution.     It  is  contended on behalf of the petitioner  that  the intention  behind the solemn undertaking given by the  State in Nandlal Jaiswal’s case clearly showed that the  intention was  to  grant the licence to the  petitioner  rejection  is contrary  to the undertaking and violating  the  fundamental right of the petitioner to establish and trade in the  manu- facture  and distribution of the liquor; further it is  dis- criminatory  is  as  much as licences have  been  issued  to others similarly placed. Alternatively, it is contended that if it is not found feasible to grant licence for Ujjain, the same be granted for Ratlam Distillery. Counsel for the State urged  that it has not been found feasible to grant  licence to  the petitioner due to grounds stated in the order  which are  in confermity with the change in policy and  the  court should  not  interfere.  On behalf  of  Rajdhani  Distillery Corpn.  it was urged that unless there is cut in the  supply area  of the operation of the existing licences and a  sepa- rate  supply area is carved out, no licence could be  issued to  the  petitioner;  that new policy is in  vogue  for  the succeeding  licensing  period of 1991 to 1993, and  the  li- cences having been issued to persons, who are not represent- ed  in  this court, the court should not  grant  the  relief asked 1or in the writ petition. Dismissing the writ petition, this Court,     HELD:  There is a change in the new policy which  is  in vogue. The licensing period is for two years commencing from 1.4.1991  to 31.3.1993. Admittedly, the petitioner  had  not submitted any tender in terms of the new policy for manufac- ture of rectified spirit or liquor for grant of D-2 and  D-1 licences,  the  licences have already been  granted  to  the third parties and they are not before this court. Any direc- tion  in this regard would not only interfere with  the  li- cences  granted to them, but also create a hiatus in  opera- tional system. This Court cannot direct the State Government to create a new policy of receiving private applications  or to  direct  the Commissioner of Excise to carve  out  a  new policy  area and to grant licence to the petitioner.  It  is not  possible to give such a direction for the reasons  that the  petitioner,  admittedly,  did not offer  himself  as  a candidate  for  consideration when tenders were  called  for licensing  period commencing from 1.4.1991. As  regards  the Government Distilleries at Ratlam is concerned for grant  of D-1(s)  licence,  as requested for, we  have  no  sufficient material whether any arrangements have 494 been  made  to  any other parties for supply  area  in  that regard. Under these circumstances, it is extremely difficult to  accede to the request made by the counsel for the  peti- tioner. [498E-499A]

& ORIGINAL JURISDICTION: Writ Petition No. 729 of 1988. (Under Article 32 of the Constitution of India).

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R.F. Nariman and P.H. Parekh for the Petitioners.     V.N. Ganpule. V.M. Tarkunde, S.K. Agnihotri, S.K. Sinha, Rajinder  Narain.  R.S.  Singh and Rameshwar  Nath  for  the Respondents. The Judgment of the Court was delivered by     K. RAMASWAMY, J. In this writ petition under Art. 32  of the  Constitution, the petitioner, a partnership firm  seeks reliefs  of mandamus to direct the State Government and  the Commissioner  of Excise of M.P. to allow the  petitioner  to set  up  a distillery pursuant to the cabinet  policy  dated December  30, 1984 and to grant D-2 licence; to declare  the letter  dated February 8, 1982 as unconstitutional,  illegal and of no effect in law and to direct the respondent Nos.  1 and  2  to grant a licence to  manufacture  potable  Alcohol within the state of Madhya Pradesh and to grant D-1  licence to supply country made liquor, etc. This case has behind  it chequered history which is necessary to adumbrate.     In the State of M.P. v. NandlaI Jaiswal & Ors., [1987] 1 SCR 1 this court considered the legality of the policy,  the subject  matter  in the writ petition. It was  held  therein that  nine distilleries in the State of Madhya  Pradesh  in- cluding  the  one at U j jain were set up on the  lands  and buildings  belonging to the Government. The plants  and  ma- chinery  therein  initially were of the Government,  but  in course  of  time  the licensees installed  or  replaced  the plants  and machinery and became the owners. The  petitioner and  its  predecessors  had licence for  the  distillery  at Ujjain  for  well  over 40 years  to  manufacture  rectified spirit. The last of the licences held by the petitioner  was for  the years April 1, 1976 to March 31, 198 1. The  period of licence was at that time for five years. The practice  as per  the  provisions of the M.P. Excise Act 1915  for  short ’the  Act’ and M.P. Distilleries, Breweries  and  Warehouses Rules for short ’the rules’ issued in exercise of the powers under  s. 62 was to call for the tenders to manufacture  and supply  the  rectified spirit or  denatured  spirit,  spirit (country made) to the retail vendors 495 within  the area attached to the distillery. Rajdahani  Dis- tillers  Corporation, for short ’RDC’ became the  successful tenderer  for  the licensing period starting from  April  1, 1981  to March 31, 1986. The petitioner challenged in  Misc. Petition  No. 701/81 in the M.P. High Court under Art.  226. Initially  stay  was granted, but later it  was  vacated  on August 20, 1981 Licence was granted for the period  starting from  August 25,1981 to March 31, 1986 to RDC and  the  dis- tillery,  plant and machinery at Ujjain was handed  over  to RDC  on  August 28. 198 1. Thereafter the  petitioner  filed another  writ  petition  No. 169/82 on March  16,  1982  for redelivery Of the plant and machinery and the warehouses and other  consequential  reliefs. That writ petition  was  dis- missed  by  the High Court against which  Civil  Appeal  No. 5483/83 was filed, which is just now disposed of. The  peti- tioner had applied for grant of licence on February 19, 1982 and he reiterated his request in number of reminders includ- ing  one oh November 3, 1986. In the interregnum  the  Govt. changed  the policy by a Cabinet Sub Committee policy  deci- sion  dated  December 30, 1984 under which they  decided  to grant licence to the existing licensees of the  distilleries and  that they should construct the factories at  their  ex- penses  on the land allotted by the State Govt. or  acquired and  allotted  by the State Govt. and that  they  shift  the business  to  new factories and the licence would be  for  a period  of  five years. Calling in question of  that  policy several  writ petitions including the one by the  petitioner

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were filed in the M.P. High Court. The Division Bench partly allowed  the  writ petition and quashed part of  the  policy decision.  Against  it appeals and special  leave  petitions were  filed  by the State and the  unsuccessful  petitioners including  the petitioner. It was disposed of by this  court reported  in Jaiswal’s case. During the hearing of the  writ petition, the Attorney General of India conceded that if the petitioner  makes  any application for grant of  licence  it would  be considered by the State Govt. and be  disposed  of quickly.  That  concession was noted and  the  argument  was founded  thereon  to hold that the Govt. did not  intend  to create  any  monopoly in favour of the  existing  licensees. This  court upheld the policy of the Govt. and  allowed  the appeals  and  dismissed the special leave petitions  of  the petitioner  and other. Pursuant thereto the petitioner  made an  application  on December 25, 1987  followed  by  several reminders. Ultimately the State Govt. rejected the  petition by letter dated February 8, 1988, which is impugned in  this writ petition.      Under s. 13 of the Act, the State Govt. is empowered to grant licence to manufacture, possession and sale of  recti- fied spirit and the liquor in the distilleries or the  brew- eries.  Under s. 14 and Rule XXII the licensee  should  also have licence to establish distillery to distil 496 rectified  spirit or denatured spirit or liquor and a  ware- house  wherein any intoxicant be deposited and kept  without payment  of duty, but subject to payment of the fee  to  the State Govt. as it may direct. No intoxicant shall be sold by operation  of s. 17, except under the authority and  subject to  the terms and conditions of the licence granted in  that behalf.  Rule  XXII provides the method of disposal  of  the licence which reads thus:               "XXII.  Disposal of licences--(1) Licence  for               the  manufacture or sale of intoxicants  shall               be  disposed  of  by  tender.  auction.  fixed               licence  fee  or in such other manner  as  the               State Govt. may, by general or special  order,               direct.                         Except  where otherwise  prescribed,               licence  shall be granted by the Collector  or               by  an Officer authorised by him in  that  be-               half." Rule  III  to V of the Distillery and Warehouse  Rules  also made  inter alia under sub-section 2(h) of s. 62  deal  with the subject of grant of’ licence and provide, in the follow- ing  terms,  for different kinds of licences  which  may  be issued, viz., licences in Forms D-1, D-1(s) and D-2:                "III.  Subject to the sanction of  the  State               Government, the Excise Commissioner may  grant               a licence in Form D-1 and Form D-1(s) for  the               wholesale  supply of country spirit to  retail               vendors.               IV.  The Collector may issue, on payment of  a               fee of Rs. 1000 a licence in Form D-2 for  the               construction  and working of a  distillery  to               any person to whom a wholesale supply  licence               has been issued.               V. Subject to sanction of the State Government               the Excise Commissioner may issue a licence in               Form D-2 for the construction and working of a               distillery on payment of a fee of Rs. 1000." The  State Govt. rejected application of the  petitioner  on three grounds. namely, (1) that the petitioner requested  to issue a licence at the old place at Ujjain Distillery  which

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is no longer available; (2) present policy of the State  and the  Central Govt. was to discourage manufacture  of  liquor for drinking purpose, except for molasses. (3) 497 However,  if  it is manufactured from  other  raw  materials other  than the Mahua, his application would be  considered. If the petitioner makes an application for establishment  or manufacturing  denatured spirit at other places and if  they produce  a No Objection Certificate from Central  Government and  Environmental  Department,  his  application  would  be considered.     The  contention of Sri Nariman, the learned counsel  for the  petitioner, is that the State Govt. having made  solemn undertaking  before this court and the arguments were  heard in Nandlal Jaiswal’s case on the basis that the  application of the petitioner would be considered and disposed of it was with  an intention to grant licence to the  petitioner,  but rejection  is  contrary  to the undertaking  given  to  this court.  It  was also contended that the  petitioner  have  a long, clean and commendable history of 40 years in  manufac- turing  country  made liquor in the  distillery  and  supply thereof within the area attached to U j jain Distillery. The State  Government’s non grant of licence thereto is  only  a rouse to defeat the fundamental rights of the petitioner  to establish  and trade in the manufacture and distribution  of the  liquor  in terms of the provisions of the Act  and  the rules  and  the instructions of the Govt.  in  that  regard. Having  given  the licence to the  other  distilleries,  the petitioner  being  similarly placed,  non-grant  thereto  is arbitrary,  discriminatory  and  violating Art.  14  of  the Constitution.  It was also further contended that the  peti- tioner if for any reason cannot be granted D-2 licence at  U j jain, D-2 licence may be granted on Government  distillery at Ratlam and supply area attached to it under D-1(s) so  as to do complete justice to the petitioner. It was resisted by Sri Ganpule, learned senior counsel for the State contending that  pursuant to the undertaking given to this  court,  the application  was considered and found not feasible to  grant the  licence to the petitioner due to grounds stated in  the impugned  order  which are relevant and  existant  being  in conformity with the change of the policy, and so this  Court cannot interfere and may not issue the writ as prayed for.     Though rule nisi was ordered on March 17, 1989,  despite notice of the Registry dated April 24, 1989, neither  copies of  the  writ petition, nor the requisite  process  fee  for service  of the rule nisi on the respondents were  deposited in  the court. As a result the rule nisi was not  issued  to the  contesting  respondents Nos. 3 to 10.  Along  with  the connected  appeal which is just disposed, Sri Tarkunde,  the learned senior counsel appearing for RDC which was impleaded as  5th  respondent  to whom licence was  given  for  Ujjain Distillery, contended that unless there is cut in the supply area of the operation of the existing 498 licences  and a separate supply area is carved out,  no  D-2 licence  could  be issued to the petitioner.  The  licensing period  of 1986 to 1991 had expired by efflux of  time.  New policy  is in vogue for the succeeding licensing  period  of 199  1  to  1993. The licences having been  granted  to  the respective  persons, who are not represented in this  court, the relief asked for cannot be granted in their absence.     In  our  view there is force in the contentions  of  the respondents. The only question for consideration is  whether it  is a fit case for interference by this court due to  the aforestated  sequence  of events.  Undoubtedly  the  learned

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Attorney General assured this court that the application, if filed  by the petitioner, would be considered. Obviously  in accordance with the provisions of the Act and the rules. The policy  of  1984 was upheld by this court under  which  nine distilleries were granted D-2 licences to manufacture recti- fied spirit and liquor and to supply to the retailers  under D-1 licence within the area attached to each of the distill- eries.  The petitioner admittedly made application to  grant licence  to manufacture country made liquor, obviously  with Mahua flowers or molasses at Ujjain. The RDC established new distillery  at  Ujjain in terms of the new  policy,  at  its expense,  and is manufacturing and supplying the liquor.  It vacated  the old distillery at Ujjain which we are  informed that  the building is still existing. RDC  had  manufactured the  spirit and country made liquor in terms of D-2  licence and  supplied  in terms of D-1 licence. The  period  of  the licence  also  expired  by efflux of time.  Again  there  is change  in the new policy which is in vogue.  The  licensing period  is for two years commencing from April 1, 199  1  to March 31, 1993. Admittedly, the petitioner had not submitted any  tender  in terms of the new policy for  manufacture  of rectified  spirit  or  liquor  for  grant  of  D-2  and  D-1 licences,  the  licences have already been  granted  to  the third  parties  and  they are not  before  this  court.  Any direction  in this regard would not only interfere with  the licences  granted  to  them, but also  create  a  hiatus  in operational system. This court cannot direct the State Govt. to create a new policy of receiving private applications  or to  direct  the Commissioner of Excise to carve  out  a  new supply  area and to grant licence to the petitioner.  It  is not  possible to give such a direction for the reasons  that the  petitioner,  admittedly,  did not offer  himself  as  a candidate  for  consideration when tenders were  called  for licensing  period commencing from April 1, 1991. As  regards the  Govt. Distilleries at Ratlam is concerned for grant  of D-1  (S)  licence as requested for, we  have  no  sufficient material  whether  any arrangements have been  made  to  any other  parties for supply area in that regard.  Under  these circumstances,  it is extremely difficult to accede  to  the request made by the 499 counsel for the petitioner, Though the petitioner had estab- lished  long career in the field to manufacture, supply  and distribution  of intoxicants in the State of Madhya  Pradesh for  about 40 years, we cannot issue any direction as  asked for.     Under these circumstances we are constrained to  dismiss the writ petition, but without costs. Y.L.                                                Petition allowed. 500