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PETITIONER: MOHD. FIDA KARIM AND ANR.

       Vs.

RESPONDENT: STATE OF BIHAR AND ORS.

DATE OF JUDGMENT31/03/1992

BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) REDDY, K. JAYACHANDRA (J) RAY, G.N. (J)

CITATION:  1992 AIR 1191            1992 SCR  (2) 408  1992 SCC  (2) 631        JT 1992 (2)   520  1992 SCALE  (1)768

ACT:      Bihar Excise Act, 1915 : Section 42 and 43.      Liquor   shops-Right   of  vend-Mode   of   settlement- Government  policy-Grant of licence for  five  years-Licence subject  to change in policy of Government-Change of  policy to auction-cum-tender method-Change in policy held valid and not   violative  of  Article  14-Section  42  and  43   held inapplicable.

HEADNOTE:      The  State  of  Bihar took a policy  decision  to  make settlement of liquor shops for five years subject to  yearly renewal on fulfilling certain conditions in terms of  change in policy.  The said policy was approved by Cabinet on 25 th January, 1990. Rules were amended accordingly and  published in  the official gazette.  In pursuance to the  said  policy the  appellants  deposited six months licence  fee  for  the first  year  of  settlement on 7th March,  1990.   The  said policy  was  challenged and the High Court  granted  interim stay of the policy directing the Government to grant licence on  yearly basis through public auction.  In  the  meanwhile the  State  Government changed the policy  under  which  the settlement  of liquor shops was to be made  by  auction-cum- tender  method  for  the next year and the  new  policy  was approved   by  the  Cabinet  on  16th  August,  1990.    The appellants  field  writ petitions in the  Patna  High  Court challenging  the  new policy of auction-cum-tender  for  the year 1991-92 which were dismissed.      In appeal to this Court, it was contended on behalf  of the  appellants  that  (i) the  period  of  licence  already granted cannot be curtailed without compliance of section 42 and 43 of the Bihar Excise Act; (ii) Government’s action was arbitrary  and  violative of Article 14 and  the  Govt.  was estopped  from adopting the new policy on the  principle  of promissory estoppel; and (iii) the impugned order was not  a change of policy but was merely an executive order passed on the wrong assumption as if the High Court had                                                       409 directed the Government to review its policy.      Dismissing the appeal, this Court,

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    Held : 1. The Government was fully competent to  change its  policy under the terms of the grant of licence  itself. The  Memorandum  and the sale Notification on the  basis  of which  the  appellants  claimed the right  to  continue  the licence  for a period of five years, clearly mentioned  that the  grant of licence was on annual basis and  such  renewal after  every  year was subject to the  conditions  mentioned therein and also subject to any change in policy.   Sections 42 and 43 of the Bihar Excise Act have no application in the case of change of policy by the Government. [412E-G, 413E]      2.  It is also well settled that the right of  vend  of excisable  articles is exclusively and absolutely  owned  by the State Government. [412G]      3.  The new policy of adopting the method  of  auction- cum-tender is certainly a change of policy.  The reason  for change of policy is that the Government realised that making settlement  for five years would give rise  to  monopolistic tendency and the interest of revenue was not fully protected in the former policy.  There is nothing wrong in taking such a  view by the State Government and to change its policy  in public  interest.  The appellants as such have no  right  to challenge the new policy. [413A-D]      4.  There  was  neither any promise nor  there  is  any justification  to  hold that the  appellants  altered  their position  on the basis of promise.  The contention based  on the ground of promissory estoppel or under Article 14 cannot be accepted. [413D-E]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1205 of 1992.      From  the Judgment and order dated 6.9.91 of the  Patna High Court in C.W.J.C. No. 2102 of 1991.      Kapil  Sibal,  Harish  N.  Salve,  Ranjit  Kumar,  G.D. Bhandari and S.C. Patel for the Appellants.      M.L. Verma, B.B. Singh, Vikash Singh and L.R. Singh for the Respondents.                                                        410      The Judgment of this Court was delivered by      KASLIWAL, J. Special leave granted.      This  appeal  is directed against the judgment  of  the Patna High Court dated 6th September, 1991.  Initially Mohd. Fida Karim and Dasrath Das had filed special leave  petition challenging  the dismissal of their writ petition,  C.W.J.C. No. 2102 of 1991 by a Division Bench of the Patna High Court by  order  dated 6th September, 1991.  In view of  the  fact that  by  a  common  decision,  the  Patna  High  Court  had dismissed   many   other  identical  writ   petitions,   the petitioners  in  those other writ petitions  also  submitted intervention   applications  before  this  Court  and   such intervention    applications   have   been   allowed.     35 applicants/interveners  are  also  supporting  the   present appeal filed by Mohd. Fida Karim and Dasrath Das.      The  controversy  in this case relates to the  mode  of settlement  of the right of vend of country  liquor,  Indian made  foreign  liquor and spiced country  liquor  under  the provisions  of  the  Bihar  Excise  Act,  1915  (hereinafter referred   to  as  the  ’Excise  Act’)  and   Rules   framed thereunder.  The Government changed its policy from time  to time.  Prior to 1984, settlement of country liquor shops was done by renewing the licence according to the sliding  scale of  system.  In 1984, the State Government decided  to  make settlement of country liquor shops by public auction.   This

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was done on annual basis for a period commencing from 1st of April  to  31st  March of the  next  following  year.   This practice continued upto 1989-90.  During the currency of the above   licensing  period  1989-90,  the  State   Government appointed  a  high  power committee  and  according  to  its recommendations  made a policy to make settlement of  liquor shops  for  five years by renewing  the  existing  licences, subject to fulfilling certain conditions like,  satisfactory record of performance and enhancement of licence fee at  the rate  of 10 per cent every year and also enhancement of  the minimum  guaranteed  quota at the rate of 5 per  cent  every year.   The  above policy decision was taken  by  a  Cabinet Memorandum  dated 25th January, 1990.  In pursuance  to  the above   policy   decision,  the   Excise   Commissioner   by communication   dated  8th  February,  1990   informed   the licensing authorities to take steps for settlement of excise shops as per the amended policy of the Government.  On  17th February,  1990, necessary amendments were also made in  the Rules framed under Section 89 of the Excise Act                                                        411 inconsonance  with  the new policy of the  Government.   The amendments  were duly published in the official  Gazette  on 7th  March,  1990, to come into force with effect  from  1st April, 1990.  The case of the apellants is that in pursuance to  the aforesaid policy, the appellants agreed to  the  new terms  and  conditions and necessary  agreements  were  also executed.  The appellants also deposited six months’ licence fee  for the first year of settlement, on 7th  March,  1990. According  to the appellants a concluded contract came  into effect  on  7th March, 1990 itself, which was to  come  into force with effect from 1st April, 1990.      Some  of the persons not satisfied with  the  aforesaid Government  policy, challenged the same by filing four  writ petitions in the High Court.  The High Court passed  interim orders  on  9th March, 23rd March, and 13th April,  1990  in these writ petitions.  The High Court in the interim  orders granted stay on the new policy of the Government and in  its place  gave directions to grant the licence on yearly  basis through  public auction.  Initially, it was  directed   that the period of such settlements shall not exceed four months, but subsequently it was made on monthly basis.  It was  also directed that the aforesaid orders will not stand in the way of the State Government in reviewing the policy decision. We have  only  mentioned the substance of such  interim  orders passed  on  9.3.1990, 23.3.1990 and 13.4.1990, as  the  same have  been  quoted  in  extenso by the  High  Court  in  its impugned  order dated 6th September, 1991.  It appears  that the  aforesaid interim orders were passed by the High  Court under  the vain hope that the main writ petitions  would  be disposed of soon.  However, before the writ petitions  could be  heard  finally, the Government started  the  process  of reviewing  the policy decision dated 25th January,  1990/8th February, 1990.  By Memorandum dated 7.7.1990 placed  before the   Council  of  Ministers,  it  was  proposed  that   the settlement  of  the  country liquor  shops,  spiced  country liquor  shops  and foreign liquor shops should  be  made  by auction-cum-tender  method, according to which  the  persons interested  were required to submit their sealed tender  and also  to participate in the public auction.  The  settlement was  to be made finally in favour of the person  making  the highest  offer whether by way to tender or at auction.   The Cabinet approved the aforesaid policy on 16th August,  1990. The Excise Commissioner also sent necessary instructions  to all  licensing  authorities by letter dated  25th  February, 1991  in  regard  to  the proposed  mode  of  settlement  by

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auction-cum-tender for the year 1991-92.                                                        412 The present appellants as well as the interveners filed writ petitions  challenging the aforesaid new policy of  auction- cum-tender for the year 1991-92.      Similar  contentions  have  been raised  before  us  on behalf  of the appellants, which were made before  the  High Court.  The challenge to the new policy has been made on the following  three  grounds.  Firstly, it has  been  submitted that there is no provision in the Excise Act or the Rules to review  or  revoke  the grant of licence or  to  curtail  or reduce  the  period  of licence  except  as  provided  under Sections  42 and 43 of the Excise Act.  The licence  already granted for a period of five years from 1990 to 1995  cannot be made ineffective by the so-called new policy of  auction- cum-tender.   A  further  limb of this ground  is  that  the period  cannot  be  curtailed  without  compliance  of   the mandatory  provisions  of Sections 42 and 43 of  the  Excise Act.  The second ground of challenge is that the  Government is  estopped  from doing so on the principle  of  promissory estoppel.   The  third  ground is that in  any  events,  the exercise  of power, in the facts of the case  is  arbitrary, irrational and patently unreasonable as such is violative of Article  114 of the Constitution.  The High Court has  dealt with  all these contentions in detail and has  rejected  the same by giving cogent reasons.  We fully agree with the view taken by the High Court.      It is important to note that the Memorandum dated  25th January,  1990 and the letter dated 8th February,  1990  and the  sale Notification on the basis of which the  appellants are claiming the right to continue the licence for a  period of  five years, clearly mentioned that the grant of  licence was  on annual basis and such renewal after every  year  was subject to the conditions mentioned therein and also subject to  any  change in policy.  Thus, the Government  was  fully competent to change its policy under the terms of the  grant of  licence itself.  It is also well settled that the  right of vend of excisable articles is exclusively and  absolutely owned by the State Government.      Mr.  Kapil Sibal, Learned Senior Counsel  appearing  on behalf of the appellants did not dispute the aforesaid legal position, but his contention was that the impugned order  of the  Government  made  in August, 1990 cannot  be  termed  a change of policy, but in fact was merely an executive  order passed  on  a wrong assumption as if the High Court  in  its interim                                                        413 orders had given a direction to the Government to review its policy.   We do not find any substance in  this  contention. The new policy of adopting the method of  auction-cum-tender is  certainly a change of policy.  The reason for change  of policy  given  by the Government is that  it  realised  that making  settlement  for  five  years  would  give  rise   to monopolistic tendency, which will not be in public interest, at  the  same  time the interest of revenue  was  not  fully protected  in the former policy.  This clearly goes to  show that  the Government wanted to adopt a new policy in  public interest  to  be  made applicable  from  the  year  1991-92. Learned  Counsel appearing on behalf of the State  of  Bihar submitted  in clear terms that the earlier policy was  wrong and  the Government realised its mistake and thus adopted  a new policy to augment its revenue and to avoid  monopolistic tendency.   We  do not find anything wrong  in  taking  such view  by  the  State Government and  to  change  its  policy considering  the same to be in public interest.  It  is  not

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disputed that the appellants have continued the business  of sale of liquor for the whole year 1.4.1990 to 31.3.1991. The appellants as such have no right to challenge the new policy which  has  to apply for the year 1991-92,  even  under  the terms  of their agreement.  We do not find any force in  the contention raised on behalf on the appellants on the  ground of   promissory  estoppel  or  under  Article  14   of   the Constitution.   There  is no basis at all made  out  in  the pleadings in support of the above grounds and the High Court has  rightly  rejected  the same.   There  was  neither  any promise  nor  there is any justification to  hold  that  the appellants  altered their position on the basis of  promise. Section  42 and 43 of the Excise Act have no application  in the case of change of policy by the Government.      Lastly,  it was contended on behalf of  the  appellants that  the  licensees  who had taken the  licence  under  the earlier  policy of the Government of 25th January,  1990/8th February, 1990 had submitted National Saving Certificates by way  of security and in case the Government had changed  its policy,   it  was  bound  to  return  the  National   Saving Certificates to the respective licensees.  We consider  this submission  to be just and proper.  Learned Counsel for  the State  appearing before us also conceded that such  National Saving Certificates would be returned to the licensees.   We accordingly  direct  the State Government to return  to  the licensees.   We accordingly direct the State  Government  to return all the National Saving Certificates taken by way  of security to all the licensees who had entered in  agreements under  the  old  policy of five years  license,  within  two months                                                        414 from  the  date of the communication of  this  order.   This direction will not apply in case of such licensees who  have filed civil suits for the recovery of such amounts and their cases  would be governed by the ultimate decision  in  those civil proceedings.      In the results, we dismiss this appeal with no order as to costs. T.N.A.                                    Appeal dismissed.                                                        415