JUDGMENT
D.P. Wadhwa, J.
(1) This petition under article 226 of the Constitution of India has been filed to have the orders of respondents Nos. 2 to 5 for grant of license L-9 (license for wholesale of country liquor in the Union territory of Delhi) for the period 1989-90 in favor of respondents No, 6 to 9 quashed, as being against the provisions of the Punjab Excise Act 1914, as applicable to Delhi, the Delhi Liquor license Rules 1976, made there under, and the terms of the tender for grant of the said L-9 license. Originally there were two petitioners, the first petitioner being the sole proprietor of the second. Objections were raised about the maintainability of this petition by these petitioners they being themselves ineligible for grant of L-9 license. By application (CM 3632/89) filed on 22.8.1989 M/s Vindhyachal Distilleries (P) Ltd. and Mr. Vijay Kumar Khanna, Managing Director thereof, were added as third and fourth petitioners respectively in these proceedings. This was by order dated 5.9.1989, and on the statement made that no further pleadings or documents were required to be filed on behalf of the added petitioners except as to what they had stated in their application for being imp leaded as parties. There are Four sets of respondents. The first set of respondent being respondent No. 1 would be Union of India through the Secretary, Department of Chemicals and PetroChemicals, Ministry of Industry; the second set of respondents comprises the 2nd, 3-d, 4th and 5th respondents being the Lt. Governor, Secretary (Finance), Commissioner of Excise and Collector of Excise, of the Delhi Administration. This set would also comprise respondent No. 4A who was the Commissioner of Excise at the time when decision was taken to grant the license to respondents Nos. 6 to 9 The third set of respondents comprises respondents Nos. 6 to 9, the 6th respondent being M/s Chhattisgarh Distilleries Ltd., and 7th, 8th and 9th respondents being its Directors: The fourth set of respondent comprises the Commissioner of Excise, U.P., being respondent No. 10.
(2) During the pendency of this petition certain interim orders were made. For the purpose of decision of this petition we do not think it necessary to refer to those orders except in passing.
(3) The case pertains to the supply of 160 lakh to 190 lakh bulk litres of country liquor to Delhi for the period from 1.5.1989 to 31.3.1990. Public notice inviting tenders for the grant of license in Form L-9,CLW-1 for the wholesale supplies of 50 under proof country liquor was issued on 21.4.1989 with the approval of the Lt. Governor, the last date of submission of tenders being 1.5.1989. Earlier, decision had been taken that tenders for the wholesale supplies would be issued by the Excise Department of the Delhi Administration and the payment for the supplies which were to be released from the Bonded Warehouses would be made by the Dtdc (Delhi Tourism Development Corporation) to the supplier. Work in regard to retail sale of So Degree country liquor was transferred to DTDC. Steps were then taken to constitute the Negotiation Committee (‘NC’ for short as provided under the relevant Delhi Liquor license Rules 1976 (Rules 32 and 33). Earlier the Nc comprised the Finance Secretary, Excise Commissioner and Secretary (Law and Judicial), all of Delhi Administration. Since decision was taken to entrust the work relating to retail sale of country liquor to Dtdc, a public sector undertaking, and the payment for procurement of wholesale supply was to be made by the Dtdc, it was suggested that Chairman, Dtdc, be also appointed as a member of the NC. This was approved by the Lt. Governor. Six tenders were received in response to the public notice and these were (in the ascending order of rates quoted by them) :- __________________________________________________________________________ S. No. Name of the Quart. Rate per dozen tenderer ____________________________ Pints. Nips. (i) M/s Chhattisgarh Rs. 68.45 Rs-41.45 Rs. 25.45 Distilleries Ltd., Durg, M.P. (ii) M/s Ransons Indus- Rs. 72.90 Rs. 42.00 Rs. 23.00 tries, Jammu, J&K (iii) M/s Co-operative Co. Rs. 74.89 Rs. 38.52 Rs. 24 75 Ltd., Saharanpur, U.P. (iv) M/s Modi Industries Rs. 77.00 Rs. 44.00 Rs. 24 50 Ltd. Modi Nagar. U.P. (v) M/s Sir Shadi Lal Rs. 78.99 Rs. 52.50 Rs. 35.00 Distillery & Chemical Works, Mansurpur, U.P. (vi) M/s Pilkhani Distil- Rs. 82.00 Rs. 46.00 Rs. 30.00 lery, Pilkhani, UP. _________________________________________________________________________
(4) Examination of the relevant file of the Excise Department showed that tenders were opened and these were scrutinised by a committee consisting of the Excise Commissioner-cum-Special Secretary (Excise). Deputy Commissioner (Excise) and General Manager (Excise) and a detailed note was prepared on 8.5.1989. The matter was then placed before the Nc which, after holding various meetings, recorded detailed minutes after examining the pros and cons of all the tenders with reference to the terms and conditions of the tender. The Nc also held discussions with the first three tenderers mentioned above. It was noted that in spite of the fact that M/s Chhattisgarh Distilleries Ltd. being the lowest tenderer, was entitled to allocation of 60% of the supplies, it had, however, agreed to 50% of the supplies while bringing the rates down. M/s Co-operative Co. Ltd., agreed to its reducing the tender rates to Rs. 68.00 (750 ml.); Rs. 38.52 (375 ml.); and Rs. 24.75 (180 ml.). The rates were thus same of both M/s Chhattisgarh Distilleries Ltd. and M/s Co-operative Co. Ltd. The Nc noted that both the tenderers had come forward to make supplies at the uniform rate regardless of imposition of ex port pass fee by the Madhya Pradesh Government and/or increase or decrease of the export pass fee by the Uttar Pradesh Government. The Nc recommended that the lowest tenderer M/s Chhattisgarh Distilleries Ltd. be given allotment of 50/o of the requirement of country liquor and the remaining 50/o be allotted to M/s Co-operative Co. Ltd. When the matter was placed before the Lt. Governor, he by his note dated 19.5.1989 observed that the Nc had held very intensive negotiations and that M/s Chhattisgarh Distilleries Ltd. submitted the lowest tender which had brought down the prices. He also noted that the supplies had to be made from the State where form alcohol had been been allotted by the Government of India for this purpose and he presumed that this was being strictly enforced and that this must not and could not be deviated from. He queried if M ‘s Chhattisgarh Distilleries Ltd., which was located in Madhya Pradesh, could get its alcohol from U.P. The matter was further examined by the Nc and in the meanwhile as the stocks of country liquor had reached rock bottom it recommended that in the first instance both M/s Chhattisgarh Distilleries Ltd. and M/s Co-operative Co. Ltd. be called upon to bring 50,000 dozen quarts each within 15 days from the date of the grant of license in order to tide over the availability crisis of the country liquor in Delhi. This recommendation was accepted in principle by the Lt. Governor. Record shows that various representations including that from Mr. S.D. Bali, Secretary to the Speaker, Lok Sabha, New Delhi, were examined by the Nc With reference to the allotment of alcohol under clause 13 of the terms and conditions of the tender, it observed as under :- “(E)Allotment of Alcohol Clause 13 relating to allotment of alcohol from the State where- from it has been allotted by the Central Govt. is only an enabling provision so that the government can assist the licensee to fulfill his obligations. In Fact, allotment of alcohol becomes an obligation on the Dirt of the government vis-a-vis licensee. The Negotiation Committed has in no way recommended any relaxation. As and when M/?, Chhattisgarh Distilleries Ltd. applies For alcohol to the Excise Commissioner it will he allotted to them from the State wherefrom alcohol is allotted by the Central Govt. to the Delhi Administration. In-as-much as the query of Lg regarding procurement of alcohol by M/s Chhattisgarh Distilleries is concerned, it is submitted that if they approach this Administration they will be allotted alcohol from U.P. till such time the Central Govt. continues to make allotment of alcohol from U.P. The Committee has not-suggested any deviation from this clause. As Lg has also observed, there is no mention of this point in the minutes.”
The note of the Nc was forwarded by the Chief Secretary, Delhi Administration, to the Lt. Governor, through the Executive Councillor (E) and in the forwarding note the Chief Secretary recorded that the note of the Nc fully explained the points raised by the Lt. Governor earlier and that the proposal made by the Nc appeared to be best possible in the given circumstances in terms of-(1) lowest possible purchase price, (2) security of supplies, (3) reasonable split of order keeping in view the capacities of the suppliers, and (4) feasibility of switch in case of default by any of them. The Executive Councillor (E) noted that in the previous nothings he as well as the Lt. Governor had clarified that alcohol should only be obtained from U.P. in terms of the letter dated 25th May of the Joint Secretary to the Govt. of India. Then the Lt. Governor in his note of 14.6.1989 recorded that there appeared to be some lack of consensus as to whether the provision of clause 13 in regard to the source of alcohol being from U.P. was an enabling provision or an obligatory one. He noted that as there was need to finalise the matters quickly, the following should be done :- (A)The supplies for Delhi to be divided equally between the two parties as proposed by the Negotiating Committee. (b) There must be strict compliance in regard to damages in the event of non-supply in time (clause 13). (c) Both parties must strictly adhere to clause 17 regarding the maintenance of minimum stock from now onwards. (d) In regard to interpretation of clause 13 this should be referred to the Ministry of law and their interpretation sought on the limited question as to whether this is only an enabling provision whereby if a supplier wants an allocation of alcohol from us we can give it only from U.P., or, the supplier must necessarily use alcohol from U.P. the State for which the Central Govt. has made an allocation of alcohol for meeting Delhi’s needs. (e) Till views of Law Ministry are obtained Chhattisgarh Distilleries may supply from M.P. as per the recommendations of the Negotiating Committee. The file to be resubmitted at that time. (f) A fortnightly report to be sent to me through Ec (E) regarding supplies made and stocks maintained by both parties.”
Then, the Chief Secretary recorded his note on 16.6.1989 particularly with reference to points (d) and (e) in the note of the Lt. Governor. He referred to the following part of clause 13 in the terms of the tender :– “PROVIDED further that the Excise Commissioner shall make allocation of alcohol to the licensee from time to time in order to enable the licensee to fulfill the said obligation. The allocation of alcohol shall however, be made from the State wherever alcohol has been allotted by the Government of India for this purpose. Provided further that the Excise Commissioner may at any time after giving one week’s notice to the supplier, reduce or cancel the allocation already allotted The holders of licenses in from L-9 will not be entitled to any compensation or relief on this account.”
And noted that the implications of the above have to be seen in the context of the matter before the Department. Relevant portion of his note is as under:- “4.First of all the system of allocation of alcohol needs to be understood. The likely surpluses in the various states and requirements of imports of others are identified in the Central Molasses Board, which includes representatives of all states. Based on such identification the Board makes recommendations in regard to the states from which the various deficit states may draw their supplies. Those recommendations are not inflexible and may be varied in the course of the year depending on actual availability conditions etc. The ‘alcohol year’ is from December to November. It has also to be noted that inter-state movements of alcohol are not prohibited; they are only regulated through the issue of permits by exporting states. 5. As far as Delhi is concerned, the position is that we have traditionally been allotted alcohol from U.P.; so it has been done also for the current alcohol year which goes up to November 1989. If we need to change our sources of supply in the next alcohol year, we can take up the matter in the Central Molasses Board and we may reasonably expect accommodation from it. 6. It was not our intention that we should place orders for country liquor on suppliers only in the state from which we have been allocated supply of alcohol. Our invitation of tenders is open to suppliers from all over the country. Indeed, restricting our offer to suppliers only in U.P. would be putting ourselves in a constraint, unwarranted and unjustified. 7. Supplies of country liquor to us are not based on the alcohol allotted against Delhi’s quota. The suppliers are free to acquire alcohol from any sources that they may choose. They are also free to make use of Delhi’s quota and may take it from the state of allocation to the state in which their works are located. So, quite clearly, allocation of alcohol from Delhi’s quota is a facility that we offer, which the suppliers may avail of or may not. We do not insist that they necessarily manufacture country liquor from the alcohol allocated from our quota. 8. I do not, therefore, realise as to how the operation of clause 13 quoted above is germane to determination of the relative claims of the two tenderers. One of them is based in Madhya Pradesh and purposes to make use of the alcohol procured from within the state, which itself is surplus in alcohol. If he wishes to secure allocation also from our quota, which until the coming November is from U.P. he is free to do so. The other tenderer has retained the option of supplying country liquor from U.P. or from Chandigarh, though the like hood of his making supplies from Chandigarh is higher because of a lower export fee prevalent there. In deciding on the relative merits of the two tenderers it is, thus, irrelevant to take into account Delhi’s allocation of alcohol from U.P. until November which may subsequently change and which we also are in a position to get altered if we need to do so. 9. The matter may kindly be reconsidered. If EC(E) Lg approve, a firm decision be taken on the lines recommended by the Negotiating Committee.”
The matter again went back to the Lt.Govenr or who noted on 21.61.1989 that he had already approved entering into contracts with the two parties on the basis of the recommendations of the NC. He said in respect of the correct interpretation of clause 13, advice of Law Ministry, or, if necessary, of the Solicitor-General, be obtained. The Law Officer of the Govt. of India agreed with the interpretation, on clause 13, of the Nc and that by the Chief Secretary. Then, on 27.6.1989, the Lt. Governor recorded the following note :- "MY orders were very clear. Contracts with the two parties on the basis of the recommendations of the Negotiating Committee had to be entered into immediately. Reference to Law Ministry was to have been made thereafter. I want to look into the legal side separately and later. As such, contracts as directed above to be entered into, penalties have to be imposed equally on both sides. After above has been done, file to be resubmitted to me." Then the matter was being processed for entering into contracts with M/s Chhattisgarh Distilleries Ltd. and M/s Co-operative Co. Ltd. and in the meanwhile, it appears, the present writ petition was filed.
(5) Petitioners have contended that respondents Nos. 2 to 5 could not permit the 6th respondent M/s Chhattisgarh Distilleries Ltd, to get alcohol from the State of M.P. for the manufacture of country liquor for supply to Delhi. They said that the letter dated 15.2.1989 of the Central Government making inter-State allocation of potable alcohol for the year 1988-89 (December to November), wherein Delhi was allocated alcohol from U.P. (quantity 52.15 lakh litres), was a direction having the force of law and that it was also a term of clause 13 of the tender that alcohol could be procured only from U.P. Petitioners then say that had they known that alcohol could be obtained from M.P. or any oilier State than U.P., they could have tendered much lower rates than Rs. 68.00 per dozen bottles (quarts) as there was no export pass fee levied by the State of M.P. as against levy of Rs. 27.32 per dozen bottles in the State of U.P. Petitioners thus bring their case within four corners of Ramana Dayarain Shetty v. The International Airport Authority of India & Ors, . In this petition, therefore, they seek- to have the order granting L-9 license to the 6th respondent for the period 1989-90 set aside; (2) direction to respondents Nos. 3 to 5 to make allocation of alcohol from the State of U.P. only in terms of condition No. 13 of the tender read with the letter dated 15.2.1989 of the Central Govt. (3) direction to respondents Nos. 2 to 5 to recover from respondents Nos. 6 so 9 excise revenue calculated at the rate of 27.32 per dozen bottles in respect of supplies made by respondents Nos. 6 to 9 from the alcohol procured from the State of M.P. and also claim from respondents Nos. 6 to 9 a sum of Rs. 62,22000.00 as penalty for their inability to supply country liquor in terms of the permits issued to them for the supply of country liquor, the amount being the difference between the retail price of Rs. 312.00 per dozen and the tender price of Rs. 68.00 per dozen bottles.
(6) We may note-(1) Co-operative Co. Ltd. which was granted contract for supply of 50% of the country liquor or any other tenderer has not been made a party in the petition; (2) for the year 1988-89 the price charged for supply of country liquor (wholesale) was Rs. 75.70 per dozen bottles and the principal supplier was Co-operative Co. Ltd. which had been supplying country liquor to Delhi for- a considerable number of earlier years; (3) while the supplies are to be made to the Delhi Administration at the rate of Rs. 68/ per dozen bottles at the wholesale price, the Delhi Administration is charging Rs. 312.00 per dozen bottles in the retail market; (4) Delhi Administration has gained crores of rupees extra revenue from getting supplies this year at the rate of Rs. 68.00 per dozen bottles compared to Rs’ 75.70 per dozen bottle at which rate it was getting supplies last year ; (5) State of U.P. though a party in this petition has not put in appearance either in support of or in opposition to the petition.
(7) Three sets of respondents being Union of India (respondent No. 1) Delhi Administration (respondents Nos. 2 to 5) and Chhattisgarh Distilleries Ltd. (respondents Nos. 6 to 9), have filed their separate counter-affidavits in opposition to the petition. They have denied the contentions raised by the petitioners and have even questioned the locus standi and also bona fides of the petitioners to maintain the petition particularly when they do not themselves satisfy the eligibility conditions for the tender and when, in fact, they did not submit any tender. Respondents 6 to 9 have also contended that these petitioners have been put up by Mr. Nanak Singh of Co-operative Co. Ltd. who was the principal supplier of country liquor to Delhi for considerable number of years earlier and had almost a monopoly on the trade which has now been broken by the award of tender to Chhattisgarh Distilleries Ltd. and lowering of rates to a great extent causing loss to Co-operative Co. Ltd. but gain to Delhi Administration running over crores of rupees.
(8) Since considerable arguments were addressed on the letter dated 15.2.1989 of the Central Govt. and the terms of the tender particularly clauses 13, 14, 17 and 26 thereof, it may be useful at this stage itself to set out the aforesaid letter and the clauses of the tender. Letter dated 15.2.1989 had been issued by Mr. D.V. Mendiratta, Under Secretary to the Govt. of India, Ministry of Industry, Department of Chemicals and PetroChemicals, and was addressed to the Secretary (Commissioner Excise) of concerned States/Union territories and the subject was: “Inter-State allocation of Alcohol for Potable/Ind. and other uses for the first half of the alcohol year 1988-89”. There are two annexures to this letter as mentioned there in the letter is as under :- “SIR,In continuation of this Ministry allocation orders of even No. on the above subject and pursuant to deliberations of the meeting of the Central Molasses Board held on 2.2.1989, I am directed say that the Inter-State allocations of alcohol for potable/ind, purpose shall be as detailed in Annx. I and Ii respectively. These allocations are in addition to the ad hoc allocations made during the current alcoholic year which, for the present, are valid up to 28.2.1989. The validity of these allocations will be up to 30.11.1989 and it has been decided to extend the validity of the ad ho; allocations up to 30.11.1989. 2. More quantities of alcohol are available in some of the surplus States than have been allocated here. ‘ if any deficit State/U.T. needs additional quantities for potable or industrial alcohol, they may inform us and the required quantities will be allotted. 23 3. You are required to make Release Lifting accordingly. Copies of all release orders etc. may be sent to this Ministry. It has been observed that the monthly data on alcohol/molasses is not coming from some of the States in time. You are once again requested to ensure that the monthly return is sent by the due date.”
Clause 13 of the tender is a bit complex and is in narrative form. While setting out this clause; we have paraphrased the same for its proper appreciation : “13.(1) The holders of L-9 licenses will be expected to supply between 160 lakh bulk litres to 190 lakh bulk litres of 50 degree Up country liquor during the licensing period, subject to the allocations of alcohol made by the Government of India from time to time. (2) (a) Provided that the preference up to 60/o of the total requirement may be given to the lowest tenderer subject to the verification of his capacity to supply the same by the Excise Commissioner and the past performance or/and fulfillment of orders for supply given by the Excise Department during the previous licensing period (s). (3) For the remaining supply negotiations will be held with the tenderers in the ascending order of rates starting with the second lowest tenderer with a view to bring the rate at part with the lowest tenderer. In case the second lowest tenderer is willing to come down to the rate offered by the lowest tenderer, supply will be given to him depending upon his capacity to supply or/and his past performance or/and fulfillment of the orders for supply given by the Excise Department during the previous licensing period (s). (4) Thereafter, negotiations will be held with the next lowest tendered on the same pattern till the requirement for wholesale supply is exhausted. (5) The Excise Commissioner shall, subject to the orders, if any, of the Lt. Governor, fix the proportion in which orders shall be placed on different licensees from time to time. (6) The Collector of Excise will place fortnightly orders for the supply of country liquor within the limits indicated above specifying the date (s) by which particular quantity shall be supplied and the licensee shall supply the quantity ordered every fortnight. (7) Provided further that the Excise Commissioner shall make allocation of alcohol to the licensees from time to time in order to enable the licensees to fulfill the said obligation. The allocation of alcohol shall, however be made from the State wherefrom alcohol has been allotted by the Government of India for this purpose. (8) Provided further that the Excise Commissioner may at any time, after giving one week’s notice to the supplier, reduce or cancel the allocation already allotted. The holders of licenses in form L-9 will not be entitled to any compensation or relief on this account. (9) Provided further that if any allotment of alcohol made in favor of any licensee lapses due non-supply of country liquor by the licensee, he will be liable to pay the damages to the extent of the difference between the retail sale price and the wholesale price at which the licensee was required to make supplies. (10) Provided further that the damages representing the difference in the retail price and the wholesale price at which the licensee was required to make supplies, due to non-supply of country liquor in the last month of the licensing period shall be recovered from the defaulting licensee because no reasonable time is available with the Administration for making any purchases at the risk and expense of the defaulting licensee.” “14.IF the quantity ordered by the Collector of Excise on fortnightly basis is not supplied by the licensee by the last date by which the supplies should have been made, the Collector of Excise shall procure such quantities of country liquor of a comparable quality from the readily available alternative source at the risk and (expense) of the licensee without giving any further (notice) to the licensee. Provided further that quantum of supplies to be brought within a fortnight the licensee shall be evenly during the fortnight and no revalidation of import permit shall be permissible.” “17.Each licensee shall always keep a minimum stock to the extent of 25/o of the total monthly allocation of country liquor at a time at the Bonded Warehouse. The licensee shall build up the buffer stock within 15 days of the grant of license.” “26.In case of any failure to build up and maintain the minimum stock of country liquor and failure to maintain its regular supplies as prescribed by the Collector of Excise from time to time which the Collector of Excise deems reasonable or for any violation of the terms and conditions of the license the Collector may initiate proceedings, after giving the licensee a reasonable opportunity of showing cause against the proposed action for imposing penalty of suspension or cancellation of the license and for making payment in respect of any loss suffered by the Administration on any account which is not expressly provided in these terms/conditions or/and for making payment in respect of any loss suffered by the Administration on account of risk and cost purchase. Such loss shall be recoverable from the licensee in accordance with the provisions of the said Act or/and recoverable from the security deposit or from the surety of the licensee or the amount due to the licensee.”
(9) We think we should first apply our mind to the question as to whether the petitioners are entitled to any relief at all and then consider the various provisions of Jaw germane to the particular relief to which the petitioners are entitled. In this context we may, at this stage itself, also note the decision of the Supreme Court in Ramana Dayaram Shetty’s case . In this case tenders were invited from registered IInd class hoteliers having at least 5 years experience for putting up and running a IInd class restaurant and two snack bars at the Airport at Bombay for a period of three years. Contract was awarded to one ‘K’. It was challenged on the ground that he did not fulfill the condition of the tender inasmuch as he was not a “registered IInd class hotelier having at least 5 years experience.” The petitioner had contended that he too was not a registered IInd class hotelier with 5 years experience and was in the same position as ‘K’ and if thus condition was to be waived, he also could have submitted his tender and entered the field of consideration for award of the contract. He did not submit tender because of the eligibility condition in the tender which he admittedly did not satisfy. After detailed discussion, the court held that the action of the first respondent in accepting the tender of ‘K’ even though he did not satisfy the prescribed condition of eligibility, was clearly discriminatory since it excluded other persons similarly situated from tendering for the contract and it was was also arbitrary and without reason. It held that the acceptance of the tender ‘K’ was, in the circumstances invalid as being violative of the equality clause of the Constitution as also of the rule of administrative law inhibiting arbitrary action. Having held so, yet the court did not set aside the contract in question as it was of the view that it would not be a sound exercise of discretion in that case. The court was of the view that-(1) the petitioner had no real interest in the result of the litigation but had been put by another person ‘A’ for depriving ‘K’ of the benefit of the contract; (2) ‘A’ was already running the restaurant at the airport and he would have to go and the petition was filed at the instance of ‘A’ with a view to helping him to obtain the contract for the restaurant and the snack bars; (3) the petitioner was guilty of laches, the contract being for a period of three years and the petitioners had approached the court more than five months after the acceptance of the tender and when ‘K’ had already spent about Rs. l,25,000.00 for making arrangements for putting up the restaurant and snack bars and thus altered his position and there was no explanation for the delay; and (4) grave doubts existed whether the petition was commenced bona fide with a view to protecting the interest of the petitioner himself. The court was thus of the view that it would be most inequitous in the circumstances to set aside the contract and it was not a fit case to exercise jurisdiction under article 226 of the Constitution.
(10) In the case before us, the contract for supply of country liquor is for a period of Ii months from 1-5-89 to 31-3-90. The allocation of potable alcohol as per letter dated 15-2-89 is for the period 1988-89 expiring in November this year itself. We find that principal concern of respondents Nos. 2 to 5 has been that there should be continuous supply of country liquor to Delhi to avoid any mishap on account of consumption of spurious liquor by the public. If we are to set aside the award of contract to the sixth respondent, as the petitioners want us to do, then in that case the whole of the contract’ for supply of country liquor to Delhi including that of the Co-operative Co. Ltd. may have to be set aside and fresh tenders called. This will result in break of supply of country liquor with apparent danger to public health on account of consumption of spurious liquor. We do not find any reasonable explanation on the part of the first two petitioners to have filed the petition at such a late stage after most two months of the award of contract to the sixth respondent and for the third and fourth petitioners to have sought impleading in these proceedings after about for months of the acceptance of tender. It has come on record that after the tenders were accepted one Gulzar Singh filed a writ petition in the Madhya Pradesh High Court immediately thereafter and in that petition he imp leaded respondents Nos. 6 to 9 herein and the Commissioner of Excise, Madhya Pradesh, to prevent respondents Nos. 6 to 9 from exporting country liquor to Delhi. In that petition, the present petitioners Nos. 1 and 2 filed an application for intervention. The writ petition by Gulzar Singh was, however, dismissed and so also the application of petitioners Nos. 1 and 2 for intervention. This was by order dated 21.6.1989. Then, as noted above, the present petition was filed on 3.7.1989 and on 12.7.1989 the said Gulzar Singh filed and application (CM 2936/89) for being imp leaded as a party. This application, however, he subsequently withdrew and was dismissed as withdrawn. This court passed interim orders on 28.7.1989. A special leave petition against that order was filed by respondents Nos. 6 to 9 in the Supreme Court which was disposed of by order dated 18.8.1989 with a direction to dispose of the writ petition with in a particular period. Then, on 22.8.1989 petitioners Nos. 3 and 4 filed an application (CM 3632/89) for being imp leaded as petitioners. In this application they said that they would be able to supply country liquor at the rate of Rs. 64.00 per case of a dozen bottles as against the rate of Rs. 68.00 per dozen bottles agreed by the sixth respondent and Co-operative Co. Ltd. The principal reason for filing this application for being imp leaded by petitioners Nos. 3 and 4 would appear to be that the first two petitioners were ineligible to give tender for supply of country liquor in terms of the conditions of the tender. This fact was admitted on behalf of the petitioner during the course of arguments. The averments in the writ petition, therefore the the first two petitioners were eligible to tender, are obviously untrue. This in itself would make the writ petition not maintainable. There has been a serious contest if the third and fourth petitioners were also eligible to tender in terms of the conditions of the tender. The main conditions are that the tenderer should have a working distillery for the supply of country liquor of 50 Degree under-proof For retail vends in wholesale in bottles of certain sizes & that with the tender documents a true attested copy of the distillery license issued by the competent authority be attached and also the documents to show the permitted installed capacity for the manufacture of country liquor and a statement indicating the production of country liquor during the last 3 years duly authenticated by the concerned Excise Officer having jurisdiction. The question is if petitioners Nos. 3 and 4 were having the requisite distillery license issued by the competent authority as on 1.5.1989, the relevant date, when the tenders were to be opened. We think, not. With their application for being imp leaded as petitioners, petitioners Nos. 3 and 4 did not file any copy of license showing that they were having a working distillery. A photo-copy of the document being license in form D-2 of the third petitioner has been brought on record which is dated 25.9-1987. As per this document, the third petitioner was granted license to manufacture industrial alcohol in its distillery from 25.9.1987 to 31.3.1988 subject to certain conditions. Reference may also be made to order dated 29.8.1989 of the Madhya Pradesh High Court (Jabalpur Bench), in a writ petition filed by the third and fourth petitioners herein before it, challenging the refusal of the Madhya Pradesh Government to permit export of rectified spirit. The court noted in that order that it was pointed out that the petitioner’s (third and forth petitioners herein) license period expired on 1.4.1989 and their application for renewal was pending. The court therefore observed as under : “IN view of the above controversy involved and also for the reason that the petitioner’s license has come to an end by efflux of time, J do not find that the petitioner can be granted any interim relief so as to permit it to export the existing quantity of rectified spirit in its possession.”
It was during the course of arguments in these proceedings that the petitioners brought on record on 1.11.1989 a photo-copy of the letter dated 24.10.1989 issued by the State of Madhya Pradesh to the effect that in the circumstances mentioned in the letter the State Government had decided to renew D-2 license of the third petitioner for the year 1989-90 on the condition that it would comply with all other rules and conditions. Though this letter would have retrospective effect and it would mean that on 1.5.1989 the third petitioner was having a valid license to run a distillery, but for the purpose of acceptance of tender as on 1.5.1989 it cannot be said that the third petitioner was eligible to tender because on that day it was not having in its possession any valid license to run a distillery and was thus ineligible to tender. We therefore, do not feel it necessary to go into the question if the third and fourth petitioners satisfied other conditions of the tender.
(11) The third and fourth petitioners appear to have jumped into the fray when it was found that the first and second petitioners were not eligible to tender and on this ground it could be held that they had no locus standi to maintain the present petition. We find considerable substance in the allegation of respondents Nos. 6 to 9 that the present petition has been filed at the instance of Co-operative Co. Ltd., the other tenderer for 50% supply of country liquor to Delhi under the tender in question. This party has been supplying country liquor to Delhi for the last several years to the extent of 60% of the total supplies as per rules. This year its supply got reduced to 50/o of the total supplies and so also the price from Rs. 75.70 per dozen bottles to Rs. 68.00 per dozen bottles. Co-operative Co. Ltd., therefore, has every right to gain if the tender of respondent No. 6 is held to be invalid on any ground. With the writ petition, the petitioners have filed three different legal opinions, one dated 15.6.1989 and the other two dated 16.6.1989. All these different opinions are to the effect that under clause 13 of the tender, alcohol had to be procured from U.P. as per the allocation mentioned in letter dated 15.2.1989 referred to above. These opinions were, admittedly, obtained by Co-operative Co. Ltd. and passed on to the petitioners for use in these proceedings, and these are annexures to the petition. At the time of admission of the petition, it would appear that this court frowned upon the conduct of the petitioners in filing these written opinions. Liberty was, however, granted to them to have these annexure deleted, but the fact remains why these opinions, which had been obtained by Co-operative Co. Ltd., were handed over to the petitioners, particularly in the light of litigation in the Madhya Pradesh High Court. Then various other documents have been filed with the petition which are from the official records of respondents Nos. 2 to 5 and the petitioners being strangers to the proceedings for acceptance of tender could not have access to this record and there is every possibility of these documents having been made available to the petitioners by the Co.operative Co. Ltd. Further, the Co-operative Co. Ltd. has not been added as a party and this fact, to our mind, is fatal to the petition. If on the pleas of the petitioners tender of respondent No. 6 is to be rejected, then the tender of Co-operative Co. Ltd. will also have to meet the same fate. For one thing, tender cannot be awarded to the petitioners without the whole process of invitation of tender having been gone into afresh as per rule 32 of the Delhi Liquor license Rules 1976. and, secondly, if in any case tender for supply is to be awarded to the petitioners Nos. 3 and 4 at their offered rate of Rs. 64.00 per dozen bottles, then Co-operative Co. Ltd. cannot be allowed to go on supplying liquor at the rate of Rs. 68.00 per dozen bottles putting the Delhi Administration to loss. Then in the case where license is to be granted by tender the Nc has also to play its role under sub-rule 7(a) of rule 32 of the Rules. Respondents Nos. 6 to 9 have contended that after they became aware of the grant of tender to them they made further investments and employed extra labour to meet the huge demand for supply of country liquor to Delhi and altered their position. They said they altered their commercial and industrial activities and entire range of ancillary and related activities for the supply of country liquor under the tender. It would be certainly most inequitous at this stage to set aside the tender granted in favor of these respondents.
(12) It was pointed out that the export pass fee at the rate of Rs. 27.35 imposed by the State of U.P. is on the country liquor and on potable alcohol duty is at the rate of Rs. 3.42 per dozen bottles. The State of U.P. would, therefore, be more interested in the export of country liquor than potable alcohol as per allocation by letter dated 15.2.1989.
(13) It was contended that the terms of the tender read with letter dated 15.2.1989 were statutory and therefore the respondents were bound by the same. We do not think this is a correct submission to make. So far as the terms of the tender are referable to the rules under the Punjab Excise Act 1914, as applicable to Delhi, these will have statutory force Otherwise, it can be said that other terms of the tender have been framed under statutory powers under the aforesaid Act and the rules but they in themselves cannot be said to be statutory in character.
(14) Coming to the relevant clauses of the tender set out above, as we read these clauses we find that under para 1 of clause 13 the Government expects a certain quantity of country liquor being supplied to Delhi subject to the quantum of allocation made but the State from which allocation is to be made is not relevant per this para. Para 5 will come into play after the tenders have been accepted and it is then that the Excise Commissioner is to fix the proportion in which the orders shall be placed on different licensees from time to time. Subject to para 5, under para 6 the Collector of Excise is to place fortnightly orders specifying the date (s) by which particular quantity of country liquor is to be supplied by the licensee who is to supply the quantity so ordered every fortnight. Clause 14 of the tender would appear to be a proviso to this para which contains a further proviso that quantum of supplies to be brought within a fortnight by the licensee shall be evenly spread during the fortnight. This proviso to clause 14 further states that no revalidation of import permit shall be permissible. This would mean that though an import permit for import of country liquor is necessary its revalidation will not be permitted. This would appear to mean only that the licensee is forced to make regular supplies of country liquor. Clause 14 does not restrict the Collector of Excise to procure country liquor from any quarter and it is not necessary that country liquor should be made only from the alcohol allocated from the State of U.P. Coming back to para 7 of clause 13, the Excise Commissioner is to make allocation of alcohol to the licensee from time to time. This he is to do in order to enable the licensee to fulfill his obligation as mentioned in paras 1, 5 and 6. It was stated before us that for the purpose of allocation a licensee has to make a request in writing to the Excise Commissioner. If that be so, then on such a request being made the allocation of alcohol will have to be made from the alcohol allotted by the Central Government from the State as mentioned in letter dated 15.2.1989. This would be as per later portion of this para. It has been brought to our notice that after making of the interim orders dated 28.7.1989 in these proceedings directing the 6th respondent to supply country liquor to Delhi manufactured from the alcohol to be obtained from U.P., the 6th respondent did not make any request for such allocation of alcohol, and apprehending disruption of supply of country liquor respondents Nos. 2 to 5 of their own gave necessary import permit to respondent No. 6 for import alcohol, from the allocation made from U.P. as per letter of 15.2.1989. There has been a great deal of controversy on the interpretation of this para read with letter dated 15.2.1989. According to respondents, para 7 would come into play only if request is made by the 6th respondent for allocation of alcohol but if it can procure alcohol from its sources, para 7 will not come into play. It is stated that the obligation is to supply alcohol in terms of paras 1, 5 and 6, because the words “the said obligation” appearing in para 7 could refer only to paras 1, 5 and 6. Further contention has been that letter dated 15.2.1989 has no statutory force, it being merely an informal communication for equitable distribution of alcohol from surplus States to deficient States. Then under para 8 the Excise Commissioner can reduce or cancel the allocation already made and on such occasion arising the licensee will not be entitled to any compensation or relief. This may mean that the licensee need not supply country liquor if there is reduction or cancellation in the allocation but then this para does not bar the licensee from going on supplying country liquor in terms of paras 1, 5 and 6 from any other source even if there is any reduction or cancellation of the allocation from the State concerned. Para 9 will come into operation only after the expiry of the period of the license, i.e. the contract period, but only if the licensee has not supplied the country liquor in terms of earlier paras and allotment of alcohol, if any, made in his favor lapses on that account. Then, he is to be burdened with damages to the extent mentioned in the para. Para 10 is an independent clause and would rather appear to be yet another proviso to clause 14. Clause 17 deals with the minimum stock which is to be maintained and clause 26 deals with certain eventualities arising out of breach of certain terms of the contract. Contraction but by the petitioners on clauses 13, 14 and 26 of the tender read as a whole may also appear to be correct that the country liquor has to be supplied from the alcohol allocated from the State of U.P. But, then clause 14 is no bar to the Delhi Administration from procuring country liquor from any other source irrespective of the fact if that country liquor is made from the alcohol from U.P. or not. Then, also it cannot be said that Contraction put by respondents Nos. 2 to 5 on clause 13 is not bona fide or reasonable or honest and particularly when the first respondent Central Government agrees with the interpretation put by respondents Nos. 2 to 5 and also keeping in view the fact that in the past the State of U.P. did not supply alcohol to Delhi in terms of the allocations made earlier.
(15) During the course of arguments it was brought to our notice that when respondent No. 6 was allotted alcohol from U.P. by the Delhi Administration, respondent No. 6 approached the excise authorities in U.P. for permission to purchase and move alcohol from U.P. to Madhya Pradesh where it was having its distillery for the purpose of manufacture of country liquor, and the State of U.P. declined permission to respondent No. 6 for the purpose. A letter dated 13.9.1989 from Delhi Administration to the Joint Secretary, Ministry of Industry, Department of Chemicals and Petro-Chemicals, Govt. of India, has been brought on record wherein it is complained that good offices of the Central Govt. be used and U.P.’s excise authorities directed to release and allow the export of potable alcohol out of the State of U.P. on the basis of release orders issued by the Delhi Administration from time to time from its quota of potable alcohol as allocated by the Central Govt. It was pointed out that refusal of the U.P. excise authorities to honour the alcohol release orders issued by the Delhi Administration and allow export of potable alcohol out of U.P. was likely to cause acute shortage of country liquor in the Union territory of Delhi. It was stated that in the event of shortage of country liquor, consumers might resort to spurious and illicit liquor endangering public health. The Joint Secretary (Chemicals), Govt.of India, by letter dated 19.9.1989 replied that for supply of country liquor through a distillery in M.P. the right course would have been for Delhi Administration to seek an inter-state allocation from the State of M.P. and that such allocation could have been made in case an adequate surplus was declared by that State. It was pointed out that as per rules and practice, the Central Govt. could make allocation from one State to another on the basis of requests received from the receiving State either a declared or assessed surplus from the issuing State and that quantities to Delhi from U.P. could be allowed on that basis and similarly from U.P. to M.P. and from M.P. to Delhi. It was stated that both the requests and release orders were to be routed through the Excise Commissioners of the concerned State. It was, therefore, suggested that if there was any requirement for allocation from M.P. to Delhi, the Central Govt. might be made known. We are quite unable to appreciate this letter of the Joint Secretary (Chemicals). The fact, however, remains that the State of U.P. has failed to honour the release orders issued by the Delhi Administration under the term of letter dated 15.2.1989. Indeed, this statement that State of U.P. has not acted on the letter dated 15.2.1989 may not be quite relevant to interpret the relevant terms of the tender, yet it would show a bona fide approach on the part of respondents Nos. 2 to 5 when it was mentioned that on earlier occasions as well the State U.P. did not allow export of alcohol required to be processed in order to get country liquor. It is also the stand of the first respondent Central Govt. that Delhi Administration was not bound to procure its requirement from Uttar Pradesh only in terms of letter dated 15.2.1989. It is admitted before us by petitioners Nos. 3 and 4 and respondents Nos. 6 to 9 that Madhya Pradesh is a surplus State in respect of potable alcohol and that there is no ban on inter-state movement of potable alcohol. Petitioners in this case must have been aware of the thinking of respondents Nos. 2 to 5 regarding clause 13 of the tender that supply of country liquor from the alcohol allocated from U.P. was not mandatory, at the time when the Nc was holding discussions under the rules. As noted above, the opinion of the Law Officer of the Central Govt. was obtained and there is authority for the proposition that Delhi Administration would be bound by the opinion rendered by the Ministry of Law. Again, as noted above, the State of U.P. has not come forward to contest the petition. It would, therefore, appear that there is no loss of revenue to the State. Rather, on the interpretation given by respondents Nos. 2 to 5 there is gain to the revenue of Delhi Administration running into crores of rupees. We find that the approach adopted by respondents Nos. 2 to 5 to various clauses of the tender has been honest. They were concerned with uninterrupted supply of country liquor to Delhi and building of minimum stocks of country liquor. In the process, the revenues of Delhi Administration have also increased tremendously.
(16) Principles laid in RamanaDayaram Shetty’s case (supra) by the Supreme Court for declining relief to the petitioners there would apply with much stronger force here and we do not find that the petitioners have acted bona fide in filing the present petition.
(17) A great deal of arguments were addressed on the question if letter dated 15.2.1989 is having statutory force. This is irrespective of the fact that term of this letter got translated into clause 13 of the tender and were thus binding on all concerned and could not be changed, varied or waived. On this aspect, however, we have said above that the construction put by respondents Nos. 2 to 5 is quite reasonable though the other view canvassed by the petitioners could also be possible. The Industries (Development and Regulation) Act 1951 (for short ‘the Idr Act’) was promulgated in 1952. The Act provides for development and regulation of certain industries. S. 2 contains declaration by the Parliament that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. Item 26 of this Schedule relates to fermentation industries. It includes (1) alcohol, and (2) other products of fermentation industries. The Act is applicable to the whole of India and under S. 18G the Central Govt. has been given power to control supply, distribution, price, etc., of any article or class of articles relatable to any scheduled industry and this the Central Govt. can do by a notified order. Under clause (e) of S. 3, a ‘notified order’ means an order notified in the Official Gazette. Letter dated 15.2.1989 is not such a notified order. As a matter of fact, the petitioners first started with the contention that this letter dated 15.2.1989 is an order under S. 18G of the Idr Act. When it was found that it was not a notified order, the argument then proceeded that irrespective of S. 18G the Central Govt. had power to issue directions under its executive power and that the aforesaid letter was such a direction but again went it was pointed out that when Parliament had made a law on the subject being the Idr Act, the executive power of the Central Govt. had to be exercised in accordance with that, it was yet further contended that Delhi being a Union territory and being administered by the Central Govt. Lists I, Ii and Iii of Seventh Schedule of the Constitution had no significance separately as Parliament could legislate on any subject mentioned in any of the said lists and the executive power of the Union would also extend to any such subject. Reference was then made to article 53 to contend that Constitution provided for exercise of executive power by the President “in accordance with this Constitution”. Parliament, therefore, by law could not curtail the power of the President in the exercise of his executive power and even if there was a law covering a particular field executive directions could still issue so long as these did not infringe the private rights or operate as unreasonable restrictions on trade and as no one had fundamental right in relation to alcohol direction issued by letter dated 15.2.1989 was valid under the Constitution in spite of the Idr Act, so the argument proceeded. It was further submitted that under article 239 of the Constitution, Delhi was to be administered by the President of India acting through the Lt. Governor and under S. 30. of the Delhi Administration Act 1966, the Lt. Governor is under the general control of, and shall comply with such particular directions, if any, as may from time to time, be given by the President. It was said that the letter dated 15.2.1989 was such a direction and the Lt. Governor was bound by the same. All the contesting respondents dispute this proposition. How can it be that while Union territory of Delhi is bound by such a direction, the State of U.P. is not so bound ?, they ask. On the subject of country liquor, Punjab Excise Act, 1914, as applicable to Delhi, and rules framed there under are already in force. Respondents Nos. 6 to 9 also contended that Idr Act could not cover potable alcohol it being intoxicating liquor and within the legislative competence of a State legislature under Entry 8, List ill of Seventh Schedule to the Constitution. But then as rightly pointed out by the petitioners Lists I, Ii, and Iii of the.Seventh Schedule Of the Constitution have no significance so far as Union territory of Delhi is concerned as Parliament is competent to make laws on any of the subjects enumerated therein for being applicable to Delhi. To our mind, alcohol and other products of fermentation industries are comprehensive enough to include industrial as well as potable alcohol and so if it appears to the Central Govt. that it was necessary or expedient for securing equitable distribution of potable alcohol or industrial alcohol, it can regulate the supply and distribution thereof and trade and commerce therein only by a notified order as required under S. 18G of the Idr Act. Since letter dated 15.2.1989 is not a notified order the Central Govt. in its executive power cannot issue direction contained in the said letter which is not in conformity with the provisions of S. 18G of the Idr Act. A 7-Judge Bench of the Supreme Court in a recent decision in Synthetics & Chemical Ltd. etc. v. State of U.P. & Ors. (JT 1989 (4) Sc 267) made certain observations relevant to the controversy before us. The main question, however, before the Supreme Court was whether vend fee in respect of industrial alcohol under different legislations and rules in different States was valid and it raised the following three questions for determination :-
(I)whether the power to levy excise duty in case of industrial alcohol was with the state legislature or the central legislature ? (ii) what is the scope and ambit of entry 8 of list Ii of the Seventh Schedule of the Constitution ? (iii) whether, the state government has exclusive right or privilege of manufacturing, seeling, distributing, etc. of alcohol including industrial alcohol. In this connection, the extent, scope and ambit of such right or privilege has also to be examined.”
Sabyasachi Mukbarji J.. who delivered the main judgment, traced the history of excise legislation in the country and referred to various earlier decisions of the Supreme Court relating to the question of industrial alcohol and potable alcohol. In fact, in this case the Supreme Court was not concerned with potable alcohol for the purpose of human consumption though a question which was to be determind was whether intoxicating liquor in Entry 8 in List Ii was confined to potable liquor or included all liquors. The court pointed out that by common standards ethyl alcohol (95% and also known as rectified spirit) was an industrial alcohol and was not fit for human consumption I.S.I. specification has divided ethyl alcohol into several kinds of alcohol. Beverage and industrial alcohols were clearly and differently treated. Rectified spirit for industrial purposes was defined as “spirit purified by distillation having a strength not less than 95% of volume by ethyl’ alcohol. Dictionaries and technical books would show that rectified spirit (95%) was an industrial alcohol and was not potable as such. It appeared, therefore, that industrial alcohol which was ethyl alcohol (95%) by itself was not only non-potable but was highly toxic. The range of spirits of potable spirits was from country spirit to whisky and the ethyl alcohol content varied between 19 to about 43 per cent. These standards were according to I.S.I, specifications. In other words, ethyl alcohol (95%) was not alcohol liquor for human consumption but could be used as raw material input after processing and substantial dilution in the production of whisky, gin, country liquor, etc. In many decisions, it was held that rectified spirit was not alcohol fit for human consumption. The court held that the relevant provisions of the said Acts were unconstitutional in so far as these purported to levy a tax or charged imposts upon industrial alcohol, namely, alcohol used and useable for industrial purposes. It also held that in view of the occupation of the filed by the Idr Act, it was not possible to levy such an impost. The court then observed that under the Idr Act licenses to manufacture both potable and non-potable alcohol were vested in the Central Govt. and that distilleries were manufacturing alcohol under the central licenses under the Idr Act, and no privilege for manufacture, even if one existed, had been transferred to the distilleries by the State. A State itself could not manufacture industrial alcohol without the permission of the Central Govt. and the States could not claim to pass a right which they themselves did not possess. The court finally observed as under :- “THE position with regard to the control of alcohol industry has undergone material and significant change after the amendment of 1956 to the Idr Act. After the amendment, the state is left with only the following powers to legislate in respect of alcohol : (a) it may pass any legislation in the nature of prohibition of potable liquor referable to entry 8 of list Ii and regulating powers. (b) it may lay down regulations to ensure that non-potable alcohol is not diverted and misused as a substitute for potable alcohol. (c) the state may charge excise duty on potable alcohol and sales tax under entry 52 of list II. However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the state on industrial alcohol. (d) However, in case state is rendering any service, as distinct from its claim of so-called grant of privilege, it may charge fees based on quid pro quo. See in this connection the observations of Indian Mica & Micanite Industries Ltd. v. State of Bihar & Ors. (1971 Suppl. Scr 319)”.
Oza, J” in his concurring judgment, observed that in view of the declaration made by Parliament in S. 2 of the Idr Act with reference to Entry 52, List I of the Seventh Schedule to the Constitution, reading as “Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest”, the industry based on fermentation and alcohol was directly under the control of the Centre and therefore even in respect of regulation the authority of the State Legislature in Entry 8, List Ii, could only be subject to the Idr Act or rules made there under by _the Centre. But, as noted above, the distinction in Lists I or Ii or Iii is not quite relevant for the Union territory of Delhi. The Idr Act is applicable and an order under S. 18G has to be a notified order and since letter dated 15.2.1989 is not such a letter we are of the opinion, it has no statutory force.
(18) Again, if reference is made to letter dated 15.2.1989 making interstate allocation of alcohol for potable/industrial purposes, there is no mention as to what is the strength of alcohol either for potable or industrial purpose. We have not been told if there is any specification for potable or industrial alcohol. If we refer to the Punjab Excise Act, 1914, as applicable to Delhi, “denatured” means effectually and permanently rendered unfit for human consumption; “liquor” means intoxicating liquor and includes all liquid consisting of or containing alcohol: and “spirit” means any liquor containing alcohol obtained by distillation, whether denatured or not. Under S. 4 of this Act, the Lt. Governor may by notification declare what shall be deemed to be “country liquor” and “foreign liquor”. Under the relevant liquor rules framed under the Act the licensee is required to supply country liquor of the strength of 50% under-proof only. We are told that country liquor is produced by certain process by diluting the alcohol, i.e. the ethyl alcohol, also called ethanol.
(19) Ethyl alcohol (95%) (Ethanol, rectified spirit) is an industrial alcohol even though it is not denatured. It is potable in the sense that when diluted and processed it can be converted into country liquor of prescribed strength as well. In case ethyl alcohol is denatured it cannot be used for conversion into country liquor as it has been rendered unfit for human consumption and denatured spirit or alcohol in any case can be used for industrial purposes only. States have power to regulate use of alcohol which is capable of being consumed by human beings as such and that power must include power to make provisions to prevent and/or check industrial alcohol often being used as intoxicating or drinkable alcohol.
(20) In the letter dated 15.2.1989 industrial liquor would, however mean the ethyl alcohol which has been rendered unfit for human consumption and as seen above is normally called denatured alcohol or denatured spirit. Ethyl alcohol to which no denatured has been added would be potable alcohol, but it is not fit for human consumption as it cannot be consumed as it is and has to be processed and diluted to a certain degree to be consumed as much. Letter dated 15.2.1989 does not show as to how much quantity of alcohol manufactured in a particular State has been earmarked for potable purpose and how much for industrial purposes. As noted above, there is no ban on inter-state movement of alcohol, either potable or industrial, except the restriction imposed on potable alcohol in terms of various excise laws in the States. Permits have been granted by respondents Nos. 2 to 5 for import from Madhya Pradesh by respondent No. 6. The State of U.P. has not complained that Delhi has not lifted its allocated quantity of alcohol in terms of letter dated 15.2.1989 putting the State of U.P. to any Lesser other difficulty. There appears to be thus no reason why respondent No. 6 could not make use of alcohol manufactured by it in its own distillery at Madhya Pradesh for production of country liquor for supply to Delhi in terms of the tender.
(21) Thus, the Central Government, therefore, could act under S. 18G of the I Dr Act for securing equitable distribution of ethyl alcohol (rectified spirit), both for industrial and potable purposes and could by notified order provide for regulating the supply and distribution thereof.
(22) Once the appropriate legislature has legislated on a subject in any of the lists in the Seventh Schedule of the Constitution executive power has to be exercised in conformity therewith and not in excess of or in derogation thereof. It cannot be disputed that directions contained in letter dated 15.2.1989 could have been issued under S. 18G of the Idr Act and this not having been done the letter dated 15.2.1989 is merely an informal communication by way of guidance without having the force of law.
(23) In this view of the matter, it is not necessary for us to refer to other arguments or various other decisions cited and referred to by the parties.
(24) A party even though stranger to the contract may have locus standi to maintain a writ petition in certain circumstances but he must show his bona fides for this court to exercise jurisdiction under article 226 of the Constitution. Petitioners’ action in filing this petition lacks bona fides.
(25) The writ petition is .therefore, dismissed with costs. Counsel’s fee Rs. 2,000.00 for each set of the contesting respondents.