IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 1124 of 2009
With
W.P.(C) No. 1661 of 2008
With
W.P.(C) No.1518 of 2005
With
W.P.(C) No. 2341 of 2006
Sheo Narayan Singh... ...... Petitioner [in W.P(C) 1124/09]
Bishwanath Shaw & Company............Petitioner [in W.P(C) 1661/08]
R.S.K. Credit & Security Pvt. Ltd...... Petitioner [in W.P(C) 1518/05]
Sanju Singh ............. Petitioner [in W.P.(C) 2341/06]
Versus
The State of Jharkhand & Ors. ... ... ... Respondents
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CORAM: HON'BLE MR. JUSTICE SUSHIL HARKAULI
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For the Petitioner: Mr. Prabir Chatterjee, Mr. AbhishekKumar,
Mr. Indrajit Sinha, Mr.Sumir Prasad
For the Respondents: Mr. R. Krishna
For the Intervener: Mr. D. V. Pathy, Mr. Abhishek Kumar
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20/24.11.2009
These four writ petitions raise a common question, and have
accordingly been heard together and are being disposed of by this
common order.
W.P.(C) No. 1124 of 2009 and W.P.(C) No. 1661 of 2008 are
by licensees of wholesale foreign liquor, who are seeking renewal
of their licenses after having completed the five year period for
which the license was granted.
W.P.(C) No. 1518 of 2009 and W.P.(C) No. 2341 of 2006 are
seeking a decision to the effect that after the maximum period {not
exceeding 5 years prescribed by Rule 44 (5)} for which the license
was granted, no wholesale license can be renewed and a fresh
settlement must be made in which the existing licensees (who have
completed their five year period) may also participate.
The refusal on part of the Excise Department of Jharkhand
Government to renew the licenses after the expiry of the 5 year
period is sought to be justified on the basis of Rule 44 (5) of the
Rules under Bihar & Orissa Excise Act, 1915 and clause (xiii) of
the Excise Policy of the State for the year 2008.
Thus the issue involved turns on Rule 44 (5) and clause (xiii)
of the Excise Policy 2008.
Rule 44 (5) reads as follows:
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“44.Licences for the wholesale or retail vend of excisable
articles may be granted for one year, from the 1st April, to the 31st
March, subject to the following provisions:-
[(1)……………………………..
(2)……………………………..
(3)……………………………..
(4)……………………………….
(5) Wholesale licenses for the supply and sale of excisable articles
may be granted for any numbers of years not exceeding five, as
the Board may decide in each case.]”
In W.P.(C) No. 2341 of 2006, a counter affidavit has been
filed on behalf of the respondent nos. 1, 2, 3 & 5 who respectively
are :
(i) State of Jharkhand
(ii) The Secretary-cum-Commissioner, Excise Department, State
of Jharkhand, Ranchi.
(iii) The Excise Commissioner, Jharkhand, Ranchi.
(iv) The Deputy Commissioner, Palamau at Daltonganj.
The said counter affidavit has been sworn by A. Kujur,
Excise Superintendent, Palamau-cum-Latehar-cum-Garhwa i.e.
covering three districts.
For ready reference, the contents of para-8 to 11 of the said
counter affidavit are relevant and are produced below:-
“8. That it is stated that before giving parawise reply of the
writ application at this stage, it is just and proper to give the
manner of settlement of licences in Form-I i.e. wholesale licence of
IMFL as per direction of this Hon’ble Court dated………
9. That it is stated that for settlement of wholesale licence of
any district, if vacancy arises advertisement is being published for
invitation of applications in prescribed Form. On receipt of the
application from the interest persons/parties, scrutiny is being
made as to which of the party/person is fulfilling all the terms and
conditions of the notice. Upon scrutiny if only one person is found
eligible, then settlement is being made with him for one year with a
condition that his licence will be renewed for the subsequent years
if his performance/conduct is found satisfactory during the last
financial year and was not a defaulter. But in case more than one
applicant after scrutiny are found eligible, then in presence of all
the applicants lottery is being made on the date fixed in the
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presence of applicant and in this way one person is selected for
settlement of the wholesale licence.
10. That advertisement is made for settlement of licenses in
Form-I as and when any vacancy is created due to non-
renewal/cancellation of licence of any licencee by the Deputy
Commissioner. It is not necessary that in every year fresh
advertisement will be made for settlement.
11. That it is stated that once settlement for wholesale
licences is made with a person, his licences can be renewed for any
number of years on year-to year basis subject to the condition that
he applies for renewal and his performance is found satisfactory
and he does not violate any terms and conditions.”
No contrary practice has been shown on the record of any of
this bunch of cases. It is therefore established, and not even
attempted to be controverted, that the Rule 44(5) was interpreted
consistently and always understood by all concerned as not
excluding the renewal of a wholesale license after the 5 year
period. Therefore it will need to be examined whether the Excise
Policy or more specifically clause (xiii) thereof has made any such
difference, as to call for the departure suggested by the State
Government from the earlier settled interpretation and practice.
On 26.8.2009, an order was passed which can be found on
the record of W.P.(C) No. 1124 of 2009 which purports to be in
respect of all these four writ petitions. The relevant part of the
order reads as follows:
“Before taking any decision, I consider it desirable, having
regard to that facts that the text book of Bihar Excise Act & Rules
shown to me appears to be out of date, to have an affidavit of the
Excise Commissioner of the State enclosing therewith the latest
rules with up-to-date amendments, the latest instructions, if any,
issued by any authority empowered to issue such instructions, the
latest excise policy, if any, including the policy immediately prior to
the existing policy with regard to the grant and/or renewal of
wholesale licences.”
In response, an affidavit of Prawin Kr. Toppo, Excise
Commissioner, Government of Jharkhand has been filed. The said
affidavit which has been described as supplementary counter
affidavit encloses as Annexure-A, the Rules under Bihar & Orissa
Excise Act, 1915 of which Rule 44(5) is a part. Annexure-B to the
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supplementary counter affidavit is a copy of the Rules framed by
the Board of Revenue under Section 90 of the Bihar Excise Act,
1915 as adopted in the State of Jharkhand. These Rules under
Section 90 do not have any bearing upon the issue involved.
Annexure-C is a Resolution of the Government dated 21.2.2004
which also is not material, being in respect of retail vend and not
wholesale. Annexure- D is another Resolution dated 07.5.2008
which fixes the license fee and which contains the crucial clause
(xiii). Annexure -E is another Resolution of 2009 of the Government
refixing the license fee.
The respondent State is relying upon the Resolution dated
7.5.2008 which is the Excise Policy of the State of Jharkhand and
which has been published in the Gazette of the same date. It fixes
the license fee for wholesale vend of foreign liquor and says in its
clause (xiii) that the wholesale license will be settled with the
proper person/firm for a maximum period of five years.
The above clause (xiii) is in the same terms as Rule 44(5),
and is quoted below:
“(XIII) fons’kh ‘kjkc Fkksd fcdzh dk okf”kZd vuqKk’kqYd dh nj fuEu izdkj gksxk :
dzzekad ftyk dk uke oÙkZeku eas ykxw okf"kZd ;Fkk fuf.kZr la'kksf/kr
vuqKk'kqYd ' okf"kZd vuqKk'kqYd
1 jkaph] iwohZflagHkwe] 5 yk[k #0 12 yk[k #0
cksdkjks] /kuckn]
gtkjhckx
2 If'peh flgHkwe] 5 yk[k #0 6 yk[k #0
fxfjfMg] iykew
3 >kj[kaM jkT; ds vU; 5 yk[k #0 dksbZ ifjoÙkZu ugha
lHkh ftysa
fons’kh ‘kjkc dh Fkksd vuqKfIr;ksa dks ;ksX; O;fDr@ QeZ ds lkFk
vf/kdre ikWap foÙkh; o”kZ rd ds fy;s gh cUnksoLr dh tk,xh A Hkkjr fufeZr
fons’kh ”kjkc ds forjdrk vuqKk/kkjh ( izi= 19 lh /kkjd vuqKk/kkjh) @ ;ksX;
O;fDr @ fofuekZ.kdÙkkZ dEiuh tks vgZrk iwjk djrs gSa dks Hkh fons’kh ‘kjkc dh
Fkksd fcdzh dh vuqKfIr mudks ns; ‘kqYd ij vf/kdre ikWap o”kZ ds fy,
cUnksoLr fd;k tk,xkA”
It will be noticed from the above that the relevant words
used in clause (xiii) of the Excise Policy are only a reproduction of
the words of Rule 44(5). It is difficult to see how this repetition of
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the words of Rule 44(5) in the Excise Policy could make any
difference to the settled position.
Seen from another angle, it has to be considered that if the
interpretation of the State is accepted and wholesale licenses are
not be renewed after the maximum 5 year period, what is to be
done after the expiry of that maximum period of five years
mentioned in the Rule 44(5) and Clause (xiii) aforesaid. Except for
the counter affidavit of the Excise Superintendent extracted above,
the Rules, the Excise Policy, the other affidavits and counter
affidavits all not very explicit. Thus we have to go by the procedure
mentioned in the counter affidavit.
It is important to keep in mind that as per the said counter
affidavit of the Excise Superintendent, if the license is not renewed
but is issued by way of a fresh settlement, the same is not by
inviting tenders or auction, so as to procure higher revenue. In
fact, the license fee or the revenue to be earned by the State is
fixed by the Government as has been done in the aforesaid
Annexures -D & E of the supplementary counter affidavit. If a fresh
settlement is to be made, applications would be invited from
eligible persons and if there are more than one eligible applicants
for any particular license, the person with whom the license is to be
settled will be picked out by a lottery.
It may be repeated here that despite ample opportunity
even the Excise Commissioner does not say that any new scheme
of settlement other than the lottery system has been devised or is
proposed. The Excise Commissioner does not even say that it
would be open to the Excise authorities to charge higher license fee
than what has been fixed by the Government.
Thus, the stand of the State of Jharkhand before this Court
is that although the licensee, who worked for past five years has
worked properly, given no cause for complaint yet his license will
not be renewed and he must apply afresh and his fate will be
determined by a lottery, meaning by a pure game of chance.
It is trite that all State action now, under the Constitution of
India, must be informed by reason and cannot be whimsical or arbitrary.
Therefore every policy, whether in original or by way of departure from
the earlier policy, must logically serve some rational purpose. If it does
so, the Court may not go into the advisability of achieving that purpose
or the sufficiency of that purpose for warranting departure from the
earlier system.
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During the arguments, the learned counsel for the State as well
as the learned counsel for the petitioners in W.P.(C) No. 1518 of 2005 &
W.P.(C) No. 2341 of 2006 were therefore expressly required by the
Court to logically demonstrate with reference to the record any rational
purpose to be served by refusing renewal of the existing licensee and
throwing them at the mercy of the roll of dice.
The only argument raised in response was that this non-renewal
is intended to break the monopoly of the existing licensees, so that they
may not have a license in perpetuity and to give other prospective
candidates for license a chance to compete for trading in wholesale
foreign liquor.
So far as breaking of the monopoly or perpetuity of license is
concerned the argument could have been accepted if the existing
licensee after completing five years of business had been debarred from
applying afresh for that very license, thereby opening out the chance of
other fresh applicants. But that has not been done. In a system of
lottery the existing licensee would stand an equal chance of getting his
license back.
Firstly, it is difficult to accept that forcing the licensees into a pure
gamble is a rational act on the part of the State. Secondly and more
importantly divorcing the renewal, extention or continuance from the
past performance of time bound holders of public offices or public
contracts is generally so highly detrimental to public interest that it
should be presumed to be irrational, unless the contrary is shown.
Reliance has been placed from the side of the petitioners
opposing the renewal upon a decision of the Patna High Court in the
case of Most. Premlata Gupta Vrs. State of Bihar reported in
2005 (2) PLJR 670. The decision does support the view canvassed by
the State but it is based upon a literal reading of the Rule 44(5) and
does not take into account the important aspects pointed out above as
also below in this order. Therefore, with respect, I am unable to agree
with the aforesaid view point of the Patna High Court. The purpose of
Rule 44(5), in the back-drop of a fixed license fee is, that if a licensee is
to be settled today for a period of more than five years, the State of
Jharkhand or the Board of Revenue would have to decide today and
inform the potential applicants as to what license fee would be payable
by them not only in the current year but also for the future years till the
expiry of the license, to enable those applicants to decide whether to
apply or not. Apparently, the rule makers were conscious of the fact that
it would be very difficult to predict the situation which would obtain at a
time beyond five years so as to quantify what license fee should be fixed
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for the years so far into the future. At the same time, renewal of
wholesale license every year also had its own administrative and other
problems. Therefore, a balance was struck and an outer limit of 5 year
period was fixed for which settlement at any one point of time was
permissible. The Board of Revenue has been given power to decide
whether such wholesale license should be granted for one year or more
but even the Board has not been empowered to extend such period
beyond five years. Thus, the purpose of the rule is only to prevent the
State from being tied down to a fix license fee for more than five years,
as it may result in loss of revenue.
To sum up, none of the rules provide for renewal or prohibit
renewal. The system being followed for the past several years has been
of renewals. There is no rational purpose to be achieved by the change
suggested on the basis of repetition of the words of rule 44 (5) in the
Resolution dated 7.5.2008 of the Government. At the cost of repetition
neither Rule 44(5) nor its repetition in the Resolution dated 7.5.2008
expressly rule out renewal after the period of five years. No reason has
been shown to hold that such renewal is ruled out by necessary
implication. There is no rational reason for holding that the renewal
offends any public interest or the interest of the State revenue.
It is, therefore, held that neither Rule 44(5) nor the Resolution of
the Government repeating the words of Rule 44(5) either expressly or
by necessary implication rule out renewal after (i) the maximum period
of five years mentioned therein for wholesale license or (ii) after such
lesser period as the Board may fix for grant of such licenses.
The respondent State will therefore proceed with regard to the
renewals in the matters of wholesale license in accordance with the
interpretation given above.
Accordingly, W.P.(C) No. 1124 of 2009 and W.P.(C) 1661 of 2008
are allowed and W.P.(C) No. 1518 of 2005 and W.P.(C) No. 2341 of
2006 are dismissed.
(Sushil Harkauli, J.)
Sudhir/