{"id":4982,"date":"2002-08-26T00:00:00","date_gmt":"2002-08-25T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/secretary-to-govt-tamil-nadu-vs-k-vinayagamurthy-on-26-august-2002"},"modified":"2015-05-08T18:35:47","modified_gmt":"2015-05-08T13:05:47","slug":"secretary-to-govt-tamil-nadu-vs-k-vinayagamurthy-on-26-august-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/secretary-to-govt-tamil-nadu-vs-k-vinayagamurthy-on-26-august-2002","title":{"rendered":"Secretary To Govt., Tamil Nadu & … vs K.Vinayagamurthy on 26 August, 2002"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Secretary To Govt., Tamil Nadu & … vs K.Vinayagamurthy on 26 August, 2002<\/div>\n
Author: Pattanaik<\/div>\n
Bench: G.B. Pattanaik, Ruma Pal, K.G. Balakrishnan.<\/div>\n
           CASE NO.:\nSpecial Leave Petition (civil)  14735 of 2002\n\nPETITIONER:\nSecretary to Govt., Tamil Nadu & Anr.\n\nRESPONDENT:\nK.Vinayagamurthy\n\nDATE OF JUDGMENT: 26\/08\/2002\n\nBENCH:\nG.B.  PATTANAIK, RUMA PAL & K.G. BALAKRISHNAN.\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
WITH
\nSLP[c] Nos. 15724, 15725, 15726, 15727 and 15728   of 2002.\n<\/p>\n
PATTANAIK,J.\n<\/p>\n
This batch of  Special Leave Petitions are by the State
\nof Tamil Nadu,\tdirected against the Judgment of the
\nDivision Bench of Madras High Court, dealing with the
\nlicensing system for retail vending of Indian made foreign
\nliquor.\t  The Excise Year is for the period of 1st of August of
\nthe year in question till the 31st of July of the next year.  In
\nJune, 2001, the Government of Tamil Nadu came forward
\nwith a Policy to be adopted for licensing of the Indian made
\nforeign liquor retail vending shops for the block period 2001-
\n2004.  The said Policy was issued under G.O.Ms. No. 113.
\nFor the aforesaid block period, it was decided that the retail
\nvending shops for the entire State should be fixed at 6000 and
\nthe privilege fee shall be worked out on the notified area
\nbasis, taking the average privilege fee of the last three years
\nand providing for some suitable increase.  It was also
\nstipulated that the licensee should lift the minimum off-take
\nfixed for the shop by the licensing authority and in case of
\nfailure to lift the same, the licensee will be liable to pay a
\npenalty in proportion to the loss of revenue due to non-lifting
\nof stocks and if there is still further default, then the licence
\nwould be liable to be cancelled.  In accordance with the
\naforesaid policy decision, amendments to the Tamil Nadu
\nLiquor (Retail Vending) Rules, 1989 were made, which were
\nissued under G.O.Ms. No. 115 dated 22nd of June, 2001.\tThe
\nProhibition Commissioner also recommended a new
\nlicensing system for grant of licences to the Indian made
\nforeign liquor retail vending shops for the block year 2001-
\n2004, which was accepted by the State Government and the
\nnecessary amendments to the Retail Vending Rules were
\nmade.  Under Rule 13 of the amended rules, when the
\nnumber of eligible applications does not exceed the number
\nof shops notified for an area, then all applicants shall be
\nselected for the grant of privilege.  But when the number of
\napplications in respect of the shops in a notified area is more
\nthen the number of shops in that area, the selection of
\napplicant for grant of privilege shall be decided by drawal of
\nlot by the licensing authority\tin the presence of the Collector
\nand the applicants who prefer to be present.  Rule 14 of the
\namended rules provided that privilege amount be fixed by the
\nCommissioner,  on the basis of the guidelines approved by
\nthe Government.\t Rule 30(2) provides for the lifting of the
\nminimum off-take of the liquor fixed for the shops by the
\nlicensing authority based on the guidelines issued by the
\nGovernment and the consequences to follow, in case the
\nlicensee fails to lift the minimum off-take.  Sub-rule (7) of
\nRule 30 provides that the applicant on being granted licence,
\nshall abide by the provisions of the Tamil Nadu Prohibition
\nAct, 1937, as wall as the Tamil Nadu Liquor (Retail
\nVending) Rules, 1989, as amended from time to time and the
\nterms and conditions of the licence granted thereunder.\n<\/p>\n
 In accordance with the aforesaid Excise Policy and the
\nprovisions of the Act and the Rules, the exclusive privilege in
\nrespect of different retail vending shops of Indian made
\nforeign liquor were settled with the applicants and licences
\nwere also issued by the licensing authority in favour of them
\nfor carrying on the business.  Even though the policy was for
\nthe block period of 2001-2004 and an existing licensee could
\napply for renewal of his licence,  for the excise year 2002-
\n2003, the Government of Tamil Nadu changed the policy by
\nissuance of three G.O.Ms. of the same date being G.O.Ms.
\nNos. 128, 129 and 130.\tThe aforesaid three G.O.Ms. indicate
\nthat the Government felt that there is a need for increasing
\nthe number of shops in unserved areas that are not notified
\nand also in the existing notified areas where there is further
\npotential and demand identified by the Collectors.  It was
\nalso indicated that the privilege amount in respect of the
\nshops located in areas adjoining the Corporations and
\nMunicipalities could be enhanced and as such there is a need
\nto re-categorise the shops and to re-fix the privilege amount.
\nThe Commissioner of Prohibition and Excise also suggested
\nthat along with the increase in the number of notified shops
\nand re-fixation of the privilege amount for the shops located
\nin peripheral areas of Corporations\/Municipalities, as well as
\nthe revision of privilege amount for augmenting the excise
\nrevenue, the Government should consider whether instead of
\nrenewing the licences of the existing licensees, all the shops
\nmay be allotted afresh in accordance with earlier G.O.Ms.
\nNo. 115 dated 22nd of June, 2001.  In other words, it
\nsuggested to have a fresh draw of lot.\tIn accordance with the
\naforesaid recommendations contained in G.O.Ms. No. 128,
\nthe State Government passed the necessary orders, directing
\nthat the provision for renewal of licences prescribed in Rule
\n14 of the Tamil Nadu  Liquor (Retail Vending) Rules, 1989
\nbe repealed and all the 7000 shops including the re-
\ncategorised shops shall be disposed of,\t as per the procedures
\nlaid  down in G.O.Ms. No. 115 dated 22nd June, 2001.
\nConsequential amendments of certain rules were also made.\n<\/p>\n
The existing holders of the privilege in question who
\nhad obtained licences for carrying on the business for the
\nexcise year 2001-2002, approached the High Court of Madras
\nby filing writ petitions, challenging the validity of the
\nGovernment Order Nos. 128, 129 and 130.\t The Learned
\nSingle Judge, on entertaining the writ petitions, granted
\ninterim orders on 16th of July, 2002, directing ad hoc renewal
\nof licences for a period of three months in respect of the
\npetitioners who had approached the Court.   The State
\npreferred the appeal to the Division Bench against the
\naforesaid interim order of the learned Single Judge and the
\nDivision Bench while being in seisin of appeal against the
\ninterim order, passed by the Single Judge, brought before it
\nthe writ petitions which were pending before the Single
\nJudge and disposed them of together by the impugned
\njudgment dated 24th of July, 2002.   On considering the
\nsubmissions made at the Bar as well as the new excise policy
\nand introduction of G.O.Ms. Nos. 128, 129 and 130, the
\nDivision Bench of the High Court came to the conclusion
\nthat though the excise policy is a subject of the policy-maker
\nand it relates to a trade, which cannot be claimed as a matter
\nof right by any citizen, but the Court would be entitled to
\nprobe into the reasonableness or otherwise of the
\nGovernmental orders and examine whether they can be
\nsustained on the touchstone of the arbitrariness.  The
\nDivision Bench sustained the Government orders, so far as
\nthey relate to the fiscal policy of the government and the
\nprovisions made therein for augmentation of the excise
\nrevenue.  It rejected the contention of the privilege holders
\nand held that doctrine of promissory estoppel and legitimate
\nexpectation will have no application.\tBut so far as the
\nprovisions dealing with the abolition of the renewal of the
\nexisting licence holders and to follow the procedure in
\nrespect of the shops by a fresh lot, the Court came to the
\nconclusion that the aforesaid provision has absolutely no
\nnexus with the object of augmentation of excise revenue and
\nit was only meant to disable the existing licensees from
\nopting for the renewal notwithstanding that the excise policy
\nas enunciated in June, 2001 was for the block period 2001-
\n2004.  The Court held the aforesaid revised excise policy to
\nbe wholly unreasonable and arbitrary,  having  no nexus at all
\nwith the object of augmentation of excise revenue for which
\npurpose the new policy was introduced.\tThe Court finally
\ndisposed of the matter with the following directions:\n<\/p>\n
“(i) The Government is at liberty to go ahead with
\nthe grant of privilege of retail vending of Indian
\nMade Foreign Liquor to the extent of 7,000 shops
\nas decided.\n<\/p>\n
(ii)But the Government shall adhere to the places
\nof retail vending which have been licenced for the
\nexcise year 2001-2002 and held by the petitioners
\nand renew the licence of the petitioners for the
\nexcise year 2002-2003 on the petitioners’
\nremittance of the privilege amount on the basis of
\nthe amount fixed in G.O.Ms. No. 129 dated
\n8.7.2002 and also taking into account the re-
\ncategorisation of the shops for the purpose of levy
\nof the privilege amount.\n<\/p>\n
(iii)The above facility of renewal to the petitioners
\nshall be made available if the petitioners remit the
\nrequisite amounts on or before 31st of July, 2002.\n<\/p>\n
(iv)For any reason, if there is a delay in renewal,
\nthe petitioners shall be entitled to vend the Indian
\nMade Foreign Liquor in retail on payment of the
\nproportionate privilege amount till the grant of
\nlicence.\n<\/p>\n
(v)The Government, the Commissioner and all the
\nDistrict Collectors shall be entitled to re-locate the
\nshops out of 7,000 at the places they feel
\nexpedient, but only after safeguarding the shops
\nwhich are being run by the petitioners.”\n<\/p>\n
It is this order of the Division Bench of the Madras High
\nCourt, which is the subject matter of challenge in all the
\nspecial leave petitions.\n<\/p>\n
\tAfter hearing Mr. K.K. Venugopal, the learned senior
\ncounsel, appearing for the State of Tamil Nadu at great length
\nand Mr. P. Chidambaram, the learned senior counsel,
\nappearing for the respondents, though we did not find any
\ninfirmity with the impugned judgment of the Division Bench
\nof Madras High Court and would have normally dismissed
\nthe special leave petitions, but since Mr. Venugopal had
\nadvanced a lengthy argument and certain directions given in
\nthe impugned judgment require modulation,  we thought it
\nappropriate to notice and answer the same,  while dismissing
\nthe special leave petitions.\n<\/p>\n
\tMr. K.K. Venugopal, the learned senior counsel,
\nappearing for the State contended that there is no inherent
\nright in a citizen to sell intoxicating liquor by retail and it is
\nnot a privilege of a citizen.  As it is a business attended with
\ndanger to the community, it may be entirely prohibited or be
\npermitted under such conditions as will limit to the utmost its
\nevils.\tThe legislature of a state or the executive government
\nis fully competent to regulate the business of vending
\nintoxicating liquor to mitigate its evils or to suppress it
\nentirely.  That being the right of a citizen to deal with the
\nliquor and by the impugned orders the State Government
\nhaving altered the existing policy for augmentation of excise
\nrevenue, the same could not have been interfered with by the
\nHigh Court.  Mr. Venugopal also further contended that there
\nis no right of renewal of the licences with the grantee of the
\nprivilege and the amended provisions having been engrafted
\nfor the new excise year, the High Court committed error in
\nholding the same to be arbitrary.  In support of this
\ncontention, reliance was placed on the decision of this Court
\nin the case of Madras City Wine Merchants’ Association
\nand another vs. State of Tamil Nadu and Anr., 1994(5) SCC\n<\/p>\n
509.\t According to Mr. Venugopal, in accordance with the
\nRules in force, the existing licensees having failed to lift the
\nminimum off-take quantity of liquor, the State has suffered a
\nloss in excise revenue and, therefore, for augmentation of the
\nexcise revenue, a new set of policy having been formulated in
\nrespect of a trade over which no citizen can claim a
\nfundamental right, the Court was not justified in interfering
\nwith the same on the ground that the decision to have a fresh
\nlot for all the shops is arbitrary and unreasonable.\n<\/p>\n
\tMr. Chidambaram, the learned senior counsel appearing
\nfor the existing licensees, on the other hand contended that
\nthe High Court was fully justified in striking down only that
\npart of the government order which was held to have no
\nnexus with the object of augmentation of excise revenue.  He
\nfurther contended that the licensees are agreeable to pay the
\nprivilege fee as decided by the Government and also would
\nbe bound by the limit of off-take of liquor to be decided by
\nthe excise authorities.\t   According to Mr. Chidambaram,
\nthere is no error in the impugned judgment, which requires
\nany interference by this Court in exercise of powers under
\nArticle 136 of the Constitution.\n<\/p>\n
 We have carefully considered the rival submissions at
\nthe Bar as well as the decision cited in support of the
\ncontention raised.  So far as the trade in noxious or dangerous
\ngoods are concerned, no citizen can claim to have trade in the
\nsame and the intoxicating liquor being a noxious material, no
\ncitizen can claim any inherent right to sell intoxicating liquor
\nby retail.   It cannot be claimed as a privilege of a citizen of a
\nState.\tThat being the position, any restriction which the State
\nbrings forth, must be a reasonable restriction within the
\nmeaning of Article 19(6) and reasonableness of the
\nrestriction would differ from trade to trade and no hard and
\nfast rule concerning all  trades can be laid down.  The
\nGovernment of Tamil Nadu does not purport to abolish the
\ntrade in intoxicating liquor and what it purports to do is to
\nchange its policy intended for augmentation of excise
\nrevenue.  With that end in view under the new set of
\nGovernment orders, there have been large number of shops to
\ndeal with retail vending of Indian made foreign liquor, there
\nhas been re-categorisation of the shops, there has been re-
\nadjustment and relocation of the retail shops, there has been
\nincrease in the amount of privilege fee and the High Court
\nhas upheld  all these conditions on the ground that they relate
\nto the augmentation of excise revenue.\tBut so far as the right
\nof renewal is concerned, the same having been unequivocally
\nindicated in the excise policy of 2001-2002, as reflected in
\nG.O.Ms. No. 115 for the block period of 2001-2004, the State
\nGovernment could not have annulled the same and directing
\nafresh the self same procedure to be adopted again by drawal
\nof lots for settling of the privileges in respect of 7,000 shops
\ninasmuch as that has nothing to do with the augmentation of
\nexcise revenue.\t To our query, as to how this should be
\nhelpful in achieving the augmentation of excise revenue, Mr.
\nVenugopal was not able to satisfy us and in our view, the
\nHigh Court rightly came to the conclusion that the aforesaid
\ndecision was nothing but an arbitrary and whimsical one
\ntaken by the State Government, only to replace the existing
\nlicensees by a fresh set of persons by a fresh drawal of lot.
\nEven though the licensees under the earlier policy may not
\nclaim an absolute right of renewal but it cannot be denied that
\nunder G.O.Ms. No. 115 read with the excise policy evolved
\nfor the block period 2001-2004 and the relevant provisions of
\nthe Act and  Rules,  contemplate a case of renewal and this is
\nalso apparent from the recommendations of the Excise
\nCommissioner himself on the basis of which the State
\nGovernment came forward with the revised policy and a new
\nset of rules by enacting G.O.Ms. Nos. 128, 129 and 130.\t We
\nhave, therefore, no hesitation in affirming the conclusion of
\nthe Division Bench of the Madras High Court that the
\nportions of G.O.Ms. dealing with the non-renewal of the
\nprivileges granted to the existing licensees subject to their
\nfulfilling the other conditions of the provisions of the Act and
\nthe rules to be arbitrary.   We are, therefore, not persuaded to
\ninterfere with the conclusion of the High Court, so far as it
\ndeals with the dispensing with the right of renewal of the
\nexisting licensees under the present set of G.O.Ms. which fell
\nbefore the High Court for consideration.  Necessarily,
\ntherefore, the appropriate excise authority will have to decide
\nthe case of the applicants for renewal of the licences in
\naccordance with the Rules as well as the other conditions of
\nthe licences.  Mr. Chidambaram very fairly stated that none
\nof the respondents have any grievances to be governed by the
\nrules and conditions of licence including the conditions
\nproviding for a minimum off-take.  But the manner in which
\nthe High Court has issued the directions, appears to us not to
\nbe in conformity with the rules for issuance of a mandamus.
\nOnce the court comes to the conclusion that certain
\nprovisions of the Act or the Rules of the Government order is
\narbitrary, then the Court would strike down the same, leaving
\nthe matter for the appropriate authority under the statute to
\ndeal with the cases of the applicants.\tIn that view of the
\nmatter, the directions contained in Clause (ii), Clause (iii) and
\nClause (iv) require modulation.\t  We, therefore, substitute the
\naforesaid clauses of the impugned judgment by the following
\ndirections:\n<\/p>\n
The competent authority\/the State Government shall
\nconsider the application for renewal of the licence in
\naccordance with law and would be entitled to include all
\nconditions in the licence, including the condition of minimum
\noff-take.  Needless to mention that the licensees of the
\nprivileges would be bound by the enhancement of the
\nprivilege amount as well as the re-categorisation of the shops
\ncontained in the three G.O.Ms., referred to earlier.   It is also
\nmade clear that the facility of the renewal would be available
\nto those of the existing licensees, who had remitted the
\nrequisite amount on or before 31st of July, 2002, as ordered
\nby the High Court itself.  We also further direct that the
\nprivilege fee already paid by these licensees for the Excise
\nYear 2002-2003 shall be duly adjusted.\tClauses (i) and (v) of
\nthe directions contained in the impugned judgment shall
\nremain as it is.\n<\/p>\n
Mr. Venugopal had referred to an affidavit which had
\nbeen filed in this Court by the Secretary to the Government
\nof Tamil Nadu,\tProhibition and Excise Department, wherein
\nit had been stated that the State Government will be willing
\nto consider the grant of renewal in favour of the existing
\nlicensees, subject to their giving an undertaking to this court
\nthat they would abide by the rules and conditions relating to
\nthe minimum off-take during the current year as well as
\nprevious excise year 2001-2002 and would withdraw the writ
\npetitions filed by them, which are pending in the High Court
\nof Madras.  So far as the minimum off-take for the excise
\nyear 2002-2003 is concerned,  Mr. Chidambaram, appearing
\nfor the respondents, fairly stated that the respondents would
\nabide by the same.  But so far as the minimum off-take for
\nthe previous excise year is concerned, the same not having
\nbeen there at the time of grant of the privilege and issuance
\nof licence, but having\tbeen introduced at a later point of
\ntime,  the legality of the same is the subject matter of
\nconsideration before the High Court of Madras and we expres
\nno opinion on the same.\n<\/p>\n
These special leave petitions are accordingly dismissed
\nwith the modulated directions, as stated earlier.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Secretary To Govt., Tamil Nadu & … vs K.Vinayagamurthy on 26 August, 2002 Author: Pattanaik Bench: G.B. Pattanaik, Ruma Pal, K.G. Balakrishnan. CASE NO.: Special Leave Petition (civil) 14735 of 2002 PETITIONER: Secretary to Govt., Tamil Nadu & Anr. RESPONDENT: K.Vinayagamurthy DATE OF JUDGMENT: 26\/08\/2002 BENCH: G.B. PATTANAIK, RUMA PAL & […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-4982","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSecretary To Govt., Tamil Nadu & ... vs K.Vinayagamurthy on 26 August, 2002 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/secretary-to-govt-tamil-nadu-vs-k-vinayagamurthy-on-26-august-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Secretary To Govt., Tamil Nadu & ... vs K.Vinayagamurthy on 26 August, 2002 - 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