# ASHOK LANKA AND ANR v. RISHI DIXIT AND ORS

- **Citation:** [2005] Supp. 1 S.C.R. 299
- **Court:** Supreme Court of India
- **Decided:** 2005
- **Case number:** I.A. Nos. 1-2 In Civil Appeal No. 3279 of 2005
- **Bench:** N. Santosh Hegde Ands. B. Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ashok-lanka-and-anr-v-rishi-dixit-and-ors-20727
- **Pages:** 43

## Headnote

B
Chhatisgarh Excise Act, 1915; Ss. 7(e), 62 and 63/Chhatisgarh Excise
Settlement of Licences for Retail Sale of CountJy/f oreign Liquor Rules, 2002;
Rules4, 8, 9, JO, JI, 13and23/Constitutionoflndia, 1950; Entries8and51 C
of List-fl of the Seventh Schedule.
Allotment of Country/Foreign liquor shops-Applications for grant of
licence-Licence granted without proper scrutiny of the applicationsProcedural requirements in terms of Rule 9-Mandatory or directory-Held:
1915 Act is regulatory in nature-Before a licence is granted, applicant must D
satisfy the eligibility requirements-An affidavit is required to be filed disclosing
all the requisite information to enable the authorities to verify the sameA uthorities could even cancel the licence on ground of non filing of affidavitThus, requirement of.filing of such affidavit is mandatory-Authorities are not
empowered to dispense with the statutory requirement of filing of an affidavitSome of the candidates did not fulfil the statutory requirements, even then E
licences were granted to them-Hence, the entire exercise of scrutiny as regards
ascertainment of eligibility vis-a-vis selection processes required to be
undertaken by the selection committee afresh-However, candidates already
selected could carry on the trade in liquor in terms of the directions-Directions
issued
Jurisdiction/Power of High Court to deal Public Interest LitigationDiscussed
Administrative Law-Subordinate Legislation:
F
Amendment in the Rules by the States in exercise of its rules making G
power-Held: State is not empowered to amend the Rules in order to justify
the illegal order on the part of the authorities.
The State Government of Chhatisgarh had invited applications for
299
H
300
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A grant of li~ences for Country/Foreign liquor shops under the provisions
of Chhatisgarh Excise Act and Rules made thereunder. A large number
of applications were received and selection process began. In the meantime,
some of the candidates challenged the selection process on the ground that
the selection process was vitiated as affidavit was not filed by the applicants
B which was a mandatory requirement under the Rules; and that the
selection was made by drawing a lot through the computer and not
manually. The High Court held that the State was entitled to make use of
computer in the selection process; and that since the selection committee
did not make any scrutiny as regards eligibility conditions/requirement
of filing of affidavit in terms of the Rules, a fresh selection be made in
C terms of the extant rules. Hence the present appeals. Disposing of the
appeals, the Court
HELD: 1.1. It may not be necessary for this Court to consider as to
whether the public interest litigation should have been entertained by the
High Court or not. The High Court did entertain the public interest
D litigation without any objection and ultimately allowed the same.
Furthermore it is well settled that even in a case where a petitioner might
have moved the court in his private interest and for redressal of personal
grievances, the court in furtherance of the public interest may treat it
necessary to enquire into the state of affairs of the subject of litigation in
E the interest of justice. [321-D-F)
Guruyayoor Devaswom Managing Committee and Anr. v. C. K. Rajan
and Ors., 12003) 7 SCC 546 and Prahlad Singh v. Col. Sukhdev Singh, 11987)
1 sec 727' relied on.
F
1.2. When public interest litigation is entertained the individual
conduct of the writ petitioners would take a backseat. There cannot be
any doubt whatsoever that in a given case a party may waive his legal
right. In an appropriate case, the doctrine of acquiescence or acceptance
sub silentio may also be invoked but the High Court, in the instant case,
has gone into the question with a wider perspective. This Court is not only
G required to construe the provisions of the statute but also to take into
consideration the subsequent events which took pla

## Text

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ASHOK LANKA AND ANR.
A
v.
RISHI DIXIT AND ORS.
MAY I 1, 2005
[N. SANTOSH HEGDE ANDS. B. SINHA, JJ.]
B
Chhatisgarh Excise Act, 1915; Ss. 7(e), 62 and 63/Chhatisgarh Excise
Settlement of Licences for Retail Sale of CountJy/f oreign Liquor Rules, 2002;
Rules4, 8, 9, JO, JI, 13and23/Constitutionoflndia, 1950; Entries8and51 C
of List-fl of the Seventh Schedule.
Allotment of Country/Foreign liquor shops-Applications for grant of
licence-Licence granted without proper scrutiny of the applicationsProcedural requirements in terms of Rule 9-Mandatory or directory-Held:
1915 Act is regulatory in nature-Before a licence is granted, applicant must D
satisfy the eligibility requirements-An affidavit is required to be filed disclosing
all the requisite information to enable the authorities to verify the sameA uthorities could even cancel the licence on ground of non filing of affidavitThus, requirement of.filing of such affidavit is mandatory-Authorities are not
empowered to dispense with the statutory requirement of filing of an affidavitSome of the candidates did not fulfil the statutory requirements, even then E
licences were granted to them-Hence, the entire exercise of scrutiny as regards
ascertainment of eligibility vis-a-vis selection processes required to be
undertaken by the selection committee afresh-However, candidates already
selected could carry on the trade in liquor in terms of the directions-Directions
issued
Jurisdiction/Power of High Court to deal Public Interest LitigationDiscussed
Administrative Law-Subordinate Legislation:
F
Amendment in the Rules by the States in exercise of its rules making G
power-Held: State is not empowered to amend the Rules in order to justify
the illegal order on the part of the authorities.
The State Government of Chhatisgarh had invited applications for
299
H
300
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A grant of li~ences for Country/Foreign liquor shops under the provisions
of Chhatisgarh Excise Act and Rules made thereunder. A large number
of applications were received and selection process began. In the meantime,
some of the candidates challenged the selection process on the ground that
the selection process was vitiated as affidavit was not filed by the applicants
B which was a mandatory requirement under the Rules; and that the
selection was made by drawing a lot through the computer and not
manually. The High Court held that the State was entitled to make use of
computer in the selection process; and that since the selection committee
did not make any scrutiny as regards eligibility conditions/requirement
of filing of affidavit in terms of the Rules, a fresh selection be made in
C terms of the extant rules. Hence the present appeals. Disposing of the
appeals, the Court
HELD: 1.1. It may not be necessary for this Court to consider as to
whether the public interest litigation should have been entertained by the
High Court or not. The High Court did entertain the public interest
D litigation without any objection and ultimately allowed the same.
Furthermore it is well settled that even in a case where a petitioner might
have moved the court in his private interest and for redressal of personal
grievances, the court in furtherance of the public interest may treat it
necessary to enquire into the state of affairs of the subject of litigation in
E the interest of justice. [321-D-F)
Guruyayoor Devaswom Managing Committee and Anr. v. C. K. Rajan
and Ors., 12003) 7 SCC 546 and Prahlad Singh v. Col. Sukhdev Singh, 11987)
1 sec 727' relied on.
F
1.2. When public interest litigation is entertained the individual
conduct of the writ petitioners would take a backseat. There cannot be
any doubt whatsoever that in a given case a party may waive his legal
right. In an appropriate case, the doctrine of acquiescence or acceptance
sub silentio may also be invoked but the High Court, in the instant case,
has gone into the question with a wider perspective. This Court is not only
G required to construe the provisions of the statute but also to take into
consideration the subsequent events which took place vis-a-vis the action
on the part of the State after passing of the interim order. The issue as
regards application of acquiescence or waiver, therefore, has become
irrelevant. [321-G-H; 322-A]
H
Haryana State Coop. Land Dev. Bank v. Nee/am, (2005) (2) SCALE
f
ASHOK LANKA v. RISH! DIXIT
301
434, relied on.
A
2.1. The Chhattisgarh Excise Act, 1915 and the Rules framed
thereunder are regulatory in nature. They are being so enacted so as to
ensure public health, as trade in liquor is considered to be obnoxious one.
The State has a duty to see that its people do not consume spurious or
adulterated liquor. The Act and the rules no doubt contain provisions for B
cancellation and/or suspension of the licence in the event the conditions
laid down therein are violated, but it is beyond any cavil that before a
licence is granted, the applicant must satisfy all the statutory conditions
and meet the eligibility requirements. [322-B-C]
Ramana Dayaram Shetty v. The International Airport Authority of India C
and Ors., [1979) 3 SCR 1014 and R. Prabha Devi and Ors. v. Government
of India, Through Secretary, Ministry of Personnel and Training,
Administrative Reforms and Ors., [1988] 2 SCC 233, referred to.
2.2. The persons who fulfill the eligibility criteria and satisfy the
requirements laid down under the Act and the Rules only could file the D
applications which required scrutiny thereof so as to enable the statutory
authorities to consider their cases for grant of licence. The advertisement
issued by the State calls upon only such persons to file applications who
are suitable therefor, which in turn would mean that the applicants must
satisfy the authorities that they are eligible for grant of licence. The
applica~ts must also demonstrate that they are suitable for grant of licence E
as in .the event of their being found unsuitable, steps are required to be
taken by the committee for resettlement of the shops, wherefor procedures
laid down in Rule 8 were required to be complied with again. Stricter
restriction is contemplated in the matter of compliance of the terms and
conditions of the licence. Rule 4 of the Rules permits not more than two p
groups of liquor shopsto a single licensee. (322-G-H; 323-A]
2.3. Rule 9 provides that the eligibility conditions should be
scrutinized before an application is made. It does not make any exception
as regard fulfilment of different clauses inasmuch as the said rules begin
with the expression "the applicant has to fulfil the following conditions". G
Such conditions are required to be fulfilled for obtaining the licence.
Whereas clauses (a), (b) and (c) thereof are essential conditions which, if
not fulfilled, would debar a person from filing an applicatmn and if such
an application is filed, the same would be liable to be rejected at the outset;
an applicant having regard to the expressions used in clause (d) has to
file an affidavit. Filing of such.affidavit, therefore, is mandatory, which is H
302
5UPR£ME COURT REPORTS (2005] SUPP. I S.C.R.
A fortified by the fact that Rule 23(1)(c) contemplates that if the affidavit
submitted by the licensee at the time of application is found incorrect and
assertions made therein are found to be false, the 1:-icensing Authority
would be empowered to suspend or cancel the licence. The rule read as a
whole, therefore, provided for filing of an affidavit at the time of grant of
l~cence. Furthermore the vary fact that a circular was issued by the
B Commissioner of Excise asking the applicants to file an affidavit after the
selection process is over itself is a pointer to the fact that filing of such an
affidavit along with the application was c1msidered by all concerned to
be necessary. The advertisement was also required to be issued in
consonance with the rules and not in derogation thereof. It would,
C therefore, be not correct to contend that whereas clauses (a) to (c) of Rule
9 postulate compliance thereof at a pre-selection stage, clause (d) postulates
compliance at the post-selection stage. [323-B-D; 324-D-G)
2.4. The question as to whether a statute is mandatory or directory
would depend upon the statutory scheine. It is now well known that use
D of the expression "shall" or "may" by itself is not decisive. The court while
construing a statute must consider all relevant factors including the
purpose and object the statute seeks to achieve. Furthermore, filing of an
affidavit in the prescribed format is a statutory requirement under the
Rules. Filing of such an affidavit is necessary as in the event the same on
E verification is found to be incorrect, not only the deponent can be
proceeded against but his licence would also be liable to be cancelled. Filing
of an affidavit under the Rules is, therefore, mandatory in character.
[325-CJ
P.T. Rajan v. T.P.M Sahir, [2003) 8 SCC 498 and U.P. State Electricity
p Board v. Shiv Mohan Singh and Anr., (2004) 8 SCC 402, referred to.
3.1. It is not correct to say that clause 22 of the circular dated 14. 2.
2005 issued by the Revenue contemplates a future amendment in the Rules.
Even if the same contemplates a future amendment, the same would not
sub serve the statutory requirements inasmuch as the Commissioner of
G Excise was not supposed to know as to how the existing Rules would be
amended and whether the same would be applied prospectively or
retrospectively. The Court cannot draw a presum·ption that the
Commissioner of Excise could proceed on a pre-supposition that his action
in issuing a circular contrary to Rules would stand ratified by retrospective
H operation of the Rules. A statutory authority, it is trite, must exercise his
ASHOK LANKA v. RISHI DIXIT
303
jurisdiction with the four-corners of the statute and cannot deviate or A
depart therefrom. [325-G-H)
J.2. The rule making power should be exercised having regard to
the policy to be adopted by the State. Such a policy may vary from time
to time. Having regard to the exigency for the situation, rule may also be
amended, but there exists no reason as to why an attempt should be made B
to amend the rule only with a view to justify an illegal action on the part .
of the Commissioner of Excise. Although the validity of the rules has not
been challenged, the Court cannot shut its eyes from considering this
aspect of the matter. This Court is not oblivious of the fact that framing
of rules is not an executive act but a Iegislat_ive act; but there cannot be C
any doubt whatsoever that such subordinate legislation must be framed
strictly in consonance with the legislative intent as reflected in the rule
making power contained in Section 62 of the Act. (326-B-D]
3.3. By reason of the amendment carried out in the rules in terms of
the notification dated 9.3.2004, ~he Commissioner of Excise was D
empowered to prescribe a format of the application form and affidavit.
Such an application or affidavit could be filed within the date and time
stipulated by him but the same would not mean that while prescribing a
format in respect of an application form or affidavit, he became authorized
to dilute the statutory requirements or dispense with the same. No
exception can although be taken as regards the format relating to the E
applications, strong exception has to be taken as regards the format of
the affidavit. (326-E)
4.1. Clause (C-1) was added after clause (c) of Rule 8 ofChhatisgarh
Excise Settlement of Licences for Retail Sale of Country/Foreign Liquor
Rules, 2002 providing that the first, second and third applicants selected F
must submit an affidavit duly verified by the public notary in the
prescribed proforma next day during office hours. The notification does
not state that the amendment will have a retrospective effect. In absence
of any express provisions contained in the notification, the court will not
ordinarily presume the same to be retrospective in nature. [327-D\
4.2. A rule may not be challenged as ultra vires the Act, but its
interpretation can certainly be an issue. The rule if given retrospective
effect would become unworkable and would not be capable of being given
effect to. A rule cannot be framed keeping in view that the Commissioner
G
has issued certain circular which is illegal. By r~ason of a rule making
power, an invalid action ·on the part of the Commissioner of Excise cannot H
304
SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.
A be validated. If a selection process is over upon following a procedure
which is illegal, by reason of a rule making power the same cannot be
rendered valid simply by directing that the same shall govern the selection
of applicants for grant of licence under the Act. The question as to whether
it can be given effect to or not is, thus, required to be judged on its own
B without reference to the circular issued by the Commissioner of Excise.
Casus Omissus, it is well known, cannot be supplied by the Court.
[327-H; 328-A, B, CJ
P. T. Rajan v. T.P.M Sahir and Ors., [2003) 8 SCC 498, referred to.
4.3. This Court fails to understand as to how without making a
C scrutiny as regards compliance of conditions, licences were granted. That
even in the notice, the selected candidates had not been asked to submit
affidavits in the prescribed format. It is not expected of the statutory
functionaries to ask the selected candidates to comply with the
requirements orally. It is beyond this Court's comprehension as to why
D such a post haste action was taken by the State. [329-F]
5.1. Having regard to the actions of the statutory functionaries, the
entire exercise of the scrutiny as regards ascertainment of the eligibility
of the candidates vis-a-vis selection process is required to be undertaken
again by the Selection Committee. Furthermore, this Court is entitled to
E take into consideration subsequent-events so as ·to do the complete justice
to the parties. When this Court passed an interim order it was expected
that the statutory requirements therefor, shall be complied with. Even if
Rule 9 is held to be directory, substantial compliance thereof was
necessary. A mandatory statute requires striet compliance whereas a
directory statute requires substantial compliance. Even if a statute is
F directory, the State cannot say that the requirements contained therein
do not envisage compliance thereof. (336-C, DJ
5.2. The Rules postulate that each and every application must be
examined carefully. Mere fact that a large number of applications, have
been filed, as a result whereof the State had been able to obtain crores
G and crores of rupees by itself did not entitle the State to dispense with the
statutory requirements. The application fees were not meant to be utilized
for the purpose of eanting revenue but to meet the administrative charges
required therefor. Application fees cannot be equated with tax.
[336~E, F]
H
Board of Control for Cricket, India and Anr. v. Netaji Cricket Club and
•
f
ASHOK LANKA v. RISH! DIXIT
305
Ors., (2005) 1 SCALE 121, relied on.
5.3. Undoubtedly, the state has the exclusive privilege to deal in liquor
but it has also to be borne in mind that it has a constitutional and legal
duty to safeguard the public interest and public health. The conditions for
grant of licence as laid down in the statute are required to be observed
only with a view to subserve the constitutional goal and not to subverse
the same. [336-G-H)
A
B
5.4 .. An affidavit required to be filed, in whatever format it may be
must disclose all the informations required under the law which would
enable the statutory authorities to verify the same. Licences to deal in C
liquor cannot be granted on mere asking by a person and only because
he is in a position to fulfil the requirements as regards deposit of licence
fee and other charges. Undoubtedly, the State is entitled to raise its revenue
but it is also obligated to fulfil its constitutional and statutory duties.
[337-A-B)
State of M.P. and Ors. v. Nandlad Jaiswal and Ors., [1986) 4 SCC 566,
relied on.
G.J. Fernandez v. State of Karnataka and Ors., [1990) 2 SCC 488,
distinguished.
Mahachandra Prasad Singh etc. v. Chairman, Bihar Legislative Council
and Ors., [2004) 8 SCC 460; Nain Sukh Das and Anr. v. The State of Uttar
Pradesh and Ors., (1953) SCR 1184; KN. Guruswamy v. The State of Mysore
and Anr., [1955) 1 SCR 305 and Ba/co Employees' Union (Regd) v. Union
of India and Ors., [2002] 2 SCC 333, held inapplicable.
Rajendra Singh v. State of M.P. and Ors"., (1996) 5 SCC and Cellular
Operators Association of India and Ors. v. Union of India and Ors., [2003) 3
sec 186, referred to.
D
E
F
5.4. The State while exercising its power of parting with its exclusive G
privilege to deal in liquor has a positive obligation that any activity therein
strictly conforms to the public interest and ensures public health, welfare
and safety. Strict adherence to the requirement to comply with the
statutory .provisions must be considered from that angle. [339-D)
The State of Bombay'· R.M.D. Chamarbaugwala, (1957) SCR 874; H
306
SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R .
. A Mis Fatehchand Himmatlal and Others etc. v. State of Maharashtra etc.,),
[19771 2 SCC 670; Khoday Distilleries Ltd and Ors. v. State of Karnataka
and Ors., (1995) 1 SCC 574; B.R. Enterprises etc. v. State of UP. and Ors.
etc., [1999) 9 SCC 700; State of A.P. and Ors. v. Mcdowell & Company and
Ors., [19961 3 SCC 709; State of Punjab and Anr. v. Devans Modern
'Breweries Ltd and Anr., [2004) 11 SCC 26 and Godawat Pan Masala
B Products J.P. Ltd and Anr. v. Union of India and Ors.: (2004) 7 SCC 68,
referred to.
c
CIVIL APPELLATE JURISDICTION : I.A. Nos. 1-2 In Civil Appeal
No. 3279 of 2005.
From the Judgment and Order dated 31.3.2005 of the Chhattisgarh
High Court at Bilaspur in W.P.No. 956 of 2005.
WITH
C.A. No. 3280/2005, I.A. No. 1 In C.A. No. 3281/2005, I.A. No. 1 in
D C.A. No. 3282/2005, I.A. No. 1 in C.A. No. 3283/2005, C.A. Nos. 3284,
3285/2005, I.A. No~. 1-2 in C.A. No. 3286/2005, C.A. Nos. 3287, 3288,
. 3289, 329012095, I.A. No. 1 in C.A. No. 3291/2005, I.A. No. 1 in C.A. No.
3292 of 2005.
C.S. Vaidyanathan, Mukul Rohtagi, Dr. Rajiv Dhawan, Kanak Tiwari,
E Soli J. Sorabjee, Dr. A. M. Singhvi, G.L. Sanghi, Ravindra Shrivastava,
Vivek Tankha, Ashok Desai, Arun Jaitley, K.K. Venugopal, Rohit K.Singh,
Satish K. Agnihotri, Sunil K.Jain, S.Porthakur, Prashanto Chandra Sen,
Ms.Meenakshi Grov(!r, Ms. Ruby Singh Ahuja, Lakshmi Raman Singh, Vivek
Singh, Ravi Prabsh, Prakash Shrivastava, Akshat Shrivastava, Manish
F Chaudhary, Ardendu Kumar Prasad, Kuna! Verma, Prashant Mishra, Rajesh
Srivastava, Ms. Suparna Srivastava, Ms. Deepti Singh, P.H. Parekh, Rohit M.
Alex, Ghanshyam Joshi, Sanjit Kr. Saxena and Partha Sil with them for the
appearing parties.
G
H
if
The Judgment of the Court was delivered by·
S.B. SINHA, J. Permission to file spe~ial leave petitions is granted.
Leave granted in all the special !~ave petitions.
INTRODUCTION
The trade in country/foreign liquor is said to be res extra commercium.
. t-
. ,.
f
ASHOK LANKA v. RISH! DIXIT [SINHA, J.]
307
A citizen does not have any fundamental right to deal therewith. The State A
alone has the exclusive privilege to deal in liquor from manufacture to
distribution and from sale to consumption. It is for the State to pa1t with its
exclusive privilege for a price which is loosely called as 'excise duty'. The
power of the State to control and regulate the trade.in liquor is envisaged
under Entry 8, List II of the Seventh Schedule of the Constitution of India. B
It may also impose excise duty as also countervailing duty in exercise of its
legislative power under Entry 51, List 2 of the Seventh Schedule of the
Constitution.
ACT AND THE RULES :
Trade in Country/Foreign Liquor is governed by the Chhattisgarh Excise C
Act, 1915 ('the Act', for short).
Section 7(e) of the Act provides that the State Government may, by
notification, for the whole or for any specified part of the State, delegate to
. the Chief Revenue authority or the Excise Commissioner all or any of its D
powers under the said Act except the power conferred by Section 62 to make
rules.
Section 62 of the Act empowers the State to frame rules for the purpose
of carrying out the provisions thereof. Without prejudice to the generality of
,-:
the said provisions, the State Government, inter alia, however, may make E
rules :
(e) regulating the periods and localities for which, and the persons
or classes of persons to whom, licences for the wholesale or
retail vend of any intoxicant may be granted, and regulating the
number of such licences which may be granted in any local area; F
(t)
prescribing the procedure to be followed and the matters to be
· ascertained before any licence for such vend is granted for any
locality;
(g) regulating the amount, time, place and manner of payment of
any duty or fee or tax or penalty;
(h) prescribing the authority by, the form in which, and terms and
conditions on and subject to which any licence, permit or pass
shall be granted, any by such rules, among other matters
G·
H
308
A
B
c
SUPREME COURT REPORTS [2005] SUPP. I S.CR.
(i) fix the period for which any licence, permit or pass shall
continue in force,
(ii) prescribe the scale of fees or the manner of fixing the fees
payable in respect of any such licence, permit or pass.
(iii) prescribe the amount of security to be deposited by holders
of any licence, permit or pass for the performance of the
conditions of the same,
(iv) prescribe the accounts to be maintained and the returns to be
submitted by licence-holders, and
(v) prohibit or regulate the partnership in, or the transfer of,
licenses."
Section 63 of the Act provides that all rules made and notifications
issued thereunder shall be pubiished in the Official Gazette, and shall have
D effect from the date of such publication or from such other date as may be
specified in that behalf.
E
F
On or about 15.3.2002, the State Government in exercise of its
aforementioned power made rules known as 'Chhattisgarh Excise Settlement
of Licences for Retail Sale of Country/Foreign Liquor Rules, 2002' ('the
Rules', for short). "Excise Year" has been defined in the Rules to mean the
financial year commencing from lst April to 3 lst March of the calendar year.
Rule 4 provides for formation of groups of liquor shops; dause (iii) whereof
prohibits an applicant/firm/company from obtaining licences for more than
two groups of shop~. Rule 5 provides for the period of licence which would
be for an excise year or part thereof. Rule 8 provides for procedure for grant
of licence, which reads as under :
"Procedure for grant of licence -
(a)
Whenever a new licence is proposed to be granted in an area or
locality, the licensing authority shall invite the applications for
G
this purpose after giving wide publicity through daily newspapers
having circulation in that area.
(b) A list of shops of country/foreign liquor for which the licensing
authority proposes to grant licence shall be exhibited along with
shopwise licence fee minimum monthwise guaranteed quantity,
H
security amount, and annual quantity in office of Collector, Tehsil,
ASHOK LANKA v. RISH! D!XIT [SINHA. J.]
309
District Excise Officer/Asstt. Commissioner excise and Deputy A
Commissioner Excise (Flying squad)
(c) Application for grant of license with application fee shall be
submitted in the prescribed form as appended to these rules as
annexure-4.
(d) The last date to be fixed for the receipt of application shall not B
be earlier than ten days with effect from the date of publication
of the advertisement in the newspapers."
Eligibility conditions for applicant are laid down in Rule 9 wh!ch read
as follows :
"Eligibility conditions for applicant. The applicant has to fulfil the
following conditions for obtaining the licence for shop/Group of shops
of Co.untry/foreign liquor.
(a) Should be a citizen of India or a partnership firm whose partners
c
a.re citizens of India. No change in partnership shall be allowed D
after settlement of shop(s) /group of shops except with the
permission of the Excise Commissioner.
(b) Should be above 21 years of age.
(c) · Should not be a defaulter/blacklisted or debarred from holding E
an excise licence .under the provisions of any rules made under
the Act.
(d) Has to submit an affidavit duly verified by public notary as
proof of the following namely :
(I) That he possesses or has an arrangement for taking on rent suitable F
premises in that locality for opening the shops in accordance
with the rules.
(2) That he possesses good moral character and have no criminal
background and have not been convicted of any offence
punishable under the Act or Narcotic Drugs And Psychotropic G
Substances Act, 1985 or any other law for the time being in
force or any other cognizable and non-bailable offence.
(3) That in case he is selected as licensee he will furnish a certificate
issued by Superintendent of Police of the district of which he is
the resident, showing that he as well as his family members H
310
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A
possess good moral character and have no criminal background
or criminal record, within thirty days of grant of licence.
(4) That he shall not employ any salesman or representative who has
criminal background as mentioned in clause (iii) or who suffer
from any infectious or contagious disease or is below 21 years
B
of age or a woman.
c
D
E
(5) That no government dues are outstanding against him."
Rule 10 envisages formation of a District Level Committee; whereas
Rule 11 provides for selection of licensees, clauses (b) and (c) whereof read
thus :
"(b) The said committee shall select licensees from the list of
applicants. In case more than one applicants are found suitable
for any particular group of shops the committee shall select the
licensee for such group of shops by lottery. In case the selected
applicant does not deposit the required amount according to rule
13 and does not fulfil the prescrib~d formalities or is unable to
arrange suitable premises for the shops within stipulated period,
the licensing authority shall cancel the allotment and take steps
for resettlement of the shops/group of shops ..
(c)
In case thee is no application for a particular group ·of shops or
no applicant is found suitable for a group ot shops the licensing
authority shall take immediate steps for resettlement as per
procedure laid down in rule 8."
Rule 13 provides for payment of licence fee and security amount, which
F reads as undyr :
"Payment of licence fee and security amount In case an applicant is
selected as licensee, he shall deposit one month's amount of license
fee and the security amount within three days of being informed of
his selection. If he fails to deposit the amount of one month licence
G
fee and security amount within prescribed period, his selection shall
stand cancelled and the said licensee shall be debarred from holding
any excise licence in future, anywhere in the State and his applications
fee shall also stand forfeited. A consolidated list of such defaulters
under this rule, along with their complete addresses shall be forwarded
by the District'Excise officer/Assistant Commissioner to the Excise
H
Commissioner, who will circulate the consolidated list of the State to
ASHOK LANKA v. RISH! DIXIT [SINHA, J.]
311
all the licensing authorities of the State."
Rule 23 provides for suspension and cancellation of the licence, in the
event any of the conditions laid down therein is violated; clause (c) whereof
is as follows :
A
"If the affidavit submitted by the licensee at the time of application B
is found incorrect and assertions made therein are found to be false.
In terms of the provisions of the said Rules, a format in which an
application is to be filed is prescribed providing for filing of an affidavit duly
verified by a public notary.
AMENDMENT IN THE RULES AND CIRCULARS ISSUED BY THE
COMMISSIONER OF EXCISE :
On or about 9.3.2004, clause (c) of Rule 8 of the Rules was amended
in the following terms :
"(c) the application form and affidavit as per format prescribed by
the Excise Commissioner, along with application fee fixed under Rule
6 shall be submitted to the licensing authority of concerning district
or grant of license for retail shops/group of c~untry/foreign liquor,
within the stipulated date and time.''
Pursuant to or in furtherance of the said power conferred upon him, the
Commissioner of Excise prescribed formats of application form and affidavit
to be furnished with the application for country/foreign liquor shops/groups:
•'
On or about 14.2.2004, a circular came to be issue~ by the Commissioner
c
D
E
of Excise whereby and whereunder it was directed that the applicants were F
not required to file affidavits along with their applications as was laid down
in the P,ules; but such affidavits may be filed after their selection was made.
Sub-clauses (1), (2) of clause 8 and clause 22 of the said circular read as
follows :
"8. APPLICATION FOR ALLOTMENT OF COUNTRY/FOREIGN G ,
LIQUOR SHOP/GROUP :
(1) Application form for the year 2005-06 for country/foreign
. ,
liquor retail shops/groups which has been amended and published in
notification issued by this office is being enclosed· and sent. Application H
312
A
B
c
D
E
SUPREME COURT REPORTS [2005] SUPP. l S.C.R.
for country/foreign liquor retail shop can be made by any applicant
in the specified enclosed format only. Separate applications will be
accepted for every group. Application fee in accordance with the cost
price of the concerned group should be in the 'form of bank draft/
bankers cheque/bank's cash order form a nationalized bank/scheduled
commercial bank or challan received after submitting the cash in the
treasury is mandatory to be produced in original with the application.
Applicant should not make any change or amendment in the format
of application form and application form will be accepted in prescribed
format only.
(2) For the year 2005-06, the Select Committee will make a draw
using a computer and select first, second and third applicant. It will
be mandatory for those selected first, second and third applicants to
immediately produce an affidavit duly verified by a notary. Selected
applicants should not make any changes or amendments to the format
of the affidavit and the affidavit will be accepted in the specified
format only. Format of the affidavit will be in accordance with the
known format of 2004-05."
"22. AMENDMENT JN THE CHHATTISGARH EXCISE
SETTLEMENT OF LICENCES FOR RETAIL SALE OF COUNTRY/
FOREIGN LIQUOR RULES, 2002 :
For settlement of retail shops/groups of country/foreign liquor for
the year 2005-06, under application system, aforesaid directions are
being issued and accordingly proceedings shall be ascertained, even
then where amendment is to be done in the Chhattisgarh Excise
Settlement of Licences for retail sale of country/foreign liquor Rules,
F
2002, for that notification shall be sent severally. Similarly, for licence
fees prescribed for the year 2005-06 for licence of F.L. 2 & F.L. 3,
notification shall be sent separately."
TENDER PROCESS:
G
A notice inviting applications for grant of licence under the Act and the
Rules was issued on 14.2.2005, clauses (2), (3), (4), (5) and (9) whereof are
as under :
"2. As per the above programme, the Collector concerned shall
publish the notice in his district on the date fixed, wherein in
H
respect of retail country/foreign liquor shop/group, the minimum
ASHOK LANKA v. RISH! DIXIT [SINHA, J.]
313
surety amount, duty amount, amount of licence fee annual A
revenue, I/12th part of licence fee and I/12th part of the duty
amount on minimum surety amount and one month licence fee
shall be mentioned.
3.
For allotment of the country/foreign liquor retail shops/groups,
only those persons/firms/companies shall submit the applications B
who are entitled for getting the excise licence under the C.G.
Excise Act, 1915.
4.
The applicants for allotment of country/foreign liquor retail shops/
groups for the year 2005-06 shall get the prescribed proforma
from the office of Assistant Excise Commissioner/District Excise c
Officer. On the prescribed proforma only, the applicant bytyping
or handwriting regarding the country/foreign liquor retail shop
of the concerned district shall apply. For each group, the separate
application will be accepted. Along with the application form, as
per the cost, the application fees through the Draft/Bankers
cheque/Cash Order of Bank of Nationalised Bank/Scheduled D
Commercial Bank or by cash, shall be submitted in the Treasury
through original challan. The applicant shall not make any change
or amendment in the prescribed proforma and the applications in
prescribed form will be accepted only.
5.
For the year 2005-06, the selection of first, second and third E
candidates will be made by computer through lottery system and
they have to submit immediately the affidavit certified by the
notary. The selected candidate shall not make any change or
amendment in the affidavit and the affidavit will only be accepted
in the prescribed form.
F
9.
The allotment of shops/groups and their running for the year
2005-06 shall govern as per the C.G. Excise Act, 1915 and the
rules framed thereunder and the Chhattisgarh Excise Settlement
of Licences for retail sale of country/foreign liquor Rules, 2002
and the amended terms and conditions and the orders of the G
State Govt./Commissioner, Excise/Collector/Assistant Excise
Commissioner/District Excise Officer."
Pursuant to or in furtherance of the said notice inviting applications,
about 2,64,703. Applications were filed out of which about 3000 applications
were rejected. Selection process began in different districts by the District H
314
SUPREME COURT REPORTS [2005] SUPP. I S.C .. R.
A Level Committees between the period from 9.3.2005 and 16.3.2005.
B
The Excise Rules were further amended on or about 22.3.2005 in the
following terms :
"Raipur, the 22nd March, 2005
NOTIFICATION
No.F-10/6/2005/CT/V(4).-In exercise of the powers conferred under
Section (d), (e), (f), (g) and (h) of sub-clause(2) of sub-clause (3) of
clause 62 of the Chhattisgarh Excise Act, 1915 (No.II of 1915), the
State Government hereby makes the following amendment in the
C
Chhattisgarh Excise Settlement of Licenses for retail sale of Country/
Foreign Liquor Rules, 2002, namely :
D
E
AMENDMENT
In the said rules, in rule - 8, -
(i) The existing clause (C) shall be substituted by the following
clause (C), namely :-
(C) The application form under rule-6 along with prescribed
application fee shall be submitted to the Licensing Authority
of the concerned district within prescribed date & time for
grant of licence for retail shop/group of country/foreign liquor
in the proforma prescribed by th~ Excise Commissioner.
(ii) After clause (C) the following clause (C-1) shall be added, namely:
(C-I) The first, second & third applicant selected for retail shop/
F
group of country/foreign liquor by the selection committee
after lottery drawn by computer must submit affidavit verified
by the Notary in the prescribed proforma the next day during
office hours.
2.
This amendment shall be effective for the settlement of Licenses
G
for retail sale shops of Country/Foreign liquor for the year 2005-"
06."
WRIT PROCEEDINGS :
The instant case originally arose out of a public interest litigation in
H Jitendra Pali v. State of Chhattisgarh, (WP No.706 of 2005). Subsequently,
I
ASHOK LANKA v. RISH! DIXIT [SINHA J.]
315
the other petitions came to be filed by candidates including Rishi Dixit v. A
State of Chhattisgarh, (WP No. 956 of 2005). Both the writ petitions were
heard together and separate judgments were delivered in each of them. The
judgment in WP No.956 of 2005 came to be passed by the High Court on
31.5.2005, which is the subject matter of appeal arising out of SLP (Civil)
CC No 4529; while the judgment and order in WP No. 706 of 2005 came to
be passed by the High Court on 8.4.2005 which is the subject matter· of B
appeal arising out of SLP (Civil) No.8575 of 2005.
Originally in the said writ application the changes made in the selection
process, namely, from manual to computer was in question; but an application
for amendment of the writ petition was made on 9.3.2005 wherein it was C
contended that the selection process adopted by the State was vitiated, inter
alia, on the premise that no affidavit was filed by the applicants as was
mandatorily required by Rule 9 of the Rules.
The contention raised on behalf of the State after the amendment dated
22.3.2005 before the High Court was that Rule 9 was directory in nature and D
not mandatory and in any event, as the said rule was amended in consonance
with the powers of the State regarding retrospective amendment of the Rules,
the selection process was not vitiated. Now, this amendment validates with
retrospective effect, the filing of affidavits after the selections are made. ·
Before we consider the judgment passed by the High Court, we may E
notice that an interim order was passed in the writ petition on 3.3.2005. On
or about 7.3.2005, however, the said interim order was modified by the High
Court directing :
"As mentioned above, in view of the return has been filed and the
matter is to_ be heard and disposed of finally, we modify the earlie_r F
order of M. W.P. No. 593/2005, to the extent that the respondents
may continue with the process of selecting the licensees, however, if
before the disposal of this writ petition the process of selection of the
licensees is completed, the respondents should not communicate the
order of their selection to the selected licensees."
G
With a view to complete the narration of facts, we may also mention
that several intervention applications were also filed by the alleged successful
bidders.
H
316
SUPREME COURT REPORTS [2005] SUPP. I S.C.R.
A HIGH COURT JUDGMENT:
The High Court upon analyzing the provisions of the Act and the Rules
framed thereunder was of the opinion that the State was entitled to make the
selection of the eligible candidates through computer. It was, however, opined
that the District Level Committees did not make any scrutiny whatsoever to
B find out· as to whether the applicants concerned satisfied the eligiqility
conditions laid down in Rule 9 or not, as no information was required to be
furnished in the format prescribed by the Commissioner of Excise in that
behalf. The High Court was further of the opinion that the disclosure of such
information by the applicants even before the submission of applications
C were necessary so as to enable the authorities to satisfy themselves about the
fulfillment of different eligibility conditions mentioned in Rule 9.
Consequently, it was directed that a fresh selection be made in terms of the
extant rules.
The High Court while rejecting the wider challenge on the legal policy,.
D held : (a) The circular letter dated 14.2.2005 issued by the Commissioner of
Excise was contrary to the Rules insofar as eligibility criteria laid down in
Rule 9 thereof were dispensed with. (b) The applications filed by the applicants
were not properly scrutinized, except the requirement o~ Rule 9(c), namely,
whether the applicants were black-listed or otherwise not eligible.