# ASHOK LENKA v. RISHI DIKSHIT AND ORS

- **Citation:** [2006] Supp. 1 S.C.R. 142
- **Court:** Supreme Court of India
- **Decided:** 2006-04-21
- **Bench:** S.B. Sinha, P.K. Balasubramanyan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ashok-lenka-v-rishi-dikshit-and-ors-21385
- **Pages:** 40

## Headnote

Chattisgarh Excise Act, 1915--Chattisgarh Excise Seu/ement of licences
for Retail Sale of Country/Foreign Liquor Rules, 2002.
Rules 9 and 11--District level Selection Commillees undertaking process
of selection of persons to be granted licences--{:;hallenge to grant-Writ petition
making some licensees parties, while leaving out many others-High Court
cancelling entire set of licences-On appeal, held-Jn writ petition private
respondents were not impleaded in representative capacity; no leave in terms
D of Order 1, Rule 8 of the Code of Civil Procedure was obtained, and no public
notice was given regarding pendency of petition---ln that view. cancellation of
licences of all private respondents was wrong-Inadequacies of fulfillment of
eligibility criteria should have been decided by taking up individual matterslt was more so as selection process was undertaken not by one but several
District level Committees, and it was not a case of gross irregularity which
E could lead to cancellation of enitre process-All licensees whose licences had
been cancelled and against whom allegations were made were necessary parties
to writ petition and in their absence it could not be decided.
Interpretation of-As there was no provision for relaxing any condition
F for grant of licence, provisions thereof are to be construed strictly.
Shortcomings of--Act and the Rules found to deal with only control and
regulations-No discretion given to authorities for relaxation of provisions of
Rules-In that behalf, Rules directed to be framed again-Also, processing of
applications for grant of licences found to be unsatisfactory and improvements
G suggested for future.
Constitution of lndia, 1950-Article 47--Grant of licence for selling of
liquor-Rules and policy decisions-Held: Their formulation must be guided
by public interest, strictly conform to public good, and not be otherwise
derogative of public health-Not only eligibility criteria sh.iuld be laid down,
H
I~
ASH OK LENKA v. RISH! DIKSHIT
143
but having regard to past experience as to -how and in what manner licensees A
find means and methods to circumvent the provisions, all endeavours should
be made to plug all loopholes-All information supplied by applicants for
licences must undergo and satisfY 'strict scrutiny test '-State should not treat
its right of parting with its privilege only a means of earning mare and more
revenue.
Licences-Grant of-Satisfaction of eligibility criteria-Burden of proofHeld-initially it is on applicants-Wherever objections are raised to grant of
licence, satisfaction was required to be arrived at by competent authority
upon their consideration, but that does not mean that burden was upon objector
to prove same.
Pleadings-Rejoinder and sur-rejoinder-No new plea is ordinarily
permitted in a rejoinder without the leave of Court-However, if new facts are
brought on record for first time in it, opposite party is entitled to file a surrejoinder controverting them.
Interpretation of s·tarutes-Subordinate legislation or· notificationRetrospective effect-Ordinarily, it cannot be given-However, if it is
clarificatory, such effect can be given.
B
c
D
Interpretation of statutes-Relaxation of statutory provisions-It can be
granted provided there exists a specific provision therefor-It cannot be.granted E
by exclusion, when th(!re does not exist any provision.
Words and° phrases~Public health-In context of Article 47 of
Constitution of India, I950. ·
Appellants were granted excise Iice·nces by co-appellant, the State. F
Grant of the licences was governed by the Chattisgarh Excise Act, 1915,
whereunder, by a notification dated 15-3-2002, the State Government had
mad Chattisgarh Excise Settlement of Licences for Retail Sale of Counrty/
Foreign Liquor Rules, 2002. However, n_otification dated ?-7-2005, with
retrospective effect, omitted from Rule 9(3)(d) requirement of certificate
regarding criminal antecedents of family members of selected licensee. G
Respondents opposed grant of licences

## Text

_Characters 0–39,920 of 86,055. This is a partial read: ask again with offset=39920 for what follows._

A
B
c
ASHOK LENKA
V.
RISH! DIKSHIT AND ORS.
APRIL 21, 2006
[S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.)
Chattisgarh Excise Act, 1915--Chattisgarh Excise Seu/ement of licences
for Retail Sale of Country/Foreign Liquor Rules, 2002.
Rules 9 and 11--District level Selection Commillees undertaking process
of selection of persons to be granted licences--{:;hallenge to grant-Writ petition
making some licensees parties, while leaving out many others-High Court
cancelling entire set of licences-On appeal, held-Jn writ petition private
respondents were not impleaded in representative capacity; no leave in terms
D of Order 1, Rule 8 of the Code of Civil Procedure was obtained, and no public
notice was given regarding pendency of petition---ln that view. cancellation of
licences of all private respondents was wrong-Inadequacies of fulfillment of
eligibility criteria should have been decided by taking up individual matterslt was more so as selection process was undertaken not by one but several
District level Committees, and it was not a case of gross irregularity which
E could lead to cancellation of enitre process-All licensees whose licences had
been cancelled and against whom allegations were made were necessary parties
to writ petition and in their absence it could not be decided.
Interpretation of-As there was no provision for relaxing any condition
F for grant of licence, provisions thereof are to be construed strictly.
Shortcomings of--Act and the Rules found to deal with only control and
regulations-No discretion given to authorities for relaxation of provisions of
Rules-In that behalf, Rules directed to be framed again-Also, processing of
applications for grant of licences found to be unsatisfactory and improvements
G suggested for future.
Constitution of lndia, 1950-Article 47--Grant of licence for selling of
liquor-Rules and policy decisions-Held: Their formulation must be guided
by public interest, strictly conform to public good, and not be otherwise
derogative of public health-Not only eligibility criteria sh.iuld be laid down,
H
I~
ASH OK LENKA v. RISH! DIKSHIT
143
but having regard to past experience as to -how and in what manner licensees A
find means and methods to circumvent the provisions, all endeavours should
be made to plug all loopholes-All information supplied by applicants for
licences must undergo and satisfY 'strict scrutiny test '-State should not treat
its right of parting with its privilege only a means of earning mare and more
revenue.
Licences-Grant of-Satisfaction of eligibility criteria-Burden of proofHeld-initially it is on applicants-Wherever objections are raised to grant of
licence, satisfaction was required to be arrived at by competent authority
upon their consideration, but that does not mean that burden was upon objector
to prove same.
Pleadings-Rejoinder and sur-rejoinder-No new plea is ordinarily
permitted in a rejoinder without the leave of Court-However, if new facts are
brought on record for first time in it, opposite party is entitled to file a surrejoinder controverting them.
Interpretation of s·tarutes-Subordinate legislation or· notificationRetrospective effect-Ordinarily, it cannot be given-However, if it is
clarificatory, such effect can be given.
B
c
D
Interpretation of statutes-Relaxation of statutory provisions-It can be
granted provided there exists a specific provision therefor-It cannot be.granted E
by exclusion, when th(!re does not exist any provision.
Words and° phrases~Public health-In context of Article 47 of
Constitution of India, I950. ·
Appellants were granted excise Iice·nces by co-appellant, the State. F
Grant of the licences was governed by the Chattisgarh Excise Act, 1915,
whereunder, by a notification dated 15-3-2002, the State Government had
mad Chattisgarh Excise Settlement of Licences for Retail Sale of Counrty/
Foreign Liquor Rules, 2002. However, n_otification dated ?-7-2005, with
retrospective effect, omitted from Rule 9(3)(d) requirement of certificate
regarding criminal antecedents of family members of selected licensee. G
Respondents opposed grant of licences to appellants by filing objections
before District Level Selection Committees. On rejection of their
objections, they filed writ petition before High Court, making sixty five
licensees parties, while leaving out one hundred and twenty six others. In
pleadings, in response to rejoinder of respondents, State filed an additional H
144
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A affidavit also. High Court held that (i) District Level Committees had
committed several irregularities, (ii) the burden of proof to prove that the
applicants for grant of licences did not possess the prescribed eligibility
was wrongly placed on the objectors like respondents, as they were not
supposed to prove the negative facts by producing evidence, (iii) there was
B no conflict between the English and Hindi versions of Rule 9(3)(d), and
English version would prevail over Hindi version, rejection contention of
State that notification dated 5-7-2005 merely corrected error in English
version which was absent in its Hindi version, (iv) a sur-rejoinder to
rejoinder was impermissible without permission of the court, and hence
did not consider it. On the aforementioned premises, the High Court
C allowed the writ petition and cancelled entire set of licences. Hence the
present appeal.
Appellant contended that the High Court having not held the whole
selection process to be bad in law, no situation arose requiring cancellation
of the entire set of licences, it should have identified the cases where
D requirements of law had not been complied with and only in such cases,
the licensees could have been directed to be revoked.
Allowing the appeal, the Court
HELD I. It was not a case where the writ petitioners had impleaded
E the private respondents in their representative capacity. In the writ
proceedings, no leave in terms of Order 1, Rule 8 of the Code of Civil
Procedure or the principles analogous thereto had been obtained. No
public notice had also been given as regard pendency of the said writ
petition. Therefore, the High Court committed an error in directing
F cancellation of licences of all the private respondents of the writ petition.
The inadequacies or otherwise of fulfillment of eligibility criteria or the
violation of the statute should have been decided by taking up individual
matters and upon proper scrutiny of the case. 1164-F; 165-C, DI
2.1. In law it is permissible to cancel the entire selection process if it
G is held that the same is tainted to such an extent that it may not be possible
to separate the innocent from the trainted ones. When selections, however,
are carried out not by one agency but by several ones, the principles of
en masse cancellation may not apply. (163-81
Benny T.D. and Ors. v. Registry of Co-operative Societies and Anr.,
H [1998] 5 SCC 269, Onkar Lal Bajaj and Ors. v. Union of lndia and Anrs.,
ASHOK LENKA v. RISH! DIKSHIT
145
(2003) 2 SCC 673, Union of India and Ors. v. Rajesh P. U. Puthuvalnikathu A
and Anr., (2003) 7 SCC 285, Bihar School Board v. S.C. Sinha, AIR (1970)
SC 1269, Union of India v. Anand Kumar Pandey, (1994) 5 SCC 663,
Hanuman Prasad and Ors. v. Union of India Anr., (1996) 10 SCC 742 and
Union of India and Ors. v. 0. Chakradhar, (2002) 3 SCC 146, relied on.
2.2. Admittedly, several District Level Committees have carried out B
the selection process and in that view of the matter is was obligatory on
the part of the High Court to consider the mode or manner of selection
made by each one of them individually. It was not a case of mass cheating
in an examination or illegality or gross irregularity in the selection process
which would lead to cancellation of the entire selection process. (163-C, DJ C
3.1. The licensees whose licences were necessary parties to the writ
petition. In the absence of any opportunity of hearing given to them, their
right to continue their business has been violated. It is not a case where
·the State, for one reason or the other, did not intend to part with its
exclusive privilege to deal in liquor. It is also not a case where the State D
acted in such an arbitrary manner which would attract the wrath of Article
14 of the Constitution of India. All licensees in relation to whom allegations
had been made, thus, were necessary parties in the writ petition and in
their absence the same could not have been decided. (162-E, F]
3.2. Furthermore, it would be travesty of justice if the parties against E
whom serious allegations were made and are said to have been found had
not been made the parties to the writ petition as by reason "thereof they in
terms of the High Court judgment were not allowed to carry on their
business in terms _of the licences granted in their favour. All such persons
whose licences had been cancelled were, thus, necessary parties.
F
(162-G, H; 163-A]
4.1. The writ petitioners have not disclosed as to how each one of
the licensees who had appeared as respondents therein were ineligible or
otherwise disqualified and/or not fulfill the conditions therefor. Had suc_h
opportunities been given, the State as also the said respondents could have G
met the said allegations. Such allegations were made only in the rejoinder.
No new plea ordinarily could have been permitted in the rejoinder without
the leave of the Court. (163-D-E]
4.2. The High Court did not place reliance upon the additional
affidavit filed by the State inter alia on the ground that the same being ·H
146
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A sur-rejoinder could not have been filed. The High Court's attention was
evidently not drawn to the fact that writ petitioners brought on record
new facts for the first time in the rejoinder and, thus, the State was entitled
to file a sur-rejoinder controverting the allegations made therein.
(163-E, Fl
B
5. The contention of the appellant that burden of proof was placed
on the objector may not be entirely correct. The initial burden was on
the applicants themselves for grant of licences to satisfy the members of
the District Level Committees that they fulfil the eligibility and other
criteria. In such matters, the satisfaction was required to be arrived at
C by the competent authority upon considering the objections raised by the
writ petitioners. It did not mean that whenever an objection was raised,
the burden thereof would be upon the objector to prove the same.
(178-A, Bl
Ashok Lenka and Anr. v. Rishi Dixit and Ors., (20051 5 SCC 598, held
D applicable.
6. Ordinarily, a subordinate legislation cannot be given a
retrospective effect. The Notification dated 15-3-2005, however, is said to
be clarificatory in nature. A clarficatory notification can be given
retrospective effect. Such a clarification, according to the State, was
E necessary to be issued as there was an apparent conflict between the Hindi
and the English version of the Notification. It may be true that before the
High Court such a contention has not been raised but the bona fide of the
State in this behalf are not in doubt. In that view of the matter, it was not
necessary for the District Level Committee or the State to verify the
criminal background of the family members of the applicants.
F
(179-A, B, CJ
7. The Act and the Rules deal only with control and regulations.
There was no provision which gives any discretion to the authorities
concerned to relax provisions of the Rules. The Rules in this behalf again
must be framed upon taking into consideration all relevant factors. The
G State in making the rules and formulating the policy decisions must be
guided by public interest. In such matters, the State has a positive
obligation to ensure that any activity contemplated, strictly conforms to
the requirements of public good and is not otherwise derogative of public
health. The State parts with its exclusive privilege on certain statutory
H conditions such as payment of excise fee. When it lays down criteria for
,..
ASHOK LENKA v. RISH! DIKSHIT
147
selection of persons who would become qualified for grant of licence under A
the Act, not only the eligibility criteria therefor should be laid down, but
having regard to its past experience as to how and in what manner, the
licensees find means and methods to circumvent the said provisions, all
endeavors should be made to plug all loopholes. The State has extremely
solemn obligation to fulfil in that behalf. All information supplied by the B
applicants for licences, thus, must undergo and satisfy the 'strict scrunity
tesC. The State should not treat its right of parting with its privilege only
a means of earning more and more revenue. It may certainly earn revenue
but only upon fulfilment of its constitutional and statutory obligations.
There exists a strong umJerlying action of public health and welfare when
the matter come~ to retention of the exclusive privilege and/or parting C
therewith either in whole or in part. 1158-F, G, H; 159-A, B]
Consumer Action Group and Anr. v. State of T.N. and Ors., Tata Iron
& Steel Co. Ltd. v. State of Jharkhand and Ors., 12005] 4 SCC 272,
Government of India and Ors. v. Indian Tobacco Association, 120051 7 SCC
396 and Commnr. of Central Excise, Raipur v. Hira Cement, JT (2006) 2 SC D
369, relied on.
Arehano Reddy v. State of A.P., (2005) 6 ALT 6, approved.
R. v. Hughes. (2002) UKPC 12, Bugdaycay v. Secy. of State for Home
Department 11987] r All ER 940, R. v. Secy of State for Home Department,
ex. p. Brind.(1991) l AA ER 720, R. v. Ministry of Defence, ex. p. Smith 119961 E
I All ER 257, referred ti>.
CAD Vol. VII No. 9 pp 496 to 498; Constitutional Law of India, by
HM. Seervai Vol II 4th Ed, p 2012, referred to.
'The Law and the Public Health: A Study of Infections Disease Law in F
the United States, Columbia Law Review, Vol. 99 No. I, January, 1999; Public
Hedlth and Human Rights; American Bar Association Journal on Human
Rights, Fall 1998, Vol. 25 No I; Halsbury's Laws of England, 4th Ed Vol. 26
p5, referred to.
7.i.· Relaxation can be granted by the authorities provided there
exists a specific provision therefor, Relaxation cannot be granted by
exclusion, when there does not exist any provision. The provisions of the
Act therefore, deserve strict construction. 1161-H; 162-A, Bl
G
CIVIL APPEL~ATE JURISDICTION: Civil Appeal No. 2I52 of2006.
From the Judgment and Final Order dated 6.3.2006 of the High Court H
148
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A of Judicature, Chhattisgarh Bilaspur in W.P. No. 2820/2005.
B
WITH
C.A. No. 2161/06, 2160/06, 2159/06, 2158/06, 2156/06, 2155/06, 2157/
06, 2154/06.
Prashant Mishra, Addi. A.G. Mukul Rohtagi, C.A. Sundram, Ranjit
Kumar, Ashok H. Desai, C.S. Vaidyanathan, lndu Malhotra, Abhishek Sinha,
Liz Mathew, Savita Sinha, Vikas l'v;ehta, P.C. Sen, Binu Tamta, Rani Chhabra,
Rajeev Srivastava, Gauri Chhabra, Sudha Pal, Suparna Srivastava, Deepti
Singh, Rajesh Srivastava, Jatin Zaveri, Rohit Singh and Dharmendra Kumar
C Sinha for the Appellant.
Soli J. Sorabjee and Prakash Srivastava for the Respondents.
The Judgment of the Court was delivered by
0
S.B. SINHA, J. Leave granted.
INTRODUCTION
The Appellants are before us in the second round. They, except the
State of Chhattisgarh, were granted excise licences. Grant of such licences
E indisputably is governed by the Chhattisgarh Excise Act, 1915 (for short "the
Act"). On or about 15.3.2002, the State Government under 'the Act' made
rules known as Chhattisgarh Excise Settlement of Licences for Retail Sale of
Country/Foreign Liquor Rules, 2002 (for short "the Rules").
The State issued notices inviting tenders for grant of licences under the
F Rules. Pursuant to or in furtherance of the said notices inviting tenders about
2,64, 703 applications were filed. The grant of licences in favour of the
Appellants in some of the appeals came to be questioned before the
Chhattisgarh High Court. By reason of a judgment dated 31.3.2005, a Division
Bench of the said Court allowed the writ petition and directed cancellation
G of the licences. Appeals thereagainst were filed before this Court. Interim
orders were passed therein as a result whereof licensees continued to carry
on their business. This Court, however, while refraining itself from setting
aside the entire selection process thought it fit to ask the respective District
Level Committees to consider the matter relating to grant of such licences
afresh. Having regard to the actions of the statutory functionaries, the exercises
H
ASHOK LENKA v. RISH! DIKSHIT [SINHA, J.]
149
as regard scrutiny so as to arrive at a satisfaction that the requirement of the A
Rules vis-a-vis selection process were required to be undertaken by the
Selection Committees. They were directed to do so afresh.
We would advert to the said directions a little later. However, we at this
juncture, may notice that, according to the State, in terms of the directions
of this Court, the District Level Committee under the strict supervision of the B
Chief Secretary as also the Commissioner of Excise went into the said exercise
over again and found that the licensees were not only eligible therefor but
also fulfilled other conditions laid.down in the Rules. It is not in dispute that
the writ petitioners-Respondents, filed objections before the District Level
Committee. The said objections were rejected. Aggrieved by and dissatisfied C
therewith, the writ petitioners-Respondents filed a writ petition before the
Chhattisgarh High Court. The. State in the meanwhile issued a notification
effecting an amendment in Rule 9 of the Rules in terms of a notification
dated 22.3.2005.
PROCEEDINGS BEFORE THE HIGH COURT
D
In the writ petition, the following reliefs were prayed for:
"7.1. That, this Hon'ble Court may be pleased to send for the entire
records from the respondents and district committees in regard to the
compliance of the directions of the Hon'ble Supreme Court and E
observance of the statutory rules and all such other relevant and
complete record as are in their possession leading to the affirmation
of the selection of the select candidates.
7.2. The respondents 1 to 12 be directed to satisfy this Hon'ble Court
regarding the compliance of the mandatory directions as given by the F
Hon'ble Apex Court in the case of Ashok Lanka v. Rishi Dikshit.
7.3. That the Hon'ble Court may be pleased to issue a writ in the
nature of mandamus quashing and annulling the entire selection of
respondents 13 to 89 and also quashing the telllporary licences by G
issuing a writ in the nature of certiorari.
That, the Hon 'ble Court may be pleased to issue a writ in the
nature of mandamus commanding the respondents 1 to 12 to make
selection strictly in accordance with law, rules and the directions of
the Hon'ble Supreme Court, afresh.·
H
150
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A
7.4. That the contempt' proceedings be initiated against the respondents
2 to l2 for the non-compliance of the order of the Hon'ble Apex
Court."
B
c
D
were:
Before the High Court, the questions raised by the parties inter alia
(i)
(ii)
(iii)
The permanent addresses of the persons in whose favour licences
were granted were not property verified.
The temporary addresses given by them were wrong and in that
view of the matter scrutiny of their applications could not be
carried out.
Provisions of Rule 9(d)(iii) in terms whereof criminal anti.;cedents
not only of the applicants but also of their family members were
required to be verified, had not been complied with. According
to the State, however, there was no necessity to verify the criminal
background of the family members of the licensees as a mere
error had crept in the English version of the notification which
stood clarified by issuing another notification dated 5.7.2005.
Before the High Court, the parties produced a large number of
documents. It is not in dispute that 191 persons had been granted licences.
E Before the High Court, however, 65 licensees were made parties and 126
were not. The private respondents also filed their counter affidavits contending
that the allegations made in the writ petition were incorrect. Several instances
of alleged irregularities on the part of the District Level Committee in the
matter of proper scrutiny of the contents of the applications filed by the
F licensees had been brought on record. The. State appears to have filed
documents containing approximately 3000 pages in order to show that the
directions of this Court had been complied with, in letter and spirit. In reply
to the said counter affidavit, the writ petitioners filed a rejoinder to which we
shall refer to hereinafter. We may. however, notice that the State in purported
response to the said rejoinder affidavit filed by the writ petitioners filed an
G additional affidavit dealing with the contentions raised therein.
The High Court in its impugned judgment has noticed some of the
purported irregularities committed by the District Level Committees. Several
instances were brought to the notice of the High Court to show as to how and
in what manner the purported irregularities in the matter of selection of the
H licensees had been effected, allegedly as a result whereof the directions
ASHOK LENKA v. RISH! DIKSHIT (SINHA, .I.]
151
contained in this court's decision in As/wk Lanka and Anr. v. Rishi Dixit and A
Ors., (2005] 5 SCC 598 (Ashok Lanka - I) were flouted.
The High Court held:
"Thus, it is quite clear that respondents I to 12 have failed to carry
out the directions issued by the Supreme Court in the ma~ner expected B
of them and in conformity with the mandatory Rules 9 and 11 of the
Rules ... "
The High Court noticed the contents of the additional return filed by
the State oil 23.02.2006 but apparently the contents thereof had not been
taken into consideration on the ground that the same was by way of si.ir- C
rejoinder to the rejoinder filed by the writ petitioners and, as such, such
pleadings are impermissible without permission of the court. It was furthermore
held that in the said additional return, untenable defences were set up covering
.
'
.
-
.
;
up serious lapses committed by Respondent Nos. I to 12.
The High Court thereafter proceeded to cite examples in support of its D
findings. It was noticed that the official respondents wrongly placed the
burden of proof on the objectors like the writ petitioners to prove that the
applicants for grant of licences did not possess the prescribed eligibility, as
the writ petitioners objectors were not supposed to prove the negative facts
by producing evidence. The responsibility cast on the statutory authorities E .......
has, thus, been sought to be placed on the objectors which constituted a
serious flaw in the enquiry vitiating the selection process.
Before the High Court, a chart was produced by the writ petitioners
showing common addresses of a number of licensees. The High Court in
detail noticed the findings of this Court and opined that the State and its F
officers failed to comply therewith and, furthermore, flouted the mandatory
provisions of Rules 9 and 11.
As regards the purported clarification made by the State in respect of
the variation in the Hindi version of Rule 3 and the English version thereof,
it was held:
G
(i)
The State and its officers were bound by the decisions of this
Court.
(ii) The English version shall prevail over the Hindi version, and
H
152
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A
(iii) In any event, there is no conflict between the English version
and the Hindi version.
On the aforementioned premise, holding that licences were illegally
granted to the Respondent Nos. 13 to 89 of the writ petition, it was directed:
B
'' ... The respondents 13 to 89 who has the beneficiaries of the illegal
acts of respondent No. I to 12 cannot be allowed to have the continued
benefits of wrong-doing of respondents I to 12 till the term of the
licences comes to an end."
On the aforementioned premise, the writ petitions filed by the contesting
C respondents herein were allowed.
SUBMISSIONS
We have heard a large number of counsel in support of these appeals.
Mr. Ashok Desai, Mr. Sunderam, Mr. Dushyant Dave, Mr. Mukul Rohtagi,
D Mr. C.S. Vaidyanathan and Mr. Ranjit Kumar appearing on behalf of successful
licensees submitted:
E
F
G
H
(i)
The High Court committed a manifest error insofar as it failed
to take into consideration that the compliance of this Court's
order was not carried out with utmost diligence.
(ii) Rule 8 does not envisage that a resident of a State other than the
State of Chhattisgarh was not eligible for filing application for
grant of licence and only in some cases temporary addresses had
been given only for the purpose of postal communications.
(iii) As regards compliance of Rules 9 and 11, the age of the candidates
was verified from documents such as driving licence, election ID
Card, PAN Card, telephone bills, electricity bills, ration cards,
residence certificates issued by competent authorities, birth
certificates, school certificate, etc.
(iv) In cases where more than one document had been submitted, the
Selection Committee satisfied itself as regards the correctness
thereof from any of the said documents. As, for example, when
a certificate in proof of residence had not been issued by an
authority competent therefor, other documents such as driving
licence, PAN Card, Election ID Card were taken into
consideration.
AS HOK LENKA v. RISH! DIKSHIT [SINHA, J.]
153
(v) The High Court, in arriving at the conclusion as regards purported A
non-compliance of the rules, failed to notice various documents
and drew inferences which were contrary to the records.
(vi) So far as the alleged non-compliance of Rule 9(c) of the Rules
is concerned, a consolidated list of defaulters along with their
complete addresses was available with all the licensing authorities B
and the same had been relied upon while scrutinizing the various
applications.
(vii) As regards, alleged compliance of Rule 9(d) of the Rules, it was
submitted that the Superintendent of Police of the respective
districts where the applicant was a resident of more than one C
district and one State had issued character certificates.
(viii) In terms of Rule 12, in the case where there had been multiplicity
of applications, a lottery was held which was completely above
board being a computer generated programme operated by a
Central Government organization, viz. National Informatics D
Centre.
(ix) The High Court had wrongly held that certificates were to be
granted only by the Revenue Authorities of Chhattisgarh inasmuch
as nothing in· the excise rules or the decision of this Court
precluded a person who is resident of another State from applying E
for and obtaining a liquor licence.
(x) The requirements of the Rules being that the applicant should be
a citizen of India and above the age of21, the certificates granted,
as also character certificates, issued by the. Superintendents of
Police of their respective Districts met the requirements of the F
Rules.
(xi) Licences of some of the licensees could not have been directed
to be cancelled on the basis of purported irregularities committed
by the District Level Committee in respect of those who were
not parties to the writ petition.
(xii) Since many of the applicants were not permanent residents of
the State they had merely given a temporary address along with
the permanent address and only for that reason there had been
overlapping of addresses.
G
(xiii)The High Court having not held the whole selection process to H
154
A
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
be bad in law, no situation arose requiring cancellation of the
entire set of licenses. The High Court was required to identify
the cases whose requirements of law had not been complied with
and only in such cases, the licensees could have been directed to
be revoked.
B
(xiv) In view of the directions contained in Para 40 of this Court's
judgment in Ashok Lanka - I (supra), the onus of proof, being on
the writ petitioners, the High Court committed a mistake in
holding that the burden of proof had been wrongly thrown on
the objectors.
C
(xv) The findings of the High Court as regards purported nonD
compliance of the directions of this Court by the State is based
on a wrong premise as for example, in the case of Abhay Singh,
although the High Court proceeded on the basis that he is a fake
person, no objection in this behalf was taken by the writ petitioners
before the District Level Committees.
Mr. Srivastava, learned counsel appearing on behalf of the writ
petitioners, however, has drawn our attention to several instances showing
how the age of some of the applicants for grant of licences had been verified
only on the basis of the certificate issued by a doctor or a dental surgeon
which could not be held to be valid proof therefor. In some cases, only
E dwelling certificates had been produced by way of proof of residence which
again could not have been considered to be valid proof having not been
certified by any statutory or public authority. In view of the admitted fact that
several persons have shown the same addresses, fictitious persons might have
been granted licences.
F
STATUTORY PROVISIONS
The Act was enacted to consolidate and amend the Excise Law in the
State of Chhattisgarh. Section 7(e) of the Act provides that the State
Government may, by notification, for the whole or for any specified part of
G the State, delegate to the Chief Revenue Authority or the Excise Commissioner
all or any of its powers under the said Act except the power conferred by
Section 62 to make rules.
H
Rule 4 provide:; for fonnation of groups of liquor shops; clause (iii)
whereof prohibits an applicant/finn/company from obtaining licences for more
ASHOK LENKA v. RISH! DIKSHIT [SINHA, J.]
155
than two groups of shops. Rule 5 provides for the period of licence which A
would be for an excise year or part thereof.
Rules "6 and 7 of the Rules read as under:
"6. Application fee with application
The application fee with the application for licence of groups of
· liquor shops shall be as shown in the table below
.. - .
B
S.No.
Reserve Price of the group
Prescribed
I.
2;
3.
application fee
. '•·
For group of shops of Rs. 5 lakh to I crore
Rs. 1,000/-
..
·For group of shops of Rs. I crore to 2 crore
Rs. 3,000/-
For group of shops of Rs. 2 crore to 8 crore
Rs. s,0001The amount of application fee will neither be adjustable in licence
fee nor the amount will be refondable in case of not granting the
licence.
7.
Issue of licence for liquor shops -
The licence.s for liquor shops shall be issued by the licensing
authority on deposit of the security amount and licence fee for the
month of advance by the licensee."
c
E
Rule 8 provides for procedure for grant of licence, which reads as
unqer:
F
"8. 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 this
purpos.e after giving wide publicity through daily newspapers having G
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,
security" amount, and annual quantity in office of Collector, Tehsil, H
156
SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
A
District Excise Officer/Assistant Commissioner, Excise and Deputy
Commissioner, Excise (Flying Squad).
B
(c) Application for grant of licence 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
\le earlier than ten days with effect from the date of publication of the
advertisement in the newspapers."
Rule 9 provides that the applicant shall affirm an affidavit as regards
C the matters specified therein. It reads as under:
D
"9. Eligibility conditions for applicant-The applicant has to fulfill
the following conditions for obtaining the licence for shop/ group of
shops of Country/foreign liquor.
(a) Should be a citizen of India or a partnership firm whose partners
are citizen of India. No change in partnership shall be allowed
after settlement of shop(s) groups of shops except with the
permission of the Excise Commissioner.
(b) Shou Id be above 21 years of age.
E
( c) Should not be defaulter/ blacklisted or debarred from holding an
F
G
H
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 -
( 1) That he possessed or has an arrangement for taking on rent
suitable premises in that locality for opening the shops in
accordance with the rules.
(2) That he possess 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
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
,.
ASHOK LENKA v. RISH! DIKSHIT [SINHA, J.]
157
of which he is the resident, showing that he as well as his A
family members 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 salesmen or representative
who has criminal background as mentioned in clause (iii) or B
who suffer from any infectious or contagious disease or is
below 21 years of age or a woman.
(5) That no government dues are outstanding against him."
Rule I 0 envisages formation of a district-level committee; whereas C
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 D
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 prescribed 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.
E
( c) In case there is no application for a particular group of shops or
no applicant is found suitable for a group of shops the licensing
authority shall take immediate steps· for resettlement as per procedure
laid down in Rule 8."
Rule 12 reads as under:
F
"12. Statement of settled shops-A statement of the settled shops
alongwith names and address of the licensees, shop wise annual
quantity, details of security amount and licence fee deposited shall be G
sent by the District Excise Officer/ Assistant Commissioner Excise to
the Excise Commissioner within 15 days of the settlement."
Rule 13 provides for payment oflicence fee and security amount, which
reads as under:
"13. Payment oflicence fee and security amount.-In case an applicant H
A
B
c
158
SUPREME COURT REPORTS 120061 SUPP. I S.C.R.
is selected as licensee, he shall deposit one month's amount of licence
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
fee and security amount within prescribed period, his selection shall
stand cancelled and the said licensee shal I be debarred from holding
any excise licence in future, anywhere in the State and his application
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
Commissioner, who will circulate the consolidated list of the State to
all the licensing authorities of the State."
CONSTITUTIONAL SCHEME
When a law is made, having regard to the phraseology used in Part IV
of the Constitution of India, it is expected that law made or actions taken
would be in furtherance thereof. In terms of the Directive Principles of State
D Policy, the State is bound to make endeavours to promote public health
which is one of its primary duties of the State. One important component of
the said directions was regulation and control over the trade in intoxicating
drinks so as to enable the State to curb or minimize, as far as possible, the
consumption thereof. The State may or may not prohibit manufacture, sale or
consumption of liquor but it is vital that while parting with its exclusive
E privilege to deal with intoxicating liquor, the provisions of the Act and the
Rules for which the same had been enacted must be strictly complied with.
The Act and the Rules deal only with control and regulations. There
was no provision which gives any discretion to the authorities concerned to
F relax the provisions of the Rules. The Rules in this behalf again must be
framed upon taking into consideration of all relevant factors. The State in
making the rules and formuiating the policy decisions must be guided by
public interest. In such matters, the State has a positive obligation to ensure
that any activity contemplated, strictly conforms to the requirements of public
good and is not otherwise derogative of public health. The State parts with
G its exclusive privilege on certain statutory conditions such as payment of
excise fee. When it lays down criteria for selection of persons who would
become qualified for grant of licence under the Act, not only the> eligibility
criteria therefor should be laid down, but having regard to its past experience
as to how and in what manner, the licensees find means and methods to
H circumvent the said provisions, all endeavours should be made to plug all
ASHOK LENKA v. RISHI DIKSHIT [SINHA, J.]
159
loopholes. The State has an extremely solemn obligation to fulfil in that A
behalf. All information supplied by the applicants for licences, thus, must
undergo and satisfy the 'strict scrutiny test'. The State should not treat its
right of parting with its privile$e only as a means of earning more and more
revenue. It may certainly earn revenue but only upon fulfillment of .its
constitutional and statutory obligations. There exists a strong underlying notion B
of public health and welfare when the matter comes to retention of the
exclusive privilege and/ or parting therewith either in whole or in part.
Inception of Article 47
Article 47 of the Constitution of India reads as under:
"The State shall regard the raising of the level of nutrition and the
standard of living of its people and the improvement of public health
as among its primary duties and, in particular, the State shall endeavour
c
to bring about prohibition of the consumption except for medicinal
purposes of intoxicating drinks and of drugs which are injurious to . D
health."
The importance of Article 4 7 of the Constitution of India may have to
be noticed tracing the history back from the date of constitutional debate.
With a view to find out the intent and purport for which the said provision
was inserted, Shri H.M. Seervai in his treatise, Constitutional Law of India, E
VoLII, 4th Ed. p.2012 noticed that all sections of the society including.the
Mohammadan community, whose social habits were reinforced by the Koranic
injunction in relation to intoxicating liquor, supported the insertion of such
a provision. The learned Author stated:
"The prohibition of intoxicating liquor had long been a part of the F
policy of the Indian National Congress; and its inclusion in Art. 47
received support fr.om the Mohammedan community .whose social
habits were reinforced by the Koranic injunction against intoxicating
liquor. In considering the directive in Art.