# CHINGLEPUT BOTTLERS v. MAJESTIC BOTTLING COMPANY

- **Citation:** [1984] 3 S.C.R. 190
- **Court:** Supreme Court of India
- **Decided:** 1984-03-15
- **Case number:** Civil Appeals Nos. 1 1970-, ·; 11972of1983
- **Bench:** P. SEN ANn•A. VARADARMAN
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chingleput-bottlers-v-majestic-bottling-company-8748
- **Pages:** 26

## Headnote

Constitution of lndia-4rt. 226-High Court's Jurisdiction .to issue writ of
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mandamus in cases where duty sought tq be enforced is-of discretz'onary nature.
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Natufal Justice-Applicaiion of rules of natural justice to case$ which relate
not to rights but to mere privile'Ces of licences.
Tamil Nada Arrai:k (Manuff(lcture) Rules, 1981-R. 7-Commissioner has no
legal duty tO grant /icence-ApprovQl of State_ Government is a pre-requisite for
grant of licence-High Court cannot com]lf!l gr~n/ of licence by Commissioner by
issuing writ of mandamus.
. .
On the surrender oft.he licence for the manufacture and supply of bottled
arrack for the Chingleput District for the financial year 1982·83 by the then
existing licensee, the C.Ommissioner of ProJ:iibition and Excise called for fresh·
appliJ;atiOns from intending persons for the grant of licence 'under the Tamil
Nadu Arrack (Manufacture) Rules, 1981 framed under the Tamil Nadu Prohibition Act, 1937. Two firms, namely, Majestic. Bottling Company and
Chingleput·Bottlers, filed there applications and an enquiry with regard to them
was held by the .. Assistant Commissioner. The Comniissioner considered the
report of enquiry, gave a separate oral hearing to the two applicants and passed
an order rejecting both the applications. As regard_s Majestic Bottling Company
the Commissioner held that they did not satisfy the requirements of rr. 5(a) and
S(e). In the case of Chingleput Bottlers,. he held that they did not satisfy the
. requirements of rr. S(a), S(c) and S(e). While recording the finding in respcc(
of CbingJCpU.t Bottlers, the CommissiOner. rCiied on a: report of the Collector and
other material gathered by him during the. course of the enquiry, which included ·
a ·representation. froq-i Majestic Bottling ComPany against the application of
Chingleput Bottlers. Both the applicants filed petitipns under Article 226 of the
Constitut~on questioning the orders passed. by the Commissioner.
.
A Single judge Of the High O?urt .issued a writ of certiorari quashing the
order· of the Commissioner insofar as he rejected the application of Majestic
Botfling Company an4 also issued ;{w.rit of miindamμs ordaining the' Commis~
sioner tO grant the licen~ to Majestic Bottling Company. As regards ChingJeput
Bottiers, the Single Judge rejec~ed their· Contention that tpe Commissioner had
acted in breach of rules of natural justice by ·his failure -to furnish them the
report .of the Collector and Observed that nothing pre~luded them from seeking
ven1s~l of. the records or from ~~king a demand for a copy of th~ sam~.
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CHINGLEPUT BOTTLERS v. MAJESTIC BOTTLiNG
191
~oth the' applicants preferred appeals to t11e D_ivision Bench. The State
Government which Was in pOssession of material adverse to the two partners· of ·
' Majestic Bott.ling Compriny did iiot initially file a ~eparate counter affidavit but
only di~ so at the conciusion of the hearing. The Division Bench ruled that the
order passed by the Commissioner must be adjud'ged by the reasons stated by
him and those reasons cannot be supp1emented by fresh reasons provided by the
State Government in its belated affidavit and upheld the judgment of the Single
Judge.
The State Government and piingleput. Traders filed appeals against the
jridgm~nt of the Division Bench.
It was contended on behalf· of the. State Government that the grant of
licence under r: 7 was.subject to the prior approval of the State Government,
that if the High Court- was satisfied that the impugned order of the Commis·
sioner. was liable to be quashed on the grouncf: that there was an error apparent
on the face of the record, the proper course for it to adopt was to issue a writ
of mandamus to the Commissioner t"ff re-determine the question of gra11t Or such
priviICge and . that. the High Court had nO power to fssue a writ of mandamus
directing the Commissioner .to grant the Jicence in favour of lvlajestic Bottling ·
Company:
It was cpntended on behal

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190
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CHINGLEPUT BOTTLERS
v.
MAJESTIC BOTTLING COMPANY
B
March 15, 1984
[A,P. SEN ANn•A. VARADARMAN, JJ.]
Constitution of lndia-4rt. 226-High Court's Jurisdiction .to issue writ of
·c
mandamus in cases where duty sought tq be enforced is-of discretz'onary nature.
D
E
F
G
.H
Natufal Justice-Applicaiion of rules of natural justice to case$ which relate
not to rights but to mere privile'Ces of licences.
Tamil Nada Arrai:k (Manuff(lcture) Rules, 1981-R. 7-Commissioner has no
legal duty tO grant /icence-ApprovQl of State_ Government is a pre-requisite for
grant of licence-High Court cannot com]lf!l gr~n/ of licence by Commissioner by
issuing writ of mandamus.
. .
On the surrender oft.he licence for the manufacture and supply of bottled
arrack for the Chingleput District for the financial year 1982·83 by the then
existing licensee, the C.Ommissioner of ProJ:iibition and Excise called for fresh·
appliJ;atiOns from intending persons for the grant of licence 'under the Tamil
Nadu Arrack (Manufacture) Rules, 1981 framed under the Tamil Nadu Prohibition Act, 1937. Two firms, namely, Majestic. Bottling Company and
Chingleput·Bottlers, filed there applications and an enquiry with regard to them
was held by the .. Assistant Commissioner. The Comniissioner considered the
report of enquiry, gave a separate oral hearing to the two applicants and passed
an order rejecting both the applications. As regard_s Majestic Bottling Company
the Commissioner held that they did not satisfy the requirements of rr. 5(a) and
S(e). In the case of Chingleput Bottlers,. he held that they did not satisfy the
. requirements of rr. S(a), S(c) and S(e). While recording the finding in respcc(
of CbingJCpU.t Bottlers, the CommissiOner. rCiied on a: report of the Collector and
other material gathered by him during the. course of the enquiry, which included ·
a ·representation. froq-i Majestic Bottling ComPany against the application of
Chingleput Bottlers. Both the applicants filed petitipns under Article 226 of the
Constitut~on questioning the orders passed. by the Commissioner.
.
A Single judge Of the High O?urt .issued a writ of certiorari quashing the
order· of the Commissioner insofar as he rejected the application of Majestic
Botfling Company an4 also issued ;{w.rit of miindamμs ordaining the' Commis~
sioner tO grant the licen~ to Majestic Bottling Company. As regards ChingJeput
Bottiers, the Single Judge rejec~ed their· Contention that tpe Commissioner had
acted in breach of rules of natural justice by ·his failure -to furnish them the
report .of the Collector and Observed that nothing pre~luded them from seeking
ven1s~l of. the records or from ~~king a demand for a copy of th~ sam~.
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CHINGLEPUT BOTTLERS v. MAJESTIC BOTTLiNG
191
~oth the' applicants preferred appeals to t11e D_ivision Bench. The State
Government which Was in pOssession of material adverse to the two partners· of ·
' Majestic Bott.ling Compriny did iiot initially file a ~eparate counter affidavit but
only di~ so at the conciusion of the hearing. The Division Bench ruled that the
order passed by the Commissioner must be adjud'ged by the reasons stated by
him and those reasons cannot be supp1emented by fresh reasons provided by the
State Government in its belated affidavit and upheld the judgment of the Single
Judge.
The State Government and piingleput. Traders filed appeals against the
jridgm~nt of the Division Bench.
It was contended on behalf· of the. State Government that the grant of
licence under r: 7 was.subject to the prior approval of the State Government,
that if the High Court- was satisfied that the impugned order of the Commis·
sioner. was liable to be quashed on the grouncf: that there was an error apparent
on the face of the record, the proper course for it to adopt was to issue a writ
of mandamus to the Commissioner t"ff re-determine the question of gra11t Or such
priviICge and . that. the High Court had nO power to fssue a writ of mandamus
directing the Commissioner .to grant the Jicence in favour of lvlajestic Bottling ·
Company:
It was cpntended on behalf of Ching1eput Bottlers that the ·Commissioner
had acted in breach of rules of na:turaI jusliee in not furnishing them a copy of
the report submitted by the Collector and _other material gathered by hi~ during
the course of the enquiry.
Allowing the appeal of th'e State Government and disniissing the appeal Of
Chingleput Bottlers.
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HELD : 1. No mandamus wil1 lie where the duty sought to be enforced is
of a discretionary nature nor wi_ll a rnandamus issue to compel th! performance
by a public body or authority of an act contrary to law. [!98H-!99A]
(a) In the instant case the Commissioner was under no legal duty to graht
a licence to Majestic Bottling Company ti11 he received the prior. approval of the
State Government under r. 7. Even assuming that the Commissioner recommended the grant of a li~ence to them under f· 7, the State Government were
.under no compulsion to grant such prior approval.
Th~ grant or refusal of such
licence was e~tirely in.the discretion of the State Government. The High Court
had no jurisdiction to issue a writ of mandamus to the_ Commissioner to grant a
l~cence to Majestic Bottling Company contrary to the provisions of r. 7.
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(199A-C] •
de Smith : Judicial Review of Administrative Acti~n, 4th Ed. pp. 341 and
5~ ;•H.W.R. Wade: Administrative Law, 5th ed. p. 638; referred to.
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(b? Absence of a specific plea in the natμre of demurrer wo~ld not.invest
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the H1~h. Court with jurisd~ction_ to issue a writ of mandamlJ,J ordaining the
~omm1&S1oner to ~ant a hcen~e un~er ;. 7 without the prior •rproval of the
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SUPREME COURT REPORTS
(1984] 3 S.C.R.
State Government w~ic~ is a condition pre-.reqUisite for the grant of such
p~ivi·,
Iege. The Hjgh Court was u·nduly technical in applying the rul6s of pleading
and short·circuited the whole procedure upon a wrongful assumption of itS own
power~. The view taken ?Y it is manifestly erronCous; ·otherwise, the statutory
requirements of such prior approval of the S.tate Government under r. 7 would
be rendered wholly otiose. [20!CE]
K.N. Guruswamy v. State of Mysore, [1955] 1 S C.R. 305; and P: ·Bhooma
Reddy v. Staie of Mysore, [1969] 3 S.C:R. 14; distinguished .
.
(c) It is not possible to accept the contention that no useful pur~ose would
have been serVed by the High Court remitting the matter for the reconsideration
of the Commissioner sinte it hacJ already found that all the reasons that could
.be given for upholding the validity of the ·commissioner's order were bad and
unsustainable. This· was not a case where it could be said tb~t there was
nothing for the. State Government to consider while examining the question
whether it should accord or." refuse prior approval to the. grant of licence to
Majestic.Brittling Com.pany under r. 7. One .of the .relevant factors that the
State Government had to t;:ike into consideration was whethe; the partners of
that Company were persons who would abide by the provisions· of the Act and
the rules. 'I:he facts d,isclosed 'in the counter affidavit of the State Government
lay a-serious charge against the partners of that Company and it \vas permissible
for "the .State Government to take those facts as justification for refusal to. grant
prior 'approval under r. 7. [202C,'203A-B, E-F]
( d) The proper course for- the High Court to adopt was to issue a writ of
mandamu1 directing the Commissioner to redeterffiine the Question after
following the procedure of r. 7 and in case ·he ca&te to a decision .to grant· the
ti~nce in favour of Majestic Bottling Company, to refer the matter to the State
Oovemment for its prior approval. [206A-B]
Mis Hochtief Gammon v. Stateof-Orissa, [1976] l S.C.R. 667; Pad/ieldv.
Minister of Agriculture, Fisheries and Fodd, L.R. [1968] A.C. 997: referred to.
•
Gujarat State Financial Corpn. v. M/s. Lotus Hotels Pvt. Ltd., [1983] 3
· s.c.c. 379; distingl\ished.
State of Tamil Nadu v. C. Vadiappan, [1982] 2 Mad. L.J. 30; and K.
Ramaswamy v. Government of Tamif. Nadu (Writ App.eat No. 368of1981);
overruled.
2. It iS a fundamental rule of law that no decision •ust be taken . which
Will affect the rights of any perSon- without first giving him an.opportuD.ity of
putting forward. his case. Strict adherence to the rules of naturai justice is
requi~ed- where a public authority or body has to deal with rights. The audi
alteram· .partem rule may -not apply to cases which relate not to rights or legal
expectation· but to mere privilege or licence. An authority or body need not
observe the ruleS of natural justice where its·, decision, although
fin<il~ relates
not to a 'right' but to a 'privilege' or· 'licence'. All that is emphasised in s:uctj
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CWINGLEPUT BOTTLERS v. MAJESTic BOTTLiNG
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Cases is that the applicatibns for grant of privilege or licence must be considered
fairly.
There are no inflexible rules of natural justice of universal application.
Each case depends on its own Circumstances. Rules of natU.ral justice vary with
the varying constitutions of statutory bodies and the rules prescribed by the
legislature under whi~h they have to act. [209C-D-G, 213D-E-G]
'The right to know the case to be met docis not necessarily involve any right
to know the source of adverse information or to confront the informants, for, in
some cases it. wou Id be quite proper for the authority to emJ?IoY confidential
sources. [210B-C]
Ridge v. Baldwin: L.R: [1964] A.C. 40 ; R. v. GaminK Board for Great
.
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Britain, [1970] 2 All E.R. 528; R. Surinder Singh Kanda v. Govanment of the
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Federation of Malaya, L-R. [1962] A.C. 322; Breen v. Amalgamated, Engineerinr
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Union, [1971] 2 Q.B. 175; Mac lnne. v. Onslow Fane & Anr., [1978] 3 All E.R.
211; l{ishanChand Arora v .. Commissioner of Police, [1961] 3 S.C.R. 135; and
Nakkuda ,\/Iv. M.F. De S. Jayaratne, L.R. [1951] A.C. 66. referred to.
3. In tbe i~t~nt case there is nothing in the language of r. 7 to sUggest
that in rCfusi~g to grant the privilege, the Corpmissioner is obliged to act
~judiciallY'· · The order refusing a licence undet r. 7 is purely. an administrative
or executive order f!.nd is not Open ·to appeal or revision. There is no /is between
, the Commissioner and the person who is refused such Privilege. ThC power of ·
refusal of licence unlike the power to grant is not subject to any pte-condition.
The grant-Of a liquor licence under r. ·7 'does ~bt involve any right or expectation ,
, but it is 3. matter of privilege. The Commissioner was· under _no obligation
either fo disclose the sources of information or the gist of the informatio·n that
he had. All that was required was that he should act fairly and deal \Vith the
applications. without any bias, _and not in an arbitrary or capricious manner.
The Commissioner was entitled to ~ct on the report of the Collector and also on
other material gathe~ed by him during the course of the enquify.
It~Cannot be ,
said that" the Commissioner in dealing with the app1icil.tions did not act fairly in
-not furnishing a copy of the report of the Collector or in taking a rePresentation
from Majesti~ Bottling Company. There is also no suggestion of any ma/ajides
on the part of the Commissioner or. the State Government.
[213G-H,'214A-B, C-E, G-H]
_J.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1 1970-,
·;
11972of1983
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Appeals by Special leave from the judgment and Order dated
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the 27th July, 1983 of the Madras High Court in W. A. Nt>s. 523,
531 & 528 of 1983.
K. K. Venugopa/ and C. S. Vaidyanathan for the Appellants in
CA-Nos. 1 1970-7118\.
Sahnti Bhushan, A. T. M. Sampath and Mr. K. Subramaniam
for the Respondents· in CA. Nos. 11970-71/83.
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SUPREME COURT REPORTS
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A. K. Sen an-d A. V. Rangam for the Appellant in CA. No.
11972of1983.
· Soli J. Sorabjee A. T.
M. Sampath and K. Subramantam
• for the Respondent in CA. 11972/83.
ihe Judgment of the Court was delivered by
SEN, J. These appeals by special leave directed against a judgment of a Division. Bench of the Madras High Court dated July 7,
i983 upholding the judgment and order ()f a learned Single Judge
· dated.June 13, 1983 relate to the grant of a licence for the manufacturing and supplying of bottled arrack to the wohlesale and. retail
licensees for the Chingleput district under r. 7 of the Tamil Nadu ·
Arrack(Manufacture) Rules, 1981 ('Rules', for short) framed under
the Tamil Nadn Prohibition Act, 1937 ('Act' for short). These
appeals raise separate' anq distinct questions and must therefore
receive separate consideration.
·Put very shortly, the essential facts are these. On May 28, 1982
one 0. H. Kumar carrying oniJusiness 11nder the name and style
of .Messrs Three Star Bottling Company surrendered his Iicene for
the mamifacture arid supply of bottled arrack for. the Chingleput
district for the financial year 1982-83. The Commissioner of Prohibition & Excise, Madras called for applications from intending
persons for the grant of the licence. fn response to the notice 'issued
by the Commissioner under r.3(2) of the Rules, 'there were two
applications filed under r.5 in Form 1, namely, by J. Balaji. managing partner of Messrs Majestic Bottling Company on June 9, 1982
anct"by V. Ramabadran, maiiaging partner of . Messrs Chingleput
Bottlers on June 14, 1982.~The Commissioner issued a questionnaire
and directed the Collector, Chingleput to have an . inquiry held as
regards the suitability of the applicants for the grant of a licence.
Pnrsuant thereto, the Collector had an inquiry held by the Assistant
Commissioner (Excise) which lasted for four days i.e. from June
·21 to June 24, 1982. Atter.the preliminary inquiry and field inspection m!de by the Assistant Commissioner (Excise), the Collector
forwarded his 'report dated July 2, 1982 to the Commissioner who
fixed July 5, 1982 for oral hearing of the parties.
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On July 5, 1982, the Commissioner &eparately heard both J.
Balaji and . V. Ramabadran. At the hearing, the Commissioner
rec<;>rded the statements of both J. Balaji and v. Ramaba.dra11 .in
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CHINGLEPUT BOTTLERS v. MAJESTIC BOTTLING (Sen, J.)
195
support of their respective claims. On July 31,1982 the Commissio·
ner passed an order rejceting both the applications. As regards
Messrs Majestic. Bottling Company, the Commissioner held. that
their application was in order but that they did not satisfy the
requirements of r. 5 (a) and (e) of the Rules. As to their suitability
under r. 5 (a), he found that though the partnership had been
formed prior to the date of the application i.e. on June 9, 1982
the firm actually got registered subsequent thereto on June 23, 1982
and therefore there was no valid partnership in. existence on June 14,
1982 i. e,. on the date of the filing of the application. As regards
r. S(e), be held that there was no water facility .in the lands owned
by the partnership firm. ·
As regafds Messrs Chingleput Bottlers, the Commissioner. held
that the application made by them was not in order because it was
not accompanied ·by a solvency certificate and that there was no
potable water available at the proposed site. ·He further held that
there was only one and a half feet water in the well at the site and
it was of poor quality. He also came to the conclusion that the
appHcation had not been made bona fide on behalf of the partnership
firm but as benami for others. The. Commisioner accordingly held
that Messrs Chingleput Bottlers did not fulfil the requriements of
r.• S(a), (c) and'(e) of the Rules.
The finding of the Commissioner that Messrs Chingleput
Bottlers were mere benamidars of 0. H. Kumar, the previous
licensee, was based on the report of the Collector and the other
material gathered by him during the course ef the inquiry.
Both Messrs Majestic Bottling Company and Messrs Chingle·
put Bottlers filed separate petitions under Art. 226 of the Constitu-
• tion before the High Court questioning the validity of the order
passed by the (;:ommissioner. By his judgment dated June 13, 1983
a learned Single Judge held that the Commissioner was not justified
in rejecting the application of Messrs Majestic Bottling Company on
a.wrongful assumption that they did not satisfy the requirement of
r. S(a) and (e) of the Rules. He held that the order was vitiated by
an error apparent on the face of the record inasmuch as J. · Balaji,
managing partner of Messrs Majestic Bottling Company had
produced record with regard to the availability ofwater.
The learned Single Judge however set aside the finding of
the Commissioner that th.~ appli~ation made by Messrs Chingleput
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SUPREME COURT REPORTS
[1984] 3 s.c.R.
Bottlers was not in order because it was not accompanied by a solvency certificate holding that non-production of a solvency certificate wonld not entail a dismissal ol the application on that Jlround
·alone, as also the finding with regard to non-availabiiity of water
. at the proposed site since. the blending unit of ~essrs Three Star .
Bottling Company was already functioning there. The learned Single
Judge rejected the contention of Messrs Chinglepnt Bottlers that
the Commissioner had acted in_breach of the rules of natural justice
by his failure to furnish the report of the Collectot obs<ll'Ving that
noth.ing precluded them . from seeking perusal' of' the records; nor
did they make a demand for it.
By his judgment, the learned Single Judge by the issue Qf a
writ of certiorari quashed the impugned ord~r of the Commissioner
- insofar as he rejected the application· made by .Messrs Majestic
Bottling Company on the ground that there was an error apparent
on the face of the record but instead of remitting the matter back
to the Commissioner to re-consider the question of grant of such
privilege, issued a writ of mandamus ordaining the Commissioner
to grant the licence to Messrs Majestic Bottling Company. He further uplteld the order of the Commissioner rejecting the application
of Messrs Chinglpet Bottlers for the grant of privilege on the ground
that they were mere benamidars of the. previous licensee. AMrieved
by the judgment of the learned Single Judge, both the State Govern- '
ment and Messrs Chingleput Bottlers preferred appeals under cf. · 15
of the Letters Patent. Upholding the judgment of the learned Single
• Jndge the learned Judge of \he Division Bench held ihat learned
Single Judge was justifiep not only in quashing the same but in'
issuing a writ of mandamus directing the Commissioner to grant
the licence in favour of Messrs Majestic Bottling Company without
the prior. approval the State Government under r. 7 of the Rules.
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Before proceeding further, we would like to mtntiOn that the
State Government did not file a separate counter. There was a
counter-affidavit filed by R. Lakshmanan, Joint Commissioner (IV), ..
Department of Prohibition & Excise, ·Madras on behalf of both the_
State Government as well as the Commissioner of Prohibition &
Excise seeking to support the impugned order passed by the Commis·
sioner. In addition to the grounds mentioned by the Commissioner'"
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for the refusal of the applications for grant of privilege, there was
an additional ground taken in paragraph 11 and it was alleged that
J. Balaji, managing partner of Messrs Majestic Bottling Company
. and his other partner Smt. Shanthi, who incidentally is also bis
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bi1NGLBPUf BOTTLERS v. MAJESTIC BOfrLING (Sen,!.)
197
mother were the two erstwhile directors of Messrs Dhana\akshmi
· Chemi~al Industries Private Limited, Ranipet up)o Novemb.er 26,
1980 and there was pr/ma facie evidence tltat the company had misused tbe large quantity of rectified spirit by diverting alcohol from
industries to arrack production and therefore they were persons not
likely to abide by the provisions of the Act and the Rules farmed
thereunder within the meaning of r.S(b); and this would have been a
relevant point to be taken into consideration by the State Government
in the matter of grant or refuMl of prior approval. under r. 7(1). It
was alleged that these two persons were directors during the afore
said period of misuse.
At the ccnclusion of the hearing of the appeals before the
High Court,. the State Government filed a supplementary affidavit
, of S. Ranganathan, Deputy Secretary to the State Government of
Tamil Nadu, Department of Prohibition & Excise furnishing further
and better particulars . of the alleged misuse of rectified spirit by
Messrs Dhanalakshmi Chemical Industries Private Limited which
.had put the. State. Government to a loss of revenue to the tune of
Rs. 2 crores. It was averred that inviostig~tion into the case was
almost complete and a p~osecution was about to be launched' against
the Company and its directors, includiPg J. Balaji and Smt. Shanthi,
the two partners of Messrs M,ajestic Bottling Company. Inasmuch as
no such abjection was taken before the learned Single Judge, the
learned Judges felt that it was not necessary for them to deal with
the facts brought out in t)le two counter-affidavits .. It appears that
the learned Advocate-General also did not press the ground at the
hearing of the appeals. The learned Judges held that the validity
of the impugned order passed by the Commissioner must be adjudged by the reasons stated by him and cannot be supplemented by
fresh reasons by the State Government in the shape of affidavit or.
otherwise.
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Ther• are really two questions that fall for determination.
The first is as to the jurisdiction of the High Court to iss\le a writ
of mandamus. It is said that the grant of licence under r.7 is subject
, to th~ prior approval of the ~late Government and is in thi discretion of the State Government. .The High Court is not the granting
authority and therefore had no power to issue a writ of mandamus
directing the Commissioner to grant a licence to Messrs Majestic
Bottling Company. The second question is whether the Commissioner acted in breach of the rules natural justice in not furnishing
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SUPREME COURT REPORTS
[1984] 3 s.c.R. ..
to Messrs Chingleput Bottlers a copy, of the report submitted by
the Collector and qther ma}erial gathered by him during the course
· of the inquiry tending to show th.at they were benamidars of one
. o.H. Kumar, the previous licensee. It is said that Messrs MaJestic
Bottling Company had at the separate hearing before the Commis-
.... sioner submitted a brief styled as a representation containing several
documents in·oppsition to the.application made by'Messrs Chingleput Bottlers on the ground that their application was benanii without furnishing a :copy of the ·same to them and this
must have
influenced the mind of the Commissioner. Even if the Commissioner
was not acting in a judicial o'r quasi judicial capacity,
he was
required to act fairly ... The rU!es of natural justice therefore required
. that Messrs Chiugleput Bottlers should not be deprived of this
business without knowing the case they had to meet. Both the ·questions that arise will have to be dealt with separately.
The first issue, as
'already indicated, raises a question of
prime importance and of some difficulty. It would therefore be
convenient, in the first instance, to deal with the appeal preferred by
the State Government.· It is urged that the High Court had no jurisdiction to issue a •writ of mandamus ordaining the Commissioner to
grant a lrcence to Messrs Chinglepl\t Bottlers under r.7 of the Rules
without the prior. approval of the State Government. It ~s said. that
although a writ of mandamus .may be a necessary adjunct to a writ
of certiorari, the proper course for the High Court to have adopted
was, if it was satisfied that the impugned ord~r of the Commissioner
was liable to be quashed insofar as he rejected the application made
by Messrs Majestic Bottling Company on the ground that there was
an error apparent on the face of the record, to have issued a writ of
mandamus Commissioner to ·redetermine the question as to the
grant of such privilege. Reliance is placed on de Smith's Judicial
Review of Administrative Yi.ction, 4th edn. at pp.341 and 5.f4. The.·
• contention must,. in our opinion. prevail.
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Iii order that a writ of mandamus may issue to compel the
Commtsioner to grant the licence, jt must be shown thai.under
the Act and the Rules framed thereunder there was a legal duty
imposed on the. Commissioner to issue a licence under r. 7 of the
Rules without the prior approvar·of the St.ate Government and that
Messrs Majestic Bottling Company had a corresponding legal right
for its enforcement. No . mandamus will lie where the duty sought
to be enforced is of a di~cretionary nature nor will a ·mandamus
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CltINGLEPUT BOTTLElls v. MAJESTIC BOTTLING (Se71, J.)
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issue to compel the performance by such public body or authority
of an act contrary to law. The Commissioner of Prohibition &
Excise was ifnder no legal duty to grant a licence to Messrs Majestic
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Bottling Company till he received the prior approval of the State
Government under r.7. Even assuming that the Commissioner
reommended the grant of a licence rt> them ;under r.7, the State
Government were under no compulsion to grant such prior approval.
The grant or refusal of such licence was entirely in the discretion of
the State Government. The High Court had no jurisdiction tll issue
a writ of Mandamus to the Commissioner t<l grant a licence to
Messrs Majestic Bottljng Company contrar' to the provisions of r.7
of the Rules.
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The learned Judges observed that in normal ci~cumstances
they would h(lve upheld the objection of the learned AdvocateGeneral as to the jurisdiction of the High Court to issue a writ of
mandamus, but in view· of the fact that the State Government had
chosen not to file a separate return. taking a specific plea that in
the event of a writ of certiorari being granted, the Court shou"id not
issue a writ of mandamus for the grant of licence since the grant or
refusal of licence was subject to ·the prior approval of the State
Government under r.7 of the Rules. The learned Judges accordingly
held that the learned Single Judge was justified in issuing a writ in
the nature of mandamus directing the Commissioner to issue a
licence in favour pf Ms:ssrs Majestic Bottliug Company in view· of
the fact that there were . only two applicants in the field and the
• application of Messrs Chingleput Bottlers having b~n rejected, the
State Government had no other option but to make .the grant in
favour of Messrs Majestic Bottling Company. Further, the learned
Judges observed that to sustain· the objection would be tantamount
to allowing the State Government to sit in appeal over the j~dgment
of the High Court. In substance, the learned Tudges were of the
. view that f~ilure of the State Government to take a specific.
plea as to jurisdiction precluded them from raising a question' as 'to
the jurisdiction of the High Court to issue a writ of mandamus.
We are afraid, we cannot accept this line of reasoning.
It is true that" sometimes it· is pfudent to couple a writ of
certiorari with a writ of mandamus to control the exercise of
discretionary power. The following illuminating passages from de
Smith's Judicial Review of Administrative Action, 4th edn. at pp.341
; and 544 pithily sum up the function of a writ of mandamus
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"It is now open to a court when granting certiorari to
·. remit the matter to the authority with a direction to recon'
' sider and to decide in a.ccordance with the findiugs of the
court. Apart from this, the role of the courts is limited to
ensuring that direction has been exercised f according to Jaw.
If, therefore, a party agg.rieved by the exercise of discretionary
power seeks an order of mandamus to compel the .authority
to determine the matter on the basis legally relevant considerations, the proper form of the mandamus will be one to hear
4
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and determine according. to Jaw ;· though by holding inad-
·missible the considerations on which the original decision was
based the court may 'indirectly indicate the. particular manner
in which the discretion ought ti!! be exercised. In practice the
frontier be~ween . control of legality and control of the actual
exercise of discretion remains indeterminate, for the courts are
sometimes observed to cross the boundaries that they have
set .to. their own jurisdiction."
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"The dnty to observe these basic principles of legality
in exercising a discretion is
unlike the "duty" to apply the
law correctly to. findings of fact, prima facie enforceable by
mandamus. Hence where an authority has misconceived or
misapplied its discretionary powers by exercising them for an
improper purpose, or capriciously, or on the _basis of irrelevant
considerations or without regard to relevant c.onsideratipns,
i.t will be deemed to hav.e failed to exercise its di;cretion or
. jurisdiction .at all or to have failed to hear and determine
according to law, al!d mandamus may issue to compel it to act
in accordance with the law."
Pr~fessor H.W.R .. Wade in his Administrative Law, 5th edn.
at p.638 also defines the purpose of a writ of mandamus in these
words:
"Mandamus is often used as· an adjunct to certiorari.
If a tribunal or authority acts in a matter where it ha.s no
power to act at all, .certiorari will quash the decision aud
prohibition will prevent further unlawful proceedings. If there
is power to act, but the power )s abμsed (as by hreach of
natural justice or error on the face of the record), certiorari
will quasli and mandamus may '. issue simultaneously to ·
require a proper rehearing.
An example is Board of Educa·
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lion v. Rice ll911] AC 179 cited elsewhere ; the Board's
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CliiNGLEPUT BOTTLERS v. MAJESTIC BOTTLING (Sen, i.)
20i
decision was ultra vtres since they had addressed their minds
to the wrong question ; consequently it was quashed by
certiorari and the Board were commanded by mandamus to
·determine the matter according to law, i.e. within the limits
indicated by the House of Lords."
In· our judgment, the High Coμrt exceeded its jurisdiction in
issuing a writ· of mandamus directing the Commission•:r to grant a
licence to Messrs Majestic Bottling Company without the prio"r
approval of the State Government as enjoined by r.7 of the Rules ..
The High Court was unduly technical in applying the rules of plead•
ings.
Absence ·of a specific plea in nature of demurrer would not
invest the High Court with jurisdiction to issue· a writ of mandamus
ordaining the Commissioner to grant a licen<e' to Messcrs Majestic .
. Bottl'tng Company under .r.7 of the Rules without the prior approval
·of the State Government which was a condition pre-requisite for the
grant of such privilege. It is regrettable that the High Court should
have short-circuited the whole procedure upon a wrongful assumption
of its own powers. The view taken by the High Court is manifestly
erroneous. Otherwise, the statutory . requirement of such prior
approval of the State Government under r.7 would be rendered
wholly otiose.
We should not be understood as laying down an inflexible
rule that the High Courts cannot, untler any circumstances, regulate
or control the manner of grant of a liquor licence by the issue of a
writ of mandamus. It would all depend upon the fktts and circum-
, stances as to whether the Hlgh Court should issue a wfit of mandamus .or not. The grant of a liquor licence is a matter of privilege. ·
II) the very nature of things, the grant of refusal of Jicen·ce is in the
discretion of the State Government. Normally, where the statute
vests a discretionary power llj)On an administrative authority, the
Court would not interfere with the exercise of such .discretion unless
it is mane with oblique motives or extraneous purposes or'upon
extraneous considerations. The present case does notfall within the ,
rule laid down in K. N. Guruswamy v. The State of MyNre & Ors.1
and P. Bhooma Reddy v. State of Mysore & Ors' The decisions in
Guruswamy's and Bhooma Reddy's cases are•both in consonance with
the well-settled principle that. the High Court can always issue a
(l) [1955] 1 SCR 305
(2) [1969] 3 SCR 14
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writ of madam us under Art. 226 of the Constitution against a public
authority to compel the performance of a public duty where such
·authority acts in violation of the law.
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It is urged on behalf of Messrs Majestic Bottling Company
placing reliance on the decision of the House of Lords in Padfield
v. Minister of Agriculture, Fisheries & Food1 and that of this Court
in Messrs Hochtief Gammon v. State· of Orissa &ldrs.2 following the
same that, no doubt where the reasons given are bad and the authority had not taken into consideration the relevant matters or real
grounds on which the order co.uld have been passed, the Court. can
direct the authority to reconsider the matter in the light of such
relevant m~ters. ~ufit was urged that ·no useful purpose would
b~ served in remitting lbe matter to the authority for reconsideration
where all the reasons that can be given for upholding the validity of
the order have been·found by the Court to be bad and unsustainable. ·
The .submission is that in such a case the Courts will not direct the
authority to refonsider the matter for, then there is nothing to .
reconsider but the Court will direct the authority to carry out what
it has by the impugned order refused to do. In Hochtief Gammon's
-case, this Court deduced the following principles from the decision
of House of Lords in Padfield';; case:
"The l!xecutive have to reach their decisions by taking
into account relevant .considerations. They should not refuse
to consider felevant matter no.r should they take into account
·wholly irrelevant or extraneous consideration. They should
not misdirect themselves on a point of law. Only sμch a decision will be lawfuf. The Courts have power to see that the
Executive acts lawfully. It is no answer to the exercise of that
power to say that. the Executive acted bona fide nor that they
have bestowed painstaking consideration. They cannot avoid
. scrutiny by courts by failing to give reasons. If they give
reasons and they are not good reasons, the court can direct
them to reconsider the matter in the light of relevant. matters
though the propriety, adequacy or satisfactory character of
these reasons may not be open to judicial scrutiny. Even if the
Executive .considers it inexpedient to exercise their powers
fhey should state their reasons and there must be;/ material to
show that they have considered all the relevant facts.
(I) LR [1968] AC 997
) · (1976] I SCR 667
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2b3
This was not a case where it coul'tl be said that there was noth·
ing for the State Government to consider as to whether should
accord or refuse prior approval to the gran~ of a licence to Messrs
Majestic Bottling Company under r. 7 of the Rules. The Commissioner by the impugned order rejected the applications for grant .of a
licence made by both Messrs Chingleput Bottlersfnd Messrs Majes·
tic Bottling Company and therefore the. stage was not reached. The
stage for the State Government to reconsider the matter of grant of
privilege under r. 7 would ,only ari~e when;. the commissioner makes
a recommendation for the grant of a licence. to Messrs Majestic Bottling Company. At that stage, the State Government would have to
consider whether they should accord prior approval for the grant 'of
such privilege to Messrs Majestic Bottjjpg Company having regard to
the matters specified in r. 5 of the Rules and the condilions set out in
r. 6(c), .in view of the further facts brought out in the supplementary
counter affidavit of Deputy Secretary to the State Government, Department of Prohibition•& Excise in support of the objection raised in
para 11 of the counter-affidavit. One of the relevant factors that the
State Government must, as they should, take into consideration is
, the suitability of Messrs Majestic Bottling Company for the graqt of
licehce as required under r. S(a) and !he other is whether J. Balaji,
the managing partner and Smt. Shanthi the other partner, were per·
sons who would abide by tlie provisisjons of the Act and the Rules
made thereunder as enjoined by).. S(b). The facts lay a serious
charge that Balaji, managing ~partner of Messrs Majestic Bottling
Company and his other partner Smt. Shanthi were directors of Messrs Dhanalakshmi Chemical Industries Private Limited, Ranipet
upto November 26, 1980 and that there was prima facie evidence
showing that the company had misused the rectified spirit issued to
it causing a loss of revenue to the State Government to the tune elf
Rupees two crores or thereabout. It would be permissible for the
State Government to take these facts as justification for refusal to
grant prior approval under r. 7 of the Rules.
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In Foming to the conclusion they did~ the learned Judges have
drawn ·sustenance from the decision of this Court in Gujarat State
Financial Corporation v. Messrs Lotus Hotels Private Limitedl and
of the High Court in the State of Tamil Nadu & Anr. v. C. Vadiappan' in support of the view that the High Court had jurisdiction .to
issue a writ of mandamus directing the State of Tamil Nadu and
(!) (1983] 3 s.c.c. 379
(2) (1982] 2 Mad. L.J. 30
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· the Commissfoner of Prohibitit'm & Excise to grant the privilege for
the manufacture and supply of bottled arrack to Messrs Majestic .
Bottling Company for tbe Chingleput district under r. 7 of the
Rules .. The decision in Gu}wat Stat~ Financial Corporation's case .
(supra) is clearly distinguishable and is not an authority for any such .
proposition. No;;uch questiou arose in that case at al1. There, the
Court was dealing with a contract entered into by the Guja~at State
. Financial Corporation with Messrs Lotus Hotels Private Limited for
the purpose of setting up a 4-star hotel. The Company ·approached
the Corporation for a loan.of rupees 30 !akhs and· the Corporation
sanctioned a loan of Rs. 29.93 lakhs on certain terms and conditions
wl'tich the Company accepted. The Corporation however finally
resolved not to disburse the lo~n to the Company whereupon the
Company moved Gujarat High Court by a petition under Act. 226
for the issue of a writ of mandamus to ·direct the Corporation to
disburse the loan. A learned Single Judge of the High Court issued
the writ as prayed for and it was confirme<\ by• a Division Bench. ·.
On appeal by the Corporation, this writ Court held that the High
Court was justified.in issuing the writ of .mandamus. The decision
in G,ujarμt State Financial·Corporation's case, (supra) turned on .the
doctrine of promissory estoppel and it does not justify the conclusion reached by the learned ludges· in the present· case for the issue
of a writ of mandamus. It is needless to ·stress that if the require-
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ment of law was that the advance of loan to be sanctioned by the
Gujarat State Financial Corporation was to be subject to the prfor.
approval of the Reserve Bank of India, the decision of the Court·
would have been otherwise.
It is difficult to subscribe to the doctrine evolved by the High
Court in Vadiappan's case, (supra) that 'the Commissioner is the 'sole.
arbiter' under r. 7 of the Rules. It relied upon the earlier deci&ion
of the High Court in K. Ramaswamy v. Government of Tam ii Nadu
& Ors' laying down that .the proviso to r. 6 of the Tamil Nadu
Arrack (Supply by Wholesale) Rules, 1981 ·had to be understood
strictly ill a negative sen~. According to the High Court, at best it
confers.on the Government a power to .vefo.