# STATE OF MADHYA PRADESH & ORS v. NANDLAL JAISWAL & ORS

- **Citation:** [1987] 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1986-03-31
- **Case number:** Civil Appeal Nos. D 1622-39 of 1986
- **Bench:** P.'I. BHAGWATI C.J.l, V. Khalid
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madhya-pradesh-ors-v-nandlal-jaiswal-ors-9341
- **Pages:** 67

## Headnote

Madhya Pradesh Excise Act, 19I5, sections 13, 14 and 62(2)(h)
read with Rule XXll of the Madhya Pradesh Excise Rules and Rules Ill
to V of Distillery Warehouse Rules. Scope of-Disposal of licences of
manufacture or sale of intoxicants-Whether it was obligatory on the
part of the competent authority to adopt the "tender method" failing
which the "auction'', failing which again by fixed licence fee method
- .and so on as prescribed in Ruic XXJf.
Licences-Grant of D-2 licences as per the policy decision of the
Government of Madhya Pradesh-Whether the licence granted create a
monopoly in favour of the licencees.
Policy decision of the State to privitise the liquor distilleries after
careful consideration of all the facts emanating from the application of
the Madhya Pradesh Distilleries Association-Whether the High Court
could bifurcate it into two and strike down one part of the policy as bad.
"Industries (De;•elopment and Regulation) Act, 1951, Section 11-
. Whether non-obtaining a licence from the Central Government disentitled the setting up distilleries·-Such a plea not taken in the High
Court-Supreme Court will not cor1$ider a new plea in an appeal under
Article I 36 of the Constitution.
Constitution of India, I950, Article 14--Applicabi/ity a/-
Whether will apply to grant of liquor licences.
Laches in filing writ petition after the implementation of the policy
decision dated 30.I2.84--Seven licences acted upon and spent at least I
to 5 crores and altered their position-Whether a writ could be granted.
Practice and Procedure-Judgment writing,Objectionable remarks should be avoided-If any, be expunged.
A
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Madhya Pradesh Excise Act, 1915 regulates the manufacture, sale
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and possession of intoxicating Uquor in the State of Madhya Prad ....
2
SUPREME COURT REPORTS
[1987] 1 S.C.R.
A Section 14 deals with the establishment or licensing of distilleries and
warehouses. The State Government has, in exercise of the power conferre under section 62, made several sets of Rules. Rule II of the Rules
of General Application made inter alia under sub-section 2(h) of section
62 lays down "live years" as the maximum period for which wholesale
licences for the manufacture supply and sale of liquor could be granted
B Rule XXII provides .for the manner in which licences for the manufacture or sale of intoxicants shall be disposed.
There were at all material times in the State of Madhya Pradesh
nine distilleries for the man11facture of spirit which were established
long back by the State Government under a licence issued by the E'xcise
C Commissioner. These nine distilleries were located at Gwalior, Ujjain,
Dhar Badwaha, Chhatisgarh, Bhopal, Seoni, Nowgaon (owned by private individuals always) and Ratlam (owned by the Government). So
far as the first seven distilleries are concerned, the land and buildings in
which they were housed belonged to the State Government and originally the plant and mach'.nery also belonged to the State Government
D but in course of time successive holders of the D-2 licences in respect of
these distilleries replaced the .Plant and machinery. The practice followed by the Excise Department in regard to the working of these
distilleries was to invite tenders for the wholesale supply of country
liquor from these distilleries and the tenderers were requested to quote
their rates for the wholesale supply of country liquor to the State
i: Government. Normally the lowest tenders were accepted but at times
the State Government used to accept even higher tenders taking various
relevant factors into account. The State of Madhya Pradesh was devided in· several areas and a particular area was attached to each distillery for the wholesale supply of cuuntry liquor in that area. The person
whose tender was accepted for any particular distillery was given a D-2
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licence for working the distillery and also a D-1 licence for wholesale
supply of country liquor manufactured in that distillery to retail vendors in the area attac

## Text

_Characters 0–39,417 of 179,013. This is a partial read: ask again with offset=39417 for what follows._

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STATE OF MADHYA PRADESH & ORS.
v.
NANDLAL JAISWAL & ORS.
OCTOBER 2~, 1986
[P.'I. BHAGWATI C.J.l. AND. V. KHALID, JJ.)
Madhya Pradesh Excise Act, 19I5, sections 13, 14 and 62(2)(h)
read with Rule XXll of the Madhya Pradesh Excise Rules and Rules Ill
to V of Distillery Warehouse Rules. Scope of-Disposal of licences of
manufacture or sale of intoxicants-Whether it was obligatory on the
part of the competent authority to adopt the "tender method" failing
which the "auction'', failing which again by fixed licence fee method
- .and so on as prescribed in Ruic XXJf.
Licences-Grant of D-2 licences as per the policy decision of the
Government of Madhya Pradesh-Whether the licence granted create a
monopoly in favour of the licencees.
Policy decision of the State to privitise the liquor distilleries after
careful consideration of all the facts emanating from the application of
the Madhya Pradesh Distilleries Association-Whether the High Court
could bifurcate it into two and strike down one part of the policy as bad.
"Industries (De;•elopment and Regulation) Act, 1951, Section 11-
. Whether non-obtaining a licence from the Central Government disentitled the setting up distilleries·-Such a plea not taken in the High
Court-Supreme Court will not cor1$ider a new plea in an appeal under
Article I 36 of the Constitution.
Constitution of India, I950, Article 14--Applicabi/ity a/-
Whether will apply to grant of liquor licences.
Laches in filing writ petition after the implementation of the policy
decision dated 30.I2.84--Seven licences acted upon and spent at least I
to 5 crores and altered their position-Whether a writ could be granted.
Practice and Procedure-Judgment writing,Objectionable remarks should be avoided-If any, be expunged.
A
B
c
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E
F
G
Madhya Pradesh Excise Act, 1915 regulates the manufacture, sale
H
and possession of intoxicating Uquor in the State of Madhya Prad ....
2
SUPREME COURT REPORTS
[1987] 1 S.C.R.
A Section 14 deals with the establishment or licensing of distilleries and
warehouses. The State Government has, in exercise of the power conferre under section 62, made several sets of Rules. Rule II of the Rules
of General Application made inter alia under sub-section 2(h) of section
62 lays down "live years" as the maximum period for which wholesale
licences for the manufacture supply and sale of liquor could be granted
B Rule XXII provides .for the manner in which licences for the manufacture or sale of intoxicants shall be disposed.
There were at all material times in the State of Madhya Pradesh
nine distilleries for the man11facture of spirit which were established
long back by the State Government under a licence issued by the E'xcise
C Commissioner. These nine distilleries were located at Gwalior, Ujjain,
Dhar Badwaha, Chhatisgarh, Bhopal, Seoni, Nowgaon (owned by private individuals always) and Ratlam (owned by the Government). So
far as the first seven distilleries are concerned, the land and buildings in
which they were housed belonged to the State Government and originally the plant and mach'.nery also belonged to the State Government
D but in course of time successive holders of the D-2 licences in respect of
these distilleries replaced the .Plant and machinery. The practice followed by the Excise Department in regard to the working of these
distilleries was to invite tenders for the wholesale supply of country
liquor from these distilleries and the tenderers were requested to quote
their rates for the wholesale supply of country liquor to the State
i: Government. Normally the lowest tenders were accepted but at times
the State Government used to accept even higher tenders taking various
relevant factors into account. The State of Madhya Pradesh was devided in· several areas and a particular area was attached to each distillery for the wholesale supply of cuuntry liquor in that area. The person
whose tender was accepted for any particular distillery was given a D-2
F
licence for working the distillery and also a D-1 licence for wholesale
supply of country liquor manufactured in that distillery to retail vendors in the area attached to the distillery. These licences in Forms D·l
and D-2 were ordinarily issued for a ~ri~ of five years. Respondent
Nos. 5 to l I in the writ petition.of Nandlal Jaiswal were the holders of
D-1 and D-2 licences in respect of these distilleries for the period ending
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31st March, 1986. There were two districts, however, which were not
attached to any distillery, namely, Jabalpur .. .and Betul and so far as
these two districts were concerned, a licence in Form D-l(s) to make
wholesale supply of country liquor to ret3il vendors in these two districts was being given and for the period ending 3 l st March, l 986, it was
issued in favour of Sagar Aggarwal. The country liquor required by
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Sagar AgaI"Wal for supply to retail vendors in Jabalpur and Betul Dis-
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STATE' OF MADHYA PRADESH'v. N. JAlSWAL
3
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tricts was being obtained by him from the Ratlam Alcohol Plant at the
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rate of Rs. l.80 per proof litre but, the supply of country liquor from
Ratlam Alcohol Plant was wholly inadequate and Sagar Agarwal was
constrained to purchase country liquor from other sources at higher
price in order to fulfil his commitment under D-1 (s) licence.
Since the land and buildings in which the distilleries were housed
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belonged to the State Government the holder of D-2 licence in respect of
any particular distillery had to pay rent for the land and buildings to
the State Government at a rate agreed upon from time to time. So far as
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the plant and machinery of the distillery was concerned, originally it
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was installed by the State Government at its own cost but in course of
time it had to be replaced and such replacement was allowed to be made c
by the holder of the D-2 licence for the time being. It was however a
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condition of D-2 licence that on the expiry of the period of licence, if
fresh D-2 licence was not issued in favour of the existing licence holder,
he would be bound to transfer the plant and machinery in favour of the
new licence holder at a price to be determined by a Valuation CommitD
tee. Therefore, during the period of D-2 licence, the plant and machinery belonged to the licence holder for the time being. The licence holder
was bound to manufacture country liquor in the distillery for which he .
was given D-2 licence and on the strength of D-2 licence supply country
liquor so manufactured to retail vendors in the area attached to the
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distillery- at the rate quoted in the tender and accepted by the State
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Government. The bottling and sealing charges were also fixed by the
State Government from time to time and they were payable to the
licence holder by the retail vendors.
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The total capacity of all the nine distilleries were only 203 lakhs
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proof litres but even this capacity of production was not realised and the
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actual production fell short of this capacity. The result was short supply
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on many occasions leading to loss of licence fee as well as excise duty by
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the State Government.
The State Government in order to meet the requirement of' the
consuming public had actually to purchase liquor from other States as a
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higher price._Moreover, the consumption of liquor was growirig from
year to year and it was estimated that by the year 199 l, the total
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consumpti;:m of country liquor would be likely to be in the neighbourhood of 482.36 lakhs of proof litres and.by the turn of the century it was
expected to be in the neighbourhood of !696.80 lakhs proof litres. The
existing nine distilleries were inadequate to meet this growing demand
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for country liquor. Further more the buildings in which these distil-
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SUPREME COURT REPORTS
[1987] 1 S.C.R.
A
leries were housed has hecome old and were in a state of disrepair and It
was not easy for the State Government to maintain them in good condition without incurring heavy expenditure every year. The plant and
machinery were also old and antiquated and it was necessary to instal
new and modern plant and machinery having increased capacity to
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manufacture country liquor. Moreover, of seems that though 'the time
of construction, these distilleries were away from the city or town, what
had happened was that with the growth of population and haphazard
and unplanned urban development, these distilleries had now come to
be in the heart of the city or own and they created health hazards and
pollution problems. There was a demand from all sections of the public
living in surrounding area to move the distilleries away in order to
c avoid water and environmental pollution. It was in these circumstances,
when the mind of the State Government was already exercised in respect of these matters that an. application was made by M.P. Distillers'
Association in July 1983 for transferring these distilleries to private
ownership. The members of the M.P. Distillers' Association who were
old distillers holding D-2 licence in respect of these distilleries offered to
D invest their own funds in the construction of new buildings and installation of latest plant and machinery with capacity to produce more country liquor in conformity with the standards laid down by M.P. Eradication of Pollution Board for Removal of Polluted water by constructing
lagoons, etc., provided they were assured D-1 licence for the area
attached to their respective distilleries.
E ,
This application of M.P .. Distilleries AsMiciatlOO was eumlned by
the State Government at different levels, cabinet sub-committees,
Spej:ial rrommittee headed by Shri Vijayavargi, spot impediom. Tbe
Cabinet, sub committee invited representatives of the M.P. Distilleries
Association, heard them before taking final decision in tbe matter.
F
Finance department's objections and suggestions were taken note of. At
the cabinet meeting held on 30th December 1984, the policy decision
was taken to privitise liquor distilleries.
Pursuant to the policy decision dated 30th December, 1984 a Letter of Intent dated !st February 1985 was is.sued by tbe State GovernG
ment in favour of each of respondent Nos. 5 to II for grant of D-2
licence for the construction of a distillery at a new site for the purpose of
manufacturing country liquor with effect from l st April 1986 in lieu of
tbt existing distillery in respect of which such respondent held D-2 and
D-1 licences for the period ending 31st March 1986. The Letter of Intent
set out various conditions subject to which D-2 licence was to be granted
H in favour of each of respondent Nos. 5 to II in W .P. No. 3718/85 before
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STATE OF MADHYA PRADESH v. N. JAISWAL
5
the High Court. The licencee to whom the Letter of Intent was issued A
was required under cl. 2 of the Letter of Intent to construct the distillery
on the land approved by the State Government and the M.P. Pollution
Board. It was provided by cl. 12 of the Letter of Intent that the licensee
shall make proper arrangements for treatment of effluents discharge
under a scheme duly approved by the M.P. Pollution Board and that
any direction issued by the excise Commission in this regard shall be
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binding on the licensee. Clause 14 of the Letter of Intent stipulated that
the licensee shall be bound to complete construction of distillery and
· installation of plant and machinery as required by the Excise Commissioner well before !st April 1986.
The Letter of Intent was followed by a Deed of Agreement dated C
2nd February 1985 executed by and between the Governor of Madhya
Pradesh acting through the Excise Commissioner and each of respondent Nos. 5 to 11. The Deed of Agreement recited that the Letter of
Intent has been issued by the State Government for grant of D-2 licence
for construction of distillery for manufacture of spirit with effect from
!st April 1986. CI. 1 of the Deed of Agreement provided that the licensee D
shall be bound to take land ou lease for a period of 30 years from the
State Government, but this clause is not material because ultimately
none of respondent Nos. 5 to 11 took land on lease from the State
Goverm'nent and each of them purchased his own land, the site of
course being approved by the State Government.
Pursuant to the Letter of Intent and the Deed of Agreement each
of respondent Nos. 5 to 11 selected with the approval of the State
Government the new site at which the distillery should be located,
purchased land at such new site, started constructing buildings for
housing the distillery and placed orders for purchase of plant and
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machinery to be installed in the distillery.
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This policy decision was challenged by Nandlal Jaiswal by filing
W.P. No. 3718/85, by Sagar Agarwal by filing his W.P. No. 335/86and·by a
firm called M/s Doongaji & Co. during the course of the arguments in
the two writ petitions. All the three writ petitions were disposed of by a
common jud1:111ent delivered by a Division Bench of the High Court G
consisting of Acting Chief Justice J.S. Verma and Justice B.M. Lal.
Both the learned Judges, by separate judgments, substantially set aside
the policy decision dated 30th December, !984. Since the decision of the
High Court for all practical purposes sent against the respondents,
they preferred Civil Appeals No. 1622 to 1639 of 1986 before the
Supreme Court by special leave. M/s Doongaji & Co. and Nand Lal
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SUPREME COURT REPORTS
[1987] 1 S.C.R.
A Jaiswal also, to the limited extent that they are not succeed, filed special
leave petitions Nos.6206 and 7440 of 1986.
B
Allowing CA Nos. 1622 to 1639/86 and dismissing the special leave
petitions, the Court,
HELD: I. I On a plaio1 reading of Rule XXII that a licence for
manufacture or sale of country liquor may be disposed of in any one of
four different modes, viz., tender, auction fixed licence fee or such
other manner as the State Government may by general or special order
direct. These four different modes are alternative to one another and
anyone of them may be resorted to for the purpose of disposing of a
C licence. It is not necessary that the mode of disposal by tender must first
be resorted to and if that cannot be acted upon, then only the mode of
disposal by auction and failing that anjl not otherwise, the third mode of
disposal by fixed licence fee and only in the event of it not being possible
to adopt the first three modes of disposal, the last mode namely, "such
D other manner as the State Government may by general or special order
direct" should be adopted. Tbiis is plain and incontrovertible. [178-D] /
1.2 On a plain grammatical construction of Rule XXll, it is ob.'ious that the Collector or an Officer authorised by him in that behalf can
choose anyone of the four modes set out in that Rule. There is nothin_g in
E the language of Rule XXII to justify the interpretation that an earlier
mode of disposal set out in lhe Rule excludes a latter mode or that
reasons must be specified where a latter mode is adopted in preference
to an earlier one. The language of Rule XXII in fact militates against
such construction. It is impossible to subscribe to the proposition that it
is only when an earlier mode is not possible to be adopted for reasons to
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be specified, that a latter one can be followed. The Collector or an
Officer authorised by him can adopt anyone of the four modes of disposal oflicence set out in Rule XXII, but, of course, whichever mode be
adopted, the equality clause of the Constitution should not be violated
in its application. [17F-H]
G
1.3 It is also clear from Rules Ill, IV and V that there are two
purposes for which a licence in Form D-2 for construction and working
of a distillery may be granted. It may be granted as an adjunct to the
licence in Form D-1 under Rule IV or it may be granted as an independent licence under Rule V irrespective whether the grantee holds a
licence under Rule V irrespective whether the grantee holds a licence in
H Form D-1 or not. There are also two types of licences for wholesale
STATE OF MADHYA PRADESH v. N. JAISWAL
7
supply of country liqnor to retail vendors, namely, licence in Form D- l
and licence in Form D-l(s). The licence in Form D-l in clause 5 clearly
contemplated that the holder of such licence.must also have a licence in
Form D-2. No one can have a licence in Form D-2. He must have a
distillery in which he distils country spirit in order that he should he
able to make wholesale snpply of country liquor to retail vendors. If for
any reason he is unable to obtain licence in Form D-2 for working a
distiller, no licence in Form D-1 can be given to him and if he has such
\
licence, it would become ineffective. It is for this reason that when a
·person is .granted a licence in Form D-1 by the Excise Commission
~
under Rule-III, he is also simultaneously granted a licence in Form D-2
under Rule IV and the period of both the licences is co-terminus. But,
though a person cannot be granted a licence in Form D-l unless he also
obtains licence in Form D-2 the converse does not hold true. A licence in
Form D-2 can be granted to a person under Rule V even though he does
not hold a licence in Form D-1. Where a person is granted a licence in
Form D-2 for w0rking a distillery under Rule V, without having a
licence in Form D-1 for wholesale supply of country liquor to retail
vendors, he cannot make wholesale supply of country liquor manufactured by him to retail vendors but he can supply such country liquor
to a person holding licence in Form D-l(s) or he can manufacture ractified spirit, denatured spirit or foreign liquor as contemplated in condi-.
lion 3 of the licence in Form D-2. It is not necessary that a person a
licence in Form D-2 must also simultaneously have a)icence in Form
D-1. [ISA-Fl
t
2. It is undoubtedly true that the recommendations of the
Cabinet Sub-Committee which were accepted by the Cabinet in the
policy decision dated 30th December 1984 provided that in the begin1-·.· .· ·
ning, D-2 licence shlill be granted for a period of 5 years and thereafter
there shall be a provision for its renewal and for this purpose, necessary
amendment in the M.P. Excise Act, 1915 or the Rules made under the
Act shall be made. But, in fact no such amendment in the Act or the
Rules was made by the State Government and when the Letter of Intent
was Issued and the Deed of Agreement was executed and even thereafter, the provisions of the Act remained unamended .and Rule II of the
Rules of General Application also continued to stand in its unamended
form. It is obvious that without an amendment of Rule II of the Rules of
General Application the maximum period for which D-2 licence could
be granted to respondent Nos. 5-11 was only 5 years and there could be
no provision for automatic renewal thereafter from year to year. It is
therefore clear that whatever might have been the original intention. it
was not effectuated by carrying out necessary amendment in the provi-
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SUPREME COURT REPORTS
[ 1987] l S.C.R.
sions of the Act or in Rule II of the Rules of General Application and the
ultimate decision of the State Government was to grant D-2 licence for
a limited period of 5 years. The provision of renewal every year was to
operate within the span of 5 years itself and every year, the licence
would he renewable on payment of licence fee of Rs.5,000 and due
fulfilment of the conditions of the licence and the provisions of the Act
and the Rules. It is not possible to spell out from clause that the licence
was to he granted for an initial period of 5 years and thereafter it was
liable to he renewed from year to year. The so called concession made
on behalf of the State Government and respondent Nos. 5 to 11 was,
therefori!", really not a concession at all but it was a stand taken in
recognition of the correct position in regard to the grant of D-2 licence.
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The High Court, was in the circumstances, right in holding the grant of
D-2 licence to respondent Nos. 5-11 was for a maximum period of 5
years and it did not operate to create monopoly in their favour for an
indefinite period of time. l.37 A-HI
3.1 The High Court was not at all justified in splitting the policy
D decision dated 30th December 1984 into two parts and in striking down
the second part, while sustaining the first. The policy decision dated
30th December 1984 was a single integrated decision arrived at by the
State Government taking a holistic view of all the aspects involved in the
decision and it is difficult to appreciate how the High Court could
sustaining one part of the policy and strike down the other. Either the
E policy as a whole could he sustained or as a whole, it could be declared
to he invalid, but certainly one part could not be sustained, whatever be
the ground and the other pronounced invalid. That would he making a
new policy for the State Government which it was not competent for the
High Court to do. Once the High Court came to the conclusion that on
account of delay or !aches in the filing of the writ petitions or the
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creation of third party rights in the meanwhile, the Court would not
interfere with one part of the policy decision, the court could not
interfere with the second part of the policy decision as well. The consequence of sustaining one part of the policy decision and striking down
the other would not only be to create a new policy for the State Government but it would also cause considerable hardship and injustice to the
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licensees and also result in public mischief and inconvenience detrimental to the interest of the State. Since the petitioners were guilty of
enormous delay in filing the writ petitions and in the intervening
period, the rights of r<ospondents Nos. 5-1 I were created in that they
spent considerable amount of time, energy and resources and.incurred
huge expenditure in setting up the new distilleries, sustaining one part
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of the policy decision while striking down the other would amount to
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STATE OF MADHYA PRADESH v. N. JAISWAL
creating a new policy for the State Government and would also entail
considerable hardship and inconvenience to respondent Nos. 5' 11 and
would also be detrimental to the interest of the State. [48H, 45F-46D]
4. The policy decision dated 30th December 1984 can be given
effect to without any new Rules being. made by the State Government.
There is nothing i!l the policy decision dated 30th December 1984 which
is contrary to the Rules made under the Act. It is true that D-2 licence in
its existing form does not contemplate construction of a distillery and
that the Rules do not seem to have prescribed the form for a licence for
constructing a distillery. But, merely because the form of a licence for
constructing a distillery is not prescribed by the Rules, it does not mean
that such a licence cannot be granted by the Excise Authorities. If the
form of a licence is prescribed, then, of course, such form has to be
followed, but if no form is prescribed, the only consequence is that the
licence to be granted by the Excise Authorities need not conform to any
particular form. Section 14 (c) of the Act clearly provides that the Excise
Commissioner may license the construction and working of a distillery
- and there was, therefore nothing contrary to the Act or the Rules in the
Excise Commissioner issuing·, Letter of Intent in favour of each of respondent Nos. 5-11 granting licence for construction of a new distillery.
Rule XXII permits any one of four modes of disposal of licence to be
adopted by the Excise Authorities and it does not prescribe that the
fourth mode denoted by the words "such other manner as the State
Government may by general or special order direct" can be resorted to
only if the first three modes fail. Here in the present case, the policy
decision dated 30th DecemlM · 1984 provided that respondent Nos. 5-11
who were the existing contractors, should be granted licence to construct new distilleries and D-1 and D-2 licences should be given to them
for a period of live years for manufacturing liquor in such new distilleries and malting wholesale supply of it to retail vendors in the areas
attached to those distilleries. This manner of disposal of licences was
clearly covered hy the fourth modeofdispoSal set out in Rule xx.ll. [508-F]
State of Orissa & Ors. v. Harinarayan Jaiswa/ & Ors .• [1?72] 3
SCR 784; L.G. Chaudhari v. Secretary. L.S.G. Deptt. Govt. of Bihar
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& Ors .• AIR 1980SC 383, referred to.
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S. Supreme Court cannot permit any new plea as in this case, that
non-obtaining a licence under the Industries (Development and Regulation) Act, disentitles setting up distilleries. The foundation for this contention should have been laid in the writ petitions and the necessary
facts should have been pleaded in support of it. No such plea having H
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SUPREME COURT REPORTS
[1987) 1 S.C.R.
been raised and no such facts having been pleades in the writ petitions,
A the court cannot allow this ciontention to be raised. Moreover, it is clear
from s.11 read with the definitions of "factory" and "industrial undertaking" contained in sub-sections (c) and (d) of s.3 of this Act that
licenee from the Central Government for setting up new distilleries
would be necessary only if 50 or more workers were petitions. There is
B nothing to show that 30 or more workers were going to be employed in
the new distilleries. In fact old distilleries were also working without
any licence from the Central Government, presumably because less
than SO workers were employed in such distilleries. [S2E-G]
6. It is well settled that the power of the High Court to issue an
appropriate writ under Art. :!26 of the Coostitution is discretionary and
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the High Court in the exercise of its discretion does not ordinarily assist
the tardy and the indolent or the acquiescent and the lethargic. If there
is inordinate delay OD the part of the petitioner in filing a writ petition
and such delay is not satisfactory explained, the High Court may decline to intervene anil grant relief in the exercise of its writ jurisdiction.
D The evolution of this rule of lacbes or delay is premised upon a number
of factors. The High Court does not ordinarily permit a belated resort
to the extra ordinary remedy under the writ jurisdiction because it is
likely to cause confusion and public inconvenience and bring in its train
new Injustices. The rights of third parties may intervene and if the writ
jurisdiction is exenised on a writ petition filed after 1111remonable
E delay, it may have the effect of infticting not only bardsblp and inconvenlenee but also injustice OD third parties. When the writ jurisdiction
of the High Court is invoked, unexplained delay ClOUpled. with the creation of third party rights in the meanwhile is an important factor wbkh
always w~ighs with the High Court in deciding whether or not to exercise such jurisdiction. However, this rule of lacbes or delay ;.. not a rigid
F
rule wbkh can be cast in a straight jacket formula, for tbere may be
cases where despite delay and creation of third party rights the High
Court may still in the exercise of its discretion interfere and grant relief
to the petitioner. But such cases whel'e the demand of justice is so
compelling that the High Court would be inclined to interfere inspite of
delay or creation of third party rights woold by their very nature be few
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and far between. Ultimately, it would be a matter within the discretion
of the Coort. Ex-hypotbese every discretion must be exercised fairly
and justly so as to promote justice and not to defeat it. [41H-42C, F-G]
Here, the petitiooers were guUty of enormous delay in filing the
writ petitions inasmuch as during the Intervening period the rights of
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third parties had intervened and respondent Nos. 5-ll acting on the
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STATE OF MADHYA PRADESH v. N. JAISWAL
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basis of the policy decision dated 30th ~ember, 1984, had incurred to
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expenditure towards setting up the distilleries. If the policy decision
dated 30th ~mher 1984 were now he set aside at the instance of the
petitioners it would work immense hardship on the seven licensees and
cause grave injustice to them, since enormous amount of time, money
and energy spent by them in setting up the distilleries would he totally
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wasted. [41F-G, 45B]
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Ramanna Dayararrr Shetty v. International Airport Authority of
India & Ors., [1979] 3 SCR 1014; Ashok Kumar Mishra & Anr. v.
Collector Raipur & Ors., [1980] I S<;R 491, referred to.
7. There is no fundamental right in a citizen to carry on trade or
business in liquor. The State under its regulatory power has the power
to prohibit absolutely every form of activity in relation to intoxicants--
its manufacture, storage, export, import, sale and possession. No one
can claim as against the State the right to carry on trade or business in
liquor and the State caunot he compeUed to part with its exclusive right
or privilege of manufacturing and selling liquor. But when the State
decided to grant such right or privilege to others the State caunot escape
the rigour of Art.14. It cauoot set arbitrarily or at its sweet will. It must
comply with the equality clause while granting the exclusive right or
privilege of manufacturing or selling liquor. It is, therefore, not possible to uphold the contention of the State Government and respondent
Nos. 5-11 that Art. i4 can have not application in " case where the
licence to manufacture or sell liquor is being· granted by the State
Government. The Staie caunot ride roughshod over the requirement of
that Article. [53G-5AB]
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7 .2 But while considering the applicability of Art. 14 in such a
case, the court must hear in mind, that having regard to the nature of F
the trade or business the court would he slow to interfere with the policy
laid down by the State Government for grant of licences for· manufacture and sale of liquor. The Court would in view of the inherently
pernicious nature of the commodity allow a large measure of latitude to
the State Government in determining its policy of regulating manufacture and trade in liquor. Moreover, the grant of licences for manuG
facture and sale or' liquor would essentially he a matter of economic
policy where the court would hesitate to intervene and strike down that
the State Government bas done, unless it appears to he plaintly
arbitrary, irrational or mala fide. In complex etonomic matters every
decision is necessarily empiric and it is based on experimentati~n or
what one may call "trial and error method" and therefore, its validity H
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SUPREME COURT REPORTS
[1987] I S.C.R.
cannot be vested on any rigid a "priori" considerations or on the application of any straight jacket formula. The Court must while adjudging
the constitutional validity of an executive decision relating to economic
matters grant a certain measure of freedom or "play in the joints" to
the executive. [54C-55C]
7 .3 It is clear from cl.2 of the policy decision that the State
Government envisaged the possibility of other · liquor contractors
making similar applications for licences to construct new distilleries
and to manufacture and supply liquor from such new distilleries and
hence provided that if any such applications are made, they should be
disposed of by the Excise Department on merits on the basis of the
principles "recommended by the sub-committee", that is on the basis
of the same principles on which the licences were decided to be granted
to the existing contractors. If any liquor contractor makes an application
for a licence to construct a new distillery on the same terms on which
licences are granted to the existing contractor his application would
have to be. considered on merits by the Excise Authorities and the Excise
Authorities may, if they find the proposal suitable, grant to such liquor
contractor licence to construct a new distillery along with D-2 liceo-:e on
the same basis. The Excise Authorities may, in such event, either (i)
direct such liquor contractor lo manufacture ractilied spirit, denatured
spirit or foreign liquor in the uew distillery for the remaining period of
the D-1 and D-2 licences of the existing contractors and thereafter consider him along with other liquor contractors for grant of D-1 and D-2
licences in respect of the new distillery or (ii) reduce and/or alter the
area of supply of any of the existing contractors and grant D-1 license to
such liquor contractor in respect of the carved out area. If the Cabinet
decision dated 30th December 1984 while granting licences to the existing contractors leave. it open to other liquor contracts to come in and
apply for similar licences, it cannot be said that Art. 14 is violated. [56C-G]
7 .4 When the State Government is granting licence for putting up
a new industry, it is not at all necessary that it should advertise and
invite offers for putting up such industry. The State Government is
entitled to negotiate with those who have come up with an offer to set up
such industry. [ 60C]
·
,
Har Shankar & Ors. etc. v. Deputy Excise & Taxation Commis·
sioner_& Ors., [1975] 3 SCR 254; R.K. Garg etc. v. Union of India &
Ors. etc. [1982] l SCR 1947, referred to.
H
Kasturi Lal Lakshmi Reddy v. State of J & K, [1980] 3 SCR !338,
followed.
);_
STATE OF MADHYA PRADESH>. N. JAISWAL [BHAGWATI, CJ.] l3
;..."·
Metropolis Theatre Company v. State of Chicago, 57 Lawyers A
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Edition 730, quoted with approval.
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8. Judges should not use strong and carping language while
criticising the conduct of parties or their witnesses. They must act with
sobriety, moderation and restraint. They must have the humility to
recognise that they are not infallible and any harsh and disparaging B
strictnres passed by them against any party may be mistaken and un·
justified and if so, they may do considerable harm and mischief and
result in injustice. Here, in the present case, the observations made and
strictnres passed by B.M. Lal J. were totally unjustified and unwarrented and they ought not to have been made. [66G-H]
In the instant case, the words used in paras I, 9, 17 to 19 and 34 of
Lal J .'s judgment are undoubtedly strong and highly disparaging
remarks attributing malafides, corruption and underheard dealing of
the State Government which are not justified by the record. [62B]
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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
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1622-39 of 1986
From the Judgment and Order dated 28.3.86 of the High Court
of M.P. at Jabalpur in Misc. Petition Nos. 3718/85, 335 & 785 of 1986.
K. Parasaran, Attorney General, A.M. Mathur and S.L. Saxena,
Adv. Genl/Dy. Adv. Genl. of the State of M.P., G.L. Sanghi, F.S.
Nariman, N.A. Modi, V.M. Tarkunde, A.B. Divan, Dr. L.M.
Singhvi, Soli J. Sorabji, L.N. Sinha, S.N. Kacker, Narayan Nittar,
G.S. Narayan, Pramod Swarup, D.P. Srivastava, V. Ravindra
Srivastava, S.L. Athley, R.F. Nariman, A. Sobba Rao, V.K. Munshi,
LB. Dadachanji, D.N. Misra, Shri Narain, S. Salve, LS. Diwani,
Mrs. A.K. Verma, K.K. Sinha, A. Mishra, A. Sapre, R.S. Singh and
S.K. Singh for .the appearing parties.
C.L. Sahu and Bharat Brewris for the Intervenor.
The Judgment of the Court was delivered by
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BHAGWATI, CJ: These appeals by special leave are directed
against a judgment of the Madhya Pradesh High Court in what has
come to be known as, M:P. Liquor case, brought before the High
Court by way of three writ petitions unde.r article 226 of the Constitution. Writ Petition No.3718 of 1985 was filed by one Nandl~I Jaiswal
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SUPREME COURT REPORTS
[1987] 1 S.C.R.
on 28the Novemb.er 1985 while writ petition No.335 of 1986.was filed
by one Sagar Agarwal on 24th-January 1986. Both these writ petitions
were directed against the policy decision of the State of Madhya
Pradesh contained in the Cabinet decision dated 30th December, 1°84.
The third writ petition, viz., writ petition No. 785 of 1986 was also filed
challenging the same policy decision of the State of Madhya Pradesh
by a firm called M/s Doongaji & Co. but it was filed much later at a
time when arguments were actually going on in court in the first two
writ petitions. The respondents in the first two writ petitions were not
aware at that time that it was a writ petition which was filed by M/s
Doongaji & Co. They thought that it was merely an intervention application since no notice was served upon them and they had also no
opportunity of filing an affidavit in reply to that writ petition. All these
three writ petitions were disposed of by a common judgment delivered
by a Division Bench of the High Court consisting of Acting Chief
Justice J.S. Verma and Justice B.M. Lal. Both the learned Judges, by
separate judgments, substantially set aside the policy decision dated
30th December, 1984. Since the decision of the High Court for all
practical purposes went against the respondents, they preferred Civil
Appeals Nos. 1622 to 1639 of 1986 before this Court by special leave.
M/s Do0ngaji & Co. and Nand Lal Jaiswal also, to the limited extent
that they did not succeed, filed special leave petitions Nos. 6206 and
7440 of 1986. That is how the present appeals and special leave petitions have come up before us. The facts giving rise to these appeals and
special leave petitions are material and need to be stated in some
detail.
But, before we advert to the facts, it is necessary to set out the
relevant provisions of Madhya Pradesh Excise Act, 1915 which is the
statute regulating manufacture, sale and possession of intoxicating
liquor in the State of Madhya Pradesh. Originally, this Act was enac·
ted for the former Province of C.P. and Berar but subsequently, after
the coming into force of the Constitution, it was extended to the State
of Madhya Pradesh by M,P. Extension of Laws Act, 1958 and it was
rechristened as M.P. Excise Act 1915. Section 2( 13) of the Act defines
'liquor' to mean 'intoxicating liquor' and to include "spirits or wine,
tari, beer, all liquid consisting of or containing alcohol, and any substance which the State Government may, by notification, declare to be
liquor for the purpose" of the Act. The term "manufacture" is defined
in Section 2( 14) to include "every process, whether natural or artificial, by which any intoxicant is produced or prepared and also redistillation and every process for the rectification, flavouring, blending or
~olouring of liquor". There is also the definition of 'spirit' in section
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STATE OF MADHYA PRADESH v. N. JAISWAL (BHAGWATI, CJ.] 15
2( 17) which provides ihat "spirit" means any liquor containing alcohol
obtainted by distillation whether it is denatured or no~. Chapter IV of
the Act is headed 'Manufacture, Possession and Sale' and that is the
chapter with which we the concerned in the present appeals. Section 13
provides, inter alia, that no distillery or brewery shall be constructed
or worked and no person shall use, keep or have in his possession any
material, still utensil, implement or apparatus whatsoever for the
purpose of manufacturing any intoxicant other than tari,,except under
the authority and subject to the terms and conditions of a licence
granted in that behalf. It is also obligatory urtder this section to have a
licence for manufacture of intoxicant and for bottling liquor for sale
and no intoxicant can be manufactured and no liquor can be bottled
for sale without such licence. Section 14 is a material section and it
may, therefore, be reproduced in extenso:
14.