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SUPREME COURT OF INDIA
M.H. BEG AND P.N. SHINGHAL, JJ.
Lakhanlal etc., Appellants
Versus
The State of Orissa and others, Respondents.
(1) Civil Appeals Nos .351-359 of 1972:
(2) Civil Appeals Nos . 1855-1863, 2091 of 1972 and 1802 of 1974:
(3) Civil Appeals Nos. 1892-1893 of 1971: 1302, 2071 and 1235-1236 of 1972:
State of Orissa and others, Appellants
Versus
Shri Ayodhya Prasad Shaw etc. etc., Respondents.
Civil Appeals Nos. 351-359: 1855-1863 of 1972 and 1802 of 1974: 1892-1893 of 1971. 1302, 2071 and 1235-1236 of 1972.
D/- 15-10-1976.
Advocates appeared
Mr. Vinoo Bhagat, Advocate, for Appellants in C. As . Nos. 351-359 of 1972 and Respondents in C. As. Nos. 1855-1862 of 1972: Mr. Gobind Das, Sr. Advocate, (Mr. G. S. Chatterjee, Advocate, with him), for Appellants in rest of the Appeals, except 1802 of 1974 and Respondents in C. As. Nos. 351-359 of 1972: M/s. R. K. Garg, and Mr. S. C. Agarwal, Advocates, for Appellant in C. A. No. No. 1802 of 1974 and for Respondent in C. A. No. 1302 of 1972: M/s. B. P. Maheshwari and Suresh Sethi, Advocates for Respondents in C. As.Nos. 1235-1236 of 1972: Mr B. Parthasarthy, Advocate, for respondents in C. A. No. 1802 of 1974
Bihar and Orissa Excise Act, 1915 - Section 38 - Boards Excise Rules, 1965 - Rule 103 – Claim of compensation – Quash of order - Issue of licenses for running shops - whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops - whether the State Government had the authority to direct the withholding and reauctioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision - whether the license was to be granted for an exclusive privilege to manufacture and sell liquor - whether the following direction in the State Governments order dated august 19, 1970 was valid - Collector of Mayurbhanj issued a notice on February 3, 1970 by which he invited tenders for the grant of licenses for establishing 70 outstill shops for 1970-71. Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rupees 34,000/- per month. His bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector. Ajodhya Prasad accordingly deposited Rs. 68,000/- on account of two months "fees", in advance, as required by Rule 103 of the Boards Excise Rules, 1965. Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by the Excise Commissioner on March 16, 1970. The Board of Revenue also refused to interfere. Ajodhya Prasad claimed that in the meantime he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1,50,000/-. He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970. He approached the Superintendent of Excise for depositing Rs. 34,000/- for the month of April, but the Superintendent did not pass the deposit chalan. Ajodhya Prasad thereupon filed a Writ Petition (O.J.C. No. 329 of 1970) in the High Court with the allegation that the Collector was not acting according to the law as the State Government had issued instructions to him not to issue the licenses. Ajodhya Prasad prayed in his petition for the issue of directions for the issue of licenses and quashing the State Governments instructions to the contrary. Raghunandan Saha also filed a petition (O. J. C. No. 357 of 1970) on April 13, 1970. The Collector issued a notice for reauction on May 1, 1970 and Ajodhya Prasad amended his petition for quashing the notice also – Held, It has also been argued that entry 8 embodying the Police powers of the State could not be invoked to sustain such an imposition. Mr. Bhagat has also argued that the collection was in the nature of a tax and Section 29 was therefore ultra vires the Constitution. Mr. Bhagat has also urged that the State was not the owner of the exclusive privilege to manufacture or sell liquor and that the Act did not empower it to part with that right or payment. We have given our reasons already for taking a contrary view with reference to the decisions in Nashirwars case (AIR 1975 SC 360) and Har Shankars case (AIR 1975 SC 1121). The State has the exclusive right or privilege to manufacture, store and sell liquor and to grant that right to its license holders on payment of consideration. with such conditions and restrictions for its regulation as may be necessary in the public interest. The argument to the contrary is futile and is rejected - Counsel has argued that as the rule was invalid it was not permissible to hold the impugned public auction because that was not permissible under any other provision of the Act. This argument is also futile because Section 5 of the Bihar and Orissa Excise (Second Orissa Amendment) Act, 1971 (Act 10 of 1971) has substituted a new sub-section (2) for the old sub-section as follows. providing for auction. and it has been stated that it shall be "deemed always to have been substituted - Then follow other clauses with which we are not concerned. Moreover Section 17 of that Act has validated all grants made by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Boards Excise Rules (including Rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal which have been adopted by Mr. Bhagat regarding the invalidity of Rule 103 - It is not necessary to deal separately with the judgment of the High Court which has given rise to civil because they are based on the aforesaid decision dated April 16, 1971 in O. J. C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6, which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason - High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha v. State of Orissa, (ILR (1971) Cut 777) and the decision of this Court in Jaiswals case (supra) and dismissed the petition. We have already dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed - Order accordingly
Judgment
SHINGHAL, J. :- These appeals by certificate or special leave are directed against judgments of the Orissa High Court dated May 15, 1970. February 3, 1971. April 16, 1971. May 7, 1971. September 6, 1971 and March 28, 1974. They arise out of several writ petitions. The facts which gave rise to the petitions changed from time to time largely because of amendments in the law, and that was the reason for the filing of separate writ petitions resulting in the impugned judgments of the High Court, but we have heard them together at the instance of learned counsel for the parties and will dispose them of by a common judgment. The nature of the controversy in these cases is such that it will be enough to state the basic facts for the purpose of appreciating the arguments of counsel for the parties.
2. The Collector of Mayurbhanj issued a notice on February 3, 1970 by which he invited tenders for the grant of licenses for establishing 70 outstill shops for 1970-71. Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rupees 34,000/- per month. His bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector. Ajodhya Prasad accordingly deposited Rs. 68,000/- on account of two months "fees", in advance, as required by Rule 103 of the Boards Excise Rules, 1965. Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by the Excise Commissioner on March 16, 1970. The Board of Revenue also refused to interfere. Ajodhya Prasad claimed that in the meantime he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1,50,000/-. He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970. He approached the Superintendent of Excise for depositing Rs. 34,000/- for the month of April, but the Superintendent did not pass the deposit chalan. Ajodhya Prasad thereupon filed a Writ Petition (O.J.C. No. 329 of 1970) in the High Court with the allegation that the Collector was not acting according to the law as the State Government had issued instructions to him not to issue the licenses. Ajodhya Prasad prayed in his petition for the issue of directions for the issue of licenses and quashing the State Governments instructions to the contrary. Raghunandan Saha also filed a petition (O. J. C. No. 357 of 1970) on April 13, 1970. The Collector issued a notice for reauction on May 1, 1970 and Ajodhya Prasad amended his petition for quashing the notice also.
3. The State Government and the other respondents traversed the claim in Ajodhya Prasads writ petition and pleaded, inter alia, that the bids at the auction were not satisfactory- and, in the interest of the State revenue, the State Government had passed the orders for not accepting Ajodhya Prasads bids. The High Court examined the questions whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops and whether the State Government had the authority to direct the withholding and reauctioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision". and could not direct a reauction. The High Court examined the nature of the realisation at the auction and held that it was a tax which was not contemplated by Section 38 of the Bihar and Orissa Excise Act, 1915, hereinafter referred to as the Act, and that Rule 103 (1) of the Boards Excise Rules in regard to the fees for the licenses was not authorised by the Act and was in excess of the rule-making power of the board. The High Court also held that the "auction price for a license is not excise duty within the meaning of Entry 51 of List II of the Seventh Schedule to the Constitution" and it was not open to the Collector "to follow the process of auctioning for
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