Judgment

JUDGMENT :- The State of Andhra Pradesh and its officers of the Excise Department have challenged the judgment of a Division Bench of the Andhra Pradesh High Court by special leave. Under R. 3 of the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969, framed under the Andhra Pradesh Excise Act, 1968, the right to sell liquor in retail was being granted by auction and such lease was ordinarily for a term of one excise year commencing from October 1. In Sept., 1982, a policy decision was taken and a proviso was added to R. 3(1) which authorised grant of license in favour of the Toddy Tappers Co-operative Societies for operating toddy shops within grade I and grade II municipalities of the State for a period of five years at a time effective from Oct. 1, 1982. Under the Scheme, four Tappers Co-operative Societies, each of which is a respondent in the respective appeals, were given the privilege for a term of five years effective from Oct. 1, 1982. In Aug. 1983, that Rule was amended and there was a reversion to settlement on annual basis. Thereupon notices were issued to the four Tappers Societies each of which had already obtained lease for a term of five years. The notices purported to be under S. 32 of the Act and intended to be brought into effect from Sept. 30, 1983, when the excise year 1982-83 ended. Aggrieved by issue of such notices, the Tappers Societies moved the Andhra Pradesh High Court for quashing of the notices. The High Court did not grant any interim relief. Consequently, on the footing that the Tappers Societies lease came to an end with effect from Sept. 30, 1983, the shops were auctioned for a term of one year, i.e from Oct. 1, 1983, to Sept. 30, 1984. On Jan 17, 1984, the High Court found in favour of the Tappers Societies and quashed the notices. The State challenges the decision of the High Court and maintains that it has power to alter the rules retrospectively and consequently the notices were valid and the Tappers Societies have no right to claim any benefit contrary to law.

2. In Krishna Kumar Narula v. Jammu Kashmir State (1967) 3 SCR 50 this Court held that the right to trade in intoxicating drugs is also a right to carry on any trade or business within the meaning of Art. 19(1)(g). At the same time, it has been held by this Court in Cooverjee B. Bharucha v. Excise Commr. and the Chief Commr. Ajmer (1954) SCR 873, that for determining reasonable restrictions within the meaning of Art. 19(6) of the Constitution on the right given under Art. 19(1)(g), regard must be had to the nature of the business and the conditions prevailing in a particular trade; State has power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public and there is no inherent right in a citizen to sell intoxicating liquors by retail. In Cooverjees case (supra) it was held that the charge of licence fee by public auction is more in the nature of a tax than a licence fee though it is described as a licence fee. One of the purposes of regulation was to raise revenue and revenue is to be collected by the grant of contracts to carry on trade in liquor and these contracts are sold by auction. In this backdrop of the legal position, no challenge is available against the Andhra Pradesh Act and the Rules made thereunder.

3. As indicated, the respondents had been given lease for a term of five years beginning from Oct. 1, 1982. Mr. Ram Reddy for the appellant State on our request has produced copies of the contracts. The State had taken the stand that it has power under S. 32 of the Act to rescind contracts at any time and the retail vendor has also a similar choice to exercise. The notice terminating the five year lease after expiry of one year was, therefore, legal and was a valid exercise of statutory power. Learned counsel also contended that the State intended to obtain more revenue and when it was found that settlement on annual basis by public auction was in t