2006 Supreme(SC) 427

2006(5) Supreme 877
SUPREME COURT OF INDIA
(From Bombay High Court)
S.B. Sinha and P.K. Balasubramanyan, JJ.
State of Maharashtra & Ors. — Appellants
versus
Nagpur Distillers, Nagpur & Anr. — Respondents
Civil Appeal No. 2381 of 2006
(Arising out of SLP (C) No. 13997 of 2005)
Decided on 1-5-2006
Counsel for the Parties :
For the Appellants : Soli J. Sorabjee, Sr. Advocate Ravinder Keshavrao Adsure, Advocate.
For the Respondents : Uday U. Lalit, Sr. Advocate, Prasenjit Keswani, Nitin Sagar, Amol Chitale, Mrs. V.D. Khanna, Advocates.

Headnote:Bombay Rectified Spirit Rules, 1951 — Rule 12(2) — Bombay Rectified Spirit (Transport in Bond) Rules, 1951 — Rule 5(2) — Issue of a transport pass for transport of rectified spirit from distillery to factory of user subject to payment of fee prescribed under the Rule — Respondent engaged in business of manufacture and sale of Indian made foreign liquor was purchasing rectified spirit and extra neutral alcohol from distilleries owned by others — Respondent was to pay fee at Rs. 2 per litre for rectified spirit and Rs. 3 per litre for extra neutral alcohol — Writ challenging the notification dt. 12-7-1999 and impugning Rule 5 of Bombay Rectified Spirit (Transport of Bond) Rules — Challenge was based on decision of Bombay High Court in Vam Organic Chemicals Ltd. case — High Court granted interim order staying recovery of fee — Appeal — Merit in argument that decision in Vam Organic might be distinguishable from cases where licensee himself did not manufacture the rectified spirit — Right to trade in liquor was only a privilege — As regard an undertaking given by respondent, Court has to balance it with plea that State had no power to impose such duty — High Court was not justified in passing in practical terms an unconditional interim order of stay — An appropriate order would be that licensee is to pay 50% of fee and given an undertaking to pay balance 50% in case Writ Petition is decided against it.

       Held : Prima facie, we find some merit in the argument that the decision in Vam Organic Chemicals Limited may be distinguishable from cases where the licensee himself does not manufacture the rectified spirit. Here, rectified spirit is not manufactured by the first respondent and such spirit is not being used captively in its own premises for manufacture of IMFL. Respondent No.1 is purchasing rectified spirit or extra neutral alcohol from other manufactures and getting it transported to its own premises for manufacturing and bottling IMFL. This factual distinction apart, we have to keep in mind that the right to trade in liquor is only a privilege farmed out by the State. Article 47 of the Constitution of India clearly casts a duty on the State at least to reduce the consumption of liquor in the State gradually leading to prohibition itself.(Para 9)

       The only excuse for the State for not following the mandate of Article 47 of the Constitution is that huge revenue is generated by this trade and such revenue is being used for meeting the financial needs of the State. What is more relevant here is to notice that the monopoly in the trade is with the State and it is only a privilege that a licensee has in the matter of manufacturing and vending liquor. (Para 9)

       It is pointed out by learned counsel for the appellants that even in the conditions attached to the license, there is an undertaking by the licensee to pay the fees as demanded. It is his submission that there was no reason to water down that obligation by way of an interim order when an attempt is made to challenge the very imposition of the fee which a licensee had agreed to pay in the first instance. We see some force in the submission, but have to balance it with the plea that the State has no power to impose such a levy. We have also to take note of the fact that after all, any amount paid to the State, could be adjusted either towards future liability or directed to be refunded by the State in case the challenge of the licensee succeeds in the Writ Petition when it is finally heard and decided. The only purpose for which the State undertakes liquor trade, notwithstanding the mandate of Article 47 of the Constitution of India, is the revenue that it generates. This aspect also cannot be lost sight of while considering the balance of convenience in cases where a liquor licensee seeks an interim order staying the fulfillment of his obligation to pay all the fees or other charges demanded from him as such a licensee.(Para 10)

       We feel that the interests of both would be protected if we were to order that the licensee is to pay 50 per cent of the license fee payable and that it should give an undertaking to pay the balance 50 per cent in case ultimately the Writ Petition is decided against it, within the time fixed by the High Court. This, as we see it, would balance the equities and afford protection to the interests of the State and the interests of the licensee. It would save the licensee from meeting the entire liability here and now pending disposal of his challenge to the levy and at the same time would not make his obligation too onerous, in case ultimately, he is found not entitled to succeed in his challenge in the Writ Petition. This would also enable the Government to realize a part of the revenue which alone appears to be the motive in permitting the trade in liquor notwithstanding the mandate of Article 47 of the Constitution of India.(Para 11)