B. SUDERSHAN REDDY, J.

( 1 ) THE manufacturing or of supplying by wholesale or of both or of selling by wholesale or by retail, any liquor in the state of Andhra Pradesh is governed by andhra Pradesh Excise Act, 1968 (for short the Act ), and the grant of licences for the import, export, transport and sale of Indian liquors, and foreign liquors is regulated by the Andhra Pradesh Indian Liquor and foreign Liquor Rules, 1970 (for short the ilfl Rules ). The Government of Andhra pradesh has been taking policy decisions from time to time enunciating liquor policy of the state every year. Section 17 of the Act provides that the Government may grant a licence for a fixed period subject to such conditions as they may deem fit to impose to any person at any place a lease or licence, or both for the exclusive privilege of manufacturing or of supplying by wholesale or of both; or by selling by wholesale or by retail; or by manufacturing or of supplying by wholesale or of both and of selling by retail, any liquor or other intoxicants within any such area in the State as may be specified in the said order,

( 2 ) ON 7th February, 2005, the government of Andhra Pradesh enunciated its Excise (IML) Policy for the year 2005- 2006, making certain minimal changes in the matter of grant of IL-24 (retail off licences) in the State of Andhra Pradesh. The preamble to the policy reads:"the Excise (IML) policy for the year 2004- 2005 will come to an end on 31st March, 2005. The Government have carefully reviewed the implementation of the policy during the year and taking into consideration the experience gained in the past, issue the following guidelines for the year 2005-06. "it inter alia says that the sale and consumption of liquor be made more streamlined and necessary steps in this direction will be to effectively eliminate the cartels in liquor trade, throw open the trade to more competition and thus ensure availability of good quality liquor to the consumers at affordable prices: the licences of IL-24 (retail of licences), which are functioning during the year 2004-05 in the state which will expire on 31st March. 2005 shall not be renewed for the year 2005- 06. For the year 2005-06, 7,500 (Seven thousand five hundred) IL-24 retail shops will be licensed in the State. The commissioner of Prohibition and Excise shall fix the number of licences to be granted in an area as provided under the ILFL Rules. The Licensing Authority shall call for applications from the general public by issuing a notification in the District Gazette. Selection of licensees from out of the applicants for grant of IL-24 licences shall be made as laid down under Rule 31 of the ilfl Rules. It is significantly stated that the present rates of licence fee charged on IL- 24 (retail) shops during the year 2004-05 will be applicable for the year 2005-06. There shall be no change in the policy with regard to permit rooms except that permit rooms will not be allowed in places where the population is 25,000 and above and within a belt area of 2 Kms of such places. According to the writ petitioners, the policy of the Government is arbitrary and discriminatory as against the existing IL-24 licensees since it has no nexus with the object of streamlining the sale and consumption of liquor; eliminating the cartels in liquor trade, and making available of good quality liquor to the consumers at affordable prices. The sum and substance of the complaint is that the policy is violative of articles 14, 19 (1) (g) and 21 of the constitution of India, and thus, liable to be declared invalid and unconstitutional.

( 3 ) BEFORE we proceed to examine the challenge to the Excise Policy of the Andhra pradesh State Government, we may first refer in short to the previous practice of granting liquor licences.

( 4 ) IN February, 1995, the Legislature of Andhra Pradesh enacted Andhra Pradesh prohibition Act, 1995, which had received the assent of the President of India. It was an Act to introduce prohib

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