1995 Supreme(AP) 246

Andhra Pradesh High Court
Judges : K.S.SHRIVASTAVA, S.S.M.QUADRI, T.N.C.RANGA RAJAN
M.C.Dowell and Company Limited, rep.by its Vice-President/office Executive, P.R.Krishna - Appellant
Versus
State OF A.P. - Respondent
Decided On : 04-28-95

The Andhra Pradesh Prohibition Act, 1995, does not prohibit the manufacture of liquor, and therefore, the rejection of applications for renewal of licenses for manufacture of liquor based on the policy of prohibition and the provisions of the Prohibition Ordinance was invalid.

Headnote:

ANDHRA PRADESH PROHIBITION ACT, 1995 - MANUFACTURE OF LIQUOR - RENEWAL OF LICENCES - LEGITIMATE EXPECTATION - VALIDITY OF REJECTION ORDER - EFFECT OF SECTION 34 OF THE ACT - RIGHT TO LIVELIHOOD - MISCELLANEOUS POINTS - RELIEF.

Fact of the Case:

The petitioners, engaged in the manufacture of spirits and liquor, challenged the rejection of their applications for renewal of licenses under the Andhra Pradesh Distillery Rules, 1970 and the Andhra Pradesh Brewery Rules, 1970, due to the introduction of total prohibition in the state. The companies had paid the fees and applied for renewal in time, and the Excise Commissioner had allowed them to function beyond the expiry date pending renewal. However, a general order was issued rejecting all applications for renewal in view of the policy decision to introduce total prohibition and the provisions of the Andhra Pradesh Prohibition Ordinance, 1994.

Finding of the Court:

1. The Andhra Pradesh Prohibition Act, 1995, introduced total prohibition on the sale and consumption of intoxicating liquors, except for medicinal, scientific, industrial, or similar purposes. Section 7 of the Act prohibited the selling, buying, being in possession, and consumption of liquor, while Section 34 amended the Andhra Pradesh Excise Act to cease the operation of its provisions that were inconsistent with the Prohibition Act. 2. The Court held that the licensees had a legitimate expectation of renewal of their licenses unless there was a good reason not to do so, as the rules indicated that the license was renewable upon application and payment of fees. The policy of prohibition and the provisions of the Prohibition Ordinance were not valid reasons for rejecting the applications, as the Act did not specifically prohibit the manufacture of liquor. 3. The Court interpreted Section 34 of the Prohibition Act to mean that only those provisions of the Excise Act that were inconsistent with the Prohibition Act would cease to operate. Since there was no inconsistency in the provisions of the Excise Act relating to manufacture and the provisions of the Prohibition Act, those sections remained in force, and manufacturers were entitled to grant of licenses for possession of liquor. 4. The Court declined to address the question of whether the Prohibition Act violated the right to livelihood under Article 41 of the Constitution, as the Act did not ban the manufacture of liquor. 5. The Court quashed the impugned orders rejecting the applications for renewal and directed the respondents to consider the applications in accordance with law and the observations in the order.

Issues: 1. Whether the licensees had a legitimate expectation of renewal of their licenses? 2. Whether under Section 34 of the Prohibition Act, the provisions of the Excise Act relating to licensing of manufacture of liquor, cease to apply? 3. Whether the reasons given in the impugned order are valid? 4. Whether the law made by the State with reference to the manufacture of liquor is abrogated by provisions of The Industries (Development and Regulation) Act? 5. Whether the workmen are entitled to the relief in respect of unemployment because of the prohibition of the carrying on of the licences of the industries in which they are employed, and whether the government has the duty to rehabilitate them? 6. Miscellaneous points. 7. The relief /s to which the petitioners are entitled?

Ratio Decidendi: 1. The doctrine of legitimate expectation imposes a duty on a public authority to act fairly by taking into consideration all relevant factors. A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though they have no legal right to receive such treatment. 2. The renewal of licenses is not entirely at the discretion of the authority, and the reasons for withholding the renewal must be stated, and the affected party must be given an opportunity to show cause against it. 3. The policy of prohibition and the provisions of the Prohibition Ordinance were not valid reasons for rejecting the applications for renewal, as the Act did not specifically prohibit the manufacture of liquor. 4. Section 34 of the Prohibition Act only ceases the operation of those provisions of the Excise Act that are inconsistent with the Prohibition Act. Since there was no inconsistency in the provisions of the Excise Act relating to manufacture and the provisions of the Prohibition Act, those sections remained in force. 5. The Court declined to address the question of whether the Prohibition Act violated the right to livelihood under Article 41 of the Constitution, as the Act did not ban the manufacture of liquor.

Final Decision: The Court quashed the impugned orders rejecting the applications for renewal and directed the respondents to consider the applications in accordance with law and the observations in the order.