Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Kar) 321

IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH
HEMANT CHANDANGOUDAR, J.
Shri Raju S/o Ramachandra Tikute – Petitioner
Versus
The State of Karnataka Rep. by its Secretary, Department of Excise – Respondent
W.P. Nos. 106715, 106956 of 2018, 102705 of 2019, 146644, 146935, 147315, 147472, 147539, 147559, 147637, 147638, 147867, 147875, 147962 of 2020
Decided On : 15-06-2021

Advocates:
Advocate Appeared:
For the Petitioner: Sri. Shivaraj P. Mudhol.
For the Respondents: Smt. K. Vidyawati, Sri. Vinayaka S. Kulkarni, Sri. Mrutyunjay S. Hallikeri, Sri. Harshawardan M. Patil.

Point of law : Owner of cinema house cannot challenge the setting up of a new cinema house because it does not result in injury to a legal right or legally protected interest, the business competition causing it being a lawful activity.

Headnote:
Constitution of India, 1950 – Article 14 – Karnataka Excise Act, 1965 – Section 71 – Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 19 – Rules 3, 12, 11 – liquor shops License Issue – Writ petitions are filed to strike down Ruie 3(11 C) of Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 and also to declare that notification issued by respondenc No.l and consequential intimation issued by respondent No.2 are without authority of law and to quash order passed by respondent No.2..
Finding of the Court:
Submission of counsel for petitioners that, ratio decidendi is not laid down and said decision is not binding or applicable to facts of present case is without any substance – Even otherwise, challenge to impugned Rule in these writ petitions is not maintainable in view of discussions made in preceding paras holding that impugned Rule so inserted does not lack legislative competence and also offend Article 14 of Constitution of India. – Petitioners have also questioned notification, circular and CL-ll(c) licenses granted to 5th respondent issued in terms of Rule 11(c) of Ruies – Admittedly, petitioners are also granted with CL-2 letail licenses to sell liquor and they are challenging notification and licenses granted in favour of 5th respondent stating they are contrary to provisions of Act and Rule 12 of Rules – Impugned notification is issued recommending four places in each assembly constituency for granting retail licenses in favour of Respondent.No.5 – Said notification is issued in terms of impugned rule and same cannot be said to be illegal since no right is created in favor of any citizen. – It is held that impugned Rule does not lack legislative competence and also does not offend Article 14 of Constitution of India and petitioners have no locus standi to challenge notification and CL- (11-C) licences granted in favour of respondent N0.5-MSIL.
Result :Petitions Dismissed

ORDER :

1. These writ petitions are filed to strike down Rule 3(11-C) of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 and also to declare that the notification dated 23.9.2016 issued by respondent No. 1 and the consequential intimation dated 6.10.2016 issued by respondent No. 2 are without authority of law and to quash the order dated 27.9.2018 passed by respondent No. 2.

2. Petitioners are all running liquor shops after obtaining CL-2 licence from the competent Authority under the provisions of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 (for short ‘Rules’). The licences granted to petitioners are in terms of Rules 12(3(b) of the Rules.

3. The 1st respondent amended the Rules by inserting Rule 3(11-C) of the Rules w.e.f. 1.7.2003 by giving overriding effect. Rule 3(11-C) of the Rules specifies that a license in Form CL(11-C) shall be granted by the Deputy Commissioner only to such companies owned or controlled by the State Government and specified by the government for possession and sale of liquor in retail shops. Petitioners are aggrieved by insertion of Rule 3(11-C) of the Rules wherein the licence to run retail sale liquor outlet are granted to Government owned/controlled companies without reference to or applicability of Rule 12 of the Rules. Petitioners are also aggrieved by notification and circular issued by respondent No. 1 approving 900 CL (11-C) licence in favour of respondent No. 5 in various locations in the State of Karnataka and also the CL-11-C granted in favour of respondent No. 5. Hence, these writ petitions.

4. Mr. F.V. Patil, learned counsel appearing for the petitioners in W.P. No. 106715/2018 and other connected writ petitions would make the following submissions:

(i) The impugned Rule 3(11-C) of the Rules which specifies for granting retail licence in favour of State owned or controlled companies without reference to Rule 12 of the Rules which provides for granting maximum number of licences in an area/Taluk on the basis of population is arbitrary and discriminatory.

(ii) Section 71 of the Karnataka Excise Act, 1965 (for short ‘Act’) empowers the State Government to make Rules to carry out the purposes of this Act by publishing notification. Section 71(2)(e) of the Act empowers the government to frame the rules for regulating the grant of licences to be granted in an area and regulating the periods etc. Hence, the grant of CL-11-C licence in favour of the State companies is contrary to Section 71(2)(e) of the Act and rules 12(3) of Rules which specifies the maximum number licenses to be granted in a local area depending on the population. By subordinate legislation, the State could not have inserted Rule 3(11-C) of the Rules to grant retail licence in favour of State owned or controlled companies, notwithstanding anything contained in Rule 12 of the Rules. In support reliance is placed on the decision of the Apex Court in the case of State of T.N. and Another vs. P. Krishnamurthy and Others, 2006 (4) SCC 517 and the decision of the Apex Court in the case of State of Kerala and Others vs. Travancore Chemicals and Manufacturing Company and Another, 1998 (8) SCC 188.

(iii) The impugned Rule is inserted so as to circumvent the two judgments of the Division Bench of this Court in the case of State of Karnataka vs. Mandya District Wines Merchants' Association, ILR 1986 Kar. 2343 and Nagaraj and Others vs. State of Karnataka and Others, ILR 1999 Kar. 2903, wherein it is held that sub-Rule 3 of Rule 12 of the Rules does not confer any power on the licensing Authority to grant additional licences over and above the maximum number fixed by the Excise Commissioner with the previous approval of the Government. Hence, the judgment of this Court cannot be annulled by the Government in exercise of its delegated power. In support, reliance is placed on the decision of the Apex Court in the case of State of Tamil Nadu and Others vs. K.S. Shyam Sunder and Others, 2011 (8) SCC 7

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2021 Supreme(Kar) 321

Point of law : Owner of cinema house cannot challenge the setting up of a new cinema house because it does not result in injury to a legal right or legally protected interest, the business competition causing it being a lawful activity.

Cases Referred (13)