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2016 Supreme(P&H) 894
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
AJAY KUMAR MITTAL, RAJ RAHUL GARG, JJ.
Amarjit Singh Sidhu - Petitioner
Vs.
State of Punjab and others - Respondents
CWP No.5593 of 2016 (O&M)
Decided On : 9-06-2016
For the Petitioner:Mr. Mohan Jain, Sr. Advocate, Mr. Vikram Jain, Mr. Arastu Chopra, Mr. Fateh Saini, Advocates, Mr. Ashish Aggarwal, Sr. Advocate, Ms. Ritu Pathak, Advocate, Mr. Sandeep Goyal, Advocate,
For the Respondents:Mr. Ashok Aggarwal, Advocate General, Punjab, Mr. Kamal Sehgal, Addl. A.G.Punjab, Mr. Harsimran Singh Sethi, Addl.A.G. Punjab
Headnote:Liquor Licence--Though a citizen has no fundamental right to carry on trade or business of liquor but where the State decides to grant the right or privilege to carry on this trade, in such a situation, the State cannot escape the rigour of Article 14 of Constitution.
(A) Punjab Liquor Licence Rules, 1956--Excise Policy 2016-17--Creation of License L-1A and Validity of Clause 2.14 (ii)--By notification dated 23.03.2016 amendment was incorporated creating L-1A license in its amended form by virtue of which as earlier L-1 licensee could purchase the liquor from manufacturer and also from L-1A licensee but now L-1 licensee has to purchase only from L-1A licensee and the manufacturer is not eligible for the grant of L-1A licenses who have consent from the manufacturer will sell the liquor to the other license holders for the wholesale--Held;
(i) The State is fully empowered to frame policy for the sale of liquor and the courts shall be loathe in interfering in the same unless it is shown to be discriminatory or arbitrary--The creation of category of license L-1A between the distilleries and L-1 licencee to augment the revenue and stop leakage thereof cannot be said to be arbitrary--Thus, it is concluded that category licence L-1A in the Punjab Liquor Licence Rules 1956 in the modified form is legal and valid;
(ii) However, subclause (ii) of clause 2.14 of the Excise Policy nowhere prescribes the manner or method for the distillery or the competent authority to be adopted for issuing authority/consent letter to one person/company/firm/organization only--It does not satisfy the requirement of being transparent, objective and very importantly gives "Level Playing Field" to all applicants--The procedure does not eliminate the vices of unfairness, unreasonableness, discrimination, non-transparency, favouritism or nepotism in the award of authority/consent letter to an applicant--Thus, sub clause (ii) to that extent would not satisfy the mandate of reasonableness as enshrined under Articles 14 and 19(1)(g) of the Constitution of India;
(iii) Authorities directed to make appropriate amendment and prescribe necessary guidelines to the manufacturers/distilleries for issuing consent/authority letter to eligible applicants either by draw of lots, auction or any other mode providing equal opportunities in a transparent and objective manner--It shall, however, be open for the respondents to retain such right with the concerned authority, if so required.
(iv) If after taking corrective measures and inviting fresh applications/offers, in case no fresh offer or application comes forth, the allotments, if any, already made shall continue for the rest of the period--Punjab Excise Policy 2016-17, Clause 2-14(ii). (Para 32 to 36)
(B) Constitution of India, 1950, Article 19--Right to carry on trade or business of liquor--Fundamental rights enshrined in Article 19(1) of the Constitution of India are not absolute but qualified and are circumscribed by conditions contained in clauses (2) to (6) of Article 19 thereof--In other words, the fundamental rights guaranteed under Article 19(1)(a) to (g) of the Constitution of India have certain restrictions as enumerated in clauses (2) to (6) of the said Article 19--Further, the State is empowered to restrict or prohibit trades which are injurious to health and welfare of the public--Thus, citizens cannot claim fundamental right to trade or carry on business in such activities and potable liquor is one which falls in this category--Thus, trade of liquor can be completely prohibited by the State. (Para 14)
(C) Constitution of India, 1950, Article 19--Right to carry on trade or business of liquor--Though a citizen has no fundamental right to carry on trade or business of liquor but where the State decides to grant the right or privilege to carry on this trade, in such a situation, the State cannot escape the rigour of Article 14. (Para 15)
(D) Constitution of India, 1950, Article 19--Right to carry on trade or business of liquor--Article 14 of the Constitution of India would be clearly attracted wherever State decides to grant contracts or licences in the trade and business of liquor to be carried on by the citizens and the action of the Government would be amenable to judicial review wherein it violates any statutory provision or rights guaranteed under the Constitution of India. (Para 17)
Ajay Kumar Mittal, J.
1. This order shall dispose of CWP Nos.5593, 5740 and 7668 of 2016 as learned counsel for the parties are agreed that the issues involved in these petitions are identical. However, the facts are being extracted from CWP No.5593 of 2016.
2. In CWP No.5593 of 2016, the petitioner prays for quashing the newly created/added Clause 2.14 of L-1A licence in the Excise Policy dated 13.3.2016 for the year 2016-17, Annexure P.1 being arbitrary, illegal and against the provisions of the Punjab Excise Act, 1914 (in short, “the Act”) and the Punjab Liquor Licence Rules, 1956 (for brevity, “the Rules”) as Excise department has no power/authority to add, delete or cancel any kind of category of licence in the Excise policy without amending the relevant Acts and the Rules where there is a chart of liquor licences. Further prayer has been made for a direction to the respondents to bring clear cut transparency in the procedure for allotment of L-1A licence by holding draw of lots. Direction has also been sought to the respondents to decide the legal notice dated 17.2.2016, Annexure P.2 submitted by the petitioner and to stay operation of issuance of L-1A licence till the pendency of the present writ petition.
3. A few facts relevant for the decision of the controversy involved as narrated in CWP No.5593 of 2016. The petitioner is engaged in the business of liquor trade for the past so many years in the State of Punjab. In the month of March 2016, the State of Punjab announced its Excise policy for the year 2016-17 under the Act and the Rules. In the previous excise policy for the last year, there were different classes of licences mentioned in the Rules. The controversy arose when the State Government announced its excise policy for the year 2016-17 in which excise department has added a new dimension to the category namely L-1A licence which is above the category of L-1 licence which is a wholesale licence for the sale of Indian made foreign liquor (IMFL). The relevant portion of the terms and conditions for the allotment of new category of L-1A licence as stipulated in Clause 2.14 of the excise policy for the State of Punjab for the year 2016-17 reads as under:-
“Clause 2.14
i) It is necessary for the applicant for this licence to have an authority/consent letter from the manufacturing unit.
ii) Any manufacturing company cannot issue the authority/consent letter to more than one person/company/firm/organization.
iii) The manufacturing company will give this consent letter to that person/company/firm/organization who is at Arms Length Distance from the manufacturing company provided there is no promoter, director, partner in the manufacturing company or there is no holding, subsidiary, closely held company, fully/partially owned/financed/managed firm/company.
iv) L-1A licensee will purchase IMFL (except Beer) wine, RTD from the State or the manufacturing companies situated outside the State and will sell it to only L-1 licensees.
v) It is proposed that the licence fees for the L-1A (IMFL) for the year 2016-17 is fixed at Rs 2.50 crores and it is proposed to have the security amount of this licence fixed at Rs 25 lacs.”
According to the petitioner, the L-1A licence has been added/created just to monopolize the trade of liquor in the State of Punjab. Earlier, there was procedure in the excise policy that the person who was licensee of L-1 wholesale licence shall take the liquor directly from the manufacturing company. After adding L-1A licence, it has been specified that a person who is holder of L-1 licence will now have to take the liquor for sale from the L- 1A licensee i.e. newly created category of licence in the excise policy for the year 2016-17. It has been further claimed that the new licence has been created to monopolize the liquor trade and extend the same to the particular group of persons namely Chadha gro
