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1977 Supreme(All) 96
Allahbad High Court
D.M.CHANDRASHEKHAR,R.M.SAHAI
Sir Shadi Lal Distillery and Chemical Works, Muzaffarnagar - Appellant
Versus
State of U.P. - Respondent
Decided On : 04/11/1977
S.K. Suri, for Petitioner; Standing Counsel, for Opposite Parties.
The grant of the exclusive privilege of supplying country liquor in wholesale is governed by statutory provisions, rules, and conditions, and the Excise Commissioner's discretion in accepting or rejecting tenders is not absolute. A tenderer with a distillery located within the district tendered for and a tender for the same has a preferential claim to the privilege.
Headnote:
EXCISE - GRANT OF EXCLUSIVE PRIVILEGE OF SUPPLYING COUNTRY LIQUOR IN WHOLESALE - U. P. EXCISE ACT, 1910, SS. 24, 37 - U. P. EXCISE RULES, 1968, R. 417 - CONDITIONS 13, 14, 15 - PREFERENCE TO DISTILLERY LOCATED WITHIN THE DISTRICT TENDERED FOR - DISCRETION OF EXCISE COMMISSIONER - JUDICIAL REVIEW.
Fact of the Case:
Petitioner, a distiller with a distillery in Muzaffarnagar district, tendered for the exclusive privilege of supplying country liquor in wholesale in that district. The Excise Commissioner granted the privilege to the opposite party, a distiller with a distillery in Bijnor district, who had not tendered for Muzaffarnagar district. The petitioner challenged the Commissioner's order, arguing that it had a preferential claim to the privilege due to its distillery's location in Muzaffarnagar district and its tender for the same.
Finding of the Court:
The court held that the Excise Commissioner's action in overlooking the petitioner's claim and granting the privilege to the opposite party was not a mere technical defect or irregularity but a violation of the statutory provisions and conditions governing the grant of the privilege. The court found that the petitioner had a better claim to the privilege than the opposite party, considering its distillery's location in Muzaffarnagar district and its tender for the same.
Issues: 1. Whether the Excise Commissioner had absolute discretion in accepting or rejecting tenders for the exclusive privilege of supplying country liquor in wholesale? 2. Whether the petitioner had a preferential claim to the privilege due to its distillery's location in Muzaffarnagar district and its tender for the same? 3. Whether the Excise Commissioner's action in granting the privilege to the opposite party was a mere technical defect or irregularity or a violation of the statutory provisions and conditions governing the grant of the privilege?
Ratio Decidendi: 1. The court held that the Excise Commissioner's discretion in accepting or rejecting tenders was not absolute and was subject to the provisions of the U. P. Excise Act, 1910, the U. P. Excise Rules, 1968, and the conditions prescribed thereunder. 2. The court found that the petitioner had a preferential claim to the privilege due to its distillery's location in Muzaffarnagar district and its tender for the same, as per Condition 14 of Rule 417 of the U. P. Excise Rules, 1968. 3. The court held that the Excise Commissioner's action in overlooking the petitioner's claim and granting the privilege to the opposite party was not a mere technical defect or irregularity but a violation of the statutory provisions and conditions governing the grant of the privilege, and therefore could not be cured under Section 37 of the U. P. Excise Act, 1910.
Final Decision: The court allowed the petition, quashed the Excise Commissioner's order granting the privilege to the opposite party, and directed the Commissioner to consider afresh and dispose of the privilege of supplying country liquor in Muzaffarnagar district according to law.
D. M. CHANDRASHEKHAR, J. :- In this petition under Art. 226 of the Constitution, the petitioner has prayed for quashing the order of the Excise Commissioner, Uttar Pradesh, dated 28-3-1977 (Annexure-I) in so far as it relates to giving to opposite party No. 3 the exclusive privilege of supplying country liquor in wholesale in Muzaffarnagar district.
2. Certain material facts which are not in dispute may be stated. The petitioner as well as opposite party No. 3 are distillers having their distilleries in the districts of Muzaffarnagar and Bijnor respectively. For the year 1977-78 the Excise Commissioner, Uttar Pradesh (opposite party No. 2) invited tenders for grant of licences for the exclusive privilege of supplying country liquor in wholesale in various districts. The petitioner who had been granted the exclusive right of supplying country liquor in wholesale in the district of Muzaffarnagar for the year 1976-
77, gave its tender for supply of country liquor in that district for the year 1977-78 also. Opposite party No. 3 had also given a tender for the supply of country liquor in wholesale, but not for the district of Muzaffarnagar. The rates offered by both the petitioner and opposite party No. 3 for supply of country liquor, were the same. By the impugned order dated 28-3-77 the Excise Commissioner granted to the petitioner the exclusive right of supplying country liquor in wholesale in the district of Bijnor and granted similar right to opposite party No. 3 in the district of Muzaffarnagar.
3. The case of the petitioner is that as it had its Distillery in Muzaffarnagar district and had also tendered for supplying liquor in that district, it (the petitioner) should have been granted the privilege of supplying liquor in Muzaffarnagar district and that the Commissioner of Excise was not justified in granting such privilege to opposite party No. 3 which did not have its Distillery in Muzaffarnagar district and had not submitted a tender for supplying country liquor in Muzaffarnagar district.
4. In the counter-affidavit filed on behalf of the opposite parties Nos. 1 and 2 namely State of U. P. and the Excise Commissioner, the stand taken is briefly as follows;
The Excise Commissioner has under the provisions of the Uttar Pradesh Excise Act 1910 (hereinafter referred to as the Act) and the rules framed thereunder, absolute right to accept or reject any tender and to give the exclusive right of supplying country liquor in wholesale in any district, to any of the tenderers. The petitioner had given an undertaking that it would accept any district allotted to it for supplying country liquor in wholesale. There were certain complaints against the petitioners Distillery of illegal supply of country spirit in Muzaffarnagar district and investigation by the Bureau of Intelligence is going on. During such investigation the State Government had suspended the Superintendent and Excise Inspector, Muzaffarnagar district. The petitioner cannot claim as of right that it should be granted the privilege of supplying country liquor in wholesale in any particular district.
5. In order to appreciate the rival contentions on behalf of the petitioner and opposite parties Nos. 1 and 2, it is useful to set out the relevant provisions of the Act and the rules thereunder.
6. Section 24 of the Act reads:
"S. 24- Subject to the provisions of S. 31 the Excise Commissioner may grant to any person a licence for the exclusive privilege
(1) of manufacturing or of supplying by wholesale, or of both; or
(2) of selling by wholesale or by retail; or
(3) of manufacturing or of supplying by wholesale, or of both and of selling by retail; any country liquor or intoxicating drug within any local area."
Rule 417 reads as under:
"The firm is selected in the following manner:
The tenders in form C. L. 23 are invited by the Excise Commissioner vide notice in form C. L. 22 for the rates at which the different categories of spirit will be supplied at all specified bonded
