Andhra HC (Pre-Telangana)
Palagani Sudhakara Rao And Ors. vs Government Of A.P. And Ors. on 26 September, 2003
Equivalent citations: 2004(2)ALD592
Author: E. Dharma Rao
Bench: Bilal Nazki, E. Dharma Rao
JUDGMENT
E. Dharma Rao, J
1. The petitioners who are dealing in liquor and carrying on business of Bar and restaurants, under valid licence granted by the respondents under FL 17 and 24, seek to invoke extraordinary jurisdiction under Article 226 of the Constitution of India to issue a writ of mandamus declaring paragraph/Rule 5 of G.O. Ms. No. 16 Revenue (Ex.II) Department dated 12.1.1995 as ultra vires to the provisions of A.P. Prohibition Act, 1995 and Rules framed thereunder and violative of Articles 14, 19(1)(g), 21 and 300A of the Constitution of India.
2. It is averred that while the petitioners were conducting business in terms of their licences, the Government with a laudable object, imposed prohibition in the State of Andhra Pradesh and the State Legislature enacted The Andhra Pradesh Prohibition Act, 1995 introducing prohibition of sale and consumption of intoxicating liquors and matters connected therewith which received assent of the President on 17. 2.1995 and first Gazetted on 20-2-1995 in the A.P. Gazette and the Act replaced the Ordinance No. 19 of 1994 i.e., The Andhra Pradesh Prohibition Ordinance, 1994. Chapter III deals with prohibition and penalties. Section 7 prohibits selling, buying and consumption of liquor otherwise than in accordance with the provisions of the Act. Section 7-A thereof prohibits manufacture of liquor and Section 8 is penal provision. Section 9 prescribes punishment for being found in a state of intoxication. Section 31 of the Act speaks of overriding effect with a savings provision notwithstanding anything inconsistent contained in the provisions of the A.P Excise Act, 1968, with a saving clause under Section 32. Section 33 of the Act confers powers on the Government, by notification, to make Rules for carrying out all or any of the purpose of this Act.
3. While the matters stood thus, the Governor of Andhra Pradesh in exercise of the powers conferred under Sub-sections (3) and (4) of Section 13 read with Section 20 of the A.P, Prohibition Ordinance, has framed the Rules, under G.O. Ms. No. 16 Revenue (Ex-II) Department dated 12.1.1995 which was published in the A.P. Gazette Part-II Extraordinary dated 13.1.1995 for Surrender of Quantities of Liquor held by the individuals as on the date of commencement of Ordinance. Rule 1 of the Ordinance mandates that whoever is in possession of liquor at the commencement of the Ordinance i.e., 16.1.1995 and desirous of retaining the quantity of liquor not exceeding one quart bottle (750 ML) shall obtain a certificate issued by a Civil Surgeon appointed by the Government of Andhra Pradesh as to his/her need of periodic consumption of liquor for preservation and maintenance of health and shall surrender the remaining quantity to the Excise Sub-Inspector, under Rule 2 thereof. Rule 3 speaks that any person who has been licensee under the A.P. (Foreign Liquor and Indian Liquor) Rules, 1970 under any category of licence i.e., FL 17 of 24, shall file a written declaration of the quantity of stocks of various brands of liquor held by him as at the time of the expiry of licence on withdrawal by the competent authority, with 24 hours of such expiry of the licence and shall also obtain a transport permit from the Prohibition and Excise Sub-Inspector and transport such liquor so declared, to the premises of the Excise Station and surrender the same to the Excise Sub-Inspector and obtain an acknowledgment thereof within three days from the expiry of the licence. The petitioners are aggrieved of Rule 5 of the Rules which reads as under:
"...No compensation is payable for the stocks surrendered to the Prohibition and Excise Department as specified in paras 1, 2 and 3 above. However, persons who surrender stocks as specified in paras 1 and 2 above are entitled to receive the permitted quantity of stock from the stock so surrendered on production of a valid permit issued by the Competent Authority under Andhra Pradesh Liquor Issue of (Permit and Licence) Rules, 1995..."
4. It is submitted that the first petitioner, who is licensee and carrying on business under the name and style of Redlips Bar and Restaurant, Kaleshwarrao Market, Vijayawada; M/s. Lucky Bar and Wines, Kondapally, Krishna District and M/s Anupama Bar and Wines, Ibrahimpatnam, Krishna District, has surrendered stock worth of Rs. 2,36,894/- the second petitioner who is licensee and running his business in the name and style of Sri Vigneswara Restaurant and Bar, Ibrahimpatnam. Krishna District is said to have surrendered stocks worth of Rs. 28,794/- while the third petitioner who is a licensee and running his business under the name and style of Sri Kanakadurga Wines, Ibrahimpamam, Krishna District is said to have surrendered the stocks worth of Rs. 45,903/- as per the annexure and an acknowledgement was passed by the respondents.
5. It is the contention of the petitioners that they have purchased the stocks from the respondents paying the market value thereof, but in view of the total prohibition imposed by the Government, it terminated the licences of the petitioners, otherwise they were entitled to carry on the trade till the end of September, 1995. It is also their contention that they have invested huge amounts for carrying on the business and were eking out their livelihood. The respondents have sold the stocks to the petitioner till the last day and suddenly imposed prohibition without giving sufficient time to sell the stocks. In view of the ban imposed on selling the liquor in open market and due to sudden imposition of prohibition, the respondents ought to have received the stocks and reimbursed the value. Instead of that, the respondents in exercise of the powers, arbitrarily framed the Rules under G.O. Ms. No. 16 dated 12.1.1995. The second respondent Corporation, which is an instrumentality of the first respondent, sold the surrendered stocks to the permit holders at higher price. Thus the action of the respondents is offending Article 12 of the Constitution. Thus the writ petition came to be filed challenging the impugned* action of the respondents in not paying the compensation for the surrendered stocks of the petitioner consequent upon the cancellation of licences by virtue of imposition of prohibition in the State, before expiry of their term of licence, as offending Articles 14, 19(1)(g), 21 and 300A of the Constitution of India, as entire action is prejudicial to the interests of the petitioner and also violative of the procedure contemplated under Section 33(2) of the Excise Act.
6. On the other hand, the respondents filed their counter-affidavit stating that under Sub-section (3) and (4) of Section 13 read with Section 20 of the Andhra Pradesh Prohibition Ordinance 19 of 1994, the Government is competent to frame the Rules and thus G.O. Ms. No. 16 Revenue Department dated 12.1.1995 came into being and published on 13.1.1995 for the surrender of quantities of liquor held by the individuals as on the date of commencement of the Ordinance. It is further stated that under Section 32 of A.P. Excise Act, 1968, in pursuance of the policy decision of the Government to introduce total prohibition in the State, notices have been issued to all the IML licence holders, including the petitioners, by the Government on 12.12.1994, making it clear to them that their licences would stand withdrawn with effect from the expiry of thirty days from the date of receipt of the notice and that after the expiry of said period of thirty days, they shall not run the shop or do business in pursuance of the said licences and that the licence fee in respect of the un-expired portion of term of the licence shall be refunded/released to them after deducting any amount due to the Government. Questioning the legality of those notices, the licencees filed writ petitions before the High Court and interim orders were granted permitting all the licencees to carry on their business upto 16.1.1995. The writ petitions filed by the IML licencees questioning the issuance of Ordinance No. 19 of 1994 dated 29.12.1994, were dismissed by this Court. It is averred that though notices were issued to the licencees that after expiry of thirty days, their licences would stand withdrawn, without assessing the actual requirement of the stocks that they can dispose of, they have purchased more stocks which they could not dispose of by the stipulated date and as such they had to surrender the unsold stocks to the Department and therefore, the action of the department in taking away the unsold stock and not paying the actual cost of the stocks is strictly in accordance with the Ordinance and Rules. It is also stated that to avoid punishment, under the Act, the petitioners have surrendered the stocks. Therefore, Rule 5 which is sought to be struck down in this writ petition, is strictly in consonance with the scheme of the Ordinance and the Act.
7. By way of Additional counter-affidavit, a Division Bench judgment of this Court in Writ Appeal No. 1213 of 1997 dated 6-2-1998 was sought to be brought to the notice of this Court, wherein while sharing the view expressed by the learned Single Judge in the judgment dated 14.3.1996 in WP.No.17617 of 1995, the Bench upheld the observation that there is no provision either statutory or otherwise, which provides for payment of compensation. That writ petition was filed seeking payment of the compensation for the surrendered stocks or alternatively to deliver the stocks to the petitioners therein. While rejecting the relief, this Court directed the petitioners therein to approach the Government for the appropriate relief.
8. In the backdrop of these facts, the learned Counsel for the petitioners submitted that though the Ordinance No. 19 of 1994 was promulgated for imposition of total prohibition in the State on 29.12.1994, but it came into effect on 16.1.1995, but the Rules were framed under Section 13(3) and (4) read with Section 20 of the A.P. Prohibition Ordinance, 1994 through G.O. Ms. No. 16 Revenue (Ex.II), dated 12.1.1995, published on 13.1.1995 for surrender of quantities of liquor. Therefore, when the Ordinance came into force from 16.1.1995, the respondents should not have given effect to the Rules framed under the Ordinance prior to 16.1.1995. Consequently, Rule 5 providing no compensation for the surrendered stocks is contrary to the provisions of the Act.
9. He further submitted that the Government had no power as on 12-1-1995 to frame the Rules under Section 13(3) and (4) read with Section 20 of the A.P. Prohibition Ordinance, 1994, as the Ordinance had not come into force on that day; that at the most the Government should have framed the Rules after the Ordinance came into force i.e., on 13-1-1995. In support of his contention reliance is sought to be placed on a decision Venkateswaraloo and Ors. v. Superintendent, Central Jail, Hyderabad State and Ors. , , which arose under the Prevention Detention Act, 1950, as amended by Act 61 of 1952. The facts of the case are that in exercise of the powers conferred by Act 61 of 1952, the order extending detention was passed on 22.9.1952 and the Act itself was passed on 22.8.1952, but came into force on 30.9.1952. When the validity of the order was challenged, the Supreme Court held that an order extending the detention of the detenu till 31.12.1952 passed on 22.9.1952 in exercise of the powers conferred by Preventive Detention (2nd Amendment) Act which was passed on 30.9.1952 is illegal and cannot be justified by the provision of Section 22 General Clauses Act, 1897. The orders under Section 22 can only be issued with respect of the time when or the manner in which anything is to be done under the Act. An order for the extension of detention made in exercise of the powers conferred by the new Act is not an order with respect to the time when or the manner in which anything is to be done under the Act and, therefore, such an order could only be made under the Act after the Act had come into force and not in anticipation of its coming into force. The Act having no retrospective operation, it cannot validate an order made before it came into force.
10. To appreciate this contention, it is pertinent to make a mention here that though the Ordinance 19 of 1994 was issued on 29.12.1994, the licencees under the old Excise Act, 1968 and conducting business, were issued notices on 12.12.1994 making it clear to them that after expiry of 30 days of the notice, their licences shall stand withdrawn and that they shall not run their business after expiry of thirty days. It was also made clear to them that the proportion licence fee for the unexpired licence term shall be refunded/released to them after deducting any dues to the Government. Challenging the said notices, writ petitions came to be filed and interim orders were granted permitting the licencees to run their business up to 16.1.1995. Thus after expiry of 30 days from 12.12.1994, the petitioners have no right to conduct their business. Evidently, the Government with a view to provide sufficient time for the disposal of the stocks which the licencees had, though the Ordinance was promulgated on 29.12.1994, it came into effect from 16.1.1995, by which date even the 30 days period mentioned in the notices issued under Section 32 of the Excise Act, 1968 also expires. Cognizant of the said date, this Court also permitted the licencees to run their business upto 16.1.1995 under the interim orders. But, it is stated that even after receiving the notices from the respondent making it clear to them that their licences would stand withdrawn after 30 days of the notice, they have drawn stocks more than the actual requirement, in proxy of disposing of the same, but could not sell the same within the stipulated period. Thus when the petitioners themselves have violated the provisions of the Ordinance and could not sell the stocks before 16.1.1995, even as per the interim orders of this Court, they are estopped from contending that Rule 5 of the Rules for surrender of quantities of liquor is ultra vires the provisions of A.P. Prohibition Act, 1995 and the respondents have rightly seized the stocks. As stated earlier, 30 days period from the notice dated 12.12.1994 issued under Section 32 of the A.P. Excise Act, 1968, at any rate expires by 13.1.1995 and the Ordinance came into effect from 16.1.1995. Therefore, the petitioners are not right in contending that the respondents have acted upon the impugned Rules arbitrarily. If at all there is any lacuna, it is rectified by the interim orders of this Court permitting the licencees to continue their business upto 16.1.1995.
11. As seen from the acknowledgements filed along with the affidavit, the petitioners have surrendered the stocks on 20.1.1995 in terms of the notice dated 12.12.1994. Thus the contention of the learned Counsel for the petitioners that the respondents have framed the Rules before the Ordinance coming into force under Section 13 of the Act, has no force.
12. Rule 1 framed under the Ordinance mandates that whoever is in possession of liquor at the commencement of the Ordinance i.e., 16.1.1995 and desirous of retaining the quantity of liquor not exceeding one quart bottle (750 ML) shall obtain a certificate issued by a Civil Surgeon appointed by the Government of Andhra Pradesh as to his/her need of periodic consumption of liquor for preservation and maintenance of health and shall surrender the remaining quantity to the Excise Sub-Inspector having jurisdiction over the area by 5.00 p.m., on 17.1.1995. Under Rule 2, any person who on or after 16.1.1995 is in possession of any liquor without any Medical Certificate, as to the need for consumption of liquor, shall surrender such liquor to the Prohibition and Excise Sub-Inspector, having jurisdiction over the area by 5.00 p.m., on 17.1.1995. Rule 3 speaks that any person who has been licensee under the A.P. (Foreign Liquor and Indian Liquor) Rules, 1970 under any category of licence i.e., FL 17 of 24, shall file a written declaration of the quantity of stocks of various brands of liquor held by him as at the time of the expiry of licence on withdrawal by the competent authority, with 24 hours of such expiry of the licence and shall also obtain a transport permit from the Prohibition and Excise Sub-Inspector and transport such liquor so declared, to the premises of the Excise Station and surrender the same to the Excise Sub-Inspector and obtain an acknowledgment thereof within three days from the expiry of the licence.
13. Rule 5, which is sought to be struck down in this writ petition reads that no compensation is payable for the stocks surrendered to the Prohibition and Excise Department as specified in paras 1, 2 and 3 above. However, persons who surrender stocks as specified in paras 1 and 2 above are entitled to receive the permitted quantity of stock from the stock so surrendered on production of a valid permit issued by the Competent Authority under Andhra Pradesh Liquor Issue of (Permit and Licence) Rules, 1995.
14. The petitioners having received notices dated 12.12.1994, ought to have drawn required quantities of liquor only and disposed of the same before expiry of 30 days. But the stocks were surrendered on 20.1.1995, as can be evidenced by the acknowledgements, which is violative of Rule 3 of the Rules framed under G.O. Ms. No. 16 dated 12.1.1995, which mandates that the licencee of any category shall file a written declaration of the quantity of stock of various brands of liquor held by him as at the time of the expiry of his licence on withdrawal by the competent authority within 24 hours of such expiry of the licence and shall also obtain acknowledgement of the surrendered quantity within three days from the expiry of licence. Admittedly, the licences of the petitioners stood withdrawn after 30 days from 12.12.1994 i.e., by 10.1.1995 at any rate not later than 16.1.1995, even in terms of the interim orders passed by this Court. But the petitioners have surrendered the stocks on 20.1.1995 i.e., seven days after the Rules framed under G.O. Ms. No. 16 dated 12.1.1995 were published on 13.1.1995. This lapse on the part of the petitioners disentitle them from receiving any compensation.
15. That apart, it is pertinent to note that even if the Rules are not given effect to on 13.1 1995, the petitioners have no licences to hold the stocks or conduct business after expiry of thirty days from 12.12.1994. Section 22 of the General Clauses Act, 1897, contemplates that where by any Central Act or Regulation, which is not to come into force immediately on the passing thereof, a power is conferred to make Rules or bye-laws or to issue orders with respect to the application of the Act or Regulation, or with respect to the establishment of any Court or office or the appointment of any Judge or Officer thereunder or with respect to the person by whom, or the time when, or the place where, or the manner in which, or the fees for which anything is to be done under the Act or Regulation, then that power may be exercised at any time after the passing of the Act or Regulation; but Rules, Bye-laws or Orders so made or issued, shall not take effect till the commencement of the Act or Regulation.
16. This Section is analogous to Section 37 of the English Interpretation Act, 1889 i.e., exercise of powers between passing and the commencement of Act. This section is filling in of the gap the commencement of Act. This section is filling in of the gap between the passing and the coming into operation of an enactment. An Act may be passed any day but its commencement may be postponed and various orders or Rules may be needed to bring it into operation. This section virtually provides for the things preparatory to the commencement of an Act and an authority is given by this section to make provision for all such incidents and instrumentalities with the aid of which enactment is to achieve its purpose. However, Section 22 can be utilized only in such situations where an Act would not come into force immediately; secondly though the power given under the section may be exercised at any time, after the passing of the Act, yet the condition is firstly the Rules, Bye-laws, Orders, etc., must be within the scope of the Rule making power conferred by the statute, that the preparation so set or the background so created shall be effect and recognized not earlier than the commencement of the Act. Section 22 expressly confers on a rule making authority, where there is an interregnum between the date of the commencement of the Act and the date of its enactment.
17. A reading of this Section makes it clear that Government is empowered to make Rules, bye-laws, orders, etc., in consonance with the Act before the Act or the Regulation came into force, but those Rules framed under subordinate legislation shall come into force only after the Act or Regulation came into operation, as per the notification of the Government.
18. Applying the ratio that emerges from the above decision to the facts and circumstances of the case, though the Ordinance came to be promulgated on 29.12.1994, but it came into effect on 16.1.1995 and the Rules were framed under Section 13(3) and (4) of the Ordinance, under G.O. Ms. No. 16 dated 12.1.1995 and were published on 13.1.1995. Thus though the Rules were published on 13.1.1995, they came into force only from 16.1.1995. Therefore, applying the interpretation of Section 22 of the General Clauses Act, we have no hesitation in holding that the Government is empowered to frame Rules preparatory to the commencement of the Act. Accordingly, we hold that the Rules validly came into force from 16.1.1995, by which date the Ordinance came into force. This view of ours is fortified by the judgment of Supreme Court in The State of Rajasthan v. The Mewar Sugar Mills Limited, Bhopal Sugar, . This case arises out of Rajasthan Sales Tax Act, which received the assent of the President on 22.12.1954 but came into force on 1.4.1955; the Rules framed under Section 26 of the Act were published on 28.8.1955. Their Lordships held that by reason of Section 22 of the General Clauses Act, the Rules are legally operative from 1.4.1955 read with Section 29 of Sales Tax Act. It is further held that the Rules published in Gazette must be held to be validly made in exercise of the rule making power under the Sales Tax Act but they would be deemed to be not in force for the period between 28.8.1955 to 31.8.1955. The Rules should be deemed to have validly come into effect from 1.4.1955. It is further held that Section 22 of the General Clauses Act is a section dealing not merely with construction but with interpretation and so the provisions of that section are applicable for the interpretation of the Sales Tax Act in view of the requirement of Section 29 thereof.
19. A reading of the Rules framed under G.O. Ms. No. 16 Revenue (Ex.II), dated 12.1.199.5 and Section 22 of the General Clauses Act, makes it clear that the Government is empowered to frame Rules, Bye-laws, Orders, etc. in the interregnum period between the date of commencement of the Act and the date of its enactment, but herein the Rules have come into operation on 16.1.1995. Even as per notice dated 12!l2,1994, after expiry of thirty days therefrom, the petitioners had no licence to carry on their avocation in liquor and thus, they had no option but to surrender the same to the Prohibition and Excise Department. Even otherwise, under the guise of the interim orders passed by this Court, the petitioners and other licencees, have carried on their avocation up to 16.1.1995.
20. As submitted by the learned Government Pleader, the petitioners have drawn more quantity of liquor than what is actually required, but could not sell the same in the stipulated time. Therefore, for their own lapse and proxy, they have to suffer. Under Section 22 of the General Clauses Act, the Government is empowered to frame Rules under Section 13(3) and (4) of Ordinance before the Ordinance comes into force, which is preparatory to the commencement of the Act. Therefore, it cannot be said the framing of Rules under G.O. Ms. No. 16 Revenue (Ex.II), dated 12.1.1995 published on 13.1.1995 and came into effect from 16.1.1995, are ultra vires to the provisions of A.P. Prohibition Act, 1995 or violative of Articles 14, 19(1)(g), 21 and 300-A of the Constitution of India.
21. That apart, a learned Single Judge of this Court while upholding the validity of the Rules in Writ Petition No. 17617 of 1995 by order dated 14.3.1996, direpted the petitioners therein to make representation to the Government for payment of compensation for the surrendered stocks, if any and a, Division Bench of, this Court in W.A. No. 1213 of 1997 confirmed the view expressed by the learned Single Judge.
22. Viewed from any angle, we do not see any reason to struck down Rule 5 of G.O. Ms. No. 16 Revenue (Ex.II) Department dated 12.1.1995 as ultra vires to the provisions of A.P. Prohibition Act, 1995 or violative of Articles 14, 19(1)(g), 21 and 300-A of the Constitution of. India. Consequently, the writ petition , fails and is accordingly dismissed. No order as to costs.