Himachal Pradesh High Court
Aditya Nath Sharma And Another vs State Of Hp And Others on 25 July, 2019
Bench: V. Ramasubramanian, Anoop Chitkara
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .
CWP No. 1323 of 2019.
Judgment reserved on 11.7.2019 Decided on: 25.7.2019 Aditya Nath Sharma and another .......Petitioners.
Versus
State of HP and others ...Respondents.
Coram
r to
The Hon'ble Mr. Justice V. Ramasubramanian, Chief Justice. The Hon'ble Mr. Justice Anoop Chitkara, Judge. Whether approved for reporting? Yes For the petitioners: Mr. Karan Singh Kanwar, Advocate. For the respondents: Mr. Ajay Vaidya, Senior Additional Advocate General with M/s J.K. Verma, Ritta Goswami, Adarsh Sharma and Ashwani K. Sharma, Additional Advocate General for respondents No. 1 to 4.
Mr. Anup Rattan, Advocate, for
respondent No.5.
V. Ramasubramanian, Chief Justice.
Challenging the grant of a L10 BB license dated 15.3.2019 in favour of the 5th respondent and the renewal of the same by proceedings dated 12.6.2019, the petitioner who holds a L2 licensee to vend Indian Made Foreign Liquor has come up with the above writ petition.
::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 22. Heard Mr. Karan Singh Kanwar, learned counsel for the petitioners, Mr. Ajay Vaidya, learned Senior Additional .
Advocate General and Mr. Anup Rattan, learned counsel for respondent No.5.
3. The second petitioner holds a L2 license to retail vend Indian Made Foreign Liquor and it is claimed by the petitioners that the shop is being run in the name of the first petitioner.
4. According to the petitioners, they are obliged to pay excise duty to the tune of Rs.12,76,00,000/ (rupees twelve crores seventy six lacs only), as per the terms of the L2 license and that they have been running the shop for the past several years.
5. The case of the petitioners is that the 5th respondent was granted a license in Form L10 BB by the proceedings dated 15.3.2019, for the period from 14.3.2019 to 31.3.2019 for the year 20182019. But the license was suspended by the Commissioner of State Taxes and Excise by a subsequent proceeding dated 23.3.2019 on the ground that the Model Code of Conduct issued by the Election Commission ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 3 of India was in force at that time. Eventually, license issued on 15.3.2019 to the 5th respondent was cancelled by the .
proceedings dated 26.4.2019.
6. Challenging the order of cancellation dated 26.4.2019, the 5th respondent came up with a writ petition in CWP No. 971/2019. After notice, it was reported by the learned Senior Additional Advocate General that the cancellation order dated 26.4.2019 was withdrawn by the competent Authority subsequently. Therefore, recording said fact, CWP No. 971/2019 was ordered to be closed. However, this Court left it open to the respondents to consider the application filed by the 5th respondent for renewal of his license for the year 2019 2020.
7. Thereafter a license in Form L10 BB was granted to the 5th respondent on 12.6.2019. Challenging the same, the petitioners have come up with the above writ petition.
8. The attack of the writ petitioners in this writ petition, is to two proceedings, one dated 15.3.2019 and another dated 12.6.2019. While the proceedings dated 15.3.2019 is the grant for the year 20182019, the proceedings ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 4 dated 12.6.2019 is renewal of the said grant for the year 2019 2010.
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9. The license as well as renewal are assailed by the petitioners primarily on the following grounds:
(i) That in terms of the policy of the State Government for the allotment of retail excise vends for the year 20192020, L10 BB licenses can be granted for urban areas only to departmental stores having a minimum floor area of 1000 square feet, but the 5th respondent does not have such a floor space;
(ii) That under the policy of the State for the grant/renewal of license for the year 20192020, L10 BB licenses shall be granted in urban areas only to those departmental stores having an annual turnover of not less than Rs. 2 crores, but the 5th respondent does not have so much of a turnover;
(iii) That the Excise Policy for the year 20192020 also mandates certain distance parameters to be maintained between an existing L2 vend and the departmental store ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 5 which applies for L10 BB licenses, but these parameters have not been followed; and .
(iv) That when the license was granted on 15.3.2019, the Model Code of Conduct issued by the Election Commission of India was in force and hence, the grant was illegal.
10. In response, it is contended by the learned Additional Advocate General and the learned counsel for the 5th respondent (i) that the prescriptions regarding the floor area of 1000 square feet and the minimum turnover of Rs.2 crores, will not apply to existing licensees; (ii) that the distance parameters were taken into account before the grant of the license; (iii) that the proceedings dated 15.3.2019 were first kept in abeyance due to the Model Code of Conduct being in force and the same were later withdrawn on 26.4.2019, but a renewal was granted on 12.6.2019 after the elections were over and (iv) that therefore, there was no illegality in the matter of grant/renewal of license in favour of the 5th respondent.
11. We have carefully considered the above submissions.
::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 612. Before consider the rival contentions, a brief prelude may be necessary. Till Himachal Pradesh became an .
independent State, the law relating to import, export, transport, manufacture, sale and possession of intoxicating liquor was governed by the Punjab Excise Act, 1914 ( Punjab Act of 1914). After the reorganization of the States, the provisions of the same Act were adopted.
13. Section 58(1) of the Punjab Excise Act, 1914 confers power upon the State Government to make Rules for carrying out the provisions of the Act. Section 58 (2) (f) of the Act indicates that the procedure to be followed for the grant of a license for the retail vend of liquor, is one of the matters about which provision can be made in the Rules framed by the Government.
14. In exercise of the powers so conferred by the aforesaid provisions, the State issued a set of Rules known as "Himachal Pradesh Liquor License Rules, 1986". These Rules were divided into several parts, with part A dealing with classes of licenses and the authorities empowered to grant and ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 7 renew licenses. Part 'B' contains regulations governing the grant and renewal of licenses.
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15 Part 'A' deals with:
(i) Foreign liquor;
(ii) Country spirit;
(iii) Denatured spirit;
(iv) Rectified spirit;
(v) Country fermented liquor and Country spirit
prepared from fruits; and
(vi) Special items.
16. Part 'A' of the aforesaid Rules contemplates the grant of different types of licenses.
17. We are concerned in this litigation with the grant of a L10 BB license in favour of 5 th respondent. The challenge to the grant is at the behest of a person having a L2 license.
In other words, the writ petition is by persons having competing business interests.
18. As per the table contained in part 'A' of the Rules, a L2 license is for the retail vend of foreign liquor to the public only and whole sale vend to certain types of licensees.
::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 819. In contrast, a L10 BB license is for the retail vend of beer, wine, cider and ready to drink beverages by .
departmental stores etc. for consumption off the premises.
20. Rule 19A stipulates the conditions to be fulfilled by a person who seeks a license in Form L10 BB. In fact, Rule 19A was inserted only by a Notification dated 31.3.2001. The conditions stipulated in Rule 19A appear to have undergone several modifications and amendments ever since the year 2001. These modifications and amendments were primarily based upon the Excise Policy announced annually, year after year.
21. In the year 2011, the State of Himachal Pradesh got its own enactment known as "Himachal Pradesh Excise Act 2011 ( HP Act No. 33 of 2012). By Section 82 of HP Act No. 33 of 2012, all the provisions of the Punjab Excise Act, 1914, except a few such as Section 58, got repealed. It may be recalled that the Rule making power is conferred upon the State Government only under Section 58 of the Punjab Excise Act, 1914. This Section 58 of the Punjab Excise Act, 1914 is not ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 9 repealed by the HP Act 33 of 2012, as could be seen by Section 82 (1) of Himachal Pradesh Act No. 33 of 2012.
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22. Even under the Himachal Pradesh Act No. 33 of 2012, the State Government is conferred with Rule making powers under Section 80 (1). The matters in respect of which the State Government may make rules, are also enlisted in subSection (2) of Section 80 of HP Act No. 33 of 2012. Clauses
(i) and (j) of sub Section (2) of Section 80 read as follows:
"80(2) (i). regulating the periods and localities for which, and the persons, or classes of persons, to whom, licenses, permits and passes for the vend by wholesale or by retail of any liquor may be granted and regulating the number of such licenses which may be granted in any local area;
(j) providing for the procedure to be followed and the matters to be ascertained before any license is granted for the retail vend of liquor for consumption on the premises;"
23. It is interesting to note that Clauses (i) and (j) of subSection (2) of Section 80 of HP Act No. 33 of 2012 are in parimateria with Clauses (e) and (f) of subSection (2) of Section 58 of the Punjab Act of 1914.
24. Therefore, it appears that the Rule making power for the government of HP flows both out of Section 58 of the ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 10 Punjab Excise Act, 1914 and out of section 80 of the HP Act No. 33 of 2012.
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25. We do not know why Section 58 of the Punjab Excise Act of 1914 was not repealed, especially when identical provisions are incorporated in Section 80 of the HP Act No. 33 of 2012.
26. Be that as it may, the Government of Himachal Pradesh do not seem to have framed a new set of Rules in exercise of the powers conferred by Section 80 (1) of HP Act No. 33 of 2012. Therefore, as on date, Himachal Pradesh Liquor License Rules, 1986 issued in exercise of the power conferred by Section 58 (1) of the Punjab Excise Act 1914 continue to be in force.
27. As we have pointed out earlier, Rule 19A lists out conditions to be fulfilled for the grant of a license in Form L10 BB. These conditions are changed from time to time depending upon the Excise Policy announced by the Government year after year. But many a time, the conditions stipulated in the Excise Policy of a particular year are not carried into effect by making an appropriate amendment to the rules (especially ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 11 Rule 19A). This has to be specifically taken note of, in view of Section 58 (3) of Punjab Act No. 1 of 1914 which mandates that .
the power conferred by the Section for making Rules is subject to the condition that the Rules be made after previous publication. Though the proviso to subSection (3) of Section 58 of the Punjab Act No. 1 of 1914 enables the State Government to make Rules without previous publication, if the Government considered that they should be brought into force at once, the requirement to make amendment to the Rules in tune with the change of policy, year after year is not to be dispensed with.
28. Keeping the above Scheme of the Rules in mind, if we come back to the contentions on the basis of which the petitioners have sought the cancellation of the license granted to the 5th respondent, it may be seen that the first contention relates to the nonavailability of required floor area in the departmental store run by the 5th respondent. The requirement of a floor area of 1000 square feet for a departmental store, to be eligible for the grant of a license in Form L10 BB was stipulated in Para 12.39(c) of the"Announcements for the ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 12 Allotment of Retail Excise Vends by Renewal for the Year 20192020". But the said condition reads as follows:
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"The L10BB license shall in future be granted/renewed in Urban areas only to the departmental store with minimum floor area of 1000 square feet and the condition of minimum floor area will not apply to the existing licenses."
29. It is clear from the above provision that the stipulation of a minimum floor area of 1000 square feet, will not apply to existing licenses. Admittedly, the policy under which the above stipulation was inserted was for the financial year 20192020. The financial year 20192020 commenced only on 1.4.2019. The petitioner was granted a license on 15.3.2019.
Therefore, he was an existing licensee, when the proceedings were issued on 12.6.2019. In such circumstances, the first ground of attack of the petitioners cannot hold good.
30. The second ground of attack to the grant of license to the 5th respondent is that the 5th respondent does not have an annual turn over of not less than rupees 2 crores as prescribed by the policy for the year 20192020. But this prescription regarding the minimum annual turn over was also inserted in Rule 19A, only by way of an amendment ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 13 Notification bearing No. 7832/2018EXN10188 dated 11.4.2019. The newly inserted subRule reads as follows:
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"(i) The L10BB licenses shall be granted in urban areas to departmental stores having annual turnover of not less than Rs. 2 Crores. The registration fee of L10BB licenses is fixed at Rs. 2 lacs per annum."
31. It is relevant to note that the above Rule inserted by way of a Notification dated 11.4.2019 speaks only of "the grant of L10BB license". It does not speak of renewal.
Therefore, the notification dated 11.4.2019 cannot be applied for the renewal of an existing license. According to the official respondents, the case of the 5 th respondent was one of renewal and not of a grant for the first time. Therefore, the Rule could not have been applied to a renewal.
32. Interestingly, the prescription regarding the minimum floor area of 1000 square feet was also incorporated only under the amendment Notification dated 11.4.2019. The Rule regarding minimum floor area reads as follows:
"(ii) The L10BB license shall in future be granted/renewed in Urban areas only to the departmental store with minimum floor area of 1000 ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 14 square feet and the condition of minimum floor area will not apply to the existing licenses."
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33. It may be seen from the above rule prescribing a minimum floor area that it speaks both about the grant and about the renewal. That is why the last line of the above Rule says that the condition will not apply to the existing licenses.
Since the Rule relating to minimum annual turn over speaks only about the grant and not about the renewal, there was no necessity for incorporating in the Rule relating to minimum annual turn over, a prescription as found in the last line of the Rule relating to minimum floor area. Therefore, the second ground of attack to the impugned order should also fail.
34. The third ground of attack to the impugned grant/renewal is that the distance parameters prescribed in the Excise Policy for the year 20192020 are not followed. The distance parameters found in the amendment Notification dated 11.4.2019, which now forms part of Rule 19A read as follows:
"(vi) No person to whom a license in form L10BB is granted shall establish the vend at a distance of not less than 100 (one hundred) metres from any recognized educational institutions and 30 (thirty) ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 15 metres from place of worship by public at large, inter district Bus Stands, cremation or burial grounds falling in the limits of Municipal Corporation, Municipal Committee and Notified area .
Committee which are Urban areas having concentration of population. However, the distance of liquor vends from prominent places of worship by public at large i.e. Jakhoo Temple and Sankat Mochan Temple in Shimla district, Chintpurni Temple in Una district, Jwala Ji Temple in Kangra district and Shree Naina Devi Ji Temple in Bilaspur district must not be less than 500 metres.
In so far as areas other than those mentioned in the foregoing paragraphs are concerned, the distance for establishing liquor vends shall not be less than 100 (one hundred) metres from any recognized educational institution and 60 metres (sixty metres) from any place of worship by public at large, inter district Bus Stand, cremation or burial grounds.
No license for L10BB shall be granted at a site if,
(i) such site is situated within 220 meters from the outer edge of any National or State Highway or of a service lane along such highway:
(ii) such site is situated within 500 meters but above 220 meters from the outer edge of any National or State Highway or of a service lane along such highway except in areas comprised in local bodies with a population of 20,000 people or less.
Provided that the distance mentioned above shall be measured along the road which is walkable/motorable. Provided further that the above restrictions shall not apply to sites located within municipal areas."
35. The grievance of the writ petitioners is not that the departmental store of the 5th respondent is located within the ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 16 prohibited distance from a recognized educational institution, or a place of worship or an interDistrict Bus Stand or cremation or .
burial grounds etc. The only grievance of the petitioners as seen from the averments contained in para 17 of the writ petition is that it is very close to the L2 vend of the petitioners and is located just 25 meters from the vend of the petitioners. No Rule is brought to our notice that there is a prohibition for the grant of L10BB licenses for a departmental store located at a particular distance from a L2 vend. Unless the petitioner is able to plead and establish that the grant/renewal was in violation of the distance parameters stipulated in the amended Rule 19A, the third ground of attack cannot be accepted.
36. The last ground of attack to the impugned grant/renewal is that on the date on which a license was granted on 15.3.2019, the Model Code of Conduct issued by the Election Commission of India was in force. But this ground of attack is like flogging a dead horse. Immediately after the grant of license on 15.3.2019, the Commissioner of State Taxes passed an order dated 20.3.2019 suspending the same on the very same ground.
Thereafter an order of revocation was passed on 26.4.2019. After the Model Code of Conduct was lifted, the revocation order dated ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP 17 26.4.2019 was withdrawn. Therefore, the issue with regard to the grant of license during the subsistence of the Model Code of .
Conduct has already been dealt with in accordance with law and closed. Hence the same cannot any more be a ground of attack.
37. As we have pointed out at the beginning, the petitioners have a L2 license. The challenge to the license granted to the 5th respondent, though couched in legal terms, is actually based upon r business rivalry. Competitions in commercial ventures are to be fought and settled only in the market place.
38. We find none of the grounds of attack to the impugned grant/renewal legally sustainable and hence the writ petition is dismissed alongwith pending applications, if any.
There will be no order as to costs.
(V. Ramasubramanian) Chief Justice (Anoop Chitkara) Judge July 25, 2019 (cm Thakur ) ::: Downloaded on - 29/09/2019 01:15:56 :::HCHP