Karnataka High Court
Hotel Bangalore International ... vs State Of Karnataka, By Its Prl. ... on 18 July, 2003
Equivalent citations: ILR2003KAR4295, 2003 AIR - KANT. H. C. R. 2408
Author: N.K. Patil
Bench: N.K. Patil
ORDER Patil, J.
1. In these Writ Petitions, wherever Rule is not issued, issue Rule nisi.
2. In these petitions, the petitioners, questioning the legality and correctness of the impugned Notification dated 1st April 2003 in No. FD. 20 PES 2002, published in the Karnataka Gazettee No. 347 dated 1st April 2003 vide Annexure A, have presented these petitions. Further, they have sought for a writ of prohibition or any other appropriate writ, prohibiting the respondents 2 to 4 from demanding minimum lifting of liquor by the petitioners.
3. The petitioners herein are the holders of Clause 2 and Clause 9 licences. They have approached this Court being aggrieved by the Notification dated 1st April 2003 in respect of sale of liquor in a particular area or city or a town or location, depending upon the probable demand of the consumers. Therefore, it is their case that it is neither possible nor feasible to specify the minimum quantity of liquor to be sold by the retailers including the Bar and Restaurants since the sale of liquor is not in the hands of licence holders. That apart, the sale of liquor also depends upon the locality in which, the licenced retail liquor business is situated and therefore, there cannot be any yardstick or a general estimation as to the sale of liquor in a particular area. It is the further case of the petitioners that people hailing from elite section of the society consume more time and less liquor, whereas, the people from lower strata consume more liquor in a lesser time. Therefore, the learned Counsel appearing for the petitioners submits that the intent of the legislation while framing the Rules, governing the sale of liquor was that no such compulsion can be imposed for sale of liquor and so also the mandate of Article 47 of the Constitution of India, which makes it a fundamental obligation on the state to bring about prohibition of consumption of intoxicating drinks and therefore, no such compulsion finds a place anywhere either in the Act or the Rules framed thereunder. He submitted that moreover, the preamble of the Karnataka Prohibition Act, 1961 states that 'whereas it is expedient to amend and consolidate the law relating to the promotion and enforcement of and carrying out the policy of prohibition of consumption except for medicinal purposes of intoxicating drinks and drugs and to provide for certain other purposes hereinafter appearing and that the said Act is in force and not been repealed so far. He submits that this aspect of the matter has not at all been taken into consideration by the first respondent while issuing the impugned Notification.
4. Be that as it may, the respondents herein have taken a decision to bring an amendment to Rule 14 of the Karnataka Excise (Sale of Indian and Foreign Liquor) Rules, 1968 (hereinafter referred to as the 'Rules') and has issued the draft Notification calling for objections from the licencees. Accordingly, some of the petitioners and some members of the Wine Merchants Association ('Association' for short) have filed detailed objections before the respondents opposing the amendment of Rules sought to be made. After filing the objections, the respondents have taken into consideration the objections and the reports submitted by the respective Deputy Commissioner of various Districts and in turn, a report has been submitted to the Committee for consideration. The committee in turn after considering the objections and other statistics collected by the Excise Department has over-ruled the objections and has issued the impugned Notification. Feeling aggrieved by the impugned Notification issued by the first respondent, the petitioners have presented these Writ Petitions.
5. Learned Counsel appearing for the petitioners, at the outset, submitted that the impugned amendment of Rules suffers from non application of mind and the first respondent has exceeded in his power and jurisdiction while amending the impugned Rules, which is under challenge. He vehemently submitted that the impugned amendment of Rules is discriminatory in nature and it violates Articles 14 and 19(1)(g) of the Constitution of India and the constitutional mandate of Article 47. Further, he submitted that in pursuance of the draft Notification, some of the petitioners and some members of the Association filed detailed objections pointing out several instances and specifically contending regarding discrimination which are in violation of Article 14 and also specifically have taken the stand of 'double jeopardy' on the ground that the statute has provided ample powers under Sections 32, 36, 43 and 45 of the Karnataka Excise Act, 1965 ('Act for short) and Rule 5 and 6 of the Rules. Further, he was quick to point out that the respondents are empowers under Section 71 of the Act, which deals with the power to make Rules. He submitted that it is only the first respondent who is empowered to make Rules and to carry out the purpose of the Act. He submitted that the purpose of the Act is not enhancement of consumption of liquor, on the contrary, to regulate the trade in liquor. The preamble of the Act makes it amply clear that the purpose of the Act is only to consolidate the existing laws operating in different areas and to bring uniform law in trade in liquor. The amendment made to Rule 14, to compulsorily lift the minimum quantity of liquor, only in respect of Clause 2 and Clause 9, is neither within the scope and ambit of Section 71 of the Act nor the same is in furtherance of achieving the purpose of the Act. Therefore, the impugned amendment of Rule 14 is beyond the legislative competence of the first respondent. Hence, it is liable to be quashed. He further submitted that the first respondent has apparently misunderstood its powers by imposing restrictions on the ground that the said restrictions imposed on liquor trade are for public morality, public interest and harmful and dangerous character of liquor, but if the said restrictions are imposed, it would defeat, violate and affect the very public morality and public interest. Hence, the same is wholly impermissible and is opposed to the Karnataka Prohibition Act, 1961 as well as the constitutional mandate of Article 47. Therefore, the amendment of Rule 14, imposing restriction of lifting of minimum quantity of liquor in a month, by the holders of Clause 2 and Clause 9 licences alone, is wholly unreasonable and has no rational reason behind it. Further, he submitted that the impugned Notification is also opposed to the principle of natural justice, as the first respondent has not heard the affected persons before issuing the impugned Notification. Further, he vehemently submitted that there is no reasonable nexus between the impugned Notification and the object sought to be achieved and therefore, the impugned Notification suffers from non application of mind and that the impugned Notification is highly discriminatory in nature, as the same refers to only the holders of Clause 2 and Clause 9 licences. Therefore, the said Notification is opposed to Article 14 of the Constitution of India. Hence, it is liable to be set aside. Further, he submitted that the first respondent has imposed a restriction for lifting of minimum quantity of liquor only in respect of Clause 2 and Clause 9 licence, whereas he has not brought any amendment in respect of Clause 1. Whole sale licence, Clause 4 - Club licence, Clause 7A - Tourist Hotel licence, Clause 8 - Military Canteen licence, and earlier Clause 13 Arrack Depot licence, which is now called as Form Arrack Shop licence - 1 (AS-1). Further, after going through the records made available by the learned Government Pleader, he submitted that the first respondent has not followed the procedure in strict compliance of the mandatory provisions of the Act and Rules and has given several instances after going through the note sheet maintained by the authorities and the decision taken by the respective Committee members. To substantiate his submission, he placed reliance on several judgments of the Apex Court as hereunder :-
1. IN RE., THE SPECIAL COURTS BILL, 1978 , SPECIAL REFERENCE NO. 1 OF 1978, DATED 1.12.1978
2. R.K. GARG v. UNION OF INDIA AND ORS. AIR 1981 SC P. 2138
3. INDIAN EXPRESS NEWSPAPERS (BOMBAY) PRIVATE LIMITED AND ORS. ETC. ETC. v. UNION OF INDIA AND ORS.
4. STATE OF M.P. AND ORS. ETC. ETC. v. NANDLAL JAISWAL AND ORS.
5. KHODAY DISTILLERIES LIMITED AND ORS. v. STATE OF KARNATAKA AND ORS.
6. STATE OF A.P. AND ORS. v. MCDOWELL AND COMPANY AND ORS.
Further, he submitted that the respondents have not at all collected the statistics from the entire five categories mentioned in the Notification. The respondents have neither made any research nor collected the particulars as to how many cases have been registered under those categories and in how many cases they have punished. Further, he submitted that by way of amendment to the instant Rules, the authorities are given excess power in addition to the ample power provided under the statute. Therefore, he submitted that the impugned amendment brought by way of impugned Notification is unreasonable, arbitrary and capricious and the same is contrary to the Article 14 and 19(1)(g) of the Constitution. He submits that at no stretch, the impugned Notification can be sustained and hence the same is liable to be set aside.
6. Per contra, the learned Government Pleader appearing for respondents, inter alia, contended and substantiated the impugned Notification issued by the respondents. He submitted that the same is in consonance with the mandatory provisions of the Act and Rules. No violation or error, as such, has been committed by the respondents in amending the Rules. Further, he submitted that the objections filed by some of the petitioners and some members of the Association, has been considered and the same have been over-ruled by the competent authorities. He vehemently submitted that the State Government has unquestionable privilege, right and interest, over the subject matter in dealing with trade in liquor. That is, the State is part with the right of the citizens by way of granting licence for the Excise year which commences on the first of July of the current year and ends on the 30th June of the subsequent year. He specifically contended that the petitioners herein are the Clause 2 and Clause 9 licence holders. Clause 2 licence holder is retail dealer in liquor business and Clause 9 licence holder is dealer in Bar and Restaurant and they have been permitted to supply the liquor in open market to the public in general and only these two categories of licence holders have been permitted to sell the liquor to the public in general and hence, these two categories of licence holders have been imposed the conditions for lifting the minimum quantity of liquor. He submitted that having regard to the nature of business carried on by these two categories of licence holders, unlike the other categories of licence holders, who do not sell the liquor to the public in general, the impugned amendment to Rules is made. He submitted that therefore, the respondents have not at all violated Article 14 of the Constitution of India. So far as the stand of 'double jeopardy' taken by the petitioners in their objections filed before the Department is concerned, he submitted that the Government has ample power to make Rules and if there is any violation of the terms and conditions of the licence, they have the power to cancel the same. He further submitted that the holders of Clause 2 and Clause 9 licences have no fundamental right to oppose the impugned amendment, since in no way, it would prejudice their rights and their day-to-day affairs for selling the liquor. Therefore, he submitted that there is no violation of Article 19(1)(g) of the Constitution of India, as submitted by the learned Counsel appearing for the petitioners. Further, he vehemently submitted that the petitioners were granted licence subject to the condition that once they have accepted the terms and conditions of the licence granted to them, it is not open for them to challenge the amendment of Rules before this Court. Further, he submitted that when they are enjoying the licence under Clause 2 and Clause 9 and doing the business subject to terms and conditions stipulated in the said licence, the question of violation of Article 14 of the Constitution of India does not arise and the petitioners have no locus standi to take shelter under the said Article before this Court. So far as the submission made by the learned Counsel appearing for the petitioners in respect of Section 71 of the Act, is concerned he submitted that the same is under process before the concerned Department to place the matter before the Legislation as provided under Section 71(4) of the Excise Act. Therefore, he submits that there is no force in the submission made by the learned Counsel appearing for the petitioners that the said amendment of Rules has not been placed before the legislation. He submits that the aim and object of bringing the amendment is to prevent unauthorised illicit liquor and to prohibit the sale of illicit liquor. The said Rule has been brought by way of additional conditions to verify /check the illicit trade and there is no unreasonableness or arbitrariness as such committed by the respondents, by way of the impugned amendment. Further, he submitted that the second highest revenue to the State Government is from the Excise Department.
7. To substantiate his submission, he mainly placed reliance on the judgment of the division Bench of MADHYA PRADESH HIGH COURT in the case of R.K. TRADERS v. STATE OF MADHYA PRADESH. 1995 M.P.LJ. P. 728 Further, he placed reliance on , (1996 ) 1 SCC 304, and AIR 1990 SC 322, 1989 Supp( 2 )SCC 753 . Therefore, he submitted that the petitioners have neither made out any case for interference in the amendment made nor the respondents have committed any error or illegality in bringing the impugned amendment. The said amendment is in strict compliance of the mandatory provisions of the Act and Rules. Therefore, he submitted that the Writ Petitions filed by the petitioners are liable to be rejected.
8. I have heard Sri G.K. Bhat, learned Counsel appearing for the petitioners and Sri B. Phalakshaiah, learned Government Pleader appearing for respondents and re-evaluated the entire material available on records with the assistance of the respective Counsel appearing for the parties. The learned Government Pleader made available the entire original records before the Court and after going through the original records threadbare, it is manifest on the face of records that, the respondents have failed to consider the objections filed by some of the petitioner and some of the members of the Association. However, it is seen from the note sheet of the records maintained by the authorities, that the proceedings of consideration of objections filed by the affected persons is not forthcoming, as submitted by the learned Government Pleader. Therefore, in my considered view, the respondents have committed an error in gross violation of the mandatory provisions of the Act.
9. In the light of the contentions urged by the learned Counsel appearing for the petitioners as well as the learned Government Pleader appearing for respondents, the points that arise for consideration are as follows:-
1) WHETHER the respondents have considered the objections filed by some of the petitioners and some of the members of the Association, in accordance with law?
ii) WHETHER the amendment brought by the respondents by way of impugned Notification is violative of Articles 14, 19(1)(g) and mandate of Article 47 of the Constitution of India?
iii) WHETHER the respondents have followed the mandatory procedure envisaged under the Karnataka Excise Act and Rules?Re: Point No. 1
10. It is not in dispute that the objections filed by some of the petitioners and some of the members of the Association have been considered by the respondents as contended by the learned Government Pleader appearing for respondents. The learned Government Pleader has taken me through the original records maintained by the respondents, and drew my attention particularly to item No. 55 of the note sheet, wherein it is stated that "in so far as prescribing the minimum quantity of liquors by Clause 2 and Clause 9 licencees, based on a more scientific criteria, the matter is under examination in consultation with EC". He also drew my attention to item No. 59 which reads as follows:-
"A meeting to discuss finalization of draft rules regarding fixation of minimum off-take of liquors by Clause 2 (retail) and Clause 9 (bar and restaurants) as published in draft Notification No. FD 20 PES 2002 dated 21st June 2002 was convened in the chambers of Secretary to Government (Budget) on 7.1.2003 at 3.00 P.M. The following officers were present in the meeting:-
1. Secretary to Government (Budget)
2. Excise Commissioner
3. Joint Commissioner of Excise (D & B)
4. Deputy Secretary (Excise)
5. Under Secretary (Excise)"
In the said meeting convened on 7th January 2003, there is a gray/passing reference regarding the objections filed by some of the-petitioners and some of the members of the Association at item No. 63 of the note sheet. The learned Government Pleader, to substantiate that the objections filed by some of the petitioners and some of the members of the Association have been considered and over ruled by the Committee and a unanimous decision has been taken to approve the draft Rules, has relied upon item No. 63, which reads as follows:-
"For the reasons explained above, the consensus was that the draft rules published in Notification No. FD 20 PES 2002 dated 21.6.2002 be issued finally in toto without making any changes by overruling the objections/suggestions received."
In my view, the said reliance placed by the learned Government Pleader, on item No. 63, as extracted above, has no substance and the same is liable to be rejected at the threshold itself because, item No. 59 of the note sheet indicates that a meeting to discuss finalisation of draft Rules regarding fixation of minimum off - take of liquors by Clause 2 and Clause 9 licencees published in the notification was convened, as stated supra. But, there is no proceedings as such, placed before the Committee for considering the objections filed by the petitioners and others. However, it is relevant to note here itself, as submitted by the learned Government Pleader, that the Department has received about 188 objections, individually included the one from the Association. There is no whisper regarding the decisions relied upon by the learned Government Pleader in the original file. It is seen from the said item No. 59 that the respondents have taken a consensus decision to approve the draft rules published in the Notification finally in toto, without making any changes by overruling the objections/ suggestions received. There is only a reference at item No. 63 that they have overruled the objections/suggestions received. The said consideration is not sufficient to overrule the objections filed by the petitioners and the members of the Association and others, when there is no proceedings as such placed before the Committee. It is well settled law, as laid down by the Apex Court and this Court that once the objections have been filed as per the mandate envisaged under the relevant provisions of the Act and Rules, the competent authority is duty cast to consider the objections filed by the parties in detail namely as to what are the objections filed? What is the object of amendment sought to be made? and what are the reasons for overruling the objections? Nothing is forthcoming from the original records, on which reliance has been placed by the learned Government Pleader, Therefore, in my considered view, the respondents have failed to consider the objections filed by the petitioners and others in a proper manner, especially when the petitioners and others have pointed out certain instances of arbitrariness, double jeopardy and violation of Articles 14, 19(1)(g) and the constitutional mandate of Article 47 of the Constitution of India. However, it is worthwhile to note that at item No. 57 of the original records, the Secretary (B) on 6th January 2003, has made a note to discuss with the EC and his legal Officer on 7th January 2003 at 3 P.M. But thereafter, there is no mention of any sort of discussion with the EC and his Legal Officer. Nothing is coming forth from the further note sheets maintained by the authorities that they have sought for legal opinion from the Legal Department as envisaged under the Karnataka Government (Transaction of Business) Rules, 1977 and as rightly pointed out by the learned Counsel appearing for the petitioners. As per Rule 62 (1)(a) of the Karnataka Government (Transaction of Business) Rules, 1977, it is mandatory to consult the Department of Law on the construction of statutes, Acts, regulations and statutory rules, orders and notifications. In the instant case, it is clear from the records that the respondents have failed to fulfill the said requirement. Nothing is forthcoming from the said records to show that the respondents have referred the matter to the Law Department to resubmit to the Hon'ble Chief Minister. Therefore, the stand taken by the respondents in their statement of objections filed before the Court stating that the objections filed by the petitioners and others have been considered in a scientific manner and has been overruled, is contrary to the original records maintained by the respondents, as stated supra. Therefore, the said stand taken in the objection statement filed by the respondents before this Court is not sustainable and hence, the same is liable to be rejected.
11. Having gone into the critical analysis of the entire original records made available before the Court by the learned Government Pleader, I do not find any evidence/material to show that the respondents have followed the mandatory provisions of the Excise Act and Rules while amending the Rules, as envisaged under the Act and Rules, as stated supra. Therefore, as rightly pointed out by the learned Counsel appearing for the petitioners, the respondents have not at all considered the objections filed by the petitioners and others. The Original records disclose that no proceedings as such has been placed before the Committee for consideration of the objections filed by the petitioners and others. Therefore, without any hesitation, I am of the considered view, on the basis of the entire original records made available before the Court, that the respondents have failed to consider the objections filed by the petitioners and some of the members of the Association in a proper manner. Therefore, the impugned amendment of Rule published in the impugned Notification is liable to be set aside.
Re: Point No. 2:
12. The learned Counsel appearing for the petitioners vehemently submitted that the impugned amendment of Rule 14 of the Rules is in violation of Articles 14 and 19(1)(g) of the Constitution of India. To substantiate his case, as pointed out in the above paragraphs, he has placed reliance on several judgments and taken me through the nature of business carried out by other licence holders namely CL-1, CL-4, CL-7A, CL-8, CL Form Arrack shop licence -1. As rightly pointed out, CL-1 licence- wholesale licence is required to lift and distribute and sell to its retailers and he is authorized to take the bulk of liquors and in turn supply to the retailers. He Submits that for holders of CL-1 licence, there is neither restriction nor prohibition not any conditions imposed regarding the minimum quantity of liquor to be lifted in a month, whereas the CL-2 and CL-9 licence holders have been targeted/compelled to lift the minimum quantity of liquor on the basis of the random check made by the Government, as stated in the Notification. In the Notification, the minimum quantity of liquor to be lifted in a month by a CL-2/CL-9 licensee is divided into five areas.
In respect of Retail shop CL-2:
(a) City Municipal Corporation areas having population more than twenty lakhs;
(b) Other City Municipal Corporation areas
(c) City Municipal Council areas
(d) Town Municipal Council/Town Panchayat areas and
(e) Other areas.
In respect of Refreshment Room (Bar) CL-9:
(a) City Municipal Corporation areas having population more than twenty lakhs;
(b) Other City Municipal Corporation areas
(c) City Municipal Council areas
(d) Town Municipal Council/Town Panchayat areas and
(e) Other areas.
The respondents in the statement of objections filed before the Court have stated that, after taking into consideration the report submitted by the Deputy Commissioner of Bagalkot, Belgaum, Gadag, Raichur and Coorg Districts they have taken a random check and also the previous three years' bulk holders of liquor has been drawn from the respective shops situated within the above five categories of areas and then came to the conclusion that these two categories of licence holders are supposed to lift a minimum quantity of liquor or as mentioned in the Notification at Page 2 column 4. The learned Government Pleader submitted that the said check has been make in a very scientific manner after thorough home work and research in the matter and thereafter they have come to the conclusion that the holders of CL-2 and CL-9 licence are supposed to lift a minimum quantity of liquor in a month. He placed reliance on the note sheet prepared by the expert in the Excise Department-the Joint Commissioner of Excise (D &B) at page 169. The said reliance placed by the learned Government Pleader is not the same as he submitted before the Court but it is only a parawise comments given by the respondents to the Writ petitions filed by the petitioners. It is stated as 'no comments' for paragraphs 1 to 3; and for Para-4 it is explained as to how the contentions of the petitioners should be meted out and no injustice has been caused and no arbitrary decisions have been taken and the one that is taken is not in violation of Articles 14 and 19(1)(g) of the Constitution of India and the constitutional mandate of Article 47 has been taken care of and that the amendment proposed is based on public morality and public interest and to regulate sale of liquor. It is further stated that the policy behind the amendment is not to encourage consumption of liquor but the same is only to regulate the sale of liquor and to discourage unauthorized sale of liquor. It is very unfortunate that the learned Government Pleader has placed reliance on the xerox copy of the parawise comments furnished by the Department to the petitions filed by the petitioners and the same is not acceptable. In the said parawise comments, there is neither reference to the objections filed by the petitioners and others nor its consideration by the expert committee, as contended by the learned Government Pleader. With the above facts, it is clear, beyond all reasonable doubt that, the respondents have neither complied with the mandatory requirements of Act and Rules nor collected the statistics from the licence holders hobli-wise, taluk-wise, area-wise, locality-wise and at the zonal level. It is more significant to note that there is no report of majority of distributors in the original file and it is not forthcoming as to whether they have called for the report from the remaining distributors. This shows that there is no application of mind on the part of the respondents and they have proceeded to take the decision without constituting the Expert Committee, to go into the matter in detail and submit the report. Further, it is relevant to note here itself that, on the basis of parawise comments of the Joint Commissioner of Excise to the petitions filed by the petitioners, the Commissioner of Excise has sent a note to the Principal Secretary to the Government, Finance Department, for consideration by the committee. The learned Government Pleader has placed reliance on item Nos. 1 and 2 in the original records, regarding fixation of minimum quantity of liquor to be sold under CL-2 and CL-9 licence. On the basis of the report called for from only few distributors and the comments submitted by the Joint Commissioner of Excise referred to above, the Excise Commissioner has forwarded the note for consideration to the Principal Secretary to Government. Therefore, after going through the bunch of files maintained by the respondents, which is produced before the Court, it is not forthcoming as to on what basis the respondents have arrived at the minimum quantity of liquor to be lifted by the holders of CL-2 and CL-9 licence alone, without taking into consideration the other licence holders, as referred to above. As rightly pointed out by the learned Counsel appearing for the petitioners that the large quantity of lifting of liquor and supplying the same to the distributors is carried on by the CL-1 - wholesale licence holders and knowing this fact fully well, the respondents have not made applicable the impugned amendment of Rules to the CL-1 wholesale licence holders. So far as CL-4 - Club licence, where the liquor is supplied to its members and their guests for reasonable price, here also, when the respondents have all the data as to the quantity of liquor lifted by them each month and annually, the respondents have not made any attempt to bring them under the amended Rule and they have been excluded. Further, so far as CL-7A - Hotel Tourist Licence is concerned, the said licence is granted to tourist's hotels managed by the Tourism Development Corporation for supply of liquor to residents or for removal to their private rooms. Here also, the bulk of liquor supplied to the said licence holders has not been taken into consideration by the respondents. Further, it is very important to note, as rightly pointed out by the learned Counsel appearing for the petitioners that, in respect of arrack depot licence, which has now been amended and substituted by Form Arrack Shop Licence-1, on the basis of the impugned Notification issued by the Excise Commissioner in respect of Bangalore Urban District, the monthly rental received by the Government would be approximately Rs. 05,50,00,000/- and so far as Bangalore Rural district having Jurisdiction over eight Taluks is concerned, the monthly rental received by the Government is approximately Rs. 04,08,72,900/-. When they are getting so much income from these two Districts, and also when they have all the statistics in their hand, yet, they have not insisted on the minimum quantity of liquor to be lifted by other licence holders, as stated supra. This shows as to how the authorities have adopted the pick and choose theory for holders of CL-2 and CL-9 licence alone. This is nothing but an arbitrary manner of amendment of Rules and the same violates Article 14 of the Constitution of India. It is worthwhile to refer to some of the landmark judgments of the Apex Court, wherein the question of violation of Article 14 and 19(1)(g) of the Constitution of India is considered. They are as follows:-
1) (IN RE; THE SPECIAL COURTS BILL, 1978. SPECIAL REFERENCE NO.1 OF 1978 DATED 1.12.1978) "Para 73; As long back as in 1960, it was said by this Court in Kangshari Haldar that the propositions applicable to cases arising under Article 14 "have been repeated so many times during the past few years that they now sound almost platitudinous.' What was considered to be platitudinous some 18 years ago has, in the natural course of events, become even more platitudinous today, especially in view of the avalanche of cases which have flooded this Court. Many a learned Judge of this Court has said that it is not in the formulation of principles under Article 14 but in their application to concrete cases that difficulties generally arise. But, considering that we are sitting in a larger Bench than some which decided similar cases under Article 14, and in view of the peculiar importance of the questions arising in this reference, though the questions themselves are not without a precedent, we propose, though undoubtedly at the cost of some repetition, to state the propositions which emerge from the judgments of this . Court in so far as they are relevant to the decision of the points which arise for our consideration. Those propositions may be stated thus:
1.......
2. The State, in the exercise of its governmental power, has of necessity to make laws operating differently on different groups of classes of persons within its territory to attain particular ends in giving effect to its policies and it must possess for that purpose large powers of distinguishing and classifying persons or things to be subjected to such laws.
3. The constitutional command to the State to afford equal protection of its laws set a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.
4. The principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another, if as regards the subject matter of the legislation their position is substantially the same.
5 ........
6 ......
7 ........
8 ..........
9 ..........
10 ..........
11. Classification necessarily implies the making of a distinction or discrimination between persons classified and those who are not members of the class. It is the essence of a classification that upon the class are cast duties and burdens different from those resting upon the general public. Indeed, the every idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality.
12. Whether an enactment providing for special procedure for the trial of certain offences is or is not discriminatory and violative of Article 14 must be determined in each case as it arises, for, no general rule applicable to all cases can safely be laid down. A practical assessment of the operation of the law in the particular circumstances is necessary."
2) R.K. GARG v. UNION OF INDIA AND ORS.
Para 6 that takes us to the principal question arising in the Writ Petitions namely, whether the provisions of the Act are violative of Article 14 of the Constitution. The true scope and ambit of Article 14 has been the subject matter of discussion in numerous decisions of this Court and the propositions applicable to cases arising under the Article have been repeated so many times during the last 30 years that they now sound platitudinous. The latest and most complete exposition of the propositions relating to the applicability of Article 14 as emerging from "the avalanche of cases which have flooded this Court" since the commencement of the Constitution is to be found in the judgment of one of us (Chandrachud, J as he then was) in Re: Special Courts Bill . It not only contains a lucid statement of the propositions arising under Article 14, but being a decision given by a bench of seven Judges of this Court, it is binding upon us. That decision sets out several propositions delineating the true scope and ambit of Article 14 but not all of them are relevant for our purpose and hence we shall refer only to those which have a direct bearing on the issue before us. They clearly recognize that classification can be made for the purpose of legislation but lay down that:
1. The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be ' fulfilled, namely (1) that the classification must be founded on an intelligible differences which distinguished those that are grouped together from others and (2) that difference must have a rational relation to the object sought to be achieved by the Act.....
3) KHODAY DISTILLERIES LTD. AND ORS. v. STATE OF KARNATAKA AND ORS.
(g) When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business.
(h).........
(i) The State can carry on trade or business in potable liquor notwithstanding that it is an intoxicating drink and Article 47 enjoins it to prohibit its consumption. When the State carries on such business, it does so to restrict and regulate production, supply and consumption of liquor which is also an aspect of reasonable restriction in the interest of general public. The State cannot on that account be said to be carrying on an illegitimate business. It carries on business in products which are not declared illegal by completely prohibiting their production but in products the manufacture, possession and supply of which is regulated in the interests of the health, morals and welfare of the people. It does so also in the interests of the general public under Article 19(6)............"
4. STATE OF AP. AND ORS. v. MCDOWELL AND CO AND ORS. Para 40 reads as hereunder:
"40. For the sake of completeness, and without prejudice to the above holding, we may examine the alternate line of thought. In Cooverjee Bharucha, a Constitution Bench of this Court expressed its wholehearted concurrence with the opinion of Field, J, in Crowley v. Christensen to the effect that;
"There is no inherent right in a citizen to thus sell intoxicating liquors by retail; it is not a privilege of a citizen of the State or of a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be entirely prohibited, or be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rest in the discretion of the governing authority."
While laying down the said proposition, Mahajan, C.J., speaking for the Court, referred generally to the position obtaining under Article 19(1)(g) and Clause (6) of the Article. The learned Chief Justice said that the reasonableness of the restriction has to be determined having regard to the nature of the business and the conditions prevailing in that trade. The learned Chief Justice said.
"The nature of business is, therefore, an important element in deciding the reasonableness of the restrictions."
These observations, it may be noted, were not made with particular reference to trade in intoxicating liquors but are general in nature. Indeed, it is after making these general observations that the Bench proceeded to refer-to and express its concurrence with the observations of Field, J, referred to above. The said observations cannot be read as recognizing a fundamental right to trade in intoxicating liquors. Any such proposition would run counter to the main holding in the decision referred to above. It is true that in Krishna Kumar Narula v. State of J and K, Subba Rao, C.J., speaking for the Constitution Bench, adopted a slightly different approach, viz., every trade is a trade; even the trade in intoxicating liquor is a trade; however, the nature and character of the business is relevant for determining the extent of restrictions that can be placed on such trade or business; in as much as intoxicating liquors are inherently harmful to the individuals consuming them and to the society as a whole, it can even be prohibited but it cannot be said that trade or business in intoxicating liquors is not a trade or business within the meaning of Article 19(1)(g). Even adopting this approach, it would be evident and the decision in Krishna Kumar Narula recognizes it- that the trade and business in intoxicating liquors can be restricted, severely curtailed or even prohibited. The fact that Article 47 of the Constitution expressly speaks of the obligation of the State to endeavor to bring about prohibition of the consumption of intoxicating drinks is itself a clear and definite pointer in this direction. Imposing prohibition is to achieve the directive principle adumbrated in Article 47. Such a course merits to be treated as a reasonable restriction within the meaning of Clause (6) of Article 19".
If all these well settled law laid down by the Apex Court are taken into consideration, it is clear that the respondents have violated Article 14 and 19(1)(g) of the Constitution of India. Therefore, I am of the considered view that the amendment brought to Rule 14, by the respondents under the impugned Notification is liable to be struck down.
Re: Point No. 3:
13. So far as the procedural aspect is concerned, after thorough analysis of the original records made available before the Court by the learned Government Pleader, it is evident that the respondents have failed to follow the mandatory procedure as prescribed under the Act and Rules. I have culled out the instances, where the respondents have failed to follow the procedure as stipulated, in the above paragraphs. In the instant cases, there is no agenda or proceedings as such, placed before the Committee consisting of five members viz. the Secretary to Government (Budget), Excise Commissioner, Joint Commissioner of Excise, Deputy Commissioner of Excise and the Under Secretary (Excise). The proceedings reliec upon by the learned Government Pleader is not in respect of the consideration of the objections filed by the petitioners and others, but the same pertains to the finalization of the draft Rules, regarding the fixation of minimum lifting of liquor by the holders of CL-2 retail vending licence and CL-9 licence bar and restaurants, as published under the Notification dated 21st June 2002. In the said proceedings at item No. 63, there is a gray reference made that they have over ruled the objections/suggestions received. In my considered view, that is not the compliance of the mandatory provisions of the law as well as the well settled law of the Apex Court and this Court Mere reference of the objections filed by the affected parties and overruling the same is not sufficient to state that the objections have been considered and overruled. The respondents have not stated as to what are the objections received and what are the reasons for over ruling the said objections, which is already discussed in detail in the proceeding paragraphs while answering point No. 1. The same may be read as part and parcel of this point also. Further, as indicated above, the respondents have also not followed the Karnataka Government (Transactions of Business) Rules, 1977. There is a reference in the note sheet maintained by the respondents that the matter must be referred to the Legal Department for discussion and for opinion. It is mandatory under rule 62(1)(a) of the Karnataka Government (Transactions of Business) Rules, 1977, that all the Administrative Departments shall consult the Law Department for construction of statutes, orders etc. Rule 62(1)(a) of the said Rules reads as hereunder:
"62 (1) All Administrative Departments shall consult the Department of Law on:
(a) the construction of statutes, Acts, regulations and statutory rules, orders and notifications."
In the instant case, the respondents have neither sought for opinion nor consulted the Law Department. There is a passing reference in the file, but they have not called for any legal opinion. Further, they have also not followed the procedure of referring the matter to the Chief Minister, as envisaged under Schedule II of the said Rules. Therefore, the respondents have failed to follow the mandatory procedure envisaged under the Excise Act and Rules read with the Karnataka Government (Transaction of Business) Rules, 1977. Therefore, in view of non-compliance of the mandatory provisions of the Excise Act and Rules, the respondents have failed to persuade this Court, making out a case that they have followed the mandatory procedure as prescribed under the Act and Rules. On this ground also, the Writ Petitions filed by the petitioners succeed.
14. In these petitions, the learned Government Pleader has placed reliance on point No. 8 of the judgment of the Madhya Pradesh High Court in the case of R.K. TRADERS AND STATE OF MADHYA PRADESH which reads as follows:-
"Point No.8- It is contended that there are no norms regarding fixation of quota required to be lifted and therefore, the provision is arbitrary. It is true that the Act and the Rules do not contain express norms regarding fixation of quota. The return indicates that provision is made to stop illicit trade in liquor, to indirectly control selling rate in shops, to ensure that illicit liquor is not obtained by the licensee and sold in the shop, to ensure that no attempt is made to under sell liquor and thereby encourage consumption and to ensure that the quality of liquor is wholesome. These factors are inherent in the exercise of power of fixation of quota required to be lifted. The Collector cannot fix a quantity in an individual case arbitrarily or without reference to the facts and circumstances relating to each area or each shop and the stock lifted in the previous years in respect of each shop. These are the broad guidelines which are inherent in the provision. The quota is announced before the public auction and the intending bidders are made aware of it. We reject the contention that there no norms prescribed and therefore, the provision is arbitrary."
In my view, the facts and circumstances of the above-referred case are different from the facts and circumstances of the instant case. For instance, in the above-referred case, the question involved is in respect of Form FL-1 and Condition 2-C- levy of penalty on un-lifted quota of liquor, and where sale is by way of public auction. There, the party has participated in the auction, after agreeing to the terms and conditions of the auction Notification. Therefore, the Court has held that once they have accepted the terms and conditions of the auction Notification, it is not open for them to challenge the validity of the amended Rules. In the instant case, the petitioners have not accepted any terms and conditions of the impugned Notification. The terms and conditions of the impugned Notification are yet to be given effect. Therefore, the said reliance placed by the learned Government Pleader appearing for respondents, is of no assistance to him. Further, it is significant to note the observations made by his lordship justice Krishna Iyer in his judgment reported in P.N. KAUSHAL ETC. ETC. v. UNION OF INDIA AND ORS. AIR SC P. 1457 which read as follows:-
"23. Parenthetically speaking, many of these thoughts may well be regarded by Gandhians as an indictment of governmental Policy even today.
24. The trust of drink control has to be studied in a Third World country, developing its human resources and the haven it offers to the poor, especially their dependents. Gandhiji again;
"For me the drink question is one of dealing with a growing social evil against which the State is bound to provide whilst it has got the opportunity. The aim is patent. We want to wean the labouring population and the Harijans from the curse. It is a gigantic problem, and the best resources of all social workers, especially women, will be taxed to the utmost before the drink habit goes. The prohibition I have adumbrated is but the beginning (undoubtedly indispensable) of the reform. We cannot reach the drinker so long as he has the drink shop near his door to tempt him"
25. Says Dr. Sethna in his book already referred to;
The introduction of prohibition in India actually caused a considerable fall in the number of crimes caused by intoxication. Before prohibition one often had to witness the Miserable spectale of poor and ignorant persons-millhands, labourers, and even the unemployed with starving families at home-frequenting the pithas (liquor and adulterated toddy shops) drinking, burning and harmful spirits, and adulterated toddy, which really had no vitamin B value; these persons spent the little they earned after a hard day's toil, pr what little that had remained with them or what they had obtained by some theft, trick, fraud or a borrowing they spent away all that, and then, at home, left wife and children starving and without proper clothes, education and other elementary necessaries of life."
If these things are taken into account, I am of the view that the respondents have failed to fulfill the mandate of Article 47 of the Constitution of India. When the entire State is facing active draught with insufficient drinking water to people, insufficient fodder to cattle and the majority of the State except western ghats has suffered with insufficient rain, it is unfortunate and astonishing to note the way in which the respondents have proceeded hurriedly by exercising the statutory power in bringing the impugned amendment. The authorities have even failed to take into consideration the well-settled law laid down by the Apex Court and this Court, time and again, as to how the State should proceed in such matters, while bringing the amendment. Further, the authorities have also not taken into consideration the fact that due to drinking of liquor, several families have been ruined and the percentage of people addicted to liquor has increased, the atmosphere in the family has been deteriorating and in some of the families, the members have committed suicide. All these factors must have been taken into consideration by the respondents while bringing the impugned amendment. To find out the ground reality and to go into the matter in detail regarding these aspects the respondents ought to have constituted Experts' Committee and collected the required statistics from the grass root level, as indicated above. Instead of doing the said exercise, the respondents, without giving sufficient time to the holders of CL-2 and CL-9 licence and without even giving sufficient publicity in the national newspapers in the respective areas, have issued the draft Notification and finalized the same within a fortnight. This shows the way in which the respondents have by-passed the mandatory procedure required to be followed while bringing the impugned amendment, as envisaged under the Act and Rules. Having regard to all these factors, as stated above, this Court has no option except to struck down the amendment brought by the respondents, which is contrary to the mandatory provisions of Articles 14, 19(1)(g) and the mandate of Article 47 of the Constitution of India, putting an embargo and necessitating on the quantity of liquor to be lifted by the holders of CL-2 and CL-9 licence, on the basis of irrational and unreasonable statistics collected and implemented by the Department without application of mind and without analyzing the ground reality. If at all the Government wanted to bring the impugned amendment, they could have followed the procedure and taken into consideration the well settled law laid down by the Apex Court and this Court, time and again, in series of matters. These factors have not at all been taken into consideration by the first respondent or other respondents.
15. Therefore, having regard to the facts and circumstances of the case, as stated above, and taking into consideration, the legal and factual aspect of the matter, as enumerated above, I do not find any justification to sustain the impugned Notification issued by the respondents and hence, the said amendment is liable to be struck down.
16. For the foregoing reasons, the Writ Petitions filed by the petitions succeed with the following directions:-
1. The Writ Petition filed by the petitioners are allowed and the impugned Notification dated 1st April 2003 in No. FD 20 PES 2002 vide Annexure A, published in the Karnataka Gazette dated 1st April 2003, is hereby set aside and the matter stands remitted back to the first respondent for reconsideration from the stage of considering the objections filed by the petitioners and to proceed in accordance with law.
2. The respondents are directed to constitute the Experts' Committee, consisting of experts from the Excise Department as well as from other fields; to collect the statistics throughout the State, area-wise, taluk-wise, district-wise, etc.
3. The respondents are further directed to proceed with the matter, in strict compliance of the mandatory provisions of the Act and Rules, after taking into consideration the Experts' Committee report and the observations made by this Court in the above paragraphs.
17. In terms stated above, these petitions are allowed and disposed of. Rule issued is made absolute.
18. I may be failing in my duty if the pain taken and the excellent assistance rendered by Sri G.K. Bhat, the learned Counsel appearing for the petitioners, and Sri B. Phalakshaiah, the learned Government Pleader, in passing the instant order, is not appreciated. The same is placed on record.