Jharkhand High Court
Pashupatinath Distributors (P) vs State Of Jharkhand & Ors on 30 August, 2011
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IN THE HIGH COURT OF JHARKAHND AT RANCHI
W.P.(C) No. 1400 of 2011
Pashupatinath Distributors (P) Ltd., Patna ... ... Petitioner
Versus
(1) The State of Jharkhand through its Secretary,
Department of Excise and Prohibition, Ranchi
(2) Member, Board of Revenue, Ranchi
(3) The Commissioner of Excise, Department of
Excise and Prohibition, Ranchi
(4) M/s Bhattacharya Bottling Plant Pvt. Ltd., Kolkata ... ... Respondents
With
W.P.(C) No. 1909 of 2011
Narang Distillery Ltd., Gonda, Uttar Pradesh ... ... Petitioner
Versus
(1) State of Jharkhand through the Secretary,
Department of Excise and Prohibition, Ranchi
(2) Commissioner Excise, Government of Jharkhand, Ranchi
(3) M/s K.D. Liquor & Fertilizer Pvt. Ltd., Patna
(4) M/s Bhattacharya Bottling Pvt. Ltd., Kolkata
(5) M/s Farini Eleven UP, Kolkata ... ... Respondents
With
W.P.(C) No. 2003 of 2011
Spicy Beverage Pvt. Ltd., Patna ... ... Petitioner
Versus
(1) The State of Jharkhand through the Secretary,
Department of Excise, Ranchi
(2) Member, Board of Revenue, State of Jharkhand, Ranchi
(3) The Commissioner of Excise, Department of
Excise and Prohibition, Ranchi
(4) M/s K.D. Liquor & Fertilizer Pvt. Ltd., Patna
(5) M/s Bhattacharya Bottling Pvt. Ltd., Kolkata
(6) M/s Farini Eleven UP, Kolkata ... ... Respondents
With
W.P.(C) No. 3033 of 2011
Saraya Distillery, Gorakhpur ... ... Petitioner
Versus
(1) The State of Jharkhand through the Secretary,
Excise and Prohibition Department, Govt. of Jharkhand, Ranchi
(2) Member, Board of Revenue, Jharkhand, Ranchi
(3) The Excise Commissioner, Jharkhand, Ranchi ... ... Respondents
PRESENT
HON'BLE MRS. JUSTICE POONAM SRIVASTAV
For the Petitioners: M/s Vinod Kanth, Sr. Advocate, Indrajit Sinha,
Rajesh Kumar, Amit Kumar, Advocates
For RespondentState: M/s A.K. Sinha, A.G., Rishi Pallav, Advocate
For the Respondents: M/s Jitendra Kumar, Sr. Advocate, Prabhat Kr. Sinha
Satyabir Bharti, Advocates
C.A.V. on: 12.08.2011 Pronounced on: 30/08/2011
Common question of law is raised in all the three writ petitions and,
therefore, are being decided simultaneously. The leading case is Pashupatinath
Distributors (P) Ltd. The Excise Commissioner, State of Jharkhand under the
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orders of the Member, Board of Revenue, has issued the two impugned notices
inviting tenders seek to initiate selection process for grant of exclusive privilege
of manufacture and wholesale supply of country liquor and spiced country liquor
after bottling and sacheting it.
Notice inviting tender (in short 'N.I.T.') for grant of exclusive privilege of
manufacture and supply of country liquor and spiced country liquor after
bottling/sacheting on the wholesale basis for a period commencing 01.04.2011
to 31.03.2014 was issued. At the very outset, the fixation of terms and conditions
for grant of exclusive privilege is challenged primarily on the ground that the
Member, Board of Revenue was not authorized to frame rules imposing certain
conditions without there being a specific delegation by the State Government
and, thus, the terms and conditions of the N.I.T. are without any authority. The
Board of Revenue could not exercise rule making power and, therefore the N.I.T.
is liable to be quashed. Certain clauses of the N.I.T. are specifically questioned in
the instant writ petitions, on the ground that the terms and conditions of the
N.I.T. provide ample scope of arbitrary exercise of power and are tailormade to
suit only a few participating bidders and to create a monopoly to the exclusion of
other tenderers, without considering the objections in terms of proviso to Section
22(1) of the Bihar Excise Act, 1915. The Board of Revenue has ample space for
manipulations and to support a favoured few. The petitions relate to conditions
detailed in the N.I.T., as they are clothed with an absolute power in matters of
grant of exclusive privilege and acceptance of tenders by adopting a procedure
contrary to the settled law. The decision making process of the Board regarding
the issuance and acceptance of N.I.T. is challenged, as blatantly arbitrary, unfair
and capable of misuse, illegal and irrational and without jurisdiction.
The entire State of Jharkhand, for the purposes of grant of exclusive
privilege of country liquor, has been divided into five zones, whereas for spiced
country liquor, it has been divided into two zones. The N.I.T. is annexed as
Annexures 1 and 1/1 of the writ petition and the main grounds of challenge on
behalf of the petitioners are enumerated herein below:
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(1) That the member, Board of Revenue has no authority/jurisdiction to
prescribe terms and conditions for grant of exclusive privilege as contemplated
by the impugned notices inviting tenders for the following reasons:
(a) That the impugned notices inviting tenders which relate to
grant of exclusive privilege for supplying country liquor after bottling and
sacheting it, is a grant made under Section 22D of the Excise Act and
insofar as it relates to grant of exclusive privilege for manufacturing and
supplying wholesale spiced country liquor after bottling and sacheting it,
also is a grant under Section 22G of the Excise Act, and all the powers
under Sections 22D and 22G are essentially exercised by the State
Government. It is an exclusive domain of the State Government.
(b) The power to fix/prescribe terms and conditions for grant of
any kind of exclusive privilege has not been delegated to the Member,
Board of Revenue and cannot be delegated as the prescription of terms
and conditions for grant of exclusive privilege and the period therefore
has to be ascertained and fixed by the State government by framing rules
in exercise of the powers under Section 89 of the Excise Act;
(II) Assuming though not admitting that the grant of exclusive privilege
as contemplated by the impugned notices inviting tenders is a grant under
Section 22 of the Excise Act, the same is sought to be granted in contravention of
the mandatory provisions of the 'proviso' to section 22 of the Act.
(III) The Member, Board of Revenue has exceeded jurisdiction in issuing
the impugned notices inviting tenders for grant of exclusive privilege by creating
zones of supply by superseding the earlier decision of the State Government as
approved by the Council of Ministers as also without following the procedure
laid down by the Rules of Executive Business of the State;
(IV) That the imposition of certain new terms and conditions by the
Member, Board of Revenue are otherwise unconstitutional, illegal and have been
incorporated in the impugned notices inviting tenders in arbitrary, malafide and
colourable exercise of powers.
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Submission of the learned counsel on behalf of the petitioners is that the
Member, Board of Revenue exercises powers and discharges his functions and
duties under the Excise Act either as a delegate under the Act or as a delegate of
the State Government, and, thus, has to act within the four corners of the
Statute. The Member, Board of Revenue cannot assume jurisdiction or authority
and exercise any power with respect to a subject wherefor no authority has been
conferred upon him by the Act or by the State Government. It is trite that
statutory authorities must act within the four corners of the Statute and cannot
be permitted to travel beyond the purview. It is emphasized that the Member,
Board of Revenue can be delegated with all or any of the powers exercisable by
the State Government. Section 7 (2) (e) of the Act provides for the same with a
specific restriction that power to make rules under Section 89 of the Act cannot
be delegated to the Member, Board of Revenue. Section (7) (2) (e) of the Bihar
Excise Act reads as under:
S.(2)(e)."delegate to the Board, the Commissioner of a Division
or the Excise Commissioner all or any of the powers
conferred upon the State Government by or under this
Act, except the power conferred by Section 89 to make
rules";
Thus, it is submitted that unless there is an express delegation of a
power by the State Government, the Member, Board of Revenue, cannot assume
jurisdiction and exercise its powers, which is, otherwise, not conferred on him by
the Statute.
On the basis of the express bar of delegation of the rule making power,
the impugned N.I.T., which is a grant under Sections 22 D and 22G, has never
been delegated by the State Government on the Member, Board of Revenue.
Section 22D and Section 22G are special provisions dealing with grant of
exclusive privileges for supply of country liquor and spiced country liquor
respectively on wholesale basis after bottling and sacheting it. The grant under
Section 22G also includes the grant of manufacturing spiced country liquor. The
applicability of Sections 22D and 22G over the general provisions of Section 22
will have to be seen in the light of well known rule of interpretation and thus,
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general provision should yield to special provision.
In the light of the aforesaid, it is submitted that the applicability of the
provisions of Section 22 of the Act stands completely excluded with respect to
the grants of exclusive privileges which are envisaged by Section 22D and 22G of
the Act.
The Advocate General appearing on behalf of the State has vehemently
opposed the aforesaid submission. The stand taken on behalf of the Government
is that the delegation of the rule making power was conferred as far back as on
01.01.1919under the Bihar and Orissa Excise Act, 1915. Provisions of the delegation under the Act are noted under:
No. 470 F the 15 January, 1919
th
- In exercise of the
powers conferred by the provisions specified below of the Bihar and Orissa Excise Act 1915 (Act II of 1915), hereinafter designated "the Act" the Lieutenant Governor in Council is pleased I. To delegate ........
........
II. To make the following orders under sub Section (2) of Section 7, to delegate to the Board, the powers conferred on 'The Provincial Governor by the provisions of the specified below.
(1) (2) (3)
(4) Section 22, subSection (1), Clauses (a) and (b) (power to grant the exclusive privilege of manufacturing a wholesale country liquor or any intoxicating drug).
6On the basis of the above provisions, the claim is that the rule making power was delegated on the Board of Revenue and, therefore, the conditions imposed in the N.I.T. cannot be said to be without jurisdiction. The Advocate General while replying to the argument regarding proviso to Section 22 of the Act which contemplates inviting objections before framing of the rules, has emphatically submitted that the publication of the impugned N.I.T. in newspaper, official Gazette as well as on the Internet is sufficient public notice as contemplated by the proviso under Section 22 (1), residing within the local area where the exclusive privilege is sought to be granted. However, learned Advocate General has conceded that the decision to grant such exclusive privilege 'District wise' was taken by the State Government after the approval of the proposal by the Council of Ministers, but to grant exclusive privilege zone wise for the period 01.04.2011 to 31.03.2014 is a decision of the Member, Board of Revenue approved by the minister incharge. A detailed explanation has been enumerated in paragraphs 15, 16, 17 and 18 of the counter affidavit. The necessity for imposing conditions in grant of exclusive privilege as challenged by the petitioner is without any basis and cannot be questioned. It is stated on behalf of the respondentState that it became essential on account of past experience of the Government. The distribution zonewise was also done only on account of the reason that the previous grantee, either intentional or for account of incapacity to perform the contract left midway and, therefore, the Board considered it that the exclusive privilege should be granted only to experienced and reputed tenderers. He further submits that there is always a risk if inexperienced persons are allowed to manufacture country liquor. Since the liquor business is not a fundamental right within the meaning of Part III of the Constitution of India, petitioners cannot claim as a matter of right. The conditions have been imposed in public interest.
It is also brought to my notice by the learned Advocate General that the Government suffered heavy loss of revenue by awarding tenders districtwise, some of the district did not find favour and remained unsettled causing loss 7 financially to the Government and disruptions in supply of country liquor and spiced country liquor. It was also considered that two or more districts be clubbed together to constitute one single zone. The Board had to take into consideration the commercial viability while fixing the terms and conditions and hence, the petitioners could not question the conditions on the ground that the same is 'unreasonable', 'Arbitrary' and 'Illegal'. Learned Advocate General has also emphasized that judicial review is very limited, as held in various decisions by the Apex Court.
Reliance has been placed on Air India Limited Vs. International Airport Limited and Ors. reported in (2000) 2 SCC 617. Paragraph7 of the said judgment is quoted below: "The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this court in Ramana Dayaram Shetty Vs. International Airport Authority of India, (1979) 3 SCC 489, Fertilizer corpn. Kamgar Union (Regd.) Vs. Union of India, (1981) 1 SCC 568, CCE Vs. Dunlop India Ltd., (1985) 1 SCC 260, Tata Cellular Vs. Union of India, (1994) 6 SCC 651, Ramniklal N. Bhutta Vs. State of Maharashtra, (1997) 1 SCC 134 and Raunaq International Ltd. Vs. I.V.R. Construction Ltd., (1999) 1 SCC 492. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bana fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decisionmaking process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decisionmaking process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of 8 public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene".
Other decisions of the Apex Court are M/s Master Marine Services Pvt. Ltd. Vs. Metcalfe & Hodgkinson Pvt. Ltd., 2005 (3) JLJR 61, paragraphs 9 to 12, Amar Chnadra Chakraborty Vs. The Collector of Excise, Govt. of Tripura & Ors. (1972) 2 SCC 442, paragraph10, State of Orissa & Ors. Vs. Harinarayan Jaiswal & Ors. (1972) 2 SCC 36, paragraph 16 to 18 and State of M.P. & Ors. Vs. Nandlal Jaiswal & Ors. (1986) 4 SCC 566, paragraphs 34, 38.
Thus, evidently, the stand taken by the State Government is that the Board of Revenue was delegated with rule making authority as far back as in the year 1919. Secondly, though it has been conceded that the decision of the Council of Ministers for grant of exclusive privilege of supplying country liquor on wholesale basis after bottling and sacheting granted districtwise in the year 2005, is now zonewise in the present N.I.T. without any approval of the Cabinet, but only by the Minister incharge. The explanation in the counter affidavit is that the previous decision was not found to be workable and commercially viable. However, this decision arrived at by the Minister incharge and the conditions imposed by the Member, Board of Revenue cannot be questioned and judicially reviewed, therefore, the N.I.T. is absolutely valid, unquestionable and cannot be quashed. The N.I.T. required the expectants to submit two bids, (1) the technical bid and, (2) the financial bid. The N.I.T. kept open to settle the exclusive privilege by negotiation as well.
The technical bid was opened and the tenderer, namely, M/s Bhattacharya Bottling Plant Private Limited, Kolkata was arrayed as party Respondent No. 4, and represented by Sr. Advocate Jitendra Kumar, assisted by Shri Prabhat Kumar Sinha. The other bidders, who were granted approval after technical bid was considered, have been arrayed as respondents in the connected writ petitions. Their intervener application was allowed. All the successful contenders have joined the arguments raised on behalf of Respondent No. 4 in the leading instant 9 petition. Shri Jitendra Kumar, Sr. Advocate, has supported the argument of the Advocate General and submitted that exclusive privilege was basically for manufacture, since the wholesale supplier is only the State after formation of Jharkhand State Beverages Corporation which has an exclusive right to supply on wholesale basis. The objection raised by the petitioner that the instant N.I.T. has also reduced the licence fee, is supported by the learned counsel that since the exclusive privilege is only for manufacture and not for wholesale supply, therefore, the price is proportionately reduced from Rs. 4 to Rs. 2 per L.P. Litre on the Minimum Granted Quantity (MGQ). An additional licence fee @ Rs. 2 per L.P. Litre on the excess quantity can be levied in the event, wholesale supply exceeds M.G.Q. While replying the objections raised by the learned counsel Shri Rajesh Kumar, Advocate, assisted by Shri Amit Kumar, in W.P.(C). No. 1909 of 2011, submission is that the N.I.T. provides that the bid could be finalized on the basis of negotiations as well. This is yet another excessive exercise of arbitrary power. The argument is countered on behalf of Respondent No. 4, on the basis of the decision of the Apex Court in the case of West Bengal State Electricity Board Vs. Patel Engineering Company Limited and Ors. reported in (2001) 2 SCC 451, paragraphs 24 to 33. The Apex Court was of the view that the state Government was not obliged to award contract to any of the bidders at their quoted price bid. It is always open to negotiate to the next lowest bidder for awarding the contract on economical viable price bid. The N.I.T. was not opened to judicial scrutiny, since it is an exclusive realm of contract of the Government and that is why, as held in the case of Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651. There was no illegality in such a term as mentioned in the impugned N.I.T. Thus, the gist of the argument on behalf of the respondents is that the challenge by the petitioners is to be outrightly rejected for the reason; firstly, they have approached this Court after they have participated in the bid, and since their technical bid was rejected. Secondly, the rule making power cannot be questioned on behalf of the petitioners. It is a policy decision. The judicial review regarding the terms and conditions of the N.I.T. is also very 10 limited, as held in various decisions of the Apex Court and the emphasis that the delegation of rule making power was absolute since the year 1919 and, therefore, it cannot be said that the division for grant of exclusive privilege zone wise is without jurisdiction. The Member, Board of Revenue had its delegated authority since the year 1919. The requisite conditions provided in the N.I.T. of six years experience in manufacturing and supply of country liquor and spiced country liquor after bottling/sacheting on the wholesale basis and also licence under the E.S.I. for previous five years is a valid condition and cannot be questioned. The argument that the terms and conditions are such to find favour only with the chosen few, is also without any foundation and baseless attempt to challenge the terms and conditions on the ground of bias or malafide, is also unwarranted.
After hearing the arguments of both the sides and going through the entire records and various citations, I proceed to decide each question. The first question that the petitioner has approached this Court after participating in the bid and his bid was rejected is to be examined at the very outset. The respondents have submitted in course of hearing that the petitioners cannot be allowed to assail the terms and conditions of the impugned N.I.T. after participating in the bid and having rejected.
Shri Binod Kanth, Sr. counsel assisted by Shri Indrajit Sinha, has highlighted that the instant writ petition was preferred, before the petitioner participated in the tender process. The State Government was directed to file counter affidavit in the writ petition and the petitioner participated only after challenging the N.I.T. Participation by the petitioner was under protest, therefore, the preliminary objection regarding challenge by the petitioner, after having lost the bid, is not acceptable.
It is admitted by the counsel appearing on behalf of Respondent No. 4 that the petitioner of W.P.(C). No. 1400 of 2011, came up for consideration before this Court on 16.03.2011, and since the last date to file tender was also 16.03.2011, the petitioner was granted leave orally to file its tender without 11 prejudice. Thus, evidently, the preliminary objection regarding challenge of N.I.T. by the petitioner after having lost its bid is factually incorrect. The notice inviting tender was challenged first and, thereafter, the petitioner filed its tender since the last date for applying was to expire.
In these circumstances, the preliminary objection raised on behalf of the respondent is not acceptable. On perusal of the N.I.T., it transpires that tenders were invited for grant of exclusive privilege for wholesale supply of country liquor and spiced country liquor in bottle and sachet for a period commencing from 01.04.2011 to 31.03.2014. On a detailed reading of the N.I.T., apparently, the tenders are invited for the State of Jharkhand for manufacture and wholesale supply and for grant of licence in Prapatra 27 'Ga', which is also a part of the N.I.T. Perusal of Scheduled3 shows that the licence for supply is to be granted under the provisions of Sections 13 and 20 of the Excise Act. Section 13 is a licence required for manufacture and Section 20 provides 'licence required for sale'. Section 5 of the Excise Act defines a retail and wholesale supply and supply made in excess of the limit prescribed for 'retail sale' would be termed as 'wholesale sale'. Thus, any sale in excess of 1.2 bulk litre, is a 'wholesale' supply by virtue of Section 5(2) of the Act. In the instant case, bottling and/or sacheting is synonymous to 'manufacture' as contended by Sri Jitendra Kumar, Sr. Advocate on behalf of respondent. The supply to be made to the Jharkhand State Beverages Corporation on wholesale basis and an exclusive privilege for manufacture alone, since the right for wholesale supply is only with the Jharkhand State Beverage Corporation. This submission is without any basis since admittedly, the Jharkhand State Beverage Corporation has not yet become functional and, therefore, the successful grantee is for supply of liquor to the retailers and would be on a wholesale basis. It is for this reason, the licence/exclusive privilege will be granted in Prapatra 'Ga' as provided in the schedule of the N.I.T. This is for wholesale vend to the retail venders after bottling and sacheting. Evidently, the submission on behalf of Respondent No. 4 that the N.I.T. is for grant of exclusive privilege of manufacture of country liquor 12 or spiced country liquor alone cannot be accepted.
The notice inviting tender relates to grant of exclusive privilege for supply of country liquor after bottling and sacheting, in the circumstances, a grant made under Section 22D of the Excise Act and spiced country liquor after bottling and sacheting, a grant under Section 22G. Section 22D was inserted by Act No. 6 of 1998 and Section 22G by Act No. 3 of 1999. The submission that it is a grant simplicitor under Section 22 cannot be accepted.
Argument on behalf of the learned Advocate General that the rule making power was delegated as far back as in the year 1919 is also not in consonance with the assertions made in the counter affidavit and relied upon by the respondent. Admittedly, Section 22D and 22G is for grant of 'exclusive privilege' was added by a subsequent amendment and, therefore, there has to be a specific delegation for making rules, specially in view of the embargo levied by the Act under Section 7 (2) (e). The delegation in the year 1919 cannot be accepted in respect of subsequent legislation or for all times to come.
In the circumstances, I am not in agreement with the arguments on behalf of the learned Advocate General that once the State Government under Order III (4) of Notification 417 F dated 19.01.1919 has delegated its power to grant exclusive privilege under Section 22 (1) (a) and (b) then, it will be a delegation for all times to come, even in respect of subsequent enactment relating to grant of exclusive privilege. In my opinion, the delegation of year 1919 can not be treated automatically delegated. There has to be a specific delegation to the Board conferred by the State Government in view of the bar regarding delegation of the rule making power. Arguments on behalf of the respondent on the face of it, appears to be far fetched and unacceptable. Thus, it is to be examined whether the Member, Board of Revenue was armed with the jurisdiction to prescribe terms and conditions for grant of exclusive privilege and the fixation of period thereof has also to be ascertained and fixed by the State Government by framing rules in exercise of powers under Section 89 of the Excise Act. It is also admitted by Advocate General that the N.I.T. for grant of 13 exclusive privilege by creating zones of supply is in supersession of the earlier decision of the State Government, as approved by the Cabinet and without following the procedure laid down by the rules of the executive business of the State.
Arguments advanced on behalf of the petitioners regarding applicability of Section 22D and Section 22G over the general provision of Section 22 apparently stands justified in the light of the wellknown rule of interpretation. It is a settled principle that the general provisions should yield to special provision. There is no conflict in the operation of the three provisions and thus, no other rules of construction of statutes need to be resorted to. Shri Binod Kanth, learned Sr. Advocate has placed reliance on a decision of the Constitution Bench of the Apex Court, Ashoka Kumar Thakur Vs. Union of India, (2008) 6 SCC
1. The relevant paragraph of the judgment is quoted below: '...The rule is, that wherever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply.' I am not in agreement with the submission on behalf of the respondent that Sections 22D and 22G of the Act have no applicability to the impugned notice. The provisions of Sections 22D and 22G were inserted by means of an amendment. It is well settled rule that rules of literal construction have to be applied when the statute is clear and unambiguous, a contrary view or intention has to be determined only when the statute is not clear. In the case of Kuldip Nayar Vs. Union of India, (2006) 7 SCC 1, wherein the Constitutional Bench of the Supreme Court held that the rule of literal construction is a safe rule, unless the language used is contradictory, ambiguous and leads to an absurd results.
The grant of exclusive privilege and licence are different and two distinct things. Reference in this context may be made to the decision of the Patna High Court in the case of United Distilleries Private Ltd. Vs. State of Bihar, reported in 1986 PLJR 51, wherein at paragraphs 11 and 12 it was held as under: 14 "11. To conclude on this aspect, the true import of the concept of exclusive privilege under Section 22 of the Act envisages a peculiar benefit granted by the State to a person to the exclusion of others in a specified local area. It is something distinct and different from the licences visualised under Sections 13, 14, 16 or 20 in Chapter IV and is in no way to be confused with the same.
12. Once it is held as above, it would necessarily follow that exclusive privilege duty cannot be foisted on the existing ordinary licences under Section 13 of the Act. The general licences under Sections 13, 14, 16 and 20 of the Act form a distinct and separate class from the grant of exclusive privilege and imposition fees or consolidated payments leviable as such. These two distinct and separate classes cannot be coalesce nor be treated as synonymous. As was noticed earlier, the whole scheme of Section 22 is that an exclusive privilege is conferred first by the State and then the grantee must be procedurally get the requisite licence thereafter....."
The Member, Board of Revenue, by virtue of Section 38 of the Act has been vested with the power to prescribe the form and particulars of a licence and also impose conditions and restrictions. Thus, before a licence is granted, the Act has, by necessary implications, not conferred any power upon the Member, Board of Revenue to prescribe any terms and conditions for grant of exclusive privilege for manufacture and supply of country liquor and spiced country liquor after bottling/sacheting. Therefore, the delegation made by the notification of 1919 has to be read only to mean that the power to grant an exclusive privilege has been delegated and not the powers to fix terms and conditions and fix the period of grant of exclusive privilege. Section 22(1) of the Act confers the following powers on the State Government:
(i) To grant the exclusive privilege, inter alia, of manufacturing or supplying wholesale or of manufacturing and supplying wholesale any country liquor within a specified local area;
(ii) To prescribe the conditions on which any such exclusive privilege may be granted; and
(iii) To fix the period for which any such exclusive privilege may be granted.
In my opinion, what has been delegated to the Member, Board of Revenue is only the power to grant and not the other two powers of Section 22. It has 15 been contended by the respondents that power to grant would include the power to fix terms and conditions. In this context, it is submitted that a delegatee cannot assume jurisdiction on a subject unless it has been expressly delegated. Reference may be made to the same notification of 1919 wherein by Order V(2)(a), power to grant passes for import has been conferred upon the Deputy Collector, but, the power to prescribe the quantity for transport has been delegated to the Member, Board of Revenue by Order III (3) of the same notification. Thus, even the same notification clearly distinguishes between the power to grant and powers to prescribe restrictions.
The argument on behalf of the respondent that once the State Government by delegation in the year 1919 delegated power to grant exclusive privilege under Section 22(1) (a) & (b) for all times to come does not stand to reason because in subsequent enactment relating to grant of exclusive privilege later on, but subjected to amendment and substituted by Act 17 of 1982. The State of Jharkhand by a notification No. 737 dated 10.05.2008, in exercise of powers under Section 7(2)(e) of the Act delegated its power to grant exclusive privilege of selling retail, in country liquor and in other intoxicant as envisaged by Clauses (a)(v) and (b) to the Excise Commissioner, Jharkhand. This notification is annexed as Annexure4 to the rejoinder filed on behalf of the petitioner on 13.06.2011. Thus, the State Government, by its own conduct, admits that delegation made by notification in the year 1919 does not cover delegation of power to grant exclusive privilege in respect of retailers and, therefore, it can very well be deduced that the previous delegation cannot encompass delegation of powers to grant privilege to the provisions of Section 22D and 22G of the Act. Grant of exclusive privilege and licence are two different and distinct aspects and, therefore, in my view, what are delegated to the Member, Board of Revenue is only power to grant and not other two powers of Section 22 i.e. to fix terms and conditions and the delegatee cannot assume jurisdiction on a subject unless expressly provided.
I have also given a careful thought to the argument advanced on behalf of 16 the petitioner regarding the decision of the Apex Court in the case of Ashok Lanka Vs. Rishi Dixit, (2005) 5 SCC 598. In the said case, the Supreme Court was dealing with the Chhattisgarh Excise Act, the provisions of which are almost parimateria with the Jharkhand Excise Act. In the said case, it was noticed that in exercise of of its Rule making power, the State of Chhattisgarh had framed Chhattisgarh Excise Settlement of Licences for retail sale of Country/Foreign Liquor Rules, 2002, which, inter alia, provided for eligibility, procedure for making application, procedure for grant of a licence, etc. In that case, what was called in question was the action of the Excise Commissioner, who being a delegatee of the State of Chhattisgarh, issued certain instructions which had an effect of amending certain provisions of the Rules. The Hon'ble Supreme Court at paragraph 55 held:
"55. The Commissioner of Excise issued a circular letter dated 14.02.2005 which power evidently he did not possess in terms of Section 7 of the Act. Although the State may delegate its power to the Commissioner of Excise, such a delegation cannot be made in relation to the matters contained in the rulemaking power of the State. The matters which are, therefore, outside the purview of the Rules only could be the subjectmatter of delegation in favour of the Commissioner of Excise. The Commissioner of Excise is a statutory authority. He is bound to exercise his power only within the four corners of the Act or the Rules framed thereunder and not dehors the same."
Thus, it is amply clear that the Member, Board of Revenue has no jurisdiction or authority to prescribe terms and conditions for grant of exclusive privilege and the delegation by the Notification of 1919 has to be read and understood to mean that only the power to grant under Section 22 has been delegated and the other two powers have not been delegated as any contrary interpretation would result in invalidating the said notification on the ground of excessive delegation and delegation beyond the intent of the legislation. Thus, I hold that the Member, Board of Revenue had no authority to fix terms, conditions and period of N.I.T. and, therefore, rendered without jurisdiction. The result is the impugned Notice Inviting Tender is hereby quashed.
The petitioner has challenged certain terms and conditions of the impugned notice inviting tenders on the ground of it being illegal and 17 unconstitutional as mentioned in paragraph 11 of the writ petition. The State respondents have sought to justify insertion of the said terms and conditions and statements to that effect have been mentioned in paragraphs 15 to 18 of their counter affidavit. The main reason assigned by the State Government is their past experience. The factual foundation of their past experience has been mentioned in paragraph 17 of their counter affidavit wherein they have stated that the earlier grantees for the districts of East Singhbhum and Dhanbad had failed to perform their obligations and as such a decision was taken to club districts into single zone so that none of the districts remain unsettled. Before proceeding further, it may be pertinent to mention that so far as the spiced country liquor is concerned, the said justification of the State Government is not available to them as earlier also spiced country liquor was settled zonewise and no complaint has been brought on record with regard to the same in their counter affidavit.
By the impugned notices inviting tenders relating to grant of exclusive privilege for supply of country liquor on wholesale basis after bottling and sacheting, it is sought to be made with respect to five zones. The details of the zones can be found at Appendix I. The zones are Ranchi (comprising of seven districts), Jamshedpur (only district of East Singhbhum), Dumka (comprising of seven districts), Hazaribagh (comprising of eight districts) and Dhanbad (only district of Dhanbad). Thus, if the past experience of the State was bad with respect to the districts of Dhanbad and East Singhbhum, then it is not understood as to why the State Government has not merged the districts of Dhanbad and East Singhbhum with any other district to create a zone and why those districts, itself, have been treated to be a zone. Thus, apparently, it appears that the creation of zones again is without any reasonable cause and explanation given in the counter affidavit is self contradictory.
The Supreme Court in the case of Kalabharati Advertising Vs. Hemant Vimalnath Narichania, (2010) 9 SCC 437 (paragraph 25) wherein it has been held as follows: 18 "25. The State is under obligation to act fairly without ill will or malicein fact or in law. "Legal malice or "malice in law" means something done without lawful excuse. It is an act done wrongfully and willfully without reasonable or probably cause with an oblique or indirect object. It means exercise of statutory power for "purposes foreign to those for which it is in law intended". It means conscious violation of the law to the prejudice of another, a depraved inclination on the part of the authority to disregard the rights of others, which intent is manifested by its injurious acts."
Thus, the object sought to be achieved has no nexus with the change sought to be brought in the terms and conditions of grant of exclusive privilege (though without any authority) and thereby makes the decision unreasonable, arbitrary and violative of Article 14 of the Constitution of India. The rationale of such change apparently is without any foundation. The scope of judicial review in such cases though is limited, but, is not completely barred. The scope of judicial review with regard to the terms and conditions of a Notice Inviting Tender has been elaborately dealt with by the Supreme Court recently in the case of Shimnit Utsch Private Limited & Another Vs. West Bengal Transport Infrastructure Development Corporation Limited & Ors., (2010) 6 SCC 303 paragraphs 34 to 48.
In the circumstances, in my opinion, the changes brought about in the terms and conditions of the notice inviting tenders are without any reasonable cause and, therefore, are vitiated on account of the reason that it tends to arm the respondents with ample opportunity of arbitrariness, unbridled power to the authorities and, therefore, in my view, is rendered illegal on the anvil of Article 14 of the Constitution of India. The deviation in the terms and conditions incorporated in the N.I.T. tends to create a monopoly for chosen few. Besides, as already held hereinabove, the grant of exclusive privilege is in fact a grant under Section 22D and 22G and, therefore, delegation pertaining to the year 1919 by means of notification 417 F will not include a delegation in respect of the instant N.I.T. In the facts and circumstances, the writ petitions are allowed. The N.I.T. is hereby set at naught and the respondents are directed to initiate fresh N.I.T. for 19 grant of exclusive privilege in accordance with the provisions and after framing rules at the behest of the State Government. The subsequent exercise of approval of technical bid and negotiations are also set at naught.
For the reasons detailed hereinabove, the writ petitions are accordingly allowed.
(Poonam Srivastav, J.) Jharkhand High Court, Ranchi Dated 30/08/2011 Manish/N.A.F.R.