Madras High Court
Lotus Recreation Club (Regd. Society) ... vs The Special Commissioner And ... on 4 September, 2007
Author: S. Manikumar
Bench: S. Manikumar
ORDER S. Manikumar, J.
Page 2590
1. The petitioner is a registered recreation club, whose application for grant of FL2 licence for running a bar was rejected by the Special Commissioner and Commissioner of Prohibition and Excise, the first respondent herein dated 12.04.2006, seeks for a Writ of Certiorarified Mandamus to quash the above order with consequent direction to the respondents to grant FL 2 licence in their favour, within the time frame as fixed by this Court.
2. Brief facts leading to the writ petition are as follows:
The petitioner is a society, registered under the Tamil Nadu Societies Act, formed for developing indoor game, health improvement, to educate and help the public, for development of dissemination of knowledge of the public etc. There are 140 members enrolled in their society and 258 visiting members, availing the benefit of the society. Out of 140 regular members, 80 of them decided to consume liquor from the club. Therefore, the petitioner submitted an application dated 21.03.2005 to the Authority concerned for grant of FL2 licence as per the Tamil Nadu Liquor (Licence and Permit) Rules, 1981 (hereinafter it is referred to as "the Rules"), by paying requisite privilege fee, licence fee etc.
3. It is the case of the petitioner that a lease agreement was entered into between the petitioner and Tvl. Ganesan, the landlord on 30.03.2005 to run the club for a period of 10 years. On receipt of the application dated 21.03.2005, the first respondent sent a communication dated 23.03.2005 to the District Collector, Virudhunagar, the second respondent herein, and sought a detailed inspection report with reference to the affairs of the petitioner. The second respondent directed the third respondent, The Assistant Commissioner (Excise), Virudhunagar to inspect the premises of the petitioner and submit a report. The premises of the petitioner was inspected in the first week of April 2005 and the third respondent was fully satisfied the requirements for grant of FL2 licence.
4. It is the case of the petitioner that though the grant of licence was duly recommended by the third respondent, no orders were passed and therefore, the petitioner was constrained to fire W.P.No. 6650 of 2006 before this Court. This Court, after hearing both sides, by an order dated 08.03.2006, directed the first respondent to pass orders on the application of the petitioner within a period of six weeks. Thereafter, the first respondent has issued notice, calling upon the petitioner to appear Page 2591 for an enquiry on 10.04.2006. At the time of enquiry, the President and the Secretary of the Club appeared before the first respondent and produced necessary certificates and documents to prove the status of the members of the club. After verifying the records, the first respondent rejected the request of the petitioner with an observation that certain signatures were bogus and for other reasons. The said order of rejection is challenged in this writ petition.
5. Mr. V. Ayyadurai, learned Counsel for the petitioner submitted that the reason stated in the impugned order that the members of the petitioner-club cannot afford higher rate to consume liquor, as the avocation of the members being newspaper agency, commercial shop, tea shop and the dealers etc., is hardly a satisfactory reason to reject FL2 licence and the same is contrary to the ground reality. He further submitted that though the third respondent, during the course of inspection, satisfied with the requirements for the grant of FL2 licence, the first respondent deliberately rejected the application on the ground of non-production of necessary documents. Referring to Rule 19(b)(2) of the Rules, he submitted that it is sufficient, if five members of the club have signified their willingness to consume liquor from the said club and if the society satisfies the conditions under Rule 19 of the said Rules, then the authority is bound to grant FL2 licence. He further submitted that in the instant case, about 80 members of the society have already expressed their willingness to consume liquor from the said club and therefore, even assuming that some of the signatures were alleged to be bogus, the first respondent ought to have granted the required licence. In fine, he submitted that the reasons stated in the impugned order established only the pre-determined mind of the first respondent and therefore, the impugned order is liable to be set aside.
6. The respondents have filed counter affidavit and submitted that pursuant to the orders of this Court in W.P.No. 6650 of 2006, certain documents/certificates were called for from the District Collector, Virudhunagar, second respondent on 23.03.2006 and the same was furnished on 27.03.2006. However, the second respondent did not furnish the certificates from the Commercial Tax Department for registration of place of business for the year 2006-07, licence from the local body for the year 2006-07 and Profit and Loss account of petitioner's club for the year 2004-05 and 2005-06, duly audited by the competent authority. Therefore, the second respondent was instructed to comply with the above particulars on 06.04.2006. When the particulars were called for by the District Collector, Virudhunar, the President and Secretary of the club appeared before the first respondent on 10.04.2006 and gave a written statement. During personal hearing, the petitioner's club was instructed to produce the certificates/documents to prove the income of each and every member of the society. On scrutiny of the application, it was found that most of the members are engaged in business like Paper Mart, Newspaper Agency, STD Booth, Page 2592 Commission Agency, Tea Shop, Tailoring, etc., and on scrutiny of their signatures affixed in the memo enclosed along with the application, the signatures were found to be bogus and not genuine. Further, on verifying the Financial Status of the club members that they cannot afford to pay higher rate to consume liquor, the request of the petitioner for grant of FL2 licence, was rejected.
7. Mr. P. Subramaninam, learned Counsel for the respondent submitted that under the Tamil Nadu Prohibition Act, 1937 and the Rules framed thereunder, licence to vend liquor is granted only if the applicant satisfies the requirement under Rule 19(B)(2)(i) of the Rules and that no individual has a fundamental right to deal with the liquor. He further submitted that the petitioner has failed to submit the relevant certificates/documents called for by the first respondent to prove the financial status of the club members. He further submitted that many of the members' signatures affixed in the memorandum submitted along with the application were bogus. Since the application itself contained incorrect and bogus signatures of the members, the conduct of the petitioner in seeking licence itself was questionable and therefore, the petitioner has not approached this Court with clean hands. The extraordinary jurisdiction should not be exercised in favour of such person (petitioner's society) for grant of FL2 licence.
7. Heard both sides. I have perused the records pertaining to the application dated 21.08.2005.
8. In Kodai Distilleries Ltd., and Ors. v. State of Karnataka and Ors. , the Supreme Court held that a citizen has no fundamental right or business in liquor as a Beverage. The right under Article 19(1)(g) confers only qualified and not an absolute right. Res extra commerciurn cannot be carried on by any citizen and the State can prohibit the trade or business completely and also impose such restrictions and limitations for smooth administration. In the back drop of legal position when trading liquor, is res extra commercium, what has to be considered is whether the petitioner is entitled to a writ of Mandamus against the respondents for grant of FL2 licence. In Paragraph 12 of the above reported case, it is held as follows:
Article 19(1)(g) provides that all citizens shall have the right to practice any profession or to carry on any occupation, trade or business. This right conferred by the aforesaid provision is circumscribed by the provisions of Clause (6) of the very article which reads as follows:
(6) Nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law insofar as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law Page 2593 insofar as it relates to, or prevent the State from making any law relating to,-
(i) the profession or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or
(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
Thus Article 19(1)(g) read with Article 19(6) spells out a fundamental right of the citizens to practise any profession or to carry on any occupation, trade or business so long as it is not prohibited or is within the framework of the regulation, if any, if such prohibition or regulation has been imposed by the State by enhancing a law in the interests of the general public. It cannot be disputed that certain professions, occupations, trades or businesses which are not in the interest of the general public may be completely prohibited while others may be permitted with reasonable restrictions on them. For the same purpose, viz., to subserve the interests of general public, the reasonable restrictions on the carrying on of any profession, occupation, trade, etc., may provide that such trade, business etc., may be carried on exclusively by the State or by a Corporation owned or controlled by it. The right conferred upon the citizens under Article 19(1)(g) is thus subject to the complete or partial prohibition or to regulation, by the State. However, under the provisions of Article 19(6) the prohibition, partial or complete, or the regulation, has to be in the interests of the general public.
9. In a decision in Ashok Lanka v. Rishi Dikshit reported in 2006 (9) SCC 90, the Supreme Court has considered the case where the petitioner expressed the grievance that there were certain irregularities on the part of the District Level Committee in scrutinizing the applications and held that the criminal antecedents of the applicants and their family members should be properly verified by the committee before granting liquor vending licence. The facts of the above reported case are that the State of Chhattisgragh invited tenders for grant of licenee under the Chhattisgragh Excise Act, 1915 for Retail Sale of Country/Foreign Liquor Rules, 2002. Pursuant to the said notice, about 2,64,703 applications were submitted. The licence granted in favour of some persons were challenged before the High Court and the Court granted interim order, whereby, the licencees were permitted to continue their business and the respective District-Level Committees were directed to consider the matter afresh. On reconsideration, the District-Level Committees reaffirmed their earlier decision and rejected the objections filed by the writ petitioner therein. The Supreme Court in Paragraph 25, held as follows:
25. The Act and the Rules deal only with control and regulations. There is no provision which gives any discretion to the authorities Page 2594 concerned to relax the provisions of the Rules. The Rules in this behalf again must be framed upon taking into consideration of all relevant factors. The State in making the rules and formulating the policy decisions must be guided by public interest. In such matters, the State has a positive obligation to ensure that any activity contemplated, strictly conforms to the requirements of public good and is not otherwise derogative of public health. The State parts with its exclusive privilege on certain statutory conditions such as payment of excise fee, when it lays down criteria for selection of persons who would become qualified for grant of licence under the Act, not only the eligibility criteria therefor should be laid down, but having regard to its past experience as to how and in what manner, the licencees find means and methods to circumvent the said provisions, all endeavors should be made to plug all loopholes. The State has an extremely solemn obligation to fulfil in that behalf. All information supplied by the applicants for licences, thus, must undergo and satisfy the "strict scrutiny test". The State should not treat its right of parting with its privilege only as a means of earning more and more revenue. It may certainly earn revenue but only upon fulfillment of its notion of public health and welfare when the matter comes to retention of the exclusive privilege and/or parting therewith either in whole or in part.
10. In Bishnu Ram Borah v. Parag Saikia reported in AIR 1934 SC 898, the Supreme Court considered as to whether a Mandamus could be issued, directing the Excise Commissioner to grant liquor licence. In the above judgment, the dispute was with regard to grant of country liquor shop and instead of remitting the matter to the Board of Revenue for a fresh decision, the High Court issued a Writ of Mandamus. The Court dealt with the merits of the rival contestants and directed cancellation of licence. While dealing with the scope and the exercise of jurisdiction under Article 226, the Supreme Court at Paragraph 14 of the judgment held as follows:
It is impermissible for the High Court to have embarked upon an inquiry into the facts to adjudge the suitability or otherwise of the rival pairs of claimants and upon a reappraisal of the evidence come to a finding contrary to that reached by the Board of Revenue. There was nothing on record to show that the Board had acted in excess of jurisdiction or there was an error apparent on the face of the record which resulted in manifest injustice. That apart, it was not a proper exercise jurisdiction under Article 226 of the Constitution for the High Court to have issued a writ of Mandamus ordaining the Deputy Commissioner to grant the liquor licence to respondents Nos. 1 and 2 in preference to the appellants. Although a writ of Mandamus may Page 2595 be a necessary adjunct to a writ of certiorari, if the High Court was satisfied that a writ of certiorari had to be issued to quash the impugned order of the Board of Revenue on the ground that its order was vitiated by an error apparent on the face of the record, the proper course for the High Court to adopt was to have issued a writ of mandamus to hear and re-determine the appeal according to law.
11. Summarising the law, the Supreme in a catena of decisions held that no fundamental right is vested on an individual to trade or business in liquor as beverages and that the right under Article 19(1)(g) is not absolute. The restrictions and limitations imposed in the legislation are mandatory and it should be strictly followed. In matters relating to grant of liquor licence, the State has got mandatory duty to ensure that the liquor vending activity should satisfy the requirements of the public good and it is the duty of the State to apply scrutinise the applications strictly to verify as to whether the information furnished by the applicants for grant of licence satisfies the provisions of the Prohibition Act and Rules framed thereunder:
13. It is a settled legal position that a person, who approaches the remedy of extra-ordinary jurisdiction under Article 226 of the Constitution of India, should come with clean hands. The Excise Commissioner, on perusal of the records, found that the signatures said to have been affixed by the members of petitioner's society were not genuine, on the contrary, the signatures were bogus. The remedy under Article 226 of the Constitution of India is only discretionary. Though the first respondent has instructed the petitioner to submit necessary documents/certificates, the Secretary of the Club has failed to produce the same. While applying the "Strict Scrutiny Test", the Excise Commissioner has found that the information furnished by the petitioner for obtaining the licence, is not bona fide and the conduct of the petitioner even at the threshold was not genuine. Therefore, I do not find that there is any manifest error committed by the respondent in rejecting the application for licence. The other reasons stated by the Excise Commissioner that the members of the club cannot afford to pay higher rate to consume liquor, cannot said to be illegal, inasmuch as the financial status of the club members, being a Newspaper Agent, STD Booth Owners, Commission Agent, Tea Shop, Tailor, Hairstylist, Fitter, etc.
14. In view of the above, there is no merits in the writ petition and same is dismissed. No costs. Consequently, connected Miscellaneous Petition is also closed.