Madras High Court
A. Mariyayee vs The Commissioner And Secretary, ... on 9 July, 1998
Equivalent citations: (1998)3MLJ145
ORDER S.S. Subramani, J.
1. In this batch of writ petitions, the main question to be considered is the scope of Rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules, 1989.
2. Under Section l7-C of the Tamil Nadu Prohibition Act, 1937, it shall be lawful for the State Government to grant to any person or persons on such conditions and for such period as they may deem fit the exclusive of other privilege, (a) of manufacturing Indian Made foreign spirits, or (b) of selling by retail Indian made foreign spirits, within any local area.
3. Section 20 of that Act provides for Permits and Licences. Section 20(d) reads thus:
The State Government or any Officer empowered by them in this behalf may issue
(a) to (c) xxxxxxxx
(d) licences to any person to possess liquor and to issue it to persons or insititutions who hold permits or licences under this Act or who have been exempted under this Act from so much of the provisions of Section 4, Sub-Section (1), Clauses (a) or (j), as relates to the possession, consumption or buying of liquors.
Section 20-A provides for matters to be taken into consideration by the licensing authority. It says:
Subject to the provisions of Section 20-B in considering any application for grant for a licence or permit under this Act, the authority competent to grant such licence or permit, as the case may be, shall have regard to the following matters, namely:
(a) the suitability of the applicant for the grant of licence or permit, as the case may be:
(b) Omitted.
(c) such other matters as may be prescribed.
There is an Explanation added to that section which reads thus:
Explanation: It is hereby declared that, in judging the suitability of the applicant for the grant of licence or permit, as the case may be, the authority competent to grant such licence or permit shall have regard to the following factors namely:
(a) solvency of the applicant;
(b) whether the applicant has contravened any of the provisions of this Act or of any rule, notification or order made thereunder or has committed the breach of any of the terms and conditions of any licence or permit granted under the provisions of this Act or of any rule made thereunder;
(c) whether the applicant has been convicted of any offence punishable under this Act or of any cognizable and non-bailable offence or of any offence under the Dangerous Drugs Act, 1930 (Central Act 11 of 1930) or under the Trade and Merchandise Marks Act, 1958 (Central Act 43 of 1958) or under Section 482 to 489 of the Indian Penal Code (Central Act XLV of 1860).
(d) whether the applicant carries on any other business which is likely to prevent him from giving his due attention to the purpose for which the licence or permit under this Act is sought for:
(e) whether the applicant was a defaulter in payment of any amount due to the State Government under this Act or the rules made thereunder or any taxes or other amounts due to the State Government;
(f) any other matter relevant to the purpose of which the licence or permit under this Act is sought for.
Chapter VI deals with Rules and Notifications. Sub-section (2) of Section 54 Act says thus:
In particular and without prejudice to the generality of the foregoing provisions, the State Government may make rules:
(a) for the issue of licences and permits and the enforcement of the conditions thereof;
....
Sub-Section (3) reads thus:
All rules made under this Act shall, as soon as possible after they are made, be placed on the table of both the Houses of the Legislature and shall be subject to such modifications by way of amendments or repeal as the Legislative Assembly may make within fourteen days on which the House actually sits either in the same session or in more than one session.
Section 55 of the Act is also of some importance. It reads thus:
All rules made and notification issued under this Act shall be published in the Official Gazette and upon such publication shall have effect as if enacted in this Act..
(Italics supplied)
4. Tamil Nadu Liquor (Retail Vending) Rules, 1989 was publishled on 15.4.1989 in exercise of the powers under various sections of the Tamil Nadu Prohibition Act which includes Sections l7-C, 20, etc. Rule 2(p) defines 'licence' thus:
(2) Definitions: In these rules, unless the context otherwise requires:
(p) 'licence' means a licence granted under Sub-section (2) of Section 17-C of the Act to any person who has been granted the privilege of vending liquor, by retail; (or licence for transport of liquor from the TASMAC to the retail vending shops within the State as the case may be).
Rule 2(u) defines 'privilege' means the privilege for retail vending in liquor.
Rule 3 deals with grant of privilege. It says that the privilege shall be granted to any person by auction in accordance with the provisions of these rules, before the auction is conducted or even notified, the maximum number of shops to be established in the State shall be determined by the Government. Thereafter, under Rule 5, notice of auction is issued for which a statutory form (Form No. 1) is also prescribed. The Rule says that notice shall be published in one leading Tamil daily and one leading English daily by the Collector atleast twenty days in advance prior to the auction. Necessary publicity also will be given by affixing the' notice on the notice board of the Taluk Office, Revenue Divisional Office concerned and in the Collector's Office. Any person who intends to participate in the auction is also directed to deposit earnest money. Rule 7 provides for the conduct of the auction. Sub-rule (2) of Rule 7 says that no person shall be permitted to participate in the auction unless he furnishes (a) a demand draft towards the Earnest Money Deposit; (b) an affidavit sworn in before a Notary Public or a Magistrate in Form II, Clause (c) of Sub-rule(2) of Rule 7 provides for getting a Certificate from Excise Officer or an Officer not below the rank of a Deputy Tahsildar duly authorised by the Collector regarding ownership or lease for not less than a year of the shop from where he intends to sell liquor in Form III. This clause(c) which was originally part of Rule 7 is now not in that place in the Statute Book. As per G.O.Ms. No. 999, Prohibition and Excise dated 27.11.1990, the same is now part of Sub-rule (1) of Rule 13. Rules 8 to 12 are not relevant for the purpose of our case. Rule 13 provides for the grant of licence. Rule 13 as it originally stood, reads thus:
13. Grant of licence. -- (1) Upon the receipt of the order of confirmation of the sale of the privilege the auction purchaser shall make an application in Form VI to the licensing authority for the grant of the licence together with the application fee specified in Sub-Rule (3).
(2) The licensing authority shall within three days of the order of confirmation of the sale grant the licence in Form VII. The licence so granted shall be valid for a period of one year.
(Rest omitted as unnecessary).
The same was also amended as per G.O.Ms.No. 999, Prohibition and Excise dated 27-11-1990. Sub-rules (1) and (2) of Rule 13 were amended, and they read thus:
(1) Within seven days of receipt of the orders of confirmation of the sale of the privilege in Form V, the auction purchaser shall make an application in Form VI to the licensing authority for the grant of the licence together with the application fee specified in Sub-Rule (3), a certificate in Form III from the Excise Officer or an officer not below the rank of a Deputy Tahsildar duly authorised by the Collector regarding suitability and also ownership or lease of the building for not less than a year of the shop from where he intends to sell Liquor, and a xerox copy of the document showing that the auction purchaser himself is the owner of the building or a xerox copy of the lease agreement executed with the landlord of the building wherein the proposed shop is to be located.
(2) The licensing authority shall, within three days from the date of receipt of documents together with the application fee specified in Sub-rule (1) above, grant the licence in Form VII.
(2A) The period of licence shall be for the period ending the 31st May of the succeeding year, unless otherwise specified in the licence issued in a particular case;
Provided that the said period shall not apply to the licences renewed for the second and third year under Rule 14.
(Italics Supplied) As per the amended Rule, after confirmation of sale of the privilege, the auction purchaser has to make an application in Form No. VI. In that Form, the applicant for licence has to say whether he is the owner of the building or whether he has taken the building only on lease for a minimum period of one year, and he has also to declare whether he has furnished the certificate in Form No. III. Form No. III which was originally part of Rule 7(2)(c) and now made part of Rule 13(1) requires production of certificate from an Excise Officer or an Officer duly authorised by the Collector wherein he has to certify that the auction purchaser is the owner or has taken on lease the building for a period of year or years and also the details of the location. He has also to certify that there is no place of worship or educational institution within the prohibited distance. Rule .14 deals with renewal of licence and, as per Col .8 of Form No. VIII, the applicant has to declare whether the building continues to be in his possession for a further period one year. Rule 17 provides for shifting of the shop, and the applicant has to make application in Form VIII-A. Under column 10 of that Form, the applicant has to declare whether the licencee is the owner of the shop to which he intends to shift the business and if he has only a leasehold right, he has to enclose the lease agreement from the owner of the building for not less than the currency period of lincence.
(Italics supplied)
5. These are the important provisions which were brought to the notice of this Court from the various sections of the Prohibition Act and also from variaus Rules of the Tamil Nadu Liquor (Retail Vending) Rules, 1989, for the purpose of these writ petitions.
6. The main reason for filing these writ petitions is, that various landlords were aggrieved by the action of the licensing authority in granting licence without complying with rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules. Some of the tenants are also aggrieved on the ground that even though they continue in possession of the building on the basis of earlier arrangement with landlord, the licensing authorities are not issuing licence since they are statutory tenants. According to these tenants, Rule 13(1) has no application so far as statutory tenants are concerned, and the same will apply only to those tenants or auction purchasers who start the business for the first time. A further contention was taken by the tenants that if Rule 13(1) is made applicible in their case, that will be taken advantage of by avaricious landlords to exploit their weak position and they will demand higher rent. It is also contended by them that Rule 13(1) should not be read as exhaustive. According to them, it must be read in such a way that the production of lease deed will arise only in such cases as are necessary and if they are entitled to any statutory protection, from irremovability, the Authorities cannot insist on production of lease agreement. A further contention is taken by the tenants that there may be cases of oral lease or lease where the term has expired, and they still continue in passession and the landlords are also refusing to give their consent or to renew the lease, and in such cases, the Authorities cannot insist on production of lease deed, and if that is insisted upon, the same will amount to arbitrariness, and by insisting on lease agreement, no purpose or object of the Act can be achieved. It is further contended that the stipulation that licence will be granted only to those tenants who are in a position to produce lease agreement for not less than a year is arbitrary, and for the above reasons, the Rule is violative of Arts. 14 and 19(1)(g) of the Constitution.
7. As against the said contention, learned Counsel for landlords submitted that business in liquor is not a fundamental right, and the State only gives a privilege to sell the liquor on certain conditions, and those conditions are incorporated in the licence. Any person who intends to do business in liquor in whatever form it may be, has to satisfy those conditions. Under Section l7-C of the Act, the State Governments entitled to grant the privilege on such terms and conditions, and Section 20 of the Act enables the State Government to issue permits and licences to any person, and under Section 20-A the Licensing Authority is also bound to take into consideration various (sic) which include such other matters as may be prescribed under the Rules and it is further said that under Section 54(2)(a), the Government is further authorised to make rules for the issue of licences and Permits and the enforcement the conditions thereof. It is further contended that under Section 55, all the Rules and Notifications made under the Act shall be deemed as if they are enacted in the Act itself. The sum and substance of the argument by learned Senior Counsel for the landlord is that the Rules and Forms which are statutory in nature form part of the parent Act itself, and when the State sells the privilege, it can dictate terms as conditions of the licence, taking into consideration the perilous nature of the business. According to them, the liquor business stands as a class by itself and the same cannot be identified or compared with any other business. Liquor being the property of the State, there cannot be any fundamental right vested with the person who intends to do the business, and there is also no scope for any argument on the ground of arbitrariness or discrimination in such cases. Any highest bidder in the auction and who satisfies the conditions of Rule 13, is entitled to do the business after getting the licence. While he participates in the auction, he knows that he has to satisfy the licensing conditions, and if he has to take the a lease agreement with the landlord, that condition also must be satisfied. It is further said that the argument that the tenant is a statutory tenant and is irremovable by virtue of the Rent Control Act cannot be read into the provisions of the Prohibition Act which is a special enactment. The landlord has got every right to decide as to the nature of business that has to be conducted in his building and the Government has recognised only that right. It is also said that while passing this impugned Rule, the Government is aware about the rights of the tenants and also about irremovability under the Tamil Nadu Rent Control Act. In spite of knowledge of the Government about the statutory tenancy, if it has chosen to further declare that the lease agreement' has to be produced, the Court cannot sit on the wisdom of the Legislature. It was further argued on behalf of the landlords that there are auction purchasers in places where even the Rent Control Act has no application or there are buildings belonging to the Local Authority or Public Corporations which are exempted from the purview of the Rent Control Legislation. To insist on the production of such an agreement for getting a licence is intended only for the purpose of showing that law is the same to all the auction purchasers. It is further said that while considering the scope of Article 14 of the Constitution, the aim of the Act also will have to be considered. Liquor business is a social evil and the intention of the Legislature in passing the Prohibition Act is to curb the production, possession and use of liquor or intoxicating drug for all purposes other than medicinal, scientific, industrial or such like purposes. So, the consent of the landlord has to be viewed with the Scheme of the legislation. It is said that the various petitioners, who, with open eyes, participated in the bid, cannot be heard to contend that they are entitled to get licence de hors the Rules. The Rules are constitutionally valid.
8. I will first consider the question how far Rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules is violative of Articles 14 and 19(J)(g) and 6 of the Constitution of India.
9. The vires of the Rule is challenged in Writ Petition No. 7601 of 1998, though the same argument was raised by various Counsel on behalf the tenants. While considering this writ petition, at this stage, I am only concerned about the legal points urged regarding the constitutionality of the Rules. On facts, whether the petitioner in this writ petition is entitled to any relief will be considered in the later portion of this Order.
10. It is contended in this writ petition that the petitioner is a statutory tenant entitled to the benefits of the Rent Control Act and he is also entitled to the benefits of irremovability. It is further said that in case of oral lease there is no scope for production of any lease agreement. Whether the term has expired or whether it is a case of oral lease, possession of the tenant, does not depend on the production of copy of the document, and Legislature intended only continued lawful possession of tenant. The continuous possession does not depend upon production of copy of the lease agreement. It is further said that the irremovability is a law declared by the Honourable Supreme Court and also by various statutes, and the same cannot be taken away by a rule under the Tamil Nadu Prohibition Act. It is further said that the petitioner in this case has obtained lease from 2nd respondent therein only for the purpose of conducting a liquor shop. Even though the term has expired on 31.5.1998, by virtue of Rent Control legislation, he has got interest in the building on the same terms and conditions. Even though he is the successful bidder, in view of the condition under Rule 13, he is not in a position to do his business. Therefore, that provision which insists on the auction purchaser to produce lease agreement must be declared as illegal, unenforceable, inoperative and unconstitutional.
11. In this connection, it may be noted that the writ petitioner obtained interim order during vacation directing the respondent-licensing Authority to issue licence, and on that basis, licence was also granted.
12. In the counter-affidavit filed by 2nd respondent in W.P.No. 7601 of 1998, the right of the tenant to continue his business in the building is seriously challenged.
13. In Amar Chandra Chakraborty v. The Collector of Excise, Tripura , this question was considered. In that case, licence was granted for a period of five years. Even before the expiry of the period of five years, licence was withdrawn in view of the provisions of the Bengal Excise Act. The same was challenged on the ground that it affects the fundamental right of the licensee to do his lawful trade or business. That is a case of vending country liquor. In paragraph 10 of the judgment, Their Lordships said thus:
Trade or business in country liquor has from its inherent nature been treated by the State and the society as a special category requiring legislative control which has been in force in the whole of India since several decades. In view of the injurious effect of excessive consumption of liquor on health this trade or business must be treated as a class by itself and it cannot be treated on the same basis as other trades while considering Article 14. This classification is founded on an intelligible differentia having a rational relation to the object to be achieved by the control imposed on the trade or business in country liquor. Article 14, it may be pointed out only forbids class legislation but reasonable classification does not come within the prohibition.
(Italics supplied) Regarding Article 19 of the Constitution, in para 13, Their Lordships have said thus:
...In dealing with reasonable restrictions no abstract standard or general pattern is possible to lay down. In each case, regard has to be had to the nature of trade or business, the conditions prevailing in such trade or business, the nature of the infringement alleged; and the underlying purpose of the restriction, the imposition of which is alleged to constitute an infringement.
In para 15, it was further held thus:
...In the determination of reasonableness of restrictions on trade or business regard must be had to its nature, the conditions prevailing in it and its impact on the society as a whole. These factors must inevitably differ from trade to trade and no general rule governing all trades or business is possible to lay down. The right to carry on lawful trade or business is subject to such reasonable conditions as may be considered essential by the Appropriate Authority for the safety, health, peace, order and morale of the society. Article 47 of the Constitution directs the State to endeavour to prohibit consumption of intoxicating drinks and or drugs which are injurious to health except for medicinal purposes. In the case of country liquor, therefore, the question of determining reasonableness of the restriction may appropriately be considered by giving due weight to the increasing evils of excessive consumption of country liquor in the interests of health and social welfare. Principles applicable to trades which all persons carry on free from regulatory controls do not apply to trade or business in country liquor; this is so because of the impact of this trade on society due to its inherent nature.
14. In Nashirwar v. State of M.P. , Their Lordships extracted various decisions including the one cited supra and held that there is no fundamental right to citizens to carry on trade or business in liquor. Lordships summarised the reasons for the same. The relevant portion is in paragraph 23, and it reads thus:
There are three principal reasons to hold that there is no fundamental right of citizens to carry on trade or to do business in liquor. First, there is the police power of the State to enforce public morality to prohibit trades in noxious or dangerous goods. Second, there is power of the State to enforce an absolute prohibition of manufacture or sale of intoxicating liquor. Article 47 states that the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. Third, the history of excise law shows that the State has the exclusive right or privilage of manufacture or sale of liquor.
(Italics supplied).
15. In Har Shankar y. Deputy Excise and Taxation Commissioner and Ors. A.I.R. 1975 S.C. 1121 : (1975) 1 S.C.C. 727, Their Lordships reiterated the above legal principle and held that the State can prohibit absolutely the sale of intoxicating drinks, and in paragraph 54 (at page 1133), it is said thus:
The wider right to prohibit absolutely would include the narrower right to permit dealings in intoxicants on such terms of general application as the State deems expedient.
(Italics supplied.) In paragraph 55, Their Lordships further held thus:
..if the Government is the exclusive ower of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights.
16. In State of Andhra Pradesh v. McDowell & Co. in paragraph 39 Their Lordships reiterated and stated thus:
The contention that a citizen of this country has -- a fundamental right to trade in intoxicating liquors refuses to die inspite of the recent Constitution Bench decision in Khoday Distilleries, this Court reviewed the entire case-law on the subject and concluded that a citizen has no fundamental right to trade or business in intoxicating liquors and the trade or business in such liquor can be completely prohibited.
Their Lordships have further stated in that case thus:
It held that because of its vicious and pernicious nature, dealing in intoxicating liquors is considered to be res extra commercium (outside commerce). Article 47 of the Constitution, it pointed out, requires the State to endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and all drugs which are injurious to health. For the same reason, the Bench held, the State can create a monopoly either in itself or in an agency created by it for the manufacture, possession, sale and distribution of liquor as a beverage. The holding is emphatic and unambiguous.
In fact, Their Lordships, after considering some of the decisions which expressed doubt on the point as to whether a citizen has fundamental right in carrying on trade in intoxicating liquor and the argument based on Articles 19( 1 )(g) and 6 is out of place. Only to complete the argument raised by learned Counsel before the Hon'ble Supreme Court, the learned Judges further said that if for any reason Article 19(1)(g) is applicable, any restriction on that business can also be validated, taking into consideration, the nature of the business. The reasonableness of the restriction will have to be taken into consideration as to the nature of business which has an important element to play. Regarding Article 14 of the Constitution of India, Their Lordships said that if an enactment is challenged as violative of Article 14, it may be struct down only if it is found that it is violative of equality clause/equal protection clause enshrined in the Constitution. The relevant portion reads thus:
...In other words, say, if an enactment is challenged as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it, can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck down on the ground that Court thinks it unjustified. Parliament and the Legislature composed as they are of, they are the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom. In this connection it should be remembered that even in the case of administrative action, the scope of judicial review is limited to three grounds, viz.,
(i) unreasonableness, which can more appropriately to be called irrationality, (ii) illegality and (iii) procedural impropriety....
The applicability of doctrine of proportionality even in administrative law sphere is yet a debatable issue.
...
It would be rather odd if an enactment were to be struck down by applying the said principle, then its applicability even in administrative law sphere is not fully and finally settled. It is one thing to say that a restriction imposed upon a fundamental right can be struck down, if it is disproportionate, excessive or or unreasonable and quite another thing to say that the court can strike, down enactment if it thinks it unreasonable, unnecessary or unwarranted.
(Italics supplied.)
17. In Khoday Distilleries Ltd., v. State of Karnataka , Their Lordships reiterated the same principle. In paragraph 13 of the judgment Their Lordships held that even if Article 19(1)(g) of the Constitution may not be available to the petitioner therein, the rule must satisfy the test of Article 14, which is a guarantee against arbitrary action. Their Lordships cautioned as to how that must be approached. It was held thus:
...However, one must bear in mind that what is being challenged here under Article 14, is not executive action but delegated legislation. The test of arbitrary action which apply to executive action do not necessarily apply to delegated legislation. In order that delegated legislation can be struck down such legislation must be manifestly arbitrary; a law which could not be reasonably expected to emenate from an authority delegated with the law making power. In the case of Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India this Court said that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. A Subordinate Legislation muy be questioned under Article 14 on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that if it is manifestly arbitrary. Drawing a comparison between the Law in England and in India, the Court further observed that in England the Judges would say "Parliament never intended the authority to make such rules; they are unreasonable and ultra vires." In India, arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. But subordinate legislation must be so arbitrary that it could not be said to be in confirmity with the statute of that it offends Article 14 of the Constitution.
(Italics supplied.) In that case, Their Lordships further went on and said, following an earlier decision reported in State of Madhya Pradesh v. Nandlal Jaiswal . that there is no fundamental right to a citizen to carry on trade or, business under in liquor; and the State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants such as its manufacture, storage, export, import, sale and possession; nevertheless when the State decides to grant such right or privilege to others, the State cannot escape the rigour of Article 14. Their Lordships extracted the relevant passage in Nandlal Jaiswal case, as to the applicability of Article 14 and its scope. It reads thus:
But while considering the applicability of Article 14 in such a case we must bear in mind that having regard to the nature of the trade or business the Court would be slow to interfere with the policy laid down by the State Government for grant of licence for manufacture and sale of liquor. The Court would, in view of the inherently pernicious . nature of the, commodity allow a large measure or latitude to the State Government in determining its policy of regulating manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government has done unless it appears to be plainly arbitrary, irrational or mala fide.
On the basis pf these decisions, the tenants will have to satisfy this Court that provision under Rule 13 is violative of Article 1,4 of the Constitution. In fact, learned Senior Counsel Mr. R. Thiagarajan did not seriously urge his contention under Article 19(1)(g). His main argument was only based on Article 14; of the Constitution. Here again, it is for the tenant to contend that it is discriminatory. Except for saying that the expressions 'oral tenancy with the tenant' and 'after expiry of the term' are not included in Rule 73, no serious argument was put forward. Of course, an argument was advanced on the basis of Rule 13 regarding its interpretation, which will be met in the subsequent portion of this Order. In this connection, it is also relevant to take into consideration the judgment of the Honourable Supreme Court reported in Special Court Bill., In re: A.I.R. 1979 S.C 478. In paragraph 73 of the judgment Their Lordships considered the various propositions arising under Article 14 of the Constitution. Sub-paragraphs 5 to 7 of paragraph 73 are relevant for our purpose. They read thus:
By the process of classification, the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some degree is Likely to produce, some inquality, but if a law deal with the liberties of a number, of well defined classes, it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. Classification, thus means segregation in classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily.
The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive.
The classifcation must not be arbitrary but must be rational, that is 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 must have a reasonable relation to object of the legislation. In order to pass the test two conditions must be to fulfilled, namely, (1) that the classification must be founded on an intelligible differential which distinguishes those that are grouped together from others and (2) that differentia must have a rational relation to the object sought to be achieved by the Act.
(Italics supplied)
18. Applying these principles, if the Licensing Authority insists on the production of a lease agreement, can it be said that it is an arbitrary action? In this case, we are not concerned with the rights and liabilities of a statutory tenant. We are only concerned about the right of the State to impose a condition before granting a licence, viz., that the auction purchaser must produce a copy of lease aereement. It pre-supposes that the Rule is intended only for those persons who are contractual tenants. Whether that classification is founded on an intelligible differentia and whether that differentia has a rational relation with the object sought to be achieved is the only matter to be considered here. If that is satisfied, there is no scope for the argument regarding violation of Article 74 of the Constitution also.
19. I have already said that the very purpose of the Prohibition Act is to curb the production, possession and use of liquor or intoxicating drug, and it is further seen from the preamble that the intention is to allow production of intoxicating drugs only for medicial, scientific, industrial or such like purposes. The consumption of intoxicating drinks is also sought to be curbed by this enactment. With that intention, and to implement that policy, if the Legislature says that the owner's consent is also required for conducting the business in his building, it is only to achieve that purpose, that clause is incorporated. In this connection, a decision of this Court reported in Neyveli Lignite Corporation v. Collector of South Arcot, etc. 1990 Writ L.R. 489 is worth mentioning. In paragraph 4 of the judgment, at page 490 P.S. Mishra, J., as he then was, has held thus:
It appears, howver, that the petitioner will Still have the right which any owner of a building or a shop will have in relation to any tenant in occupation of such a building or a shop...
(Italics supplied) In that case, Their Lordships justified the objection of Neyveli Lignite Corporation, the owner of the building, in locating certain liquor shop within its area. Even though the Lignite Corporation was providing other amenities to the township, it was an added reason for Their Lordships to recognise the right of every landlord over his building. Their Lordships further went and said thus:
...They (N.L.C.) may bring to the notice of the respondents/State Government their objections to the location of any liquor shops for which they may have a right independently of any policy decision of the State Government for saying not to opening of a liquor shop in a premises or a shop belonging to them unless they have licensed the tenant in the house or shop extending a right to them to run a liquor shop.
(Italics supplied) In my opinion, this decision recognises the right of a landlord that he has a say as to how his building should be used. The decision further declares that the premises must be given to the tenant extending him a right to run a liquor shop and not as a mere lessee alone.
20. Regarding user of the building, the landlord has a right of say. Merely because there is a statutory tenant in the building, the right of the landlord is not taken away. Why a contractual tenant alone has been given the right to get licence is also to be considered. One or the main purposes of liquor vend is to augment the revenue of the State. The person who purchases the privilege in auction need not be a statutory tenant alone to whom Rent Control Act applies. It is not disputed by any one of the Counsel that there are auction purchasers even in village areas" where the Rent Control Act has no application and even within the areas where Rent Control legislation has application, there are buildings which are exempted from the purview of the Act. If the auction purchaser happens to be the owner of the building, the question of getting consent from others will not arise. The question of getting consent will arise only in the case of a tenant of a building. If the intention of the State in permitting liquor vend is to augment its income, it cannot make a difference between a tenant in the rural area and the tenant of a building to which Rent Control Act has no application. The State will have to consider all these auction purchasers alike, and this could be achieved only if the auction purchaser is a contractual tenant. Otherwise, there will be discrimination as between auction purchasers, and the classification will have no rational relation to the object to be achieved.
21. In the decision reported in State of Orissa v. Narain Prasad in paragraph 35. (at page 758), Their Lordships have defined as to what is meant by 'privilege' under the Prohibition Act. Their Lordsklps have said thus:
...In the context of excise enactments, the expression 'privilege' means the licence or permit granted by the State. We may explain: The State is entitled to prohibit the trade in intoxicating liquors altogether; it can impose a total ban; no citizen can claim any fundamental right to manufacture or to trade in these liquors; it is, however, open to the State to lift the ban partially and allow the trade in liquor to be carried in the manner prescribed; the State says that a citizen can trade in liquor only under a licence to be granted by it for the consideration specified in that behalf and that the trade therein can be carried on only in accordance with the regulatory provisions prescribed by it in that behalf. It is this grant of licence/permit which is called or is described sometimes as grant of 'privilege'.
(Italics supplied) If the auction purchasers are getting only a privilege and with open eyes wanted to do business on the basis of the privilege, can they contend that any provision of the Rule is invalid or violative of Article 14 of the Constitution? As was held in the decision cited supra, in paragraph 21, 'a person who enters into certain contractual obligations with his eyes open and works the entire contract, cannot be allowed to turn round and question the validity, of those obligations or the validity of the rules which constitute the terms of the contract. The extraordinary jurisdiction of the High Court under Article 226 which is of a discretionary nature and is exercised only to advance the interest of justice, cannot certainly be employed in aid of such persons. Neither justice nor equity is in their favour'. Though in that case their Lordships declared the above legal principle when the amount from the auction purchaser was sought to be recovered, I feel that the same principle could be applied in this case also, the reason being that all these conditions were brought to the notice of the auction prrchasers even at the time when they intended to participate in the auction.
22. According to me, it is not a case of the State preferring contractual tenant to the exclusion of other categories of tenants. Even a statutory tenant or person holding an oral tenancy are also entitled to get a privilege only if a lease agreement is produced. A lessee is entitled to quiet enjoyment, and, taking into consideration the trade in liquor, the lessee, must have the right of enjoyment without any disturbance from any source. If the owner himself gives a written consent in the form of a lease agreement for the purpose of conducting a liquor shop, that guarantees the peaceful enjoyment of the lessee. That is also a purpose why a lease agreement is insisted. The place where the lessee chooses to run the business is also to be secluded and selected and found suitable by the Department. The landlord, should also agree and assure the Department that the lessee will have a right of quiet enjoyment during the period of licence. When the auction purchaser has invested huge amounts, his business also must be protected, and taking a lease deed is in the nature of protection. All these have rational nexus to the object sought to be achieved.
23. As held in Har Shankar v. Deputy Excise and Taxation Commissioner and Ors. , the State has also the narrower right to permit dealings in intoxicants on such terms of general application as the State deems expedient. It is only that right that has been exercised by the State in passing the above Rules.
24. Mr. R. Muthukumaraswami, learned Senior Counsel argued that this Rule is a part of subordinate legislation and goes beyond the scope of the main Act itself. Therefore, it has no sanctity and this could be challenged an the basis of the decision in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India in paragraph 78 of the judgment (at page 69.1), Their Lordships declared the circumstances under which a subordinate legislation could be struck down. Learned, counsel relied on the above passage and contended that the same applies to the facts of this case. It reads thus:
That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co. Ltd. V. Notified Area Committee, Tulsipur ; and Ramesh Chandra Kachardas Porwal v. State of Maharashtra and in Bates v. Lord Hailsham of St. Marylebone (1972) 1 Writ L.R. 1373. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all the grounds on which administrative action may be questioned, such as, non-application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc., etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to betaken into consideration by the statute, or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 79(1)(a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant.
(Italics supplied.)
25. Learned Counsel submitted that the licensing Authority is expected to take only certain matters into consideration for the grant of licence and the same are enumerated in Section 20-A of the Tamil Nadu Prohibition Act. It is said that what the Section contemplates is the suitability of the applicant for the grant of licence and not the suitability of the locality of the building which is governed by Rule 18. The argument of learned Counsel is that for getting a licence, if the suitability of a person is a matter to be considered, the necessity of producing a lease agreement goes beyond the scope of the section. Though the argument, prima facie appears to be attractive, I do not think the same could be accepted. While considering the scope of Section 20-A of the Prohibition Act, I find-that the section contemplates two matters, namely, (1) Consideration of the application ; and (2) suitability of the applicant. The main section itself says that in considering any application, Sub-section (c) to Section 20-A enables the Government to have regard to such other matters as may be prescribed. So, in considering an application for getting licence, the Government is competent to prescribe the Rules. The Explanation in that section only deals with one such subject, i.e., the suitability of the applicant and it does not say anything about the procedure to be followed while considering an application for licence. Section 54 provides for the rule-making power of the Act for the purpose of carrying into effect the provisions of the Act. Sub-section (2) to Section 54 of the Act declares that 'in particular and without prejudice to the generality of the foregoing provisions, the State Government may make rules (a) for the issue of licences and permits and the enforcement of the conditions thereof. That section also enables the Government to make Rules, and the most important section, according to me, is Section 55 which declares that all Rules and Notifications under the Act shall be published. In the Official Gazette and upon such publication shall have effect as if enacted in this Act.
(Italics supplied)
26. A similar provision under the U.P. Excise Rules came, for consideration before the Honourable Supreme Court in the decision reported in State of U.P. v. Delhi Cloth Mills . Section 77 of the U.P. Excise Act is similar to Section 55 of our Act. Commenting on the sage, at page 465 of the judgment, in paragraph 16, Their Lordships considered the scope of the expression 'as if enacted in this Act'. It was held thus:
Both the old and the new Rule 814 must, therefore, have effect from the date of publication in the Official Gazette or from such other date as may be Specified in that behalf as if enacted in the Act. The object of this ancient formula, namely, "as if enacted in this Act" was to emphasise the fact that the notifications were to be as. effective as the Act itself. Its validity could be questioned in the same way as the validity of the Act could be questioned. It is an ancient form, of rule making still to be found in the Act....
In view or the above legal principles, though the impugned Rule is not part of the main Act, in view of Section 55 of the Tamil Nadu Prohibition Act, we have to read it as part of the main Act itself. Its validity could be questioned in the same way as the validity of the Act could be questioned. It is an ancient form of rule-making which is still to be found in the Act. Even otherwise, if we consider it only as a subordinate legislation, I do not think that it is contrary to Statute, nor could it be found that the rule-making authority, has not taken into consideration vital facts, nor could it be struck down as violative of Article 14 of the Constitution. I have already said that Article 19(1)(g) of the Constitution-has no application. Therefore, I hold that the rule, namely, Rule 13 of the Tamil Nadu Liquor (Retall Vending) Rules, 1989 is valid, and the various auction purchasers are not even competent to challenge its validity.
27. It was next contended by various auction purchasers that even if the Rule is held to be valid, while interpreting, the same to be read down and, the same can be made applicable only to those cases were lease agreement is necessary.
28. Learned Senior Counsel Mr. R. Muthukumaraswamy argued that after Sub-rule (1) to Rule 13, the words 'whenever required' must be added on the principle that the Rule suffers from causes omissus and, according to learned Senior Counsel, that will be a reasonable interpretation to the Rule.
29. For the applicability of the sale Rule, we have to consider the nature of Statute, the Objects and Reasons, and whether there is any vagueness in the Rule, and what was the intention of the Legislature, and whether there is any vagueness, and in giving effect to the Rule as literally interpreted whether there will be any manifest injustice but for the words sought to be added to the Rule.
30. In The Commissioner of Sales tax v. Parson Tools and Plants, Kanpur paragraph 16, their Lordships have said that 'if the Legislature wilfully omits to incorporate something of an analogous law in a subsequent statute or even if there is casus omissus in a statute, the language of which is otherwise plain and unambiguous, the court is not competent to supply the omission by engrafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be a general principle of justice and equity. To do so would be entrenching upon the preserves of Legislature, the primary function of a court of law being jus dicere and not jus dare. In paragraph-23 their Lordships further said thus:
...where the Legislature clearly declares its intent in the scheme and language of a statute, it is the duty of the court to give full effect to the same without scanning its wisdom or policy, and without engrafting, adding or implying anything which is not congenial to or consistent with such expressed intent of the law-giver; more so if the statute is a taxing statute.
Their Lordships further went on and said thus:
...We will close the discussion by recalling what Lord Hailsham has said recently, in regard to importation of the principles of natural justice into a statute which is a clear and complete Code, by itself:
It is true of course that the courts will lean heavily against any construction of a statute which would be manifestly fair. But they have no power to amend or supplement the language of a statute merely because in one view of the matter a subject feels himself important to a larger degree of say in the making of a decision than a statute accords him. Still less is it the functioning of the courts to form first a judgment on the fairness of an Act of Parliament and then to amend or supplement it with new provisions so as to make it conform to that judgment.
31. In a decision in M.G. Wagh v. Jay Engineering Works, Ltd. at paragraph 4 of the judgment Their Lordships have held thus:
...to impute to the legislature that it did not know its job inasmuch as it has tackled the problem only particularly without any rational basis for excluding the transactions of completed sales from the purview of the legislation which would substantially erode or defeat the purpose of the legislation. When it is equally possible to take the view which would be conducive to the conclusion that there is no lacuna in the legislation, it would be unreasonable to take the view that the, legislature has left a lacuna either by negligence or by lack of foresight or because it did not know its job.
32. In the decision reported in Punjab Land Development, & Reclamation Corporation Ltd. v. Presiding Officer, Labour Court in paragraphs 78 to 81, their Lordships considered this question in detail. They read thus:
Regarding the seeming gaps in the definition one would apply remember that Lord Simonds said against the view that the court having discovered the intention of Parliament must proceed to, fill in the gaps and what the legislature had not written the court must write:
It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation. And, it is the less justifiable when it is guess work with what material the legislature would, if it had discovered the gap, have filled it. If a gap is disclosed, the remedy lies in an amending Act.
The court has to interpret a statute and apply it to the facts. Hans kelsen in his Pure Theory of Law (p. 355) makes a distinction between interpretation by the science of law jurisdiction on the one hand and interpretation by a law applying organ (especially the court) on the other. According him, "jurisprudential interpretation is purely cognitive ascertainment of the meaning of legal norms. In contradistinction to the interpretation by legal organs, jurisprudential interpretation does not create law. "The purely cognitive interpretation by jurisprudence is therefore unable to fill alleged gaps in the law. The filling of a socalled gap in the law is a law-creating function that can only be performed by a law-applying organ; and the function of creating law is not performed by jurisprudence interpreting law. Jurisprudential interpretation can do no more than exhibit all possible meanings of a legal norm. Jurisprudence as cognition of law cannot decide between the possibilities exhibited by it, but must leave the decision to the legal organ who, according to the legal order, is authorised to apply the law". According to the author if law is to be applied by a legal organ, he must determine the meaning of the norms to be applied: he must 'interpret' those norms (p.348). Interpretation therefore is an intellectual activity which accompanies the process of law application in its advance from a higher level to a lower level. According to him. the law to be applied is a frame. "There are cases of intended or unintended indefiniteness at the lower level and several possibilities are open to the application of law." The traditional theory believes that the statute, applied to a concrete case, can always supply only one correct decision and that the positive legal 'correctness' of this decision is based on the statute itself. This theory describes the interpretive procedure as if it consisted merely in an intellectual act of clarifying or understanding; as if the law-applying organ had to use only his reason but not his will, and as if by a purely intellectual activity, among the various existing possibilities only one correct choice could be made in accordance with positive law. According to the author: 'The legal act applying a legal norm may be performed in such a way that it conforms (a) with the one or the other of the different meanings of the legal norm, (b) with the will of the norm creating authority that is to be determined somehow, (c) with the expression which the norm-creating authority has chosen, (d) with the one or the other of the contradictory norms; or (e) the concrete case to which the two contradictory norms refer may be decided under the assumption that the two contradictory norms annul each other. In all these cases, the law to be applied constitutes only a frame within which several applications are possible, whereby every act is legal that stave within the frame.
The definitions is Section 2 of the Act are to be taken 'unless there is anything repugnant in the subject or context.' The contextual interpretation has not been ruled out. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. :
Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the Statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than what the statute is looked at without glasses provided by the context. With these glasses we must look at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the court construed the expression 'Prize Chit' in Srinivasa Enterprises v. Union of India (1980) 4 S.C.C. 507 and we find no reason to depart from the court's construction.
As we have mentioned, industrial and labour legislation involves social and labour policy. Often they are passed in conformity with the resolutions of the International Labour Organisation. In Duport Steels v. Sirs (1980) 1 W.L.R. 142, the House of Lords observed that there was a difference between applying the law and making it, and that judges ought to avoid becoming involved in controversial social issues, since this might affect their reputation in impartiality. Lord Diplock said:
A statute passed to remedy what is perceived by Parliament to be a defect in the existing law may in actual operation turn out to have injurious consequences that Parliament did not anticipate at the time the statute was passed; if it had, it would have made some provision in the Act in order to prevent them....But if this be the case it is for Parliament, not for the judiciary, to decide whether any changes should be made to the law as stated in the Acts....
33. In the decision reported in O.S. Singh v. Union of India in paragraph 9 this question was considered while interpreting Service Law. There, Their Lordships held that there are two views regarding the same, and both of them have been approved by the Honourable Supreme Court. One view which reflects the traditional approach is that the court cannot legislate for causes omissus and that if there is a gap or an omission in the statute, the lacuna cannot be supplied by court by judicial construction and that it is for the law-making authority to remove the defect. The other view is that if there is any omission, without changing the material, the court should try to iron out the creases. The argument of learned Counsel for some of the petitioners is that by adding the words 'Whenever required', the court is only ironing out the creases and not adding some words into the Statute.
34. In a very recent decision of the Supreme Court reported in S.C. Bola v. B.D. Sardana (1977) 8 S.C.C. 522, in paragraph 181 (at page 652), their Lordships held that the intention of the legislature must be found in the words used by the Legislature itself, and if the plain meaning indicates a particular set of affairs, the Courts are not required to get themselves busy with the 'supposed intention' or with 'the policy underlying the statute'. This view was expressed in the minority judgment. Even in the minority judgment by Justice K. Ramaswami, regarding interpretation of statutes, there is no difference of opinion. Relevant portion which is useful for our purpose, in paragraph 181, reads thus:
The general rule of interpretation is that the language employed is primarily the determining factor to find out the intention of the Legislature. Gajendragadkar, J as he then was, in the case of Kanai Lal Sur v. Paramnidhi Sadhukhan observed that "the first and primary rule of construction is that the intention of the Legislature must be found in the words by the Legislature itself." In the case of Robert Wigram Crawford v. Richard Spooner 4 M.I.A at 1987, Lord Broughman had stated thus: "... If the Legislature did intend that which it has not expressed clearly; much more if the legislature intended something very different; if the legislature intended pretty nearly the opposite of what is said, it is not for Judges to invent something which they do not meet with in the words of the text..." Thus when the plain meaning of the words used in a statute indicates a particular state of affairs, the courts are not required to get themselves busy with the 'supposed intention' or with 'the policy underlying the statute' or to refer to the objects and reasons which accompanied the Bill while introducing the same on the floor of the legislature. It is only when the plain meaning of the words used in the statute creates an ambiguity, then it may be permissible to have the extrinisic aid of looking to the statement of Objects and Reasons for ascertaining the true intention of the legislature. In the aforesaid state of affairs to find out whether the impugned Act is a usurpation of judicial power by the legislature, it would not be permissible to look into the statement of objects and Reasons which accompanied the Bill while introducing the same on the floor of the legislature nor the affidavit filed an officer of the Government would control the true and correct meaning of the words of the statute....
From the above decisions, let us see whether the argument advanced by learned Senior Counsel Mr. R. Muthukumaraswami, could be accepted.
35. Rule 13 itself was amended in November, 1990, which I have already extracted. The original unamended Rule before 1990 read thus:
13. Grant of licence. - (1) Upon the receipt of the order of confirmation of the sale of the privilege the auction purchaser shall make an application in Form VI to the licensing authority for the grant of the licence together with the application fee specified in Sub-rule (3).
(2) The licensing authority shall within three days of the order of confirmation of sale grant the licence in Form VII. The licence so granted shall be valid for a period of one year.
36. It is not the case of any of the petitioners, nor could it be argued that the Legislature was not aware of the rights of a statutory tenant or that of a person who was in lawful possession. It may be further seen from a reading of the Rules as amended, the Legislature wanted or declared its intention to give licence only if the auction purchaser is a contractual lessee. The Legislature had three options while granting the licence, i.e., either to a person who is in lawful possession, or only to a contractual tenant, or to a person in lawful possession who is also a statutory tenant. When there were such options open to the legislature, and when it said that the auction-purchaser must produce a lease agreement for not less than a period of one year, it only shows the intention of the legislature that the lease must be either co-terminus with the licence issued or atleast during the licence period, there must be a live lease or a contractual lease. Sub-rule (1) of Rule 13 as amended directs the auction purchaser to produce documents to show his ownership or if it is in the case of a lessee, that he is a lessee for not less than a year, evidenced by a xerox copy of the lease agreement which he has entered into with the landlord. Along with the same, the Excise Officer or an Officer Authorised by the Collector has also to certify in Form No. III. Whether the auction purchaser is owner or has taken a building on lease for a period of...years. The Form is a part of the statutory Rule and, therefore, mandatory. A statutory tenant cannot say that he is a lessee for...years though under the Rent Control Act, he is allowed to continue in possession until evicted. He may have interest in the property. Even then, he cannot say that he is a lessee for a fixed period term, or at any rate, he cannot say that his lease is for not less than a year. If the Legislature also intended a statutory tenant, there was no necessity to say that the lease must be for not less than a year.
37. The above interpretation holds good when we come to the shifting of a shop. Rule 17 of the Tamil Liquor (Retail Vending) Rules provides for it, and Form No. VIII-A is a Statutory Form. In Column 10, the licensee will have to declare that either he is owner of the premises to which he intends to shift the shop or that he is a lessee, and he has also to enclose a lease agreement from the owner for a term of not less than the current period of the licence. That also contemplates only a contractual tenancy and not a statutory tenancy. Learned Counsel submitted that the expression 'currency period' is used only for the purpose of Rule 17, and not to Rule 13. I do not think that the said argument will advance the case of the auction purchasers in any way. When a person applies for licence, he has to apply in Form No. VI. As per Column No. 9 of that Form, the applicant has to declare, in case he is not the owner of the premises, that he is a lessee for a minimum period of one year, and a certificate has to be furnished in Form No. III. The words minimum period of one year' and 'not less than a year' taken along with the certificate to be issued by Excise Officer, declare the intention of the Legislature. The lease must be for a term of not less than a year, and then only the licensee will be in a position to do the business to the end of the licensing year, and in the case of shifting, he should be able to continue on the basis of the same licence for the remaining licensing period.
38. I have already stated the reason why the Legislature preferred a contractual tenant, and did not say anything about statutory tenants or tenants holding under oral lease. I have also stated the objects for which the Prohibition Act itself was enacted. When strict interpretation is required regarding Liquor Vending Rules, and the Rules also do not show any vagueness, I do not think the Court has to add some words which are not in the Statute. It is the intention of the Legislature. The words in Rule 13 (1) are very clear, and I do not think there is any vagueness or omission in the Rule, as argued by learned senior counsel for some of the petitioners herein.
39. Learned senior counsel Mr. R. Thiagarajan argued that in Rule 13 (1), the condition for production of xerox copy of lease agreement does not say that it should be for a term and, therefore, even past transactions could be taken into consideration by the licensing authority.
40. I cannot accept the argument put forward by learned senior counsel, in view of the clear words found in that Rule. It is also better to refer to a recent decision of a Special Bench of the Andhra Pradesh High Court reported in N. Sarada Mani v. G. Alexander A.L.R. 1998 A.P. 157. Relevant portions of paragraphs 7 and 12 read thus:
While resorting to interpreting some of the provisions of a statute, courts should be loath and adopt a construction which tends to make any part of the statute otiose. Courts should always strive for arriving at a balanced View by adopting a rule of liberal construction so as to ensure its full meaning to all parts of the provision and made as far as possible the whole of it effective and operative. The courts also would not usually disperse or restructure the section unless it is essential or it is the only rational method by which the whole of it can be given its full meaning and contents. Even when there is causes omissus, it is for the Parliament than the courts to remedy the defect. But, when bad and defective draftsmanship is noticed by the court very often, it becomes imperative for the court to probe into the Objects and Reasons and the intention of the Legislature to give effect to the provisions instead of declaring it as illegal or unconstitutional. There is a growing necessity for this attitude in changed times to cope up with the aspirations and desires of the people having regard to the socio-political and economic developments taking place in the country, which were not existing at the time when the statute Was enacted.
Argumentum inconvenient, principle of hardship, absurdity, have no application, while interpreting the Statutes, But, however, the cardinal principle is that the statute should be interpreted in such a way as to avoid absurdity and to have harmonious effect. The court must construe a section, unless it is impossible to do so to make it workable rather than making it meaningless. Thus, an attempt must always be made to reconcile the relevant provisions as to advance the remedy by the Statute. Therefore, where the literal meaning of the words in a statutory provision, would manifestly defeat its object by making a part of it meaningless and ineffective, it is legitimate and even necessary to adopt to the liberal construction so as to give meaning to. all parts of the provisions and to make whole of it effective and operative. Especially in cases of pre-constitutional statutes, courts are to find and follow the interpretation which will be in tune with the provisions of the Constitution and thereby avoid striking down the pre-constitutional statute being in conflict with the Part III of the Constitution. If the language of Act is such as to admit of a choice between two constructions, either of which is unreasonable, one ought to unquestionably be inclined to that construction which is on consonance with the common law than to that which is dissonant from it.
41. Learned Counsel for auction purchasers relied on the decision reported in Sujit Singh Klara v. Union of India , with particular reference to paragraph 19, wherein it was declared thus:
True it is not permissible to read words in a Statute which are not there, but "where the alternative lies between either supplying by implication words which appear to have been accidentally omitted, or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words" (Craies Statute Law, 7th Edn.P.109). Similar are the observations in Hameedia Hardware Stores v. B. Mohan Lal Sowcar where it was observed that the court construing a provision should not easily read into it words which have not been expressly enacted but having regard to the context in which a provision appears and the object of the Statute in which the said provisions is enacted the court should construe it in a harmonious way to make it meaningful. An attempt must always be made so to reconcile the relevant provisions as to advance the remedy intended by the Statute. (See Sirajul Haq Khan v. Sunnil Central Board of Waqf).
There also, their Lordships only declared the law that normally the court should not add words to the Statute. But at the same time, their Lordships said that having regard to the object of the Statute, the court should construe in a harmonious way and make it meaningful. In that case, their Lordships found that there was an omission in the Statute, and the purpose could not be achieved but for adding the words. It was also found that the intention of the legislature was also to read the Statute with the words so added by Court. I have already said that if we construe the object of the Act, the decision may not have any application.
42. In Directorate of Enforcement v. Deepak Mahajan also, the court held that it may be compelled to go behind the words of the enactment so as to give effect to the intention of the Legislature. The decision therein also may not have any application to the case on hand.
43. It may also be relevant to take note in Deepak Theatre v. State of Punjab wherein in para 3, their Lordships said that 'it is settled law that the rules validly made under the Act, for all intents and purposes, be deemed to be part of the Statute.
44. Learned Senior Counsel also relied on two unreported decisions of this court, namely (1) K. Loganathan v. The Assistant Commissioner Prohibition and Excise, Chepauk, Madras-5, W.P.No. 11283 of 1991, Order dated 13.8.1991) and (2) K. Jagadish v. The Assistant Commissioner, Excise, Madras W.P.10861 of 1993 - Order dated 16.6.1993) and contended that this Court has taken a view that Statutory tenants are covered by Rule 13 and, therefore, the Authorities are justified in granting licence if the applicants are found to be statutory tenants.
45. It is true that in both these cases, learned Judges have held that if the applicant is a statutory tenant, licence could be obtained. But on perusing the original records of those two writ petitions, and also from the statement of facts as narrated in the orders passed therein, it is clear that the question that came for consideration before the learned Judges was only regarding application of Rule 14 of the Tamil Nadu Liquor (Retail Vending) Rules, and Rule 13 never came for consideration before the learned Judges, nor was it interpreted by them. In this connection, it may also be noted that the wordings of Rule 14 and the Statutory Form are different from what is provided in Rule 13. In W.P.No. l 1283 of 1991, the auction purchaser therein applied for renewal and the Licensing Authority refused to grant licence on the ground that he has not produced certificate in Form No. III. It was this question that came for consideration, and the learned Judge said that being a statutory tenant, he is entitled to continue for a further period of one year. Form No. VIII which deals with renewal does not prescribe for the production of lease agreement. The said decision was followed in the subsequent decision in W.P.No. l 0861 of 1993 which was also a case of renewal. I do not think that the said decisions preclude me from holding otherwise when I interpret only Rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules.
47. For the purpose of verification, I have also perused the original records and also the Orders in W.P.Nos. 11283 of 1991 and 10861 of 1993, and from the averments made in those writ petitions, it is clear that the petitioners therein never approached the court under Rule 13 of the Tamil Nadu Liquor (Retail Vendor) Rules, and the same was not a matter in issue, nor was it decided by the learned Judges.
48. It is further contended by learned Senior Counsel for auction purchasers that most of them are already in possession of buildings, and have carried on liquor business upto 31.5.1998, and even if they are continuing the business from 1.6.1998, they could be construed Only as renewals, and not as fresh licensees or as fresh entrants to the business. In other words, the argument is that Rule 14 will have to be applied in such cases.
49. The said argument is also without any basis. Rule 13 (1) as amended does not give any concession to persons who were already doing business. From the Rules, it is also clear that auction will have to be conducted every three years, and if the business is conducted on the basis of auction, Rule 13 alone could be applied. The antecedent rights before the auction are not recognised, nor are they of any relevance. They are considered only equally or on par with new entrants.
50. It was argued by learned Senior Counsel for auction purchasers that the decision of this Court that statutory tenants are entitled to get licence was accepted by the Department and instructions have been issued to Subordinates not to insist on a lease deed. Learned Counsel also brought to my notice the Instructions issued by the Commissioner of Excise dated 27.4.1995.
51. I do not think that the said argument can be accepted. The Authorities under the Act cannot go beyond the statutory provisions. Those directions have no sanctity of a Rule or Notification. They are only inter-departmental instructions, officers of the Department are not the Authorities to interpret law. The Instructions issued by them also cannot go against the statutory provisions. Consequently, the reliance placed on the Instructions issued by the Commissioner of Excise cannot be sustained, and the argument advanced on that basis has no merit.
52. Learned Senior counsel for auction purchasers submitted that the maxim Contemporanea expositio must be applied by interpreting Rule 13 and the Instructions issued by the Commissioner of Excise could be considered for such purpose, and if so considered, persons in lawful possession or whose term of lease expires also can be brought within the Rule enabling them to get licence.
53. Learned Senior counsel for the said purpose, relied on the decision reported in Senior Electric Inspector v. Laxminarayan Chopta. . Relevant portion in paragraph 8 to which emphasis was laid by learned Senior Counsel reads thus:
The legal position may be summarised thus: The maxim contemporanea expositio as laid down by coke was applied to construing ancient statutes but not to interpreting Acts which are comparatively modern. There is a good reason for this change in the mode of interpretation. The fundamental rule of construction is the same whether the court is asked to construe a provision of an ancient statute or that of a modern one, namely, what is the expressed intention of the legislature. It is perhaps difficult to attribute to a legislative body something in astatic society that its intention was couched in terms of considerable breadth so as to take within its sweep the future development comprehended by the phraseology used. It is more reasonable to confine its intention only to the circumstances obtaining at the time the law was made. But in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature making laws to govern a society which is fast moving must be presumed to be aware of an enlarged meaning the same concept might attract with the march of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations if the words are capable of comprehending them.
... ...
But, their Lordships have, in the earlier portion of the judgment, extracted the principle laid down in State of Madras v. Gannon Dumkerley & Co which reads thus:
The principle of these decisions is that when, after the enactment of a legislation new facts and situations arise which could not have been in its contemplation the statutory provision could properly be applied to them if the words thereof are in a broad sense capable of containing them.
The same principle was reiterated in K.P. Varghese v. Income Tax Officer Ernakulam and Anr. . There, the circulars of the Central Board of Direct Taxes was the subject matter in issue, and how far the same will aid the interpretation of Section 52 (2) of the Income-tax Act, 1961. The relevant portion of the said decision reads thus:
...The rule of construction by reference to contemporanea expositio is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. This rule has been succinctly and felicitously expressed in Crawford on Statutory Construction (1940 Edn.) Where it is settled in paragraph 219 that 'administrative construction (i.e., contemporaneous construction placed by administrative or executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical construction, although non-controlling, is nevertheless entitled to considerable weight, it is highly persuasive.
The validity of this rule was also Recognised in Baleshwar Bagarti v. Bhagirathi Dass where Mokerjee, J. stated the rule in these terms:
It is a well-settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since by those whose duty it has been to construe, execute and apply it.'...
54. In M.S.J.K. Cotton Spinning and Weaving Mills Ltd. and Anr. v. Union of India and Ors. 1987 S.C.C. (Supp.) 350 in paragraph 45, it was held thus:
Under the circular, the Collector is required to specify under Rule 9 (1) both the place of production and premises appurtenant thereto, if any. In view of this direction given in the circular, the learned Counsel for the appellants submits that it is not only binding on the collector and the other officers of the Central Excise Department, but also the circular is in the nature of contemporanea exposito rendering useful aid in the construction of the provision of Rule 9(1) of the Rules. This contention finds support from the decision of this court in K.P. Varghese v. I.T.O. relied on by the learned Counsel of the appellants. Indeed, it has been observed in that case that the rule of construction by reference to contemporanes exposito is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. In our opinion, the language of Rule 9 (1) admits of only one interpretation and that is that the specification that has to be made by the Collector is of any premises appurtenant to the place of manufacture or production of the excisable goods. The specification is not required to be made and, in our view, cannot be made of the place of manufacture or production of the excisable goods. Apart from that, as observed by Subba Rao, J., upon a review of all the decisions on the point, in an earlier decision of this Court in the Senior Electric Inspector v. Laxmi Narayan Chopra A.I.R. 1962 S.C. I59 : (1962) 1 S.C.J. 592 the maxim contemporanea exposito as laid down by Code was applied to construing ancient statutes but not to interpreting Acts which are comparatively modern. Further, it has been observed that in a modern progressive society it would be unreasonable to confine the intention of a legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them. Most respectfully we agree with the said observation of Subba Rao, J. In the circumstances, we do not agree with the direction of the Board of Central Excise and Customs given in the impugned Circular that both the place of manufacture and the premises appurtenant thereto must be specified by the Collector under Rule 9 (1) of the Rules. Thus, there being no question of specification of the place of manufacture, the contention of the appellants that without such specification there cannot be any deemed removal, fails.
55. It is clear from these decisions that the circulars or Administrative Instructions issued by Administrative or Executive Officers, which are contemporaneous, are relevant. But they cannot be applied when the language of the Statute is plain and unambiguous. The Instructions must also be contemporaneous, placed by the Administrative or Executive Officers.
56. In the case on hand, the Instructions are not contemporaneous and the language of the Statute is also plain and unambiguous. There is no new situation which was not thought of when the Rule was amended in 1990. Even before 1975, what are the rights of a statutory tenant, has he any right in the property; what is the effect of termination of tenancy, were part of Statute law in this Country.
57. Section 106 of the Transfer of Property Act came for consideration and the Legislature was also aware of similar situation when they have enacted legislations and where the licence is necessary for conducting the business. Under the Tamil Nadu Cinema (Regulation) Act and the Rules framed thereunder, the licence of a cinema theatre has to be in lawful possession. Regarding the same, various decisions of the Honourable Supreme Court as well as this Court have come up consideration even before 1974, and in fact some of the decisions cited in this case were based on the interpretation given under the Cinema Regulation Act.
58. From the above decisions of the Honourable Supreme Court, the principle of contemporanea exposito cannot be applied and the departmental instructions of circulars also cannot be used for interpreting the Rules. If the same are applied, different consequences will follow and the rule will have to be .interpreted differently, taking into consideration the status of the landlord. The said contention is, therefore, rejected.
59. Learned Senior Counsel for auction purchasers also relied on the following decisions, to substantiate their case: Chander Kali v. Jagdish Singh Thakur . (2) Gian Devi Anand v. Jeevan Kumar and Ors. . (3) Chandavarkar Sita Ratna Rao v. Ashalata S. Guram . (4) Ballu Ram v. Mandir Tuhiram Harnam Doss . and (5) Vishnu Narayan Gadskari v. Paralal Baladev Uza . All these decisions were relied on only for the purpose of showing the rights of statutory tenants after termination of tenancy. It has been held in those cases that a statutory tenant, even after termination is entitled to continue in possession, and to a certain extent, he is irremovable. It has also been held by the Honourable Supreme Court in some cases that statutory tenants have interest in the property and the same is also hereditable.
60. I do not think that any of the above said decisions has any relevance for the purpose of interpreting Rule 13 which is in issue in this case. In these cases, we are not concerned about the rights between the landlord and tenant. We are concerned only with the question whether the tenants whose term has expired, are entitled to get licence under Rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules, which is a special law regarding the same. While considering the provisions of the Tamil Nadu Prohibition Act, we have to interpret only the provisions therein.
61. In all these writ petitions, though counter affidavit was not filed by the State, the learned Additional Government Pleader produced before the Court all the records pertaining to each and every case and also argued the matter on instructions. Now I will deal with individual cases.
62. W.P.Nos. 5071 of 1998: In this writ petition, petitioner seeks issuance of writ of mandamus, directing respondents 2 and 3 to cancel the Licence granted under L-3/30411/97 dated 28.5.1997 relating to IMFL Shop at No. 6, Poes Road, Teynampet, Chennai-18, to the 4th respondent therein.
63. Fourth respondent is a tenant, and, on the basis of a lease agreement, he was doing liquor business. It is the case of the petitioner that the lease was only for a period of one year, and the lease itself was granted on a specific under standing that he will surrender on the basis of expiry of the licence period. When he did not surrender, proceedings were also initiated and there were also proceedings before this Court to forbear the licensing authorities from granting licence to 4th respondent. But the 4th respondent was successful in getting licence de hors the direction issued by this court. There was also a direction by me that before granting any licence to 4th respondent, the landlord also should be heard, and I further directed that the licensing authority shall not allot the shop without hearing the landlord. The tenant filed an appeal against the said direction as Writ Appeal No. 658 of 1998 and during vacation, a Bench of this Court held that merely because the 4th respondent is a statutory tenant, the right of the landlord to make a representation and also to raise objection is not taken away, and it was further observed that only after considering the objection of the licence, licence shall be confirmed in the name of fourth respondent. The direction given by the Bench only goes against the fourth respondent. It is seen that pursuant to the direction of the Division Bench, notice was issued to the petitioner to appear and submit his objection. An objection was raised, and, on the hearing date, petitioner could not appear. The Licensing Authorities have said that they have considered the objection and issued the licence.
64. From the decision of the Division Bench, it is clear that even in respect of statutory tenants, the landlord is entitled to raise objection regarding allotment of shops. Merely because the fourth respondent is a statutory tenant, he does not become the owner. The owner has a right to inform the Licensing Authorities that he does not want his building to be used as a liquor shop. Under Rule 13, the consent of the landlord in the nature of lease agreement is necessary. Merely because the landlord has raised objection and the licence was issued thereafter, it cannot be said that the requirement under Rule 13 is satisfied. Under Rule 13, licence could be issued only if tenant files before the Authorities xerox copy of lease agreement of the proposed shop and the lease agreement must be for not less than a year. The lease also must be in existence or alive. I have already interpreted Rule 13, and held that it is constitutionally valid. In view of my finding in the earlier portion of this order, it has to be held that the licence issued to 4th respondent is not proper, and the same is liable to be revoked or cancelled.
65. In the decision reported in Ramachandra v. Govind , their Lordships have considered the question of non-compliance of statutory requirements regarding surrender under the Bombay Tenancy and Agricultural Lands Act. In Paragraph 25 of the judgment (at page 918), their Lordships have said that when a power is given to do a certain thing in a particular manner, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden. Relevant portion of para 25 of that judgment reads thus:
A century ago, in Taylor v. Taylor (1875) 1 Ch.D. 426. Jessel, M.R. adopted the rule that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden. This rule has stood the test of time. It was applied by the Privy Council, in Nazir Ahmed v. Emperor 63 LA. 372 : A.I.R. 1953 P.C. 253 (2). and later by this Court in several cases. Shiv Bahadur Singh v. State of V.P. . Deep Chand v. State of Rajasthan . to a Magistrate making a record under Sections 164 and 364 of the Code of Criminal Procedure, 1898. This rule squarely applies "where, indeed, the whole aim and object of the legislature would be plainly defeated if the command to do the thing in a particular manner did not imply a prohibition to do it in any other. Maxwell's Interpretation of Statutes 11th Edn., pp.362-363
66. In a recent Bench decision of our High Court in Golden Granites Etc. v. K. V. Shanmugam and Ors. (1998) Writ L.R. 47. in paragraph 42 (at page 64), it was held thus:
It is a cardinal rule of interpretation that where a Statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is settled rule of interpretation that where the statute is penal in character, it must be strictly construed and followed. When a law says that a thing is to be done particularly, it should be done in accordance with the said principles and not otherwise. We have already noticed that the requirement under Section 2 is mandatory and, therefore, non-compliance of the same must result in cancelling the grant made in favour of the grantee.
The passage which I have already extracted from the decision of the Supreme Court was also followed by the Bench. Once I hold that the respondents 1 to 3 have not followed the legal requirements for granting licence, naturally it has to be held that the licence issued to the fourth respondent was not proper, and they cannot take shelter on the ground that they have considered the objection of the landlord and issued the licence. Compliance of the judgment will not amount to compliance of statutory conditions requirements. There will be a direction to respondents 2 and 3 to cancel the licence issued in favour of fourth respondent, and I direct them to close the shop after removing the stocks forthwith. The writ petition is allowed accordingly.
111. In view of my above findings, my conclusions are:
(1) Rule 13 of the Tamil Nadu Liquor (Retail Vending) Rules, 1989 is valid.
(2) Rule 13 is also neither beyond the scope nor against the statutory provisions, and in view of Section 55 of the Tamil Nadu Prohibition Act, the Rules will have effect as if they have been enacted in the Act itself.
(3) In Rule 13, there is no vagueness or ambiguity, and there is no scope for applying the principle of causes omissus or the maxim contemporanea exposito and there is also no scope for getting external aid for interpreting that Rule. Rule 13 is exhaustive and the conditions have to be satisfied by the auction purchaser before getting licence. Being a law governing intoxicating drinks, it has to be strictly interpreted.
(4) Production of a xerox copy of lease agreement for not less than a year in case the auction purchaser is not the owner, is a statutory requirement, and the same will have to be complied with even in the case of a tenant who is holding possession and whose term has expired. Before granting licence, the Excise Officer or Officer authorised by the Collector is also bound to certify that the auction purchaser is a lessee, of the building for not less than a year or that he is lessee for...year or years. The lease must confer a right on the leasee to run a liquor shop as decided in Neyveli Lignite Corporation v. Collector of South Arcot 1990 Writ L.R. 489 (5) Instructions issued by the Commissioner of Prohibition and Excise to his subordinates conferring right on statutory tenants to get licence de hors Rule 13 are not valid, and the Licensing Authority can issue licence only if the auction-purchaser satisfied all the conditions required under Rule 13.
(6) I further direct that the Licensing Authority shall also take necessary steps to cancel the licence to whomsoever it is granted, where there is violation of Rule 13.
112. In the result, W.P.No. 5071 of 1998 is allowed, There will be a direction to respondents 2 and 3 to cancel the licence issued in favour of 4th respondent. They are also directed to close the shop after removing the stocks, forthwith. W.P.No. 6809 of 1998 is allowed as prayed for. If licence was already granted in favour of third respondent, respondents 1 and 2 shall cancel the same. If any stocks are there in the building, they should be removed forthwith. W.P.No. 6968 of 1998 is allowed to the extent indicated supra. Respondents 1 to 3 are directed to close down Shop No. 522 after removing the stocks therein forthwith. W.P.no. 7158 of 1998 is dismissed. W.P. 7371 of 1998 is dismissed. W.P. 7454 of 1998 is allowed as prayed for. W.P. 7470 of 1998 is allowed. Respondents 1 to 4 are directed to pass orders on the application of petitioner within a week from today. W.P.No. 7483 of 1998 is allowed. First respondent is prohibited from granting licence in favour of second respondent for conducting IMFL shop in the premises W.P.No. 7601 of 1998 is dismissed as devoid of merits. W.P.Nos. 7723 of 7724 of 1998 are allowed. Licence, if any, issued in these cases is liable to be revoked for non-compliance of statutory conditions. W.P.No. 7829 of 1998 is allowed. Third respondent is prohibited from doing any liquor business in the premises belonging to the petitioner. W.P.No. 7963 of 1998 is allowed. W.P.No. 8118 of 1998 is allowed. Respondents 1 to 3 are prohibited from permitting 4th respondent to do business in the premises without complying Rule 13. W.P.Nos. 8142, 8235 and 8236 of 1998 are dismissed. W.P.No. 8409 of 1998 is allowed, as prayed for. There will be no order as to costs in all the writ petitions. The connected W.M.Ps. are closed