1972 (5) TMI 59 - SC - Central Excise

Government can withdraw excise licence following policy changes and territory redistricting under Section 43 Bengal Excise Act

AMAR CHANDRA CHAKRABORTY Versus COLLECTOR OF EXCISE, GOVERNMENT OF TRIPURA & ORS.

The SC upheld the withdrawal of an excise licence by Tripura authorities following policy changes recommended by the Committee of Estimates. The ... Validity of Section 43 of the Bengal Excise Act, 1909 and Rule 164A of the Tripura Excise Rules, 1962 - withdrawal of the licence - non-compliance with the proviso to, section 22 (1) of the Act -reasonableness of restrictions on trade or business - Violation of Articles 14 and 19 of the Constitution - HELD THAT:- In the present case, according to the counter-affidavit after the Committee of Estimates had in their Fifth Report criticised the working of the Excise Department in the territory of Tripura in general and the procedure adopted in granting five years licence to the appellant in particular, the Council of Minister,,,, as a consequence of this criticism, resolved that the exclusive privilege of supplying countery liquor by wholesale should be allowed to three persons and not to one and that also by tender-cum-auction. Pursuant to this decision r. 164A was inserted in the Tripura Excise Rules on July 2, 1970. The Union Territory of Tripura was accordingly divided into three districts for the purpose of licence for wholesale supply of country liquor with effect from September 1, 1970. It was for implementing this policy decision of the State Government that on july 6, 1970 the Collector of Excise informed the appellant by the impugned order that his licence would be withdrawn on september 1, 1970, at the same time remitting to him 15 days licence fee as required by statute. The Government then took steps to invite tenders and fix a date for auction of. wholesale supply of country liquor. The cause for withdrawing the appellant's licence is in terms of the major policy decision taken by the Tripura Government and this, in our opinion, is a cause which, keeping in view the purpose and object of granting such exclusive privileges and licences, cannot be considered to be either irrelevant or collateral to that purpose and object. The appellant had, it may be recalled, secured his licence for the maximum period of five years as provided by r. 22(4) of the Tripura Excise Rules, 1962 for a nominal annual sum. On the withdrawal of the licence, fee for 15 days was remitted to him and the fee paid in advance and the deposit made were also directed to be refunded as provided by s. 43(3). The underlying policy of s. 22 seems to be not to allow such an important matter to be decided in the secrecy of office without giving it proper publicity. All the conditions of the proposed grant including its duration are expected to be notified. Such notification would serve also to eliminate chances of favouritism, nepotism and corruption. Section 22 seems also to have its roots in these deeper considerations. Failure to give such public notice was, therefore, in our opinion, rightly considered by the learned Judicial Commissioner to be fatal to the grant, of the exclusive privilege to the appellant. Nothing convincing has been said at the bar against this view. If non-compliance with the proviso to s. 22 (1) is by itself fatal to the grant of exclusive privilege than the impugned order dated July 6, 1970 is sustainable on this ground alone and the writ petition was thus rightly dismissed. In any event, this ground, along with the others already noticed, would, in our opinion, constitute a good cause for withdrawing the licence under s. 43 of the Act. On this view the impugned judgment of the learned Judicial Commissioner does not seem to us to be open to challenge particularly under Art. 136 of the Constitution. This appeal accordingly fails and is dismissed with costs. Issues Involved:1. Validity of Section 43 of the Bengal Excise Act, 1909 and Rule 164A of the Tripura Excise Rules, 1962.2. Authority of the Collector of Excise to withdraw the license.3. Compliance with the requirement of public notice under Section 22(1) of the Act.4. Alleged violation of Articles 14 and 19 of the Constitution.5. Requirement of a show cause notice under Section 43 of the Act.Detailed Analysis:1. Validity of Section 43 of the Bengal Excise Act, 1909 and Rule 164A of the Tripura Excise Rules, 1962:The appellant challenged the validity of Section 43 of the Act and Rule 164A of the Rules. The Court held that Section 43 merely imposes reasonable restrictions on the trade in liquor, which is a special category requiring legislative control due to its injurious effects on health. The Court also upheld Rule 164A as intra vires and within the terms of Section 86 of the Act, stating that the rule was a valid exercise of the power conferred by the Act.2. Authority of the Collector of Excise to Withdraw the License:The appellant contended that the Chief Commissioner, not the Collector of Excise, was the authority to withdraw the license. The Court rejected this argument, clarifying that under Section 22(2) of the Act, the Collector is the authority to issue and therefore withdraw the license. The Court pointed out that the license was issued from the office of the Collector of Excise, Agartala, and was signed by that officer, making the Collector the competent authority to withdraw the license under Section 43.3. Compliance with the Requirement of Public Notice under Section 22(1) of the Act:The Judicial Commissioner found that the appellant's license was granted without issuing a public notice as required by the proviso to Section 22(1) of the Act. This non-compliance invalidated the contract or the privilege of selling country liquor secured by the appellant. The Court agreed with this finding, emphasizing that public notice is a condition precedent to the grant of exclusive privilege, intended to prevent favoritism, nepotism, and corruption.4. Alleged Violation of Articles 14 and 19 of the Constitution:The appellant argued that Section 43 conferred unguided and uncanalized power to withdraw the license, violating Articles 14 and 19 of the Constitution. The Court held that the trade or business in country liquor is a special category requiring legislative control, and the restrictions imposed are reasonable. The Court noted that Article 47 of the Constitution directs the State to endeavor to prohibit the consumption of intoxicating drinks, which justifies the regulatory framework. The Court also dismissed the argument that the withdrawal of the license without fault on the appellant's part was unreasonable, stating that the cause for withdrawal was aligned with the policy decision of the State Government.5. Requirement of a Show Cause Notice under Section 43 of the Act:The appellant contended that a show cause notice was required before withdrawing the license. The Court clarified that Section 43 does not contemplate two separate notices. The order dated July 6, 1970, which provided 15 days' notice of the intention to withdraw the license, was deemed sufficient. The Court found that the appellant had ample opportunity to show cause against the withdrawal, and the procedure followed did not violate any rule of natural justice.Conclusion:The Supreme Court upheld the validity of Section 43 of the Bengal Excise Act, 1909, and Rule 164A of the Tripura Excise Rules, 1962. It confirmed the authority of the Collector of Excise to withdraw the license and found that the requirement of public notice under Section 22(1) was not complied with, invalidating the appellant's contract. The Court dismissed the arguments regarding the violation of Articles 14 and 19, and the necessity of a show cause notice, concluding that the withdrawal of the license was justified and lawful. The appeal was dismissed with costs.