1972 (5) TMI 59 - SC - Central Excise

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

The SC upheld the withdrawal of an excise licence by Tripura authorities following policy changes recommended by the Committee of Estimates. The ... Power to withdraw licence under the Bengal Excise Act - Requirement of fifteen days' notice and remittance under withdrawal provision - Authority who grants licence: Collector's power under section 22(2) read with section 43 - Public notice as condition precedent to grant of exclusive privilege under section 22 - Reasonable restrictions on trade in liquor as permissible limitation on Art. 19 - Application of ejusdem generis and Article 14 challenge to licensing powers - Rules of natural justice and show-cause requirement in statutory withdrawalPower to withdraw licence under the Bengal Excise Act - Authority who grants licence: Collector's power under section 22(2) read with section 43 - Requirement of fifteen days' notice and remittance under withdrawal provision - Validity of the Collector's order withdrawing the appellant's licence under section 43 and whether the Collector was the competent authority to grant and withdraw the licence. - HELD THAT: - The Court held that although section 22(1) vests power to grant exclusive privileges in the Chief Commissioner, section 22(2) makes clear that no grantee may exercise the privilege until he has received a licence from the Collector or Excise Commissioner; consequently the Collector is the licensing authority within the meaning of section 43 and was competent both to issue and to withdraw the licence. Section 43 requires remission of an amount equal to fifteen days' fees and either withdrawal after fifteen days' written notice or immediate withdrawal with additional compensation; the impugned order complied with the statutory requirement by remitting the fifteen days' fee and giving written notice that the licence would be withdrawn with effect from the specified date, so that no separate subsequent order was required by the statute. The section does not mandate an additional separate show-cause procedure distinct from the statutory notice and remittance scheme, and the order afforded the licensee adequate opportunity to make representations.The Collector was the competent authority to grant and withdraw the licence and the impugned order complied with the procedural requirements of section 43.Public notice as condition precedent to grant of exclusive privilege under section 22 - Whether failure to issue public notice as required by the proviso to section 22(1) vitiated the grant of the exclusive privilege to the appellant. - HELD THAT: - The Court agreed with the Judicial Commissioner that the proviso to section 22(1) makes public notice of the intention to grant an exclusive privilege a condition precedent: because the grant creates a virtual monopoly affecting residents of the locality, publicity for objections and prevention of favouritism is integral to the statutory scheme. Non-compliance with the proviso was therefore fatal to the validity of the grant of the exclusive privilege, and the licence could not be regarded as a validly conferred right on that basis.The grant of the exclusive privilege was invalid for failure to give the statutory public notice, a ground sufficient to sustain the withdrawal.Reasonable restrictions on trade in liquor as permissible limitation on Art. 19 - Rules of natural justice and show-cause requirement in statutory withdrawal - Whether section 43 is violative of Article 19 by conferring arbitrary power to withdraw licences or otherwise unreasonably infringing the right to carry on trade in liquor, and whether natural justice required a separate show-cause notice. - HELD THAT: - The Court held that trade in country liquor is a special category subject to regulation in the public interest (Article 47), and restrictions on carrying on such trade must be judged by reference to the nature and social impact of the trade; consequently broad regulatory powers to withdraw licences are permissible provided the cause for withdrawal has a reasonable nexus with the object of regulating the trade. Section 43, though not specifying precise grounds, must be read as allowing withdrawal for causes reasonably related to the statutory purpose. The statutory mechanism of remittance and notice supplies the procedural safeguard; therefore no additional, separate show-cause notice was required by rules of natural justice beyond what section 43 prescribes.Section 43 does not unconstitutionally infringe Article 19 and does not require a separate show-cause notice beyond the statutory notice and remittance.Application of ejusdem generis and Article 14 challenge to licensing powers - Whether the phrase 'any cause other than' in section 43 must be read ejusdem generis with the specific grounds in section 42(1) to avoid arbitrariness under Article 14. - HELD THAT: - The Court rejected the contention that ejusdem generis should restrict the scope of section 43. The clauses in section 42 do not form a single homogeneous class that would invite the rule; moreover the language and objects of the two provisions indicate a wider legislative intent. The classification treating trade in country liquor as a special category for regulatory control is an intelligible differentia having a rational relation to the object of public health and welfare, so that section 43 is not vulnerable to an Article 14 challenge on the basis advanced.Ejusdem generis does not apply to construe section 43 narrowly, and the provision does not offend Article 14.Final Conclusion: The Court affirmed the Judicial Commissioner's dismissal of the writ petition: the Collector validly exercised power under the Act to withdraw the licence; the grant was vitiated by failure to give the public notice required by the proviso to section 22(1) (a ground independently sufficient to sustain withdrawal); section 43 is constitutionally permissible and the statutory notice/remittance procedure satisfied natural justice. The appeal 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.