2001 (3) TMI 1008 - SC - Central Excise

Delhi Court Upholds Liquor Trade Regulation, Rejects Challenges

UGAR SUGAR WORKS LTD. Versus DELHI ADMINISTRATION AND ORS.

The court upheld the impugned notification regulating the trade of liquor in Delhi, finding it valid and within the Delhi Administration's regulatory ... Whether impugned notification issued by Respondent No. 2 laying down terms and conditions for registration of different brands of Indian Made Foreign Liquor (IMFL) for supply within the territory of Delhi during 2000-2001 and laying down Minimum Sales Figures (MSF), as a criteria of eligibility for grant of licence in form L-l, is violative of Articles 14, 16 and 19(l)(g) of the Constitution? Held that:- Economic mechanism is a highly sensitive and a complex matter. With inflation every year, it goes without saying, that the brand which has the 'lowest price tag' this year, was perhaps not the brand which had 'lowest price tag last year'. It is possible that the brand ’with lowest price tag’ this year may not be of that good quality as the brand with identical price tag last year, even though it may conform to ISI standards. It was, therefore, reasonable for the State to find out whether that particular brand with the lowest price tag this year, had been tested and tried elsewhere and had been accepted largely by the public in other parts of India to determine if that particular brand of liquor can be considered to be liquor of good quality keeping the health and welfare of the public in view. The impugned notification in our opinion furthers the object of providing good liquor having larger acceptability. The policy is made in the interest of health, welfare and morals to benefit all citizens of Delhi and not the big industrial houses as alleged. Determination of wide scale acceptability on the basis of revised minimum sales figures (MSF) does not strike us as being unreasonable let alone irrational, arbitrary or unfair. Under these circumstances there is no justifiable reason warranting interference with the impugned notification. Writ petition dismissed. Issues Involved:1. Validity of the impugned notification under Articles 14, 16, and 19(1)(g) of the Constitution.2. Fundamental right to trade in intoxicants.3. Competence of Delhi Administration to regulate trade in liquor.4. Rationality and reasonableness of the Minimum Sales Figures (MSF) requirement.5. Allegations of discrimination against small scale manufacturers.Issue-wise Detailed Analysis:1. Validity of the impugned notification under Articles 14, 16, and 19(1)(g) of the Constitution:The petitioner challenged the notification issued by Respondent No. 2, which laid down terms and conditions for the registration of different brands of Indian Made Foreign Liquor (IMFL) for supply within Delhi during 2000-2001, including the MSF criteria for eligibility for the L-1 license. The petitioner argued that this notification was arbitrary, discriminatory, and violated Articles 14, 16, and 19(1)(g) of the Constitution. The court examined the statutory provisions and previous case law to determine the validity of the challenge.2. Fundamental right to trade in intoxicants:The court reiterated that there is no fundamental right to trade in intoxicants, as established in previous judgments such as State of A.P. & Ors. v. Mc Dowell & Co. & Ors. and Har Shankar & Ors. v. The Dy. Excise and Taxation Commr. & Ors. The court noted that trade in intoxicants is considered res extra commercium (outside commerce) and can be completely prohibited by the State. Consequently, any argument based on Article 19(1)(g) was deemed out of place and was emphatically rejected.3. Competence of Delhi Administration to regulate trade in liquor:The court found that the Delhi Administration was competent to take policy decisions regarding the regulation of trade in liquor, including laying down various regulatory measures. The court emphasized that the State has the right to regulate the supply of liquor within its territorial jurisdiction to ensure that it is of good quality, in the interest of health, morals, and welfare of the people.4. Rationality and reasonableness of the Minimum Sales Figures (MSF) requirement:The petitioner argued that the MSF requirement was arbitrary and had no nexus with the objective of providing good quality liquor. The court, however, found that the MSF requirement was a fair and relevant mode for determining the acceptability and quality of a particular brand of liquor. The court noted that the requirement was uniformly applied and aimed at ensuring that only brands tested and accepted in other states were sold in Delhi. The court declined to enter into the area of testing the executive policy on the grounds of its fairness, reasonableness, or rationality, as long as it was not mala fide, unreasonable, or irrational.5. Allegations of discrimination against small scale manufacturers:The petitioner contended that the policy was discriminatory against small scale manufacturers, as it would deprive them of marketing their brands in Delhi if they did not achieve the prescribed MSF outside Delhi. The court rejected this argument, stating that the policy objective was to provide good quality liquor to consumers in Delhi, and the MSF requirement was a relevant and fair mode for determining the acceptability of a brand. The court emphasized that the policy was made in the interest of health, welfare, and morals of the citizens of Delhi, and not to benefit big industrial houses.Conclusion:The court dismissed the writ petition, finding no merit in the arguments presented by the petitioner. The impugned notification was upheld as a valid exercise of the State's regulatory powers, aimed at ensuring the supply of good quality liquor in Delhi. The court emphasized that it is not within its province to prescribe or question the correctness of executive policies unless there is a violation of constitutional or statutory provisions.