2006 (4) TMI 490 - SC - Central Excise

State failed to scrutinize liquor license applications despite directions, prioritized revenue over Article 47 constitutional duties

Ashok Lenka Versus Rishi Dikshit & Ors

SC held that Chhattisgarh State failed to properly scrutinize liquor license applications despite court directions, prioritizing revenue over ... Notices inviting tenders for grant of licences - En Masse Cancellation of Licenses - Compliance with Rule 9(d)(iii) regarding Criminal Antecedents - Regulation of liquor vis-`-vis Public Health - State's constitutional duty under Article 47 - violation of the provisions of the statute or the directions of this Court - Whether the applicants fulfill the eligibility criteria and are otherwise suitable for grant of licence under the Act and the Rules? Held that:- The period for which licences had been granted is over. For all practical purposes, the State and the licensees have succeeded in their attempts to defeat the purpose for which the writ petitions were filed by the writ petitioners - Respondents. We must express our dismay that despite our directions, the applications filed by the Appellants had not been scrutinized minutely which should have been done. The State of Chhattisgarh, we are not very sure, whether was aware of its constitutional duties and functions. It seems to have been more concerned with raising of revenue. To that extent it had succeeded, as the High Court in the first round of litigation despite directing a fresh scrutiny of the applications did not direct refund of the huge amount collected by it by way of application fees. We would, however, expect the State and its officers to scrupulously follow the constitutional mandate in future. It was with this intention we have dealt with these matters at some detail. We hope and trust that the State of Chhattisgarh and its authorities would not commit the same mistakes in the coming years keeping in mind the mandate of Article 47 of the Constitution of India and scrupulously observe the rules for disposal of liquor shops. With the aforementioned observations and directions, these appeals are allowed. Issues Involved:1. Verification of Permanent Addresses2. Accuracy of Temporary Addresses3. Compliance with Rule 9(d)(iii) regarding Criminal Antecedents4. Examination of Documents and Affidavits5. Handling of Objections by Writ Petitioners6. Compliance with Supreme Court Directions7. En Masse Cancellation of Licenses8. Clarification of Notification and Retrospective Effect9. Proper Authority for Issuing Certificates10. Constitutional and Statutory Obligations of the StateDetailed Analysis:1. Verification of Permanent Addresses:The High Court found that the permanent addresses of the licensees were not properly verified. It was noted that many applicants provided temporary addresses for postal communication purposes only, which led to scrutiny issues. The High Court held that the official respondents wrongly placed the burden of proof on the objectors to prove that the applicants did not possess the prescribed eligibility.2. Accuracy of Temporary Addresses:The High Court observed that temporary addresses given by the applicants were often incorrect, making it difficult to carry out proper scrutiny. A chart produced by the writ petitioners showed common addresses for a number of licensees, indicating possible irregularities.3. Compliance with Rule 9(d)(iii) regarding Criminal Antecedents:Rule 9(d)(iii) required verification of criminal antecedents of both applicants and their family members. The State argued that a mere error in the English version of the notification was clarified by a subsequent notification dated 5.7.2005. The High Court, however, found that the State and its officers failed to comply with the mandatory provisions of Rules 9 and 11.4. Examination of Documents and Affidavits:The High Court found that several instances of alleged irregularities in the scrutiny of applications were brought on record. It was noted that documents like certificates issued by doctors or dental surgeons were considered as proof of age, which was deemed invalid. The High Court held that the authorities failed to carry out proper scrutiny as directed by the Supreme Court.5. Handling of Objections by Writ Petitioners:The High Court noted that the objections raised by the writ petitioners were not properly addressed by the District Level Committees. The burden of proof was wrongly shifted to the objectors, which constituted a serious flaw in the inquiry process.6. Compliance with Supreme Court Directions:The High Court found that the directions issued by the Supreme Court in Ashok Lanka - I were not complied with in letter and spirit. The State and its officers were found to have flouted the mandatory provisions of the Rules.7. En Masse Cancellation of Licenses:The High Court directed the cancellation of licenses of all private respondents without individually verifying the eligibility and compliance of each licensee. The Supreme Court held that en masse cancellation was not warranted and that individual scrutiny was necessary to determine compliance with statutory requirements.8. Clarification of Notification and Retrospective Effect:The State issued a clarificatory notification on 5.7.2005, deleting the words 'as well as his family members' from the notification dated 15.3.2005. The Supreme Court accepted the State's contention that the notification was clarificatory and could be given retrospective effect.9. Proper Authority for Issuing Certificates:The High Court found that residence certificates issued by unauthorized persons like Councillors or Sarpanches were considered valid, which was incorrect. The Supreme Court emphasized the need for certificates to be issued by competent authorities and suggested future measures for proper verification.10. Constitutional and Statutory Obligations of the State:The Supreme Court highlighted the State's constitutional duty under Article 47 to promote public health and regulate the trade in intoxicating drinks. The Court expressed dismay that the State seemed more concerned with raising revenue than fulfilling its constitutional obligations.Conclusion:The Supreme Court allowed the appeals, noting that the period for which licenses had been granted was over. The Court emphasized the need for strict compliance with constitutional and statutory mandates in future processes and directed the State to scrupulously follow the rules for the disposal of liquor shops. The parties were directed to bear their own costs.