1994 (7) TMI 366 - SC - Indian Laws

Tamil Nadu liquor vending and bar licence rules: distinct regulatory schemes; repeal ended licence validity and no entitlement to renewal.

The document addresses whether two sets of Tamil Nadu liquor rules constitute an integrated scheme, the applicability of the doctrine of legitimate ... Legitimate expectation - arbitrariness under Article 14 - judicial review of subordinate legislation - renewal of licence and administrative discretion - integrated scheme doctrine - power to repeal subordinate rules - Section 8 of the Tamil Nadu General Clauses ActIntegrated scheme doctrine - power to repeal subordinate rules - Whether the Retail Vending Rules, 1989 and the Bar Rules, 1992 together formed an integrated scheme. - HELD THAT: - The Court found the two sets of rules to be distinct regulatory regimes. The Retail Vending Rules governed entitlement to vending licences obtained by auction and contained detailed renewal provisions including specified percentage increases; the Bar Rules governed grant and renewal of privileges to hold Bars and contained separate provisions leaving the privilege amount to be fixed by the State and expressly permitting refusal of renewal. Merely requiring a vending licence as a precondition for applying for a Bar licence did not render the two rule-sets an integrated scheme. Consequently authorities and precedents concerning integrated schemes (e.g., Nandlal) were inapplicable.The two rule-sets do not constitute an integrated scheme; the argument of integration is rejected.Legitimate expectation - renewal of licence and administrative discretion - Whether the appellants could invoke the doctrine of legitimate expectation to prevent rescission of the Bar Rules or to claim renewal beyond their term. - HELD THAT: - The Court analysed the doctrine and observed that legitimate expectation may arise from an express promise, consistent past practice, or an administrative representation, but its operation is limited where a right depends on discretionary or legislative provisions. The Bar licences were of one-year duration and renewals were subject to the State fixing privilege amounts and to refusal by the licensing authority; there was no promise of automatic renewal. The impugned policy decision to discontinue grant/renewal was taken by subordinate legislation and announced publicly before any renewal application arose. As the Bar Rules were subordinate legislation (enacted under powers of the Prohibition Act) and could be repealed by exercise of the same rule-making powers, the doctrine of legitimate expectation did not preclude such legislative change and could not be invoked to prevent repeal or to entitle appellants to renewal.Legitimate expectation does not arise to prevent rescission of the Bar Rules or to secure renewal beyond the prescribed licence period.Judicial review of subordinate legislation - arbitrariness under Article 14 - Whether rescission of the Bar Rules by G.O.Ms. No.44/1993 was arbitrary or violative of Article 14 or principles of natural justice. - HELD THAT: - The Court reiterated that legislative or subordinate legislative action is not subject to procedural natural justice in the manner administrative acts are, though subordinate legislation can be struck down if it offends statute or constitutional provisions such as Article 14. Here the State received complaints about law-and-order and public nuisance from Bars and the Governor publicly announced policy to discontinue Bars; the rescission was a policy decision taken in public interest and within the rule-making and repeal powers under the Prohibition Act. There was no established promise of renewal, no requirement that a committee report precede repeal, and no demonstrated arbitrariness amounting to a constitutional violation on the facts.The rescission was not arbitrary or violative of Article 14; the challenge fails.Section 8 of the Tamil Nadu General Clauses Act - power to repeal subordinate rules - Whether Section 8 of the Tamil Nadu General Clauses Act preserved rights under the repealed Bar Rules so as to entitle appellants to licences or renewal beyond 31st May, 1993. - HELD THAT: - The Court held that Section 8 protects rights already accrued under a repealed enactment for acts done or consequences already having ensued, but it cannot extend the life of a right beyond the period for which it was valid under the repealed rules. The Bar licences were valid only until 31st May, 1993 and renewals (if any) had to be considered under rules which were rescinded effective 1st June, 1993. Thus Section 8 could not be invoked to create a fresh entitlement or prolong validity beyond the prescribed term.Section 8 does not preserve or create a right to renewal beyond the licence period; the contention based on the General Clauses Act fails.Final Conclusion: The appeals and the writ petition are dismissed. The Court upheld the validity of the Government order rescinding the Bar Rules, held that the Bar Rules and Retail Vending Rules are not an integrated scheme, denied relief based on legitimate expectation and Article 14, and ruled that Section 8 of the General Clauses Act does not entitle appellants to renewal beyond 31st May, 1993. Issues Involved:1. Whether the Tamil Nadu Liquor (Retail Vending) Rules, 1989 and Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 form an integrated policy.2. Whether the appellants can claim the benefit of the doctrine of legitimate expectation.3. Whether the rescinding of the Bar Rules by the impugned G.O. was arbitrary and violated Article 14.4. Whether the appellants could claim the benefit of Section 8 of the Tamil Nadu General Clauses Act.Issue-wise Detailed Analysis:1. Integrated Policy:The court examined whether the Tamil Nadu Liquor (Retail Vending) Rules, 1989 and Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 form an integrated policy. It was concluded that these are two separate sets of rules. The Retail Vending Rules deal with the retail vending of Indian Made Foreign Spirits (IMFS), while the Bar Rules regulate the issue of licenses and the privilege of retail vending of liquor in bars. The mere fact that one must hold a retail vending license to apply for a bar license does not integrate these rules into a single policy. Thus, the argument that they form an integrated scheme was rejected.2. Doctrine of Legitimate Expectation:The doctrine of legitimate expectation was discussed extensively. The court noted that legitimate expectation may arise from an express promise or a consistent past practice. However, it emphasized that such an expectation must be reasonable and cannot preclude changes in policy or public interest. In this case, the bar licenses were for a period of one year and could be renewed only on the privilege amount fixed by the State Government. Given the lack of an express promise of renewal and the policy decision announced before the renewal applications were due, the court concluded that there was no legitimate expectation for renewal. The court also noted that the doctrine of legitimate expectation applies primarily to administrative decisions and not to legislative actions.3. Arbitrariness and Violation of Article 14:The court addressed whether the rescinding of the Bar Rules was arbitrary and violated Article 14. It was established that legislative actions, including subordinate legislation, are not subject to the principles of natural justice. The decision to repeal the Bar Rules was based on public interest considerations, including law and order issues and complaints from the public, particularly from women. The court found that the government acted within its policy-making authority and that the decision was neither arbitrary nor unreasonable. The court also noted that the government is competent to formulate policies and that the repeal of the Bar Rules was a matter of policy.4. Section 8 of the Tamil Nadu General Clauses Act:The court examined the applicability of Section 8 of the Tamil Nadu General Clauses Act, which deals with the effect of repeals. It was noted that Section 54 of the Prohibition Act is a rule-making section, and the rules and notifications issued under it have the effect of being enacted in the parent act. The court agreed with the High Court's reasoning that the repealed rules ceased to exist after 31.5.1993, and the privilege and licenses granted under those rules were valid only up to that date. Therefore, the appellants could not claim the benefit of Section 8 to extend the validity of their licenses beyond the repeal date.Conclusion:The court dismissed the appeals and the writ petition, concluding that the Tamil Nadu Liquor (Retail Vending) Rules, 1989 and Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 do not form an integrated policy. The appellants could not claim the benefit of the doctrine of legitimate expectation or Section 8 of the Tamil Nadu General Clauses Act. The rescinding of the Bar Rules was not arbitrary and did not violate Article 14. The appeals and writ petition were dismissed with no order as to costs.