Liquor licensing power under the Excise Act cannot be used to create a state-wide monopoly

The Punjab Excise Act, 1914 was read as reserving to the State Government the power to regulate the period, localities, persons and number of licences for local areas, while barring delegation of that power under Section 13(a). On that reading, the Financial Commissioner and Excise Commissioner could not use general regulatory powers to fix the number of L-1BF licences for the entire State or create a State-wide licensing monopoly, and Rule 24(i-eeee) was therefore treated as ultra vires. The commentary also notes a dissent that would have upheld broader State-wide regulation under Section 59 and accepted the rule, subject to limits on arbitrariness.

---

---

Issues: (i) Whether Rule 24(i-eeee) of the Haryana Liquor License Rules, 1970, providing for only one L-1BF licence in the State and allotment through e-bidding, was ultra vires the Punjab Excise Act, 1914.

Analysis: The power under Section 58(2)(e) of the Punjab Excise Act, 1914 to regulate the period, localities, persons and number of licences is vested in the State Government and is confined to licences for any local area. Section 13(a) prohibits delegation of the State Government's powers under Section 58, and Section 59(a) confers only regulatory powers on the Financial Commissioner in relation to manufacture, supply, storage or sale after a licence is granted. Reading Sections 5, 6, 8, 13, 58 and 59 together, the scheme of the Act distinguishes between local-area licensing and wider regulatory control, and does not authorise the Financial Commissioner or the Excise Commissioner to create a State-wide monopoly by fixing the number of licences for the entire State.

Conclusion: The rule was held ultra vires the Act and was struck down; this issue was decided in favour of the appellant.

Dissenting Opinion: K.M. Joseph, J. held that the expression "local area" in Section 58(2)(e) limits the State Government's power, but the broader regulatory language of Section 59 permits the Financial Commissioner to regulate sale of liquor for the State as a whole, including the number of licences. The dissent would have upheld the rule and dismissed the appeal, while also rejecting the constitutional challenge based on monopoly, Article 19, and Article 14, subject to safeguards against arbitrary conduct by the exclusive licensee.

Ratio Decidendi: Where the statute vests the power to fix the number of licences in the State Government for local areas and expressly forbids delegation of that power, a delegated authority cannot use general regulatory powers to create a State-wide licensing monopoly.

---