TaxTMI 
TaxTMI 
2006 (4) TMI 490
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....fore the Chhattisgarh High Court. By reason of a judgment dated 31.3.2005, a Division Bench of the said Court allowed the writ petition and directed cancellation of the licences. Appeals thereagainst were filed before this Court. Interim orders were passed therein as a result whereof licensees continued to carry on their business. This Court, however, while refraining itself from setting aside the entire selection process thought it fit to ask the respective District Level Committees to consider the matter relating to grant of such licences afresh. Having regard to the actions of the statutory functionaries, the exercises as regard scrutiny so as to arrive at a satisfaction that the requirement of the Rules vis-a-vis selection process were required to be undertaken by the Selection Committees. They were directed to do so afresh. We would advert to the said directions a little later. However, we at this juncture, may notice that, according to the State, in terms of the directions of this Court, the District Level Committee under the strict supervision of the Chief Secretary as also the Commissioner of Excise went into the said exercise over again and found that the licensees were....
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....iven by them were wrong and in that view of the matter scrutiny of their applications could not be carried out. (iii) Provisions of Rule 9(d)(iii) in terms whereof criminal antecedents not only of the applicants but also of their family members were required to be verified, had not been complied with. According to the State, however, there was no necessity to verify the criminal background of the family members of the licensees as a mere error had crept in in the English version of the notification which stood clarified by issuing another notification dated 5.7.2005. Before the High Court, the parties produced a large number of documents. It is not in dispute that 191 persons had been granted licences. Before the High Court, however, 65 licensees were made parties and 126 were not. The private respondents also filed their counter affidavits contending that the allegations made in the writ petition were incorrect. Several instances of alleged irregularities on the part of the District Level Committee in the matter of proper scrutiny of the contents of the applications filed by the licensees had been brought on record....
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....he selection process. Before the High Court, a chart was produced by the writ petitioners showing common addresses of a number of licensees. The High Court in detail noticed the findings of this Court and opined that the State and its officers failed to comply therewith and, furthermore, flouted the mandatory provisions of Rules 9 and 11. As regards the purported clarification made by the State in respect of the variation in the Hindi version of Rule 3 and the English version thereof, it was held: (i) The State and its officers were bound by the decisions of this Court. (ii) The English version shall prevail over the Hindi version, and (iii) In any event, there is no conflict between the English version and the Hindi version. On the aforementioned premise, holding that licences were illegally granted to the Respondent Nos. 13 to 89 of the writ petition, it was directed: "The respondents 13 to 89 who has the beneficiaries of the illegal acts of respondent No. 1 to 12 cannot be allowed to have the continued benefits of wrong-doing of respondents 1 to 12 till the term of the licences comes to an....
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...., it was submitted that the Superintendent of Police of the respective districts where the applicant was a resident of more than one district and one State had issued character certificates. (viii) In terms of Rule 12, in the case where there had been multiplicity of applications, a lottery was held which was completely above board being a computer generated programme operated by a Central Government organization, viz. National Informatics Centre. (ix) The High Court had wrongly held that certificates were to be granted only by the Revenue Authorities of Chhattisgarh inasmuch as nothing in the excise rules or the decision of this Court precluded a person who is resident of another State from applying for and obtaining a liquor licence. (x) The requirements of the Rules being that the applicant should be a citizen of India and above the age of 21, the certificates granted, as also character certificates, issued by the Superintendents of Police of their respective Districts met the requirements of the Rules....
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....een granted licences. STATUTORY PROVISIONS The Act was enacted to consolidate and amend the Excise Law in the State of Chhattisgarh. Section 7(e) of the Act provides that the State Government may, by notification, for the whole or for any specified part of the State, delegate to the Chief Revenue Authority or the Excise Commissioner all or any of its powers under the said Act except the power conferred by Section 62 to make rules. Rule 4 provides for formation of groups of liquor shops; clause (iii) whereof prohibits an applicant/firm/company from obtaining licences for more than two groups of shops. Rule 5 provides for the period of licence which would be for an excise year or part thereof. Rules 6 and 7 of the Rules read as under: "6. Application fee with application - The application fee with the application for licence of groups of liquor shops shall be as shown in the table below- S. No. Reserve Price of the group Prescribed application fee 1. For group of shops of Rs. 5 lakh to 1 crore Rs. 1,000/- 2. For group ....
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....isions of any rules made under the Act. (d) Has to submit an affidavit duly verified by public notary as proof of the following, namely - (1) That he possessed or has an arrangement for taking on rent suitable premises in that locality for opening the shops in accordance with the rules. (2) That he possess good moral character and have no criminal background and have not been convicted of any offence punishable under the Act or Narcotic Drugs and Psychotropic Substances Act, 1985 or any other law for the time being in force or any other cognizable and non-bailable offence. (3) That in case he is selected as licensee, he will furnish a certificate issued by Superintendent of Police of the district of which he is the resident, showing that he as well as his family members possess good moral character and have no criminal background or criminal record, within thirty days of grant of licence. (4) That he shall not employ any salesmen or representative who has criminal background as mentioned in clause (iii) or who suffer from any infectious or contagious disease or is below 21 years of age or a woman. (5) That no government dues are outstanding against him." Rule 1....
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.... the licensing authorities of the State." CONSTITUTIONAL SCHEME When a law is made, having regard to the phraseology used in Part IV of the Constitution of India, it is expected that law made or actions taken would be in furtherance thereof. In terms of the Directive Principles of State Policy, the State is bound to make endeavours to promote public health which is one of its primary duties of the State. One important component of the said directions was regulation and control over the trade in intoxicating drinks so as to enable the State to curb or minimize, as far as possible, the consumption thereof. The State may or may not prohibit manufacture, sale or consumption of liquor but it is vital that while parting with its exclusive privilege to deal with intoxicating liquor, the provisions of the Act and the Rules for which the same had been enacted must be strictly complied with. The Act and the Rules deal only with control and regulations. There was no provision which gives any discretion to the authorities concerned to relax the provisions of the Rules. The Rules in this behalf again must be framed upon taking into consideration of all relevant factors. The State in ma....
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.... provision. The learned Author stated: "The prohibition of intoxicating liquor had long been a part of the policy of the Indian National Congress; and its inclusion in Art. 47 received support from the Mohammedan community whose social habits were reinforced by the Koranic injunction against intoxicating liquor. In considering the directive in Art. 47, it may be observed that alcohol (the intoxicating ingredient of liquor) is a "narcotic", a word replaced by the word "depressant" to describe the same effects contrary to the popular belief that it is a stimulant. It is not mere accident that intoxicating liquor and dangerous drugs have been clubbed together in entry 8, List II." Article 47 has a unique feature in the sense that the first part refers to public health, whereas the second part specifically refers to prohibition of liquor. Similar provisions are found in the Constitution of U.S. and Lithuania as well. It is of some significance to note that Section 70 was inserted in the draft Constitution after the first part was suggested by Shri B.N. Rau derived from the recommendations of the U.N. Conference on Food ....
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....cal care with health, but the vast majority of research into the health of populations identifies so called 'societal factors' as the major determinants of health status. Public health, although starting as a social movement, has at least in recent years, responded relatively little to this profound knowledge about the dominant impact of society on health, such as behaviour like excess alcohol. Given that the major determinants are societal in nature, it seems evident that only a framework that expresses fundamental values in societal terms, and a vocabulary of values that links directly with societal structure and function, can be useful to the work of public health. [See Jonathan M. Mann, Public Health and Human Rights, American Bar Association Journal on Human Rights, Fall 1998, Vol. 25 No.1, pp. 2,3 and 4.] Grant of licence as a measure of control of intoxicating liquor is an age-old phenomenon. Even in England several statutes have been enacted therefor including the current one which was enacted in 2003. (See Halsbury's Laws of England, 4th Ed. Volume 26 p.5.) Regulation of liquor under the Act The Chhattisgarh Act provides for a unified regulation of sal....
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....crutiny test. (See Bugdaycay v. Secy of State for Home Department (1987) 1 All ER 940 at 952, R. v. Secy of State for Home Department, ex. p. Brind (1991) 1 AA ER 720, R. v. Ministry of Defence, ex p Smith (1996) 1 All ER 257 and B. Archana Reddy v. State of AP, (2005) 6 ALT 6). NECESSARY PARTIES The licensees whose licences were directed to be cancelled were necessary parties to the writ petition. In the absence of any opportunity of hearing given to them, their right to continue their businesses has been violated. It is not a case where the State, for one reason or the other, did not intend to part with its exclusive privilege to deal in liquor. It is also not a case where the State has acted in such an arbitrary manner which would attract the wrath of Article 14 of the Constitution of India. All the licensees in relation to whom allegations had been made, thus, were necessary parties in the writ petition and in their absence the same could not have been decided. Furthermore, it would be a travesty of justice if the parties against whom serious allegations were made and are said to have been found had not been made the parties to the writ petition as by reason thereof th....
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....ing of marks in respect of several candidates and as such there has been no fair and objective selection, public interest demanded annulment of the entire selection. This Court held that the same could not be done as the same would tantamount to gross violation of principles of natural justice which cannot be brushed aside on the ground that public interest demands annulment of the selection. Yet again in Onkar Lal Bajaj and Others v. Union of India and Another[(2003) 2 SCC 673], this Court while dealing with a case of en masse cancellation of the licences granted to the LPG Distributors as a result whereof unequals were said to have been clubbed by reason of arbitrary exercise of executive power, the same was held to be impermissible stating: "The solution by resorting to cancellation of all was worse than the problem. Cure was worse than the disease. Equal treatment to unequals is nothing but inequality. To put both the categories - tainted and the rest -on a par is wholly unjustified, arbitrary, unconstitutional being violative of Article 14 of the Constitution" It was further held: ....
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....e directions of this Court. To put it shortly, the inadequacies or otherwise of fulfillment of eligibility criteria or the violation of the statute should have been decided by taking up individual matters and upon proper scrutiny of the case. To the aforementioned extent, the judgment of the High Court cannot be sustained. It was also not a case wherein en masse cancellation was warranted as enunciated in Bihar School Examination Board v. S.C. Sinha [AIR 1970 SC 1269], Union of India v. Anand Kumar Pandey [(1994) 5 SCC 663], Hanuman Prasad and Others v. Union of India and Another [(1996) 10 SCC 742] and Union of India and Others v. O. Chakradhar [(2002) 3 SCC 146] ASHOK LENKA - I Analysing the provisions of the Act and the Rules, this Court opined that the Rules contemplated strict compliance of the Rules as also the terms and conditions of the licences. Eligibility clause contained in the advertisement was, therefore, required to be considered applying a rigorous standard. Emphasising the necessity to verify the requisite documents by the District Level Committees and the mode and manner in which the selection processes were to be adverted to in terms of Rule 11 of the....
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....ii) Irrespective of the format prescribed by the Commissioner of Excise, each of the selected candidates must file an appropriate affidavit, which would be in strict compliance with the requirement of Rule 9. (iii) Such affidavits must be filed before the respective Committees within one week from date, the contents whereof would be verified in terms of Order 6 Rule 15 of the Civil Procedure Code. The said affidavits shall be scrutinised by the Committee so as to enable them to arrive at a finding as to whether the applicants fulfil the eligibility criteria and are otherwise suitable for grant of licence under the Act and the Rules. (iv) The writ petitioners or any other person in the locality may file appropriate applications before the said Committee with a view to show that the selected candidates do not fulfil the eligibility criteria or are debarred or are otherwise unsuitable for obtaining a licence under the Act. (v) Such objections may also be filed within two weeks from date. The Committee may consider the said objections and, if necessary, may call for further or better particulars from the selected candidates so as to satisfy themselves about their eligibility, ....
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.... Direction No. 9 Direction No. 10 Details of records received in regard to examination of the affidavit and page No. Photocopy of the report submitted by the Supdt. Of Police regarding character verification Details of the supervision conducted by the Chief Secretary and Excise Commissioner 1 2 8 11 12 1. Shri Amit Singhal, Ganjpara, Respondent No. 3 1. Domicile Certificate, 2. Higher Sec. Certificate, 3.Telephone Bill 32-34 Enclosed 35-36 Directions issued for time bound proceedings on 14.05.2005, meeting held by the Excise Commissioner on 16.05.2005. Video Conferencing held by the Chief Secretary on 26.05.2005, letter issued to the Suptd. Of Police by Chief Secretary, Chhattisgarh on 26.05.2005, letter issued to the General Director, Police, Chhattisgarh by Chief Secretary on 07.06.2005 Page No. 37 to 130 45. Shri Vikram Vishwal, Sarsiva, respondents No. 61 and 80 1. Dwelling Certificate, 2. Age Certificate by Doctor 1391-1392 Enclosed 1393 As above 47. ....
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....at the selected candidates do not fulfil the eligibility criteria or are debarred or are otherwise unsuitable for obtaining a licence under the Act. ? Respondents merely sought to raise general and omnibus objections that the addresses of some of the other successful candidates seem to be incomplete or duplicated. V Such objections may also be filed within two weeks from date. The Committee may consider the said objections and, if necessary, may call for further or better particulars from the selected candidates so as to satisfy themselves about their eligibility, etc. ? The objectors were given an opportunity for making representations before the Committee. ? The Committee decided the objections raised by the objectors after considering the objections with the documents that had been submitted by the successful Applicants. ? However, the objectors did not point out a single instance where Applicant was ineligible as not fulfilling the eligibility criteria as prescribed in Rule 9 of the Excise Rules. Vi The respective district-level committees shall strictly verify and scrutinise the affidavits as also other documents furnished by the said applicants so as to arri....
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....ise incompetent to issue the same, had been taken into consideration. It may be true that residence certificates granted in favor of the applicants who are not ordinarily inhabitants of the State of Chhattisgarh, cannot be procured from the Revenue Department of the State. The applicants, however, could procure such certificates from the competent authorities of the respective States where the applicant was a resident and who hold similar status in their State, particularly, when it is one of the eligible criteria. The High Court in paragraph 21 of its judgment has noticed the example of residence certificate of Abhay Singh, which does not even bear the revenue case number or seal of the office of the Tehsildar which are mandatory requirements. The High Court has also noticed that the certificates relating to age had been issued by Dental Surgeons and Orthopaedic Surgeons. The High Court furthermore noticed the report of the Station House Officer, Chirmiri to S.P. Koria mentioning about one licensee Pradeep Gupta that he is an employee of liquor contractor Amolak Singh Bhatia and financial condition of Pradeep Gupta is not such that he could take the financial burden of liquor trad....
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....e age of 21 years is not granted a licence. NOTIFICATION Before us the Hindi version of the notification has been read wherefrom it appeared that the requirement of providing the certificate as regards the alleged criminal background of the family members of the licensees had inadvertently appeared in the English version of the notification, but were absent in the Hindi version. It is true that this Court had delivered the judgment in Ashok Lanka - I (supra) on 11th May, 2005. A clarificatory notification was issued on 5.7.2005 by deleting the words "as well as his family members" from the notification dated 15.3.2005. The relevant portion of the said notification reads as under: "In the said rules, - (1) In sub rule 3 of clause (d) of rule 9 the words "as well as his family members" shall be omitted." The said notification was given a retrospective effect. Ordinarily a subordinate legislation cannot be given a retrospective effect. The Notification dated 15.3.2005, however, is said to be clarificatory in nature. A clarificatory Notification can be given retrospective effect. Such a clarification, according to the State, was necessary to be issued as there was ....
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....d conditions of the advertisement did not mandate that a person residing outside the State of Chhattisgarh would be ineligible for filing an application. If that be so, then those who were residents of places other than the State of Chhattisgarh would also be eligible therefor. They may have a temporary address in Chhattisgarh or they may not have a permanent address within the said State but by way of temporary address, they cannot give an address which is not their residence even for temporary purpose. Even in paragraph 71 of the judgment in Ashok Lanka - I (supra), this Court pointed out the said fact. No serious dispute has been raised that the said contention of the writ petitioners was not correct. But, even if they had no temporary address but they had been able to file their character certificates and proof of permanent address, they cannot be held to be ineligible for the grant of licences. Furthermore, there is nothing to indicate that the District Level Committees had information as to whether the applicants were defaulters in respect of some other State. Such mechanism of scrutiny is not available in the statutory scheme and in our opinion should be provided. We hope....