THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.26957 o”
28110. of 2012, 28576 of 2012 and 29219 o”
02. 01-2013 Kothamaram Nagi Reddy and 5 others ....
Petitioners The Government of Andhra Pradesh rep., by its Principal Secretary, Revenue (Excise-II), Secretariat, Hyderabad and 8 others....
Respondents Counsel for the petitioner: Sri D.Kodandarama Reddy Counsel for respondents : G.P.
for Prohibition & Excise Sri A.
Santosh Kumar HEAD NOTE: ?Citations:
1. Judgment in Writ Petition No.16508 of 2006, dated 29.03.2007.
2) (2011) 5 SCC 43.3) AIR 199.SC 231.4) (1992) Supp (1) SCC 15.5) AIR 196.SC 191.6) (1987) 4 SCC 48.7) (2006) 6 SCC 395.8) AIR 196.SC 117.: (1961) 3 SCR 18.9) AIR 199.SC 223.10) AIR 196.SC 121.11) AIR 196.SC 83.: (1962) 1 SC”
12. (1980) 3 SCC 9.13) (2001) 3 SCC 63.14) (2006) 4 SCC 32.15) (2009) 14 SCC 8.16) 2004 (3) SCC 40.17) (1993) 1 SCC 44.18) (2011) 2 SCC 57.19) 48 L E”
20. (2008) 1 SCC 68.21) (1989) 1 SCC 8.22) (1911) 2 Ch.1 23) (2006) 3 SCC 62.24) (1995) 1 SCC 57.25) (2004) 11 SCC 2.26)(1994) 4 SCC 10.COMMON ORDER: The order under challenge, in these petitions, are the proceedings of the Commissioner of Prohibition & Excise, Hyderabad dated 04.08.2012, whereby the Deputy Commissioners of Prohibition & Excise were informed that, in order to stabilize the maximum retail price (MRP) for sale of Indian made foreign liquor (IMFL) and Foreign liquor (FL), and to control illicit distillation, in certain areas/localities it was decided to permit A.P.
Beverages Corporation Limited (APBCL) to open outlets for the sale of IMFL& FL in public interest.
The Deputy Commissioners were directed to identify suitable premises to locate the outlets, and make all the outlets operational.
The Commissioner of Prohibition and Excise ("Commissioner" for short), by proceedings dated 20.07.2012, had earlier conveyed his decision to open 51 outlets at 50 places in certain Districts where notified shops could not be allotted, in the drawal of lots, as no applications were received.
However, none of the petitioners in these petitions are aggrieved by the Commissioner's action in this regard or by his action in permitting APBCL to open retail outlets with a view to control illicit distillation.
Their grievance is limited to the permission accorded to APBCL to open outlets in areas in which licences were granted to the petitioners after drawal of lots.
It would suffice to note the facts in W.P.
No.26957 of 2012.
The District Collector, Prakasam invited applications for grant of licenses for retail outlets, for the licence year 2012-2013, through drawal of lots.
The petitioners applied for the shops at Darsi village, and were selected through drawal of lots.
They were, thereafter, granted licences.
For the year 2012-2013 the annual licence fee was fixed at Rs.34,00,000/- for each shop in Darsi village.
The petitioners claim to be running the licensed shops; to have paid 1/3rd of the licence fees; and to have furnished bank guarantees for the balance.
The Director of Enforcement, by his proceedings dated 23.07.2012, informed the Deputy Commissioner of Prohibition & Excise, Prakasam of the proposal to open three outlets by APBCL in Prakasam District to ensure stabilization of MRP.
One of these outlets was proposed to be opened in Darsi village.
Thereafter, by the impugned proceedings dated 04.08.2012, the Commissioner conveyed his decision to permit APBCL to open outlets in certain areas which he considered necessary to stabilize MRP, and to control illicit distillation.
In the counter affidavit, filed on behalf of the Commissioner, it is stated that prior to 01.07.2012 retail liquor vends were given in public auction; the auction system bred many unintended and undesirable results such as retailers violating the MRP, forming cartels, and disregarding consumer interests; the Government, heeding to public demand, had constituted a cabinet sub-committee to examine the policy of retail vending of liquor in the State; after due deliberations with the stake holders, such as manufacturers, retailers and social organizations, the cabinet sub-committee decided to do away with the system of auction of liquor vends; owing to the sensitivity of the subject, and the responsibility thrust on the Government by the directive principles of state policy, the Government formulated a new Excise policy in G.O.Ms.No.390, Revenue Ex.II Department, dated 18.06.2012, for the year 2012-2013 commencing from 1st July, 2012, not to continue with the auction system of retail vends; one of the main objectives of the new policy was to ensure that retailers did not increase the price of liquor, and adhered to the MRP printed on the labels of liquor bottles; to achieve this objective, the government accepted a reduction of Rs.1000 crores per annum as lease amounts, and introduced a fixed licence fee for retail shops at reasonable levels; while fixing the licence fee, care was taken to ensure that the licence holder made a reasonable profit, after payment of the licence fee to the Government, and still sell at MRP; due allowance was given to operational expenses such as transport charges, rent of shops, salaries of workers, electricity charges, interest on capital, and all other expenses normally associated with the liquor trade; the interests of the consumer was paramount; to ensure that the public get true value for the money, and traders do not sell liquor at higher prices, it was decided in public interest to permit APBCL to open outlets at strategic places; opening of such outlets would not only act as a deterrence to liquor being sold at prices higher than MRP, but the consumers would also have the alternative of purchasing IMFL and FL from APBCL outlets; several MRP violations were noticed, and cases booked, during the years 2010-2012; in the State of Karnataka retail vending by the Karnataka State Beverages Corporation, along with private enterprise in retail vending, has been successfully implemented; it is only after a detailed examination of the field situation that a decision was taken to permit APBCL to run additional outlets; the contention that the petitioners would suffer financial loss if APBCL outlets were opened is without basis as is evident from the fact that the licence fees for retail shops was drastically reduced from Rs.501 lakhs during 2011-2012, to Rs.204 lakhs during the year 2012-2013.
In its counter affidavit, the Andhra Pradesh Beverages Corporation Limited (APBCL) would submit that it was incorporated under the Companies Act, 1956 on 23.07.1986 with the object of manufacturing, purchasing, importing, exporting alcohol and all other beverages suitable for human consumption; under Rule 4 of the Andhra Pradesh (Regulation of trade in Indian Made Foreign Liquor, Foreign Liquor) Rules, 1993, APBCL, a company wholly owned and controlled by the State Government, has been conferred exclusive privilege of importing, exporting and carrying on wholesale trade and distribution of IMFL and FL on behalf of the Government for the entire State of Andhra Pradesh; Rule 14 thereof enables APBCL to sell IMFL and FL through its permitted wholesale depots only to the holders of a licence issued under the Andhra Pradesh Excise (Lease of Right of selling by Shop, Bars, Licence and Conditions) Rules, 2012 (hereinafter called the "rules"); the decision taken to identify suitable areas and locations for sale of IMFL and FL by APBCL was in the public interest of stabilizing MRP, and to control illicit distillation.
Heard Sri O.
Manohar Reddy, Sri Koneti Raja Reddy, Sri D.
Kodanda Rami Reddy and Sri A.
Jagannadha Rao, Learned Counsel for the petitioners, and the Learned Government Pleader for Prohibition & Excise appearing on behalf of respondents.
The proceedings of the Commissioner are subjected to challenge in these Writ Petitions on grounds that the number of shops, in any given area/locality, is fixed after taking into consideration the factors enumerated in Rule 4; the various factors mentioned in Rule 4 are conjunctive, and only after all such factors are satisfied can the power conferred under Rule 4 be exercised; Rule 18(2) has to be read harmoniously with Rule 4 of the Rules; and, when so read, the Commissioner cannot permit new retail outlets being opened by APBCL, in a particular area/locality, unless all the conditions stipulated in Rules 4 and 18 (2) are satisfied; permitting new retail outlets to be opened by APBCL is contrary both to the Excise policy of the Government and the statutory rules; policy decisions of the Government cannot supplant statutory rules; the Commissioner has not adverted to the factors stipulated in Rule 4 while passing the impugned order; as there are no MRP violations, in any of the shops allotted to the petitioners, permitting APBCL to run additional outlets in their areas is arbitrary, illegal and contrary to the new excise policy; before invoking the power under Rule 18(2), the Commissioner has to satisfy himself that opening of new retail outlets are necessary; in the impugned proceedings dated 04.08.2012 the Commissioner has neither adverted to, nor has he exercised his mind independently to, the aspect of public interest in Rule 18(2), and has merely sought to implement the decision of the Director of Enforcement; it is not open to the petitioner to increase the number of shops, fixed under the Excise Policy in G.O.Ms.No.390 dated 18.6.2012, in the middle of the excise year; for violation of MRP in one notified area, the respondents cannot permit APBCL to open a retail outlet in another; as none of the petitioners have violated the conditions of their licence, the respondents cannot permit additional retail outlets being opened by APBCL in the notified areas where the petitioners' shops are located; retail shops can be permitted to be established by APBCL only in the areas/locations where retail outlets have violated MRP, and not extended to the jurisdictional area of an Excise station; permission for establishment of shops are granted, and the license fees for such shops are fixed, on the basis of the population in a given area; if the proposed retail outlets are permitted to be established, the viability of the petitioners' shops would be adversely affected; the power, to permit new retail outlets to be opened by APBCL, cannot be exercised for MRP violations detected prior to issuance of G.O.Ms.
No.390 dated 18.6.2012; and the action of the respondents is contrary to the law laid down by this Court in Ramesh Reddy v.
Commissioner of Prohibition and Excise1.
Learned Government Pleader for Prohibition and Excise would submit that the petitioners have no fundamental right to carry on business in retail sale of IMFL and FL; the Retail Shop Rules, notified in G.O.Ms.No.391 dated 18.06.2012, empower the Commissioner to permit new shops to be opened by APBCL in public interest anywhere in the State; the factors enumerated in Rule 4 of the Rules are disjunctive, and not cumulative; Rules 4 and 18 of the Rules are independent of and supplement each other; establishment of APBCL outlets is in public interest, and is in accordance with the Rules; Rules 4, 5 and 18 of the Rules have to be read together; the Excise policy of the Government, as notified in G.O.Ms.No.390 dated 18.06.2012, is to retain the number of shops at the then existing level of 6596; while fixing the number of shops at 6596 the Excise policy also stipulated that, in cases of MRP violations, APBCL may run additional retail vends wherever necessary; Para 6 of G.O.Ms.No.390 dated 18.06.2012 must be read in conjunction with Rule 18(2); the petitioners were aware of the Rules notified in G.O.Ms.No.391 dated 18.06.2012, and the policy instructions issued in G.O.Ms.No.390 dated 18.06.2012, before they participated in the auction by drawal of lots; having participated in the selection process, in accordance with the Rules and executive instructions, it is not open to the petitioners to now turn around and contend that APBCL should not be permitted to open additional retail outlets; an excise station is an administrative unit; the Commissioner decided to permit APBCL to open additional retail outlets with a view to stabilize MRP within the jurisdictional area of an excise station where MRP violations were detected; the construction placed by the petitioners, on the Rules and executive instructions, is erroneous; it is open to the Commissioner to take into consideration earlier MRP violations, i.e., those committed prior to the Excise policy being notified in G.O.Ms.No.390 dated 18.06.2012, in deciding to permit APBCL to open new retail outlets; and it is only in the public interest of ensuring that the licensees do not sell IMFL and FL at prices higher than the MRP is the proposed action being taken.
Before examining the rival contentions, it is useful to refer to the relevant rules and executive instructions issued by the Government.
The "Rules" were made in supersession of the Andhra Pradesh Excise (Lease of Right of selling by shop and conditions of licence) Rules, 2005, as notified in G.O.Ms.No.998, dated 24.05.2005.
Rule 2(1)(l) of the Rules defines 'licensing authority' to mean the Prohibition and Excise Superintendent of the concerned place in which the licensed shop is located; Rule 2(1)(m) defines 'licence fee' to mean the annual licence fee as notified by the Government from time to time, and includes proportionate licence fee.
Clause (n) of Rule 2(1) defines 'licence period' to mean the period of twelve months commencing from 1st July and ending on 30th June of the succeeding year or part thereof; clause (o) of Rule 2(1) defines 'licensed premises' to mean a premises where IMFL and FL are permitted to be sold by the licensee; clause (p) defines 'maximum retail price' to mean the price indicated by APBCL, or any other agency authorized by the Government, for declaration on each variety of label by the manufacturers of IMFL; clause (u) defines a 'shop' to mean a privilege granted, under the Rules, for sale of IMFL and FL in sealed or capsuled bottles or packages or tins to an individual in quantities not exceeding the limits as prescribed, without permitting consumption on the licensed premises; and clause (x) defines 'village/town/city etc.' to mean a village/town/city as defined in the latest census.
Rule 2(2) stipulates that the words and expressions used, but not defined, in the Rules shall have the same meaning assigned to them in the Andhra Pradesh Excise Act, 1978, and Andhra Pradesh Excise (Import, Export and Transport of Indian Made Foreign Liquor and Foreign Liquor - Permits) Rules, 2005.
Rule 3(1) stipulates that, subject to the provisions of the Rules, the right to sell IMFL and FL in retail by shops shall, ordinarily, be granted by way of a licence issued after publishing a notification and inviting applications from the public.
As the contentions urged by counsel on either side revolve mainly around the construction to be placed on Rules 4 and 18, it is appropriate to extract the said Rules in their entirety:- 4.
Establishment of Shops:- Subject to such directions, which the Government may issue in this regard from time to time, the Commissioner of Prohibition and Excise, having due regard to the requirement, public order, health, safety and other factors as he thinks fit, may fix the number of shops to be established in an area/locality before the publication of notification under Rule 5.
18.
Sale by outlets of A.P.B.C.L and by the licence holder of a IMFL Manufactory/Brewery: (1) The District Collector, with the approval of the Commissioner of Prohibition and Excise, may permit the A.P.B.C.L.
or a licensee of IMFL Manufactory/Brewery under the Act to open outlets for the sale of IMFL and FL in such areas/localities where the privilege of sale by shop could not be disposed of through selection or when a licence already granted is cancelled and the same could not be reallotted for any reason.
(2) The Commissioner of Prohibition and Excise may permit the A.P.B.C.L.
or a licensee of IMFL Manufactory/Brewery under the Act to open outlets for the sale of IMFL and FL anywhere in the State whenever he deems it necessary in public interest.
(3) The outlets opened under this rule shall sell IMFL and FL at prices not exceeding the Maximum Retail Price indicated on the labels of the bottles and issue bills to the customers accordingly.
The outlets opened by a licensee of IMFL Manufactory/Brewery shall also pay the applicable licence fee and comply with the other relevant provisions of this rule.
Rule 16 relates to licence fee and privilege fee for retail shops.
Under sub-rule (1) thereof, the annual licence fee for the shop licence shall be levied on the basis of population, and at the rates notified by the Government from time to time.
Sub-rule (2) enables the licence fee to be paid in one lump sum or in three equal installments at the option of the selected applicant.
Under sub-rule (9), the licensee is required to pay privilege fee @ 8%, plus applicable Value Added Tax thereon, on the sale price of IMFL and FL purchased from APBCL when the cumulative value of his/her purchases, during the licence year, exceed six times the annual licence fee.
The State Government formulated the Excise policy, for the year 2012-2013, for disposal of retail liquor outlets.
This policy was notified in G.O.Ms.No.390 dated 18.06.2012.
Clause (1) of the said policy stipulates that the privilege of selling liquor through retail shops shall be granted by collecting a fixed licence fee based on the population of the places where the shops are proposed to be established.
Clause (2) provides that the method of selection, for grant of shop licences, shall be by drawal of lots.
Clause (4) stipulates that the period of licence shall be one year.
Clause (5) stipulates that the number of retail shops shall be retained at the present level i.e., 6596.
Clause 6 stipulates that, in case of MRP violation, the APBCL may run additional retail vends, wherever necessary, under the relevant provision of the Retail Shop Rules.
Clause 9 stipulates that the Prohibition and Excise Department, particularly the Enforcement Wing, should be strengthened in order to effectively control all excise offences.
While exercising power under Rule 4, the Commissioner is required to have due regard to the requirements, public order, health, safety and other factors.
It is having regard to the aforesaid factors that Commissioner is enjoined to fix the number of shops to be established in an area/locality.
After the Commissioner fixes the number of shops to be established in an area/locality in accordance with Rule 4, the licensing authority is required under Rule 5(1) to invite applications for grant of licenses for the shops so fixed by the Commissioner.
The manner prescribed by Rule 5(1) to call for applications, for grant of licenses to sell IMFL/FL by shops, is by notification in the District Gazette at least seven days in advance of the date of selection.
The factors which Rule 4 requires the Commissioner to have due regard to, while fixing the number of shops to be established in an area/locality, are the requirement of the number of shops to be established in the area/locality, (ii) public order, (iii) health, and (iv) safety of the public at large.
The factors enumerated in Rule 4 are illustrative and not exhaustive as the Commissioner is empowered by Rule 4 also to take into consideration such other factors as he thinks fit.
All the factors aforementioned are factors which are in public interest.
Even if the petitioners contention, that all the factors enumerated in Rule 4 are cumulative and not alternative, is said to have some merit, they are all factors which the Commissioner should have due regard to before he fixes the number of shops for which licenses should be granted in an area/locality.
While Rule 4 relates to fixation of the number of shops in an area/locality for sale of IMFL and FL by shop, Rule 18(2) empowers the Commissioner to permit outlets, for sale of IMFL and FL, to be opened anywhere in the State.
The permission which the Commissioner is empowered to accord under Rule 18(2) is either to the manufacturer or brewer of IMFL or to APBCL which controls the wholesale trade and distribution of IMFL and FL in the State of Andhra Pradesh.
Unlike exercise of power under Rule 18(2) the Commissioner does not, under Rule 4, grant permission for opening outlets for the sale of IMFL and FL.
He merely fixes the number of shops to be established in an area/locality.
After the number of shops in an area/locality are fixed by the Commissioner under Rule 4, the District Collector selects the licensees by a transparent process of selection (under the present policy by drawal of lots), and, thereafter, it is the Prohibition and Excise Superintendent who, under Rule 24, has been conferred the power to issue licences.
Neither APBCL nor the manufacturer/brewer is required to participate in the process of selection prescribed under Rules 4 and 5 for being accorded permission under Rule 18(2).
Rule 18(3) stipulates that, in the additional outlets opened in terms of Rule 18(2), IMFL and FL shall be sold at prices not exceeding MRP.
While sub-rule (3) requires the manufacturer/brewer, which has been permitted to open additional outlets, to pay the applicable license fee no such liability is fastened on APBCL.
The submission that Rule 18(2) is subject to Rule 4 is without merit as both these provisions are independent of each other, and operate in different fields.
The power conferred on the Commissioner, under Rule 4 of the Rules, is subject to such directions which the Government may issue from time to time.
The Government formulated the Excise policy, for disposal of retail liquor outlets, in G.O.
Ms.No.390 dated 18.06.2012.
Para 5 of the said G.O.
stipulates that the number of retail shops shall be retained at the present level i.e., 6596.
The Commissioner could not, therefore, have increased the number of retail shops beyond 6596 shops which is the number of shops fixed by the Government.
Para 6 of the Excise policy, in G.O.Ms.No.390 dated 18.06.2012, carves out an exception to the limit, prescribed in para 5, of 6596 shops.
The permission accorded to APBCL, by para 6 of the policy, to run retail vends/outlets is in "addition" to the total number of retail outlets of 6596 shops stipulated in para 5.
Reading para 6 of the Excise policy, as enabling permission to be accorded to APBCL to open retail outlets/vends only within the limit of 6596 shops, would render the word "additional" in para 6 redundant.
Exercise of the power, to formulate the Excise policy in G.O.Ms.
No.390 dated 18.06.2012, is referable to the executive power of the State under Article 162 of the Constitution of India.
Executive instructions, which are issued for guidance and to implement the scheme of the Act, do not have the force of law.
They can be issued, altered, replaced and substituted at any time.
The law merely prohibits the issuance of a direction which is not in consonance with the Act or the statutory rules applicable thereunder.
(Joint Action Committee of Air Line Pilots' Association of India (ALPAI) v.
Director General of Civil Aviation2; Union of India v.
Amrik Singh3) The executive instructions, in G.O.Ms.
No.390 dated 18.06.2012, must be read as supplementing the Rules notified in G.O.Ms.
No.391 dated 18.06.2012.
Executive instruction can supplement a statute or cover areas to which the statute does not extend, but it cannot run contrary to the statutory provisions or whittle down their effect.
The Government cannot amend or supersede statutory rules by administrative instructions.
But if the rules are silent on any particular point, the Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed.
(Joint Action Committee of Air Line Pilots' Association of India (ALPAI)2; State of M.P.
v.
G.S.
Dall & Flour Mills4; Sant Ram Sharma v.
State of Rajasthan5; State of Gujarat v.
Akhilesh C.
Bhargav6; K.H.Siraj v.
High Court of Kerala7.
Para 6 of the Excise policy enables APBCL being permitted to open additional retail vends wherever necessary, under the relevant provisions of the retail shop rules (i.e., the rules notified in G.O.Ms.No.391 dated 18.06.2012), only for MRP violations.
The relevant provision of the Rules, referred to in Para 6 of the Excise policy, is Rule 18(2).
On a conjoint reading of Rule 18(2) of the Rules, with para 6 of the executive instructions in G.O.Ms.No.390 dated 18.06.2012, it is evident that the Commissioner is empowered to permit APBCL to open additional outlets for sale of IMFL and FL, wherever necessary in case of MRP violations, anywhere in the State.
It is only if the licensees sell IMFL and FL in their shops at prices higher than those fixed by APBCL would it result in MRP violations.
Among the conditions, subject to which a licence is granted, is the requirement of the licencees selling IMFL and FL at prices not higher than the MRP.
One mode of controlling MRP violations is to permit additional retail outlets/vends to be opened by APBCL, thereby enabling consumers to purchase IMFL and FL from such outlets at MRP or below.
The contention that, as the number of shops fixed under Rule 4 is in relation to an area/locality, it is only in the same area/locality where MRP violations are detected can the Commissioner permit APBCL to run additional vends, and not in other areas/localities, does not merit acceptance.
Rule 18(2) empowers the Commissioner to permit APBCL to run outlets for sale of IMFL and FL anywhere in the State.
The only restriction placed on the exercise of power by the Commissioner, under Rule 18(2), is that he should deem it so necessary in public interest.
The Commissioner must be satisfied that public interest requires APBCL to be permitted to open outlets for sale of IMFL and FL.
Controlling MRP violations is in public interest.
When Para 6 of the Excise policy is read with Rule 18(2) of the Rules, it is evident that the permission which may be given to APBCL, to run additional vends in case of MRP violations, need not be restricted only to the area/locality referred to in Rule 4 of the Rules.
Rules 4 and 18(2) should be read together and a harmonious construction must be placed thereon.
Statutory rules must be read as a whole, and each rule must be harmoniously read with the other, to ensure that all the provisions are given effect to.
In the interpretation of statutes, the court always presumes that the legislature inserted every part thereof for a purpose and the legislative intent is that every part of the statute should have effect.
These presumptions will have to be made in the case of the rule-making authority also.
(J.K.
Cotton Spinning & Weaving Mills Co.
Ltd.
v.
State of U.P.8).
It is a cardinal principal of construction of a statute or statutory rule that effort should be made in construing the different provisions so that each provision will have its play, and in the event of any conflict a harmonious construction should be given.
A statute, or rules made thereunder, should be read as a whole and one provision should be construed with reference to the other so as to make the rules consistent.
Any construction which would bring any inconsistency or repugnancy between one provision and the other should be avoided.
One rule cannot be used to defeat another rule in the same rules unless it is impossible to effect harmonisation between them.
The well-known principle of harmonious construction is that effect should be given to all the provisions and, therefore, a construction that reduces one of the provisions to a 'dead letter' is not a harmonious construction as one part is being destroyed.
(Jagdish Singh v.
Lt.
Governor Delhi9).
The Court should, when it seeks the legislative intent, construe all of the constituent parts of the statute/statutory rules together, and seek to ascertain the legislative intention from the whole Act/Rules, considering every provision thereof in the light of the general purpose and object of the Act/Rules itself, and endeavouring to make every part effective, harmonious, and sensible.
This means, of course, that the Court should attempt to avoid absurd consequences in any part of the statute/rule and refuse to regard any word, phrase, clause or sentence superfluous, unless such a result is clearly unavoidable.
(D.
Sanjeevayya v Election Tribunal, Andhra Pradesh10; Crawford's Statutory Construction at page 260).
To harmonise is not to destroy.
We must, therefore, seek some other means of harmonising two provisions.
(Chief Inspector of Mines v.
Karam Chand Thapar11).
Accepting the submission, made on behalf of the petitioners, that the power conferred on the Commissioner, under Rule 18(2) of the Rules and para 6 of the Excise policy, to permit APBCL to open additional outlets is restricted only to the area/locality where MPR violations are detected, would render the words "anywhere in the State" in Rule 18(2) redundant and inapposite surplussage.
While the submission that, giving a broad meaning to Rule 18(2) would enable the Commissioner to permit APBCL to run an additional retail outlet in, for instance, Sirpurkaghaznagar town of Adilabad District for MRP violations in one shop in Tirupati town of Chittoor District, may well be the result, it is wholly unnecessary for this Court to delve on this aspect any further as the Learned Government Pleader for Prohibition and Excise would submit that the permission to be accorded to APBCL to open additional outlets would be limited only to the area of an Excise Station where MRP violations are detected.
The re-structured Prohibition and Excise Department was notified in G.O.Ms.No.996 dated 11.12.1998 whereby the then existing set up was restructured with viable field units i.e.
Enforcement Zones, State Task Force, Prohibition and Excise Stations etc.
The District set-up was to be headed by a Prohibition and Excise Superintendent.
Para 11 of the said G.O.
deals with new Excise Stations.
It is noted thereunder that there exist 225 station houses; the government decided to establish 85 new excise stations at the erstwhile stations where there were no stations; and the Commissioner of Prohibition and Excise should notify the jurisdiction of the new stations.
A statement giving details of the names, headquarters, and the area of jurisdiction of the prohibition and excise stations was notified.
The area of jurisdiction of Darsi Prohibition and Excise Station (which is the area of the Excise Station relating to W.P.
No.26957 of 2012) includes the Revenue Mandals of Darsi, Mundlamuru, Donakonda and Kurichedu.
The respondents would submit that, on 14.08.2012, M/s.
Sri Sai Wines, Chandavaram Village, Donakonda Mandal was inspected and was found to have indulged in MRP violations.
The area of jurisdiction of Nandyal Prohibition and Excise Station, (which is the area of the Excise Station relating to W.P.
No.28110 of 2012), includes the Revenue Mandals of Nandyal, B.Atmakur, Thimmapuram, Panyam and Gadivemula.
M/s.Suprabath Wines of Nandyal town is said to have indulged in MRP violations, and is said to have been booked for such offences, on 07.07.2012.
The area of jurisdiction of Mangalagiri Prohibition and Excise Station, (which is the area of the Excise Station relating to W.P.
No.28576 of 2012), includes the Revenue Mandals of Mangalagiri, Tadepalli, Tulluru, Amaravathi and Tadikonda.
The area of jurisdiction of Macherla Prohibition and Excise Station (which is the area of the Excise station relating to W.P.
No.29219 of 2012) includes the Revenue Mandals of Macherla, Gurazala, Rentachintala, Durgi and Veldurthi.
M/s.
Amrutham Wines, located within the jurisdictional area of Mangalagiri Prohibition and Excise Station, is said to have indulged in MRP violations, and a case is said to have been instituted against them on 06.07.2012.
Likewise Durgi shop, (Venkata Sai Wines), located within the jurisdictional area of Macherla Prohibition and Excise Station, is said to have indulged in MRP violations, and proceedings are said to have instituted against them on 07.07.2012.
An excise station is an administrative unit, and the Commissioner has thought it fit to permit APBCL to open additional retail outlets within the said administrative unit wherein MRP violations are detected.
Whether the permission to be given to APBCL, to open additional outlets, should be restricted only to the area/locality where MRP violations are found or within the limits of an Excise Station within whose jurisdictional area the MRP violations are detected, are policy choices of the Executive which this Court would not, ordinarily, examine in judicial review proceedings under Article 226 of the Constitution of India.
Policy is not static but is dynamic.
The court cannot strike down a GO or a policy merely because there is a variation or contradiction.
Life is sometimes contradiction, and even consistency is not always a virtue.
What is important is to know whether mala fides vitiates or irrational and extraneous factor fouls.
(T.N.Education Deptt.
Ministerial & General Subordinate Services Assn.
v.
State of T.N.12).
Courts, in exercise of their power of judicial review, do not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on grounds of mala fide, unreasonableness, arbitrariness or unfairness etc.
However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interests does not justify invalidating the policy.
In economic regulation cases, there are good reasons for judicial restraint, if not judicial deference, to the judgment of the executive.
The courts are not expected to express their opinion as to whether, at a particular point of time or in a particular situation, any such policy should have been adopted or not.
It is best left to the discretion of the State.
(Ugar Sugar Works Ltd.
v.
Delhi Admn.13).
The Court, in exercise of its power of judicial review, cannot sit in judgment over the policy of the administration except on limited grounds.
Each State is empowered to formulate its own liquor policy keeping in view the interest of its citizens.
No direction can be given or expected from the Court regarding the "correctness" of an executive policy unless, while implementing such policies, there is infringement or violation of any constitutional or statutory provision.
(Ugar Sugar Works Ltd.13) Article 14 of the Constitution would be attracted even in the matter of trade in liquor.
(Kerala Samsthana Chethu Thozhilali Union v.
State of Kerala14; V.K.
Ashokan v.
Assistant Excise Commissioner15).
The State, while parting with its exclusive privilege or a part thereof, may impose conditions but once such terms and conditions are laid down by reason of a statute, the same cannot be deviated from.
(Kerala Samsthana Chethu Thozhilali Union14).
It is only if this Court is satisfied that exercise of power by the Commissioner is so unreasonable as to violate Article 14 would interference be justified.
The concept of 'reasonableness' defies definition.
Reasonableness is an expression used to convey basically the Natural Law ideal of 'justice between man and man'.
The concept of 'reasonable man' is also an application of the principles of natural justice to the standard of behaviour expected of the citizen.
The functional and conceptual implication of the term 'reasonableness' is that it is essentially another word used for public policy.
The 'test of reasonableness is nothing substantially different from 'social engineering', 'balancing of interests', or any of the other formulae which modern sociological theories suggest as an answer to the problem of the judicial function'.( Om Prakash v.
State Of Uttar Pradesh16; Friedmann: 'Legal Theory, 4th Ed., at pages 83-85').
While examining an administrative decision, in judicial review proceedings, the Court does not act as a court of appeal and record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case.
The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority appointed to take the decision.
Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion.
If it passes those bounds, it acts ultra vires.
The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion.
It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which the legislature is presumed to have intended.
Decisions which are extravagant or capricious cannot be legitimate.
But if the decision is within the confines of reasonableness, it is no part of the court's function to look further into its merits.
'With the question whether a particular policy is wise or foolish the court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority." (Sterling Computers Ltd.
v.
M & N Publications Ltd.17; Administrative Law, Prof.
Wade).
As Rule 18(2) empowers the Commissioner to permit APBCL to open additional outlets for sale of IMFL and FL, if he considers it so necessary in public interest, anywhere in the State, the proposed action to permit APBCL to open additional retail vends within the limits of the Excise station where MPR violations are detected, cannot be said to be so unreasonable as to be in violation of Article 14 of the Constitution of India.
Even if this Court were to be satisfied that permitting APBCL to open shops within one area of an Excise Station, far distant from the area/locality where MRP violations are detected, is harsh, interference is still not called for as the executive is entitled for a "play in the joints".
Article 14 cannot be interpreted in a doctrinaire or dogmatic manner.
Absolute and inflexible concepts are anathema to progress and change.
The machinery of the government would not work if it were not allowed some free play in its joints.
Excessive interference by the judiciary in the functions of the executive is not proper.
It is not prudent or pragmatic for the Court to insist on absolutes when there are diverse situations and contingencies.
In view of the inherent complexities involved in modern society, some free play must be given to the executive authorities.
(Transport and Dock Workers Union v.
Mumbai Port Trust18; Missouri, Kansas and Texas Railway Co.
v.
May19; Aravali Golf Club v.
Chander Hass20) .
While fair play in action is an essential requirement, "free play in the joints" is also a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere.
(Fasih Chaudhary v.
D.G., Doordarshan21).
Public authorities must have liberty in framing policies.
If a decision has been taken in a bonafide manner, although not strictly following the norms laid down by Courts, such decisions are upheld on the principle that Courts, while judging the validity of executive decisions, must grant certain measure of freedom of "play in the joints" to the executive.
(Sterling Computers Ltd.17).
Judges should exercise judicial self-restraint while exercising powers of judicial review of administrative or legislative decisions.
In view of the complexities of modern society, and the restricted scope of any man's experience, tolerance and humility in passing judgment on the worth of the experience and beliefs of others become crucial faculties in the disposition of cases.
The successful exercise of such judicial power calls for intellectual disinterestedness and penetration, lest limitation in personal experience and imagination operate as limitations of the Constitution.
It is misfortune if a Judge reads his conscious or unconscious sympathy with one side or the other prematurely into the law, and forgets that what seem to him to be first principles are believed, by half his fellow men, to be wrong.
(Transport and Dock Workers Union18).
On the question, whether the Commissioner can permit additional retail vends to be opened by APBCL, even for MRP violations committed/detected prior to the notification of the statutory Rules in G.O.Ms.
No.391 dated 18.06.2012 or the executive instructions in G.O.Ms.No.390 dated 18.06.2012, it must be borne in mind that statutory rules are, ordinarily, prospective unless the parent Act confers power on the rule making authority, either explicitly or by necessary implication, to make rules retrospectively.
A subordinate legislation can be given retrospective effect and retroactive operation, if power in this behalf is contained in the main Act.
The rule-making power is a species of delegated legislation.
A delegate, therefore, can make rules only within the four corners thereof.
No statute or statutory rule shall be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.
(West v.
Gwynne22; Mahabir Vegetable Oils (P) Ltd.
v.
State of Haryana23).
No provision of the A.P.
Excise Act which confers on the Government the power to make Rules retrospectively has been brought to the notice of this Court.
The State Government has, in its wisdom, chosen to retain the number of shops at 6596 on the date on which the Excise policy was notified in G.O.Ms.No.390 dated 18.06.2012.
As noted hereinabove, while fixing the number of shops in an area, Rule 4 requires the Commissioner to have due regard to several factors all of which are in public interest.
Fixation of the number of shops at 6596, under Para 5 of the Excise policy notified in G.O.Ms.
No.390 dated 18.06.2012, would imply that the factors enumerated in Rule 4 were taken into consideration before the number of shops, for which licenses should be granted, was fixed.
As both the Government and the Commissioner have fixed the number of shops at the existing level of 6596, (even though MRP violations had been detected prior to the Rules being made and the Excise policy notified), Rule 18(2) of the Rules and Para 6 of the Excise policy cannot be so read as to empower the Commissioner to permit APBCL to open additional outlets for MRP violations detected prior to the Rules being made, and the Excise policy notified, on 18.06.2012.
It is only for MPR violations detected after 18.06.2012 can the Commissioner exercise power, under Rule 18(2) of the Rules read with para 6 of the Excise policy, to permit APBCL to run additional retail vends within the jurisdictional limits of the Excise Station where MRP violations are detected.
The submissions that the petitioners have paid licence fees on the premise that the total number of shops would be 6596, and not more; and they would suffer huge losses, if additional shops were to be now permitted; need only to be noted to be rejected.
The State can adopt any mode of selling licences, for trade or business in liquor, with a view to maximise its revenue as long as the method adopted is not discriminatory.
(Khoday Distilleries Ltd.
v.
State of Karnataka24).
No one has a right to carry on any business in liquor as it is considered "res extra commercium".
Trade in liquor is not a fundamental right.
It is a privilege of the State.
The State parts with this privilege for revenue considerations.
(State of Punjab v.
Devans Modern Breweries Ltd25; Kerala Samsthana Chethu Thozhilali Union14) Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful.
A citizen has, therefore, no fundamental right to carry on trade or business in liquor.
The State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium.
When the State permits trade or business to be carried on in potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any.
(Khoday Distilleries Ltd.24) Article 47 of the Constitution enjoins upon the State to prohibit consumption of intoxicating drinks like liquor.
The right to trade or carry on business in potable liquor is subject also to the provisions of the said article.
There is nothing in clauses (2) to (6) of Article 19 which makes it imperative to impose the restrictions only by a law enacted by the legislature.
Restrictions can also be imposed by any subordinate legislation as long as such legislation is not violative of any provisions of the Constitution.
The trade or business in potable liquor is a trade or business in res extra commercium and hence can be regulated and restricted even by an executive order provided it is issued by the Governor of the State.
(Khoday Distilleries Ltd.24) As noted hereinabove the Excise Policy, while retaining the number of retail shops at the existing level of 6596, makes it clear that, in case of MRP violations, APBCL may run "additional" retail vends.
The retail vends which APBCL can run is in addition to the existing 6596 retail shops.
It is evident that, even while participating in the selection process for grant of licences by drawal of lots, the petitioners were aware of the Excise policy under which APBCL could be permitted to run additional retail vends in case of MRP violations, which would then take the number of retail shops beyond the present level of 6596.
The Excise policy of the State is formulated and made known to licensees before they participate in the selection process for being granted licenses.
The licensees, having paid the fee without any protest, are not entitled to challenge certain provisions/clauses merely because they do not suit them.
The licensees cannot approbate and reprobate.
They had the option to opt out of the business field if such conditions were detrimental to their interest or were to their disadvantage.
(Devans Modern Breweries Ltd.25).
Having participated in the selection process, based on the extant rules and the Excise policy, it is not open to them to now turn around and contend that exercise of power, strictly in terms thereof, is illegal.
The respondents deny the petitioners' contention that they would suffer huge losses if APBCL were permitted to open additional retail outlets and submit that, while the licence fee for retail shops for the excise year 2011-12 was Rs.501 lakhs, the licence fee received in the excise year 2012-13 fell down to Rs.204 lakhs.
The submission, in effect, is that it is not the petitioners but the government which is bearing huge losses in excise revenue and, as a consequence, the licensees would earn far higher profits than the licensees of the previous excise year.
The right to carry on business, more so in the sale of liquor which is Res extra commercium, does not carry with it any obligation on the State to guarantee the licensees a particular rate of return on their investment.
Any person carrying on business may earn huge profits, or may suffer extensive losses.
Neither does the State promise a businessman to make good the losses suffered by him nor would the businessman share his profits with the State if it is in excess of what he had earlier envisaged.
Maybe the licensees were not wise in offering their bids.
Many an unexpected development may occur which may either cause loss to the contractor or result in large profit.
Such contracts do not imply a warranty - or a guarantee - of profit to the contractor.
It is a business for him - profit and loss being normal incidents of a business.
(Asstt.
Excise Commr.
v.
Issac Peter26).
Prescription of the privilege fee under Rule 16(9) at 8%, for purchases made by the licensees from APBCL in excess of six times the annual licence fee, cannot be construed as an assurance by the State that the licensees would be compensated for any loss which they may sustain in the course of their business.
Fixation of the licence fee, under Rule 16(1), is for grant of a licence pursuant to a transparent procedure for selection of licensees under Rules 4 to 15.
Rule 16(1) of the Rules requires the annual licence fee for a shop to be levied on the basis of the population, and at the rates notified by the government from time to time.
Merely because the licence fee has been fixed, among others, on the basis of population also, does not disable the Commissioner from according permission, under para 6 of the Excise policy and Rule 18(2) of the Rules, to APBCL to open additional outlets for sale of IMFL and FL wherever he deems it necessary.
The only limitation on the Commissioner's power, under Rule 18(2) of the Rules read with para 6 of the Excise policy, is that it should be exercised in public interest.
Controlling MRP violations is in the larger public interest of ensuring that the licensees do not sell IMFL and FL at rates higher than the MRP.
The Commissioner records, in his proceedings dated 04.08.2012, that the matter was examined in detail by the Director of Enforcement who discussed the matter with the Deputy Commissioners of Prohibition and Excise in the districts, with reference to the situation prevailing in each district; and, in order to achieve the above purpose, it was decided to permit APBCL to open outlets in the areas/localities (mentioned in the said letter) which were considered essential under Rule 18(2) of the Rules.
Whether or not there are MRP violations, within the jurisdictional area of an Excise Station, is a matter of fact which the Commissioner could only have ascertained either from the Deputy Commissioners of Prohibition and Excise or the Director of Enforcement.
Merely because the Commissioner has accepted their statements regarding MRP violations does not mean that he has failed to exercise his mind independently to the aspect of public interest, and is merely implementing the decision of the Director of Enforcement.
Exercise of power by the Commissioner, to permit APBCL to run additional outlets, is not referable to Rule 4 but to Rule 18(2) of the Rules read with para 6 of the Excise policy.
In Ramesh Reddy1, the validity of the action of the respondents in proposing to shift/relocate the shops, originally notified in different areas, by way of a fresh notification was under challenge.
The petitioners therein contended that, since the location of the shops was fixed by the Commissioner of Prohibition and Excise, before publication of the auction notice, under Rule 5 of the Rules, the respondents had no power to shift/relocate the said shops to a different area for the purposes of fresh auction proposed under the notification; and the number and location of the shops so fixed by the Commissioner of Prohibition and Excise could not be altered on any ground in the absence of any provision under the Andhra Pradesh Excise Act or the Rules made thereunder empowering the respondents to do so.
While examining the contentions urged against relocation/shifting of the shops, this Court considered the scope of Rule 21 of the earlier Rules which read as under: Sale by outlets of A.P.B.C.L.
and the Distiller/Brewery Licence holders: (1) the auctioning authority with the approval of the Commissioner of Prohibition and Excise may permit the A.P.B.C.L or a holder of a Distiller/Brewery Licence under the Act to open outlets for the sale of IL & FL in such areas/localities where the privilege of sale by shop could not be disposed of in the auction or when a lease already granted is cancelled and the same could not be re-auctioned for any reason.
(2) The Commissioner of Prohibition and Excise may permit the A.P.B.C.L to open outlets for the sale of IL & FL anywhere in the State whenever he deems necessary in public interest.
This Court, thereafter, observed that, in case the privilege of a sale by shop was not disposed off in the auction for any reason, the auctioning authority, with the approval of the Commissioner of Prohibition and Excise, had to permit APBCL, or the Distillery/Brewery licence holder under the Act, to open outlets for sale of IL & FL in such areas; in certain circumstances re-auction of the right of sale, in the areas/localities identified by the Commissioner of Prohibition and Excise, was also permissible; there was, however, no provision empowering either the auctioning authority or the Commissioner of Prohibition and Excise to relocate the shop identified under Rule 4 to another locality/area for the purpose of conducting fresh auction on any ground whatsoever; and Rule 29(3) of the Rules, which provided for shifting of the licensed premises after granting the lease to the successful bidder, was not applicable for relocation of the shop, originally identified in a particular area, for the purpose of re- auction.
While Rule 21(1) of the earlier rules is similar to Rule 18(1) of the present rules, Rule 21(2) is similar to Rule 18(2) of the Rules now in force.
In Ramesh Reddy1 this Court examined the scope of a rule similar to Rule 18(1) of the present rules, and not Rule 18(2).
Reliance placed on the said judgment is, therefore, misplaced.
It is wholly unnecessary for this Court to examine the facts in each of these writ petitions as it would suffice if the Commissioner is directed to reconsider the issue of permitting APBCL to open additional outlets for MRP violations, in the light of the observations made hereinabove, and thereafter take an appropriate decision in this regard.
Though no statutory obligation is cast on the Commissioner to do so, it would be just and fair that he causes intimation to all the licensees, operating within the jurisdictional area of a particular Excise Station, details of the shop where MRP violations have been detected and the place at which APBCL is being permitted to open additional retail outlets.
The Writ Petitions are, accordingly, disposed of.
The miscellaneous petitions pending, if any, shall also stand disposed of.
There shall be no order as to costs.
_______________________________ (RAMESH RANGANATHAN, J) Date:02.01.2013