HIGH COURT OF ORISSA: CUTTACK In the matter of applications under Articles 226 and 227 of the Constitution of India. -------Ajit Kumar Routray Pravash Ku. Sahoo BiNo.Ku. Sahoo Braja Kishore Sahoo Nrusingha Ch. Routray Pravash Kumar Sahoo Ajit Kumar Routray Avijit Panda W.P.(C) No.8084 of 2013 W.P.(C) No.8082 of 2013 W.P.(C) No.9531 of 2013 W.P.(C) No.9533 of 2013 W.P.(C) No.9549 of 2013 W.P.(C) No.7110 of 2013 W.P.(C) No.7111 of 2013 M/s Ramakanta Mohanty, D.Mohanty, S.Mohanty, D.Varadwaj, A.Mohanty, S.Mohanty, P. Jena & A.K.Das W.P.(C) No.9378 of 2013 M/s Gopal. Kr. Mohanty, P.K.Panda, D.Mishra & N.K.Khan Pradeepta Kumar Nath Yogesh Sahu & Ors. MaNo.Ku. Sahoo Bimala Dalabehera Aruna K. Sahoo and Another W.P.(C) No.8912 of 2013 W.P.(C) No.9558 of 2013 W.P.(C) No.10085 of 2013 W.P.(C) No.10731 of 2013 W.P.(C) No.8911 of 2013 M/s Narasingh Patra, A.K.Patra & B.Shadangi Gitanjali Sahoo Bipin Bihari Nayak W.P.(C)No.6351 of 2013 W.P.(C)No.10690 of 2013 M/s Kali Pr. Mishra, S.Mohapatra, T.P.Tripathy, L.P.Dwivedy, J.K.Khandayatray & S.Dash Sarat K. Ratha W.P.(C)No.7061 of 2013 W.P.(C)No.7160 of 2013 Monalisa Rath W.P.(C)No.7159 of 2013 W.P.(C)No.7161 of 2013 Sarojini Satpathy Chittaranjan Singhsamanta Bimal Kru. Sundaray W.P.(C)No.7162 of 2013 W.P.(C)No.7380 of 2013 W.P.(C)No.7381 of 2013 M/s Pitambar Acharya, S.Rath, B.Bhadra, B.K.Jena, P.Pattnaik & 2 J.P. Parida Kirtan Mahalik W.P.(C)No.7275 of 2013 M/s Dr.S.C.Hota, S.K.Behera, K.Ghadai, J.K.Mahapatra & Miss.A.R.Nayak Bhaskar Ch. Rout & others Manorama Devi & Ors. Pabitra M. Pradhan Om Prakash Singh and others Arabinda Sahoo and others Iswar Chandra Das and others W.P.(C) No.7347 of 2013 W.P.(C) No.8509 of 2013 W.P.(C) No.7029 of 2013 W.P.(C) No.7028 of 2013 W.P.(C) No.7031 of 2013 W.P.(C) No.7033 of 2013 M/s Prafulla K. Rath, R.N.Parija, A.K.Rout, S.K.Pattnaik, A.Behera, S.K.Singh, P.K.Sahoo & D.Mohapatra Santanu Ku. Dash W.P.(C)No.8102 of 2013 M/s Achyutananda Routray, U.R.Bastia, Mrs.M.Routray & N.B.Dora Priyabrata Mohanty and others W.P.(C) No.7030 of 2013 W.P.(C) No.8433 of 2013 M/s M.S.Panda & M.Panda Sachin Ku. Bhol & Ors. W.P.(C) No.8848 of 2013 M/s Sambit Rath & B.K.Nayak-3 Gitanjali Sahoo Deepak Sahoo Jyotiranjan Pradhan Harihar Mallick W.P.(C) W.P.(C) W.P.(C) W.P.(C) Pradyumna Khuntia W.P.(C) No.10047 of 2013 W.P.(C) No.10048 of 2013 Saudamini Nayak W.P.(C) No.10225 of 2013 W.P.(C) No.10226 of 2013 M/s Nityananda Panda & S.Das W.P.(C) No.9426 of 2013 W.P.(C) No.9427 of 2013 W.P.(C) No.9428 of 2013 W.P.(C) No.9429 of 2013 W.P.(C) No.9430 of 2013 W.P.(C) No.9431 of 2013 W.P.(C) No.9608 of 2013 Pafulla Ku. Choudhury Sukanta Nandi Dhira Behera Kuntali Mania Laxmikanta Satpathy Dhirendra Panigrahi Sangram Keshari Jena No.8963 No.9689 No.9952 No.9953 of of of o”
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3. Satyajit Mohanty W.P.(C) No.9606 of 2013 W.P.(C) No.9613 of 2013 W.P.(C) No.9615 of 2013 M/s Samarendra Mohanty Sudhansu S. Sahoo W.P.(C) No.9855 of 2013 M/s Jaydeep Pal, B.K.Mishra, A.K.Behera & R. Mohapatra Mayadhar Prusty & Ors. Ranjit Ku. Rout Tadit Ku. Rout W.P.(C) No.10231 of 2013 W.P.(C) No.10232 of 2013 W.P.(C) No.10233 of 2013 M/s P.K.Dhal, S.Das, P.Ranjan & S.K.Das Sujit Kumar Routray W.P.(C) No.7145 of 2013 M/s. Umesh Ch. Pattnaik, S.D. Mishra, S. Patnaik & K.K. Rout Pramod Kumar Jena Chandra M. Sahu Kabita Patnaik Santosh K. Patro Md. Shamim L. Sanjukta Sahu P. Srinibas Patro Kabiraj Sahu MaNo.K. Nayak Almas Khan Dipak Mohanty Md. Raja Hussain W.P.(C) No.7901 of 2013 W.P.(C) No.7902 of 2013 W.P.(C) No.7903 of 2013 W.P.(C) No.7904 of 2013 W.P.(C) No.7905 of 2013 W.P.(C) No.7906 of 2013 W.P.(C) No.8093 of 2013 W.P.(C) No.8090 of 2013 W.P.(C) No.8091 of 2013 W.P.(C) No.8092 of 2013 W.P.(C) No.8094 of 2013 W.P.(C) No.8095 of 2013 M/s. Amar K. Mohanty, K.A. Guru & S.K. Mohapatra Sandeep Ku. Sahoo Lalan Prasad Gupta Lalan Prasad Gupta Atul Sahu Gunanidhi Sahu MaNo.Ku. Meher Manish Sahu Nitan Ku. Jaiswal Purna Ch. Singh W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) Laalan Prasad Gupta No.9471 No.9472 No.9473 No.9474 No.9475 No.9476 No.9477 No.9478 No.9479 of of of of of of of of o”
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2013. 2013 W.P.(C) No.9480 of 2013 M/s. N. Paikray, B.P. Mohanty, A.N. Ray, J.J.Pradhan, R.P. Kar & K.K. Sahoo 4 Vivek Prasad Jaiswal W.P.(C) No.9481 of 2013 M/s. B.P. Mohanty, A.N. Ray, K.K. Sahoo & J.J.Pradhan Atul Sahu Atul Sahu Manish Sahu Manish Sahu Yogesh Sahu Yogesh Sahu Gopal Prasad Jaiswal Atul Sahu Bidya Devi Yadav Amit Singh Yadav W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) W.P.(C) No.9482 No.9483 No.9484 No.9485 No.9486 No.9487 No.9488 No.9489 No.9731 No.9736 of of of of of of of of of o”
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2013. 2013 2013 M/s. B.P. Mohanty, A.N. Ray, J.J.Pradhan, N. Paikray & R.P. Kar … Petitioners -VersusState of Orissa & others … For opposite parties : Opp. Parties (In all the cases) Advocate General ---------P R E S E N T: THE HONOURABLE SHRI JUSTICE I. MAHANTY AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgment:
24. 07.2013 B.N. Mahapatra, J.These Writ Petitions have been filed with a common prayer to quash Notification No.1964/Ex dated 23.03.2013 (hereinafter referred to as “Excise Policy”.) and subsequent order No.2158/Ex. dated 05.04.2013 (for short, “Order”.) issued by the Government of Odisha in Excise Department prescribing the procedure to be followed in conducting “e-auction”. to settle the IMFL OFF Shops and Country Liquor 5 Shops for the excise year 2013-14 on the ground that such Excise Policy and order are without jurisdiction, contrary to the provisions of Bihar and Orissa Excise Act, 1915 (in short ‘the Act”.) and the Orissa Excise Rules, 1965 (in short “the Rules”.), arbitrary, irrational, discriminatory, mala fide and unworkable.
2. Since the grounds of challenge in all the writ petitions are almost similar, for the purpose of convenience, all those grounds of challenge are dealt in this judgment.
3. The petitioners challenge the impugned Excise Policy and order on several grounds, i.e., that settlement of IMFL OFF shops and CS shops through ‘e-auction’ for the excise year, 2013-14 is a clear case of discrimination; ‘e-auction’ process is beyond the scope of Section 29(2) of the Act since Section 29(2) does No.empower the State authorities for settlement of privilege and grant of licence through e-auction, determination of consideration money through ‘e-auction’ without amending Section 29 to that effect is illegal; in the event of implementation of ‘e-auction’ process there will be monopoly of big traders in selling their own products as a result of which numerous small traders will be deprived of their livelihood in remote areas, ‘eauction’ process canNo.be implemented properly due to illiteracy, lack of skill, interrupted power supply and inter-net connection; the stringent condition imposed in the impugned order will deprive the new comers and will encourage big business houses which is contrary to the instruction 100 of the Boards Instructions; in case of entertaining outside State solvency certificate, it will be impossible for the State to 6 collect arrear excise revenue from the defaulting licensees; by implementing e-auction process there is no chance of generation of more revenue; in exercise of power under Section 89(2) (1) of the Act Government has No.made any Rule regulating procedure to be followed and prescribing the manner to be ascertained before issuing any licence for the whole year for retail vend or any intoxicant is granted for any locality; grant or renewal of licence for exclusive privilege without complying paragraph 40 of the policy which provides that the provisions of Section 22 and 26-A of the Act will be complied with in relation to public notice and approval of the Grama Panchayat respectively is illegal. Thus, it is contended by the petitioners that the Excise Policy and the Order suffers from gross infirmity, arbitrariness, unreasonableness, discrimination and the same has the tendency of overriding various provisions of the Act and Rules made thereunder.
4. Per contra, opposite party-State has filed counter affidavit in W.P.(C) No.8084 of 2013 taking various stands opposing the contentions taken by the petitioners. Mr.Ashok Mohanty, learned Advocate General submitted that the State adopts the counter filed in W.P.(C) No.8084 of 2013 in all the writ petitions. The preliminary objection raised by learned Advocate General is that the writ petitions are No.maintainable either in law or in fact. Some writ petitioners are existing licensees, who are granted licences during the excise year to year beginning from 1 st of April and ending on 31st of March and as such renewal or otherwise of the existing licence is the prerogative of the Government. There is no vested right with the petitioners, either statutory or fundamental, to continue 7 with the existing licence and to challenge the procedure or modalities prescribed by the authority under the Act. The petitioners therefore, have no locus standi to maintain the writ petitions and hence, the same are liable to be dismissed.
5. The Excise Policy was formulated for the year 2013-14 and the same has been duly approved by the Cabinet in the matter of dealing in intoxicants. Exercising the power conferred under Section 29(2) of the Act the State Government in its wisdom after analysing various factors has decided to hold ‘e’ auction to settle the exclusive privilege as it is likely to fetch more competitive bids in comparison to straight renewal. The order made under empowerment of statute does No.require legislative sanction. Section 29(2) of the Act specifically provides for settlement of exclusive privilege under Section 22(1) of the Act. ‘Eauction’ is nothing but a mode of auction and therefore to say that ‘eauction’ itself is beyond the purview of the statute is a misnomer.
6. The modalities prescribed under the order dated 05.04.2013 is neither arbitrary No.unreasonable; rather all care has been taken to make it transparent and to allow all intending bidders a reasonable opportunity to participate in the ‘e-auction’.
7. The Government intended to give enough time to the intending bidders to get themselves equipped for participating in ‘e-auction’ process and familiarize themselves with the modalities for which the Government decided to grant extension of two months, i.e., from 1st April to end of May, 2013 with a hike of 20% over the monthly consideration money of the previous year which is legal and reasonable”
8. The out-still liquor shop has never been similarly placed with the CS shops or IMFL OFF shops and is treated in a different footing. Out still system is prevalent mostly in the tribal districts and has been treated on a different footing as the vending of the out still liquor also includes the manufacture of out still liquor whereas in respect of C.S. shops or IMFL OFF shops as the case may be, the liquor is supplied by the State Beverage Corporation.
9. Referring to the judgment of the Hon’ble Supreme Court in the case of State of Bihar and others v. Nirmal Kumar Gupta, (2013) 2 SCC 565.learned Advocate General submitted that in view of the injurious effect of excessive consumption of liquor on health this trade or business must be treated as a class by itself and it canNo.be treated on the same basis as the other trades while considering Article 14. Placing reliance on the judgment of the Hon’ble Supreme Court in the case of Bajaj Hindustan Limited. V. Sir Shadilal Enterprises Limited, (2011) 1 SCC 640.learned A.G. submitted that even if some persons are at a disadvantage and suffered losses on account of formulation and implementation of the Government Policy that is No.by itself a sufficient ground for interference by the Court.
10. Referring to the judgment of the Hon’ble Supreme Court in the case of Balco Employees’ Union V. Union of India and others, (2002) 2 SCC 333.it is emphatically argued that the wisdom and advisability of economic policies of Government are No.amenable to judicial review. It is No.for the Courts to consider the relative merits of different economic 9 policies. Court is No.the forum for resolving the conflicting clauses regarding the wisdom or advisability of policy.
11. Placing reliance on the judgment of the Hon’ble Supreme Court in the case of State of Orissa and others v. Harinarayan Jaiswal and others, in (1972) 2 SCC 36.it is submitted that power given to the Government by the Act to sell the exclusive privilege in such other manner as it thinks fit is a very wide power. That power is unrestricted. It undoubtedly includes the power to sell the privileges in question by private negotiation. The Hon’ble Supreme Court in the case of Kuldeep Singh v. Government of NCT of Delhi, (2006) 5 SCC 702.held that the matter relating to grant of licence for dealing in liquor is within the exclusive domain of the State.
12. Mr. Mohanty, learned Advocate General further submitted that ‘e-auction’ is covered by the word “auction”.. Alternatively, it is argued that e-auction is covered under the expression “other wise”. appearing in Section 29(2). All ingredients of auction being present in ‘e-auction’, the same is “auction”.. Sales of Goods Act has no application to ‘e-auction’. Sales of Goods Act is applicable to tangible goods.
13. On the rival contentions of the parties, the following questions fall for consideration of this Court: (i) Whether the writ petitions challenging the Excise Policy dated 23.03.2013 and notification dated 05.04.2013 are maintainable?. (ii) Whether the Excise Policy dated 23.03.2013 and order dated 05.04.2013 are arbitrary, irrational, discriminatory, mala fide and No.workable?. 10 (iii) What order?.
14. Question No.(i) is with regard to maintainability of the writ petitions. Mr. Ashok Mohanty, learned Advocate General appearing for the State Government raised the preliminary objection with regard to maintainability of the writ petitions on the ground that the policy decisions of the Government are No.amenable to judicial review. It is No.for the Courts to consider the relative merits of different economic policies. In support of his contention, learned Advocate General relied upon the decisions of the Hon’ble Supreme Court in the cases of Balco Employee’s Union (supra), Bajaj Hindustan Ltd.’s case (supra). Learned Advocate General also placing reliance on a case of this Court in Dr.Sashi Bhusan Acharya & Ors. Vs. State of Orissa and others, 105 (2008) CLT 16.submitted that policy being No.violative of either constitutional right or statutory right, the Court has no power to interfere with it.
15. It is true that in the matter of policy decision of the Government, the scope of judicial review is extremely limited. Unless the decision is arbitrary, contrary to any statutory provision or the Constitution, the Court canNo.interfere with the same.
16. Article 226 of the Constitution of India, 1950 (in short ‘the Constitution’) confers an express power on the High Court “to issue to any person or authority, including in appropriate cases, any Government, directions/orders/writs, including writs in the nature of 11 habeas corpus, mandamus, prohibition, quo-warranto and certiorari or any of them, for the enforcement of any of the rights conferred by Part-III and for any other purpose”.. Construing this Article, the Hon’ble Supreme Court in the case of T.C. Basappa v. T. Nagappa and another, AIR 195.SC 44.held as under : “(6) The language used in Articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well. In view of the express provisions in our Constitution we need No.No.look back to the early history of the procedural technicalities of these writs in English law, No.feel oppressed by any difference or change of opinion expressed in particular cases by English Judges. We can make an order or issue a writ in the nature of ‘certiorari’ in all appropriate cases and in appropriate manner, so long as we keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law.”
17. In Dwarkanath v. I.T. Officer, AIR 196.SC 81.the Hon’ble Supreme Court held that the power of the High Court under Article 226 canNo.be equated to the English Courts to issue prerogative writs and the High Court has wider power and can mould relief to meet the peculiar and complicated requirements of this country.
18. Needless to say that where the obligation sought to be enforced is associated with public duty or public interest and there is no adequate alternate remedy for its enforcement and justice of the case requires 12 such enforcement, the same must be enforced under Article 226 by issue of writ in the nature of mandamus.
19. In the present case, challenges have been made to various clauses of the Excise Policy dated 23.03.2013 and order dated 05.04.2013 on the ground that those are arbitrary, unreasonable and contrary to the statutory provision as well as the Constitution and unworkable. The petitioners prima facie have made out a case in their favour, the details of which we shall deal with while answering to question no.(ii) hereinafter.
20. In the above backdrop, we are of the considered view that the present writ petitions are maintainable.
21. Question No.(ii) is as to whether the Excise Policy dated 23.03.2013 and notification dated 05.04.2013 are arbitrary, irrational, discriminatory, mala fide and No.workable.
22. Prior to issuance of the present policy and notification, a decision was taken by the State Government vide order No.1401/Ex dated 28.02.2013 for settlement of all existing new IMFL Off Shops and CS Shops through ‘e-auction’. The said order was challenged in W.P.(C) No.5606 of 2013 and the State Government was directed to show cause. However, during pendency of the writ petition, the said order dated 28.02.2013 for holding ‘e-auction’ was withdrawn vide Government Order No.1856 dated 18.03.2013 and consequently, the same was rendered infructuous. Thereafter, the Government declared the present Excise Policy with regard to excise duty, fee structure and guideline for the year 2013-14 vide letter dated 23.03.2013 for settlement of IMFL 1 OFF Shops and CS shops through e-auction and consequently, notification dated 05.04.2013 was issued, which are under challenge in the present writ petitions on the ground that the policy and notification in question are arbitrary, irrational, discriminatory, mala fide and No.workable.
23. Law is well-settled that trade in liquor is considered inherent, noxious and pernicious. There is no fundamental right to trade in intoxicating liquor. [See State of Punjab and another vs. Devans Modern Breweries Ltd. and another, (2004) 11 SCC 26.Khoday Distilleries Ltd. and others Vs. State of Karnataka and others, 1995 (1) SCC 574.State of Orissa and others, Vs. Harinarayan Jaiswal and others, (1972) 2 SCC 3.(Orissa)]..
24. In Secretary to Govt., T.N. and another vs. K. Vinayagamurthy, (2002) 7 SCC 104.the Hon’ble Supreme Court has held as under: “7...... So far as the trade in noxious or dangerous goods is concerned, no citizen can claim to have trade in the same and intoxicating liquor being a noxious material, no citizen can claim any inherent right to sell intoxicating liquor by retail. It canNo.be claimed as a privilege of a citizen of a State. That being the position, any restriction which the State brings forth, must be a reasonable restriction within the meaning of Article 19(6) and reasonableness of the restriction would differ from trade to trade and no hard-and-fast rule concerning all trades can be laid down.....”
25. The Hon’ble Supreme Court in the case of State of Bihar and others vs. Nirmal Kumar Gupta, (2013) 2 SCC 565.held as under: “In Amar Chandra Chakraborty v. Collector of Excise2 this Court held thus: (SCC p. 448, para
10”
10. Trade or business in country liquor has from its inherent nature been treated by the State and the society as a special category requiring legislative control which has been in force in the whole of India since several decades. In view of the injurious effect of excessive consumption of liquor on health this trade or business must be treated as a class by itself and it canNo.be treated on the same basis as other trades while considering Article 14.”
20. In Nashirwar v. State of M.P.3 this Court opined that the State has the exclusive right or privilege in manufacturing and selling of liquor and a citizen has no fundamental right to do business in liquor. It has been further ruled that it is within the police power of the State to enforce public morality by prohibiting trade in noxious or dangerous goods.
21. In Har Shankar v. Excise and Taxation Commr.4 the Constitution Bench reiterated the principles that there is no fundamental right to do trade or business in intoxicants and the State has the authority to prohibit every form of activity in relation to intoxicants including manufacture, storage, export, import, sale and possession. It has also been laid down that a wider right to prohibit absolutely would include the narrower right to permit dealings in intoxicants in such terms of general application as the State deems expedient.”
26. The Hon’ble Supreme Court in the case of State of M.P. and others vs. Nandlal Jaiswal and others, (1986) 4 SCC 566.held as under:
“34. But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We 15 had occasion to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in R.K. Garg v. Union of India6. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do No.admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. xx xx xx The problem of Government”. as pointed out by the Supreme Court of the United States in Metropolis Theatre Co. v. State of Chicago8”. “are practical ones and may justify, if they do No.require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should No.be hastily expressed. What is best is No.discernible, the wisdom of any choice may be disputed or condemned. Mere errors of Government are No.subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void.”
. The Government, as was said in Permian Basin Area Rate cases9 is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court canNo.strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must No.proceed to deal with the contention of the petitioners based on Article 14 of the Constitution.”
. (underlined for emphasis) 27. The Hon’ble Supreme Court in the case of Nandlal Jaiswal (supra) further held that when the State decides to grant its exclusive right or privilege of manufacturing and selling of liquor it canNo.escape the rigour of Article-14. In paragraph 32 of the said Judgment the Hon’ble Supreme Court held as under:
16. /p>
“32. But, before we do so, we may at this stage conveniently refer to a contention of a preliminary nature advanced on behalf of the State Government and Respondents 5 to 11 against the applicability of Article 14 in a case dealing with the grant of liquor licences. The contention was that trade or business in liquor is so inherently pernicious that no one can claim any fundamental right in respect of it and Article 14 canNo.therefore be invoked by the petitioners. Now, it is true, and it is well settled by several decisions of this Court including the decision in Har Shanker v. Deputy Excise & Taxation Commissioner that there is no fundamental right in a citizen to carry on trade or business in liquor. The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants — its manufacture, storage, export, import, sale and possession. No one can claim as against the State the right to carry on trade or business in liquor and the State canNo.be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others the State canNo.escape the rigour of Article 14. It canNo.act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It is, therefore, No.possible to uphold the contention of the State Government and Respondents 5 to 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. The State canNo.ride roughshod over the requirement of that article.”
. (Underlined for emphasis) 28. Let us see whether either any of the provision of the Excise Policy dated 23.03.2013 and/or order dated 05.04.2013 is arbitrary, irrational, discriminatory, mala fide and No.workable.
29. The Excise Policy decision dated 23.3.2013 has been challenged basically on two grounds. First ground of attack is that the policy of ‘e-auction’ is discriminatory and violative of Article 14 of the Constitution. In 17 paragraph 19 of the impugned policy, it is provided that all the existing licences of Bhang, Tari, Pochwai and Out Still shops shall be renewed for the year 2013-14 with hike of 12% increase over and above the existing consideration money after observing the formalities. Similarly, paragraph 21 provides that the licensees of all the existing Out Still Shops operating in 21 districts shall be renewed from 2013-14 with hike of 20% over and above the existing consideration money. In respect of unsettled shops, Collector may take steps for settlement by draw of lottery. However, paragraph 20 provides that all the existing C.S. shops will be settled by e-auction for the year 2013-14 and extension for two months i.e. April and May, 2013 was granted with hike of 20% over and above the consideration money. It was argued by the petitioners that “Out Still”. (O.S.) and “Country Spirit”. (C.S.) both are licences granted for sale of country liquor, within the definition provided under Section 2 of Act 1915. Only difference is Country Spirit licensee gets country spirit liquor from distillery and sells the same. Out Still licensee produces country spirit through a still and sells it through a maximum permissible ten numbers of branch shops. Merely because O.S. licensee produces C.S. that by itself does No.make it a class of its own, as the object sought to be achieved is one and the same i.e. sale of country liquor. Therefore, it is argued that the Excise Policy of the Government to, on one hand renew the licences of all existing Bhang, Tari, Pochwai and Out still shops for the year 2013-14 and on the other hand debarring renewal of all other existing country spirit shops for the entire year 2013-14 is illegal, 18 contrary to the principle of equality, procedural discrimination, unreasonable classification, test of principle of equal protection of law that is the right to equal treatment to similar circumstances since Out Still and C.S. are both country liquor as defined under Section 2 of the 1915 Act. It is further argued that the petitioners in some of the cases are licensees of Country Spirit shops and are continuing their Country Spirit shops on renewal basis on payment of licence fees as per the Excise Policy for the last 13 years by investing huge amount of money towards land and building, show case, engagement of man power etc. Hence they have the legitimate expectation that their licences will be renewed for the year 2013-14 so that they will maintain their livelihood from the earning or profit. It is further argued that the order or policy decision has to satisfy the test of reasonableness and must also appear to be a reasoned decision and advanced public interest. But the present policy decision is arbitrary and irrational.
30. Secondly, the excise policy for the year 2013-14 by the State Government is inconsistent and against the statutory provisions of law contained in the Act as well as Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989 (in short ‘Privilege Rules’). The impugned Excise Policy providing ‘e-auction’ runs counter to Section 29(2) of the Act. The express ion ‘or otherwise’ as found place in Clause (a) of sub-section (2) of Section 29 canNo.include ‘e-auction’ because when the provision was enacted, the concept of ‘e-auction’ could No.have been conceived and the Legislatures had never intended to include ‘e-auction’ in the expression 19 ‘Or otherwise’. Therefore, the Excise Policy and impugned government order in respect of ‘e-auction’ are No.feasible in the eye of law. Moreover, the ‘e-auction’ will never come under the word ‘auction’, because an “auction”. would require the bidders to be present in person before the Collector at the time of auction but in an ‘e-auction’ realm that requirement is totally absent. Reliance was placed in the case of State of Orissa and others v. Gopinath Dash and others, AIR 200.SC 65.in support of the contention that the scope of judicial enquiry is confined to be questioned whether the decision taken by the Government is against any statutory provisions or it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution.
31. The stand of the State Government is that in the matter of dealing in intoxicant, there is no right either statutory or fundamental of the petitioners to continue with the existing licences. The policy for the year 2013-14 has been duly approved by the Cabinet. The Government after considering existing policy and the previous policies have come to the conclusion that the policy of renewal has effectively resulted in creating a vested right with a few of the licensees which is practically becoming heritable. Further, Government has formed an opinion that to determine the consideration amount for parting with the privilege order to grant exclusive privilege ‘e-auction’ would fetch more competitive bids than the statutory 10% increase in the consideration amount. Grant of exclusive privilege through ‘e-auction’ maintains transparency and allows all intending bidders a reasonable opportunity to participate in ‘eauction’. 20 Further, it was submitted that “out-still system”. is prevalent mainly in tribal and forest areas where raw materials, i.e., to say, mahua flower is available in plenty. Therefore, taking into consideration the nature of the out-still system which includes manufacture and sale of liquor, it has to be treated in a different footing. The State has introduced the “e-auction”. for the first time and intends to cover all types of liquor and it has been in principle decided to go for ‘e-auction’ in respect of “out-still”. also from the next year, as evident from the Excise Policy. Viewed from this angle also, policy decision can No.be faulted with on the ground of discrimination. It will be relevant here to state that grievance regarding discrimination has been made No.by the Out-still licensees but by the privilege holders of CS and IMFL who hold particularly different kind of licence from that of the out-still lincensees. There is no discrimination per-se between the exclusive privilege holders of IMFL and/or privilege holder of CS.
32. To deal with the challenges made against policy dated 23.03.2013 on the above two grounds, it is to be kept in mind that the trade in intoxicants is a State monopoly under the Act. The aim and object of the Act may have more than one object, i.e., the benefit of revenue, improvement of public health or morals by control of liquor trade etc. It may also be presumed that it was the intention of the Legislature when enacting the Act to include prohibition as well. The Hon’ble Supreme Court in the case of Rajendra Singh Vs. State of M.P., AIR 199.SC 273.held that the object of all Excise Laws is two folds, to raise revenue and regulate the trade in liquor which is an obnoxious 21 substance. The Hon’ble Supreme Court in Har Shankar and others etc. etc. Vs. The Deputy Excise and Taxation Commissioner and others etc., AIR 197.SC1121 further held that the manner and extent of regulation rests in the discretion of the governing authority. The specific stand of the State is that there is no vested right with the petitioners to challenge the procedure or modalities described by the authority under the Act. The policy has been formulated for the year 2013-14 and the same has been duly approved by the Cabinet in the matter of dealing with intoxicants. The Government after considering the existing policy and previous policies have come to the conclusion that the policy of renewal is creating a vested right with the licensee which is becoming heritable. Further, the government has formed an opinion to hold auction to determine the consideration amount for parting with the privilege or to grant the privilege or to grant the exclusive privilege to deal with the trade which will fetch more competitive bids and will thus result in earning of more public revenue rather than the stipulation of 10% increase of the consideration amount.
33. If we will closely look into the system of renewal of licence it will reveal that the said system tends to create monopoly in favour of the persons, who were granted licence in the past, to the exclusion of others interested in the trade, who may be willing to offer higher price. The grant of licence must be viewed in the background of the aims and objects sought to be achieved by the Excise Act. The object of the Act is to create State monopoly. But the State has no power to sacrifice public interest for the benefit of third parties or to create monopoly in their 22 favour. Creation of a right of renewal in favour of the existing purchaser irrespective of the fact that others who are prepared to offer higher price would be creating a monopoly in favour of existing licensees and that is certainly No.in public interest. Such a system is against the public policy and interest of the public. Renewal system is No.the appropriate method to achieve public interest. Therefore, we are of considered view that grant of licence to trade in intoxicants through auction in each year instead of renewal is more appropriate and is in consonance with the objects sought to be achieved by the Excise Act.
34. The Hon’ble Supreme Court in the case of Rasbihari Vs. State of Orissa, AIR 196.SC 108.considered a Scheme evolved by the State of Orissa for sale and disposal of Kendu leaves under Section 10 of Orissa Kendu Leaves (Control of Trade) Act, 1961. Under the Scheme, the Government offered to renew the contracts of the existing purchasers if they had observed and performed all the terms and conditions to the satisfaction of the Government and had been prompt in taking delivery of leaves and making payments. Hon’ble Supreme Court held the said Scheme invalid and observed as under:“Section 10 leaves the method of sale or disposal of Kendu leaves to the Government as they think fit. The action of the Government if conceived and executed in the interest of the general public is No.open to judicial scrutiny. But it is No.given to the Government thereby to create a monopoly in favour of third parties from their own monopoly.”
. The Hon’ble Supreme Court in the said case, further held as follows:“The classification based on the circumstances that certain existing contractors had carried out their obligations in the previous year regularly and to the 23 satisfaction of the Government is No.based on any real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved i.e., effective execution of the monopoly in the public interest. Exclusion of all persons interested in the trade, who were No.in the previous year licensees is ex facie arbitrary: it had no direct relation to the object of preventing exploitation of pluckers and growers of Kendu leaves, No.had it any just or reasonable relation to the securing of the full benefit from the trade, to the State.”
35. In view of the above, the system/policy of renewal or any clause in the agreement to that effect should be construed against the existing licensees. We do No.think that it is necessary to find out as to whether a distinction has been made for grant of licence for trade in CS and IMFL through e-auction for the year 2013-14 and there is any reasonable cause to adopt the same procedure in respect of OS in the next year, i.e., 201415. Moreover, it is nobody’s case that the State has made any distinction among the licensees of CS and IMFL shops. A conscious decision was taken by the State that the CS and IMFL shops shall be settled by eauction throughout the State. It is also nobody’s case that the settlement of OS through ‘e-auction’ has been totally excluded; on the other hand, it is postponed to the next year only.
36. Moreover, exclusion of one sub-class from the Policy will No.itself vitiate the Policy. [See M.P. Oil Extraction and another Vs. State of M.P. and others, (1997) 7 SCC 592]..
37. In the fact situation, we are of the view that the impugned Excise Policy is No.discriminatory and/or hit by Article 14 of the Constitution, inasmuch as “Out-still system”. of liquor has been permitted to enjoy exclusive privilege on the basis of renewal for the year 2013-14, 24 whereas such privilege has been denied to the existing licensees in respect of CS and IMFL.
38. Now, coming to the second ground of challenge it is vehemently argued that clause (a) of sub-section (2) of Section 29 of the Act does No.bring within its sweep ‘e-auction’. Therefore, without amending the said provision, the State has no power to grant exclusive privilege through eauction. The specific stand of the State is that ‘auction’ in its generic term will include ‘e-auction’. The word ‘auction’ has No.been defined in the Act. Therefore, the meaning thereof has to be gathered from common parlance of the word as per the dictionary meaning. Oxford Advanced Learner’s Dictionary of Current English, Eighth Edition, 2010 defines ‘auction’ “a public event at which things are sold to the person who offers the most money for them”.. The examples provided therein also include “an internet auction site”.. Meaning ‘e’ has been given in Oxford ALD: ‘e’ as a combining form (in nouns and verbs) is connected with the use of electronic communication, especially the internet, for sending information and doing business etc. The main ingredients of auction namely ‘Public participation’, ‘bid’ and ‘auctioneer’ are present also in the ‘e-auction’ process. In the alternative, it is submitted by the State that the word ‘otherwise’ as given in Section 29(2) (a) of the Act will comprehend in its grammatical variation mode of ‘e-auction’. Therefore, there is no infringement of statue as such”
39. For better appreciation of rival contentions, it is necessary to quote here sub-section (2)(a) of Section 29 of the Act:“(2) The sum payable under Sub-section (1) shall be determined as follows: (a) by auction or by calling tenders or otherwise the State Government may, in the interest of excise revenue, by general or special order, direct; and”.
40. A plain reading of Sub-section (2)(a) of Section 29 reveals that it provides three modes of settlement of exclusive privilege, i.e., (a) by auction, (b) by calling tender, and (iii) ‘or otherwise’ as the State may in the interest of excise revenue by general or special order direct. The stand of the State Government is that auction includes e-auction. In support of such contention, reliance is placed on the Dictionary meaning of the word ‘auction’ given in Oxford Advanced Learner’s Dictionary of Current English, Eighth Edition. Alternatively, it is also contended that “or otherwise”. appearing in Section 29(2)(a) also will comprehend in its grammatical variation mode of ‘e-auction’. An attempt has been made by the petitioners to distinguish and draw distinction between ‘auction’ and ‘e-auction’. Referring to the dictionary meaning and Halsbury’s Laws of England, 3rd Edition, Vol.2, page 69 it is argued that ‘auction’ as defined in other statutes which requires the presence of the participants in case of auction which is absent in ‘e-auction’. Therefore, it is argued that State has no power of holding e-auction within the existing provisions under Section 29(2)(a) of the Act. Some of the petitioners have also raised an interesting point that when the provisions of Section 29(2)(a) were enacted the ‘e-auction’ concept was No.thinkable and the Legislature had never intended to include ‘e-auction’ in the words “or otherwise”.”
41. We have already stated that the objects and reasons of enactment of the Act; it is a State monopoly and the Act has more than one object, i.e., benefit of the revenue and improvement of public health or moral by control of liquor trade etc.
42. The Hon’ble Supreme Court in Har Shankar (supra) held that it is No.a privilege of a citizen of a State to sell intoxicating liquor by retail, as it is a business attended with danger to the community, it may be entirely prohibited or be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rests in the discretion of the governing authority.
43. On this background, if we consider the provisions of Section 29(2)(a) of the Act, one of the modes for grant of exclusive privilege appearing in the said Section is “or otherwise”.. The expression ‘or otherwise’ is wide enough to adopt any mode as the State Government may think proper in the interest of excise revenue. The expression “or otherwise”. has been provided in Section 29(2)(a) in addition to “by auction”. or “by calling tender”.. The sole purpose is that in the prevalent circumstances there may be some more proper/suitable mode for grant of exclusive privilege besides “by auction”. or “by calling tender”..
44. The matter can be looked into from a different angle. The petitioners have no grievance for grant of exclusive privilege through auction. Their grievance is against grant of exclusive privilege through ‘eauction’. Undisputedly, both ‘auction’ and ‘e-auction’ aim at transparency in grant of exclusive privilege. The only grievance of the petitioners is that in case of ‘e-auction’, the physical presence of the 27 bidders is No.necessary. In our opinion, such a grievance is hyper technical and in no way detrimental to the object sought to be achieved by settling the exclusive privilege through ‘e-auction’. With the advancement of technology and technical know-how and keeping with the change of time and circumstances more transparency and fair play can be maintained in case of settlement of exclusive privilege through ‘eauction’.
45. For the reasons stated above, we are of the considered view that grant of exclusive privilege through ‘e-auction’ comes within the enabling provision of Section 29(2)(a) and there is no need to bring any amendment to Section 29(2)(a) for grant of exclusive privilege through ‘eauction’.
46. In view of the above, it canNo.be said that the policy decision dated 23.03.2013 is No.sustainable on the challenges made by the petitioners.
47. Now, we have to examine as to whether the order dated 05.04.2013 issued in pursuance of the above Excise Policy is arbitrary, irrational, discriminatory, mala fide and No.workable.
48. To deal with the above aspect, it would be beneficial to kNo.what Wednesbury principle is?. The Hon’ble Supreme Court in the case of Tata Cellular Vs. Union of India, AIR 199.SC 1.held as under:“98. At this stage, The Supreme Court Practice, 1993, Vol. 1, pp. 849-850, may be quoted :
4. Wednesbury principle.— A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing 28 itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. 31, per Lord Greene, M.R.)”.
99. Two other facets of irrationality may be mentioned. (1) It is open to the court to review the decisionmaker's evaluation of the facts. The court will intervene where the facts taken as a whole could No.logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, canNo.be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment 34, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel was operated in such a way that the bar was No.an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J.said that he could No.see on what basis the Secretary of State had reached his conclusion. (2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council, ex p Johnson 35 the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down.”
. xx xx xx 101. A modern comprehensive statement about judicial review by Lord Denning is very apposite; it is perhaps worthwhile noting that he stresses the supervisory nature of the jurisdiction : “Parliament often entrusts the decision of a matter to a specified person or body, without providing for any appeal. It may be a judicial decision, or a quasi-judicial decision, or an administrative decision. Sometimes Parliament says its decision is to be final. At other times it says nothing about it. In all these cases the courts will No.themselves take the place of the body to whom Parliament has entrusted the decision. The courts will No.themselves embark on a rehearing of the matter. See Healey v. Minister of Health 36. But nevertheless, the courts will, if called upon, act in a supervisory capacity. They will see that the decision- 29 making body acts fairly. See H.K. (an infant), Re 37, and R. v. Gaming Board for Great Britain, ex p Benaim and Khaida 38. The courts will ensure that the body acts in accordance with the law. If a question arises on the interpretation of words, the courts will decide it by declaring what is the correct interpretation. See Punton v. Ministry of Pensions and National Insurance 39. And if the decision-making body has gone wrong in its interpretation they can set its order aside. See Ashbridge Investments Ltd. v. Minister of Housing and Local Government 40. (I kNo.of some expressions to the contrary but they are No.correct). If the decisionmaking body is influenced by considerations which ought No.to influence it; or fails to take into account matters which it ought to take into account, the court will interfere. See Pad field v. Minister of Agriculture, Fisheries and Food 41. If the decision-making body comes to its decision on no evidence or comes to an unreasonable finding — so unreasonable that a reasonable person would No.have come to it — then again the courts will interfere. See Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn.31 If the decision-making body goes outside its powers or misconstrues the extent of its powers, then, too the courts can interfere. See Anisminic Ltd. v. Foreign Compensation Commission42. And, of course, if the body acts in bad faith or for an ulterior object, which is No.authorised by law, its decision will be set aside. See Sydney Municipal Council v. Campbell 43. In exercising these powers, the courts will take into account any reasons which the body may give for its decisions. If it gives no reasons — in a case when it may reasonably be expected to do so, the courts may infer that it has no good reason for reaching its conclusion, and act accordingly. See Padfield case (as AC pp. 1007, 1061). xx xx xx 111. In Sterling Computers Limited v. M&N Publications Ltd.5 this Court observed thus : (SCC p. 455, para
12) “In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while dealing with public property. It is No.possible for courts to question and adjudicate every 30 decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is No.always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although No.strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of ‘play in the joints’ to the executive.”
112. In Union of India v. Hindustan Development Corpn.6 this Court held thus : (SCC p. 515, para
9) “... the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds. In Erusian Equipment & Chemicals Ltd. v. State of W.B.9 this Court observed as under : (SCC p. 75, para
17) ‘When the Government is trading with the public, “the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions”.. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need No.enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure.’ ”.
49. The Hon’ble Supreme Court in the case of Union of India and another Vs. G.Ganayutham (Dead) by LRs, AIR 199.SC 338.held as under:10. This case is treated as laying down various basic principles relating to judicial review of administrative or statutory discretion. Before summarising the substance of the principles laid down therein we shall refer to the passage from the judgment of Lord Greene in Associated Provincial Picture Houses Ltd. v. 31 Wednesbury Corpn.8 (KB at p. 229: All ER p. 682). It reads as follows: “... It is true that discretion must be exercised reasonably. No.what does that mean?. Lawyers familiar with the phraseology used in relation to exercise of statutory discretions often use the word ‘unreasonable’ in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must No.be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does No.obey those rules, he may truly be said, and often is said, to be acting ‘unreasonably’. Similarly, there may be something so absurd that no sensible person could even dream that it lay within the powers of the authority. ... In another, it is taking into consideration extraneous matters. It is unreasonable that it might almost be described as being done in bad faith; and in fact, all these things run into one another.”
. Lord Greene also observed (KB p. 230: All ER p.
683) “... it must be proved to be unreasonable in the sense that the court considers it to be a decision that no reasonable body can come to. It is No.what the court considers unreasonable. ... The effect of the legislation is No.to set up the court as an arbiter of the correctness of one view over another.”
. (emphasis supplied) Therefore, to arrive at a decision on “reasonableness”. the Court has to find out if the administrator has left out relevant factors or taken into account irrelevant factors. The decision of the administrator must have been within the four corners of the law, and No.one which no sensible person could have reasonably arrived at, having regard to the above principles, and must have been a bona fide one. The decision could be one of many choices open to the authority but it was for that authority to decide upon the choice and No.for the Court to substitute its view. The CCSU case (1985) and the expectation of future adoption of proportionality 11. The principles of judicial review of administrative action were further summarised in 1985 by Lord Diplock in Council of Civil Service Unions v. Minister for Civil Service9 as illegality, procedural impropriety and irrationality. He said more grounds could in future 32 become available, including the doctrine of proportionality which was a principle followed by certain other members of the European Economic Community. Lord Diplock observed in that case as follows: “... Judicial review has I think, developed to a stage today when, without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground I would call ‘illegality’, the second ‘irrationality’ and the third ‘procedural impropriety’. That is No.to say that further development on a case-by-case basis may No.in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of ‘proportionality’ which is recognised in the administrative law of several of our fellow members of the European Economic Community;”. Lord Diplock explained “irrationality”. as follows: “By ‘irrationality’ I mean what can by No.be succinctly referred to as ‘Wednesbury unreasonableness’. It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at.”
50. Since the State has filed counter in W.P.(C) No.8084 of 2013, and filed memo with a prayer to adopt the same in other connected writ petitions, let us first examine the various challenges made to the order dated 5.4.2013 in the said writ petition taking into consideration the rival contentions of the parties.
51. The first ground of challenge is that the State Government is No.authorised under Section 29(2) of the Act to introduce the process of e-auction as under the said provision the legislature has No.empowered the authority to implement the modality for settlement of exclusive privilege. Therefore, the impugned excise order is contrary to law, beyond the scope of statute and hence liable to be quashed. 33 (ii) The stand of State-opposite parties is that the modality to be prescribed for settlement of exclusive privilege under Sec. 29(2) being an order made under the empowerment of statute does No.require legislative sanction. (iii) At this juncture, it is necessary to quote the relevant portions of Section 29 of the Act, which provides for payment for grant of exclusive privilege.
“29. Payment for grant of exclusive privilege – (1) Instead of or in addition to, any duty leviable under this Act, the (State Government) may accept payment of a sum in consideration of the grant of any exclusive privilege under Section 22. (2) The sum payable under Sub-section (1) shall be determined as follows: (a) by auction or by calling tenders or otherwise as the State Government may, in the interest of excise revenue, by general or special order, direct; and (b) by such authority and subject to such control as may be specified in such order.”
. (iv) A true construction of Section 29(1) reveals that the State Government may accept payment of a sum in consideration of the grant of any exclusive privilege under Section 22 instead of or in addition to any duty leviable under the Excise Act. Clause (a) of Sub-section (2) of Section 29 prescribes the modes how the consideration amount payable under Sub-section (1) of Section 29 shall be determined. Clause (b) of Sub-section (2) of Section 29 empowers the State Government to pass order specifying the authority and control subject to which the consideration money shall be determined. (v) It may be noted that Section 89 (2)(i)(1) and (2) of the Act provides that the State Government may make rules for regulating the 34 procedure to be followed and prescribing the matters to be ascertained before any licence for the wholesale or retail vend or any (intoxicant) is granted for any locality and for regulating the time, place and manner of payment of the sum payable under Section 29. (vi) Thus, Section 89 empowers the State Government to make rules for regulation, procedure etc. as provided under Section 89(2)(i)(1) and (2). Therefore, without making such rules, as contemplated under Section 89 (2) (i) (1) and (2), the State canNo.issue the impugned order in exercise of its power under Section 29(2) prescribing modality, eligibility criterion etc. for determination of consideration through eauction.
52. Further stand of petitioners is that process of ‘e-auction’ is No.provided in the statute and as per the definition of ‘auction’, the presence of bidders is necessary at the time of conducting the same whereas in case of ‘e-auction’, the said practice is No.followed. Since we have already held that the settlement of exclusive privilege through ‘e-auction’ is coming within the purview of Section 29(2) (a), the said ground of challenge on that score fails.
53. The next ground of challenge is that ‘e-auction’ will certainly entail loss of Government revenue and will also against the interest of State Government as many bona fide EP holders will be deprived of participating in the e-auction process due to several restrictions imposed in the said order. Every licensee has to arrange his own upgraded computer, internet connection, back up, generator, scan machine, etc. and shall be well conversant in internet system. The other restriction is 35 that in case of internet failure, the State Government will No.be responsible in any manner. It is submitted that such stringent requirements are nothing but aimed to put the bona fide licensees to harassment and to deprive them from participating in the process. Moreover, in remote areas of Odisha, it is No.possible to comply such requirements. The genuine difficulties of the licensees in remote rural areas of Odisha where no internet facilities, electricity connection are available as yet, were No.taken into consideration at all. Even in Naxal areas, time and again, the internet towers are being damaged. Thus, the e-auction system will only help a group of licensees of urban areas who are in privileged position. It is further alleged that the existing licensees of Odisha are mostly uneducated so far as internet system is concerned and to get them educated it needs sufficient time otherwise the e-auction process canNo.be implemented properly and the genuine licensees will be deprived of participating in the same due to their lack of education and ultimately they will lose their source of income. The reply of the State is that the order does No.prohibit the bona fide ‘e-auction’ holder from participating in the e-auction process. There is no intention to harass the bona fide licensees as alleged. In the present day, the requirement of a computer and internet system is essential. If it is No.available for any reason with the intending bidder, he can take the help of a person on whom he has confidence and who possesses such facilities. Therefore, clause (a) provides the bidder or his associates and contemplates a bidder who has access to hardwire and it 36 is No.the requirement that every bidder is required to own a computer and internet facility. A reasonable time has been granted to the intending bidder to have access to the computer and internet from a place where it is so available. The intending bidder, who pays a monthly consideration amount in thousands and at time, running into lakhs, canNo.be said to be deprived of the facility to travel and avail access to a computer and internet facility in a place of his choice. There is no stipulation under the Act that the person bidding for a particular shop must belong to that particular area or must give a bid from that particular place. Further reply of the State is that the operation of the exclusive privilege involves a whole gamut of following of forms as prescribed under the Act and the Rules made there under and even uneducated persons are complying with such requirements through their staff engaged or their authorized agent. The process of e-auction is prevalent in the matters of coal allotment. Even for construction works of the State Government, in case of works exceeding Rs.10 lakhs e-tendering has been made mandatory. Therefore, it is too late in the day to say that the Government should be precluded from e-auction as there is likelihood of some persons No.being familiar or educate enough to participate in the ‘e-auction’. After considering the allegation of the petitioners and reply of the State to the allegations, we do No.find that participation in e-auction through internet is impracticable so far as the bidders belonging to remote rural areas are concerned. In the advanced technology age, computer and internet are always beneficial to carry on many 37 transactions. That will create more transparency in the transaction and provide safety to the participants as there will be no threatening from hooligans at the instance of mischief mongers. However, at this stage, we feel it appropriate to suggest that the State should allow participants to take help of internet facility available at NIC maintained in each district at Collectorate Office and provide assistance of computer operator, if they so required to remove all apprehensions of internet failure, power supply failure, etc. as alleged by the petitioners.
54. The next ground of challenge is that the process of ‘e-auction’ is No.adopted by any State throughout India till date except Odisha. The existing system of ‘auction’ is a clean system and running smoothly and facilitating the Government in raising revenue. By introducing the process of ‘e-auction’ there is less possibility of augmenting more revenue than before. It is only an eye wash and in the name of maintaining transparency such policy has been adopted by the Govt. to facilitate proxy bidders and outside bidders and deprive the existing licensees. The decision of the Excise Department is against the public policy and is an arbitrary action which is tainted with mala fide and also against the principles of natural justice. To this, reply of the State is that the Government in its own wisdom, after analyzing various factors, has decided as a matter of policy to introduce ‘e-auction’ system as it is likely to fetch more competitive bids in comparison to straight renewal and it is No.for the petitioner to say that under the existing system, there is less possibility of augmenting more revenue than before. It is further submitted that it is No.known 38 how the new system will facilitate proxy bidders and the existing licensees are likely to be harassed. Rather there is no scope for the proxy bidders and cartel with vested interest as each bidder will be issued with a separate mask ID. Considering the rival contentions, we are of the opinion that there has to be a beginning at some point of time keeping in tune of the challenging situation and demand of the time and society. It is always wise to take advantage of the new technologies, if it serves better than the earlier existing/old method. Since each bidder will be issued with a separate mask ID, we are unable to understand how the system of new eauction will facilitate proxy bidders and the existing licensees are likely to be harassed. Merely because ‘e-auction’ has been introduced for the first time in our State, that canNo.be a ground to strike down the process unless it is established that such system in any manner is detrimental to the public interest. Since the State in its wisdom has taken a decision that ‘e-auction’ system would fetch more revenue, we are No.inclined to interfere with their decision without any convincing and valid reason.
55. The further challenge is that the Government who is the granting authority of exclusive privilege under Section 22 of the Act has delegated such power to the Collector of the District. In paragraph 96 of Chapter-3 Excise Manual Vol.III, it is clearly stipulated that Collector himself is to conduct the auction but in the ‘e-auction’ process such procedure has been violated. The Excise Auction Committee has been constituted for settlement of exclusive privilege. Therefore, it is argued that such formation of the Committee is contrary to the Act. 39 In reply, it is submitted by the State that it is trite law that delegatee will exercise the power till such time of delegation and the power really vests with the authority which delegates the power. The Excise Manual Vol.III is a manual and has no statutory effect and therefore canNo.override the notification made under the statute. There is no dispute that under Section 22 of the Act, the State Government is only empowered to grant exclusive privilege and has delegated such power to the Collector of the district. Therefore, the delegatee shall exercise such power during the period of delegation. Needless to say that power is always vested with the delegator. In the instant case, the State Government constituted a committee and delegated the power to process ‘e-auction’ to arrive at the highest bid on a Committee called “Excise Auction Committee’ chaired by Commissioner. At this juncture, it is relevant to deal with the grounds of challenge raised in other writ petitions with regard to vesting of the power of granting exclusive privilege with the ‘Excise Auction Committee’. In W.P.(C) No.9471 of 2013 and others, a stand is taken that the impugned order is violative of and contrary to Rule 4 of the Privilege Rules. It is contended that Rule 4 of the said Rules provides for determination of consideration money by the Collector whereas in the impugned order such power is vested with Excise Auction Committee. In W.P.(C) No.8911 of 2013, a stand has been taken that Chapter-III of Part-I of Rule 103 of the Board’s Excise Rules, 1965 provides the manner of fixation and realization of fees for licences for retail vending 40 of country spirit and Chapter-III of the instruction framed by the Board of Revenue, Orissa provides for settlement and grant of licenses under the Rules and Instructions. Paragraphs 93 to 108 provide the procedure for settlement by auction and the conduct of the auction. Therefore, it was argued that the order of the State Government to put the existing C.S. shops IMIFL OFF shops through ‘e-auction’ without prescribing any rules and instructions is illegal, arbitrary and contrary to law. Now, the question arises as to whether the impugned order shall override Rule 4 of the Privilege Rules, which has been made by the State Government in exercise of the powers conferred by sub-section (1) of Section 89 of the Act read with proviso to sub-section (3) of the said Section. In our opinion, Privilege Rules made in exercise of rule making power vested with the State Government under sub-section (1) of Section 89 read with proviso to sub-section (3) of the said Rule is at higher pedestal than the impugned order passed under Section 29(2). Therefore, the impugned order canNo.override the Rule 4 of Privilege Rules. Similarly, the next question arises whether without amending Rule 103 of the Board’s Excise Rules, 1965 which has been made in exercise of the power conferred by Section 90 of the Act, the State Government can provide the manner of settlement of CS shops in the order passed under Section 29(2) of the Act. We have no hesitation to hold that the Board’s Excise Rules, 1965 is at higher footing than the impugned order. Therefore, without amending Rule 103, the issuance of the impugned order which provides new procedure to the extent inconsistent to the provisions of Rule 103 is No.valid. 41 In view of the above, we are of the opinion that the action of the State Govt. delegating the power of determination of the consideration money to the Excise Auction Committee without amending Rule 4 and proviso to sub-rule (3) of Rules 1989 and Rule 103 of Board’s Excise Rules, 1965 is No.valid. It may be noted that Section 89 (2)(i)(1) and (2) of the Act provides that the State Government may make rules for regulating the procedure to be followed and prescribing the matters to be ascertained before any licence for the wholesale or retail vend or any (intoxicant) is granted for any locality and for regulating the time, place and manner of payment of the sum payable under Section 29. A true construction of Section 29 reveals that the State Government may accept payment of a sum in consideration of the grant of any exclusive privilege under Section 22 instead of or in addition to any duty leviable under the Act. Subsection (2) of Section 29 prescribes the mode how the consideration amount payable under Sub-section (1) of Section 29 shall be determined. But as stated above, Section 89 empowers the State Government to make rules for regulation, procedure etc. as provided under Section 89(2)(i)(1) and (2). Therefore, without making such rules, as contemplated under Section 89 (2) (i) (1) and (2), the State canNo.issue the impugned order in exercise of its power under Section 29(2) prescribing eligibility criterion to proceed for ‘e-auction’.
56. The further challenge to the impugned order is that in the new system the Excise Department has decided that licensee has to produce solvency certificate for 12 months of the consideration amount of the 42 exclusive privilege on the basis of the land records and similarly the licensee is prohibited to deal with the said land against which the solvency certificate would be issued. Such a system is highly stringent and harassing in nature and against the fundamental right of the licensee guaranteed under the Constitution of India. In W.P.(C) No.8911 of 2013 a challenge has also been made with regard to furnishing of solvency certificate. It is alleged that the Collector has accepted non-refundable application fee and solvency certificate three times of monthly consideration money in Form-VI issued under Rule 3 (v) of the Orissa Miscellaneous Certificates Rules, 1984 from the petitioners for the year 2013-14. Therefore, the payment of nonrefundable application fee and submission of solvency certificate again equal to No.less than 12 times of reserve price by the petitioners for each shop as per Para (vi) (a) and (c) of the impugned Order to qualify for participation in ‘e-auction’ is illegal and the petitioners having small means were No.able to take part in ‘e-auction’ due to requirements of huge amount of solvency certificate within shot span of time. Because of such condition, the super rich people or big corporate shall capture liquor trade. In the Counter, it is stated that the condition regarding production of solvency certificate is rational and logical as the excise licence is granted for the entire excise year, i.e., for the entire 12 months, and the intending licensee should have solvency at least 12 times of the monthly reserve price of the shop(s) to bid for and No.the consideration amount as stated by the petitioners. There is no fundamental right to 43 trade in intoxicants as has been decided time and again by the Hon’ble Supreme Court. In our view, since the petitioner has already furnished the nonrefundable application fee and solvency certificate for three times of monthly consideration money for the year 2013-14, there is no reason to ask to furnish solvency certificate again equal to No.less than 12 times of the reserve price by the petitioner for each shop as per Para (vi) (a) and (c) of the order to qualify for participation in ‘e-auction’. No doubt, the State having the exclusive right to deal with intoxicants and in order to protect the interest of Revenue, it can ask for reasonable adequate security, but the State should No.fix the amount of security in such a manner that the genuine small intending parties shall be excluded from participating in the ‘e-auction’. We do No.find any cogent reason for asking solvency certificate equal to No.less than 12 times of the reserve price despite the fact that the licensees have already furnished the solvency certificate three times of the monthly consideration money for the year 2013-14. Therefore, this needs reconsideration by the State.
57. The further allegation is that Out Still liquor shops are similarly placed but the ‘e-auction’ process has No.been made applicable to it which amounts to discrimination. Since earlier we have already held that there is no discrimination on this score, allegation on this score fails.
58. Another important challenge to the notification is that under the impugned order, the Excise Commissioner is the final authority in the matter of settlement of exclusive privilege. Such a clause is 44 redundant and void in law since as per Rule 60 of the Rules, the Excise Commissioner is the appellate authority against the order of the Collector, who is the granting authority of the exclusive privilege. Such provision is still in vogue and therefore, the Excise Commissioner canNo.act as the authority for settlement of exclusive privilege under the new system which is against the existing Rules. State’s reply is that Section 29(2)(b) provides that the sum payable under Sub-section (1) shall be determined by such authority and subject to such control as may be specified in such order. Therefore, the Notification having been made under Section 29(2) of the Act, formation of the Committee which is No.to discharge any statutory function but to over-see the process of ‘e-auction’ being chaired by the Excise Commissioner canNo.be faulted with. The Collectors of the respective districts are the licensing authorities under Section 20 of the Act. The power remains with the Collectors but only the process of ‘auction’ to arrive at the highest bid is being carried on by the Committee. A combined reading of clause (ii) with clause (xix) which states that the decision of the Excise Commissioner or any grievance arising in course of the ‘e-auction’ process in the State shall be final will lead to the conclusion that the Committee is only to conduct the ‘e-auction’ and No.the real process of settlement as would be evident from clause (4). ‘Eauction’, as stated under clause-3, will be published in the sale notice and will be made available in ‘e-auction’ website and official website. Therefore, ‘e-auction’ process has nothing to do with deciding the available statutory remedies. 45 Para (vii) (e) of the impugned order provides that “bidder shall abide by the decisions of the Excise Commissioner in case of any grievance arising in course of the ‘e-auction’ process. Clause (xix) of the impugned order also provides that “the decision of the Excise Commissioner on any grievance arising in course of the e-auction process in the State shall be final”.. As per Para (ii) of the impugned order, the process of settlement shall be conducted by a departmental Excise Auction Committee (EAC), chaired by the Excise Commissioner and comprising 3 to 6 members appointed by him from time to time. At this juncture, it is necessary to refer to Section 8 of the Act provides for control, appeal and revision. Section 8 of the Act provides that the Collector, shall, in all proceedings under the Excise Act be subject to the control of the Excise Commissioner. Sub-section (2) of Section 8 further provides that the order passed under the Act or any Rule made there under shall be appealable to such authorities and under such procedure as may be prescribed by Rule 89, clause (c). Rule 60 of Rules, 1965 provides that appeal shall lie to the Commissioner from the order made by the Collector or Additional District Magistrate. Principles of natural justice demands that nobody should be the judge of his own cause. Section 8 of the Act and Rule 60 of the Rules being in vogue, in our opinion, the provisions contained in Paras (ii), (vii) (e) and clause(xix) are contrary to Section 8 read with Rule 60 of the Excise Rules and violative of principles of natural justice and needs reconsideration. It would be desirable to designate somebody else as appellate authority or 46 to head the Committee (EAC), to get over the legal deficiencies indicated above.
59. It is also alleged that as per report of the Committee consisting of Dr. Arabinda Kumar Padhi, IAS, Ex-Excise Commissioner, Odisha accompanied by two Deputy Excise Commissioners the renewal of excise shops in favour of existing licensees was appreciated and as such suggestion was given accordingly to the State Government. Therefore, introduction of e-auction for settlement of exclusive privilege is No.just and proper. In reply, it is stated that the State Government having been vested with the power of grant of exclusive privilege, on its wisdom, has decided No.to accept the report of the Committee. The Committee has submitted an open mind report suggesting the pros and cons of the auction process vis-à-vis renewal process. After perusing the said report, the State Government has taken a conscious decision in the Cabinet to go for ‘e-auction’. In view of the above stand taken by the State, it canNo.be said that introduction of ‘e-auction’ is improper being contrary to the suggestion given by the Dr. Padhi’s Committee. Moreover, perusal of the said report does No.reveal that any study has been made by the Committee as to whether ‘e-auction’ is beneficial to the Revenue or No.and the three States referred to in the report of the Committee have introduced ‘e-auction’. Therefore, the report of the Committee does No.lend any support to the challenge made by the petitioner to the impugned order”
60. The impugned order has been challenged on the ground that the sum payable for grant of privilege and MGQ in favour of the petitioners have already been determined by the Government putting 20% hike over the existing consideration money as per Para 20 of the Excise Policy dated 23.03.2013 and taking into account the provisions of Section 29(2) of the Act and Rule 6-A of Rules, 1970. Therefore, the petitioners are entitled to renewal of CS shop licences for the year 2013-14. It is only in order to facilitate completion of ‘e-auction’ as per the policy already approved by the Cabinet it has been decided to grant extension of licence to existing C.S. shops for two months, i.e., April and May, 2013 with a hike of 20% in consideration money. Therefore, on consideration of such ground, no right of renewal of the CS shops for the entire year 2013-14 accrues in favour of the petitioners on that basis.
61. It is further alleged that as per Rule 31 of the Rules, if any licence is granted at any time after 1st April it shall be granted only up to 31st March next year. Therefore, it is argued that since the licence has been granted after April, 2013 the same must be granted till 31st March, 2014. A true construction of Sub-rule (6) justifies the action of the State in granting the licence for two months, i.e., April and May, 2013 out of the whole excise year 2013-14 for the reasons stated in paragraph 20 of the impugned order. Therefore, the claim of the petitioners for renewal of the licence for the whole year 2013-14 on the basis of Subrule (2) of Rule 31 merits no consideration”
62. Referring to Para (viii) of the impugned order it is challenged that the provisions contained in said paragraph are contrary to principles of natural justice. Clause (viii) of the impugned order reads as follows: “(viii) After the last date of online submission of pre-qualification documents by registered bidders, the EAC members with assistance of IT support staff, shall conduct online scrutiny of pre-qualification documents [verification of content of all scanned documents stipulated in paragraph (vi) of bidders through their Department authorized DSCs. In case, the online documents, on scrutiny, are found to be defective and/or inadequate, the bidder’s profile shall be summarily rejected online along with the justification/reason which can be viewed online by the concerned bidder and he shall No.be permitted by the system to participate in eauction process. Bidders who are found to be eligible in online scrutiny shall be approved in the system by the EAC members with assistance of IT support staff. The e-auction prequalification status shall be updated automatically in the registered bidders’ online profile before start date of e-auction, and system-generated e-mails and SMSs on prequalification status may also be sent to all registered bidders.”
. (underlined for emphasis) Perusal of such condition reveals that the EAC members with assistance of IT support staff, shall conduct online scrutiny of pre-qualification documents and on scrutiny if the said documents are found to be defective and inadequate the bidders’ profiles shall be summarily rejected online along with the justification/reason which can be viewed online by the concerned bidder and thereafter the bidder shall No.be permitted by the system to participate in ‘e-auction’ process. There is nothing in the said clause to show that before disqualifying the registered bidder by rejecting his/her scanned documents neither a show cause notice No.49 any opportunity of hearing has been provided to the registered bidder. Disqualification of a registered bidder has civil consequence. Therefore, before disqualifying a registered bidder from participating in the ‘eauction’, principles of natural justice demands that an opportunity of hearing should be given to the registered bidder. To this extent, the provision contained in Clause (viii) of the impugned order is arbitrary and un-reasonable and the same needs reconsideration by the State. There is no dispute over the contention of the State that the trade in intoxicants is a State monopoly under the Excise Act, Rules made thereunder and no one can claim against the State the right to carry on trade or business in liquor and the State canNo.be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others, the State canNo.escape from rigour of Article 14. It canNo.act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It, therefore, canNo.be possible to uphold the contention of the State Government that Article 14 can have no application in a case where the licence to manufacture or to sell liquor is being granted by the State Government. The State canNo.ride roughshod over the requirement of that Article. (See Nadlal Jaiswal’s case (supra).
63. It is challenged that e-auction principle as envisaged in Para (x) of the impugned order without framing Rule as contemplated under Section 89 of the Act and without issuance of Form-A statutory sale notice is illegal and No.sustainable. 50 In view of the specific stand of the State, that necessary documents to be filled up will be floated along with the sale notice and there will be a gap in between the Sale Notice and the date of auction and intending bidders will have enough time to complete and process their applications in pursuance of the sale notice, the allegation of the petitioners on this score is premature. Further stand of the State which merits consideration is that the sale notice will be published in Form-A, which is a statutory document, and other affidavit is a format and it has been styled as Form ‘B’ which will be prescribed along with the sale notice.
64. The further challenge is that the pre-qualification scrutiny of bidders being done at the level of Excise Commissioner on the basis of the scanned documents uploaded online, there is every chance of presentation of forged or fabricated documents for the purpose of qualifying and to disturb the ‘e-auction’ by unscrupulous bidders. If any defective or fraud documents are detected during final verification stage, the entire ‘e-auction’ procedure will turn to be e-fraud and it will affect small traders and they have to ensure again internet connection and other infrastructure to participate in ‘e-auction’. On the above ground, the impugned order canNo.be said arbitrary or unworkable. In such event, Clause (b) of Para (xiii) provides that all provisional highest bidders for respective shops are required to submit original documents to prove that he is the owner of the premises or has rented the premises where he intends to set up shops in designated locality. Failure to furnish the documents prescribed in the said paragraph before stipulated deadline or furnishing forged document 51 shall be sufficient ground for cancellation of provisional highest bidder status and filing of false/forged document shall make the bidder liable for criminal proceedings under the provisions of IPC. However, it may be appropriate to verify the genuineness of the documents before auction commences. This aspect needs consideration to avoid unnecessary post-auction complicacies.
65. Referring to para (xv) of the impugned order, it is submitted that in case the petitioners will become the highest bidder then they can provide their existing shop premises for opening of the shop(s) after issuance of licence, but in case of new bidder who becomes successful in e-auction canNo.provide premises for opening of shop(s). Therefore, it is submitted that the conditions stipulated in para (xv) are contrary to Form-A public notice and the same canNo.be enforced in case of the new bidders. The reason given by the petitioners to challenge the illegality of Clause (xv) is No.sustainable because on the basis of the documents furnished as required under Clause (xiii)(b) to prove that the highest bidder is owner or tenant of the premises, the licence shall be issued to a highest bidder.
66. Next challenge to the impugned order is that as per the condition stipulated in sub-clause (c) of Clause (vi), the bidders from outside the State of Orissa will take part in auction by submitting the Solvency Certificate in respect of the immovable property situated in outside State of Orissa. Therefore, it is argued that the ‘e-auction’, will certainly create scope to the big excise vendors to do monopoly in excise 52 business as a result of which small excise vendors will be wiped out from the retail business and the said big excise vendors will certainly detect things to the office. Thus it is argued that sub-clause (c) of Clause (vi) is unreasonable, unfair and against the interest of the Government Revenue. Further referring to Instruction No.100 of the Instructions framed by the Board of Revenue, Orissa, it is submitted that the Excise policy does No.envisage that the highest bid on every occasion must be accepted. State must prevent monopoly in a district. The instruction further envisages to promote small local businessman and to prevent capitalist who will scare away opposition. As per the said instruction, price is No.the sole criteria for accepting a bid. Paragraphs 6 and 8 of counter of the State Government in W.P. (C) No.8084 of 2013 and W.P.(C) No.7030 of 2013 clearly reveal that fetching of better revenue is the sole consideration for the ‘e-auction’. Thus it is argued that e-auction is clearly against the instruction framed by the Board of Revenue which is the basis of the State’s Excise Policy. In this context it is further argued that the report of the Excise Commissioner is very relevant which clearly indicates that e-auction will increase monopoly of big houses and frighten away the small vendors who are ready to run the shop and pay the Govt. dues out of the profits of the shop. The fresh ‘e-auction’ order dated 5.4.2013 will bring the liquor barons of the country into the fray and virtually wipe out the small local vendors by creating a monopoly. 53 Reliance is placed on a judgment of this Court in the case of Orissa Printers and Binders Mahasangha Vrs. State of Orissa and others in W.P.(C) No.2862 of 2010. Reliance is also placed on a judgment of the Hon’ble Supreme Court in Nandalal’s case (supra) and it has been submitted that the State canNo.act arbitrarily on its own sweet will. Further placing reliance upon the Full Bench decision of this Court in the case of Bijay Kumar Panigrahi and others Vrs. State of Orissa (AIR 201.Orissa 174), it is submitted that this Court upheld the State Government’s endeavour to remove inequalities amongst Big Contractors and Small Contractors. Now, it is relevant to extract here the Instruction No.100 of the Instructions framed by Board of Revenue, Orissa. “When advisable to accept other than highest bidsIt is No.an absolute rule that highest bid must on every occasion be accepted. It is desirable to prevent monopoly in a district and unrestricted auction occasionally leads to monopoly of a large area. If a fair price therefore can be obtained from a small local man of good character and independent means, his bid may be accepted in preference to that of a capitalist who bids higher merely to frighten away the opposition. A vendor who manages his own shop may be preferred to one who conducts the business through hired servants.”
. This Court in the case of Orissa Printers and Binders Mahasangha (supra) struck down the resolution deciding to invite National Tender on the ground that such resolution was against the Industrial Policy issued by the State Government. Instruction No.100 of Instructions framed by Board of Revenue, Orissa, does No.envisage that the highest bid on every 54 occasion must be accepted. On the other hand, the State seeks to prevent monopoly in a district. The Instruction also provides to promote small local businessman and seeks to prevent capitalist who will scare away opposition. Price is No.the sole criteria for accepting the bid. But, paragraphs-6 and 8 of the counter filed by the State reveal that better revenue is the sole consideration for adopting ‘e-auction’. Such subjective is certainly against the instruction framed by the Board of Revenue which is also an Excise Policy. At this stage, it is relevant to extract here the relevant portion of the Full Bench decision of this Court in the case of Bijay Kumar Panigrahi (supra). Same reads as follows:“We are unable to accept the contention advanced by the learned counsel for the petitioners that no rational object is sought to be achieved by the State by promulgating such an amendment and incorporating the clause quoted above. The State has considered the consequences while amending the aforesaid rule. The State is bound “to act reasonably”. and such act on the part of the State has to be tested on the touchstone of public interest. We are of the considered view that the public interest would be protected and limiting a higher class contractor to offering bids for his own category and the next lower class achieves the intent of protecting the interests of lower category contractors. The claim of the petitioner contractors of a higher category to permit them to bid for all work, meant for a lower category contractors is a clear attempt to try and make an inequals to compete as an equal and, therefore, violative of the constitutional guarantee of equality under Article 14. A contractor of a lower category would have a very poor chance or no chance of getting any work at all. Accordingly, we are of the view that the amendment made protects the interest of contractors of lower categories and has been enacted to protect the big fishes from eating “small fish”.. 55 It is also relevant to extract here the relevant portion of the Excise Department order dated 28.2.2013. Same reads as under:“Original up to date solvency certificate in respect of immediate property situated in the State of Orissa obtained from Revenue authority of the State equal to No.less then three times the combined annual reserve price(s) of the shop(s) the bidder intends to bid for.”
. We make it clear that we are No.against introduction of ‘eauction’ for the purpose of settlement of exclusive privilege in favour of successful bidders, but while doing so, the State may make appropriate rules and regulations to protect the interest of small traders of good character with independent means who manage their own shop(s). This aspect of the matter can be looked at from a different angle. In view of the impugned order, bidders from across the country, small or big, can participate in ‘e-auction’ irrespective of situation of the property in any State. The bidders need No.hold property in the State for the purpose of furnishing Solvency Certificate. It may so happen that liquor baron of the country, who is a manufacturer of IMFL, participates in the ‘e-auction’ and offering some attractive bids gets all IMFL shops of the State settled in his favour. Thereafter, he will try to sell his own product of IMFL in the State through all the IMFL retail outlets and Orissa State Beverage Corporation shall be bound to procure a particular IMFL brand as per demand of the retail IMFL outlets. This will certainly create unhealthy situation. The IMFL of other brands would be smuggled and sold in the State in fraudulent manner resulting loss of Government Revenue. 56 Therefore, it is necessary that the State must consider this aspect while framing the Rule and Regulations for settlement of exclusive privilege through ‘e-auction’.
67. Referring to clause (vi)(b) and clause (xiv) of the impugned order, it is submitted that the intention of the Govt. is No.clear from clause (xiv) and as it appears, the small new intending bidder arranges an amount equal to EMD to receive his licence. Thus, it is alleged that attempt has been made to wipe out the small businessman from the fray as his investment becomes doubled. For better appreciation, it is necessary to quote here clause (xiv) of the impugned order. “(xiv) Post physical scrutiny of original documents, upon realization of advance consideration money as may be determined by the Government from time to time and after adjustment against deposited EMD, the highest evaluated responsive bidder shall be confirmed with the settlement of the shop. He shall then put his signature in the Register of Settlement and Register of Undertaking to lift the monthly minimum guaranteed quantity as may be determined by the Government from time to time and shall be then granted licence by the Collector.”
. Clause (xiv) contemplates that post physical scrutiny of original documents, upon realization of advance consideration money as may be determined by the Government from time to time and after adjustment against deposited EMD, the highest evaluated responsive bidder shall be confirmed with the settlement of the shop. He shall then put his signature in the Register of Settlement and Register of Undertaking to lift the monthly minimum guaranteed quantity as may be determined by the 57 Government from time to time and shall be then granted licence by the Collector. There is no question of determination of consideration money by the Government because on the basis of reserve price of the consideration money, the bidding starts and the bid is finalized with the highest bidder. Further the expression “after adjustment against deposited EMD”. also needs clarification as to whether the EMD has to be adjusted against the highest consideration money or anything else ?. On the other hand, clause (vi)(b) provides for furnishing of EMD in the form of Fixed deposit receipt of Scheduled Bank/Kisan Vikash Patra/Post Office Savings Bank Account/ National Savings Certificate/ Postal Office Time Deposit Account only having validity of at least 90 days from the date of publication of sale notice and duly pledged in favour of the concerned District Collector and payable at the concerned District. These aspects need clarification by the State Government.
68. The next challenge to the impugned notification is that clause (xviii) of the notification dated 28.2.2013, which barred bidders of doubtful solvency, having criminal antecedents, persons disqualified under Rules 45 and 102A of Orissa Excise Rules, 1965 has been given a go-by in the notification dated 5.4.2013 without any valid and cogent reason. 58 This aspect needs consideration by the State Government to ensure that the disqualified fraudulent bidders are barred in taking part in ‘e-auction’ process in public interest.
69. Petitioners have further urged that the Government has been conferred with power under Section 89 (1) and (2) of the Act to make Rules. Powers given to the Commissioner under Para (ii) of the impugned order amount to sub-delegation of power by the Commissioner. Section 7 (2) (e) of the Act does No.authorize the Government to give power of subdelegation of delegated power. This allegation of the petitioners are No.correct. Under Section 7(2) (e) of the Act, the State Government may delegate to the Board, the Commissioner of a Division, [Excise Commissioner or the Collector of a district]. all or any of the powers conferred upon the State Government by or under this Act, except the power conferred under Section 89 to make the Rules. Paragraph (ii) of the impugned order envisages that the process of settlement of shop shall be conducted by a departmental Excise Auction Committee chaired by the Excise Commissioner and comprising 3 to 6 members appointed by him from time to time. The EAC may be guided from time to time by a Core team of the Government comprising officials from different Departments, i.e., Excise Department, SPC, NIC, OMEGA. It is further provided that EAC shall be assisted by the IT support staff comprising of computer trained officers as may be provided by the Government from time to time. True construction of para-(ii) of the order does No.show that the Government has given power of sub-delegation to the Commissioner. The Commissioner as the head of 59 the Committee is responsible to the Government for proper discharge of the work entrusted to him. He can take assistance of other officials, but the decision of the EAC headed by the Commissioner is always final. Taking assistance to discharge the duty is No.sub-delegation of the delegated power.
70. It is further alleged that Para (iii) of the impugned order speaks of issue of sale notice in Form-A inviting on line applications from bidders for settlement of shop or group of shops at least 10 days before the commencement of e-auction, but no form has been prescribed. Moreover, the issue of sale notice as provided in para (iii) violates provision of Section 22 of the Act and Rule 3 of the Privilege Rules. Proviso to Section 22 of the Act postulates that public notice shall be given with the intention to grant any exclusive privilege under that Section and that any objections made by any person residing within the area affected shall be considered before an exclusive privilege is granted. In the impugned order, no provision has been made for inviting and considering objection of the person residing within the area affected. This needs reconsideration by the opposite party State.
71. It is also urged that the bargaining power does No.entitle the State to impose any condition it desires. Placing reliance on the decision of the Hon’ble Supreme Court in Krishnan Kakkanth Vs. Government of Kerala and others, AIR 199.SC 128.it is submitted that if the policy decision is capricious or arbitrary and No.informed by reason whatsoever or it suffers from vice of discrimination or infringes any 60 statutes or provision of the Constitution the said Policy decision can be struck down. There is no dispute over the above legal proposition settled by the Hon’ble Supreme Court and that is the reason why we are examining the validity of the impugned policy and the order.
72. The apprehension that appointment of associate for internet use may ditch the bidders and misuse his ID at the instance of his opponent/competitor has nothing to do with the validity of the impugned order since in commercial world the owner himself is No.doing all the business activities but depends upon many associates in respect of important works. Therefore, there is nothing wrong in the said provision.
73. The order is further challenged on the ground that Rule 31 of the Rules, licence for retail vender intoxicants may be granted for one year from 1st April of the year to the 31st March of the next year subject to the condition provided thereunder. Sub-rule (6) of Rule 31 empowers the Excise authority for grant of licence for any shorter period. In paragraph 22 of the Policy State Government has itself decided to extend the policy for two months, i.e., for April and May, 2013. Therefore, settlement of privilege through e-auction for the whole year 2013-14 is selfcontradictory and conflicting within itself. This needs clarification from the State specifying the exact period for which the exclusive privilege shall be settled through eauction.
74. The other ground of challenge is that under the present policy licence has been issued for two months, i.e., April and May, 2013. As a 61 result of this, the licensees would No.be able to sell away MGQ within the period of two months; but the petitioners would be forced to lift the MGQ for the said two months on the enhanced rate. Under the Excise Law, non-selling of certain quantity for a particular period is spread over to the next month and in the process the vender would be able to reequip the loss in the succeeding month(s) and by the end of the year the licensee manages to sell out the entire quantity being lifted over the entire year. In the current arrangement, the petitioners would suffer irreparably and the loss canNo.be reequipped and compensated by any other means since the entire unsold quantity at the expiry of the licence period of two months would be treated as illegal stock and the same would be subject to destruction at the cost of the vendor as per excise law. Thus, it is argued that the decision to grant licence for two months without making any provision as to how the interest of the petitioners shall be protected with regard to unsold MGQ is illegal and arbitrary. Under Sub-rule 6-A(5) of the Orissa Exclusive Privilege (Foreign Liquor) Rules, 1989 (for short, ‘ Foreign Liquor Rules’), the left over stock on expiry of the licence shall be forfeited to the government. In the peculiar circumstances, provisions should have been made for transfer of the left-over stock to the incoming licensee who shall take it towards his MGQ on payment of cost price and excise duty to the outgoing licensee so that the licensee would be in a position to lift the stock as per MGQ. This aspect also needs consideration by the State Government”
75. In essence, while upholding the maintainability of the writ petition and policy decision of the Government dated 23.03.2013, directions given for reconsideration of different aspects for the reasons stated above are summarized below:(i) The State should allow participants to take help of internet facility at NIC available at each district headquarters; (ii) Clause-(vi) (a) and (c) of the impugned order asking solvency certificate equal to No.less than 12 times of the reserve price to qualify for participation in e-auction despite the fact that the licensee have already furnished the solvency certificate 3 times of the monthly consideration money; (iii) Clauses (ii) (vii) (e) and Clause-(xix) vis-à-vis Rule 8 read with Rule 60 of the Excise Rules for the purpose of designating somebody else as appellate authority or to head the EAC to get over legal deficiencies; (iv) Clause (viii) of the impugned order which violates mandates of Article 14 of the Constitution so far No.providing opportunity of hearing before disqualifying a registered bidder from participating in “e-auction”.; (v) Sub-clause (c) of Clause-(vi) allowing bidders from outside the State to take part in auction by submitting solvency certificate in respect of immovable property situated outside the State of Odisha and to frame the Rules and Regulations in this regard; (vi) Clause (vi)(b) and Clause (xiv) of the impugned order— post physical scrutiny of the original documents and adjustment of deposited EMD; (vii) To make provision to bar bidders of doubtful solvency, having criminal antecedents, persons disqualified under 63 Rules 45 and 102A of Orissa Excise Rules, 1965, as has been provided in Clause (xviii) of Notification dated 28.02.2013; (viii) Clause (iii) of the impugned order with regard to issue of sale notice in Form-A which violates provisions of Section 22 of the Act and Rule 3 of the Privilege Rules and to make provision for inviting and considering objection of the persons residing within the area affected; (ix) Exact period for which exclusive privilege shall be settled through ‘e-auction’ for the excise year 2013-14 should be clarified as a part of the year 2013-14 has already been settled in favour of the petitioners; (x) Provision for transfer of left over stock to the incoming licensee who may take it towards his MGQ on payment of cost price and excise duty to the outgoing licensee so that licensee would be in a position to lift the stock as per MGQ for the extended license period.
77. In view of the above, we are of the opinion that the order dated 5.4.2013 appears to be unreasonable and unsustainable in law for the reasons stated supra. It would be, therefore, desirable if the State Government addresses itself on the aforesaid aspects to take a fresh decision as early as practicable and till then existing arrangements shall continue.
78. With the aforesaid observations and directions, all the writ petitions are disposed of. ……………………….. B.N. Mahapatra,J.I. Mahanty, J.I agrée. ……………………….. I. Mahanty, J.Orissa High Court, Cuttack Dated 24th July, 2013/skj/ss/ssd