B.P. Ray, J.
1. The Petitioner has filed this Writ Petition under Articles 226 and 227 of the Constitution of India, alleging non-renewal of existing licences for manufacture and sale of country spirit in respect of ten Out Still shops (for short, 'O.S. shops') in the district of Keonjhar praying for a direction to Opp. Party No. 3 Collector, Keonjhar to renew the existing licenses of the Petitioner under Annexure-1 series for the year 2008-2009 in his favour and for a declaration that the action of the Opp. Party No. 3 in issuing show cause notice under Annexure-4 for inclusion of name of Opp. Party No. 7 in the existing licences of the Petitioner and subsequently inclusion of name of Opp. Party No. 7 in the renewal licences of the Petitioner are illegal, without jurisdiction and bad in law.
2. The Petitioner was granted exclusive privilege for carrying on business in manufacturing and selling of country spirit in the district of Keonjhar on the strength of licences issued by the Collector, Keonjhar in ten O.S. shops for the year 2004-05 vide licence Nos. 18/04/05 to 27/04-05 which had been renewed from 1st April, 2005 to 31st March, 2006 on deposit of consideration amount fixed by the State Government. The further case of the Petitioner is that he successfully carried out the manufacturing and selling of country spirit by managing the out still shops to his utmost devotion and has never defaulted in paying the dues of the Government. He further states that on 1.4.2006 he had entered into a partnership agreement with O.P. No. 7 who was the exclusive privilege holder in respect of eight aut Still shops in the district of Keonjhar. The partnership agreement to constitute a partnership firm is stated have been entered for smooth operation of the eighteen O.S. shops in respect of which Petitioner and O.P. No. 7 had been granted licences.
3. When the matter stood thus, O.P. No. 5, the Superintendent of Excise, Keonjhar, vide his letter dated 11.10.2007, intimated the Petitioner to explain in detail with regard to the alleged partnership deed with O.P. No. 7. Thereafter, the Petitioner ascertained that O.P. No. 7 had submitted the partnership deed and annual accounts before the O.P. No. 5 on the basis of which said letter dated 11.10.2007 had been issued to the Petitioner. Before submission of explanation the Petitioner also received a notice dated 20.11.2007 from O.P. No. 3, the Collector, Keonjhar wherein he was asked to show cause as to why the Government shall not be moved for cancellation/ suspension of licences for violation of Excise Law and Rules and in the alternative why the names of Satyajit Singh and other 5 with whom Petitioner had entered into partnership for carrying on business of ten O.S. shops, in respect of which licenses had been granted to the Petitioner, as well as O.P. No. 7 shall not be included in the licences of the Petitioner as co-licensees. The Petitioner was asked to submit the said show cause within 15 days from the date of receipt of the letter.
In response to the said letter, the Petitioner in his reply dated 5.12.2007 stated that he was not in a position to file show cause in the absence of documents said to have been submitted by above said persons. It is alleged that the O.P. No. 3-Collector, Keonjhar, without supplying the documents as prayed for by the Petitioner relying on which the show cause notice had been issued, issued another show cause notice dated 7.12.2007 directing the Petitioner to show cause within 15 days as to why the Government shall not be moved for cancellation/suspension of licences for non-submission of solvency certificate. The further case of the Petitioner is that he had applied for renewal of his existing licences for manufacture and sale of country spirit in respect of ten O.S. shops for the year 2008-09. It is averred that though as per the direction of the Excise Department, the Petitioner had submitted the proforma application supplied by O.P. No. 5 together with the fees with 10% increase over and above the existing consideration amount in respect of all shops along with all required documents as required under the guidelines for renewal, the O.P. No. 3, instead of simply renewing Petitioner's existing licenses, included the name of O.P. No. 7 in the renewed licenses, which action of O.P. No. 3 is assailed to be arbitrary and mala fide. It is averred that inclusion of name of O.P. No. 7 in all the licenses as a co-licensee amounts to assignment without any proposal from Petitioner by O.P. No. 3, and is without jurisdiction.
4. After receipt of the notices, O.P. Nos. 5, 7 and 8 have filed their returns separately. It may be relevant to mention here that even though the Petitioner has impleaded O.P. No. 8, as his name also had been recommended by the Collector to be included as a co-licensee along with Petitioner and O.P.No.7, the Petitioner has not claimed any relief against O.P. No. 8. From the returns submitted by O.P. No. 5 and O.P. No. 7, it appears that O.P. No. 3 - Collector has passed a detailed office order assigning reasons while recommending the Government to renew the licenses of the Petitioner along with O.P. Nos. 7 and 8. The said order of the Collector, which is Annexure-1/7 to the counter affidavit filed by O.P. No. 7, is quoted here-in-below for ready reference:
District Excise Office: Keonjhar
No. 719/Ex.Dtd. 31.03.2008
Office Order
Whereas one Sri Prawin Kumar Immamganj, Dist: Gaya, Bihar had been granted exclusive privilege in respect of 10 out still shops in the district of Keonjhar with the condition to submit local surety and adequate local solvency, apart from irrevocable Bankguarantee equivalent to two months consideration money;
And whereas in spite of several notices sent to him, Sri Prawin Kumar failed to submit adequate local solvency in the District Excise Office, Keonjhar till 31.3.2008.
And whereas to save himself from such a situation, Sri Prawin Kumar entered into a partnership deed with one Sri Rajesh Kumar Sahu of Titilagarh, Dist: Bolangir, Orissa on 1.5.05 declaring therein that he has already applied for addition of the name of Sri Rajesh Kumar Sahu as a co-licence holder or a joint licensee with the mutual consent of party of both part with same terms and conditions of licence and thereafter tagged the solvency certificate of Rs. 99,000 originally submitted by him, as an immediate measure to comply with the instruction for submission of local surety and local solvency at the earliest.
And whereas one Satyajit Singh of Poiwan, Dist: Aurangabad, Bihar filed a representation before the Collector, Keonjhar disclosing therein that a partnership deed was executed on 1.4.03 between seven partners including Sri Prawin Kumar to carry on business in liquor in the State of Orissa in the name of the partnership Firm M/s Prawin Kumar, pursuant to which an amount of Rs. 34,62,000 from the partnership fund was drawn and deposited towards advance consideration money of aforesaid 10 out still shops. The fact was reflected in the Income Tax Return filed by the firm M/s Prawin Kumar for the year 2003-04. And whereas the said Satyajit Singh has complained that the partnership Firm M/s Prawin Kumar has been facing difficulties in the matter of liquor business with regard to Income Tax and Sales Tax returns due to non-disclosure of profit and loss of the firm and for that he prayed for inclusion of the names of all the seven partners of the Firm in the licences of aforesaid 10 out still shops;
And whereas Sri Prawin Kumar did not disclose at any point of time either about his status or about his financial condition or position or about his entering into partnership deed with Satyajit Singh and others oh 1.4.03 or with Rajesh Ku. Sahu on 1.5.05 to carry on the business in iiquor in respect of the aforesaid 10 out still shops and kept he District Administration in dark, while carrying on the business surreptitiously at the cost of the lawful business associates of two partnership Firms.
And whereas for the subterfuge adopted by Sri Prawin Kumar to circumvent the partnership faith, Sri Rajesh Ku. Sahu, who has already invested a huge amount for the aforesaid 10 out still shops and has stood as a local surety, has come forward with a prayer to add his name to the licences of 10 Section shops now held by Prawin Kumar as per the declaration made in the partnership deed dtd. 01.05.05 cited supra.
And whereas Prawjn Kumar while applying for renewal of the licences for the year 2008-09 submitted one solvency certificate issued in his favour by Tahasildar, Champua, Keonjhar, Orissa for Rs. 99,000 only.
In addition to that, he has submitted two valuation certificates; 1-Issued in favour of one Baidyanath Prasad for Rs.i 1,05,554, issued by Anchal Adhikari, Immamganj, Gaya, Bihar, and 2-issued in favour of Prawin Kumar for Rs. 25,00,000/-, issued by Anchal Adhikari, Aurangabad, Bihar.
As the above two certificates are not solvency certificates and valuation certificates only and as both the certificates were issued outside the State of Orissa, those were not taken Into consideration. Besides, the above three certificates, Prawin Kumar did not submit any Bank Guarantee or local surety.
And whereas it is apprehended that it is considered appropriate that unless the names of Sri Satyajit Singh relating partnership deed of 01.04.03 and Sri Rajesh Kumar Sahu of partnership deed of 01.05.05 are added to the licences of 10 Out Still shops held by Prawin Kumar, there might be future litigation resulting in closure of 10 Out Still shops entailing loss of revenue to Govt.
Now, therefore, it is hereby ordered that while renewing the licences for the year 2008-09, names of Sri Rajesh Kumar Sahu and Sri Satyajit Singh should be added provisionally to the licences of 10 Out Still shops, subject to confirmation by the State Government.
Sd/-31.3.08
Collector, Keonjhar
5. In pursuance of said recommendation of the Collector, Keonjhar, the State Government vide Order Dated 26th May, 2008 which is Annexure-J/7 to the counter filed by O.P. No. 7, passed a detailed order which reads as follows:
Government Of Orissa Excise Department
Order
No----/Ex., Bhubaneswar, dated the 26th May,2008
IEX(A)60 /2007
The Collector, Keonjhar vide his order No. 719 dt. 31.3.08 allowed renewal of licences provisionally in respect of 10(ten) Out Still shops in Keonjhar district namely Barbil, Bhadrasahi, Thakurani, Bansapani, Juruli, Kalimati, Bolani, Remuli, Jhumpura and Palaspanga in the names of the original licensee Sri Prawin Kumar and two other persons namely Sri Rajesh Kumar Sahoo and Sri Satyajit Singh jointly for the year 2008-09 subject to the confirmation by the State Government on the ground that the later two persons were long associated with functioning of these shops as partners and surety.
The licensee Sri Prawin Kumar preferred W.P.(C) No. 5311 of 2008 before the Hon'ble High Court praying to renew the existing licences in respect of the aforesaid 10(ten) Out Still shops in his favour exclusively for the year 2006-09 declaring the orders of collector regarding renewal of licences in the aforesaid joint names as illegal and without jurisdiction.
The Hon'ble High Court in their interim order dt. 15.04.08 in the aforesaid W.P.(C) No. 5311 of 2008 have passed orders to the effect that till next listing, the Out Still shops in question shall not be allowed to run or operated by person other than the original licensee. However, it will be opened for the State Govt. to put the shops to auction in accordance with law. The same shall be subject to further orders of the Court. The Hon'ble High Court in their subsequent order dt. 23.4.08 in the aforesaid W.P.(C) has passed orders that the interim order dt. 15.4.08 shall remain in operation. However, this will not debar the State Govt. to take a decision in the matter and if a decision is taken the same shall not be implemented without leave of this Court and shall be placed before this Court along with records.
In such a backdrop, the Excise Commissioner vide his letter No. 4067 dt. 24.4.08 has requested for consideration and approval of the action taken by the Collector, Keonjhar in renewing the licences jointly in favour of Sri Prawin Kumar, Sri Rajesh Kumar Sahoo and Sri Satyajit Kumar Singh or alternatively, since the licensee, Prawin Kumar failed to provide due solvency as required under the rules, the licences may not be renewed in his name and the shops may be put to fresh auction and till then the shops may run jointly. He has requested to communicate Govt. decision in the matter for placing the same before the Hon'ble High Court.
As per the existing SRO No. 265 dt. 28th April 2005, the Out Still shops, which cannot be renewed, are required to be settled byway of lottery and not by auction. Moreover, the 10 (ten) Out Still shops in question involving a huge amount of Rs. 96.00 lakh per annum towards licences fee and Rs. 32.40 lakh per annum towards MGQ may not be settled for the year 2008-09 due to involvement in litigation in the Hon'ble High Court resulting huge loss of Excise revenue.
From the letters/reports/orders of the Collector, Keonjhar, the excise Commissioner and the superintendent of Excise, Keonjhar as well as materials on record, it is revealed that Sri Prawin Kumar was the Exclusive Privilege Holder of the 10 (ten) Out Still shops in Keonjhar district namely 91) Palaspanga, 92) bansapani, (3) Juruli, (4) Kalimati, (5) Barbil, (6) Bhadrsahi, (7) Thakurani, 98) Balani, (9) Remuli and (10) Khumpura in the year 2003-04. While confirming the provisional settlement of the aforesaid 10 (ten) O.S. shops in a lot in favour of Sri Prawin Kumar for monthly consideration money of Rs. 5,77,000 for the remaining period 2003-04, Govt. in their letter No. 3070 dt. 18.6.03 of the Excise Department had imposed the following conditions:
(i) The bidder shall submit local surety and adequate local solvency.
(ii) He shall furnish irrevocable bank guaranty equivalent to two months C. Money.
The shops could not be opened during the financial year 2003-04 due to stay order granted by Hon'ble High Court. After vacation of the said stay order, the Excise Commissioner was intimated vide Excise Department Letter No. 5338 dt. 13.09.04 for issuance of licence in respect of ten (10) Out Still shops of Keonjhar District in favour of the negotiator in whose favour the settlement was made provisionally by the collector, Keonjhar with 5% excess in monthly consideration money for the remaining period of 2004-05.
Accordingly, Sri Prawin Kumar, the negotiator for Barbil lot of Out Still shops was intimated vide letter No. 2345 dt. 20.09.04 of the Superintendent of Excise, Keonjhar to furnish the following documents relating to the remaining period of the year 2004-05 in respect of the aforesaid Out Still shops.
1. Bank guarantee for Rs. 3,00,000/- only with validity upto 31.03.05.
2. Local surety bond with solvency certificate with validity upto 31.03.05.
3. Chalan showing deposit of required C. Money of all Out Still shops M.F. storage permit, user charges application fee etc.
4. Solvency certificate from Bihar State.
It is revealed from the report of the Collector, Keonjhar vide his letter No. 1024 dt. 09.05.08 that one Rajesh Kumar Sahoo had furnished required security for Prawin Kumar. It is also revealed from the copy of the affidavit dt. 17.09.04 furnished by Sri Rajesh Ku. Sahoo that he was solvent enough to the extent of Rs. 85.00 lakh as per solvency certificate issued by the Addl. District Magistrate, Bolangir. He had expressed to stand as surety for Sri Prawin Kumar in respect of 10 (ten) Out Still shops in Keonjhar District. He had under taken in that affidavit that he would be held responsible for any lapses in transaction with Govt. It is revealed from the copy of the affidavit dt. 24.03.06 furnished by Sri Rajesh Ku. Sahoo that he was solvent to the extent of Rs. 1.00 Crore as per the solvency certificate issued by the Addl. District Magistrate, Bolangir. He had intended to place his solvency certificate as surety for Sri Prawin Kumar in respect of 10 (ten) O.S. shops in the district of Keonjhar which were settled by govt. He had also under taken he would be held responsible for any lapses in transaction with Govt. It is further revealed from the affidavit dt. 29.03.07 furnished by Sri Rajesh Kumar Sahoo that he was solvent enough to the extent of Rs. 1.00 Crore and he had under taken to bear the entire liability in respect of 10 (ten) Out Still shops in the districts of Keonjhar which were settled in favour of Sri Prawin Kumar. From the above documents it is revealed that Sri Rajesh Kumar Sahoo who had adequate solvency stood as surety for Mr. Prawin Kumar for the aforesaid 10 (ten) Out Still shops in Keonjhar District as the licensee Mr. Prawin Kumar was not solvent enough in respect of 10 O.S. shops in question. It is revealed from the letter No. 1024 dt. 09.05.08 of the Collector, Keonjhar that aforesaid surety furnished by Rajesh Ku. Sahoo for Prawin Kumar in different years had been accepted by the Collector.
A partnership was constituted on 01.05.05 w.e.f. 01.04.05 between Sri Prawin Kumar and Sri Rajesh Kumar Sahoo for managing the aforesaid 10(ten) O.S. shops in question as partner due to financial difficulties of Mr. Prawin Kumar. It is specifically mentioned in the said deed of partnership that the party of the first part has already been applied for addition of the name of the party of the 2nd part as a co-licence holder or joint licence holder with the mutual consent of the party of the both part with the same terms and conditions of the licence. The aforesaid deed of partnership dt. 01.05.05 has been registered and entered in the register of Firms as No. 264 of 2006. Both Sri Prawin Kumar and Rajesh Kumar have obtained Permanent Account No. AAJFP0547L on 01.05.05. Further it is revealed from the copy of deed of the partnership dt. 01.04.06 between Sri Prawin Kumar and Rajesh Ku Sahoo that they had reconstituted the partnership in respect of the aforesaid 10 (ten) O.S. shops in question and included further 8 (eight) O.S. shops namely, Mandua, Bileipada. Telkoi, Ukhunda, Khiritangiri, Jagamohanpur, Bayakumutia and Akul for which Sri Rajesh Sahoo was the licence holder. The involvement of Sri Rajesh Kumar Sahoo in functioning of the aforesaid 10 (ten) O.S. shops in question since issue of the licence in favour of Sri Prawin Kumar in the year 2004-05 has been proved from the aforesaid documents. Considering the prayer of Sri Rajesh Kumar Sahoo who has already invested a huge amount for the aforesaid 10 (ten) Out Still shops and has stood as a local surety with adequate solvency, the Collector, Keonjhar has allowed his prayer and granted joint licence taking cognigence of the express desire of the licensee Sri Prawin Kumar in the aforesaid partnership deed dt. 01.05.05 for adding the name of Sri Rajesh Ku. Sahoo to the licence of 10 (ten) O.S. shops in question, surety furnished by Sri Rajesh Kumar Sahoo for. Prawin Kumar in respect of the aforesaid shops from the first year of issuance of licence, non reporting of status and financial condition and in entering partnership with Sri Rajesh Kumar Sahoo to carry the business in liquor in respect of the aforesaid 10 (ten) O.S. shops. The Collector, Keonjhar has also not satisfied about the solvency certificate filed by Sri Prawin Kumar for renewal of the licence in respect of the aforesaid 10 (ten) O.S. shops for the year 2008-09 in spite of prior notice to him. From the aforesaid documents, involvement of Rajesh Sahoo in management of the shops and express desire of Sri Prawin Kumar to include Sri Sahoo as a co-partner in respect of the aforesaid 10 (ten) O.S. shops in question has been proved. Hence, there is no reason to interfere in the decision of the Collector, Keonjhar to include the name of Sri Rajesh Kumar Sahoo as a joint licensee alongwith the licensee Sri Prawin Kumar in respect of the aforesaid 10 (ten) Out Still shops in Keonjhar District.
Further, the Collector, Keonjhar after consideration of the representation of Sri Satyajit Singh, has allowed his prayer to include his name as a joint licensee alongwith the name of the licensee Sri Prawin Kumar and Sri Rajesh Kumar Sahoo. The Collector Keonjhar has considered the unregistered deed of partnership executed on 01.04.03 between Sri Prawin Kumar, Sri Satyajit Singh and six others. The partnership Firm M/s. Prawin Kumar had deposited an amount of Rs. 34,62,000 towards advance consideration money for the aforesaid 10(ten) Out Still shops and the fact of such investment was reflected in the Income Tax return filed by the Firm M/s. Prawin Kumar for the year 2003-04. As the Firm, M/s. Prawin Kumar faced difficulties for filing income tax and sales tax return in respect of liquor business due to non disclosure of profit and loss of the Firm, Sri Satyajit Singh prayed for inclusion of the names of all the seven partners of the Firm in the licences of the aforesaid 10(ten) Out Still shops. It is admitted by Sri Prawin Kumar in his letter dt. 11.10.07 addressed to the Superintendent of Excise, Keonjhar that a partnership deed was executed among seven members including himself to carry on business. But he has disclosed that in spite of execution of such partnership, their firm was not participated in the auction of the shops held on 16.04.03. He has admitted that due to shortage of money he availed loan from the partnership Firm. He has further admitted that for the shake of convenience he disclosed the above facts in the Income tax return in the capacity of partnership Firm. However, out of seven partners in respect of the partnership deed dt. 01.04.03, only Sri Satyajit Singh who is solvent enough to the tune of Rs. 70.00 lakhs, has prayed for inclusion of his name in the licence and no other partner has requested for the same for which the Collector has considered to include the name of Sri Satyajit Singh alone out of seven partners as one of the three joint licenses in respect of the 10(ten) Out Still shops in question.
The Excise Commissioner in his letter No. 4067 dt. 25.04.08 has reported that the monthly consideration money of the aforesaid 10 (ten) Out Still shops is more than Rs. 8.00 lakh and Sri Prawin Kumar should have a minimum solvency of Rs. 25.00 lakh. Since Sri Prawin Kumar was found to be insolvent and operating business under partnership deed made with Rajesh Kumar Sahoo and Satyajit Kumar Singh, the Collector, Keonjhar in consideration of the prayer made by Sri Sahoo and Sri Singh incorporated their names as joint licensees alongwith the name of Sri Prawin Kumar in respect of the aforesaid 10 (ten) Out Still shops to bring transparency and making safe the huge Govt, revenue involved.
As per provisions under Section-23 of the Bihar and Orissa Excise Act 1915(1) a grantee of an exclusive privilege under Section 22 shall not let or assign the same or any portion thereof unless he is expressly authorized, by a condition made under that Section, to do so.
(2) Such letting or assignment shall be made only a person approved by the Collector or (if the letter or assignment extents to more than one district) the Excise Commissioner.
(3) The lessee or assignee shall not exercise any right as such unless and until, the Collector has, upon his application, granted him the licence to do so.
. As per Sub-rule (1) of Rule-127 of the Board's Excise Rules, 1965, no transfer or sub-lease entire or partial, of a license under the act or any rule or order there under shall be made, subject to the rules made under Section 89, except with the previous permission of the Collector. There is also an executive instruction issued by the Excise Commissioner vide his letter No. 2661 dt. 23.06.1973 addressed to Collector, Dhenkanal with copy of all Collectors that prior approval of Govt. through Excise Commissioner should be taken for transfer of exclusive privilege licences. In such backdrop, the Collector, Keonjhar after considering the representation of Sri Rajesh Kumar Sahoo and Sri Satyajit Singh has allowed renewal of the licences in respect of 10 (ten) Out Still shops in question in the names of Sri Prawin Kumar, Sri Rajesh Kumar Sahoo and Sri Satyajit Singh for the year 2008-09 in order to avoid closure of the shops and loss of huge excise revenue. It is stated that there may be liquor crime if the shops will be closed and it can be effectively checked by allowing operation of the shops.
Taking into account of all the facts on record, Govt. have considered the action taken by the Collector, Keonjhar in renewing the licences jointly in favour of Sri Prawin Kumar, Sri Rajesh Ku Sahoo and Sri Satyajit Ku. Singh in respect of the aforesaid 10 (ten) Out Still shops for the year 2008-09 as just and proper and in the consequence approved it as Sri Prawin Kumar has failed to satisfy by furnishing the required solvency, in view of his consent in the partnership deed dt, 01.05.05 to add the name of Sri Rajesh Kumar Sahoo as a co-licensee, long association of Sri Rajesh Kumar Sahoo in management of the shops as a local surety with consent of the licensee as approved by the Collector, Keonjhar and in view of partnership deed of Sri Prawin Kumar with Sri Satyajit Kumar Singh and others for formation of a Firm named M/s. Prawin Kumar to manage and finance the shops in question. The above decision of the Government is subject to leave of the Hon'ble High Court of Orissa.
Sd/- G.V.V.Sarma,
Commissioner-cum-Secretary to Govt.
6. Mr. R.K. Rath, Learned senior Counsel appearing for the Petitioner contended that the Petitioner has not given any consent to include the name of Opp. Party No. 7 or anybody in the renewed licences. The action of the Opp. Party Nos. 1 to 5 in including the name of O.P.No.7 while renewing the licenses is beyond their jurisdiction; and as the existing business stood in the name of the Petitioner alone, renewal implied continuance simplicitor of the existing licences and ought to have been so renewed. The renewed licenses have to be granted in favour of the Petitioner only. It is further contended that since the Petitioner had applied for renewal of licenses according to the excise policy and had deposited the consideration amount, the renewal has to be made in favour of the Petitioner. Since the excise authorities are bound by their own excise policy, Act and Rules, they can not travel beyond it, in any manner, in as much as it is not their look out to protect the interest of partnership business and the State Government is not concerned with the inter-se disputes between the partners which they may settle amongst themselves. Therefore, the inclusion of names of Opp. Party Nos. 7 and 8 is without any authority of law.
7. Mr. Narsingh Patra, Learned Counsel for O.P. No. 7 contended that for renewal of existing license, a licensee who intends to renew the licence, has to fulfill all the terms and conditions such as solvency, Income Tax and Sales Tax clearance and no dues certificate etc. The Petitioner has taken O.P. No. 7 as local surety who furnished local solvency to the extent of Rs. 1 crore for the years 2006-07 and 2007 -08. He contended that as the Petitioner did not take any step to include the name of O.P. No. 7-as co-licensee/joint licensee and thereby attempted to ignore the terms and conditions of the registered partnership deed, the O.P. No. 7, in order to fulfill the stipulation in the partnership deed, filed application to include his name along with the Petitioner with relevant documents such as partnership deed, solvency, annual accounts of the firm, PAN card in the name of the firm, etc. The Collector after giving due notice and opportunity to the Petitioner and O.P. No. 7 passed a reasoned order on 31.3.2008 to include the names of O.P. Nos. 7 and 8 as co-licensees and accordingly renewed the licenses in respect of ten O.S. shops for the year 2008-09 subject to confirmation by the State Government.
8. Mr. J. Mohanty, Learned Govt. Advocate contended that the State Government has the right to grant the exclusive privilege of selling country liquor to any person on such conditions and for such period as it may think fit. He further contended that the powers conferred on the State Government under Sections 22 and 23 of the Bihar and Orissa Excise Act (hereinafter referred to as 'the Act') are absolute powers and hence the Petitioner can not challenge the impugned order passed by the Government. One of the important purposes of selling the liquor in wholesale or retail is to raise revenue. Therefore, in order to protect the financial interest of the State, in the facts and circumstances of the case, there was no alternative for the State Government than to include the names of Opp. Party Nos. 7 and 8 as co-licensees, particularly, when the Petitioner's business was carried on by the partnership firm without obtaining necessary approval in contravention of the terms and conditions of the licenses as well as the provisions of the Act and the Rules made thereunder.
9. Similarly, Mr. Mohapatra appearing for the Opp. Party No. 8 supported the arguments advanced by Mr. Patra appearing for O.P. No. 7 and also contended that since O.P. No. 8 has invested substantial amount in business of the Petitioner, the State Government has rightly included the name of O.P. No. 8 also as the co-licensee.
10. In view of the rival contentions made by the parties, we proceed to examine the correctness of the issue raised and the legality of the order passed by O.P. Nos.1, 3 & 5 in the light of the following principles laid down by the Supreme Court in The State of Orissa and Ors. v. Harinarayan Jaiswal and Ors. reported in : [1972]3SCR784 :
(a) While accepting or rejecting a bid the State Government is performing an executive function and the correctness of its conclusion is not open to the judicial review.
(b) Government has power to sell by way of public auction the exclusive privileges set out in Section 22 of the Act as the Government is the exclusive owner of such privileges. Raising revenue is one of the important purposes of provisions under Sections 22 and 29 of the Act.
(c) The citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government nor can there be any infringement of Article 14 of the Constitution if the Government tries to get the best available price for its valuable rights.
(d) The power of the Government reserved for itself to accept or reject the highest bid is nothing more than what has been conferred on it by the Legislature under Sections 22 and 29 of the Act. The validity of a Government order could not be challenged without challenging the validity of Section 29 itself.
(e) The powers conferred to the State Government by Sections 22 & 29 of the Act to sell the exclusive privileges in such manner as it thinks fit are absolute powers.
11. It is evident from the ratio laid down in the aforesaid decision that the Government has wide powers in the matter of sale of exclusive privilege. Keeping the ratio in view, it is observed that the Petitioner belongs to State of Bihar and since local surety and local solvency were required as a condition precedent for grant of licences, the Petitioner took O.P. No. 7 as a local surety and utilized his local solvency. Accordingly, O.P. No. 7 initially furnished solvency certificate to the tune of Rs. 85,00,000 and filed affidavit to stand as surety for the Petitioner in respect of the ten O.S. shops. The O.P. No. 7 undertook in the said affidavit that he would be held responsible for any lapses in transaction with the Govt. On the basis of the aforesaid local solvency and surety of the O.P. No. 7, the Petitioner was issued with licences and accordingly, he carried on business in respect of shops in question from the month of September, 2004 till 31st March, 2005.
12. Thereafter, the Petitioner is carrying on the business in respect of aforesaid ten O.S. shops taking O.P. No. 7 as Managing Partner by constituting a partnership firm with effect from 1.4.2005 in terms of partnership deed in the name and style of 'M/s. Prawin Kumar and Rajesh Kumar.' In the partnership deed, it is categorically stated that the Petitioner has already applied for addition of O.P. No. 7 as co-licensee/joint licensee with mutual consent with the same terms and conditions of licenses in respect of ten O.S. shops of the Petitioner. However, the claim of the Petitioner that the partnership deed covering 18 O.S. shops held by the Petitioner and O.P. No. 7 has not been substantiated. As per the terms and conditions agreed upon by them in the partnership deed, the O.P. No. 7 is the Managing partner of the firm who is empowered to sign, execute and enter into all sorts of contracts, engagements and agreements pertaining to the business of the firm with any Govt. body, private establishment or local authority. O.P. No. 7 is also, inter alia, empowered to appear and participate in auction of excise shops and to submit tenders, to sign all papers in that connection, and to apply for all kinds of excise licenses registration certificates/renewals and to secure them and also to apply for quota rights and for the purpose to appear before the authorities appointed for the same and to sign all papers in this connection. It may be relevant to mention here that the Petitioner and O.P. No. 7 had jointly submitted the application in Form No. 1 for registration of the partnership firm in the name and style of 'M/s. Prawin Kumar and Rajesh Kumar' on 1.6.2005 and accordingly certificate of registration has been issued on 29.3.2006 and the said partnership firm is still in existence. For the renewal of licenses of ten O.S. shops the existing licensee who intends to renew the license has to fulfill all the terms and conditions such as solvency, Income Tax and Sales Tax clearance and no dues certificate. The Petitioner has taken O.P. No. 7 as local surety who furnished local solvency to the extent of Rs. 1 crore for the years 2006-07 and 2007-08 and accordingly, on the basis of local surety of O.P. No. 7, the licenses were renewed in favour of the Petitioner for the above years. As the Petitioner did not take steps to include the name of O.P. No. 7 as co-licensee/joint licensee as per the terms and conditions of the registered partnership deed, O.P. No. 7 filed applications on 6.10.2007 and 26.3.2008 to include his name along with the Petitioner at the time of renewal of the license for the year 2008-09 as agreed by them in the said partnership deed. In terms of the deed, as the Managing partner, the O.P. No. 7 is empowered to make such an application on behalf of the firm.
13. The Apex Court has held that though no citizen has a fundamental right to carry on business of liquor and the State, under its regulatory power, can prohibit absolutely every form of activity in relation to intoxicants, such as manufacture, storage, export, import, sale and possession, the decision of the Government for grant of licence for manufacture and sale of liquor would essentially be a matter of economic policy, not liable to be interfered with, unless it is apparently arbitrary, irrational or mala fide. Therefore, it requires to be examined whether there is any manifest arbitrariness while re.newing the licences of the Petitioner for the year 2008-09.
14. The inclusion of names of O.P. Nos. 7 and 8 is alleged to be arbitrary only on the vague and unexplained ground that it will cause undue hardship to the Petitioner. From the narration of the facts stated above, it is abundantly clear that on an application by O.P. No. 7, the Collector of the District, as was obliged, enquired into the genuineness of the firm and its constitution as specified in the instrument of partnership and, on such enquiry, he was satisfied that a genuine firm with the constitution as specified in the instrument of the partnership is in existence. The existence of partnership is not disputed by any of the parties. It is equally not in dispute that the prior approval of the Collector was not obtained prior to entering into such partnership, though the Petitioner admitted in the agreement to have applied for addition of the name of O.P. No. 7 with licenses. Also there is no challenge to the genuineness of the partnership. In fact, in view of unambiguous terms and conditions of the partnership agreement, the Petitioner, being a party to it, is estopped from doing so. However, an attempt is being made on behalf of the Petitioner, in spite of subsistence of partnership (empowering the O.P. No. 7-Managing Partner to, inter alia, 'apply for all kinds of Excise licenses, registration certificate/renewals and to secure them and xx xx, for the purpose, to appear before the authorities appointed for the same and to sign all papers in this connection,') to avoid the partnership as being prohibited by law by seeking assistance from the provision under Section 23 of the Act.
15. However, Section 23 of the Act provides for the circumstance under which there may be 'transfer of exclusive privilege'. It is pertinent to refer to the provision under Section 23 of the Act which reads:
23. Transfer of exclusive privilege - (1) A grantee of an exclusive privilege under Section 22 shall not let or assign the same or any portion thereof unless he is expressly authorized, by a condition made under that Section, to do so.
(2) Such letting or assignment shall be made only to a person approved by a Collector or (if the letting or assignment extends to more than one district) the Excise Commissioner.
(3) The lessee or assignee shall not exercise any rights as such unless and until the Collector has, upon his application, granted him a licence to do so.
16. If there is a transfer of the license by the grantee of an exclusive privilege by way of letting or assignment without approval and express authorization by the Collector in contravention of provision under Section 23 of the Act, it is for the State Government to decide in the interest of State revenue whether such transfer should be regularized or ignored. In the present case, the Petitioner's stand appears to be that State Government should have ignored the formation of partnership by him with O.P. No. 7. In fact, there is no grievance from the side of the State against such partnership. Also, there is no evidence that exclusive privilege granted by virtue of the licenses issued in favor of Petitioner was let out or assigned to another entity by including the name of the O.P. No. 7 in the licenses. Addition of name of O.P. No. 7 by O.P. Nos. 1, 3 and 5 in the licenses reflect a fait accompli. The application for such addition was made by O.P. No. 7 by virtue of authority derived from terms and conditions of the very partnership which the Petitioner does not dispute to have entered into by him but attempts to try and avoid. It has already been observed that one of the important purposes for selling the liquor by the State Government is to raise revenue. Efficiency of administration of revenue requires that the records must be prepared in consonance with the existing facts. On a close reading of Section 45 of the Act and Rule 31 of the Excise Rules, 1965, it appears to us that licence for each year is a fresh grant.
17. Having observed the wide nature of powers of the Government in the matter of granting exclusive privilege for sale manufacture etc. of intoxicant including the 'liquor, it is noticed that in the present case it is neither O.P. No. 3-Collector nor O.P. No. 5-Superintendent, Excise, Keonjhar, but the State Government, which took the decision to renew the Petitioner's licences after addition of names of his partners as co-licencees. The order of State Government to that effect has already been quoted above. The Petitioner seeks to rely upon the guidelines of the Government of Orissa in Excise department dated 10.3.2008 laying down the terms and conditions of renewal of existing licences for the year 2008-09 to avoid the obligations arising out of his partnership and to urge that renewal of licence means renewal simplicitor. However, the guidelines dated 10.3.2008, which is Annexure-8 to the Writ Petition, provides at clause-40 that:
No person shall have a right of renewal of license or exclusive privilege but such renewal shall be subject to the fulfillment of terms and conditions and the provisions of law to the satisfaction of the competent authorities under the Act.
18. Therefore, the Petitioner has no scope to claim renewal simplicitor of the existing license as a matter of right. The power of the State Government to grant exclusive privilege is not at all fettered by the guidelines which rather retains the discretion of the State Government in the best interest of the revenue administration. In Harinarayan Jaiswal (supra), the Supreme Court having held that raising revenue is one of the important purposes of the provisions under Sections 22 and 29 of the Act, categorically observed that the power to accept or reject the highest bid is given to the highest authority in the State i.e. the Government, which is expected to safeguard the finances of the State, for which there is no scope to apprehend that such power may be exercised arbitrarily in an unguided manner. In the present case, the decision for renewal of the licenses after incorporating the names of O.Ps. 7 & 8 has been taken at the highest level of State Government. However, the Petitioner has not chosen to call into question the order of the State Government. The Petitioner has simply sought declaration against the actions of O.P. If No. 3, the Collector. The material part of the prayer made by the Petitioner in the Writ Petition reads:
It is therefore prayed that this Hon'ble Court be graciously pleased to issue rule Nisi calling upon the Opposite Parties to show cause as to why a writ in the nature of mandamus or certiorari or any other appropriate writ/writs shall not be issued commanding the Opp. Parties, more specifically Opp. Party No. 3 - Collector, Keonjhar to renew the existing licences of the Petitioner under Annexure-1 series for the year 2008-09 in favour of Petitioner; And be pleased to hold and declared that the action of the Opp. Party No. 3 in assigning/including the names of Opp. Party No. 7 in the existing licences of the Petitioner while renewing the same for the year 2008-09 is illegal and without jurisdiction;
And further be pleased to hold and declared that the action of the Opp. Party No. 3 in issuing show cause notice under Annexure 4 for inclusion of name of Opp. Party No. 7 in the existing licences of the Petitioner and subsequent action inclusion of name of Opp. Party Np.7 in the renewal licences of the Petitioner is illegal and bad in law
19. The Petitioner having hot GhalJenged the action of the State Government in directing addition of the names of O.P. Nos. 7 & 8 in the renewed licenses, and the O.P. No. 3 having issued the renewed licenses in terms of the order passed by the State Government, the Writ Petition is misconceived and is liable to be rejected on that score also.
20. Even if the Petitioner would have challenged the action of the State Government, nonetheless, in view of the admitted facts and circumstances of the case there is no basis to assail the decision of the State Government. The Petitioner has to have a very strong case to assail the discretion of the State Government in the matter of grant of exclusive privileges. In Khoday Distilleries Ltd. etc. v. State of Kamataka and Ors. : AIR1996SC911 , it has been held that:
In this connection, we would also like to refer to a decision of this Court in the State of Madhya Pradesh v. Nandlal Jaiswal : [1987]1SCR1 . This Court has held that though there is no fundamental right in a citizen to carry on trade or business in liquor; and the State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants such as its manufacture, storage, export, import, sale and possession; nevertheless when the State decides to grant such right or priviiege to others, the State cannot escape the rigour of Article 14. The Court, however, observed. '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 wqvid, 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 plaintly arbitrary, irrational or mala fide.
It is also observed by the Apex Court that the wider right to prohibit absolutely all forms of activities in relation to intoxicsints, necessarily includes within it also the narrower right to permit-dealing in intoxicants on such terms of general application as the State deems expedient.
21. None of the grounds contained in the office order of the Collector, Keonjhar, or the order of the State Government quoted above has also been assailed by the Petitioner to be legally untenable. None of the facts upon reference to which the orders have been passed has also been challenged as untrue or unfounded. The Petitioner was issued with notice before action was initiated for addition of the names of partners in the renewed licences. In such circumstances, where there is no dispute as to the facts on the basis of which the order of the State Government was passed, there is no scope to hold that the Petitioner was deprived of any opportunity for which prejudice has been caused. In this context, reference may be made to the case of K.L. Tripathi v. State Bank of India and Ors. : (1984)ILLJ2SC .
22. Having found that the Writ Petition is liableto be dismissed for the reasons stated above, it is also observed that the Petitioner has not approached the Court with clean hands. The Writ Court is a Court of equity. When a Petitioner deliberately approaches the Court without clean hands, he is not liable to get any relief. In this context, The Chancellor and Anr. v. Dr. Bijayananda Kar and Ors. : (1994)ILLJ364SC , Prestige Lights Limited v. State Bank of India : (2007)8SCC449 and Haryana Roadways v. Jai Bhagwan and Anr. : (2008)IILLJ663SC may be referred to. In the present case, the Petitioner seeks renewal of his licences in his name alone when a partnership validly entered into by him with O.P. Nos. 7 & 8 in respect of ten O.S. shops is subsisting, ignoring the terms and conditions of the partnership deed. Not only the Petitioner did not bring to the notice of the authorities that he had entered into partnership in which O.P. No. 7 has been designated as the Managing Partner, but also, in violation of the terms of the partnership deed, the Petitioner resists O.P. No J's attempt to get the licences renewed for which the O.P. No. 7 has been empowered to apply in terms of the partnership agreement. It is worthwhile to note that though the Petitioner in the Writ Petition has referred to the partnership, it appears that he has made a deliberate attempt not to disclose the details thereof. Petitioner has also not filed a copy of the partnership deed. The action of the State Government is in consonance with the terms of the partnership which is subsisting. As per the terms and conditions of the partnership, as have been referred to above, it is the obligation of the parties thereto to bring the partnership to the notice of the State Government and apply for addition of the name of O.P. No. 7 as a co-licence holder. Therefore, the action of the Petitioner in filing the Writ Petition amounts to an attempt to try and get benefit out of his own latches. Such a Writ Petitioner is not entitled to any relief from any Court.
23. For the reasons stated above, we find no merit in the Writ Petition and accordingly, the same is dismissed.
I. M. Quddusi, J.
I agree.