C O M M O N O R D E R The petitioners are all licensees, who have been granted licence by the Tamil Nadu State Marketing Corporation Limited (TASMAC) to collect empty bottles and sell eatables in the Bar attached to the various TASMAC liquor retail vending shops in the State of Tamil Nadu. Though there may be a slight variation in prayer made in the various writ petitions covered in this batch, essentially the challenge is to the tender notices issued by the Regional Manager, TASMAC, calling for applications for grant of licence to collect empty bottles and sell eatables in the Bar attached to the TASMAC liquor retail vending shops. The first and foremost ground of challenge is that the licence fee, which has been fixed is very high and such fixation is contrary to the directions issued in W.P.Nos.26445 of 2015 etc., batch dated 27.10.2015, wherein there was a specific direction to fix the upset price taking into consideration the volume of sales and finalize the tender. The petitioners would state that the difficulties faced by them in participating in the impugned tender is on account of the following factors:
(i) There is no rationale in fixing the upset price based on sales done by TASMAC, but the upset price must be based on the sales done in the Bar;
(ii) The direction issued in W.P.No.26445 of 2015 etc., batch dated 27.10.2015 has not been followed;
(iii) The upset price has not been fixed in the respective shops till date and the petitioners are kept in dark till the last moment;
(iv) The TASMAC never owns any building nor takes the building on rent for running the bar and it is only a licensee, who secures the permission by paying huge sums of money and the premises is sublet to TASMAC for which the licensees are paid a meagre amount;
(v) In terms of the clarificatory order passed by the Honble Supreme Court with regard to relocation of the shops which were hither to on the National Highways, the process is yet to be completed and there is no urgency in issuing the impugned tender without finalizing the relocation;
(vi) By way of illustration, it is stated that in Tiruvallur, there were totally 204 retail vending shops, out of which only about 130 are functioning and the remaining have to be relocated, which is yet to be done. Similar statistics were given in respect of Kancheepuram and Chennai Districts;
(vii) The volume of sales in the retail vending shop cannot be the basis for fixing the upset price as the entire stock, which is sold in the retail vending shop is not consumed in the bar attached to the shop and therefore, it is necessary that the upset price must be based on the consumption in the bar;
(viii) There are other issues such as payment of GST and compelling the intending bidder to register under the Goods and Service Tax is not tenable;
(ix) In Nilgiris District alone the sales figures for the past 12 months have been published online, which has not been done in Districts of Chennai, Kancheepuram and Tiruvallur;
(x) In terms of Section 17C(1b) of the Tamil Nadu Prohibition Act, TASMAC has exclusive privilege to vend liquor in the State of Tamil Nadu and therefore, the respondent cannot goby the privilege clause for fixing the upset price, but should goby the actual cost. In other words, it is not the turnover of the retail vending shop, which is relevant, but the volume of sales, which is relevant;
(xi) On account of the steep increase in the price of Indian made Foreign liquor, the turnover of the ships gives a distorted picture and this is why the respondent should not adopt the turnover for fixing the upset price;
(xii) The direction issued in the earlier Writ Petitions was to fix the upset price taking into consideration the volume of sales and not the turnover and therefore, the impugned tender notification is not sustainable;
(xiii) There is discrimination between the intending bidders in Nilgiris District and the other Districts, since in Nilgiris District, the percentage fixed for calculating the upset price is 2% for Municipal areas and 1.5% for Panchayat areas, whereas in the Districts of Chennai, Tiruvallur and Kancheepuram, uniformly it has been fixed at 3%;
(xiv) The prescription under the Tamil Nadu Transparency and Tenders Act, 1998 and in particular, the requirement under Section 9(3) and Section 9(4) read with Rule 16 of the Rules have not been followed. Thus, the basis for fixing the upset price in the impugned tender notifications is irrational and illegal.
2. The above were broadly the submission of the learned Senior Counsels Mr.K.M.Vijayan, Mr.R.Muthukumarasamy, Mr.AR.L.Sundaresan, Mr.B.Gnanadesikan, and learned counsels Mr.R.Thirugnanam, Mr.K.Selvaraj and others.
3. In support of his contention, Mr.K.Selvaraj, learned counsel appeaing for the petitioner referred to the decision in the case of LIC of India & Anr., vs. Consumer Education & Research Centre & Ors., reported in (1995) 5 SCC 482; Ramana Dayaram Shetty vs. International Airport Authority of India & Ors., reporetd in (1979) 3 SCC 489, Style (Dress Land) vs. Union Territory, Chandidarh & Ors., reported in (1999) 7 SCC 89; Sterling Computers Limited vs. M/s.M&N Publications Ltd & Ors., reported in (1993) 1 SCC 445 and Kerala Samsthana Chethu Thozhilali Union vs. State of Kerala & Ors., reported in (2006) 4 SCC 327.
4. Mr.P.Arumugarajan, learned Standing Counsel and Mr.K.Sathiskumar, learned counsel appearing for the respondents/TASMAC submitted that the petitioners are attempting to create a monopoly by holding over the licences by repeatedly challenging the notification issued by the TASMAC and the impugned notifications have been issued strictly in accordance with the directions issued by the Court in the earlier round of litigation. The learned counsel circulated a note containing certain details about the procedure which was adopted by TASMAC during the previous period. It is submitted that the formula adopted by TASMAC with effect from 01.03.2005, was by adopting 2.5% of the actual sale of the concerned shops as the upset price. In so far as the upset price for the Nilgiris District was fixed as 2% for urban areas and 1% for rural areas and 1.5% for Grade-III Panchayats and Special Grade Panchayats. Subsequently, with effect from 01.08.2006, the TASMAC decided that the highest monthly sale amount in the concerned shop during the previous 12 months period will be taken up for the fixation of the upset price. Subsequently, in 2010, the respondents/TASMAC adopted a new system, that is, by fixing 2.5% of the average monthly sales of the immediately preceding months plus amount arrived at by applying the shop growth rate on the average monthly sale amount of the preceding amount or in the alternative, the average monthly demand amount of the last successful tender in respect of shops whichever is higher. In terms of the said formula, the intending bidders have to offer their bid in terms of money and not as percentage. Under this method, the monthly demand for all the months for the entire period of licence will be constant irrespective of the actual sale during the concerned month. In 2011, it came to the notice of the respondents/TASMAC that on account of higher upset price, there were no bidders for the bars attached to the retail vending shops in village Panchayat areas and therefore, a decision was taken on 28.12.2011 by fixing the upset price as 1.5% of the average monthly sale in the immediate preceding year plus amount arrived at by applying the shop growth rate on the average monthly sale amount of the preceding year. Under this procedure, the monthly demand will be constant for the period of licence irrespective of the actual sale.
5. The Government by G.O.(Ms).No.20, (Home) Prohibition Excise Department, dated 29.03.2013, inserted Rule 9A in the Tamil Nadu Liquor Retail vending (in Shops and Bars) Rules 2003, with effect from 29.03.2013, by which the Board of TASMAC was empowered to decide the upset price and other terms and conditions of the tender from time to time with the approval of the Commissioner of Prohibition and Excise; TASMAC will collect the tender amount from the successful tenderers and remit the same to the Government after retaining 1% of the amount so collected, as commission. It is stated that in accordance with the said provision, the respondent/TASMAC requested the Commissioner of Prohibition and Excise for approving the formula for fixing the upset price decided in the meeting held on 05.03.2010 i.e. 2.5% of the average monthly sale in the preceding year plus the amount arrived at by applying the shop growth rate on the average monthly sale amount of the preceding year. The said request was approved by the Commissioner of Prohibition and Excise on 19.07.2013.
6. It is further submitted that on account of the directions issued by the Honble Supreme Court, the shops on Highways had to be relocated and there was difficulty in securing suitable buildings for such relocation and when shops are relocated, the expected sales will be less when compared to the sale in the original location and in such cases, if the licence fee is fixed based on the sale in the original location, it will be high and there will not be any takers and therefore, the respondent came to the conclusion that there is need to revise the formula for fixation of the upset price and the monthly fees for the bar. Therefore, a decision was taken to be implemented for a period of one year and to be reviewed thereafter, by keeping 2.5% of the actual sale of the concerned shop as upset price and whenever shops are relocated, since the sale in the new location would not be known at the time of calling for tender. For the purpose of security deposit of two months and one month advance, the sale of the original shop may be considered; In respect of Nilgris District, the upset price for bars may be fixed at 2% for urban areas and 1% for rural areas of the actual sale of the concerned shops. Subsequently, the matter was taken up for discussion and the Board of TASMAC in the meeting held on 05.04.2017, resolved as follows:-
(i) Permission is to be granted to sell eatables and to collect empty bottles in the bars attached to retail shops (both existing and relocated shops) of TASMAC on tender basis, by keeping 3% of the actual sale of the concerned shop as the upset price.
(ii) Wherever shops are relocated, since the sale in the new location would not be known at the time of calling for tender, for the purpose of Security Deposit of two months and one month advance, only sale of the original shop is to be considered.
(iii) In respect of the Nilgiris District, the upset price for bars is to be continued at 2% for urban areas and 1% for rural areas of the actual sale of the concerned shop as upset price.
(iv) The other existing terms and conditions already approved by the Board of TASMAC and subsequently by the Commissioner of Prohibition Excise for granting permission for sale of eatables and collections of empty bottles in the bars are to be continued.
(v) The above system is to be continued for a period of one year and the system may be reviewed thereafter.
7. It is submitted that pursuant to such decision, the impugned tender notifications have been issued and there is no irrationality or arbitrariness in the manner of fixation of the percentage for computing the security deposit payable to TASMAC by the intending tenderers. The reason for fixing differential percentage for urban and rural areas in Nilgiris District has a proper nexus to the actual state of affairs, as the percentage of consumption of liquor in bars in the said District is low when compared to other Districts. It is further submitted that the direction issued by this Court in the earlier Writ Petition has been scrupulously followed and a proper decision has been taken balancing the interest of the intending tenderers as well as protecting the interest of revenue. It is further submitted that the directions issued in the earlier writ petition was to take into consideration the volume of sales and finalize the tender and essentially, the volume of sales has to be arrived at based on the sales effected in the respective retail vending shop and the contention of the petitioner that it should be based on the volume of consumed in the bar is an incorrect submission.
8. Heard the learned counsels appearing for the parties and carefully perused the materials placed on record.
9. The scope of interference by this Court in exercise of its jurisdiction under
Article 226, while testing the correctness of the terms and conditions of a tender are fairly well settled. If the tender inviting authority is found to have taken into account the relevant facts and excluded the irrelevant facts, the Court would not interfere with the decision arrived at by the tender inviting authority. This is so because, the Court does not sit as an appellate authority against the decision and does not examine the merits of the decision. Thus, interference would be possible, if the action of the tender inviting authority is actuated by bias, his conditions of selection is mala fide or his action is irrational or arbitrary. The petitioners have placed their challenge to the impugned tender notification on the ground that it is irrational. According to the petitioners, the irrationality has occurred on account of the fact that the turnover of the retail vending shop has been taken as the basis for arriving at the security deposit/monthly fee to be offered by the intending tenderer. It was argued that the Court, in the earlier round of litigation, directed that the upset price for issuing licence to collect empty bottles and sell eatables in the bar should be fixed taking into consideration the volume of sales and the volume of sales has to be ascertained based on the volume consumed in the bar and that alone would be the rational approach in fixing the upset price. Undoubtedly, fixation of the value of a tender is entirely within the purview of the tender inviting authority or the agency concerned and interference in such decision could be made only if it is proved that the fixation of such value was wholly arbitrary and unreasonable. It should not be forgotten that award of contract or a tender or a licence is essentially a commercial transaction regardless of the fact as to who is the person or organization, which invites the tender. In the instant case, the tender inviting authority is a State owned Corporation, which has been given the exclusive privilege to vend liquor in the State of Tamil Nadu. Assuming if such a right was entrusted to other than a State owned Corporation, the present challenge was not maintainable. Thus, the respondent Corporation should be given leverage to take a commercial decision considering the commercial considerations. It should be given a free hand to arrive at a decision and such decision would normally not be opened for scrutiny, unless it is established that such decision was wholly arbitrary, irrational or unreasonable. If the tender notification violates the law, it may be a good ground to interfere with such notification but to succeed in such an attempt, the petitioner should show that on account of such violation, he has suffered some prejudice. Thus, merely showing that there is a violation of law will not be a ground to interfere with a tender notice.
10. Admittedly, in the instant case, there is no allegation of malafides. A faint plea of legal mala fide was raised by Mr.Umapathy, and to drivehome such a contention, the learned counsel referred to certain statistics with regard to the number of shops, which were in existence in Tiruppur District from the year 2014-15 and in how many shops there were successful bidders for the bar and the remaining shops though had a bar attached were illegally run by TASMAC themselves as there were no bidders.
11. Based on such statistices no inference of legal mala fides could be drawn. There is also no allegation of bias made against TASMAC by any of the petitioners. Thus, the only ground of challenge to the impugned notification is on the ground of irrationality. It was argued that the method of fixation of the upset price was irrational, since the volume of sales in the bar has to be considered and not the volume of sales in the retail vending shops. Admittedly, the exclusive right to vend liquor vest with TASMAC. The licence to be granted by TASMAC for which the impugned notification has been issued, is to sell eatables and collect empty bottles in the bar attached to the shop. The normal concept of a bar cannot be adopted in the present batch of cases, unlike the bars, which are functioning in hotels where licence is granted in form FL-II and FL-III. Though the respondent/TASMAC states that the eatables ought to be sold in the bar attached to the shop to term the premises as a bar in the general sence, as it is popularly understood as incorrect. This is so because, the licensee is not permitted to vend liquor in the premises termed as bar attached to the shop. TASMAC does not vend liquor in the premises termed as bar attached to the shop. At best, it could be termed as a facility offered by TASMAC by having a premises adjacent to the retail vending shop, where the consumers who purchase liquor from the retail vending shop would be permitted to consume the liquor, so purchased, in the said premises. By way of addition facility, licences are issued for selling eatables and collecting the empty bottles. Therefore, there should be reasonable nexus between the turnover in the retail vending shop and the licence fee to be fixed by TASMAC for granting the licence to sell eatables and collect empty bottles. It is not for this Court to examine as to whether fixation of 3% or 2.5% or 1.5% or 1% of the turnover of the shop for computing the quantum of Security Deposit/licence fee.
12. As pointed out earlier, these are all commercial matters and best left to the concerned authority or Corporation to determine the same. If there is a reasonable basis for such computation, the challenge to the impugned notifications has to necessarity fail. The petitioners projected their case as if that 3% of the turnover of the concerned shop is fixed as the licence fee for every month. However, on a careful reading of the tender conditions, it is clear that the turnover for the month of October, 2017 is being taken for consideration for calculating the Security Deposit payable by the intending tenderer by calling upon him to pay 3%/2.5% or 1% of such amount. This fixation cannot be stated to be irrational, as it has been shown that there should be some yardstick for the TASMAC to arrive at the quantum of Security Deposit. The respondent/TASMAC has not fixed a static amount as upset price as found in other bid documents. Due regard has been given to the variation in the turnover and therefore, the percentage adopted, which would take care of the situation on shop to shop basis. The tender condition further states that the licence fee will be fixed on a month to month basis. That would depend upon the sales in the concerned retail vending shop. Therefore, even on that aspect, the amount is not static and can either increase or decrease depending upon the sales. If the sales for the months of December 2017, January 2018 and February 2018 shows an upward trend, then the licensee is required to proportionately increase the Security Deposit. This condition cannot be termed as either arbitrary or irrational, as such conditions are contained in other agreements including the Security Deposit payable to the Electricity Board by a consumer, which is required to be increased, if the level of consumption of electricity increases.
13. The fixation of a different percentage for Nilgiris District cannot be a sole reason to strike down the impugned notification, as the respondent seeks to justify their action by stating that such was the basis ever since 2003 onwards and considering the ground realities prevailing to that District 2006 onwards, a different percentage was fixed. Above all none has a fundamental right to trade in liquor. The licence, which is proposed to be offered pursuant to the impugned tender is an adjunct to the right to trade liquor, as it is intended as a facility to the consumers who consume liquor purchased from the retail vending shop adjacent to the premises. Therefore, it has to be observed that the petitioner cannot equate the licence, which will be granted to them as any other licence issued by the Government or Government Corporations. But for the permission granted by TASMAC to create a faclity for permitting customers to consume liquor in a designated area, no independent right flows in favour of the petitioners. There are specific prohibition under the Rules, which prohibit establishment of shops near places of worship, educational institution etc.
14. The learned counsels appearing for the respondent/TASMAC submitted that the concept of providing a permises for consumption of liquor adjacent to the shop on account of ban of consumption of liquor in public places and to prevent persons from consuming liquor in open areas and to maintain a hygienic atmosphere, which most of the petitioners, who are existing licensees have failed to adhere to. This is also one of the contributory factors for lack of patronage as stated by some of the petitioners.
15. For all the above reasons, I find that there is no irrationality or arbitrariness in the conditions stipulated in the impugned tender notification and the basis for calculating the Security Deposit and the monthly licence fee has been shown to be done in an appropriate manner taking into consideration the turnover of a particular retail vending shop. Apart from that the licence fee does not remain static throughout the period of licence, as was earlier, but would depend upon the sale in the preceding month. This would take care of situation, where the sales have come down in a particular shop for a particular month. This condition cannot be stated to be irrational or unreasonable.
16. As pointed out earlier, the argument of the petitioner that the volume of sale in the bar alone should be taken into consideration and not the turnover in the retail vending shop is a plea which is to be rejected, as there is no right to vend liquor in the premises termed as bar and it is only a facility offered for persons, who purchase liquor from the retail vending shop and would desire to consume the same in the facility, which is adjacent to the retail vending shop. In such facility authorized by the TASMAC, the petitioner is granted licence to sell eatables and collect empty bottles. Thus, there can be no indenpendent turnover for the Bar. Hence, the volume of sales calculated based on the sales turnover of the shop is just and proper. All these years, the licence fee has been computed based on the turnover of the shops. Hence, the contention of the petitioner in this regard is devoid of merits.
17. In the light of the conclusion arrived at by this Court holding that there is no irrationality or unreasonableness in the impugned tender notification, the decision in the case of LIC of India (supra), International Airport Authority of India (supra) would have no application to the facts of the present case. Equally, the decision in the case of Style (Dress Land) (supra) also would not be applicable to the cases on hand, as this Court was found that there is no arbitrariness or irrationality in the conditions of tender. In the case of Kerala Samsthana Chethu Thozhilali Union (supra), the challenge was to the Kerala Abkari Shops Disposal Rules, 2002 as ultra vires the Abkari Act and on the contentions raised with regard to the Constitutional validity of the Rules, a decision was rendered holding that the State while parting with exclusive privilege cannot take recourse to a doctrine take it or leave it having regard to the equity clause enshrined under
Article 14 of the Constitution of India and State in its dealings must act fairly and reasonably and the bargaining power of the State does not entitle it to impose any condition it desires. The said decision can have no application to the cases on hand in the State of Tamil Nadu, the law governing liquor trade is the Tamil Nadu Prohibition Act and the right to vend liquor is an exclusive privilege of the State. The petitioners have failed to establish as to how
Article 14 of the Constitution has been infringed on account of the tender condition and in the light of the discussion in the preceding paragraphs, it can be safely concluded that the action of the respondent/TASMAC has been fair and reasonable and the conditions imposed are neither arbitrary or irrational. The decision in the case of Doongaji and Co. (I) vs. State of Madhya Pradesh and others reported in (1991) Suppl. (2) SCC 313 cannot be applied to the cases on hand, as it dealt with issuance of licence to manufacture and supply liquor under the Madhya Pradesh Excise Act, 1915. The said decision is clearly distinguishable on facts as under the provisions of the Tamil Nadu Prohibition Act, the exclusive right to vend liquor vests with the State.
18. For all the above reasons, it is held that the petitioners have not made out any case for interference with the impugned notification and accordingly, these Writ Petitions fail and they are dismissed. No costs. Consequently, connected miscellaneous petitions are closed.
23.11.2017 Index : Yes/No pbn To
1.The Managing Director, The Tamil Nadu State Marketing Corporation Limited (TASMAC), Thalamuthu Natarajan Maaligai, Gandhi Irwin Road, Egmore, Chennai-8.
2.The Senior Rengional Manager L.L.A., The Tamil Nadu State Marketing Corporation Limited (TASMAC) Buildings, Anna Salai, Chennai-2.
3.The District Manager (East), The Tamil Nadu State Marketing Corporation Limited (TASMAC), No.1, Bangalore High Way, Chembarambakkam, Thiruvallur District.
T.S.SIVAGNANAM, J.
pbn Pre-delivery orders made in W.P.Nos.29727 to 29746 of 2017 etc., batch 23.11.2017