JUDGMENT Satish Chandra, C.J.
1. Two principal questions of law require consideration by this Full Bench. The first is whether the restriction imposed by the Excise Commissioner that all excise shops shall, with effect from December 20, 1980, remain closed on Friday also, will apply to the pre-existing licensees of excise shops. The second question is whether the variation of the strength of liquor is valid.
2. We shall take up the question of Friday closure first. The wholesale and retail sale of liquor and other excisable articles is generally permitted by auctioning shops of various places to the highest bidder. This is an auction system of sale of excise shops.
3. Previously, according to paragraphs 351 and 352 of the U. P. Excise Manual, the excise shops could ,be kept open till 10 P. M. On September 18, 1977, notifications were issued amending these rules and directing that the licensees of excise shops shall keep their shops open till 8 P. M. only. Thus, the business hours were reduced by two hours. The licensees of a large number of excise shops challenged these notifications by filing writ petitions. Those writ petitions came up for hearing before a Division Bench whose judgment is reported in G. C. Jaiswal v. Excise Commissioner U. P. 1978 All LJ 802. The Bench held that the power to place restrictions and conditions subject to which license may be granted fell within the purview of Section 41 (c) (v) of the U. P. Excise Act (No. IV of 1910). Such restrictions and conditions could only be placed on licenses which may be granted thereafter. They will not be applicable to licenses already issued. Hence, the amending notification reducing the business hours of excise shops by two hours, was not applicable to existing licenses. The writ petitions were accordingly allowed and the authorities were directed not to enforce the notification dated September 18, 1977 on the existing licensees.
4. On August 20, 1980, the Excise Commissioner issued another notification under Section 41 (c) (v) of the U. P. Excise Act seeking to amend Rule 13-B of the General Rules for conducting sales. This Rule 13-B laid down the days on which excise shops were to remain closed. In that rule, the amendment was to add "all Fridays" with the result that under it all excise shops were required to remain closed on Fridays as well. This notification was challenged by licensees of excise shops. Those group of writ petitions came up for hearing before another Division Bench. They were allowed by a iudg-ment which is reported in Darshanlal v. State of Uttar Pradesh (1981 UPTC 156). The Bench reiving on the earlier Division Bench decision of this Court in G. C. Jaiswal (supra), held that the amendment of Rule 13-B will be inapplicable to existing licensees. They agreed that such restrictions could be placed only at the time of the grant of the licences. The power to place restriction was prospective and could not affect licenses already issued. The writ petitions were accordingly allowed.
5. Not to be outdone, the Excise Commissioner issued yet another notification on December 20, 1980. This was in exercise of the powers under Section 41 of the U. P. Excise Act. It again purported to amend the same Rule 13-B. The notification states that it has been made in supersession of earlier notification to amend the rules relating to "general conditions to be observed by all licensees," published with the Board of Revenue, U. P. order dated September 26, 1910 contained in Section XXXI of the U. P. Excise Manual Volume I, Second Edition, 1974. It goes on to amend Rule 13-B. There it says that in the rules relating to general conditions to be observed by all licensees contained in para 348 (7) of Section XXXI of U. P. Excises Manual Volume I, Second Edition. 1974 for the rule as set out in Column I below the rule as set out in Column 1 Column 2 Existing Rule Rule hereby substituted.
13-B. All excise shops (including foreign liquor, country spirit, hemp, drug, opium, tari and outstill shops shall remain closed on Independence day (Aug. 15) Mahatma Gandhi's Birthday (October 2) and on the day of Mahatma Gandhi's tragic death (January 301 every year and also on all Tues-days:
13B. AH excise shops, of every intoxicant shall not be kept open on the following days, in addition to the day following the burning of Holi and the principal Dewali Day:
(1) Independence Day (August 15) (2) Mahatma Gandhi's Birthday (October 2) (3) The day of Mahatma Gandhi's Martyrdom (January 30) (4) The first day of every month (5) All Tuesdays and (6) All Fridays, Here again, the only material and relevant amendment made was to add "all Fridays" in that rule. The effect of this notification was that Rule 13-B now required all excise shops not to open on, inter alia, all Fridays.
6. In August. 1930, the same Rule 13-B was amended. This rule was sup-? posed to be contained in para 374 ,of the Excise Manual, relating to "general rules for conducting sales". By the notification of December 20, 1980 the same Rule 13-B is being amended and, it is stated that this rule is contained in paragraph 248 (7) (348 (7)?) of Section XXXI of U. P. Excise Manual, Volume I, Second Edition, 1974. When we look to the 1974 Excise Manual, we fail to find any rule like Rule 13-B mentioned in it. Paragraph 348 (7) is there which deals with the days on which the excise shops are to remain closed. Be that as it may, in spite of two Division Bench decisions of this Court holding that any amendment of rules relating to restrictions and conditions subject to which licenses may be granted, are applicable prospectively and cannot be enforced on existing licenses, the Excise Commissioner issued a Radiogram to all Excise Officers to see that the amendment introduced by the notification of December 20, 1980, is complied by all persons. In fact, there was no one else except the existing licenses to be affected by it, the licenses for the subsequent excise year having not been granted till then. The sole purpose of issuing the notification on December 20, 1980 was to affect existing licensees and to force them to close the excise shops on all Fridays. The Excise Commissioner thus acted in teeth of the two Division Bench decisions of this court, without either taking power by amendment of the law to get over the difficulties pointed out by the earlier decisions or by getting those decisions re-examined and set aside by a higher court. We may observe that the Government and high Executive Authorities are expected to follow the law as laid down by this Court. If it is not convenient, they should, before defying it, make appropriate amendments to the law. This group of writ petitions is an illustration of the wholly unnecessary litigation and harassment engineered by the Excise Commissioner and the State Government.
7. When this group of writ petitions came up for hearing before a Division Bench of which two of us were members (Hon'ble the Chief Justice and Hon'ble K. N. Seth J.), the learned Advocate General, invited the attention of the Bench to paragraph 347 of the Excise Manual. He submitted that this rule was not brought to the notice of the earlier Division Benches, else the decision might have been different. Paragraph 347 of the Excise Manual states :
"Every licensee for the retail vend of intoxicants shall be bound to observe both the general and special conditions, (if any) of his license; and all directions, prohibitions and orders of the excise laws for the time being in force, whether such directions, prohibitions and orders be embodied in the conditions of his license or not; and all directions, orders and prohibitions contained in rules lawfully made under the excise laws of which he shall have received due notice."
8. Learned counsel appearing for the petitioners submitted that paragraph 347 of the Excise Manual is not a rule made under any rule making power conferred by the U. P. Excise Act and so it does not have the force of law. The learned Advocate General contradicted him. The Bench, however thought that the matter was of substantial importance and since it may involve the reconsideration of earlier Division Benches, it referred the case to a larger Bench. This led to the constitution of the present full Bench.
9. At the hearing before the Full Bench, the question at the threshold was whether paragraph 347 has any statutory force. The learned Advocate General stated that he has not been able to lay his hands upon any notification issued under the rule making power either by the State Government under Section 40 or by the Excise Commissioner under Section 41, but that his Department was searching for it. We, however granted him time to file an affidavit stating the source of this paragraph. In paragraph 6 of the affidavit filed, it has been stated :--
"That so far as the question relating to the source of para 347 of the Excise Manual, Volume I is concerned, it is stated that the department has not yet been able to find out the particulars and the reference of the order of the Revenue Authority and Excise Commissioner by which this para was inserted in the Manual."
10. It is thus clear that the notification, if any, by which this paragraph was introduced is not available. It is not known which authority made the order. The rule making power has been conferred on the State Government (Section 40) and the Excise Commissioner (Section 41). Under Section 77 of the U. P. Excise Act, all rules made and notifications issued under the Act are required to be published in the official gazette. Then they have effect as if enacted in this Act. The respondents do not say that any rule or notification to the effect as mentioned in paragraph 347 was ever published in the gazette. In State of U. P. v. Kishori Lal Minocha AIR 1980 SC 680, the question was whether Rule 357 of the Excise Manual was statutory rule. This High Court had held that the conditions mentioned in Rule 357 had never been published as required and they did not, therefore, have the force of law. Part II of the Excise Manual which includes Rule 357 contained provisions which were "commonly referred to as the rules." But were not really statutory rules and that it was "a sort of a book of guidance." The Supreme Court upheld this view of this court and held that Rule 357 not having been published in the gazette, did not have the force of law.
11. A Full Bench of our court in P. C. Kapoor and Bros. v. Commr. of Income-tax, Lucknow 1973 UPTC 21 : (1973 Tax LR 498), had occasion to deal with Volume I of the U. P. Excise, Manual. Their Lordships observed (at p. 503 of Tax LR) :--
"Volume I of the U. P. Excise Manual is a compilation of the Excise laws, rules and executive instructions. It has been divided into two parts. The first part reproduces the U. P. Excise Act (Act IV of 1910) together with some other enactments and their extracts. The second part has been divided into various chapters dealing with all aspects of the excise administration. In this part, the letters and the instructions issued by respective authorities have been tabulated in the form of paragraphs so that the one may get a clear picture about the administration and working of the Excise Department in the State. It also contains other incidental and connected information. As against several of these paragraphs the source which for the basis for the information contained therein has also been stated. All the paragraphs of Volume II of the Excise Manual cannot be equated with rules framed by relevant rule making authority under the provisions of the U. P. Excise Act. Some of these paragraphs may he based on actual rules framed under the Act whereas some others may merely be executive instructions issued by relevant authorities from time to time-Some of the paragraphs may merely convey incidental or factual information which does not flow either from a law. rule or executive instructions. While considerinct the implication of what is contained in a particular para-graph of the Manual the source on the basis of which the facts mentioned in that paragraph have been stated will have to be traced."
12. In the Manual, opposite paragraph 347 there is no indication of its source. It cannot hence be said as to who issued the instructions or guidance on the basis of which paragraph 347 was introduced in the Manual.
13. The learned Advocate General submitted that paragraph 347 of the Manual is referable to Section 31 of the Excise Act. Under it. the Excise Commissioner has the power to place restrictions and conditions on licenses.
The question does not arise because the fact that the Excise Commissioner had issued direction to the effect as mentioned in paragraph 347 itself has not been proved. Further, a Division Bench of this Court in State of U. P. v. K. P. Sui. 1976 All LJ 483 : (AIR 1977 All 279) has held that power under Section 31 can be exercised by the Excise Commissioner only by making appropriate rules under Section 41 of the Act. The learned Advocate General did not even refer to this decision in his arguments and we see no reason to take a different view. It is thus clear that paragraph 347 is not a statutory rule and does not have the force of law.
14. Even on the merits, paragraph 347 does not help the respondents. This paragraph only requires that every licensee shall be bound by directions, prohibitions orders and the excise law for the time being in force even where such directions, etc., are not incorporated in his license. The directions in question must be of the excise laws or those contained in the rules lawfully made under the excise laws Rule 13-B as interpreted by successive Division Benches of this Court is applicable to licenses that may be granted after the date of its amendment. Hence, there is no lawful direction that excise shops be closed on all Fridays which may valid-ly apply to licenses that had been granted prior to December 20, 1980.
15. The learned Advocate General submitted that the impugned notification amending Rule 13-B could valid-ly be made by the Excise Commissioner under Section 31 of the Act. We are not impressed by this submission. In the first place, the notification itself recites that it has been made under Section 41 with the previous sanction of the State Government. Then the Division Bench decision in State of U. P. v. K. P. Sui (AIR 1977 All 279) (supra) lays down that the power under Section 31 can be exercised only in accordance with Section 41. That takes us back to Section 41. Under Section 41, the position is that restrictions and conditions with respect to the days or hours of closure are applicable to licenses issued on or after the date of the coming into force of the restrictions.
16. It was also faintly suggested that Clause (xv) of the petitioners' license makes a provision similar to paragraph 347. As already seen such a clause would make only validlv issued orders binding on the licensees. If a particular rule or order is ultra vires, its mere incorporation in the contract will not make a binding term of contract. This has been held by the Division Bench in State of U. P. v. K. P. Sui (supra). Looked at from any point of view, the notification of December 20, 1980 amending Rule 13-B cannot be held applicable to pre-existing licensees. The Radiogram enforcing it against the existing licensees was an exercise in futility.
17. We then come to the question of variation of strength. It appears that when the excise shops were auctioned for the year 1980-81, the prevailing strength of liquor was 36/v./v. On Aug. 21, 1980, a notification was issued which had the effect of reducing the strength from 36v/v to 28 v/v. In the group of writ petitions covered by the judgment of this Court in Darshanlal v. State of U. P. (supra), the notification reducing the strength was also held inapplicable to existing licensees.
18. The State Government however, wanted that the existing licensees should also sell comparatively diluted liauor i. e. instead of 36 v/v strength, they should sell 28 v/v strength. To that end, the State Government issued a notification : dated December 20, 1980 under Section 4 (2) of the Act. The notification stated :--
"Notification/ Miscellaneous No. 8272-E/XIII-656/79, dated Lucknow, December 20, 1980. In exercise "of the powers conferred by Sub-section (2) of Section 4 of the U. P. Excise Act, 1910 (U. P. Act No. IV of 1910) and in partial modification of notification No. 6121-E/ XIII-275 (1)/58 dated Dec. 30, 1960, the Governor is pleased to declare that for the purposes of the said Act, the following shall be deemed to be country liquor and foreign liquor, respectively :
I. Country Liauor-- , (1) Plain or spiced spirit containing alcohol not exceeding 28 per cent v/v and which has been made in India from materials recognised as bases for coun-trv spirit, namely, mahua. rice, gur or molasses and on which duty has not been imposed at the rate fixed for the importation of spirit into India : (2) Tari and (3) All fermented, alcoholic beverages made from mahua, rice, millet or other grains according to Indian process.
II. Foreign Liquor :
(1) Beer and spirit, wines and liquors which have been imported into India and are intended for human consumption and were liable on such importation to duty under the Customs Tariff Act 1975 read with the Customs Act, 1962 (2) Spirit made in India and sophisticated or coloured so as to resemble in flavour or colour liquor imported into India (3) Beer brewed in India; (4) Wines and liquors made in India; and (5) all rectified, perfumed medicated and denatured spirits wherever made By order of Governor.
Sd/- Saran Prasad Special Secretary."
19. The term 'liquor' has been defined under Section 3 (11) of the U. P. Excise Act to mean intoxicating liquor and includes spirits of wine, spirit. wine. Tari, pachwai beer and all liquid consisting of or containing alcohol, also any substance which the State Government may, by notification, declare to be liquor for the purposes of this Act. Section 4 confers powers on the State Government to declare what is to be deemed 'liquor'. It provides :--
"4 (1). The State Government may, by notification, declare any substance to be 'liquor' for the purposes of this Act or any portion thereof. (2). The State Government may in like manner and for the like purposes declare what shall be deemed to be 'country liquor' and 'foreign liquor' respectively."
20. It appears that by the notification dated December 30. 1960. the State Government had declared what shall be deemed to be 'country liquor' and 'Foreign Liquor'. The present notification dated December 20, 1980 partially modified the earlier notification dated December 20, 1960. The Principal modification is specification of strength. This notification of the State Government has been challenged on the following grounds :--
(1) Under Section 4 (2) of the Excise Act, strength of liquor cannot be ore-scribed. The same is in the exclusive domain of the Excise Commissioner under Section 41 (e) (iii) of the Act.
(2) The notification is unreasonable and hence invalid.
(3) The State Government is barred by the principle of promissory estoppel in varying the strength in the middle of the year.
21. Under Section 4 (1) the State Government can declare any substance to be 'liquor'. Under Section 4 (2) the State Government can declare what shall be deemed to be country liquor and 'Foreign Liquor'. The State Government's power is not confined to declaration of substance which may be liquor. In addition to this general power, the State Government has special power to declare what shall be deemed to be 'country liquor' and 'Foreign Liquor'. So the State Government can for instance declare thai tari will be liquor. Under Section 4 (2) the State Government can validly limit the strength up to which a substance shall be deemed to be 'country liquor' or foreign liquor. Or beyond which it shall not be deemed to be country liquor or foreign liquor for purposes of the U. P. Excise Act. The power to lay down the limits of the strength within which a substance will be deemed to be country liquor or foreign liquor is plainly within purview of Section 4 (2) of the Act.
22. Section 41 provides that the Excise Commissioner subject to the previous sanction of the State Government may make rules on subjects mentioned in its various clauses. Clause (c) (iii) reads :--
"(c) prescribing the restriction under and the conditions on which any license, permit or pass may be granted including provision for the following matters :--
(i) & (ii).....
(iii) the fixing of the strength, price or auantity in excess of or below which any intoxicant shall not be sold or supplied, and of the quantity in excess of which denatured spirit shall not be processed, and the prescription of a standard of quality for any intoxicant."
23. The provision no doubt deals with, inter alia, the fixing of the strength subject to which license may be granted. Under Section 41, the Excise Commissioner cannot (sic) (do if) subject to the previous sanction of the State Government. Under Section 4 (2), the State Government had declared what shall be the country liquor and foreign liquor. These two provisions are on the same topic. They should be read harmoniously. So read it is apparent that the Excise Commissioner can make rules under Section 41 in relation to the fixing of the strength keeping in view the limits laid down by the State Government in declaring what shall be deemed to be the country liquor and foreign liquor.
24. We are not impressed by the submission that Clause (e) (iii) of Section 41 is a special provision and Section 4 (2) a general provision, and so the special would undo the general. This doctrine cannot be applied to nullify a completely independent provision like Section 4 (2). So far as the topic of the fixing of the strength is concerned, it is included in both the provisions. None of them is special as compared to the other. The power under Section 4 (2) is a general power of the State Government. It cannot be nullified by such a construction of Section 41 (c) (iii).
25. It was next submitted that the notification was unreasonable and so invalid. There is no merit in this submission. The attempt of the State Government in reducing the strength of country liquor is obviously in consonance with the Directive principles of State policy as laid down under Article 47 of the Constitution. Article 47. inter alia, provides that the State shall regard the improvement of public health as among its primary duties and shall, in particular, endeavour to brine about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are iniuri-ous to health. On July 31, 1954 the State Government issued a notification which is paragraph 3 of the Exci.se Manual Volume I. It says that the fundamental policy of Excise Administration as enunciated in Article 47 of the Constitution of India, into promote, enforce and carry into effect the policy of prohibition of the consumption except for medicinal purposes of intoxicating drinks and drugs which are injurious to health. By the impugned notification, the State Government has slightly reduced the strength of country liquor. That is obviously with a view to execute the Directive principles of State policy enunciated under Article 47 of the Constitution to some extent. There is no element of unreasonableness in it. It was faintly suggested that by reduc-
ing the strength in the middle of the year, the petitioners are being compelled to violate the contract which was to sell country liquor of 36v/v strength.
26. By prescribing a reduced strength of country liquor, the State Government makes country liquor of a higher strength not available. The reduction of strength is more directed to the manufacturers of country liquor rather than the sellers like the petitioners. Country liquor of higher strength cannot validly be manufactured. The Government's attempt is not to compel the petitioners to violate any contract. The petitioners obtained the license for sale of country liquor of 36v/v strength because, at that time, that was the declared substance to be the country liquor. With the reduction in the strength, the petitioners would sell only the reduced strength available country liquor. It has not been alleged that they had entered into any contract with any one else to supply country liquor of 16v/v strength. There is hence no question of the petitioners being compelled to violate some contract of theirs.
27. The last argument was that the respondents were barred by the doctrine of promissory estoppel in changing the strength so as to affect the existing licensees. Reliance was placed upon Motilal Padamgat Sugar Mill Co. Ltd.'s case (AIR 1979 SC 621). This decision of the Supreme Court was considered and dealt with by it in a subsequent decision in Messrs. Jit Ram Shiv Kumar v. State of Haryana (AIR 1980 SC 1285). After an elaborate discussion, Kailasam J. held (at p. 1302) :--
"The scope of the plea of doctrine of promissory estoppel against, the Government may be summed up as follows :
(1) The plea of promissory es-toppel is not available against the exercise of the legislative functions of the State.
(2) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.
(3) When the officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available. The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers.
(4) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. The officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position.
(5) The officer would be justified in changing the terms of the agreement to the preiudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State."
In that case, levy of octroi duty by a municipality contrary to representations made by it to the buyers of the sites in the town was upheld as valid. The Court held that it cannot be challenged as it was in the exercise of its statutory duty.
28. The notification challenged in the present case covered by the first two heads as laid down by the Supreme Court. The declaration of strength has been made by the State Government in discharge of its statutory function. Moreover, the notification is a piece of subordinate legislation and is not an executive direction because it formulates a binding rule of conduct generally for the purposes of the Excise Act. The notification has been made in exercise of the legislative function of the State Government. The doctrine of promissory estoppel is hence inapplicable to it.
29. In the result, we find no merit in any of the submissions made before us to challenge the notification reducing the strength of the liquor.
30. In the result, the petitions succeed and are allowed in part. The respondents are directed not to enforce the notification relating to Friday Closure against the petitioners who are all existing licensees. In view of the divided success, the parties will bear their own costs.