*THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO + WRIT PETITION Nos. 19468 AND 24530 OF 2014 % Dated: 08.10.2014
W.P.No.19468 of 2014
BETWEEN Y. Rajaiah Naidu, S/o Krishnama Naidu R/o B.N. Kandriga, Gazette SlNo.369 Shop No.1, B.N. Kandriga Mandal , Chittoor District and 1 another ….. Petitioners AND The Government of Andhra Pradesh Rep by its Principal Secretary, Revenue (Excise II) Department, Secretariat, Hyderabad and 4 others ….. Respondents ! Counsel for the Petitioner : Sri S.V. Muni Reddy ^Counsel for the Respondents : 1. GP for Prohibition & Excise 2. Sri Maheswara Rao Kuncheam
W.P.No.24530 of 2014
BETWEEN Y. Rajaiah Naidu, S/o Krishnama Naidu R/o B.N. Kandriga, Gazette SlNo.369 Shop No.1, B.N. Kandriga Mandal , Chittoor District and 1 another ….. Petitioners AND The Government of Andhra Pradesh Rep by its Principal Secretary, Revenue (Excise II) Department, Secretariat, Hyderabad and 4 others ….. Respondents ! Counsel for the Petitioner : Sri S.V. Muni Reddy ^Counsel for the Respondents : 1. GP for Prohibition & Excise 2. Sri Vedula Srinivas <Gist:
>Head Note:
? Citations:
1. 1966 AIR 671
2. AIR 1967 SC 1606
3. AIR (SC) 1950 PG 222
4. 1963 (1) SUPP SCR 242
5. AIR 1954 SC 220
6. AIR 1957 SC pg 414
7. AIR 2004 SC 658
8. 2007 (3) ALD 128 (DB) THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NOs.19468 AND 24530 OF 2014 COMMON ORDER:
Both these writ petitions are instituted by the very same petitioners.
Respondents are also common in both the cases.
W.P.No.19468 of 2014 is instituted seeking a writ of mandamus for declaring the action of the respondents 2 to 4 in permitting the fifth respondent to shift his shop notified in the Gazette at Serial No. 371 from Nelavai Village to Neerupakakota Village as illegal, malafide and violative of the scope and power vested under Rule 28 of the Andhra Pradesh Excise (Grant of License of Selling by Shop and Conditions of License) Rules, 2012, and to consequently direct the respondents 1 to 4 not to permit the fifth respondent to shift and operate his shop at Neerupakakota Village, B.N. Kandriga Mandal, Chittoor District whereas W.P.No.24530 of 2014 seeks a writ of mandamus to declare the proceedings dated 18.08.2014 of the Commissioner of Prohibition & Excise, Government of Andhra Pradesh as illegal, unjust and violative of Article 19(1)(g) of the Constitution of India.
The Prohibition & Excise Superintendent, Tirupati issued notification dated 23.06.2014 in the District Gazette inviting the applications for consideration and grant of licenses for retail sale of liquor for a period of one year commencing on 01.07.2014. In accordance therewith the first petitioner herein applied for Shop No.1, Buchinaidu Kandriga, while the second petitioner applied for Shop No.2 of Buchinaidu Kandriga. Accordingly, both the petitioners were selected for grant of license for sale of Indian Made Foreign Liquor and Foreign Liquor in retail. It is the case of the petitioners that the fifth respondent applied for and was selected and granted license for the shop notified at serial no.372 of the district gazette to be located at Nelavai Village. Though Nelvai Village also falls within B.N. Kandriga Mandal, the same is at a distance of more than 9 kms wherefrom the petitioners have established their retail liquor vends. The writ petitioners came to learn that the fifth respondent has applied for shift of his licensed premises from Nelvai Village to Neerupakakota Village, with a malafide intention to cause business loss to the petitioners herein. The application of the fifth respondent has been taken up for consideration behind the back of the petitioners without any notice or communication to them. At that stage, the petitioners have instituted W.P.No.19468 of 2014. However, since the necessary permission has been accorded to the fifth respondent by the second respondent Commissioner of Prohibition & Excise, Government of Andhra Pradesh on 18.08.2014, the second writ petition W.P.No.24530 of 2014 has come to be instituted challenging the validity of the said order.
Heard Sri S.V. Muni Reddy, learned counsel for the petitioners and the learned Government Pleader for Prohibition & Excise and Sri Vedula Srinivas, learned counsel for the fifth respondent.
It is contended by Sri S.V. Muni Reddy that only for valid reasons, a shift in the licensed premises can be permitted by the Commissioner of Prohibition & Excise whereas the Commissioner has not assigned any reasons whatsoever in his order dated 18.08.2014 permitting the shift from Nelavai Village to D.No.2-64 Neerupakakota Panchayat of B.N. Kandriga Mandal. For sheer absence of reasons, the order dated 18.08.2014, the petitioners contend, deserves to be set-aside. Further, the petitioners have not been put on notice and specific opportunity was not provided to them and without considering the likely impact upon the business of the petitioners, the impugned order has been passed. It is also contended that, by permitting shift of the licensed premises of the fifth respondent, it is the petitioners business interests which will get adversely effected and hence the action of the respondents is contrary and in violation of the fundamental rights guaranteed to the petitioners under Article 19(1)(g) of the Constitution of India. It is also contended that, when the notification in the district gazette appeared on 23.06.2014, each mandal-wise, a number of shops to be located at the specified area/locality have been notified. The petitioners have picked up the licenses for the two shops notified to be located at B.N. Kandriga Village by offering the license fee of Rs.32.50 lakhs, whereas, the fifth respondent has offered to take the license at Nelvai Village of B.N. Kandriga Mandal. The fifth respondent was thus granted the license for Nelvai Village and it appears he applied for a shift of his licensed premises for no valid or justifiable reasons and hence, the order passed by the Commissioner on 18.08.2014 deserves to be set-aside.
The Prohibition & Excise Superintendent, Tirupati, the fourth respondent filed a detailed counter affidavit. It is pointed out that while the petitioners were selected for Shop Nos. 1 & 2 on 28.06.2014 in the very first round of the auctions, nobody has applied for or taken the license for the shop at serial no.372 at Nelvai Village, B.N. Kandriga Mandal. During the second round, the fifth respondent was the only applicant for grant of license of Nelvai Village and accordingly, the license was granted in favour of the fifth respondent on 08.07.2014. The fifth respondent has applied for shift in the licensed premises as he is unable to run business a t Nelvai Village due to several objections raised by the villagers and women organizations. The Station House Officer, Srikalahasti enquired into the matter and reported that the general public and women in particular, are objecting for carrying on liquor business in Nelvai Village. The media has also covered the protests of the general public and women organizations for establishment of the liquor vend in the village. Eversince the license was granted in favour of the fifth respondent, the villagers have been continuously protesting against the establishment of a liquor vend in their village. Therefore, the claim of the fifth respondent that he was not able to carry on business in Nelvai Village is a genuine one. Hence, his application for shift of licensed premises to B.N. Kandriga village has been taken for consideration. Further, it is pointed out that, as per the report of the 2011 census, the total population of Nelvai Village is only 394 whereas the population of Neerupakakota Panchayat is 388 and the population of B.N. Kandriga Village is 1555. B.N. Kandriga village is incidentally the mandal headquarters village, whereas, Neerupakakota Panchayat is a separate revenue village. As per the statistical information available, the total sales turn over of the retail outlets in B.N. Kandriga village for the period from 01.07.2013 upto 30.06.2014 was to the order of Rs.2.18 crores and Rs.2.10 crores respectively. Further, the sales particulars of the two licensed shops for B.N. Kandriga Village from 01.07.2014 upto 11.08.2014 is to the order of little more than Rs.28 lakhs and Rs.25 lakhs respectively, whereas, the sales turnover of the fifth respondent at Nelvai Village upto 11.08.2014 is to the order of Rs.7.69 lakhs, thus reflecting that both the petitioners had carried business of more than 3 times the sales turn over of the fifth respondent at Nelvai Village. Since the license fee of the fifth respondent is also the same as that of Rs.32.50 lakhs, equal to that of the petitioners herein, the request of the fifth respondent to shift to Neerupakakota Village, though is nearer to B.N. Kandriga Mandal is found reasonable and hence ordered by the Commissioner of Prohibition & Excise.
The fifth respondent in his counter affidavit would submit that after the fifth respondent has established his shop at Nelvai Village by incurring huge amounts, the local women have held dharna in front of the shop and thus, created difficulties for the fifth respondent to run his business there. Since the protests of the villagers is going on unabated, the fifth respondent is unable to carry on his business there.
In this backdrop, the entire question which is required to be resolved is as to whether the action of the Commissioner in permitting shift of the licensed premises of the fifth respondent is justified and as to whether it is in accord with the requirement of Rule 28?
To deal with matters relating to the production, manufacture, possession, transport and purchase of sale of intoxicating liquor and drugs, the levy of duties of excise and countervailing, duties on alcoholic liquors for human consumption and to provide for matters connected therewith, the State Legislature enacted the Andhra Pradesh Excise Act, 1968, for short referred to as ‘Act’ henceforth.
Under Subsection (1) of Section 3, Government is empowered to appoint an officer as the Commissioner of Prohibition & Excise for the State, who subject to the general or special orders of the Government, shall be the Chief Controlling Authority in all matters connected with the administration of the Act. Under Subsection (1) of Section 5, Government may also appoint such number of Additional Commissioners, Joint Commissioners, Deputy Commissioners and Assistant Commissioners of Prohibition & Excise and such other subordinate Officers as it may think fit for purposes of performing the functions respectively conferred on them by or under the Act. Subsection (1) of Section 15 prohibited selling or buying of any intoxicant except under the authority and in accordance with the terms and conditions of license granted in that respect. Subsection (1) of Section 17 spelt out that subject to the provisions of Section 28 and any rules made in that behalf, the Government may, subject to such conditions as they may deem fit to impose, grant for a fixed period to any person, a lease or license or both for the exclusive privilege, amongst various other things, for sale of liquor or intoxicants or any other material by shop or by bar. Whereas, Section 28 specified the terms and conditions subject to which the licenses could be granted under the Act. Subsection (1) of Section 20 authorized the District Magistrate by notice in writing to the licensee/leaseholder to close any shop/bar in which any intoxicant is sold at such times or for such period, as he may think necessary for preservation of public peace. Subsection (2) thereof authorizes any Magistrate, in case of any riot or unlawful assembly is apprehended or occurs in the vicinity of such shop/bar, for reasons to be recorded in writing, require such shop/bar to be kept closed for such reasonable period as he may think necessary. Subsection (3) thereof makes it abundantly clear that the licensee/leaseholder shall not, on account of closure of the shop/bar under this section, be entitled to any compensation or refund of a license fee or lease amount. Thus, specific power has been conferred upon the District Magistrate and or any other Magistrate to keep the shop/bar closed for such reasonable time or period as one might consider it necessary for purposes of keeping public peace and upon any such order of closure of the shop/bar the licensee thereof is not entitled to any compensation or refund of license fee or the lease amount. Subsection (1) of Section 23 of the Act empowered the Commissioner or any other officer authorized from accepting payment of a sum in consideration of the grant of lease or license for the exclusive privilege in respect of liquor or any other intoxicant granted in terms of Section 17 apart from levy of any excise duty or fee in terms of Sections 21 & 22 of the Act. Section 63 provided for appeals to be preferred against the orders passed by officers subordinate to the Commissioner. While Section 64 of the Act provided that the Government may either suo motu or on an application call for and examine the records of any officer in respect of any decision, order or other proceedings made under the Act, including those relating to grant, issue or refusal of license or permit, for the purpose of satisfying themselves as to the correctness, legality or propriety of any such decision or order or as to the regularity of such proceedings and if in any case, it appears, to them that such decision, order or proceedings should be modified, annulled, reversed or remitted for reconsideration, they may pass orders accordingly. The proviso incorporated in Section 64 of the Act makes it clear that before using any such power, no order adversely affecting any party shall be passed unless he has been given an opportunity of making his representation. Section 72 of the Act conferred power on the Government to make rules for carrying out all or any of the purposes spelt out in the Act. Subsection (2) of Section 72 listed out in detail the purposes for which the rules may be made by the Government. Clause (a) thereof made it clear that rules can be made prescribing the powers and duties of Prohibition & Excise Officers. Clause (e) also made it clear that rules can be made for regulating the periods and localities in which and the persons or classes of persons to whom, licenses for the wholesale or retail sale or buying of any intoxicant may be granted and regulating the number of such licenses which may be granted in any area. Thus, rules can be framed under Section 72 of the Act prescribing the powers and duties of various Prohibition & Excise Officers and regulating the licenses for retail sale of intoxicants that might be granted in any area. Accordingly, The Andhra Pradesh Excise (Grant of License of Selling by Shop and Conditions of License) Rules, 2012, for short henceforth called as ‘Shop Rules’ have come to be framed. This subordinate legislation is, thus, enforceable. Sub-rule (1) of Rule 3 made it clear that, the right to sell Indian Made Foreign Liquor and Foreign liquor in retail by shops shall ordinarily be granted by way of license issued after publishing a notification and inviting applications from the public. Rule 4 specified that subject to such directions which the Government may issue from time to time, the Commissioner of Prohibition & Excise, having due regard to the requirement, public order, health, safety and other factors as he thinks fit, may fix the number of shops to be established in an area/locality before the publication of the notification under Rule 5. Thus, Rule 4 obligates the Commissioner of Prohibition & Excise to have due regard to the consumption requirement, public order, health, safety and other factors before he fixes the number of shops to be established in any area or locality. Thereafter, under Rule 5 the licensing authority can call for applications for grant of licenses only in such area/locality as approved by the Commissioner of Prohibition & Excise by issuing a notification in the District Gazette specifying the serial number and name of the area/locality where the shop will be established. The procedural aspects relating to submission of applications and selection of applicants for grant of license has been detailed in Rule 12. Rule 15 obligated the selected applicant to obtain the license in Form A-4 after fulfilling the required formalities and satisfying the rules in respect of the premises where the shop will be located. Rule 18 empowered the Commissioner of Prohibition & Excise to permit the Andhra Pradesh Beverages Corporation Limited or a licensee of IMFL Manufactory/ Brewery to open outlets for the sale of IMFL and FL anywhere in the State whenever he deems it necessary in public interest to do so. Similarly, the District Collector with the approval of the Commissioner of Prohibition & Excise may permit the Andhra Pradesh Beverages Corporation Limited or a licensee of IMFL Manufactory/Brewery to open outlets for sale of IMFL and FL in such area/localities where the privilege of sale by shop could not be disposed of through selection or when a license already granted is cancelled and the same could not be re-allotted for any reason. The outlets opened under this rule shall sell the IMFL and FL at prices not exceeding the maximum retail price indicated on the labels of the bottles and shall issue bills to the customers accordingly. This apart, the outlets opened shall also pay the applicable licensee fee and comply with other relevant provisions of the rules. Rule 24 declared that the Prohibition & Excise Superintendent concerned is the competent authority to issue license once the applicant is selected by the District Collector. Further, the Prohibition & Excise Superintendent shall issue the license for the retail shop in Form A-4 and for the permit room in Form A-4(B) after being satisfied that the premises selected are in accordance with the relevant rules. The procedure for selecting the suitable premises is spelt out in Rule 25. Rule 28 which permitted the sale of liquor at the licensed premises reads as under:
“28. Sale permitted at the licensed premises only:
1. The licensee shall sell liquor only at the premises specified in the licence.
2. No change or alteration of the licensed premises shall be made nor the licensed premises shifted elsewhere.
3. Shifting of the licensed premises may be permitted for valid reasons within the notified area and subject to conditions as may be specified by the Commissioner of Prohibition. & Excise, subject to payment of 1% of the licence fee or Rs.25,000/- whichever is higher.
Provided that the Commissioner may consider and permit for valid reasons shifting of the licensed premises, notwithstanding the notified area of the licensed premises, within the same Mandal or Municipality or Municipal Corporation without affecting the total number of Notified shops in the said Mandal or Municipality or Municipal Corporation subject to conditions as specified by the Commissioner and subject to payment of 1% of licence fee or Rs.25,000/- whichever is higher.”
Rule 28 specifically enables the licensee to sell liquor only at the licensed premises specified in the license and no change or alteration of the licensed premises shall be made nor the licensed premises be shifted elsewhere. However, Sub-rule (3) made it clear that the licensed premises may be permitted to be shifted for valid reasons within the notified area by the Commissioner of Prohibition & Excise, subject to the other stipulations contained therein. The proviso under Sub-rule (3) of Rule 28 conferred power on the Commissioner to consider and permit for valid reasons shifting of the licensed premises, notwithstanding the notified area of the licensed premises, within the same mandal or municipality or municipal corporation without affecting the total number of notified shops in the said mandal or municipality or municipal corporation subject to the other conditions specified therein. It is thus clear that the Commissioner of Prohibition & Excise for valid reasons may authorize shifting of the licensed premises to another premises within the same notified area and similarly the Commissioner may also consider and permit for valid reasons shifting of the licensed premises to some other area within the same mandal or municipality or municipal corporation. It is significant that the Commissioner is obligated to consider the reasons behind the proposal for shifting of the licensed premises and further he must also accord the necessary permission only for valid reasons.
Existence of valid reasons is the pre-requisite for consideration of any proposal and according the necessary permission for a shift of the licensed premises by the Commissioner of Prohibition & Excise. The reason behind this is very simple. Upon selection of the applicant for grant of a license by the District Collector for a specified area/locality, the successful applicant shall select a suitable premises within that area/locality and that suitable premises must also comply with the other requirements specified under Rule 25. When the rule making authority has used the expression ‘suitable’, it made the position clear by setting out that the suitability must be assessed from the stand point of view of relevant factors such as the consumption requirement of the locality, the possible public order requisites, safety and other factors bearing relevance to the residents of the locality. These factors, it is obvious, are rooted in public interest. It is appropriate to bear in mind that these are the very factors that are required to be assessed beforehand by the field level staff working under the control of the Prohibition & Excise Superintendent. Based upon the inputs gathered by the field staff, the Prohibition & Excise Superintendent would draw up his report suggesting to the Commissioner the areas or localities where shops for retail sale of liquor can be usefully established. It is upon consideration of such reports, the Commissioner is required to firm up his opinion under Rule 4 by fixing the number of shops to be established in an area/locality before publication of the notification under Rule 5. Thus, the theme behind the requirements specified in Rule 4 would not merely run through Rules 5,12,18,24 and 25, but would have a bearing upon them. As was already noticed supra, the notifications issued by the respective Prohibition & Excise Superintendents under Rule 5 shall specify the serial number and the name of the area/locality where the shop is proposed to be established in the notification. It is quite possible and probable that upon a careful assessment of the reports of the Prohibition & Excise Superintendent, the Commissioner may not necessarily select all such areas or localities where retail shops are suggested to be established. He may prune the total number of shops or the areas or localities where they are proposed to be established. Once, he finalizes and firms up his opinion and fixes the number of shops to be established in an area/locality, the same gets reflected in the notification to be followed under Rule 5. Those numbers cannot be increased later on. Thus, the basic exercise got carried out by the departmental officials prior to the Commissioner making up his mind under Rule 4 of the Rules, plays a very crucial role in the entire exercise of establishment of the chain of retail shops. If some of the licenses for the shops proposed to be established could not be disposed of through selection, Rule 18 provided answer to deal with such a contingency by vesting necessary power with the District Collector and also the Commissioner of Prohibition & Excise, in permitting either the Andhra Pradesh Beverages Corporation Limited or a licensee of IMFL Manufactory/Brewery from opening outlets for sale of liquor by retail, at such undisposed areas/localities. Rule 18 thus enabled retail outlets to be opened at such areas and localities which are found feasible earlier duly keeping an eye on the factors specified which would help the Commissioner firm up his opinion under Rule 4. Thus, Rule 18 is conceived as a step-in-aid mechanism not only for securing the interests of the State’s revenue and also to cater to the potential consumption requirements of the locality/area identified by the field staff and to take care, essentially of the public order and health and significantly the safety of the locality. Public health and safety is intended to be protected specifically by the Rules. Lest, for want of a retail liquor vend, the potential consumer can get trapped by illicit distillers or unauthorized bootleggers. Similarly, when the rule making authority used the expression ‘safety’, it obviously, meant to ensure that it is the safety of the residents of the locality, which is intended to be taken care of by it. This much is clear that, it is not the safety of the licensee, which is intended to be taken care of by the rule. Every licensee is capable of putting in place adequate safety measures for the men employed by him to carry out the retail sale operations and importantly, for his stock, both during its transportation and warehousing. The rule making authority has also assumed that the potential consumer would take the necessary precautions, about his own safety, for, he was not supposed to be permitted to consume liquor at the A-4 licensed shop, nor can he consume the liquor purchased by him at any other public premises close by to the licensed A-4 shop. I am conscious and alive that a purchaser of liquor at an A-4 shop premises can however consume the same at A-4 (B) licensed permit room. Since a customer is not liable to be served liquor in loose quantities in permit rooms, the rule making authority expected the potential consumer to know his tolerance/reasonable limits to stand up to and accordingly buy the requisite quantity of liquor only for consumption in A-4(B) permit room. Thus, Rules 4, 5 and 18 are not intended to cater specifically for the safety of the potential purchaser/consumer or the licensee or his men. To my mind, therefore, Rules 4 and 5 are intended to preserve and take care of the safety of the residents of the locality/area where the shop is sought to be established. If this is what the requirement of rules is all about, then, why would the need for a shift in the licensed premises occasion?
Sub-rules 1 & 2 of Rule 28 made it clear that the retail sale of liquor shall be carried out only at the licensed premises but not elsewhere. That is the normal event that should occur. Hence, for purposes of permitting a shift of the licensed premises, the rule required existence of valid reasons. What would constitute valid reasons for consideration of a shift of the licensed premises has not been attempted to be outlined, in my opinion, very wisely, by the rule making authority. It is not possible to lay down accurately or with any precession what would constitute a reasonable ground or justification for a shift in the licensed premises. No such exhaustive list of circumstances can legitimately be conceived or provided for. It all depends upon the prevailing facts and circumstances. Therefore, discretion has been vested by the rule making authority in the hands of the Commissioner to consider and accord the necessary permission in respect thereof. That is the reason why the rule making authority guided the Commissioner to exercise his discretion for permitting a shift of the licensed premises under Sub-rule 3 and its proviso, only for valid reasons. What would eventually constitute valid reasons falls within the domain of consideration of the Commissioner. Whenever a rule or a provision of a statute confers discretion, the same is expected to be exercised carefully and after due deliberation. Exercise of discretion is not to be carried out whimsically or upon fanciful notions entertained by the authority. It is to be guided by the reason. Reasons behind every exercise offer the soul and substratum of that very exercise. The fairness of action gets reflected in the reasons. They not merely bring out clarity and transparency but also offer the necessary shield of vigilance against arbitrary exercise of the powers. Exercise of discretion is not made to depend upon the subjective satisfaction of the authority. It is the objectivity behind the exercise which brings out the rationality through the reasons assigned as to why such a decision was taken. Reasons are the sign posts of good governance. Reasons leave behind footprints as to the lines on which the mind of the competent authority came to be applied. It is appropriate, in this context, to notice what Justice Koka Subba Rao (the learned Chief Justice of India then was) has observed in his minority opinion in Madhya Pradesh Industries Ltd vs Union Of India
[1]
And Others “In the context of a welfare State, administrative tribunals have come to stay. Indeed, they are the necessary concomitants of a welfare State. But arbitrariness in their functioning destroys the concept of a welfare State itself. Self-discipline and supervision exclude or at any rate minimize arbitrariness. THE least a tribunal can do is to disclose its mind. THE compulsion of disclosure guarantees consideration. THE condition to give reasons introduces clarity and excludes or at any rate minimizes arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellant or supervisory Court to keep the tribunals within bounds. A reasoned order is a desirable condition of judicial disposal.
The conception of exercise of revisional jurisdiction and the manner of disposal provided in R. 55 of the Rules are indicative of the scope and nature of the Government's jurisdiction. If tribunals can make orders without giving reasons, the said power in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuse of power. But, if reasons for an order are to be given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrelevant considerations, will be subject to judicial scrutiny and correction. A speaking order will at its best be a reasonable and at its worst be at least a plausible one. The public should not be deprived of this only safeguard.”
This view came to be approved subsequently in Bhagat Raja vs.
Union of India
[2]
.
Time and time again the Constitutional Courts have been reminding the authority entrusted with the task to speak his mind out by assigning reasons for the decision arrived at. Realizing this necessity, the Rule making authority has specified in Rule 28(3) of the Rules that the Commissioner can order for a shift of the licensed premises for valid reasons. But reasons are not assigned by the Commissioner as to why he was ordering for a shift of the licensed premises. The present case is not a kind of solitary exception. Failure to assign reasons while exercising the power under Rule 28(3) has become the normal position. That, in fact, belies the trust reposed in him by the Rule. Does this reflect an attitude of resistance to get corrected? Committing repeatedly the same error, does not reflect any sense of accountability. It is time corrective mechanism is put in place.
The above discussion brings to the fore as to whether the power entrusted to be exercised by the Commissioner under Rule 28 is a quasi judicial exercise or a pure and simple administrative exercise. It is true that the dividing line between the administrative exercise and a quasi judicial exercise is getting increasingly demystified. But nonetheless, sure enough there exists a distinguishing dividing line between an administrative exercise and a quasi judicial exercise. It is apt to focus our attention as to how an executive or administrative exercise came to be distinguished from that of a quasi judicial act.
It would be extremely instructive to revisit the principles in this regard as expounded by the Supreme Court in Province of Bombay vs. Khushaldas S Advani since deceased and after him his legal
[3]
representative a Govindram Khushaldas and B Ramchand Khushaldas
Chief Justice Kania (with whose opinion Justices Fazal Ali, Patanjali Shastri and S.R. Das have agreed, while Justice Mahajan and Justice Mukherjee disagreed) noted as under:
“A discussion about the distinction between judicial and quasi-judicial functions is not useful in this case as the point for determination is whether the order in question is a quasi-judicial order or an administrative or ministerial order. In Regina (John M'Evoy) v. Dublin Corporation(1), May CJ. in dealing with this point observed as follows:--' It is established that the writ of certiorari does not lie to remove an order merely ministerial, such as a warrant, but it lies to remove and adjudicate upon the validity of acts judicial. In this connection, the term 'judicial' does not necessarily mean acts of a judge or legal tribunal sitting for the determination of matters of law, but for the purpose of this question a judicial act seems to be an act done by competent authority, upon consideration of facts and circumstances, and imposing liability or affecting the rights of others.' This definition was approved by Lord Atkinson in Frome United Breweries Co. v. Bath Justices (2) as the best definition of a judicial act as distinguished from an administrative act.
A distinction between the nature of the two acts has been noticed in a series of decisions. This Irish case is one of the very early decisions. On behalf of the respondent it was contended that as stated by chief justice May, whenever there is the determination of a fact which affects the rights of parties, that determination is a quasi- judicial decision and, if so, a writ of certiorari will lie against the body entrusted with the work of making such decision. As against this, it was pointed out that in several English cases emphasis is laid on the fact that the decision should be a judicial decision and the obligation to act judicially is to be found in the Act establishing the body which makes the decision. This point appears to have been brought out clearly in The King v. The Electricity Commissioners (1), where Lord Justice Atkin (as he then was) laid down the following test: 'Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the King's bench Division exercised in these' writs.' This passage has been cited with approval in numerous subsequent decisions and accepted as laying down the correct test. A slightly more detailed examination of the distinction is found in The King v. London County council (2), where Scrutton L.J. observed as follows :--'it is not necessary that it should be a court in the sense in which this court is a court; it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a court; if it is a tribunal which has to decide rights after hearing evidence and opposition, it is amenable to the writ of certiorari.' Lord Justice Slesser in his judgment separated the four conditions laid down by Atkin L.J. under which a rule certiorari may issue. They are: wherever any body of persons (1) having legal authority (2) to determine questions affecting rights of subjects and (3) having the duty to act judicially (4) act in excess of their. legal authority a writ of certiorari may issue. He examined each of these conditions separately and came to the conclusion that the existence of each was necessary to determine the nature of the act in question. In. The Ryots of Garabandho and other villages v. Zamindar of Parlakimedi (1) Viscount Simon L.C., in delivering the judgment of the Board, accepted the test of these four conditions to determine the nature of the act. He stated: 'This writ does not issue to correct purely executive acts but, on the other hand, its application is not narrowly limited to inferior 'courts' in the strictest sense. Broadly speaking, it may be said that if the act done by the inferior body is a judicial act, as distinguished from being a ministerial act, certiorari will lie. The remedy, in point of principle, is derived from the superintending authority which the Sovereign's superior courts and in particular the court of King's bench, possess and exercise over inferior jurisdictions. This principle has been transplanted to other parts of King's Dominions and operates, within certain limits, in British India.' In Franklin v. The Minister of Town and Country Planning (2), the points of distinction are again noticed. The question arose in respect of the town and country planning undertaken under the relevant Statute on the order of the Minister following a public local inquiry under the provisions of the Act. The question was whether the order of the Minister was a quasi-judicial act or a purely administrative one.
……. BEARING in mind the important factor which distinguishes a quasi-judicial decision from an administrative act, it is next necessary to find out whether the action of Provincial government permitted under section 3 of the Ordinance, read along with the scheme of the Ordinance, is a quasi-judicial decision or an administrative act. Section 3 of the Ordinance permits the Provincial government, if in its opinion it is necessary or expedient to do so, to make an order in writing to requisition any land for any public purpose. Keeping aside for the moment the proviso to the section, it is not seriously disputed that the subjective opinion of the Provincial government in respect of the order of the requisition is not open to challenge by a writ of certiorari. The Ordinance has left that decision to the discretion of the Provincial government and that opinion cannot be revised by another authority. It appears therefore that except when mala fides is clearly proved, that opinion cannot be questioned.”
……..In my opinion, this third alternative contention is clearly correct and it is unnecessary therefore to deal, with the first two arguments. There appears nothing in the Ordinance to show that in arriving at its decision on this point the Provincial government has to act judicially. S. 10 and 12, which were relied upon to show that the decision was quasi-judicial, in my opinion, do not support the plea. The enquiries mentioned in those S. are only permissive and the government is not obliged to make them.”
Justice S.R. Das (as the learned Chief Justice was) in his independent opinion has noted as under:
“TO summarise: It is abundantly clear from the authorities cited above that questions of fact such as the existence of a public purpose or the interest of the public safety or the defence of the realm or the efficient prosecution of the war, or the maintenance of essential supplies and the like may well be and, indeed, are often left to the subjective opinion or satisfaction of the executive authority. Merely because such a matter involves a question of fact it does not follow at all that it must always, and irrespective of the language of the particular enactment, be determined judicially as an objective fact. When the Legislature leaves it to an executive authority to form an opinion on or to be satisfied about such a matter as a condition for the exercise of any power conferred on it, and to act upon such opinion, what is condition precedent is, not the actual existence of the matter but, the subjective opinion or satisfaction of the executive authority that it exists. The cases referred to above clearly establish this much that when the Legislature leaves it to the opinion or satisfaction of the executive authority as to whether it is necessary or expedient to requisition any land for a public purpose the executive authority is constituted the sole judge of the composite matter, that is to say of the existence of the public purpose as well as the necessity or expediency for requisitioning the land for that public purpose, call it a condition precedent or an objective fact or what you will. On a proper construction of section 3 of the Bombay Ordinance (No. V of 1947) there can be no doubt that that section left it to the Provincial government to form its own opinion on the entire matter, namely, whether it was necessary or expedient to requisition any land for a public purpose and to act upon that opinion. So construed, the formation of opinion on the whole matter and the act founded thereon was nothing but a purely administrative, (i.e., executive) act. If the acts were done in good faith and within the four corners of the Ordinance, the court cannot interfere with it in any proceeding and far less by the prerogative writs of certiorari or prohibition. If there be any hardship the appeal of the subject must be to the Legislature and not to the court.”
Once again, a Constitution Bench of the Supreme Court, in Jaswanth
[4]
Sugar Mills Limited vs. Lakshmichand has considered the
distinguishing features between an administrative/executive order and that of quasi judicial order and laid down the relevant tests in the following words:
“6. QUESTION whether a decision is judicial or is purely administrative, often arises when jurisdiction of the superior courts to issue writs of certiorari is invoked. Often the line of distinction between decisions judicial and administrative is thin: but the principles for ascertaining the true character of the decisions are well-settled. A judicial decision is not always the act of a Judge or a tribunal invested with power to determine questions of law or fact: it must however be the act of a body or authority invested by law with authority to determine questions or disputes affecting the rights of citizens and under a duty to act judicially. A judicial decision always postulates the existence of a duty laid upon the authority to act judicially. Administrative authorities are often invested with authority or power to determine questions, which affect the rights of citizens. The authority may have to invite objections to the course of action proposed by him, he may be under a duty to hear the objectors, and his decision may seriously affect the rights of citizens but unless in arriving at his decision he is required to act judicially, his decision will be executive or administrative. Legal authority to determine questions affecting the rights of citizens, does not make the determination judicial: it is the duty to act judiciary which invests it with that character. What distinguishes an act judicial from administrative is therefore the duty imposed upon the authority to act judicially. Mukherjea J. in the Province of Bombay v. K. S. Advani 1950 SCR 621: ( AIR 1950 SC 222) observed at p. 670 (of SCR):
"there cannot indeed be a judicial act, which does not create or impose obligations but an act, x x x is not necessarily judicial because it affects the rights of subjects. Every judicial act presupposes the application of judicial process. There is well marked distinction between forming a personal or private opinion about a matter, and determining it judicially. In the performance of an executive act, the authority has certainly to apply his mind to the materials before him; but the opinion he forms is a purely subjective matter which depends entirely, upon his state of mind. It is of course necessary that he must act in good faith and if it is established that he was not influenced by any extraneous consideration, there is nothing further to be said about it. In a judicial proceeding, on the other hand, the process or method of application is different, the judicial process involves the application of a body of rules or principles by the technique of a particular psychological method, vice Robsons Justice and Administrative Law p.33. It involves a proposal and an opposition, and arriving at a decision upon the same on consideration of facts and circumstances according to the rules of reason and justice, vice R. v. London Country Council, (1931) 2 KB 215 at p. 233. It is not necessary that the strict rules of evidence should be followed: the procedure for investigation of facts or for reception of evidence may vary according to the requirements of a particular case. There need not by any hard and fast rule on such matters, but the decision which the authority arrives at, must not be his 'subjective', personal or 'private' opinion. It must be something which conforms to an objective standard or criterion laid down or recognised by law, and the soundness or otherwise of the determination must be capable of being tested by the same external standard. This is the essence of a judicial function which differentiates it from an administrative function; and whether an authority is required to exercise one kind of function or the other depends entirely upon the provision of the particular enactment x x x x x Generally speaking where the language of a statute indicates with sufficient clearness that the personal satisfaction of the authority on certain matters about which he has to form an opinion founds his jurisdiction to do certain acts or make certain orders the function should be regarded as an executive function."
It may be observed that Mukherjee J., was on the ultimate decision in the case, in the minority, but the principle enunciated by him had substantially the approval of the Court. Das J., in the same case at p. 719 (of SCR): observed:
"a person entrusted to do an administrative act has often to determine questions of fact to enable him to exercise his power. He has to consider facts and circumstances and to weigh pros and cons in his mind before he makes up his mind to exercise his power just as a person exercising a judicial or quasi-judicial function has to do. Both have to act in good faith. A good and valid administrative or executive act binds the subject and affects his rights or imposes liability on him just as effectively as a quasi-judicial act does. The exercise of an administrative or executive act may well be and is frequently made dependent by the Legislature upon a condition or contingency”
From the tests laid down in the above cited cases, it emerges that an administrative exercise is one which does not essentially deal with any resolution of lis relating to any rights and obligations of two sets of players, one of them could be the State itself. Thus the most distinguishing feature came to be noticed is the absence of a lis involved in an administrative exercise. A shift of licensed premises does not involve any lis. It is not involving any two separate licensees inter se. It is a matter concerning the licensee and his own request for a shift of the licensed premises for consideration of the Commissioner. In my opinion, the order liable to be passed by the Commissioner of Excise under Rule 28(3) is the result of a pure and simple executive function and the consequential order is wholly an administrative order, but not a quasi judicial one. Only for the purpose of ensuring that such request should not be dealt with mechanically or routinely and that too by the licensing authority, the rule making authority considered it appropriate to entrust this task to the Prohibition & Excise Commissioner. This is a safety valve which the rule making authority has devised against any possible arbitrary and unjust exercise of power. By requiring the Commissioner to grant the necessary permission wherever there are valid reasons behind any such request, the rule making authority ensured that only the genuine hardships, if any, suffered by a licensee are appropriately redressed. In that process, the rule making authority ensured that even this administrative power is exercised carefully and diligently and by specifying ‘for valid reasons’, it brought out clearly that artificial or unjust grounds cannot be taken into consideration. This measure would ensure that, no licensee would pick up a license at the first instance at once place or the other and then devise an artificial reason for soliciting a shift of the licensed premises to enable him run after pastures green. When once an elaborate procedure is prescribed by the Rules for selection of candidates, the applicant is expected to make his own preliminary assessment about the consumption potential of liquors in the particular locality where he intends to carry on business and the possible profit or fall-out there from. He cannot pick up a license first and then quickly follow it up with a request for a shift of the licensed premises from the locality. Any such request of the licensee inherently points out to the injudicious recommendation made by the field staff for establishment of a retail liquor vend at that locality/area, for consideration of the Commissioner prior to his firming up the opinion as per Rule-4 at the first instance and subsequently while affirming the premises selected by the licensee, a second time.
If any particular area/locality is absolutely ill-suited for establishment of a retail liquor vend, thereat, it projects in poor light the exercise carried out by the field staff of the Prohibition & Excise Department prior to sending up its proposals for consideration of the Commissioner under Rule 4. It is quite possible that the field staff may not have correctly gazed the pulse of the residents of the entire locality. Consequently, they may have erred in their judgment before recommending a particular area/locality as ideally suited for establishment of a retail liquor vend. But nonetheless, they owe an explanation to the Commissioner as to how and why they went wrong earlier in their assessment when they recommended for establishment of a retail liquor vend at that particular area/locality. After all, the Commissioner, as per Section 3 of the Act, is the Chief Controlling Authority. The numbers of retail liquor vends may not remain static. Their numbers either could be increasing or decreasing. One of the factors which might help the decision for increasing the retail outlets in any particular area/locality could be the sales turnover data by the licensees for the previous year(s). That is not the only factor. Public order and health and the consumption requirements of the locality also prompt the necessary revision in the total number of retail liquor vends from getting established in an area/locality. While the State must endeavour sincerely for securing prohibition from consumption of alcoholic liquors and other intoxicants, but, at the same time, when its prohibition is incapable of being achieved satisfactorily due to the menace of bootlegging activities or illicit brewing, and the corresponding lack of adequate manpower to tackle this menace, the necessary energy must be concentrated for securing positively the public health and order. The potential consumer shall not fall prey to the illicit liquor vends. Apart from losing revenue, this illicit liquor vends can cause havoc by supplying impure or spurious liquors which will leave disastrous consequences on the health of the consumer. Instead of shedding a tear whenever such tragedies caused by illicit distillers and bootleggers, come to light and media glare, the State must also endeavour for plugging the parallel liquor supply chain. Therefore, there is no escape for the field staff but to offer their explanation to the Commissioner as to where it went wrong when they made the recommendation earlier for establishment of a retail liquor vend at a particular locality/area, whenever an application/occasion had arisen for a shift in the locality. Any failure to have an appropriate corrective mechanism in this respect will only leave the field staff reckless towards their duty by not owing up any accountability for the lapses committed by them. No State, which is wedded to the principles of good governance can ill afford any administrative laxities on the part of their well paid servants.
Organization of dharnas by women activist groups against establishment of retail liquor vends in any particular area/locality need not necessarily be viewed with any disfavour. A genuinely concerned women group or organizations, can legitimately protest against establishment of a retail liquor vend in any particular locality or area to secure the attention of the State’s administration towards the problems faced by them. The concerns of the women or their welfare organization is not difficult to be understood and or appreciated. They might be struggling and striving hard to ensure that their men folk do not get tempted to take to liquor, as an easy escape route from discharging their primary and fundamental duties/obligations towards the family as a unit. Far from using the alcoholic beverage as an occasional or healthy relaxant, their quantum of consumption has reached an alarming level, if only the sales turnover data is any indicator. Easy availability of liquor makes the position of women in a family unit that much vulnerable. Those who are concerned with the preservation of value system of a family unit, could genuinely be opposing establishment of a liquor vend. Therefore, the departmental officials may not have possibly felt the pulse of repulsion towards a retail liquor vend when they made the recommendations initially for consideration of the Commissioner in terms of Rule 4.
But, at the same time, it will not be difficult for one to imagine that some of these protests and dharnas could also be stage managed for a particular price. Therefore, a selfish licensee, who is not to get easily satisfied with the quantum of profits which he would earn at the licensed premises, can manage to organize one such mock protest so as to use the same as a mere cloak or ruse or lever for soliciting the shift of the licensed premises from out of a less profit making area and choose a more profit earning area. The business dynamics in this regard cannot be construed as a reasonable ground, much less, a valid one for the Commissioner to exercise his discretion in favour of such licensee. For instance, the fifth respondent has used the dharna organized by the women folk against the establishment of a retail liquor vend at Nelvai Village area/locality as a ground or basis for shift of his licensed premises. The counter affidavit filed by the Prohibition & Excise Superintendent discloses that while the petitioners have carried out business of approximately Rs.28 lakhs and Rs.25 lakhs respectively, for the period from 01.07.2014 to 11.08.2014, the seventh respondent has achieved a sales turn over of Rs.7.69 lakhs. A sales turn over of Rs.7.69 lakhs, when compared to Rs.28 lakhs or Rs.25 lakhs might look to be substantially low. However, for the previous excise year, the licensed Shop No.1 & 2 of B.N. Kandriga Village have achieved the sales turn over of Rs.2.18 crores and Rs.2.10 crores. Therefore, the sales turn over achieved by those licensees for the period between 01.07.2014 upto 11.08.2014 is only proportionate to the annual sales turn over of the previous year. If the women folk have really prevented the fifth respondent to carry on his business operations at Nelvai Village, as claimed by him, then, a question would arise as to how he could still achieve sales turn over to the order of Rs.7.69 lakhs by lifting several crates of liquor. This aspect of the matter was completely bypassed by the Superintendent of Prohibition & Excise while recommending the shift, thus showing as to how mechanically the whole question is approached. It is quite probable that the fifth respondent is only using the occasion to shift his business premises to a more potential area to derive greater quantum of profits. In cases and circumstances of this nature, exercise of power available under Section 20 of the Act, would have produced the much desired effect. If a licensee is ordered to close down his business for a while or by reducing the number of his business hours, the non-genuine and stage managed protestors would have quietly receded to the back ground.
The contention of the petitioners that the fundamental right guaranteed to them under Article 19(1)(g) will get adversely affected is a contention which is raised and urged without any regard to the well settled legal principle that there is no fundamental right guaranteed to carry on business in intoxicants, as ruled by the Supreme Court in
[5]
Cooverjee B. Bharucha vs. Excise Commissioner , State of Assam
[6]
vs. Kedwai , Prohibition & Excise Superintendent, A.P vs. Toddy
[7]
Tapers Cooperative Society, Maredpally .
Similarly, when there is no lis involving the writ petitioners, the question of the Commissioner of Prohibition & Excise putting them on notice or providing them an opportunity of hearing also would not arise. In an administrative exercise, the application of principles of natural justice is not warranted. Further, in the absence of any proven malafide exercise of power, by the Commissioner under Rule 28(3) the said exercise is hardly amenable to judicial review. Exercise of judicial review is essentially directed against the decision making process but not the decision per se, where the decision of the Commissioner is not bonafide, as was found by a Division Bench of this Court in D.R. Sridhar Naidu vs.
Commissioner of Prohibition & Excise, A.P., Hyderabad
[8]
, such an
administrative order can be interdicted by this Court. Above all, if the commissioner has faulted or erred in passing an order of permission to shift the licensed premises from out of Nelvai Village to Neerupakakota Village, he is only answerable to the State Government to whom he is subordinate. It is for the State Government to pull-up the commissioner and correct his ways of dealing with these kind of issues. That is the precise reason why Rule 64 provides for a revision either suo moto or otherwise. It is, therefore, open to the petitioners to approach the State Government.
Hence, both the writ petitions stand dismissed, but however, without costs.
Consequently, all miscellaneous applications pending shall stand closed.
JUSTICE NOOTY RAMAMOHANA RAO 08.10.2014 sp Note: LR copy
[1]
1966 AIR 671
[2]
AIR 1967 SC 1606
[3]
AIR(SC)-1950-0-222
[4]
1963 (1) SUPP SCR 242
[5]
AIR 1954 SC 220
[6]
AIR 1957 SC pg 414
[7]
AIR 2004 SC 658
[8]
2007 (3) ALD 128 (DB)