IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.2291 of 1998 =========================================================== Arun Kumar S/o Sri Raghunath Prasad Bachan Traders, Balkishunganj, Patna 7 resident of Mohalla Balkishunganj P.S. Alamganj Town and District Patna .... .... Petitioner/s Versus 1. The State of Bihar, through the Secretary incharge Government of Bihar, Patna 2. Member, Board of Revenue, Old Secretariat, Bihar, Patna 3. The Excise Commissioner- cum- Secretary to State Government, Department of Excise and Prohibition of Bihar, Patna-1 4. The Deputy Commissioner of Warehouse and Distilleries, State of Bihar, Patna 5. The Collector, Patna 6. The Collector, Muzaffarpur 7. The Collector, Vaishali at Hazipur 8. The Collector, Sitamarhi 9. The Collector, East Champaran at Motihari 10. The Collector, West Champaran at Bettia .... .... Respondent/s WITH Civil Writ Jurisdiction Case No. 2292 of 1998 =========================================================== Pirthwinath Prasad S/o Sri Baleshwar Prasad resident of Durga Asthan Barh, P.S. Barh, District Patna .... .... Petitioner/s Versus 1. The State of Bihar, through the Secretary incharge Government of Bihar, Patna 2. Member, Board of Revenue, Old Secretariat, Bihar, Patna 3. The Excise Commissioner- cum- Secretary to State Government, Department of Excise and Prohibition of Bihar, Patna-1 4. The Deputy Commissioner of Warehouse and Distilleries, State of Bihar, Patna 5. The Collector, Saran 6. The Collector, Siwan 7. The Collector Gopalganj .... .... Respondent/s WITH Civil Writ Jurisdiction Case No. 2293 of 1998 =========================================================== Ashok Kumar S/o Sri Raghunath Prasad resident of Mohalla Balkishunganj PS. Alamganj, District Patna .... .... Petitioner/s Versus 1. The State of Bihar, through the Secretary incharge Government of Bihar, Patna 2. Member, Board of Revenue, Old Secretariat, Bihar, Patna 3. The Excise Commissioner- cum- Secretary to State Government, Department of Excise and Prohibition of Bihar, Patna-1 Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 2 4. The Deputy Commissioner of Warehouse and Distilleries, State of Bihar, Patna 5. The Collector, Rohtas at Sasaram 6. The Collector, Kaimur 7. The Collector, Bhojpur 8. The Collector, Buxar .... .... Respondent/s WITH Civil Writ Jurisdiction Case No. 2294 of 1998 =========================================================== Kumar Rajiv Ranjan S/O Sri Raghunath Prasad resident of Mohalla Balkishunganj PS. Alamganj, District Patna .... .... Petitioner/s Versus 1. The State of Bihar, through the Secretary incharge Government of Bihar, Patna 2. Member, Board of Revenue, Old Secretariat, Bihar, Patna 3. The Excise Commissioner- cum- Secretary to State Government, Department of Excise and Prohibition of Bihar, Patna-1 4. The Deputy Commissioner of Warehouse and Distilleries, State of Bihar, Patna 5. The Collector, Gaya 6. The Collector, Jahanabad 7. the Collector, Aurangabad 8. the Collector, Nalanda .... .... Respondent/s WITH Civil Writ Jurisdiction Case No. 2823 of 1998 =========================================================== 1. M/S S.C.I.India Limited , Registered Office at D.N.Singh Road, P.S. Kotwali, District Bhagalpur through one of its Director, Shri Binod Kumar Kishorpuria, Son of Late Sanarmal Kishorpuria, resident of D.N.Singh Road, P.S. Kotwali, District Bhagalpur 2. Binod Kumar Kishorpuria, Son of Late Sagarmal Kishorpuria, resident of D.N.Singh Road, P.S. Kotwali, District Bhagalpur .... .... Petitioner/s Versus 1. The State of Bihar 2. The Member, Board of Revenue, Bihar, Patna 3. The Commissioner of Excise, Vikas Bhawan, Patna .... .... Respondent/s =========================================================== Appearance : (In all the cases) For the Petitioner/s : Mr. Y.V.Giri, Senior Advocate Mr. Sanjeev Kumar, Advocate Mr. Ashish Giri, Advocate Mr Nikhil, Advocate Mr V.K.Bharti, Advocate Mr R.R.Choudhary, Advocate For the State : Mr Lalit Kishore, AAG I Mr Piyush Lal, AC to AAG I =========================================================== Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 3 CORAM : HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH and HONOURABLE MR. JUSTICE SHIVAJI PANDEY CAV JUDGMENT (Per: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH) Since all the five writ petitions involve common issues of facts and law as they seek to challenge the vires of the Bihar Excise (Amendment and Validating) Ordinance, 1998 which was subsequently replaced by the Bihar Excise (Amendment and Validating) Act , 1998 (6 of 1998) (hereinafter referred to as „the Validating Act), hence, they have been heard together and are being disposed of by a common judgment. CWJC No.2291 of 1998 was argued as a leading case by Mr Y.V.Giri, Senior Advocate and therefore, unless otherwise indicated, facts have been taken from the records of said writ petition. 2. The facts are not in dispute and can be easily gathered from an earlier judgment rendered by a Division bench of this Court on 28.5.1996 in the case of M/s Sheo Narain Jaiswal Vs. The State of Bihar, reported in 1996 BBCJ 469. However, for the sake of ready reference and convenience, some essential facts may be noticed. In exercise of powers under Section 22 of the Bihar Excise Act, 1915, the State of Bihar decided to grant exclusive privilege for manufacture Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 4 and wholesale supply of country liquor. The whole State of Bihar had been divided into nine zones for this purpose. The Board of Revenue, Bihar issued tender notice dated 3.6.1995 (Annexure-1) inviting tenders from interested parties for grant of the aforesaid privilege in different nine zones for the period 1st July, 1995 to 31st March, 1999. The terms of tender notice permit grant of exclusive privilege for manufacture and wholesale supply of country liquor to more than one licensee in a particular zone and it also provided that the licence fee had to be paid in equal proportion by the licensees in a particular zone. For each zone an annual guaranteed quantity was worked out on the basis of the gross sale of country liquor in different zones during the year 1994-95 and the licence fee was determined at the rate of Re.1 per L.P. litre of the guaranteed quantity. The successful tenderers such as the petitioners were informed of the grant of licence through different communications which contain a condition inconformity with the terms of the tender notice, noticed above. One such communication dated 23rd June, 1995 (Annexure-2) shows that the petitioner- Arun Kumar and another licensee for the Muzaffarpur zone were informed about annual minimum guarantee on the basis whereof licence fee was to be realized. In clause 6 of that communication for grant of the exclusive privilege it was indicated that for each licensee of a particular zone, the licence fee would be at the rate of Re.1 L.P. Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 5 Litre on the minimum guaranteed quantity payable proportionately in advance. It was clarified that the licence fee would be payable only for each financial year in advance and in case the quantity supplied exceeds the guaranteed quantity, further licence fee would be payable by each licensee over such excess quantity. 3. When the petitioners who had been granted licence for exclusive privilege for manufacture and wholesale supply of country liquor along with some other licensees in same zone were coerced to pay the entire licence fee for the zone and not proportionately along with other co- licensee of the zone, two licensees- Sheo Narain Jaiswal and M/s Ellen Breweries & Distilleries Pvt. Ltd. preferred writ petitions which were allowed by the judgment in the case of M/s Sheo Narain Jaiswal (supra). The Division Bench of this Court considered the meaning of clause 2 (kha) and 3 (ga) of the notice inviting tenders as well as clause 6 of the conditions of grant to come to a conclusion that the terms of the grant provide that the licence fee calculated in the manner prescribed shall be paid by each of the grantee in equal proportion and no other meaning could be given to the said clause. The Division Bench after giving the aforesaid finding in paragraph 13 of the judgment went on to consider the results that would accrue if the case of the State was accepted and in paragraph 14 of the judgment it held that it would result in clear unfairness between sole Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 6 grantee of any zone vis-à-vis co-grantees in another zone. For the sake of convenience paragraph 13 and 14 of the judgment are reproduced herein below : “13. It was submitted by the counsel for the State that in the earlier year when the licence was granted with effect from 1st of July, a proportionate reduction had been granted in the licence fee having regard to the fact that the grantees could not carry on their business for three months. He, therefore, submitted that use of the word „SAMANUPATIC‟ has relevance only for reduction in the licence fee in case a grantee is not granted the licence for the whole year. In our view, neither clause 2 (kha) and 3 (Ga) of the notice inviting tenders, nor clause (6) of the licence referred to, conceive of a situation where the lease is granted for a shorter term. The reduction in the licence fee on account of the term of the licence being curtailed may be the logical consequence in law. Clause (6) of the grant appears to us to be clearly applicable to a case where more than one grantee is granted special privilege by the State in a particular zone. In such a situation, the term provides that the licence fee calculated in the manner prescribed shall be paid by each of the grantee in equal proportion. We are not able to give to the said clause any other meaning. 14. Counsel for the petitioners submitted that even if it is possible to give more than one meaning to the terms and conditions of the grant, that meaning Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 7 should be given which is in consonance with fairness and justice and is also consistent with commonsense. An interpretation which results in absurd or unfair results must be avoided. He submitted that if the clauses in the notice inviting tenders and clause (6) of the grant is construed in the manner sought to be construed by the respondents, it would result in an absurdity, and in any event an unfair result. If the licence fee is the price for parting with the exclusive privilege of the State which is parted with in favour of a private person or persons, the State can only insist upon the payment of price. If within a zone more than one grantee is granted exclusive privilege, the benefit derived by the grantee is reduced in as much as has to compete with other grantees within the same zone. What the state parts with in favour of a grantee is more when there is a single grantee and less when there are several grantees. If each grantee is held liable to pay the licence fee determined for the zone individually, the State would greatly benefit by charging the price many times over, but the grantee would get a lesser benefit than what he would have got had he been a single grantee in whose favour the exclusive privilege was granted. The unfair consequence that may result can also be demonstrated by taking another illustration. If in respect of zones A and B the licence fee is determined at rupees one lac each, and if there is only one grantee in zone A and four grantees in zone B, the State will get a sum of rupees one lac only in zone A but would get rupees four lacs in Zone B by way of price of Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 8 the privilege which is otherwise equally valued. On the other hand, the grantee of Zone A would be in a much more advantageous position by paying less than the grantees of Zone B who shall have to pay the same amount for getting lesser benefit. Such would be the resultant unfairness if clause (6) is construed in the manner commended by counsel for the State.” 4. Clearly, the licence fee realized or demanded by the State was found to be against law on two counts- (1) it was contrary to plain meaning of relevant clauses in the notice inviting tenders as well as the terms of the grant and (2) it was based upon a view which was clearly unfair and unjust. By now it is well settled in law that unfairness in State action would negate the mandate of Article 14 of the Constitution of India. 5. While allowing writ petitions the Division Bench noticed the interim order dated 13th March, 1996 which required deposit of the licence fee but with an interim protection that in case the writ petitions was allowed, the petitioners would be entitled to refund of excess amount deposited by them together with interest calculated at the rate of 16% per annum within one month of the date of judgment. In terms of the interim order, final direction was issued to refund to the petitioners the excess amount of licence fee deposited by them with interest at the rate of 16% per annum calculated from the Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 9 date of deposit till the date of payment. The refund was to be made within a period of one month. 6. Against the judgment of this Court noticed above, the State of Bihar preferred Special Leave Petitions before the Supreme Court which were dismissed by judgment and order dated 24.10.1997 in the case of State of Bihar Vs. M/s Sheo Narain Jaiswal Pvt. Ltd, reported in AIR 1998 SC 233. The Apex Court noticed the arbitrariness in State‟s stand in paragraph 6 of the judgment in the following words : “ Petitioner 1 has charged from each of the contractors in one zone the full licence fee calculated at the rate of Re 1 per L.P. litre based on consumption for the year 1994-95 in that zone. But according to the respondents, the licence fee so calculated is for each zone.” It was further held that the High Court judgment was correct in holding that in the light of provisions in the tender notice and under the licence, the total licence fee for the zone was to be realized from the contractors of that zone in equal proportion. The plea of the State of Bihar that since the licence fee related to manufacture and sale of liquor and, therefore, it was open for the State to charge full licence fee from each contractor in a zone was negatived by the Apex Court on the ground that “if the tender conditions and the conditions of the licence Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 10 do not so provide, the State will not be able to collect the full licence fee from each of the licensees/ contractors.” 7. After the Division Bench judgment of this Court stood confirmed by the Supreme Court, the State Government apparently chose to nullify the said judgments requiring refund of the excess licence fee with interest, by promulgating the Validating Ordinance dated 21.2.1998. The ordinance is Annexure-4 and the Act replacing the same is Annexure-7 in CWJC No.2291 of 1998. Since the Validating Act is paramateria same as the Ordinance, it will be useful to refer to the provisions in the Validating Act for deciding the issue of vires. In the objects and reasons there are four clauses. In the first clause, it has been reiterated that in the State of Bihar, the grant of exclusive privilege of wholesale supply of country liquor is governed under Section 22 of the Bihar Excise Act, 1915. In clause (2), the provision in clause 2 (kha) of the tender notice for proportionate licence fee at the rate of Re.1 per L.P. litre on the minimum guaranteed quota specified for the zone has been mentioned. In clause (3), the judgments of this Court and of the Supreme Court in the writ petitions filed by two grantees have been mentioned. Clause (4) runs as follows: “(4) Under the above circumstances, the existing system of realization of licence fee at the rate of Re.1 per L.P. litre from each grantee of a specified zone and to legitimate the realized licence fee, it has become Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 11 necessary to validate the said provisions of the Act. Therefore, necessary provisions have been made in the Act, enactment of which is the object of this Act.” The objects and reasons noticed above no doubt mention the necessity to validate provisions of the Bihar Excise Act, 1915 but they ignore an important fact that the High Court or the Supreme Court did not declare the demand for licence fee as made by the State, illegal on account of any lacuna or shortcomings in that Act or on account of invalidation of any provisions of that Act. That explains vagueness in the expression- “said provisions of the Act”. Three is no clear indication as to which provision of the Act required validation and why? 8. The preamble of the Act contains eight clauses. The preamble runs as follows : “Preamble.- WHEREAS, the Cabinet had approved the proposal of the Excise & Prohibition Department for imposing licence fee on every licensee of the zone at the rate of Rupee 1 per L.P. litre on the M.G.Q. of the zone and the tender notice was to be issued accordingly; AND, WHEREAS, the tender notice was issued for the period 1st July 1995 to 31st March 1999 and the period of supply of country liquor during the first year being only 9 months the Excise & Prohibition Department intended to grant a proportionate reduction Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 12 of licence fee for the shorter period and with this intention had used the expression on “Samanupatik” in the tender notice and licence; AND, WHEREAS, at the time of negotiations of rates and its determination all the tenderers were fully aware of the number of tenderers in each zone and the rate was fixed and agreed upon after including Rs.2 per L.P. litre for covering the licence fee burden which was intended to be passed on to the retailer/ consumer; AND, WHEREAS, The tenderers had accepted the rate fixed in writing and 13 out of 15 tenderers paid the licence fee at the rate of Rupee 1 per L.P. litre on M.G.Q. for the years 1995-96, 1996-97 and 1997-98 and did not challenge the imposition of the said licence fee; AND, WHEREAS, only two tenderers filed writ petitions in the Patna High Court, after depositing licence fee at the above rate for the period 1995-96 and all the tenderers supplied monthly liquor at the fixed agreed rate and passed on the licence fee burden to the retailer/ consumer; AND, WHEREAS, the Hon‟ble Supreme Court and the High Court held that the expression „samanupatik‟, in the context, meant that the total licence fee for the zone was to be paid by the licensees of the zone in equal proportion; AND, WHEREAS, the Hon‟ble Supreme Court had held that the State will not be able to charge from each contractor in a zone the full licence fee unless it is so Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 13 provided clearly in the tender conditions and the conditions of licence; AND WHEREAS, it has become necessary to validate and impose licence fee in accordance with the intent of the policy approved by the Cabinet on 13th June 1995, by rectifying the unintended error in the tender notice dated 3rd June 1995 and the licences issued in pursuance thereof, and also to validate the collection of licence fee already made from each licencee; Be it enacted by the Legislature of the State of Bihar in the forty-ninth year of the Republic of India as follows :” 9. As is usual with the Validating Acts, sub-section (3) of Section 1 makes the Act retrospective by providing that the Validating Act shall be deemed to come into force with effect from 1st June, 1995. Vide section 2 of the Validating Act three new sections, namely, Sections 22D, 22E and 22F have been inserted in the Bihar Excise Act, 1915 after Section 22. For the sake of convenience they are extracted herein below : “22D- Grant of exclusive/ special privilege for bottling/ sacheting and wholesale supply of country liquor- 1. The State government may grant to any person/ persons on such conditions and for such terms and conditions and for such period as it may think fit, the exclusive/ special privilege for supplying country Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 14 liquor on wholesale basis, after sacheting/ bottling. There may be more than one grantee in a zone of supply. 2. No Grantee of any privilege under Sub-section (1) shall exercise the same unless he has received a licence in that behalf from the Board of Revenue / Excise Commissioner/ Collector. 3. A licence fee shall be paid in advance in one lump sum by each licensee of the zone determined by the member, Board of Revenue/ Excise Commissioner at the rate of Rupee 1 per L.P. litre calculated on the basis of the annual M.G.Q. Additional licence fee shall be paid by each licensee of the zone if the total wholesale supply of the country liquor in the zone exceeds the annual M.G.Q. which would also be calculated at the rate of Rupee 1 per L.P. litre on the excess quantity. 4. The condition regarding payment of advance licence fee and additional licence fee as per sub-section (3) would be deemed to be included in the tender notice dated 3rd June, 1995 issued by the Excise & Prohibition Department for wholesale supply of country liquor during the period 1st July, 1995 to 31st March, 1999 and would also be deemed to be included in all the licenses issued in pursuance thereof and any expression, term or condition to the contrary contained in the tender notice and licenses would be deemed to be deleted and substituted accordingly. 22E. Validating of Licence Fee. – 1. Notwithstanding anything contrary contained in a Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 15 judgment/ decree or order of any court, Tribunal or Authority, advance licence fee in the lump sum on each licence for wholesale supply of country liquor after sacheting / bottling granted pursuant to tender notice dated 3rd June, 1995 issued by the Bihar Excise & Prohibition Department shall be deemed to have been imposed on every licence at the rate of Rupee 1 per L.P. litre calculated on the annual .M.G.Q. and additional licence fee at the same rate on excess supply shall also be deemed to have been imposed on every licence of the zone where the total wholesale supply in the zone exceeds in the annual M.G.Q. 2. The amount of licence fee collected from the various licensees at the above rate shall be deemed to have been validly collected, irrespective of any term or condition contained in the tender notice dated 3rd June, 1995 and the licence issued in pursuance thereof and the licence fee so collected shall not be refundable and no Court, Tribunal or Authority shall order for refund of such licence fee : Provided that if any licensee has not paid licence fee as specified in subs-section (3) of Section 22D under the order of any Court, Tribunal or Authority the State Government shall realize the same as arrears of revenue. 22F. Overriding effect of the Ordinance.- Notwithstanding anything to the contrary contained in any judgment, decree or order passed by any court and in any law for the time being enforce, the provision of Patna High Court CWJC No.2291 of 1998 dt.02-09-2011 16 this Ordinance shall prevail and have effect”. 10. Section 3 of the Validating Act provides for repeal of the Bihar Excise (Amending and Validating) Ordinance, 1998 but saves actions taken under the same as one under the Validating Act. 11. On behalf of the petitioners it has been submitted that the challenge to the action of the State in seeking to realize entire licence fee of a zone from each