Reserved Judgment THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition (M/S) No. 731 of 2010. Anuj Jaiswal and others … Petitioners. Vs. State of Uttarakhand through Excise Secretary, Civil Secretariat, Dehradun and another. …Respondents. . Mr. U.K.Uniyal, Senior Advocate, with Mr. Paresh Tripathi, Advocate, learned counsel for the petitioners. Mr. S.N.Babulkar, Advocate General, with Mr. J.P.Joshi, C.S.C., learned counsel for the respondents. WITH Writ Petition (M/S) No. 733 of 2010. D.N.Sah and others … Petitioners. Vs. State of Uttarakhand through Excise Secretary, Civil Secretariat, Dehradun and another. …Respondents. . Mr. Rajendra Dobhal, Senior Advocate, with Mr. Paresh Tripathi, Advocate, learned counsel for the petitioners. Mr. S.N.Babulkar, Advocate General, with Mr. J.P.Joshi, C.S.C., learned counsel for the respondents. Date September 16, 2010. Hon’ble B.S.Verma, J. Since the controversy involved in both the writ petitions is similar, therefore, for the sake of convenience, they are being decided by this common order. The petitioners in writ petition no. 731 of 2010 (M/S) have sought a writ in the nature of certiorari quashing the impugned orders dated 30-3-2010 and 1-5-2010 issued by the respondent no.2 contained as Annexure Nos. 1 and 2 respectively to the writ petition and the order of the State Government mentioned in the impugned 2 order dated 1-5-2010. Petitioners have also sought writ of certiorari quashing the approval accorded by the respondent no.1 to the impugned orders passed by respondent no.2. In Writ Petition No. 733 of 2010(M/S), the petitioners have sought a writ in the nature of certiorari quashing the impugned orders dated 30-3-2010 and 29-4-2010 issued by the respondent no. 2 contained as Annexure Nos. 1 and 2 respectively to the writ petition. They have also sought a writ of certiorari quashing the approval accorded by the respondent no.1 to the impugned orders. The petitioners in the former writ petition are the licensee of the country liquor shops, while the petitioners in the latter writ petition are the licensee of different foreign liquor shops. According to the petitioners, the State of Uttarakhand, in exercise of powers vested under Section 40 of the U.P. Excise Act 1910 framed the Rules for the financial Year 2010-2011 for the period 1-4-2010 to 31-3-2011 vide Notification dated 5-3-2010, which has been annexed as Annexure-3 to the writ petition in each case. The petitioners claim that the State Government took note of each and every aspect relating to the policy of prohibition as provided under the Excise Act and for regulating the import, export, transport, manufacture, sale and possession of liquor for the year 2010- 11. While framing the said Rules, the revenue was determined keeping in view the applications received in the previous year 2009- 2010 and an increase was made between 5% and 17% in the revenue from the liquor shops. The minimum guaranteed duty (MGD) was also determined. The application fee was also enhanced. The rates of minimum security for exit of foreign liquor was also increased like increase of the production fee on the manufacture of counter made and foreign liquor. The admitted facts of the case are that the petitioners were issued allotment orders in respect of their respective liquor shops. It is 3 also not disputed that the petitioners deposited the license fee immediately as well as other amount shortly thereafter. The petitioners are aggrieved by the orders passed by the Excise Commissioner, Uttarakhand, whereby the decision of the Government determining the maximum retail price (MRP) of the country-made liquor as well as foreign liquor/Beer for the year 2010- 11 were communicated to all the District Magistrates. According to the petitioners, the State Government has framed the Excise Policy for the year 2010-2011 and in the light of the Rules made in that regard, the petitioners were induced to apply for the shops and then they had participated in the draw for obtaining the liquor shops in question considering the Rule 53 mentioned in the Excise Policy which made it clear that other things will remain as it is as for the financial year 2009-2010. The petitioners claim that the respondents could not have issued the impugned orders subsequent to the settlement of the shop and if the respondents were of the view that the retailers’ margin needs to be reduced, the only course open to them was to have apprised the petitioners before hand particularly prior to the settlement of shops. The petitioners would have been aware of the retailers’ margin determined by the State Government before incurring heavy amount in the participation of draw for liquor shops. It is also stated by the petitioner that after issuance of the impugned order dated 30-3-2010, a representation was made to the respondent no.1 that by the impugned order only the retailers’ margin has been reduced to 20% from 30% while there was increase in respect of all other counts. The petitioners also claim that the respondents could not change the Rule of the game after the game has begun and the allotment order of the liquor shops in question in favour of the 4 petitioners had already been made and the petitioners had deposited the license fee and the Minimum Guaranteed Duty (MGD), as per allotment order. The impugned orders passed subsequent to it are not tenable in the eye of law. The petitioners also claim that the respondents are estopped from passing orders contrary to the rules framed under the excise policy for the year 2010-2011, particularly when the petitioners applied with the legitimate expectation of being given the same retailers’ margin, which was prevailing in the previous financial years as provided under Rule 53 of the said Rules. Counter affidavit has been filed on behalf of the respondent no. 2. It is stated in the counter affidavit that the petitioners are the retail licensees of the liquor shops in question for the year 2010-2011. Both the impugned orders were passed by the respondent no. 2 under Rule 23 of the Excise Policy for the year 2010- 2011. The petitioners have challenged the M.R.P. of the country liquor and foreign liquor fixed for the year 2010-11. The petitioners are demanding the increase in the margin of profit on the basis of factors prevailing last year. It is further stated that the following factors were not in existence at the time of fixing the M.R.P. of the country/foreign liquor: I. The response and impact of additional 20% lifting of the total MGD of the shops were not known. II. The licence fees of each shop was not uniformly determined i.e. every shop of the country/foreign liquor has the different incidence of the licence fee per BL/per bottle. It is also stated in the counter affidavit that the that the profit of the vendor has to be fixed by the Excise Commissioner under Section 41(2)(e)(iii) of the U.P. Excise Act 1910(Adopted & Adapted in Uttarakhand) and the factors determining the retail price of an intoxicant has to be governed by the provisions of Section 35 of the said Act. The respondents took all the above factors into consideration and fixed the MRP for the year 2010-11. It is also stated that the 5 margin of retailers has been rationalized taking into consideration 20% additional lifting of the liquor against the MGD and the licence charged. The retailer sold the entire lifted stock against M.GD at the fixed MRP and no benefit was given to the customer. The incidence of the license fee for each shop has been uniformly fixed 11% of the total revenue of the concerned shops, which was variable from 6.9% to 34% in the previous year. Regarding country liquor, it has been stated that there was 20% additional lifting of country made liquor to the tune of MGD Rs. 23,24,64,971.88 and the retailer sold this lifted stock against MGD at the fixed MRP and no benefit was given to the consumer. The retailer got net profit of Rs. 25.08 crores in addition to the quantity allotted to the retailer shops in the State sold at the fixed MRP at the profitable rate. As regards foreign liquor, it is stated in the counter affidavit that there was 20% additional lifting of foreign liquor to the tune of MGD Rs. 94,122,873/- and licence fee Rs. 1,99.58,796/- amounting to total Rs. 11.40 crores approximately, which was not charged from the retailer by the government. The retailers sold this lifted stock against MGD at the fixed MRP and no benefit was given to the consumer. The retailer got net profit of Rs. 11.40 crores in addition of the quantity allotted to the retailer shops in the State. It is also stated that the licence fee for retailers of country liquor was rationalized and it has been uniformly fixed at 11% of the total revenue of the concerned shops, which was variable between 6.9% and 34% in the last year. Regarding foreign liquor, it is stated that the incidence of the licence fee for each shop has been uniformly fixed at 15% of the total revenue of the concerned shops, which was between 10.84% and 28.96% in the last year. In the counter affidavit filed in each of the petition, the respondents have further stated that the fixing of the Maximum Retail 6 Price by the Excise Department is in accordance with Rule 35 of the Rules framed under the U.P. Excise Act 1910 for determination of the cost of intoxicants to the consumers, which empowers the Commissioner of Excise to fix the M.R.P. by framing policy to this effect under Section 41(e)(iii) of the U.P. Excise Act, 1910. It is also stated that the petitioner has nowhere stated that Rule 53 of the Excise Rules enacted for the year 2010-11 are not being followed by the respondents by issuing the orders impugned. It is further stated that there is a statutory alternative remedy provided under Section 11 of the U.P. Excise Act 1910 and the petitioners could have moved an application before the Government but in spite of availing the statutory alternative remedy the writ petitions were filed. The petitioner in each petition has also filed supplementary affidavit and along with the supplementary affidavit, the petitioners have annexed the Excise Policy of the State Government for the financial years 2008-2009 and 2009-2010 as Annexure SA-1. The petitioners have also filed their rejoinder affidavit in each case. I have heard learned counsel for the parties at length and perused the material placed before this Court. By the impugned orders, the Excise Commissioner has fixed the Maximum Retail Price for sale of country liquor as well as foreign liquor for the year 2010-2011 thereby the retailers’ margin has been reduced from 30% to 20% as compared to previous year. The main grievance of the petitioners is that the State Government had framed the Excise Policy for the year 2010-2011 and accordingly issued Notification No. 142/XXIII/2010/64/2009 dated March 05, 2010 and thereby Rules have been formulated to regulate the excise policy, but the impugned orders passed by the Excise 7 Commissioner subsequent to that are against Rule 53 of the Excise Policy which depicts that other things will remain the same as per policy for the year 2009-2010. According to the petitioners, the respondents could not have issued the impugned orders subsequent to the settlement of the liquor shops and since the impugned orders have been passed without hearing the petitioners, the same are not tenable in the eye of law particularly when the petitioners had incurred huge amounts by depositing the licence fee and other amounts after allotment of retail shops in their favour. Learned counsel for the petitioners has firstly contended that the impugned orders passed by the respondents are not at all tenable in view of the provision of Rule 53 of the Rules, which reads as under:- “53- vU; 'ks"k O;oLFkk;sa foRrh; o"kZ 2009&10 ds vuq:Ik ;Fkkor~ ykxw jgsxhA” Learned counsel for the petitioners therefore argued that on the strength of Rule 53, the respondents had induced the petitioners to apply for the liquor shops and after the settlement of shops, the respondents cannot be allowed to reduce the margin, which is safe- guarded under the aforesaid Rule. Learned counsel for the petitioners secondly contended that the respondents after the settlement of shop and after having been invested huge amounts towards licence fee and other charges by the petitioners could not have reduced the retailers’ margin and if there was need to do so, the only course open to the respondents was to apprise the petitioners and other applicants prior to the settlement of shops, therefore, the impugned orders having been passed subsequent to the settlement of shops are not only illegal and arbitrary but also suffer from mala fide exercise of power. Learned counsel for the petitioners thirdly contended that the respondents could not have changed the Rule of the game after the same has begun with the promulgation of the Rules. 8 On the other hand, the learned Advocate General appearing for the State has submitted firstly that the writ petitions are not maintainable because the petitioners had statutory alternative remedy to approach the State Government under Section 11(2) of the Excise Act. In reply, the learned counsel for the petitioners has vehemently urged that it is evident from a perusal of the impugned order dated 1-5-2010 of the Excise Commissioner that the decision to fix MRP for sale of the country liquor was approved by the Government. Therefore, to approach to the Government in such a matter would be a futile attempt in view of the law laid down by the Apex Court in para no. 23 of the case of D.S.M. Sugar Mills Vs. State of U.P. [(2007) 8 SCC, Page 338, wherein it has been observed that once the decision is taken by the Government, in such cases the appeal to the Government means virtually an appeal from “Caesar to Caesar’s wife”. Since the price has been fixed with the consultation and approval of the State Government and in the case at hand there is no dispute of question of fact, therefore, it the petitioners are relegated to alternate remedy, it would be a futile exercise. The contention of the learned counsel for the State on this score is not acceptable. Learned counsel for the State has further contended that the fixation of price is a legislative exercise of power and the petitioners cannot raise any grievance against the same particularly when the petitioners have no vested right to carry on the business of liquor. It has been vehemently argued that the petitioners categorically accepted the terms and conditions of the Government policy relating to price fixation, while entering into contract without any protest and reservation and have entered into a contract duly executed between the parties. An interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. In support of his contention, reliance has been placed upon paragraph no. 31 of the case 9 of Binny Ltd. And another Vs. V.Sadasivan and others reported in (2005) 6 S.C.C. Page 657. Learned counsel for the State has further placed reliance in paragraph no. 4 of the case of Union of India and another Vs. Cynamide India Ltd. And another (1987) 2 SCC Page 720. In paragraph no. 4 reported in (1987) 2 SCC Page 720 (supra), the Apex Court has made the following observations:- “4. We start with the observation, ‘Price fixation is neither the function nor the forte of the court’. We concern ourselves neither with the policy nor with the rates. But we do not totally deny ourselves the jurisdiction to enquire into the question, in appropriate proceedings, whether relevant considerations have gone in and irrelevant considerations kept out of the determination of the price. For example, if the legislature has decreed the pricing policy and prescribed the factors which should guide the determination of the price, we will, if necessary, enquire into the question whether the policy and the factors are present to the mind of the authorities specifying the price. But our examination will stop there. We will go no further. We will not deluge ourselves with more facts and figures. The assembling of the raw materials and the mechanics of price fixation are the concern of the executive and we leave it to them. And, we will not re-evaluate the considerations even if the prices are demonstrably injurious to some manufacturers or producers. The court will, of course, examine if there is any hostile discrimination. That is a different ‘cup of tea’ altogether.” In reply, the learned counsel for the petitioner has submitted that as regards the plea for fixation of price is a legislative function would apply when the same is being done under the Essential Commodities Act, wherein Section 3(2)(c) confers the power on the Government to fix a price while in the present case there has been no such exercise of power under the Excise Act. Learned counsel for the petitioner has argued that unless it is shown that the fixation of price 10 under Rule 35 is a legislative exercise no argument in that regard can be made and that the impugned price fixation by the respondents falls within the ambit of administrative exercise of power. According to the learned counsel for the petitioners interference by the Court is permissible on the ground of extreme arbitrariness. In the present writ petitions, the only question to be examined by this Court is whether the impugned orders have been passed by the Excise Commissioner outside the purview of the Excise Policy of the State Government for the year 2010-2011 promulgated on 5th March 2010 and in violation of the provisions of the Excise Act. The petitioners have annexed the Excise Policy of the State Government as Annexure No. 3 to the writ petition in each case. For a just decision of the case, a reference to relevant provisions of the Excise Act and Rule 35 of the Rules framed under the Excise Act as well as relevant clause no. 1 and 23 of the Excise Policy formulated by the State Government for the year 2010-2011 is necessary. The power of Excise Commissioner to make rules is provided under Section 41 of the Excise Act, relevant extract of which reads as under:- “41. The Excise Commissioner subject to the previous sanction of the State Government may make rules: (a ) regulating the manufacture, supply, storage or sale of any intoxicant including- (i) the erection, alteration, repair, inspection, supervision, management and control of any place for the manufacture, supply, storage or sale of such article and the fittings, implements and apparatus to be maintained therein; (ii) the cultivation of the hemp plant (cannabis sativa); 11 (iii) the collection of portions of the hemp plant (cannabis sativa) from which any intoxicating drug can be manufactured and the manufacture of any intoxicating drug therefrom; (b) regulating the deposit of any intoxicant in a warehouse and the removal of any intoxicant from any such warehouse or from any distillery, brewery or manufactory. (c) prescribing the scale of fees or manner of fixing the fees payable for any licence, permit or pass including any consideration for the grant of any exclusive or other privilege granted under Section 24 or Section 24-A or for storing of any intoxicant: Provided that nothing contained in this clause shall be construed to prevent the State Government from levying by notification made from time to time, any fee, including vend fee, as part of consideration for the granting of any such privilege. Explanation.-(1) Fees may be prescribed under this sub-clause at different rates for different classes of licences, permits, passes or storage, and for different areas. (2) The manner of fixing such fee or consideration includes any one or more of the following manners, namely- (i) auction, (ii) invitation of tenders. (iii) assessment on the basis of sales made or quota lifted under the licence, permit or pass. (d) regulating the time, place and manner of payment of any duty or fee; (e) prescribing the restrictions under and the conditions on which any licence, permit or pass may be granted, including provision for the following matters- (i) the prohibition of the admixture with any intoxicant of any substance deemed to be noxious or objectionable; (ii) the regulation or prohibition of the reduction of liquor by a licensed manufacturer or licensed vendor from a higher to a lower strength. (iii) the fixing of the strength, price or quantity in excess of or below which any intoxicant shall not be sold or supplied, and of 12 the quantity in excess of which denatured spirit shall not be possessed, and the prescription of a standard of quality for any intoxicant; (iv) the prohibition of sale except for cash; (v) xxx xxx xxx.” Section IV of the Rules framed under the U.P. Excise Act deals with systems of Taxation. Rules 35 reads as under:- “35. Explanatory- How the cost of an intoxicant or of opium to the consumer is determined-Factors determining the retail price of an intoxicant or opium are- (a) the supplier’s price, covering the cost of production, manufacture or import, the cost of distribution to bonded warehouses or to shops, and to profit of the producer, manufacture, or importer; (b) the excise duty, if any, levied on the article produced, manufactured or imported, or in the case of an article imported into India, the customs of tariff duty, if nay; (c) the licence fee levied by the Government from the vendor in return for the grant of the right to sell article; and (d) the vendor’s profit.” Relevant extract of Rules 1 and 23 of the Excise Policy for the year 2010-2011 reads as under:- “1- efnjk nqdkuksa ls dqy jktLr dk fu/kkZj.k%& nqdkuokj ns’kh@fons’kh efnjk nqdkuksa dk dqy jktLo (U;wure izR;kHkwr M~;wVh rFkk ykbZlasl Qhl dh jkf’k dk ;ksx) dk fu/kkZj.k o"kZ 2009&10 dk dqy jktLo rFkk Qjojh rd 20% mBku ds U;wure izR;kHkwr vfHkdj (,e0th0Mh0) rFkk vfrfjDr mBku ds jktLo dks tksM+dj nqdkuokj dqy jktLo esa fuEukuqlkj o`f) djds fu/kkZfjr fd;k tk;sxkA” “23- foRrh; o"kZ 2009&10 dh Hkkafr efnjk ds fodz; ewY; ds ifjizs{; esa vokaNuh; izfrLi/kkZ dh izo`fRr dks fu;af=r fd;s tkus rFkk miHkksDrkvksa ds fgrksa dks lajf{kr fd;s tkus ds mn~ns’; ls ns’kh@fons’kh efnjk@fc;j@okbZu dk vf/kdre QqVdj fcdzh ewY; fu/kkZfjr fd;k tk;sxkA lHkh czk.M dh bZ0Mh0ih0 fnYyh jkT; esa vkiwfrZ fd;s tk jgs czk.Ml dh bZ0Mh0ih0 ls vf/kd ugha j[kh tk ldsxhA ,sls czk.M ftldh bZ0Mh0ih0 fnYyh esa fcdzh fd;s tk jgs lUrqY; czk.M dh bZ0Mh0ih0 ls vf/kd gksxh] dh fcdzh mRrjk[k.M jkT; esa vuqeU; ugha gksxhA tks vkiwrZd fnYyh jkT; esa vkiwfrZ ugha dj jgs 13 gSa os vU; fdlh jkT; esa vkiwfrZ fd;s tk jgs czk.M dh bZ0Mh0ih0 ?kksf"kr fd;s tkus lEcU/kh fn;s x;s 'kiFk i= esa ;fn ;g ik;k tkrk gS fd vU; jkT; esa blls de bZ0Mh0ih0 ?kksf"kr dh x;h gS] rks izR;sd =qfViw.kZ bZ0Mh0ih0 ij :0 1]00]000 yk[k (,d yk[k :Ik;s ek=) isukYVh vkjksfir fd;s tkus ds lkFk&lkFk vU; oS/kkfud dk;Zokgh Hkh dh tk ldsxhA” In the Uttaranchal Excise (Settlement of Licences for retail sale of foreign liquor and beer) Rules, 2001 in the Definition Clause (k) the definition of “Monthly Minimum Guaranteed Duty” has been given as under:- “(k) “Monthly Minimum Guaranteed Duty” means the part of consideration money for the grant of licence for exclusive privilege under section 24 of the Act, which is payable on the entire “Monthly Minimum Guaranteed Quantity” of a month at the rate notified by the State Government for duty on IMFL leviable under section 30 read with section 28 of the Act from time to time.” Much emphasis was given by the learned counsel for the petitioner in clause 53 of the Excise Policy formulated by the State Government and it was vehemently argued that the respondents could not have reduced the retailer’s margin of profit from 30% to 20%, as it was prevailing @ 30% during the year 2009-2010. Main ground of challenge raised by the learned counsel for the petitioners is that