THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE K.S.APPA RAO W.A.Nos.717 & 718 of 2011 Date of judgment: --10-2011 CT in W.A.No.717 of 2011 Between: M/s.Arthos Breweries Limited ..Appellant and 1.The Govt. of A.P. rep. By its Principal Secretary (CT.&Excise), Revenue Department, A.P. Secretariat Hyderabad and others. ..Respondents The Court made the following Judgment: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE K.S.APPA RAO W.A.Nos.717 & 718 of 2011 Common Judgment: (Per Honourable Sri Justice A.Gopal Reddy) These two intra-court writ appeals filed by the writ petitioners against the orders of the learned single Judge dismissing WPMP No.25806 of 2011 in W.P.No.21195 of 2011 and WPMP No.27683 of 2011 in WP No.22654 of 2011, dated 30-08-2011 filed to stay procurement policy for Beer for the year 2011-2012 issued in G.O.Ms.No.1093 Revenue (Excise—II) Department, dated 12-07- 2011 are heard together and disposed of by this common judgment. The State Government which formulated the policy for procurement of Indian Made Foreign Liquor and Beer from time to time and the policy issued in G.O.Ms.No.1158 Revenue (Excise-II), dated 20-11-1993 was continued till the year 2009-2010. When two local manufactures, viz., M/s. Crown Beers India Limited and M/s Arthos Breweries Limited—petitioner in W.P.No.21195 of 2011, who are unable to secure a hold in the State market, had submitted a representation to the State Government on 12-03-2010 and 15-03-2010 voicing their concern about not being able to even enter into the State market by reason of the procurement policy of the State resulting in a lopsided market conditions favouring only a few suppliers, the 2nd respondent—Corporation undertaken a detailed study and submitted report stating that the policy contained in G.O.Ms.No.1158, dated 20-11-1993 had created a situation whereby non-availability of required space for other operators in the Beer market and consolidating the market share in favour of all the existing players by virtue of lack of clarity in Clauses 6 and 7 contained in the annexure appended to G.O.Ms.No.1158, dated 20-11-1993 resulted in severe shortcomings in the subject matter. The Government after considering the report submitted by the 2nd respondent came to the conclusion that duopolistic presence of interests in the activity would be tantamount to creating anti competitive tendencies and constricting consumers’ choices and suggestion made the Corporation to have a shift from the present procurement policy of Beer to one basing on market share statistics available from a wider basket of markets in the country which would open the doors for other manufacturers/suppliers also to enter the fray leading to wider choice for the consumers and enhancement of competitive spirit issued a new procurement policy for Beer in G.O.Ms.No.462, dated 19- 05-2010. Questioning the policy envisaged in G.O.Ms.No.462, W.P.No.14842 of 2010 was filed before this Court in which the first respondent filed counter supporting departure from the earlier policy stating that it is equally reasonable in public interest and to ensure that no anti competitive measures on the market and to ensure that there is equality of opportunity to participate in the trade for all the manufacturers and as the earlier policy issued in G.O.Ms.No.1158 lacks clarity in Clauses 6 and 7 which resulted in severe shortcomings of the subject matter and created duopolistic presence of interests in the activity and creates anti-competitive tendencies etc. As the earlier guidelines issued in G.O.Ms.No.1158 has not left any space for other manufacturers resulting in 90—96% market share to the two companies and need for change in the policy issued revised policy in G.O.Ms.No.462, dated 19-05-2010. While so, impugned G.O.Ms.No.1093, dated 12-07-2011 was issued. The analysis of Beer market during the year 2010-2011 shows the share of two major suppliers come down from 93% to 88% and the small suppliers has increased from about 7% to 12% under the policy issued in G.O.Ms.No.462, dated 19-05-2010 and no new suppliers have entered into the Beer market and the policy was only marginal success in achieving the objectives set out in the Beer procurement and on receipt of representations reviewed the policy through the impugned G.O. and decided to revert back to the pre-existing Beer procurement policy which was in vogue prior to the procurement year 2010-2011 i.e. to base the procurement on the preferences exhibited by the Beer consumers at the State level. Questioning the same writ petitions have been filed contending that the impugned G.O. is violative of Article 14 of the Constitution and it is contrary to the earlier policy issued and it is issued to promote just two manufactures. The impugned G.O. is arbitrary and creates an entry barrier in the State of Andhra Pradesh, which is contrary to the principles enshrined in Article 304 of the Constitution, and the said policy decision is irrational and unreasonable and deserves to be struck down. The first respondent filed a detailed counter stating based on the sale profile and on the representation of the petitioners and M/s. Crown Beers India Limited the 2nd respondent—Corporation submitted a report stating only two major players viz., M/s.Skol Breweries Limited and M/s.United Breweries Limited had occurred 95 to 96% of the Beer market in Andhra Pradesh whereas it is 75% at the national market and all other small players had a negligible market share of 4 to 5% in A.P. as against 25% at the national market which lead to create duopoly. Basing on the said report the first respondent issued G.O.Ms.No.462, dated 19-05-2010 with a view to enhance competitive spirit and to open doors to other manufacturers/suppliers to enter into the fray which lead to wider choice for the consumers. The main objective of G.O.Ms.No.462 was specified in para- 6 of the counter. The State Government decided to review its policy and accordingly issued G.O.Ms.No.1093, dated 12-07-2011 to revert back to the pre-existing procurement policy and pursuant to the new policy respondent No.2 also has to procure Beer from the various suppliers located in the entire India and offers were invited online which were opened on 28-07- 2011. In all 20 suppliers including the petitioner in W.P.No.21195 of 2011 have supplied their offers to supply Beer to the 2nd respondent— Corporation. The terms and conditions incorporated in the offer are more beneficial to all the manufacturers. As per Condition No.2.9A of the offer schedule: a) The Corporation will be under no obligation to place orders for any specified minimum quantities of Beer from the supplier during the period of contract. b) Orders will be released to the suppliers during first 45 days of the contract on their request. c) Subsequent orders will be released based on the average of actual sales during preceding three months or proceding period if it is less than 3 months. As per condition No.2.6 (b) the Corporation can permit suppliers to introduce new sizes/brands during the terms of rate contract (Original or extended by the Corporation). So new entrants, both suppliers and brands are permitted into the A.P. market. Petitioners, who failed to increase its market percentage share during the year of operation of G.O.Ms.No.462, cannot complain that the new G.O. has created an entry barrier to the State of Andhra Pradesh. Further, any supplier can enter into the A.P. market at any point of time during the term of the rate contract. Petitioners who filed its tender for the rate contract for the year 2011-2012 (commencing from 01-09-2011) on 28- 07-2011 cannot complain that the impugned G.O. is irrational and illegal and will monopolistic nature, but in fact, it benefits for small suppliers. Ellaborate arguments were made before the learned single Judge by a battery of senior lawyers for the petitioners and the learned Advocate General for the respondent—State. The learned single Judge refused to stay the policy decision issued in G.O.Ms.No.1093, dated 12-07-2011. After dismissal of WPMPs. separate counter has been filed in W.P.No.22654 of 2011 reiterating the same stand specifying supplier wise details in the counter to show that the small suppliers quantity during the operation of excise policy issued in G.O.Ms.No.462, dated 19-05-2011. As the objective in the said policy is to encourage small suppliers was not achieved impugned G.O. is issued. Sri S.Ravi, learned senior counsel for the appellant in W.A.No.717 of 2011 contends that there is no difference between the policy existing prior to issuance of G.O.Ms.No.462 and the impugned present policy. State not having disowned its stand indicated in the counter filed in W.P.No.14842 of 2010 in support of policy issued in G.O.Ms.No.462 pointing out the evils of the earlier policy in vogue for 17 years in paras 7 and 8. The reasons assigned in para-6 go back to old policy is retroactive having condemned the earlier policy and issued G.O.Ms.No.462, the State is not justified in reverting back to the earlier policy. What made the State Government to change their policy has not been emphasized nor how to redress the evils of the said policy vide pertaining to 2010-2011 issued in G.O.Ms.No.462. The facts pertaining to 2010-2011 and 2011-2012 in issuing two G.Os. makes difference to the ratio laid down in UGAR SUGAR WORKS LIMITED v. DELHI ADMINISTRATION[1] which has been relied upon by the learned single Judge. The Government having condemned the earlier policy is not justified to go back to the same policy and whether it is irrational or not has to be considered in the light of the plea taken by the parties. The balance of convenience of staying the policy lies in favour of the petitioners in fact, as discussed by the learned single Judge in para-23 of the judgment. Under the policy a particular brand of Beer can enter into franchise and the party giving its franchise can use a brand and supply the said Beer which has given a go bye in the new policy. The chart given by the Advocate General that the statement showing company wise shows that first 45 days it is everybody’s case. Sales show that 95% by two suppliers the rate contract does not provide minimum quantity. The State failed to demonstrate how the stand taken in the earlier counter is inapplicable. Learned senior counsel pointed out para-10 of the counter in W.P.No.22654 of 2011 contends even as per the impugned policy there was only marginal success to the objects sought to be achieved in G.O.Ms.No.462 for the year 2010-2011 is factually incorrect; that the impugned order do not contain any reasons and the same cannot be supplemented in justification of the order when challenge is made by playing reliance on the judgment of the Supreme Court in MOHINDER SINGH GILL v. CHIEF ELECTION COMMR.[2]. Sri Vedula Venkata Ramana, learned senior counsel for the appellant in W.A.No.718 of 2011 contends that State in spite of becoming more wiser have become more conservative and demonstrated what it was doing wiser for last 17 years is not correct and issued G.O.Ms.No.462 without any reasons, much less valid reasons, the Government wants to retrogate or revert back the old policy. Even according to the counter affidavit filed in the earlier writ petition, policy of 2010 achieved marginal success, small players cannot supply to the maximum within 45 days of free period on par with large manufacturers. As per para-6 of the impugned G.O.45 days will commence from 01-09-2011 and future supplies will be formalized based on such supplies will continue for the rest of the year. As there are no financial implications in the present policy, to have more competition among Beer manufacturers, which also benefit the State Government and consumers by reverting back to the age-old policy, State cannot create monopoly in bulk manufacturers. In support of the same reliance is placed on the following judgments: 1. SINDHI EDUCATION SOCIETY v. CHIEF SECRETARY, GOVERNMENT OF NCT OF DELHI[3] 2. MOHD. ABDUL KADIR v. DIRECTOR GENERAL OF POLICE, ASSAM[4] 3. STATE OF M.P. v. NANDLAL JAISWAL[5] He further contends when the Government changes its policy decision, it is expected to give valid reasons and act in the larger interest of the entire community. While pointing out to the tenders called for procurement under the respective policies and after making analysis of all the three policies and in comparison he tried to establish that the object of transparent foolproof procedure for procurement are given a go-bye in the impugned policy. The policy formulated in G.O.Ms.No.462 is not for any excise year. Therefore, even if the impugned policy is stayed the policy envisaged in G.O.Ms.No.462 can take care of for the present year also. Therefore, balance of convenience lies in favour of the petitioners and no irreparable injury and hardship will be caused to the respondent-State if the earlier policy is continued for the present year also, unless a comprehensive study is made and formulated to enable the participation of all the Beer manufactures. Per contra, learned Advocate General contends that while issuing G.O.Ms.No.462, dated 19-05-2010 sales in all States have been taken and fixed the percentage. In the present policy no percentage is fixed. As per condition No.2.9 whenever stock is finished any supplier will not be send away as there is no fixation of quota. Once it is consumer market, orders will be placed as per the demand. Therefore, non-fixation of quota helps to place such orders, as nobody is left out from the field. As level playing field for all suppliers is same, as stated in para-6 of the counter, petitioners have not demonstrated how they are discriminated to attract Article 14 by placing reliance on the judgments of the Supreme Court in UGAR SUGAR WORKS LIMITED (1 supra) and MOHD. FIDA KARIM v. STATE OF BIHAR[6]. As per the old policy prevalent in 2010-2011, if the quota fixed is exhausted within 15 days, the Corporation cannot place orders from suppliers to meet the demand and to remove the said contingency new policy has been formulated and the orders can be placed basing upon the demand. To support the same reliance is placed on the following judgments: 1. NASHIRWAR v. STATE OF M.P.[7] 2. HAR SHANKAR v. DY. EXCISE & TAXATION COMMR[8]. 3. STATE OF M.P. v. NANDLAL JAISWAL (5 supra) 4. PUNJAB COMMUNICATIONS LTD. v. UNION OF INDIA[9] 5. TRANSPORT AND DOCK WORKERS UNION v. MUMBAI PORT TRUST[10] 6. BAJAJ HINDUSTAN LIMITED v. SIR SHADI LAL ENTERPRISES LIMITED[11] 7. STATE OF U.P. v. HIRENDRA PAL SINGH[12] Before adverting to the rival submissions made by the counsel on either side, it is appropriate to notice the parameters of judicial review on Government policy decision and the relative merits of different economic policies on the subject and power of court to strike down a policy on the ground that another policy would have been fairer and better. In NANDLAL JAISWAL’s case (5 supra) the change of policy decision taken by the State of M.P. to grant licence for construction of distilleries for manufacture and supply of country liquor to existing contractors was challenged. Dealing with the power of the Court in considering the validity of policy decision relating to economic matters, it was observed as follows: “But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in R.K. Garg v. Union of India. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the following admonition given by Frankfurter, J. in Morey v. Doud. ‘In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events — self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.’ What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though the executive decision may not be placed on as high a pedestal as legislative judgment insofar as judicial deference is concerned. We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call ‘trial and error method’ and, therefore, its validity cannot be tested on any rigid ‘a priori’ considerations or on the application of any strait- jacket formula. The Court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or ‘play in the joints’ to the executive. ‘The problem of Government’ as pointed out by the Supreme Court of the United States in Metropolis Theater Co. v. State of Chicago ‘are practical ones and may justify, if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void’. The Government, as was said in Permian Basin Area Rate cases, is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide.” In BALCO EMPLOYEES’ UNION (REGD.) v. UNION OF INDIA[13] a three judge Bench of the Supreme Court while dealing with the Government policy regarding disinvestment and sale of majority shares within BALCO after referring to the judgment in NANDLAL JAISWAL (5 supra) and various other judgments on the subject at para-46 observed as follows: “ It is evident from the above that it is neither within the domain of the courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are our courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.” After elaborately considering the various submissions on the topic the Supreme Court quoted in paras 92 and 93 as under: “ In a democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested interests. Unless any illegality is committed in the execution of the policy or the same is contrary to law or mala fide, a decision bringing about change cannot per se be interfered with by the court. Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts. Here the policy was tested and the motion defeated in the Lok Sabha on 01-03-2001.” Keeping in view of the above observations, we have to see whether the petitioners have made out a prima facie case and balance of convenience lies in their favour for staying the impugned policy or not. Learned counsel for the appellants mainly relied upon the judgments of the Supreme Court in SINDHI EDUCATION SOCIETY (3 supra) MOHD. ABDUL KADIR (4 supra) and NANDLAL JAISWAL (5 supra). To buttress their submissions that whenever Government changes its policy decision it is expected to give reasons acting larger interest of the community to show that the Government applied its mind for such change of police as held by the Supreme Court in SINDHI EDUCATIONAL SOCIETY (3 supra). In the case of MOHD. ABDUL KADIR (4 supra) the Supreme Court was dealing with the policy formulated by the Government of India for strengthening of Assam Government machinery for detection and deportation of foreigners and its continuation as claimed by the Staff employed in the said project. It was observed as under: “We are conscious of the fact that the issue is a matter of policy having financial and other implications. But where an issue involving public interest has not engaged the attention of those concerned with policy, or where the failure to take prompt decision on a pending issue is likely to be detrimental to public interest, courts will be failing in their duty if they do not draw attention of the authorities concerned to the issue involved in appropriate cases. While courts cannot be and should not be makers of policy, they can certainly be catalysts, when there is a need for a policy or a change in policy. In NANDLAL’s case (5 supra) after referring the observation made earlier in HAR SHANKAR’s case (8 supra) it was held when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It is, therefore, not possible to uphold the contention of the State Government and Respondents 5 to 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. The State cannot ride roughshod over the requirement of that article. While holding so it was summarized in para-34 as referred to above. In UGAR SUGAR WORKS LIMITED (1 supra) while reiterating the citizen has no fundamental right to carry on the trade in liquor and State has right to formulate its policy keeping in view the interest of the citizens it was held indeed, arbitrariness, irrationality, perversity and mala fide will render the policy unconstitutional. However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interests of a party, does not justify invalidating the policy. While considering the objective of the policy as reflected in the notification impugned is to provide good quality of