W 9 Y5€ Rish g aou ikshit 2 s years, Shri R S.ikshit, Baaa ho hy a aipur, Dist. Raipur (0.6.) Versus N THE mGH céURr o I ' tioner . / Peti ta hattgarh, hrug the Re '. ommrcia et, Taxe E Qw (#:2 , / E “ 9 /' %. hawan aaaya, Rai B, Mmrl p ise sian, Chkmttisgar, Raipur (C.G.) Ste of ta GV¢° ' ' ' AND IRloNs ‘ , 0;, warts DECT , ” / w/ F JUDICATURE CHHATTISGARH AT mam. 1 2005 ' Aed i D, bt 8 lo G.D 10 Cwk, Sam Hgar R I / , K Ste of Chis ‘ 3p Toh f sgomleina _ 4, Secrary Cel $ (x mci Commiser h 9 § rn‘ 39 ' A)?“ ”5¢ 2 PETHION V MANDAMUS OFINDIA UNDER FOR AND ARTlcwa ISSUAHCEQF iiERTIORARI 226i AND APPRopRmTE 227 OF FOR THE OTHER comermmon mm SUITABLE OF Ri$hi Dik‘shit Versus State of Chhattisgarh & Another O R D E R (31“ at March 2005) AK. Painaik, CJ: The foHowing Order of the Court was bassed by 5 3 The petitioner is a business man and deaIS in !iquor business. The State of Phhattisgarh wa'a formed with effect fram 01 11 2000 and the Madhya Pradesh Excnse Act 1915 was adapted under the prowsions of the Madhya Pradeeh Re-orgamzaticn Act so as to make it applicable With modifications in the State of Chhattisgarh and on such adaptation the Act has been renamed as Chhattisgarh EXCise Act 1915 (for short “the Act") Section 62(1) of the Act prowdes that the State Government mav make rules for the purpose of carrying out the proVISioQs of the Act and Section 62(7) proVides that the Qtate Government may in particuiar and Without preiudice to the generaiity of the proVismns of section 62(1) make rules on the matters specified in Ctauses (a) to (n) thereof In exerCise of thie power under Section 6W1) reed With Clauses (d) (d 1) (e) (f) (g) and Ptauee (b) of Section 18(1) of the Act the State Covemment bv a notifcation dated 15 0? 2002 made the Phhattisgarh Excise Settlement of Licences for retail sale of comtw I Foreign i-quor Rutes, 2002 (for short the Rules 2002’). Thereafter, the Excise Commissioner, State of Chhattisgarh issued a circutar dated 14.02.2005 to aii the Coiiectors of the State of nhhattisgarh regarding the ru'es for settiement of iicencee for retaii sate of roJntry I foretori iiduor shoos in the State of Chhattisgarh for the veer 2005-06 Pursuant to the said Circular appiications were inVited from intending apphcants for settiement of ticences for retaii sale of country Iiquor l foreign liquor' in the State of Chhattisgarh for the year e Iv 2005-06 and the petitioner amongst others applied for the group Rasera, District Raipur vide their application No.01 250026 dated 26.02.2005 for iicence of retail saie of ccuntry Iiquor I foreign liquor. After receipt of the applications, the respondents have proceeded to select the licensees. The petitioner has filed this writ petition challenging the circular dated 14.02.2005 issued by the Excise Commissioner, State of Chhattisgarh and praying that the impugned’circular be quashed and suitable directions be given to the respondents with regard to selection of the retail licensees of country / foreign liquor shops in the State of Chhattisgarh. 2. At the hearing, Mr. Ravindra Shrivastava along with Mr. P. Diwaker, 3r. Advocates submitted that under Section 62(2) of the Act, the State Government has made the Rules 2002 and Rule 9 of the Rules 2002 stipulates the eligibility conditions of the applicant and these are that the applicant should be a citizen of lndia or a partnership firm whose partners are citizen of India; should be above 21 years of age; should not be a defaulter I or should not be black liged or debarred from holding an excise licence under the provisions of the, Rules made under the Act, possesses or has an arrangement for taking on rent suitable premises in the concerned locality for opening the shops in accordance with the Rules; possesses good moral character and has no criminal background and has not been convicted of any offence punishable under the Act or Narcotic Drugs and Psychotropic Substances Act, 1.985 or any other law for the time being in force and that no government dues are outstanding against him. But the format of the application as prescribed by the Excise Commissioner, State of Chhattisgarh in the impugned circular does not contain any column requiring the applicant to furnish information to show that he satisfies the aforesaid eligibility conditions as prescribed under Rule 9 of the Rules 20.02. They submitted that Rule 11 of Rules 2002 provides for selection of licensee from amongst such eligible or suitable applicants but unless the applications show that the applicants satisfied the eligibility conditions as prescribed in Rule 9 of the Rules 2002, the Committee entrusted under Rule 11 to select the licensee will not be able to know as to whether the applicant is eligibie or suitabie for grant of iicence for retail sale .of country or foreign liquor. They argued that the provisions in Rule 9 provide the eligibility conditions of the applicant, and are, therefore, mandatory and cannot be dispensed with by the Excise W 3 Commissioner, State of Chhattisgarh and yet it appears from the impugned circular as we“ as the prescribed farmat of the application in which the applicants are required to appiy that these mandatory provisions in Ruie 9 of the Rules 2002 have heen dispensed with. They argued that since there has been a breach of the mandatory requirements of the Rules 2002 by the impugned circular and the applications filed by the applicants do not contain the information for the purpose of determining as to whether the applicants are eligible or suitable, the entire exercise under taken by the Department in selecting the licensees has to be declared by the Court as illegal and contrary to the Rules 2002. 3. In reply to the aforesaid submissions made by learned counsel to! the petitioner, Mr. Prashant Mishra, learned Additional Advocate General submitted that a reading of Rule 9 would show that the appticant has to fulfill the conditions mentioned therein “for obtaining licence for shops ! group of shops of the country liquor l foreign liquor" and, therefore, it is on!y after a seiection is made from amongst the applioants in accordance with Rule 11 of the Rule 2002 that the selected candidates would have to satisfy the eligibility conditions as mentioned in Rule 9 of Rules 2002. He further submitted that the impugned circular was issued by the Excise Commissioner, State of Chhattisgarh pursuant to the decision taken by the State Government to amend the Rules 2002 and the circular was an internal circular issued to the Collectors of different districts of the State of Chhattisgarh. He produced before us a copy of the notification dated: 22.03.2005 of the State Government of Chhattisgarh by which the provisions of Rule 8 of Ruie 2002 have been amended. He futther argued that since the petitioner has submitted an application in the format as prescribed by the Excise Commissioner, State of Chhattisgarh and has participated in the process of seiection of the licensees, he has acquiesced in the entire procedure of the selection as iaid down in the impugned circular of the Excise Commissioner, State of Chhattisgarh and at this stage he cannot challenge the said procedure as contrary to the Rules 2002. In support of his submission, he cited the judgment of Supreme Court in the case of Nain Sukh Das v. U.P. State reported in AIR 1953 SC 384, wherein the Supreme Court has held that the petitioners acquiesced in the elections being conducted under the old system of separate electorates and felt no discrimination having been practised against them could not complain of infringement of their fundamental rights under Articles 15(1) and 14 of the Consiitution. Mr. Mishra further submitted that it is new well settled by the Courts that the Court would be slow in interfering in matters relating to the policy of the State. Government regarding sale of foreign iiquor .l country iiquor. ln particular, he cited decisions of the Supreme Court in the case of state of Orissa vs. Hari Narayan Jaiswai reported in AIR 1972 SC 1816, and in the case of Khoday Distilieries Ltd. vs. State of Karnataka reported in {1 9.95) 1 SCC 574. He submitted that in this case also the Courts should not interfere with the poiicy decision of the State Government as incorporated in the impugned circular of the Excise Commissioner, State of Chhattisgarh. 4. Mr. Ravi Shankar Prasad, Sr. Advocate assisted by Mr. Abhishek Sinha, iearned counsel appearing for the interveners simiiarly cited the decision of the Supreme Court in the case of State of Madhya Pradesh and Others vs. Nandlal Jaiswal and ethers reported in (1986) 4 scc 566 in which the Supreme Court has observed that while considering the applicability of Article 14 in the case where iicence for manufacture and sale of liquor is being granted by the State Government, the Court would be stow to interfere with the policy laid down by the State Government for grant of licences for manufacture and saie of iiquor having regard to the nature of the trade or business. He aiso relied on the Constitution Bench decision of the Supreme Court in the Khoday Distiileries vs. State of Karnataka and Others (supra) in which the Supreme Court white summarizing the law reiating to the iiquor business held that the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees and the State can impose limitations and restrictions on the trade or business in such iiquor and such restrictions or I limitations can extend to the State carrying on the trade or business itself to the exclusion of and elimination of others and / or to preserving to itself the right to sell licences to do trade or business in the same. Mr. Prasad argued that in View ‘of the aforesaid iaw laid down by the Supreme Court, the decision of the State Government as to how it wiil select the retail iicensees of country / foreign liquor in the State of Chhattisgarh should be .v‘ 5 » !eft to the state and should not be interfered with by the Court in exercise of its power of judiciai review. Regarding Rule 9 of the Ruies 2002, he argued that that the requirements in Clauses (a)(b) and (c) of the said Rule 9 that the applicant should be a citizen of India or a partnership firm whose partners are eitizens of India; that he should be above 21. years of age; and that he should net be a defauiter/ or should not be black listed or debarred from hoiding an excise iicence under the provisions of the Rules made under the Act are eligibility conditions and are mandatory in nature and every applicant has to satisfy the said requirements, but the appiicant need not tiie an afrrdavit as required in Rule 9 (d) of Ruies 2002 to show that he possesses or has an arrangement for taking on rent suitable premises in the concerned locality for opening the shops in accordance with the Rules or that he possesses good morat character or has no criminal back ground or that no government dues are outstanding against him. Such an affidavit, according to Mr. Prasad, can be tiled by the applicant alter he is selected in accordance with the Rule 11 of the Rules 2002. He cited the decision of the Supreme Court in the case of Rajendra Singh vs. State of MP. reported in (1996) 5 soc 460 for the proposition that every breach of statutory provision does not furnish a good ground for the Court to interfere and if a statutory provision is only a directory one and not a mandatory one and there is substantial compliance with the directory provision, the Court will not interfere merely because there is some reach in the provisions of the Rules. He submitted that in the case of Rajenclra Singh (supra) the Supreme Court has further held that wherever a complaint of Violation of mandatory provision is made, the Court should inquire as to whose interest the provision is conceived and if it is not conceived in the interest of the public, the question of waiver and/ or acquiescence may arise subject of course to the pleadings of the parties and it is necessary for the Court to keep these considerations in mind while deciding whether or not to interfere in the decision under Article 226 or in a suit. Mr. Prasad further submitted that in this case, since the petitioner has acquiesced by submitting an application in the format as prescribed by the Excise Commissioner, State of Chhattisgarh under the impugnedcircular, he cannot, at this stage be allowed to challenge that Rule 9 of Rules 2002 has been dispensed with by the Excise Commissioner, State of Chhattisgarh in the impugned circular and the format does not contain columns in which the applicant is required to 5. Rules 8, 9, 10 and 11 for fhis case, are extracted hevein below: “8. Procedure for grant of licence — of the Rutes 2002 which are reievant (a) Whenever a new licence is proposed to be granted in an area or locah'ty, the licensing authority shall wide publicity through daily newspapers having circulatio r for which the cence shall be fee minimum amount, and Tensil,‘ District excise and Deputy (c) Application for grant of licence with application fee shail be submitted in the, prescribed form as appended to these rules as annexure 4. (d) The last date to be tixe ' shall not be earlierytha invite the applications for this purpose after giving (b) A list of shops of country / foreign liquo n in that area. licensing authority proposes to grant li exhibited along with shopwise licence monthwise guaranteed quantity, security annual quantity in omce of Collector, Excise Qmcer / Asstt. Commissioner Commissioner Excise (Flying squad). Vdate of publication newspaper. d for the receipt of application n ten days with effect from the of the advertisement in the 9. Eligibility Conditions for applicant — The applicant has to fulfil the foiloWing conditions for obtaining the iicence for shop/Group of shops of Country/foreign liquor. (a) Should be a citizen of lndia or a partnership iirm whose partners are citizen of lndia. No chan shall be allowed after settlement of shops except with the permiss Commissioner, ge in partnership shop(s)fgroup of ion of the Excise (b) Should be above 21 years of age. (c) Should not be a defaulter/blacklisted or debarred from hotding an excise licence under the provisions of any fules made under the Act. (d) Has to submit an affidavit duly verified by public notary as proof of the foliowing, namely- (1) That he possesses or has an arrangement for taking on rent suitable premises in that locality for Opening the shops in accordance with the rules. (2) That he possesses good moral character and have no criminal background and have not been convicted of any offence punishable under the Act or Narcotic Drugs and Psychotropic Substances Act, 1985 or any other law for the time being in force or any other cognizabie and non~baiiabie offence. (3) That in case he is seiected as licensee he will furnish a certificate, issued by Superintendent of Police of the district of which he is the resident, showing that he as weil as his family members possess good more! character and have no criminal background or criminai record, within thirty days of grant of licence. That he shall not employ any salesman or representative who has criminal background as mentioned in ciause (iii) or who suffer from any infectious or contagious disease or is below 21 years of age or a woman. (5) (4) ‘ 10. 11. W3 7 That no government dues are outstanding against him. District lave! committee for licensing- There shall be a district levei committee for selection of licensees for sale of country / foreign iiquor. The committee shal! consists of the — (i) The Coliector of the District Chairman (ii) The District Excise Ofticer/ Member Secretary Asstt. Commissioner of the District Selection of Licensee- (a) The member secretary of the committee shall prepare a Iist of a" appiicants with summary report to be put up before the district ievei committee. (b) The said committee shail select iicensees tram the iist of applicants in case more than one applicants are found suitable for any particular group of shops the committee shall select the licensee for such group of shops by lottery {c}. ln case the selected applicant does not deposit the required amount according to rule 13 and does not fultil the prescribed formalities or is unable to arrange suitable premises for the shops within stipulated period, the licensing authority shall cancel the allotment and take steps for resettlement of the shops / group of shops. (c) ln case there is no application for a particular group of shops or no appiicant is found suitable for a group of shops, the licensing authority shall take immediate steps for resettlement as per procedure laid down in rule 8. (d) “aw Licensing authority shall have the right to reject application received for a group of shops without assigning any reason. (at The person in whose favour licence is granted shall be bound by the terms and conditions of licence issued under rule 3(b)." Rule 8 extracted above provides for procedure for grant of licence. Clause (c) of Rule 8 as it stood before its amendment by notification dated 22.03.2005 provided that the application for grant of licence with application fee shall be submitted in prescribed form as appended to the Rules as annexure 4. The said Clause (c) has now been substituted by new‘ Clause (c) by the amendment under the notification dated 22.03.2005 which now reads as hereunder: 6. . 9 “(C) The application form under rule-6 abng with prescnbnd applicahon fees shal! be submitted to *he Licensing Authonty of the ccncnmed dustnct withm prescnbed date & time for gmnt of hcense for ratall shop / group of country/foreign llquor m thn proforma prescnbed by the Excise Commrcsroner." By the aforesaid amendment by notification dated 22.03.2005 after Clause (c), a new clause (6-1) has been added which reads as follows: “(C-1) The first, second & third applicant selected for retail shop i group of country I foreign liquor by the selection committee after lottery drawn by computer must submit aftidavit verified by the Notary in the prescribed proforma the next day during office hours.” By the notification dated 22 0? 2005 no amendment has been made whatsoever to Rule 0 of the Puies 2002 Hence the position before the amendment by the notifcation dated 22.03.2005 and after the amendment by the notification dated 22.03.2005 as regards Rule 9 remains the same. 7. A plain reading ot Rule 9 quoted above would show that the applicant “has" to fulfi the conditions mentioned therein for obtainind licence for shop / group of shops of country / foreign liquor Therefore the applicant has to be a Citizen of India or a partnership frm whose partners are citizens of India he has to be above 21 years of age he should not be a defaulter or a person black listed or debarred from holdina an excise ticence under the provrswns of the Rules made under the Act and he has to submit an affidaVit furnishing the information as required under Rule G(d) of the Ruies 2002 namely that he possesses or has an arrandement for taking on rent suitable premises in the concerned locality he possesses good moral character and has no criminal background and has not been convicted of any offence under the law and he has no government dues outstanding against him. lf we accept the contention of Mr Mishra learned Additional Advocate General that at! these conditions may be fulflled bv the apbticant as provrded in Ciauses {a} (b) (c) and (d) m Pu'e 9 after the applicant is selected then the consequence would be that the District Level Committee formed in accordance With Rule 10 wrll 10 not be ab!e to seiect or find out as to who amongst the applicants are eligible or suitab!e for grant of licences for country liquor or foreign liquor shops. !t is, therefore, necessary that before the process of se!ection is undertaken under Rule 11 information shouid be avaiiable with the District Level Committee as to whether the applicants fulfil the eligibility conditions in Clause (a), (b), (c) and (d) of Ruie 9. Moreover, the expression "eligibiiity conditions for applicant“ by itself implies that the conditions have to be satisfied by the applicant for being eiigibie for consideration under Rota/1 1. For these reasons we are of the view that the provisions of Rule 9 of the Ruies 2902 iaying down the eligibility conditions for the applicant are mandatory provisions and are not directory provisions. 8. Section 62 (2)(e) of the Act provides that the State may make ruies regulating inter alia the persons or classes of persons to whom, licences for the wholesale or retail vend of any intoxicant may be granted. it is in exercise of such power under Section 62(e) that Rule 9 of the Rules 2002 has been made by the State of Chhattisgarh stating therein that only applicants who satisfy the eiigibiiity conditions'as laid down in the said Rule 9 are the persons or classes of persons to whom licence for retail sale of country or foreign liquor can be granted and who can apply for such iicence. Obviousiy these provisions of Section 62 (2) (e) of the Act and Rule 9 of the Rules 2002 have been made not for the benefit of any individual but in the interest of the public because the object of these provisions is that a person who does not satisfy the conditions as laid down in Rule 9 should not be allowed to hold a licence for retail sale of country or foreign liquor. 9. if the provisions of Rule 9 of the Rules 2002 are mandatory and have been made in the interest of the public, breach of the provisions of Rule 9 will cail for interference by the Court and the fact that the petitioner has submitted an application in the prescribed format as laid down in the impugned circular of the Excise Commissioner will not stand in the way of the Court interfering in the matter and issuing appropriate directions to the State for compliance with the provisions of Rule 9 of the Ruies 2002 as per the .law laid down in the case of Rajendra Singh Vs. State of MP. (Supra). The relevant portion of the said judgment of the Supreme Court in the case of Rajendra Singh is quoted here in below: 11 “Whiie examining compiaints of Violation of statutory rules and conditions, it must be remembered that violation of each and every provision does not furnish a ground for the court to interfere. The provision may be a directory one or a mandatory one. In the case of directory provisions, substantial compliance would be enough. Unless it is established that violation of a directory provisions has resuited in loss and/or prejudice to the party, no interference is warranted. Even in the case of violation of a mandatory provision, interference does not follow as a matter of course. A mandatory grovision conceived in the interest of a Em can be waived by that gag, whereas a mandatom grovision conceived in the interest of the Qublic cannot be waived by him. in other words, wherever a complaint of violation of a mandatory provision is