IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.4111 of 2010 SUNIL KR.CHOUDHARY, S/O SRI KRISHNA CHOUDHARY, R/O MOH KARBIGAHIA, P.S. JAKKANPUR, DISTT-PATNA … PETITIONER Versus 1. STATE OF BIHAR, 2. THE COMMISSIONER OF EXCISE, BIHAR AT PATNA, 3. THE COLLECTOR, PATNA, 4. THE ASSISTANT COMMISSIONER OF EXCISE, PATNA … RESPONDENTS. ----------- For the Petitioner : Mr. Manoj Kumar Ambastha, Adv. For the State : Mr. P.K.Shahi, Advocate General, with Mr. Vikas Kumar, A.C. to A.G. ----------- PRESENT- THE HON’BLE THE CHIEF JUSTICE THE HON’BLE MR. JUSTICE MIHIR KUMAR JHA O R D E R (18.03.2010) As per Dipak Misra, C.J.- The petitioner an aspirant to avail the exclusive privilege under the Bihar Excise Act, 1915 (for brevity „the Act‟), has called in question the legal propriety of the amended sale notification issued vide Memo No. 490 dated 25.2.2010 and prayed for issue of a writ of certiorari for quashment of the same. 2. It is contended in the petition that the Collector-cum-District Magistrate on 6.2.2010, vide 2 Annexure 3, issued a notification for sale of certain liquor shops which were to be sold in „Samuh‟, i.e., cluster. The petitioner legitimately expected that he would participate in the cluster of Patna Nagar Nigam Shop No.62 and Prakhand Mukhyalaya, Bihta, Shop No.1, but a further sale notification was issued by the Collector as per Annexure 1 whereby the shops situate in Patna Municipal Corporation were segregated and given the status of individual shop but there was no segregation of the Bihta cluster. That apart, one more shop was added to the said cluster, namely, Khagaul Nagar Parishad. It is averred in the petition that vide notification dated 25.2.2010, discrimination has been created between the shops situate within the Patna Municipal Corporation and the shops which are beyond the Patna Municipal Corporation. In this backdrop, a prayer has been made for quashing the said notification. 3. A return has been filed by the answering respondents contending, inter alia, that initially Annexure 3 was issued indicating the names of the 3 shops and cluster on 6.2.2010 and offers were called for but the offers were not adequate. The State Government in order to augment more revenue issued a policy on 8.2.2010. According to the policy, the competent authority has been conferred jurisdiction to issue a sale notification in respect of individual shops or a cluster of shops regard being had to the potentiality of the revenue to be generated by grant of such exclusive privilege. It has been explained that a lottery system is prevalent and when more than one offer comes for one shop or the cluster of shops, the lottery process is taken recourse to and the person whose name comes in the lottery is granted the exclusive privilege. It is asserted that the said policy has been introduced for augmentation of the revenue and the notification that has been issued on 25.2.2010, as per Annexure 1, is in consonance with the policy. 4. We have heard Mr. Manoj Kumar Ambastha, learned counsel for the petitioner, and Mr. P.K.Shahi, learned Advocate General along with Mr. Vikas Kumar, learned counsel for the State. 4 5. Criticizing the sale notification, contained in Annexure 1, it is submitted by the learned counsel for the petitioner that the said notification offends Article 14 of the Constitution of India inasmuch as discrimination has been created by putting the shops inside the Patna Municipal Corporation in one individual compartment and the shops situate outside the Patna Municipal Corporation in a cluster or a group. It is also urged by the learned counsel for the petitioner that the notification has been issued to benefit the individuals who can afford to have the exclusive privilege whereas small time businessmen or competitors have been deprived to get into the fray. 6. Mr. Shahi, learned Advocate General, resisting the aforesaid submissions, contended that when the petitioner has not assailed the policy, the notification is unassailable, the same being in accord with the policy. It is canvassed by him that the petitioner had not applied pursuant to Annexure 3 and, therefore, does not have the locus standi to challenge Annexure 1 which has come into force 5 after the change in the policy. It is also highlighted by him that the grant of exclusive privilege has a different connotation in law and by no stretch of imagination, it can be said that the notification plays foul of Article 14 of the Constitution of India. 7. Before we advert to the conceptual essentiality and connotative eventuality with regard to the scope of judicial review of the policy relating to grant of exclusive privilege, we think it apt to dwell upon the jurisdiction of the courts while dealing with the facet of policy decision. It is well settled that the courts in exercise of their jurisdiction would not ordinarily transgress into the field of policy decision. The policy making process involves expertise and study of ground realities. Adjudication on a policy decision by a court of law is limited. 8. In Rusom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248 : (AIR 1970 SC 564), it has been expressed as under: “It is again not for this Court to consider the relative merits of the different political theories or economic policies…This Court has the 6 power to strike down a law on the ground of want of authority, but the Court will not sit in appeal over the policy of Parliament in enacting a law.” 9. In G. B. Mahajan & ors. v. The Jalgaon Municipal Council & ors., (1991) 3 SCC 91 : (AIR 1991 SC 1153), while dealing with the scope of judicial review, the Apex Court expressed the view as under: “14.………With the expansion of the State’s presence in the field of trade and commerce and of the range of economic and commercial enterprises of government and its instrumentalities there is an increasing dimension to governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost over-runs in projects, balancing of costs against time-scales, quality- control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with 7 concomitant economic expediencies. These are essentially matters of economic policy which lack adjudicative disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator’s right to trial and error, as long as both trial and error are bona fide and within the limits of authority…….” 10. In Premium Granites v. State of T.N., (1994) 2 SCC 691 : (AIR 1994 SC 2233), while dealing with the powers of the Courts interfering with the policy decision, their Lordships have held thus: “It is not the domain of the Court to embark upon unchartered ocean of public policy in an exercise to consider as to whether a particular policy is wise or a better public policy can be evolved. Such exercise must be left to the discretion of the executive and legislative authorities as the case may be.” 11. In Delhi Science Forum v. Union of 8 India, (1996) 2 SCC 405 : (AIR 1996 SC 1356), while adverting to the facet of the validity of the decision of the Government to grant licence under the Telegraph Act, 1985 to a non-Government company, their Lordships have observed thus: “The national policies in respect of economy, finance, communications, trade, telecommunications and others have to be decided by Parliament and the representatives of the people on the floor of Parliament can challenge and question any such policy adopted by the ruling Government.” 12. In R.K. Garg v. Union of India, (1981) 4 SCC 675 : (AIR 1981 SC 2138), while dealing with the scope of interference by the Court under Article 14 in respect of laws relating to economic activities, the Apex Court expressed the opinion that the Courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country, any such national policy should have been adopted or not. Their Lordships proceeded to state as under: “7. …….. There may be views and 9 views, opinions and opinions which may be shared and believed by citizens of the country including the representatives of the people in Parliament. But that has to be sorted out in Parliament which has to approve such policies. Privatization is a fundamental concept underlying the questions about the power to make economic decisions. What should be the role of the State in the economic development of the nation? How the resources of the country shall be used? How the goals are fixed shall be attained? What are to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensure that the decision regarding privatisation is in public interest? All these questions have to be answered by a vigilant Parliament. Courts have their limitations – because these issues rest with the policy-makers for the nation. No direction can be given or is expected from the Courts unless while implementing such policies, there is violation or infringement of any of the constitutional or statutory 10 provision.” 13. In M.P. Oil Extraction and another v. State of Madhya Pradesh and others, (1997) 7 SCC 592 : (AIR 1998 SC 145), it has been expressed as under: “41. After giving our careful consideration to the facts and circumstances of the case and to the submissions made by the learned counsel for the parties, it appears to us that the industrial policy of 1979 which was subsequently revised from time to time cannot be held arbitrary and based on no reason whatsoever but founded on mere ipse dixit of the State Government of M.P. The executive authority of the State must be held to be within its competence to frame policy for the administration of the State. Unless the policy framed is absolutely capricious and, not being informed by any reason whatsoever, can be clearly held to be arbitrary and founded on mere ipse dixit of the executive functionaries thereby offending Art. 14 of the Constitution or such policy offends other constitutional provisions or comes in 11 conflict with any statutory provision, the court cannot and should not outstep its limit and tinker with the policy decision of the executive functionary of the State. This Court in no uncertain term, has sounded a note of caution by indicating that policy decision is in the domain of the executive authority of the State and the Court should not embark on the unchartered ocean of public policy and should not question the efficacy or otherwise of such policy so long the same does not offend any provision of the statute or the Constitution of India. The supremacy of each of the three organs of the State i.e. legislature, executive and judiciary in their respective field of operation needs to be emphasised. The power of judicial review of the executive and legislative action must be kept within the bounds of constitutional schemes so that there may not be any occasion to entertain misgivings about the role of judiciary in outstepping its limit by unwarranted judicial activism being very often talked of in these days. The democratic setup to which the polity is 12 so deeply committed cannot function properly unless each of three organs appreciate the need for mutual respect and supremacy in their respective field.” 14. From the aforesaid pronouncement of law, it is clear as day that it is not within the domain of the Courts nor the scope of judicial review to embark upon an inquiry as to whether a particular public policy is wise and acceptable or whether a better public policy could evolve. A policy is not to be struck down merely because a different policy could have been fairer, wiser or more logically acceptable. The Courts can only interfere if the policy framed is absolutely capricious, not informed by reasons whatsoever, totally arbitrary and founded on ipse dixit or offending the basic requirement of Article 14 of the Constitution of India. 15. Presently, we shall dwell upon the scope of exercise of jurisdiction by courts while dealing with the policy pertaining to grant of exclusive privilege. 16. It is settled in law that grant of exclusive privilege has a different connotation in law. No one 13 can assert that he has a fundamental right to trade in liquor. Grant of exclusive privilege is within the domain of the State Government. The State can formulate a policy for distribution of exclusive privilege on the basis of consideration amount and grant licences but such a policy can be assailed on the touchstone of Article 14 of the Constitution of India. 17. In State of M.P. & ors., etc. etc. v. Nandlal Jaiswal & ors., etc. etc., AIR 1987 SC 251, a two-Judge Bench of the Apex Court expressed the view that Article 14 of the Constitution is attracted to grant of exclusive right or privilege for manufacture and sale of liquor as it involves the State‟s largesse. While so holding, their Lordships proceeded to state as follows: “33. 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 14 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 had 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, (1982) 1 SCR 947: (AIR 1981 SC 2138) …….” 18. In Secretary to Govt., Tamil Nadu & Anr. V. K. Vinayagamurthy, AIR 2002 SC 2968, their Lordships have expressed as follows: “7. ……So far as the trade in noxious or dangerous goods are concerned, no citizen can claim to have trade in the same and the intoxicating liquor being a noxious material, no citizen can claim any inherent right to sell 15 intoxicating liquor by retail. It cannot be claimed as a privilege of a citizen of a State. That being the position, any restriction which the State brings forth, must be a reasonable restriction within the meaning of Article 19(6) and reasonableness of the restriction would differ from trade to trade and no hard and fast rule concerning all trades ca be laid down. …….” 19. In Ashok Lanka & Anr. V. Rishi Dixit & ors., AIR 2005 SC 2821, a two-Judge Bench of the Apex Court opined as follows: “89. There cannot, however, be any doubt or dispute that having regard to the several decisions of this Court, e.g. State of Bombay v. R.M.D. Chamarbaugwala ((1957) SCR 874); M/s Fatehchand Himmatlal and others etc. v. State of Maharashtra etc. ((1977) 2 SCC 670); Khoday Distilleries Ltd. and others v. State of Karnataka and others ((1995) 1 SCC 574); B.R. Enterprises etc. v. State of U.P. and others etc. (1999) 9 SCC 700), State of A.P. and others v. Mcdowell & Company and others ((1996) 3 SCC 709); State of Punjab 16 and another v. Devans Modern Breweries Ltd. and another ((2004) 11 SCC 26), trade in liquor is considered to be res extra commercium although tobacco produce has not been declared so. (See Godawat Pan Masala Products I.P.Ltd. and another v. Union of India and others ((2004) 7 SCC 68). The State while exercising its power of parting with its exclusive privilege to deal in liquor has a positive obligation that any activity therein strictly conforms to the public interest and ensures public health, welfare and safety. Strict adherence to the requirement to comply with the statutory provisions must be considered from that angle.” 20. In Gupta Modern Breweries v. State of J & K & ors., (2007) 6 SCC 317, a two-Judge Bench of the Apex Court, placing reliance on Khoday Distilleries Ltd. (supra), opined that in dealing with the liquor trade, the Government cannot be manifestly unjust or arbitrary and the same can be challenged on the touchstone of Article 14 of the Constitution of India. 17 21. But an interesting facet of the present case is that the petitioner has not challenged the constitutional validity of the policy but has only assailed the notification which is a fall-out of the policy. Clause 13 of the policy, which has been pressed into service, on being translated into English reads as follows: “All kinds of retail liquor shops shall be settled generally shop-wise by lottery system but if considered necessary in the interest of settlement of excise shop and in interest of state revenue settlement shall be made in single shop or making a group of maximum three retail shops by lottery system as per existing provision of settlement. Small group of maximum three shops shall be made in such a way that group be constituted of more profitable shops and less profitable shops. Rest of the provisions shall remain as it is. For any reason shops are not settled those shops shall be settled with Bihar State Beverages Corporation Ltd.” 22. On a scrutiny of the said clause, it 18 is absolutely vivid that the competent authority can put a singular individual shop or a cluster of shops depending upon the concept of augmentation of revenue. When the policy has not been challenged, we are afraid that the notification can be assailed. However, despite the same, we would like to advert with regard to the justifiability of the notification. In the counter affidavit, in paragraphs 9 to 11, the State has stated thus: “9. That the Collectors were asked to send the proposal for the settlements of shops following the guidelines in order to obtain the approval of Excise Commissioner on it. The Excise Commissioner thereafter approved the settlement proposals and group of shops sent by the Collector. 10. That a state wide settlement programme was published vide Excise Commissioner’s letter no. 1191 dated 23.12.2009 for the first time. The same was also published in daily news papers of the state and outside the State. The shops/ group of shops were 19 scheduled to be settled on 22.02.2010. 11. That a sale notification for settlement of various excise shops in the district of Patna for the year 2010- 11 through lottery system was published and circulated by the Collector, Patna also vide memo No. 298 dated 06.02.2010. According to the aforesaid sale notification the excise shops were to be settled on 22.02.2010 through lottery system and interested persons were invited to submit applications with requisite papers latest by 17.02.2010. A copy of the sale notification has already been annexed as Annexure-2 to the writ application.” 23. It is submitted by Mr. Shahi, learned Advocate General for the State, that the State has a right to formulate a policy and solely because the shops of Patna Municipal Corporation have been segregated to be in individual compartment and other shops which are beyond the Patna Municipal Corporation area put into clusters, the concept of discrimination would not come into play. 20 24. It is worth noting that the Patna Municipal Corporation is a municipal area and a single shop, as has been contended by the State, will fetch more revenue. The shops which are situate beyond the Patna Municipal Corporation stand on a different footing. That apart, as is noticeable from Annexure 3, the cluster combines foreign liquor shops only which are in a group, whereas as far as Patna Municipal Corporation is concerned, it contains both foreign liquor as well as country liquor and spiced country liquor and the same are required to be sold in a singular shop which would have the entire composition. Thus, in Patna Municipal Corporation, in a singular individual shop, foreign country liquor and spiced country liquor can be sold in a composite shop. If it is not a composite shop, it is allowed to be entitled to sell only such item for which the exclusive privilege is granted. 25. In our considered opinion, the notification is in conformity with the policy and the policy in question does not invite the frown of Article 14 of the Constitution having its own rationale. It treats all the 21 participants uniformly and equally. Apart from the above, the policy has been introduced to augment revenue and, that apart, the classification that has been made for various categories of shops has its own rationality and the formation of the policy and the issuance of notice in consequence thereof cannot be said to be manifestly unjust or arbitrary. Therefore, it is difficult to accept the submission that the policy is arbitrary and the notification is irrational. 26. In view of the aforesaid analysis, we do not perceive any merit in this writ petition and, accordingly, the same stands dismissed without any order as to costs. (Dipak Misra,C.J.) (Mihir Kumar Jha,J.) Patna High Court. The 18th March, 2010. AFR. Surendra/ 22