Case: Chingleput Bottlers Vs. Majestic Bottling Company

forfeiture but merely an attempt at acquisition that fails, the legitimate expectation of a renewal of the licence or con formation of the membership is one which raises the question of what it is that has happened to make the applicant unsuitable for the membership or licence for which he was previously thought suitable.In such cases, Megarry, V.C. felt that much help cannot be had from discussing whether natural justice or fairness was the more appropriate term. He observes that if one expects that natural justice is a flexible term which impose, different requirement in different cases, it is capable of applying appropriately to the whole range of situations indicated by the terms such as judicial, quasi-, judicial and administrative. The content of the "duty to act fairly did not impose on the Board to give either oral hearing to the applicant or to disclose the case against him nor was . it under any obligation to give reasons for a decision. The learned Judge then went on to say that there was no obligation for the Board to give the applicant even the gist of the reasons while they refused his application, or proposed to do so, and added.The concepts of natural justice and the duty to be fair must not be allowed to discredit themselves while ranking unreasonable requirements and imposing undue burdens."24. In such cases; the right to hearing has been denied on the ground that the claim or interest or legitimate expectation is a more privilege or licence. This is in consonance with the decision of a Constitution Bench of this Court in Kishan Chand Arora v. Commissioner of Police, Calcutta following the judgment of the Privy Council in Nakkuda Ali v. M.F.De S. Jayaratnes case.25. It is beyond the scope of the present judgment to enter into a discussion on the apparent conflict between the decision . Of the Privy Council in Nakkuda Alis case and the observation of Lord Reid in Baldwins case. It would appear that the long line of cases beginning with Baldwins case and ending with Darcy Ryans case are cases dealing with interference with property rights, deprivation of membership of professional or other non-statutory bodies, dismissal from office, imposition of penalties and deprivation of advantages etc. Both the Privy Council as well as this Court have required strict adherence to the rules of natural justice where a public authority or body has to deal with rights. But the principle that there was a duly to observe the audi alteram partem rule may not apply to cases which relate not to rights or legal expectations but to mere privilege or licence.It is now well-settled that while considering the question of breach of the principles of natural justice, the Court should not proceed as if there are inflexible rules of natural justice of universal application. Each case depends on its own circumstances. Rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act.26. There is nothing in the language of r.7 of the Rules to suggest that in refusing to grant the privilege, the Commissioner is obliged to act judicially. The order refusing a licence under r.7 is purely an administrative or executive order and is not open to appeal or revision. There is no lis between the Commissioner and the person who is refused such privilege. The power of refusal of licence unlike the power to grant is not subject to any pre- condition.27. It must follow that the grant of a liquor licence under r.7 of the Rules does not involve any right or expectation but it is a matter of privilege. The Commissioner was there fore under no obligation either to disclose the sources of information or the gist of the information that he had. All that was required was that he should act fairly, and deal with the applications without any bias, and not in an . arbitrary or capricious manner.28. There is no suggestion of any mala fides on the part of the Commissioner or the State Government. The Commissioner heard both the parties after he had an inquiry made through the collector to adjudge their suitability for the grant of the licence. The Commissioner had issued a questionnaire and had the material collected by the Collector. The Commissioner was entitled to act on the report of the Collector and also on other material gathered by him during the course of the inquiry. There is no requirement under the Act for a confronted hearing like the hearing contemplated between rival claimants for the grant of a stage carriage permit under the Motor Vehicles Act, 1939 into their respective merits an d demerits. The Commissioner separately heard both the parties and had their statements recorded with respect to all the relevant aspects It cannot be said that the Commissioner in dealing with the applications did not act fairly in not furnishing a copy of the report of the Collector or in taking a representation from Messrs Majestic Bottling Company.,The High Court could not have in proceedings under Art. 226 of the Constitution interfered with the impugned order of the Commissioner merely because on a reappraisal of the evidence it might have come to a contrary conclusion. There was no error of jurisdiction on the part of the Commissioner nor was the impugned order vitiated by any error apparent on the face of the record. The fin ding reached by the Commissioner that the application made by Messrs Chingleput Bottlers was not made bona fide on their own account but as benanmi for others is a finding based on appreciation A of evidence. The Commissioner was entitled to rely upon the facts found by the Collector. It may be pointed out that the Collectors report is entirely based on the statement of V. Ramabadran, managing partner of Messrs Chingleput Bottlers. The High Court was therefore justified in dismissing the appeal preferred by Messrs Chingleput Bottlers.29.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It is said that the gr ant of licence under r. 7 is subject to the prior approval of the State Government and is in the discretion of the State Government. The High Court is not the granting authority and therefore had no power to issue a writ of mandamus directing the Commissioner to grant a licence to Messrs Majestic Bottling Company. Thesecond question is whether the Commissioner acted in breach of the rules natural justice in not furnishing to Messrs Chingleput Bottlers a copy of the report submitted by the Collector and other material gathered by him during the course of the inquiry tending to show that they were benamidars of one O.H. Kumar, the previous licensee.It is said that Messrs Majestic Bottling Company had at the separate hearing before the Commissioner submitted a brief styled as a representation containing several documents in opposition to the application made by Messrs Chingleput Bottlers on the ground that their application was benami without furnishing a copy of the same to them and this must have influenced the mind of the Commissioner. Even if the Commissioner was not acting in a judicial Or quasi judicial capacity, he was required to act fairly. The rules of natural justice therefore required that Messrs Chingleput Bottlers should not be deprived of this business without knowing the case they had to meet. Both the questions that arise will have to be dealt withfirst issue, as already indicated, raises a question of prime importance and of some difficulty. It would therefore be convenient, in the first instance, to deal with the appeal preferred by the State Government. It is urged that the High Court had no jurisdiction to issue a wri t of mandamus ordaining the Commissioner to grant a licence to Messrs Chingleput Bottlers under r. 7 of the Rules without the prior approval of the State Government. It is said that although a writ of mandamus may be a necessary adjunct to a writ of certiorari the proper course for the High Court to have adopted was, if it was satisfied that the impugned order of the Commissioner was liable to be quashed insofar as he rejected the application made by Messrs Majestic Bottling Company on the ground that there was an error apparent on the face of the record, to have issued a writ of mandamus Commissioner to redetermine the question as to the grant of such privilege. Reliance is placed on de Smiths Judicial Review of Administrative Action, 4th edn. at pp.341 and 544. The contention must, in our opinion. prevail.In order that a writ of mandamus may issue to compel the Commissioner to grant the licence, it must be shown that under the Act and the Rules framed thereunder there was a legal duty imposed on the Commissioner to issue a licence under r. 7 of the Rules without the prior approval of the State Government and that Messrs Majestic Bottling Company had a corresponding legal right for its enforcement. No mandamus will lie where the duty sought to be enforced is of a discretionary nature nor will a mandamus issue to compel the performance by such public body or authority of an act contrary tomust follow that the grant of a liquor licence under r.7 of the Rules does not involve any right or expectation but it is a matter of privilege. The Commissioner was there fore under no obligation either to disclose the sources of information or the gist of the information that he had. All that was required was that he should act fairly, and deal with the applications without any bias, and not in an . arbitrary or capriciousis no suggestion of any mala fides on the part of the Commissioner or the State Government. The Commissioner heard both the parties after he had an inquiry made through the collector to adjudge their suitability for the grant of the licence. The Commissioner had issued a questionnaire and had the material collected by the Collector. The Commissioner was entitled to act on the report of the Collector and also on other material gathered by him during the course of the inquiry. There is no requirement under the Act for a confronted hearing like the hearing contemplated between rival claimants for the grant of a stage carriage permit underthe Motor Vehicles Act, 1939 into their respective merits an d demerits. The Commissioner separately heard both the parties and had their statements recorded with respect to all the relevant aspects It cannot be said that the Commissioner in dealing with the applications did not act fairly in not furnishing a copy of the report of the Collector or in taking a representation from Messrs Majestic Bottling Company.,The High Court could not have in proceedings under Art. 226 of the Constitution interfered with the impugned order of the Commissioner merely because on a reappraisal of the evidence it might have come to a contrary conclusion. There was no error of jurisdiction on the part of the Commissioner nor was the impugned order vitiated by any error apparent on the face of the record. The fin ding reached by the Commissioner that the application made by Messrs Chingleput Bottlers was not made bona fide on their own account but as benanmi for others is a finding based on appreciation A of evidence. The Commissioner was entitled to rely upon the facts found by the Collector. It may be pointed out that the Collectors report is entirely based on the statement of V. Ramabadran, managing partner of Messrs Chingleput Bottlers. The High Court was therefore justified in dismissing the appeal preferred by Messrs Chingleputt issue, as already indicated, raises a question of prime importance and of some difficulty. It would therefore be convenient, in the first instance, to deal with the appeal preferred by the State Government. It is urged that the High Court had no jurisdiction to issue a wri t of mandamus ordaining the Commissioner to grant a licence to Messrs Chingleput Bottlers under r. 7 of the Rules without the prior approval of the State Government. It is said that although a writ of mandamus may be a necessary adjunct to a writ of certiorari the proper course for the High Court to have adopted was, if it was satisfied that the impugned order of the Commissioner was liable to be quashed insofar as he rejected the application made by Messrs Majestic Bottling Company on the ground that there was an error apparent on the face of the record, to have issued a writ of mandamus Commissioner to redetermine the question as to the grant of such privilege. Reliance is placed on de Smiths Judicial Review of Administrative Action, 4th edn. at pp.341 and 544. The contention must, in our opinion. prevail.In order that a writ of mandamus may issue to compel the Commissioner to grant the licence, it must be shown that under the Act and the Rules framed thereunder there was a legal duty imposed on the Commissioner to issue a licence under r. 7 of the Rules without the prior approval of the State Government and that Messrs Majestic Bottling Company had a corresponding legal right for its enforcement. No mandamus will lie where the duty sought to be enforced is of a discretionary nature nor will a mandamus issue to compel the performance by such public body or authority of an act contrary tolaw. The Commissioner of Prohibition &Excise was under no legal duty to grant a licence to Messrs Majestic Bottling Company till he received the prior approval of the State Government under r. 7. Even assuming that the Commissioner recommended the grant of a licence, to them under r. 7, the State Government were under no compulsion to grant such prior approval. The grant or refusal of such licence was entirely in the discretion of the State Government. The High Court had no jurisdiction to issue a writ of Mandamus to the Commissioner to grant a licence to Messrs Majestic Bottling Company contrary to the provisions of r. 7 of theour judgment, the High Court exceeded its jurisdiction in issuing a writ of mandamus directing the Commissioner to grant a licence to Messrs Majestic Bottling Company without the prior . approval of the State Government as enjoined by r. 7 of the Rules. The High Court was unduly technical in applying the rules of pleadings. Absence of a specific plea in nature of demurrer would not invest the High Court with jurisdiction to issue a writ of mandamus ordaining the Commissioner to grant a licence to Messrs Majestic Bottling Company under r. 7 of the Rules without the prior approval of the State Government which was a condition pre-requisite for the grant of such privilege. It is regrettable that the High Court should have short- circuited the whole procedure upon a wrongful assumption of its own powers. The view taken by the High Court is manifestly erroneous. Otherwise, the statutory requirement of such prior approval of the State Government under r. 7 would be rendered wholly otiose.We should not be understood as laying down an inflexible rule that the High Courts cannot, under any circumstances, regulate or control the manner of grant of a liquor licence by the issue of a writ of mandamus. It would all depend upon the facts and circumstances as to whether the High Court should issue a writ of mandamus or not. The grant of a liquor licence is a matter of privilege. In the very nature of things, the grant of refusal of licence is in the discretion of the State Government. Normally, where the statute vests a discretionary power upon an administrative authority, the Court would not interfere with the exercise of such discretion unless it is made with oblique motives or extraneous purposes or upon extraneous considerations. The present case does not fall within the rule laid down in K. N. Guruswamy v. The State of Mysore ? and P. Bhooma Reddy v. State of Mysore &ors. The decisions in Guruswamys and Bhooma Reddys cases are both in consonance with the well-settled principle that the High Court can always issue a writ of mandamus under Art. 226 of the Constitution against a public authority to compel the performance of a public duty where such authority acts in violation of the law.