Case: Government Of Maharashtra  Vs. M/S. Deokar'S Distillery

Act while obtaining the licence, they cannot wriggle out of the contractual liability voluntarily incurred by them.33. The order of the High Court is bad in law. The High Court, in our view, has erred in not appreciating the impugned demand notice was also in the nature of demanding balance of the price of the exclusive privilege which would become final only on issue of the Notification, order under Article 309, the bulk of which have already been recovered in advance, which privilege exclusively vests with the Government considering effect of provisions especially Section 49 and Section 143(2)(u) of the Prohibition Act. In our opinion, the establishment charges demanded are in the nature of price for parting with the privilege to permit manufacture and sale of liquor, and the privilege exclusively vests with the Government.34. We have already noticed the observations made by this Court in the case of M/s. Anabeshahi Wine and Distilleries Pvt. Ltd. (supra). In this context, it is well-settled by catena of decisions of this Court that there is no fundamental right to trade in liquor and State can charge consideration for granting the privilege in respect of potable liquors for raising revenue as ruled in M/s. Anabeshahi Wines judgment (supra).35. As already noticed, the High Court has failed to appreciate that the judgment of this Court in Polychems case (supra) was required to be read with the decision f the Full Bench of the said Court in Mohan Meakins case (supra) in which the earlier decision in J.E. Bilimorlas case (supra) was overruled on entirely different reasons than those given in the judgment of the High Court in Gustad Mayur Iranis case (supra), the judgment dated 24.2.1994 in W.P. No. 2718/1991 and M/s. Vidarbha Wine Traders vs. State of Maharashtra and order dated 5.9.1994 of this Court rejecting S.L.P.(C) No....../1994 (CC 26531) filed by Vidarbha Wine Traders & fifteen other licensees.36. Inspite of the above position including different reasons given in the Full Bench judgment than those in Gustad Mayur Iranis case (supra) and in the rejection of the special leave petition filed by Vidarbha Wine Traders, learned counsel for the respondents is unable to give any reasons for establishing that the Full Bench decision in the Mohan Meakins case (supra) was not correct and the High Court has also not given any reasons in the impugned judgment for disagreeing with the reasons given in the Full Bench judgment of the Mohan Meakins case (supra).37. We have perused the judgment in Polychems case (supra) which was delivered on the basis of a concession and incorrect information submitted by the learned advocate appearing for the State of Maharashtra. The above facts and the legal position that the J.E. Bilimoria decision was overruled long back in the Full Bench judgment in the case of Mohan Meakin (supra) and which Full Bench judgment was already confirmed by this Court by order dated 8.9.1994 rejecting the Special Leave Petition No.... /1994 (CC 26531) filed by Vidarbha Wine Traders and 15 other licensees were not placed for consideration of this Court in the Polychems case by the State of Maharashtra as would be seen from the following observation in Polychems case, inter alia, that "It is common ground that these supervision charges are collected in advance at the beginning of each quarter.... We presume that this Division Bench judgment was not brought to the notice of the latter Division Bench, otherwise they would not have taken diametrically opposite view without referring the issue to a larger Bench. We further notice that the judgment in J.E. Bilimorias case was not challenged by the Revenue as per the information passed on by Mr. Nargolkar, learned counsel for the respondents."38. It appears that the learned counsel appearing for the State of Maharashtra had not sought any instruction in the Polychems case (supra) before making any statement in respect of J.E. Bilimoria judgment (supra), when it was already overruled long back in the judgment of the Mohan Meakins case (supra). Therefore, the correct facts and the legal position, as submitted above, could not be placed for consideration of this Court in the Polychem matter. We are, therefore, of the opinion that the judgment of this Court in Polychems case was delivered on the basis of the concession by the learned Government advocate when he conceded that supervision charges are collected only in advance, when under the residuary powers under Rule 17(43) of the Rules of 1966 and Rule 6(36) of the Rules of 1973, additional amounts were or could be demanded, as also di9rectly under Section 58A and Section 114 of the Prohibition Act. In our opinion, the High court has erred in not appreciating the submission of the appellants that the judgment in the case of Polychem appears to have been delivered on the basis of a concession/incorrect information and its ratio ought to be applied to the facts placed for consideration and the issues considered and decided.39. This apart, the High Court has also not right in rejecting the writ petition of the respondents at the threshold. The High Court has failed to notice another important factor that the statutory provision under Article 309, namely, the Notification dated 10.12.1998 and the consequential administrative instructions/orders issued for carrying out the executive function under Section 58A of the Prohibition Act and Article 162 namely, the circular letter dated 30.7. 1999 had not been challenged by the respondents herein and, therefore, they were not entitled to challenge the demand notice which was merely a consequential communication. The High Court, therefore, is not right in quashing the demand notice issued by appellant No. 4, namely, the Sub-Inspector of State Excise, in charge of the manufactory of the respondent, without examining the validity of or quashing the Rules of 1988 and the consequential circular letter dated 30.7.1999 issued by appellant No.2, namely, the Commissioner, since the demand notice was merely a consequential communication issued in furtherance of the rules of 1998 and the circular letter dated 30.7.1999.

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

Explanation:
1[ds]30. In the case on hand, the licensees gave an undertaking at the time of obtaining grant or renewal of the license in the application form itself, both under the Rules of 1966 and the Rules of 1973, that they would abide by all orders made under the Prohibition Act and the Rules. Under Rule 17(43) of the Rules of 1966 and under Rule 6(36) of the Rules of 1973, there are residuary powers of making a demand in special circumstances not foreseen in Rule 17(12) of the Rules of 1966 or Rule 6(12) of the Rules of 1973. It is seen from Rule 17(43) of the Rules of 1966 that the licensee shall abide by all the Rules. Regulations and orders made from time to time under the Act. A similar provision also exists under Rule 6(36) of the Rules of 1973. The object of Section 58A of the Prohibition Act the intention of the Legislature, in our opinion, could not be anything other than that the entire cost incurred by the Government on account ofpaid to the Government employees posted for supervision should be paid by the licensee and that this cost should not be met from the Government exchequer.31. We have already extracted the relevant undertaking that the respondents had given in the application in Form P.L.A. prescribed under the Rules of 1966 and application in Form C.L.A. prescribed under Rules of 1973. Apart from the undertaking under Condition No. 17 of the licence in Form C.L.A. for grant or renewal of licence that the orders made from time to time under the Act shall be complied with.43 of Rule 17 of the Rules of 1966 and36 of Rule 6 of the Rules of 1973 also prescribed that the licensee shall abide by the orders made from to time under the Prohibition Act and these are the provisions which give residuary powers to the petitioners, inter alia, direct to pay the supervision charges.The legal licensee does not have a fundamental right to deal in liquor under Entry 8, List II in the Seventh Schedule to the Constitution of India and thereby under Sections 49 and 143(2)(u) of the Prohibition Act, the State has the exclusive right/privilege in respect of potable liquor and the State, in our opinion, can charge any reasonable expenses or even consideration for permitting such activity by grant of licence and that respondents ought to comply with all reasonable orders, as undertaken by them while obtaining the licence. This factor, the High court, has not appreciated. Once the liquor licensee has undertaken to abide by all reasonable orders under the Prohibition Act while obtaining the licence, they cannot wriggle out of the contractual liability voluntarily incurred by them.33. The order of the High Court is bad in law. The High Court, in our view, has erred in not appreciating the impugned demand notice was also in the nature of demanding balance of the price of the exclusive privilege which would become final only on issue of the Notification, order under Article 309, the bulk of which have already been recovered in advance, which privilege exclusively vests with the Government considering effect of provisions especially Section 49 and Section 143(2)(u) of the Prohibition Act. In our opinion, the establishment charges demanded are in the nature of price for parting with the privilege to permit manufacture and sale of liquor, and the privilege exclusively vests with the Government.34. We have already noticed the observations made by this Court in the case of M/s. Anabeshahi Wine and Distilleries Pvt. Ltd. (supra). In this context, it isby catena of decisions of this Court that there is no fundamental right to trade in liquor and State can charge consideration for granting the privilege in respect of potable liquors for raising revenue as ruled in M/s. Anabeshahi Wines judgment (supra).35. As already noticed, the High Court has failed to appreciate that the judgment of this Court in Polychems case (supra) was required to be read with the decision f the Full Bench of the said Court in Mohan Meakins case (supra) in which the earlier decision in J.E. Bilimorlas case (supra) was overruled on entirely different reasons than those given in the judgment of the High Court in Gustad Mayur Iranis case (supra), the judgment dated 24.2.1994 in W.P. No. 2718/1991 and M/s. Vidarbha Wine Traders vs. State of Maharashtra and order dated 5.9.1994 of this Court rejecting S.L.P.(C) No....../1994 (CC 26531) filed by Vidarbha Wine Traders & fifteen other licensees.36. Inspite of the above position including different reasons given in the Full Bench judgment than those in Gustad Mayur Iranis case (supra) and in the rejection of the special leave petition filed by Vidarbha Wine Traders, learned counsel for the respondents is unable to give any reasons for establishing that the Full Bench decision in the Mohan Meakins case (supra) was not correct and the High Court has also not given any reasons in the impugned judgment for disagreeing with the reasons given in the Full Bench judgment of the Mohan Meakins case (supra).37. We have perused the judgment in Polychems case (supra) which was delivered on the basis of a concession and incorrect information submitted by the learned advocate appearing for the State of Maharashtra. The above facts and the legal position that the J.E. Bilimoria decision was overruled long back in the Full Bench judgment in the case of Mohan Meakin (supra) and which Full Bench judgment was already confirmed by this Court by order dated 8.9.1994 rejecting the Special Leave Petition No.... /1994 (CC 26531) filed by Vidarbha Wine Traders and 15 other licensees were not placed for consideration of this Court in the Polychems case by the State of Maharashtra as would be seen from the following observation in Polychems case, inter alia, that "It is common ground that these supervision charges are collected in advance at the beginning of each quarter.... We presume that this Division Bench judgment was not brought to the notice of the latter Division Bench, otherwise they would not have taken diametrically opposite view without referring the issue to a larger Bench. We further notice that the judgment in J.E. Bilimorias case was not challenged by the Revenue as per the information passed on by Mr. Nargolkar, learned counsel for the respondents."38. It appears that the learned counsel appearing for the State of Maharashtra had not sought any instruction in the Polychems case (supra) before making any statement in respect of J.E. Bilimoria judgment (supra), when it was already overruled long back in the judgment of the Mohan Meakins case (supra). Therefore, the correct facts and the legal position, as submitted above, could not be placed for consideration of this Court in the Polychem matter. We are, therefore, of the opinion that the judgment of this Court in Polychems case was delivered on the basis of the concession by the learned Government advocate when he conceded that supervision charges are collected only in advance, when under the residuary powers under Rule 17(43) of the Rules of 1966 and Rule 6(36) of the Rules of 1973, additional amounts were or could be demanded, as also di9rectly under Section 58A and Section 114 of the Prohibition Act. In our opinion, the High court has erred in not appreciating the submission of the appellants that the judgment in the case of Polychem appears to have been delivered on the basis of a concession/incorrect information and its ratio ought to be applied to the facts placed for consideration and the issues considered and decided.39. This apart, the High Court has also not right in rejecting the writ petition of the respondents at the threshold. The High Court has failed to notice another important factor that the statutory provision under Article 309, namely, the Notification dated 10.12.1998 and the consequential administrative instructions/orders issued for carrying out the executive function under Section 58A of the Prohibition Act and Article 162 namely, the circular letter dated 30.7. 1999 had not been challenged by the respondents herein and, therefore, they were not entitled to challenge the demand notice which was merely a consequential communication. The High Court, therefore, is not right in quashing the demand notice issued by appellant No. 4, namely, theof State Excise, in charge of the manufactory of the respondent, without examining the validity of or quashing the Rules of 1988 and the consequential circular letter dated 30.7.1999 issued by appellant No.2, namely, the Commissioner, since the demand notice was merely a consequential communication issued in furtherance of the rules of 1998 and the circular letter dated 30.7.1999.