Case: Ugar Sugar Works Ltd Vs. Delhi Administration

2. The petitioner is a company incorporated under the Companies Act, 1956 having its registered office in Sangli, Maharashtra. It is engaged in the business of manufacture of IMFL and holdslicence for supply of its various brands of liquor for vending within the territory of Delhi.3. The trade and business of liquor in National Capital Territory of Delhi is governed by Punjab Excise Act, 1914 (hereinafter referred to as ‘theand the grant of licence for vending liquor is regulated by Delhi Liquor Licence Rules, 1976 (hereinafter. Respondent No. 1Delhi Administration in exercise of its powers under Section 5 of the Act has been taking policy decisions from time to time and issuing notifications dealing with Registration of Brands and Eligibility of Brands of IMFL for its sale in the National Capital Territory of Delhi. The eligibility for grant of licencewhich enables the supplier to supply his brands of IMFL in Delhi, is regulated by those policy decisions and includes compliance with specific MSF requirements for a particular year. According to the petitioner, the policy of Delhi Government pursuant to which impugned notification, laying down MSF criteria for the yearhas been issued, is arbitrary and discriminatory as against small scale manufacturers and has no nexus with the object of providing liquor of good quality for consumption within the territory of Delhi and is as such violative of Articles 14, 16 and 19(1)(g) of the Constitution and, thus, liable to be declared invalid and unconstitutional.4. Before we proceed to examine the challenge to the policy of Delhi Government, on the basis of which the impugned notification laying down MSF requirements for supply of various brands of liquor in Delhi has been issued, we may first refer in short to the previous history of the case.5. In 1996 the petitioner filed Civil Writ Petition No. 483/1996 challeging MSF requirements fixed for that year. Rule nisi came to be issued. That petition has remained pending. Delhi Wine Merchants Assocation filed an SLP against an order of the Delhi High Court upholding MSF requirements through its judgment dated 24.4.1996 in Civil Writ Petition No. 4843 of 1995. That SLP is also pending. Both these cases pertain to the challenge to the notification issued for the period ofThe present writ petition has put in issue the notification issued for the yearfixing enhanced MSF requirements as a condition of eligibility to getlicence. The grounds of challenge in all the three cases are similar.6. Through the impugned notification MSF requirement for the lowest price tag has been raised from 60,000 cases (7.2 lac bottles) to 75,000 cases (9 lac bottles) over the previousMSF requirements for the ‘lowest pricebrand of liquor and this raise, according to the petitioner is unfair, unreasonable, arbitrary and violative of Articles 19(1)(g) and 14 of the Constitution.7. Let us first examine some of the statutory provisions dealing with theRespondent No. 1is empowered by Section 5 of the Act to issue notifications laying down maximum/minimum quantity of any intoxicating liquor which may be sold either in retail or in wholesale in the territory of Delhi. Section 5 providesPower of the Lieutenant Governor to declare limit of sale by retail and by whole sale.—The Lieutenant Governor of Delhi may by notification declare, with respect either to the whole of the Union Territory of Delhi or to any local area comprised therein and as regards purchases generally or any specified class of purchases and generally or for any specified occasion maximum or minimum quantity or both of any intoxicant which for the purposes of this Act may be sold by retail and by

Court's reasoning:
16. In view of this settled position of law, any argument impugning the policy decision of the State Government, as reflected in the impugned notification, based upon Article 19(1)(g) is totally out of place and merits outright rejection and we have no hesitation in doing so most emphatically.17. Faced with the settled legal position that there is no fundamental right to trade in liquor, learned Counsel for the petitioner did not pursue the argument based on Article 19(1)(g) to question the competence of Delhi Administration to take a policy decision with regard to regulating trade in liquor and laying down various regulatory measures and in our opinion rightly so. Learned Counsel, however, mounted his challenge to the impugned notification based on Article 14 principally on the ground that the policy as reflected in the impugned notification was irrational and that raising of MSF requirements over the previousfigures with a view to regulate thebeing sold in Delhi was arbitrary and has no nexus with the object sought to be achieved viz., to provide liquor of good quality to the consumers in the National Capital Territory of Delhi. It was also urged that the policy is discriminatory and as a result of the policy, small scale manufactures with good quality of liquor, were likely to be deprived of their marketing brand within the potential market of Delhi, in case they do not achieve the prescribed MSF outside Delhi and that would result in leaving the field wide open only for big business houses who would retain their monopoly in Delhi market.In the present case the executive policy regulating the sale of liquor in the territory of Delhi is sought to be challenged by the petitioner on the ground that it isbesides beingand has no nexus with the object sought to be achieved. We are unable toallegations of mala fide made in the writ petition are totally bereft of any factual matrix and we, therefore, do not detain ourselves at all to consider challenge on that ground. In fairness to learned Counsel for the petitioner we may record that challenge to notification on grounds of mala fide was not pressed during arguments. Laying down requirement of achieving minimum sale figures of a particular brand of liquor in other States, as a mode for determination of theof that brand of liquor, is neither irrelevant, nor irrational or unreasonable. It appears that prescription of MSF requirement is aimed at allowing sale of only such brands of liquor which have been tested, tried and found acceptable at large in other parts of thebasis for determination is not only relevant but also fair. No direction can be given or expected from the Court regarding theof an executive policy unless while implementing such policies, there is infringement or violation of any constitutional or statutory provision. In the present case, not only there is no such violation but on other hand, the State in formulating its policy has exercised its statutory powers and applied them uniformly.25. Though, we are not required to test the correctness of thefor increase of MSF over the previousfigures, but it is relevant to point out that increase of sale from 60,000 cases to 75,000 cases in respect of ‘lowest pricebrand of liquor does not appear to be arbitrary and on the other hand it appears to have a rational basis. Economic mechanism is a highly sensitive and a complex matter. With inflation every year, it goes without saying, that the brand which has thethis year, was perhaps not the brand which had theprice tag latIt is possible that the brand ‘with lowest pricethis year may not be of that good quality as the brand with identical price tag last year, even though it may conform to ISI standards. It was, therefore, reasonable for the State to find out whether that particular brand with the lowest price tag this year, had been tested and tried elsewhere and had been accepted largely by the public in other parts of India to determine if that particular brand of liquor can be considered to be liquor of good quality keeping the health and welfare of the public in view. The impugned notification in our opinion furthers the object of providing good liquor having larger acceptability. The policy is made in the interest of health, welfare and morals to benefit all citizens of Delhi and not the big industrial houses as alleged. Determinaton of wide scale acceptability on the basis of revised national sales figures (MSF) does not strike us as being unreasonable let alone irrational, arbitrary or unfair. Under these circumstances there is no justifiable reason warranting interference with the impugned notification.