Skip to content


Sir Shadi Lal Distillery and Chemical Works, Muzaffarnagar Vs. State of U.P. and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ Petn. No. 120 of 1977
Judge
Reported inAIR1977All349
ActsUttar Pradesh Excise Act, 1910 - Sections 24 and 37; Uttar Pradesh Excise Rules - Rule 417; Constitution of India - Article 226
AppellantSir Shadi Lal Distillery and Chemical Works, Muzaffarnagar
RespondentState of U.P. and ors.
Appellant AdvocateS.K. Suri, Adv.
Respondent AdvocateStanding Counsel
DispositionPetition allowed
Excerpt:
.....226 of constitution of india. (ii) undertaking - section 24 of u.p. excise act, 1910 - the excise commissioner cannot act otherwise than required under the act. (iii) privilege - sections 24 and 37 read with rule 417 of u.p. excise act, 1910 - whether privilege granted can be withdrawn only on suspicion where there is no contravention of act or rule - held, cannot be withdrawn. - - the petitioner as well as opposite party no. the contract will ordinarily be awarded to the firm tendering at the lowest rates, but full power is reserved to accept such tender as may be deemed best in public interest, and to reject any of those received without reasons being assigned, no payment is required for the exclusive right of supply the object being to secure to the retail vendors a supply..........distilleries in the districts of muzaffarnagar and bijnor respectively. for the year 1977-78 the excise commissioner, uttar pradesh (opposite party no. 2) invited tenders for grant of licences for the exclusive privilege of supplying country liquor in wholesale in various districts. the petitioner who had been granted the exclusive right of supplying country liquor in wholesale in the district of muzaffarnagar for the year 197-6-77, gave its tender for supply of country liquor in that district for the year 1977-78 also. opposite party no. 3 had also given a tender for the supply of country liquor in wholesale, but not for the district of muzaffarnagar. the rates offered by both the petitioner and opposite party no. 3 for supply of country liquor, were the same. by the impugned order.....
Judgment:

D.M. Chandrashekhar, J.

1. Inthis petition under Article 226 of the Constitution, the petitioner has prayed for quashing the order of the Excise Commissioner, Uttar Pradesh, dated 28-3-1977 (Annexure I) in so far as it relates to giving to opposite party No. 3 the exclusive privilege of supplying country liquor in wholesale in Muzaffarnagar district.

2. Certain material facts which are not in dispute may he stated. The petitioner as well as opposite party No. 3 are distillers having their distilleries in the districts of Muzaffarnagar and Bijnor respectively. For the year 1977-78 the Excise Commissioner, Uttar Pradesh (opposite party No. 2) invited tenders for grant of licences for the exclusive privilege of supplying country liquor in wholesale in various districts. The petitioner who had been granted the exclusive right of supplying country liquor in wholesale in the district of Muzaffarnagar for the year 197-6-77, gave its tender for supply of country liquor in that district for the year 1977-78 also. Opposite party No. 3 had also given a tender for the supply of country liquor in wholesale, but not for the district of Muzaffarnagar. The rates offered by both the petitioner and opposite party No. 3 for supply of country liquor, were the same. By the impugned order dated 28-3-77 the Excise Commissioner granted to the petitioner the exclusive right of supplying country liquor in wholesale in the district of Bijnor and granted similar right to opposite party No. 3 in the district of Muzaffarnagar.

3. The case of the .petitioner is that as it had its Distillery in Muzaffarnagar district and had also tendered for supplying liquor in that district, it (the petitioner) should have been granted the privilege of supplying liquor in Muzaffarnagar district and that the Commissioner of Excise was not justified in granting such privilege to opposite party No. 3 which did not have its Distillery in Muzaffarnagar district and had not submitted a tender for supplying country liquor in Muzaffarnagar district.

4. In the counter-affidavit filed on behalf of the opposite parties Nos. 1 and 2 namely State of U. P. and the Excise Commissioner, the stand taken is briefly as follows:

The Excise Commissioner has under the provisions of the Uttar Pradesh Excise Act, 1910 (hereinafter referred to as the Act) and the rules framed thereunder, absolute right to accept or reject any tender and to give the exclusive right of supplying country liquor in wholesale in any district, to any of the tenderers. The petitioner had given an undertaking that it would accept any district allotted to it for supplying country liquor in wholesale. There were certain complaints against the petitioner's Distillery of illegal supply of country spirit in Muzaffarnagar district and investigation by the Bureau of Intelligence is going on. During such investigation the State Government had suspended the Superintendent and Excise Inspector, Muzaffarnagar district. The petitioner cannot claim as of right that it should be granted the privilege of supplying country liquor in wholesale in any particular district.

5. In order to appreciate the rival contentions on behalf of the petitionerand opposite parties Nos. 1 and 2, it is useful to set out the relevant provisions of the Act and the rules thereunder.

6. Section 24 of the Act reads:

'Section 24-- Subject to the provisions of Section 31 the Excise Commissioner may grant to any person a licence for the exclusive privilege

(1) of manufacturing or of supplying toy wholesale, or of both; or

(2) of selling by wholesale or by retail; or

(3) of manufacturing or of supplying by wholesale, or of both and of selling by retail; any country liquor or intoxicating drug within any local area.'

Rule 417 reads as under:

'The firm is selected in the following manner:

The tenders in form C. L. 23 are invited by the Excise Commissioner vide notice in form C. L. 22 for the rates at which the different categories of spirit will be supplied at all specified bonded warehouses and wholesale depots in the area indicated. These tenders are submitted for orders of Government. The contract will ordinarily be awarded to the firm tendering at the lowest rates, but full power is reserved to accept such tender as may be deemed best in public interest, and to reject any of those received without reasons being assigned,

No payment is required for the exclusive right of supply the object being to secure to the retail vendors a supply of good spirit at a cheap and fixed rate Spirit may be supplied from any distillery, whether situated within the State or outside.

The detailed conditions of the contract are given in the notice in form C. L. 22 calling for tenders and in the form of licence C. L. 1.'

Under Rule 417 certain conditions have been prescribed regarding disposal of tenders for wholesale supply of country liquor for sale in particular districts. Condition No. 13 provides that tenders should be sent to the Excise Commissioner in sealed covers and that full power is reserved for accepting such tender as may be deemed more advantageous and of rejecting any of those received without any reasons being assigned.

7. Condition No. 14 reads:

'No district is reserved for any tendering party. Other things toeing equal, preference will however, be given to the party tendering for supply of spiritmanufactured in a distillery located within the district tendered for. In the event of two or more tendering distilleries being situated in the same district, preference will be given to the distillery already holding contract for supply provided that the difference in the tendering rates is not appreciable.'

Condition No. 15 provides that the tender should be submitted for each district separately and that each tenderer may submit tenders for more than one district.

8. Condition No. 15 provides that tenders should be submitted for each district separately.

9. Opposite party No. 3 who had not even tendered for Muzaffarnagar district could not have been considered for being given the exclusive privilege of supplying country liquor in that district. At any rate, the petitioner who had submitted its tender for that district and had offered to supply liquor at the same rate as that offered by opposite party No. 3 had a better claim than opposite party No. 3 for being allotted Muzaffarnagar district. Moreover, Condition No. 14 provides that other things being equal, preference should be given to the tendering party who has his distillery within the district tendered for. As stated earlier, the petitioner's distillery is situate in Muzaffarnagar district, while the distillery of opposite party No. 3 is not situate in that district. Even according to Condition No. 14, the petitioner should have been preferred to opposite party No. 3 unless there were good reasons for excluding the petitioner,

10. However, the learned Standing Counsel advanced the following contentions in defence of the impugned action of the Excise Commissioner:

(i) The petitioner cannot claim, as of right, the privilege of supplying liquor in any particular district.

(ii) The Excise Commissioner had absolute discretion in accepting or not accepting the petitioner's tender.

(iii) As grant of exclusive privilege of supplying liquor, is a matter of contract between the State and the supplier, the petitioner cannot invoke the writ jurisdiction of this court, for enforcing its contractual rights, if any.

(iv) The petitioner himself had offered to take up the privilege of supplying country liquor in Bijnor district.

(v) Since there were serious complaints against the petitioner who had been giventhe exclusive privilege of supplying country liquor in Muzaffarnagar district in the previous year, the Excise Authorities were justified in not allotting that district to it in the current year.

(vi) Even if there was any defect or irregularity in granting the exclusive privilege of supplying liquor in different districts, such defect or irregularity would not invalidate such grant in view of the provisions of Section 37 of the Act.

11. We shall now proceed to consider the aforesaid contentions of the learned Standing Counsel.

12. Contentions Nos. (i) and (ii) which are cognate, may be considered together. It is true that no person has absolute right to claim the privilege of supplying liquor in any particular district and that the Excise Commissioner has discretion to accept or not to accept any tender for such supply of country liquor. The disposal of the privilege of supplying country liquor, is governed by the provisions of the Act, Rules and the conditions thereunder and if the action of the Excise Commissioner is not in conformity with those provisions, any tenderer has sufficient interest to invoke the writ jurisdiction of this court to challenge such action of the Excise Commissioner.

13. Regarding the third contention of the learned Standing Counsel, the grant of privilege of selling liquor is not purely a matter of contract, but is governed by statute. If there is infraction of such statutory provisions, the aggrieved party can approach this court under Article 226 of the Constitution.

14. No doubt, the petitioner had given an undertaking that it was prepared to take up supply of liquor in any districts other than those for which it had tendered. But such undertaking is not contemplated by the provisions of Act or the rules and hence did not enable the Excise Commissioner to act otherwise than in accordance with the provisions of the Act rules and conditions prescribed by them.

15. Regarding the alleged complaints against the petitioner, no particulars of any acts or omissions constituting any infraction of the provisions of the Act or any other law, on the part of the petitioner, have been set out in the counter-affidavit filed on behalf of the Excise Commissioner. The learned Standing Counsel produced before us the files of the Excise authorities. All that is found in those files is that certain irregularitieswere detected in the bonded warehouse in which the petitioner had kept liquorand the Superintendent of Excise and the Excise Inspector connected with that bonded warehouse, were kept under suspension. As rightly pointed out by Sri S. K. Suri, learned counsel for the petitioner, the bonded warehouse was in the charge of the Excise authorities and not the petitioner. Even if certain irregularities were there, it did not necessarily follow that the petitioner was responsible for them. At this stage there is no material worth mentioning to infer that the petitioner was guilty of contravention of any of the provisions of the Act. On the basis of mere suspicion the Excise Commissioner could not refuse to grant to the petitioner the privilege of supplying liquor in Muzaffarnagar district when it (the petitioner) had a preferential claim for being allotted that district.

16. We shall now deal with the last contention of the learned Standing Counsel.

Section 37 of the Act reads:

'37 (1). No licence granted under this Act shall be deemed to be invalid by reason merely of any technical defect, irregularity or omission in the licence or inany proceeding taken prior to the grant thereof.

(2) The decision of the Excise Commissioner as to what is a technical defect, irregularity or omission shall be final.'

The action of the Excise Commissioner in overlooking the claim of the petitioner who had tendered for Muzaffarnagar district and who had its distillery in that district and in granting the privilege of supplying liquor to opposite party No. 3 who did not have a distillery in that district and who had not even tendered for supplying country liquor in that district, cannot be said to be a mere technical defect or irregularity or omission. Hence Section 37 of the Act cannot be called in aid to cure the action of the Excise Commissioner which was not in accordance with law.

17. All the contentions urged by the learned Standing Counsel in defence of the impugned order, must be rejected.

18. In the result we allow this petition and quash the order of the Commissioner of Excise dated 28-3-1977 (Annexure I) in so far only as it relates to grant to opposite party No. 3 of the exclusive privilege of supply of country liquor in Muzaffarnagar district.

19. It will be open to the Excise Commissioner to consider afresh and dispose of the privilege of supplying country liquor in Muzaffarnagar district according to law. If he grants such privilege to the petitioner in respect of Muzaffarnagar district, it will be open to him to cancel the grant of such privilege to the petitioner in respect of Bijnor district which was assigned to it (the petitioner) in lieu of Muzaffarnagar district. It will also be open to the Excise Commissioner to make such interim arrangements as is permissible under law for supplying of country liquor in wholesale in Muzaffarnagar district until he decides afresh which distiller should be given the exclusive privilege of supplying country liquor in wholesale in Muzaffarnagar district.

20. In the circumstances of the case we direct the parties to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //