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N.K. Doongaji and Co. Vs. the State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. Nos. 390, 391, 392, 394, 395, 399, 400, 401, 403, 404, 405, 407, 409, 413, 415, 416, 417
Judge
Reported inAIR1975MP1; 1974MPLJ699
ActsMadhya Pradesh Excise Act, 1915 - Sections 8 to 17, 18, 25, 27 and 28; Madhya Pradesh Excise (Amendment and Validation) Act, 1964; Constitution of India - Articles 19(1), 19(6), 47 and 265
AppellantN.K. Doongaji and Co.
RespondentThe State of Madhya Pradesh and ors.
Appellant AdvocateM.N. Phadke, ;C.P. Sen, ;D.M. Dharmadhikari and ;I.K. Jha, Advs.
Respondent AdvocateJ.P. Bajpai, Deputy Adv. General, ;M.V. Tamaskar, Govt. Adv. and ;K.K. Adhikari, Dy. Govt. Adv.
DispositionPetition dismissed
Cases ReferredP. Ramchandra v. The State
Excerpt:
- - he urged that the amount could not be levied as a tax and it could not as well be treated as price of granting a licence because no transfer of a right to property is involved in the case of foreign liquor, which does not belong to the state government at any stage. this is the most important question to be considered in these cases in the light of the provisions of the constitution as well as the madhya pradesh excise act, 1915 (hereinafter referred to as 'the act'). 6. in order to appreciate the arguments of the learned counsel, it is necessary to refer to the various provisions relating io the legislative powers of the state in respect of liquor. whereas the indian constitution clearly specifies the nature of the tax and makes a clear distinction between a tax and a fee. the.....raina, j.1. this order will govern miscellaneous petitions nos. 391, 392, 394, 395, 399, 400, 401, 403, 404, 405, 407, 409, 413, 415, 416, 417, 420, 421, 422, 423, 424, 427 and 430 of 1970.2. the petitioners in these cases are excise contractors and hold licences for sale of foreign liquor in form f. l. 1 at various places in the state. a licence in form f. l. 1 is for retail sale of foreign liquors not to be drunk on the premises. before 1964, licences for sale of foreign liquor were granted by the excise authorities on applications. in 1964-65, the state government for the first time introduced the system of public auctions for the grant of such licences. this action of the government was challenged by writ petitions in the high court; but they were subsequently withdrawn after the.....
Judgment:

Raina, J.

1. This order will govern Miscellaneous Petitions Nos. 391, 392, 394, 395, 399, 400, 401, 403, 404, 405, 407, 409, 413, 415, 416, 417, 420, 421, 422, 423, 424, 427 and 430 of 1970.

2. The petitioners in these cases are Excise Contractors and hold licences for sale of foreign liquor in Form F. L. 1 at various places in the State. A licence in Form F. L. 1 is for retail sale of foreign liquors not to be drunk on the premises. Before 1964, licences for sale of foreign liquor were granted by the Excise authorities on applications. In 1964-65, the State Government for the first time introduced the system of public auctions for the grant of such licences. This action of the Government was challenged by writ petitions in the High Court; but they were subsequently withdrawn after the Madhya Pradesh Excise (Amendment and Validation) Act, 1964 (Act No. 19 of 1964)was passed. Thereafter, auctions were held in the year 1965-66. In the year 1966-67, no auction was held and the old licences were renewed; In 1967-68 also, the old licenses were renewed, but in that year new licences as a result of scrapping of prohibition were auctioned. In 1968-69, the old licences were renewed, while new licences were auctioned. The State Government at that time gave an assurance that the licences granted once by auction would be renewed subsequently on fees per bottle system and the licences in Form F. L. 1 and Form F. L. 2 were renewed from year to year since then vide Annexure 'A' in Miscellaneous Petition No. 390 of 1970. The policy of renewal of the old licences was continued till 1970-71.

3. The petitioners acquired licences for foreign liquor shops in Form F. L. 1 at the excise auctions held in the year 1968-69 or so by offering huge bids in the expectation that thereafter the licences would be renewed from year to year without any fresh auctions. The licences were renewed during the year 1969-70 on accepting Rs. 1,000/- as renewal fee. For the year 1970-71 also, the State Government decided to renew the licences, as would appear from the notification, dated 28th March 1970, vide Anuexure 'B'. According to that notification, the foreign liquor licences in Form F. L. 1 were to be disposed of from 1st April 1970 on payment of Rs. 1,000/-per annum and a fee per bottle at the rate of Rs. 1/- per bottle of Malt liquor and Rs. 6/- per bottle of foreign liquors or other than Malt liquor and cider. The petitioners, therefore, expected that their licences would be renewed for the year 1970-71; but the Government announced its policy of issuing licences in Form F. L. 1 by auction vide news item in 'Nai Duniya', dated 21-8-1970, (Anuexure 'C' in Miscellaneous Petition No. 390 of 1970). Being aggrieved thereby, the petitioners have filed these petitions praying that the notification, dated 21st August 1970 relating to auctions of all retail vends of foreign liquor be quashed and the State Government and other authorities be restrained from auctioning foreign liquor shops and be ordered to renew the licences held by the petitioners from time to time. The petitioners have challenged the action of the Government on various grounds which shall be considered in the course of this order.

4. The first and most important contention of Shri Phadke, learned counsel for the petitioners is that the State Government is not competent to charge any premium for the grant of a licence for sale of foreign liquor. According to him, it can merely charge a licence fee commensurate with the services rendered as quid pro quo. He urged that the amount could not be levied as a tax and it could not as well be treated as price of granting a licence because no transfer of a right to property is involved in the case of foreign liquor, which does not belong to the State Government at any stage. He tried to distinguish the earlier cases of this Court on the ground that they related to country liquor. As for the latest decision of this Court in Gulabrai and Sons v. State of M. P., 1972 MPLJ 1066 = 1973 Tax LR 2066, he urged that it needed reconsideration in the light of his submissions. He further urged that a citizen has a fundamental right to carry on trade in liquor and, although the Government is competent to regulate the manufacture, sale, etc. of foreign liquor, that is merely in exercise of its statutory power; it d'es not involve any transfer of a right from the Government to the licensee. Alternatively, he argued that in case it is held that the State Government has acquired a monopoly of trade in liquor, it could not be operated in this manner by holding auctions. In this connection, the learned counsel also challenged the validity of Sections 18 and 27 of the Madhya Pradesh Excise Act, 1915 as also of the Amendment and Validation Act, 1964, in so far as they relate to foreign liquor.

5. The basic point for consideration in these petitions, therefore, is whether the State Government is entitled to charge any fee it chooses for the grant of such licences and is, therefore, competent to hold auctions for the disposal of such licences in order to realise the maximum fee which a bidder at an auction is prepared to pay. Auctions are usually held for securing the highest price for transferring some property or grant of some right. For example, an owner of property may hold an auction for the sale of his property. Similarly, the owner of some immovable property may hold an auction to secure the highest price for the grant of a lease or a licence. But, in every such case, the person holding the auction owns some property and the right, which is intended to be transferred or granted for the maximum price which may be available at the auction is in relation to such property. In the case of an auction held by the Government for the grant of a licence in Form F. L. 1, does the Government transfer any right or grant any right in respect of property vested in it to the licensee? This is the most important question to be considered in these cases in the light of the provisions of the Constitution as well as the Madhya Pradesh Excise Act, 1915 (hereinafter referred to as 'the Act').

6. In order to appreciate the arguments of the learned counsel, it is necessary to refer to the various provisions relating Io the legislative powers of the State in respect of liquor. Entry 8 of List II, that is, the State List, in Schedule VII of the Constitution reads as under:--

'Intoxicating liquors, that is to say, the production, manufacture, possession, trailsport, purchase and sale of intoxicating liquors.

From the aforesaid Entry it is clear that, the State Legislature is competent to enact a law relating to production, manufacture, possession, transport, purchase and sale of intoxicating liquors. In exercise of the legislative powers conferred by the said Entry the Legislature is competent to empower the State Government to regulate the manufacture, possession, purchase and sale, etc. of intoxicating liquors by grant of a licence. The said power includes the power to impose partial or even total prohibition vide State of Bombay v. F. N. Balsara, AIR 1951 SC 318. Under Entry 66 of the State List the Legislature can also empower the State Government to charge fees in respect of licences granted in respect of intoxicating liquors. The imposition under this Entry, being a fee, must be distinguished from tax.

7. In The Commissioner of Hindu Religious Endowments Madras v. ShriLakshmindra Thirtha Swamiar, AIR 1954 SG 282, their Lordships pointed out the distinction between a tax and a fee. It was held therein that while a tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered; a fee is defined to be a charge for a special service rendered to individuals by some Governmental agency. The amount of fee levied is supposed to be based 011 the expenses incurred by the Government in rendering the service. This definition was again em-phasised by their Lordships in Ratilal Pana-chand Gandhi v. State of Bombay, AIR 1954 SC 388. It was pointed out by their Lordships that in fees there is always an element of quid pro quo which is absent in a tax; and that in order that the collections made by the Government can rank as fees, there must be correlation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. The distinction between a tax and a fee was again considered by their Lordships in Shri Jagannath Ramanuj Das v. State of Orissa, AIR 1954 SC 400. The following observations made by their Lordships in paragraph 9 are pertinent:

'As has been pointed out in the Madras appeal, there is no generic difference between a tax and a fee and both are different forms in which the taxing power of a State manifests itself. Our Constitution, however, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein.'

XX XX XX Thus tax is a common burden and the only return which the tax-payer gets is the participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded.'

8. It is not the case of the Government that the fee realised by it in respect of Excise contracts has any relation to the services rendered by it and, therefore, it is apparent that the amount cannot be justified as a fee. The learned Deputy Advocate-General, who appeared on behalf of the State, frankly conceded this position. He, however, made a feeble attempt to justify the amount which an Excise contractor is required to pay for obtaining a licence as a tax on luxuries leviable under Entry 62 of the said List. But we have no hesitation in rejecting this contention. A tax on luxuries must be correlated to the value, quality and quantity of luxuries. It cannot be imposed for enjoying the privilege of carrying on trade in the articles of luxury vide M/s. D. Cawasji and Co., Mysore v. State of Mysore AIR 1969 Mys 23. Moreover tax is never imposed by auction. We need not deal with this matter any further because it was not pressed by the learned Deputy Advocate-General with any seriousness. We may here mention that a similar contention was repelled by a Division Bench of the Allahabad High Court in Sheo Pat Rai v. State of Uftar Pradesh 1972 All LJ 1000 = (1973 Tax LR 2271).

9. The learned Deputy Advocate-General further urged that even though the licence fee cannot be justified either as a tax or as a fee, it can be justified as consideration for the grant of a right to carry on trade by the Government to the licensee. In support of this contention he developed two lines of argument. In the first place, he contended that the State Government, being competent to regulate the trade in intoxicating liquor, could incidentally charge fees in order to augment its revenue in exercise of its regulatory power. In support of this contention he mainly relied on a Full Bench decision of the Kerala High Court in Ram-chandra v. State of Kerala AIR 1971 Ker 146 (FB). In that case, while dealing with a similar question, the learned Judges upheld the imposition of licence fee unrelated to the services rendered on the ground that where the primary purpose of the Act is regulatory in character to control, regulate and restrict a particular activity, collection of revenue, which is incidental to such regulation, is permissible. In support of this proposition they quoted the following extract from American Jurisprudence in paragraph 34-

'An exaction which is invalid as an exercise of the taxing power may not be upheld as an exercise of the police power where it is clear that the legislative body imposing it did not intend it as such; but, on the other hand, an exaction which would be invalid as an exercise of the taxing power may be upheld as a regulatory measure where the primary purpose of the legislature in imposing it was the regulation of some calling or activity which is potentially inimical.'

[American Jurisprudence, 2nd Edition, Vol. 16, p. 520, paragraph 265.] It was, therefore, held that when the primary purpose of the Act is regulatory in character to control, regulate and restrict a particular activity, if in exercise of the regulatory power revenue is collected and paid into tho treasury it will not by itself show that the collection is as a tax or a fee. With great respect for the learned Judges we are unable to agree with the aforesaid proposition. The principles of American Jurisprudence cannot serve as a useful guide in this connection because the doctrine of police power is peculiar to that jurisprudence. Our Constitution is more specific and for every imposition, which the Government seeks to make, the power must necessarily be derived from some entry in the legislative list. Under the American Constitution, general power of taxation is conferred on the Legislature with certain limitation; whereas the Indian Constitution clearly specifies the nature of the tax and makes a clear distinction between a tax and a fee. Entry 66 of List If provides for fees in respect of any of the matters in the List excluding fees taken in any Court. It appears to us that in the American Constitution there is no corresponding provision for levying fees and that is why levy of such fees has to be justified in exercise of the police power which is considered to be an essential attribute of sovereignty and inherent in every State. So far as our Constitution is concerned, the imposition of a tax or a fee can be justified only in exercise of the legislative power conferred on the State Legislature under one of the Entries in the State List. It cannot be justified as in exercise of the police power independent of the provisions of the Constitution.

10. We have carefully perused the decision of the Supreme Court in Nagai Mahapalika, Varanasi v. Durga Das, AIR 1968 SC 1119, referred to by the learned Judges of the Kerala High Court; but there is nothing to suggest that the doctrine of police power can be invoked in our legal system. It is, no doubt, true that their Lordships referred to the principles of American Jurisprudence in this connection; but it was nowhere stated that they are applicable to our system. On the contrary, their Lordships quashed the imposition of licence fees in respect of rickshaws on the ground that there was no quid pro quo for the same.

11. Apart from this, this is not at all a case of collection of revenue incidental to exercise of police power. The statement of objects and reasons of the Madhya Pradesh Excise (Amendment and Validation) Act, 1964 published in Gazette Extraordinary, dated 29-8-1964, at pages 2817 to 2819, clearly shows that the object of including foreign liquor in Section 18 of the Act was only to augment the revenue of the State. The imposition of such licence fee cannot be justified even in exercise of the police power.

12. We, therefore, now proceed toconsider the next and the most importantquestion whether the State Government isentitled to charge licence fees as a consideration for transferring a right to carry ontrade in liquor to a licensee. This is one ofthe most vexed questions which has baffledthe lawyers as well as the Courts from timeto time when the question has come up forconsideration. There can be no doubt thatintoxicants are a noxious commodity andfreedom to carry on trade in such commodities would be dangerous to the community and subversive of its morals. Therefore,restrictions on such freedom are essentialand, as pointed out above, they can be extended to the point of total restriction onsuch trade. The basic question, therefore,that remains to be considered, is whether aperson has a fundamental right to carry ontrade in intoxicating liquor. This questionis important because whenever a person ispermitted to carry on trade in intoxicatingliquor under a licence, we have io see whether he does so in exercise of his fundamental right subject to restrictions imposedby the conditions of the licence or whetherit is a right which is transferred by theState Government Lo him for a consideration. This, in our opinion, is the crux ofthe whole matter.

13. It appears that when the matter came up for consideration before their Lordships of the Supreme Court in Coover-jee B. Bharucha v. Excise Commr. and the Chief Commr., Ajmer, AIR 1954 SC 220, their Lordships were of the view that there is no inherent right in a citizen to sell intoxicants by retail and that it is not at all a privilege of a citizen. Their Lordships quoted with approval the following observations of Field, J. in P. Crowley v. Chris-tensen, (1890) 34 Law Ed 620 = 137 US 86.

'There is no inherent right in a citizen to thus sell intoxicating liquor by retail; it is not a privilege of a citizen of the State or of a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be entirely prohibited or be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rest in the discretion of the governing authority.'

Although it was observed in the aforesaid case that there is no inherent right in a citizen, the observations seem to have been made to emphasise that it was not a right of a nature which cannot be controlled or regulated. The observations cannot be construed to mean that their Lordships were of theview that a citizen has no fundamental right of trade in such a commodity, because if there were no such right, the question of regulation would not arise and the right could be exercised only where it was transferred to the person concerned by the Government under a lease or a licence.

14. The question whether a right of trade in intoxicating liquors is a fundamental right or not was more expressly considered by their Lordships in Krishan Kumar Narula v. State of Jammu and Kashmir. AIR 1967 SC 1368. After referring to the observations of Field, J. relied upon in Cooverjee's case. AIR 1954 SC 220 (supra), their Lordships observed as under at page 1372:

'It will be seen that the said passage from the judgment of Field, J. has nothing to do with the constitution of Article 19(1)(g) of the Constitution of India. The learned Judge was considering the scope of the 'police power' and in that context the said observations were made. This Court applied those observations in considering the reasonableness of the restrictions imposed on the fundamental rights. Indeed, perusal of the entire judgment shows that the Court conceded the fundamental right but held that the said regulation operated as a reasonable restriction on the said right.'

After duly considering several authorities on the subject their Lordships held in paragraph 14 that dealing in liquor is a business and a citizen has a right to do business in that commodity; but the State can make a law imposing reasonable restrictions on the said right in public interest. Thus, their Lordships held that a citizen has a fundamental right to do business in intoxicating liquors and the State Government is competent to impose reasonable restrictions on this right within the meaning of Article 19(1)(g) of the Constitution of India in the interest of public. The aforesaid decision was referred to and tacitly approved by their Lordships in Amar Chandra v. Collector of Excise, Tripura, AIR 1972 SC 1863. This is borne out by the following observations of their Lordships in paragraph 13.

'According to Shri Sen, the business of selling liquor is protected by Article 19 of the Constitution as a fundamental right and reliance for this submission has been placed on 1967 SCR 50 = AIR 1967 SC 1368. Tin's fundamental right has been illegally infringed, said the counsel. It is no doubt true that this Court in the case cited held that dealing in liquor is business and a citizen has a right to do business in that commodity but, it was added, that the State can make a law imposing reasonable restriction on the said right in public interest. In dealing with reasonable restrictions no abstract standard or general pattern is possible to lay down. In each case, regard has to be had to the nature of trade or business, the conditions prevailing in such trade or business, the nature of the infringement alleged, andthe underlying purpose of the restriction, the imposition of which is alleged to constitute an infringement.'

15. In Sukhlal Sen v. Collector, District Satna, 1969 MPLJ 516 = (AIR 1969 Madh Pra 176) a Division Bench of this Court relying on the decision of the Supreme Court in Krishan Kumar's case, AIR 1967 SC 1368 (supra), held that a citizen has a right to do business in liquor; but the State can make a law imposing reasonable restriction on the right in public interest.

16. It is thus almost settled that every citizen has a fundamental right to carry on trade in intoxicating liquor subject, however, to such restrictions as the State may choose to impose under the Excise Act.

17. We shall now deal with the contention of the learned Deputy Advocate-General that the State has exclusive privilege to carry on trade in liquor and this privilege is transferred to the licensee for such consideration as the State Government may determine.

18. In Nanhibai v. Excise Commr. State of M. P. Gwalior, 1963 MPLJ 526 = (AIR 1963 Madh Pra 352) this Court held that the State Government has exclusive right of manufacturing, selling or possession or intoxicants or any country liquor and it is this privilege which is auctioned and assigned to the highest bidder under a contract which is followed by a licence. It was further held in that case that as the exclusive right of manufacturing or selling any intoxicant drug belongs to the Government, transfer of the right to a person is essential before he can manufacture or sell drugs and that licence itself passes no interest. It is necessary to examine these observations in the light of the various provisions of the Madhya Pradesh Excise Act.

19. Section 8 of the Act gives to the Government authority to prohibit throughout the State or in any specified area thereof the import, export or transfer of any intoxicant. Section 9 lays down that without the sanction of the Government no intoxicant shall be imported, exported or transported, except on payment of prescribed duty and on compliance with such conditions as the State Government may impose. Sections 10, 11 and 12 of the Act deal with the requirement of pass for import, export or transport. Section 13 prohibits the manufacture or collection of intoxicants and excisable articles, except under the authority and subject to the terms and conditions of a licence granted in that behalf, Section 14 contains provisions for the establishment and licensing of distilleries, breweries and warehouses. Section 15 provides that without the sanction of the State Government no intoxicant shall be removed from any distillery, brewery, warehouse or other places of storage. By Section 16 of the Act Government is given the power to prescribe thelimit of quantity for the possession of any intoxicant. Section 17 enacts that no intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf. Section 18 of the Act provides for the grant of a lease of the right to manufacture or sell. Section 18 is the most important section, the proper construction of which is vitally important for a proper decision of the issues involved in these cases. It is, therefore, reproduced below for ready reference:

'18. Power to grant lease of right to manufacture, etc.--(1) The State Government may lease to any person, on such conditions and for such period as it may think fit, the right-

(a) of manufacturing, or of supplying by wholesale, or of both, or

(b) of selling by wholesale or by retail, or

(c) of manufacturing or of supplying by wholesale, or of both and selling by retail, any liquor or intoxicating drug within any specified area.

(2) The licensing authority may grant to a lessee under Sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits sub-letting, may, on the application of the lessee, grant a licence to any sub-lessee approved by such authority.'

20. Section 27 of the Act is also important and has to be read with Section 18. Section 27 of the Act reads as follows :

'27. Payment for grant of lease :-- Instead of or in addition to any duty leviable under this Chapter, the State Government may accept payment of a sum in consideration of the grant of any lease under Section 18.'

21. Once it is accepted that every citizen has a fundamental right to carry on trade in intoxicating liquors, it can legitimately be argued mat this right can be exercised subject to a licence granted under Section 17 of the Act. The observations in Nanhibai's case 1963 MPLJ 526 = (AIR 1963 Madh Pra 352) (supra) that the transfer of the right to the licensee is essential before he can manufacture or sell drugs do not at all fit in with the concept of the fundamental right referred to above. In fact, it seems that that case proceeded upon the view that there was no such right, on the basis of the observations of their Lordships of the Supreme Court in Cooverjee's case AIR 1954 SC 220 (supra). We have, however, pointed out that in the latter decisions, the Supreme Court has clearly laid down that a citizen has a fundamental right to carry on trade in liquor. There is, therefore, no question of transferring any right to him. All that is necessary for him to exercise this right is that he should obtain a licence in accordance with the provisions of the Act. Grant of a licence as contemplated by Section 17 of the Act is merely to control and regulate the exercise of the right. There is no transfer of the right to carry on trade under the licence.

22. We may now turn to Section 18 of the Act. It contemplates a grant of a lease of the right to sell or manufacture liquor by the State Government to the licensee. The word 'lease' necessarily implies a transfer of some right vested in the State to the transferee, that is, the lessee. Shri Phadke, learned counsel for the petitioners, urged that the question of grant of lease could arise only where the subject-matter of the lease vested in the State. Where the intoxicant or liquor belongs to the State, there can be no doubt that it has the exclusive right or privilege to carry on trade in such commodity and Section 18 of the Act enables it to grant a lease of its right of manufacture or trade to the lessee, The contention of the learned Deputy Advocate General, however, is that this exclusive right extends to intoxicants or intoxicating liquors which do not belong to the State. In support of his contention he relied upon a number of decisions which it would be appropriate to examine at this stage.

23. In a recent case before this Court, namely, Gulab Rai and Sons v. State of Madhya Pradesh 1972 MPLJ 1066 = (1973 Tax LR 2066) this Court had an occasion to consider Section 18 of the Act. It was held in that case that Section 18 envisages that the right to sell and other rights mentioned in the section belong to the State which may lease out such rights. No doubt, the use of the word 'lease' in Section 18 clearly indicates that the right to sell an intoxicant vests in the State; but we have to examine this right of the State in the light of the proposition that a citizen has a fundamental right to carry on trade in intoxicating liquors. The right to regulate trade does not necessarily imply that the right to carry on trade is itself vested in the controlling authority. The controlling authority may have no such right itself and yet it may by statute be empowered to impose reasonable restrictions on the trading activities of others in the interest of the public. For example, the Collector regulates the trading activity in foodgrains by grant of licences. That does not imply mat the Collector or the Government itself has the right to carry on trade itself, particularly in food-grains which do not belong to the State.

24. We may here refer to the decision of their Lordships of the Supreme Court in Produce Exchange Corporation Ltd. v. Commr. of Excise, Assam, AIR 1972 SC 2281. In that case the decision was given particularly with reference to the provisions of Section 19 of the Eastern Bengal and Assam Excise Act and Rules 91 and 92 of the Rules framed thereunder.Section 19 provided that the Provincial Government may grant to any person, on such conditions and for such period as it may think fit, exclusive privilege of manufacturing or of supplying any country liquor or intoxicating drug within any specified area and the Rules dealt with the procedure for such grant. The validity of Section Z9 was not challenged before their Lordships in that case and it was observed that it conferred on the Government very wide powers in the matter of granting exclusive privilege of manufacturing or supplying to licensed vendors in country liquor or intoxicating drugs within any specified area.

25. In State of Orissa v. Harinara-yan, AIR 1972 SC 1816, their Lordships, while dealing with a case under the Bihar and Orissa Excise Act, 1915, referred to the exclusive right of the Government to sell liquor and to sell the said right in order to raise revenue in paragraph 17 of the judgment.

26. It is necessary here to examine the legal connotation of the expression 'exclusive privilege'. 'Privilege' in legal parlance is: 'a particular and peculiar benefit or advantage enjoyed by a person, company or class, beyond the common advantages oi other citizens' vide Black's Law Dictionary, Fourth Edition, p. 1359. Thus, it is a kind of right enjoyed by a person. A licensee under the Excise Act can be said to have acquired a privilege of carrying on trade in liquor in accordance with the conditions of the licence. This privilege springs from the statutory power of the State Government to regulate the trade in liquor. The State Government may have the exclusive power to regulate and control trade under a statute; but that does not mean that it has the exclusive right or privilege to cany on trade itself.

27. As we have shown above, a citizen has a fundamental right to carry on trade in liquor and, therefore, all that he needs is that statutory restraint on his power to carry on trade may be lifted under a licence by the authority competent to grant such licence under the Act. Thus, the fact that State Government alone is competent to grant the privilege does not necessarily imply that it has got exclusive right to carry on trade in liquor and the grant of the privilege under a licence involves the transfer of such right. If the fundamental right of a citizen to carry on trade in intoxicating drugs is recognized, the State Government is merely competent to impose reasonable restrictions on the exercise of such right in the interest of the general public. As the right is already vested in a citizen, no question of transferring such a right to him arises.

28. For a proper construction of Section 18 of the Act we must bear in mind that this Act was enacted in 1915, long before the Constitution of India came intoforce, and at the time of the enactment fundamental rights had no place in law. It would, also, be pertinent to take note of the fact that the section, as originally enacted, applied only to country liquor and not to foreign liquor. The word 'country' was omitted vide the Madhya Pradesh Excise (Amendment and Validation) Act, 1964 and it became applicable to foreign liquor only after the amendment came into force. Before the amending Act came into force, Section 18 was not applicable to foreign liquors and trade in such liquors was merely regulated by grant of a licence under Section 17 of the Act.

29. Shri Phadke, learned counsel for the petitioners urged that the Excise Act, being a pre-Constitution Act, he would not question the realisation of licence fee in respect of country liquor, particularly in view of Article 277 of the Constitution. But he challenged the validity of Section 18 of the Act as amended by the Amendment Act of 1964 on the ground that the Government could not treat foreign liquor, at par with country liquor and could not impose a licence fee out of all proportion to the services rendered in this connection.

30. It appears to us that the case of country liquor stands on somewhat different footing. The State Government has established distilleries for manufacturing country liquor and under the contract with the State Government the licensee manufactures liquor to be supplied to warehouses at an agreed price for the State Government. Thus, immediately after its manufacture, the liquor belongs to the Government before it is issued to the licensee for sale. In these circumstances, the State Government can be said to have the exclusive privilege of selling country liquor, which it may assign to the licensee for a price of its choice. But the position in the case of foreign liquor is somewhat different. Foreign liquor may be manufactured outside the State and at no stage does it become the property of the State Government before it is sold. In these circumstances, the grant of licence does not involve any transfer of a right of sale from the Government to the licensee. The grant of licence is merely in exercise of tbe regulatory power. Since there is no transfer ot a right, the State Government is not entitled to charge any consideration for the same. It can only charge a licence fee which can be strictly justified as a fee.

31. It appears to us that the distinction between country liquor and foreign liquor was not brought out or pressed before this Court in Gulab Rai's case, 1972 MPLJ 1066 = (1973 Tax LR 2066) (supra). That case proceeded to adopt the line of reasoning in Nanhibai's case, 1963 MPLJ 526 = (AIR 1963 Madh Pra 352) (supra) which was a case relating to country liquor.

32. The learned Deputy Advocate-General laid considerable stress on the following observations of their Lordships of the Supreme Court in a case under the Bihar and Orissa Excise Act, 1915 reported in AIR 1972 SC 1816 (supra):

'As held by this Court in Cooverjee Bharucha's case, 1954 SCR 873 = AIR 1954 SC 220 one of the important purposes of selling the exclusive right to sell liquor in wholesale or retail is to raise revenue. Excise revenue forms an important part of every State's revenue. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence, quite naturally, the Legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction sale is adequate.'

33. It would, however, be pertinent to mention that the aforesaid observations were with reference to the earlier decision of their Lordships in Cooverjee Bharucha's case, 1954 SCR 873 = AIR 1954 SC 220 (supra) which itself related to business in intoxicating liquors under the Ajmer Excise Regulation, a pre-Constitution enactment. In fact, in that ease, their Lordships observed in paragraph 9 that the levy of licence fee was more in the nature of tax; and it was frankly conceded by the learned Deputy Advocate-General that he could not justify the imposition of this high licence fee as a tax.

34. We may here also refer to the decision of their Lordships of the Supreme Court in Lakshinikant Sahu v. Supdt. of Excise, Berhampur, 1968 SCD 14. In that case their Lordships, after examining the various provisions of the Bihar and Orissa Excise Act, 1913, held that under the Act the State Government had no power to levy duty in the form of a payment for the grant of a licence for retail vend of foreign liquor. It would be of some interest to refer to the facts of this case. The appellant held a licence for the retail 'off' vend of foreign liquor at his shop at Berhampur in the State of Orissa. The licence was renewed since 1956, from year to year up to the year ending March 31, 1966. The fees for the licences for the retail 'on' and 'off' vend of foreign liquor were fixed from time to time by the Rules framed by the Board of Revenue, Orissas A Rule framed by the Board on August, 14, 1965 prescribed that the fee for a licence granted for the retail 'on' and 'off' vend of foreign liquor shall not be less than Rs. 600/- per annum. The appellant duly paid the licence fee of Rs. 600/- for the year 1965-66. Rule 103 (1) of the Board's Excise Rules framed on August 14, 1965 provided that the fees for licences for the retail vend of country spirit, fermented tari, etc. shall be fixed by auction, subject to a reserved fee sanctioned in each case by the Commissioner. The Rule did not apply to licences for the retail vend of foreign liquor. By a notification, dated 28th January 1966, the Board amended the 1965 Rules whereby the amended Rule 103 (1) was made applicable to foreign liquor. In view of the amended Rule 103 (1), the fees for the licence for the retail 'off' vend of foreign liquor had to be fixed by auction. The Additional District Magistrate issued a notification fixing February 4, 1966 for auction sale of 'foreign liquor off' shops in the district for the year 1966-67. The appellant thereupon filed a writ petition in the High Court asking for writs quashing the sale notification and restraining the authority from giving effect to it. The validity of the amended Rule 103 (1) was challenged on the ground that the charge for the grant of a privilege for the retail 'off' vend of foreign liquor under the system of auctioning introduced by the amended Rule 103 (1) was a tax and the imposition of such a tax was not authorized by the Act. The High Court rejected this contention; but, in appeal, it was held by their Lordships of the Supreme Court that the amended Rule 103 (1) was invalid in so far as it provided that the fee for licences for the retail sale of foreign liquor shall be fixed by auction. The appeal was, however, dismissed as the auction, in the meantime, had been held.

35. It, therefore, appears to us that in respect of foreign liquor, which does not at any stage belong to the State Government, no transfer of right to sell is involved and as such the State Government is not competent to charge price for such transfer at its pleasure. Where foreign liquor belongs to the State Government, the position may be different. Section 18 of the Act, after its amendment, can be construed in the context of foreign liquor only as a provision conferring monopoly on the State because the right to grant the lease necessarily implies that the right of sale vests in the State Government and if the right of sale vests in the State Government exclusively, that is, to the exclusion of others, it amounts to monopoly. But, if the section is construed in this manner, even then the State Government would not be competent to confer monopoly rights on others in respect of specified area either by lease or by licence on charging a licence fee of its choice. In Akadasi Padhan v. State of Orissa, AIR 1963 SC 1047, their Lordships, while dealing with the provisions of the Orissa Kendu Leaves (Control of Trade) Act, 1961 considered the operation of monopoly, which is permissible under Article 19(6)(ii) of the Constitution, and held that the agency, which can be legitimately allowed under Article 19(6)(ii) of the Constitution, is agency in the strict and narrow sense of the term. It includes only agents who can be said to carry on the monopoly at every stage on behalf of the State for its benefit and not for their own benefit at all. It is, therefore, clear that conferring monopolistic rights onothers by a lease or a licence is not permissible and, as such, the State cannot do so for a consideration which it may claim as a licence fee. In Gulab Rai's case 1972 MP LJ 1066 = (1973 Tax LR 2066) (supra) it was observed as under in paragraph 16:

'Since the Excise Act in this State has Completely taken over the trade, no citizen can claim a right to trade in it unless he obtains the authority of the State and under the Act the State is entitled to charge consideration for giving this authority.'

The aforesaid observations clearly indicate that this Court proceeded upon the view that the State acquired a monopoly to carry on trade in liquor under the Act; but the operation of monopoly in the light of the decision of the Supreme Court in AIR 1963 SC 1043 (supra) was not considered apparently because the case was not argued from this angle.

36. To sum up, the position is as under: Cooverjee's case, 1954 SCR 873 = (AIR 1954 SC, 220) (supra) related to country liquor under the Ajmer Excise Regulation which was a pre-Constitution enactment. In Nanhibai's case, 1963 MPLJ 526 = (AIR 1963 Madh Pra 352) (supra) this court dealt with a case of country liquor following the decision of the Supreme Court in Cooverjee's case. As pointed out above, the case or country liquor stands on a different footing. Gulab Rai's Case, 1972 MPLJ 1066 = (1973 Tax LR 2066) (supra), no doubt, related to foreign liquor; but it does not seem to have been urged in that case that a licence relating to foreign liquor stood on a different footing, particularly because the provisions of Section 18 of the Act were made applicable to foreign liquors by the Madhya Pradesh Excise (Amendment and Validation) Act, 1964, a post-Constitution enactment. In that case this Court seems to have proceeded upon the view that the State Government had a monopoly of trade in liquor, as would appear from the observations in paragraph 8 as well as the following observations in paragraph 16:

'Since the Excise Act in the State has completely taken over the trade, no citizen can claim a right of trade in it unless he obtains the authority of the State.'

This Court, however, was not invited to consider whether the monopoly could be operated in this manner in the light of the decision of the Supreme Court in AIR 1963 SC 1047 (supra). In the decisions of the Supreme Court in AIR 1972 SC 1816 and in AIR 1972 SC 2281 (supra) also the legal position in respect of foreign liquor in a post-Constitution enactment and the rights of the State Government in respect of trade in such liquor were neither pressed nor considered. The position in respect of foreign liquor appears to us to be as follows.

37. Since citizens have a right to carry on trade in intoxicating liquor, this trade may be carried on by them eitherunder a licence granted by the State Government or the statute may confer a monopoly of such trade on the State Government but, in the latter case, the monopoly must be operated through the agents and servants of the State exclusively for the benefit of the State. If we hold that a monopoly in trade in foreign liquor has been conferred on the State, it is quite clear that the monopoly cannot be exercised by transferring the right of trade, the so-called exclusive privilege, to others for a consideration under a lease or a licence. If, on the other hand, it is held that there is no monopoly, no question of transfer of any right to the licensee arises. His right is merely regulated and controlled by a licence, and in such a case the State Government can only charge a fee for the licence as is contemplated by Entry 66 of the State List. Since the learned Deputy Advocate-General has conceded that the fee is not related to the services rendered, the collection of licence fees by auction in the case of licence in Form F. L. 1 or by grant of licence in Form F. L. 3 for a fixed licence fee cannot be upheld. We have already held above that the imposition of the licence fee cannot be justified as a tax. We may here point out that a similar view has been expressed by a Division Bench of the Allahabad High Court in 1972 All LJ 1000 = (1973 Tax LR 2271). On the view we have taken neither Section 18 nor Section 27 of the Act can bo adjudged to be ultra vires even in the context of foreign liquor. All that is clear is that the State Government is not competent to charge a licence fee unrelated to the services rendered by it. We are aware that this decision would adversely affect the excise revenue of the State but it has other lawful avenues open for augmenting its excise revenue.

38. We, therefore, hold that theState Government is not competent to grantlicences in Form F. L, 1 in respect offoreign liquor by holding auctions and thenotification, dated 21st August 1970 as wellas the Rules framed by the Government inthis connection are hereby quashed as illegaland void. It is further hereby declared thatthe State Governmnt is competent to grantlicences in Form F. L. 1 in respect offoreign liquor only for a reasonable licencefee with due regard to the observationsmade above.

39. The petitions are thus allowed to the extent indicated above. We do not, however, make any order as to costs, in the circumstances of these cases, and the amounts of security deposited by the petitioners shall be refunded to them.

Singh, J.

40, I have carefully read the judgment prepared by Raina, J. and I regret my inability to agree with his conclusion that Section 18 of the Central Provinces Excise Act, 1915, as amended by Act 19 of 1964, must be restricted in application to liquor owned by the State.

41. The facts have been fully stated by Rama J. and I will not repeat the same. I will straightway come to the relevant provisions of the Excise Act. Section 2 of the Act contains certain definitions. 'Intoxicant' is defined by Section 2 (11-A) to mean any liquor or intoxicating drug. Section 2 (13) defines 'liquor' to mean intoxicating liquor including spirits of wine, spirit, wine, tari, beer, all liquid consisting of or containing alcohol, and any substance which the State Government may by notification, declare to be liquor for the purposes of the Act. Power is conferred on the State Government by Section 4 of the Act to declare what, '.for the purposes of the Act, shall be deemed: to be 'country liquor' and 'foreign liquor'. In exercise of this power a notification was issued on 4th July 1959 defining 'foreign liquor' and 'country liquor' as follows:

'(i) Liquor of every description, other than rectified spirit, denatured spirit, medicinal and toilet preparations as defined in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (Central Act No. 16 of 1955)-

(a) which is imported by sea, land or air into any State of India and is liable on importation to a duty under the Indian Tariff Act, 1894, or the Sea Customs Act, 1878, or

(b) which is manufactured or compounded in India and made in colour or Savour to resemble liquor imported as aforesaid shall be deemed to be foreign liquor: and

(ii) Liquor other than foreign liquor, rectified spirit, denatured spirit, medicinal and toilet preparations as defined in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (Central Act No. 16 of 1955), shall be deemed to be country liquor.'

Chapter III of the Act in which occur Sections 8 to 12 deals with import, export and transport of intoxicants. The expressions 'import' and 'export' in the Act respectively mean to bring within the State and to take out of the State; [See Sub-sections (9) and (11) of Section 2]. Section 8 of the Act empowers the State Government to prohibit import, export and transport of any intoxicant. Sections 9 to 12 generally lay down that no intoxicant shall be imported, exported or transported except under a pass issued for the purpose and after payment of duly payable under the Act. Chapter IV of the Act comprising of Sections 13 to 24 deals with manufacture, possession and sale of intoxicants. As provided in Section 13, no intoxicant can be manufactured except under the authority and subject to the terms and conditions of a licence granted in that behalf. The Government can, under Section 16, prescribe a limit of quantity for possession of any intoxicant. Section 17 provides that no intoxicant shall be sold except under the authority and subject to the terms and conditions of licence grantedin that behalf. Then comes Section 18 which reads as follows:

'18. Power to grant lease of right to manufacture, etc.-- (1) The State Government may lease to any person, on such conditions and for such period as it may think fit, the right-

(a) of manufacturing, or of supplying by wholesale, or of both, or

(b) of selling by wholesale or by retail,

(c) of manufacturing or of supplying bywholesale or of both, and selling by retail, any liquor intoxicating drug within any spe-cified area.

(8) The licensing authority may grantto a lessee under Sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits sub-letting may, on the application of the lessee, grant a licence to any sub-lessee approved by such authority.'

It may here be mentioned that Section 18 was originally restricted to 'any country liquor intoxicating drug' but by amending Act 19 of 1964 the word 'country' has been omitted and the Section now applies to 'any liquor intoxicating drug.' Chapter V of the Act deals with duties and fees. Section 25 in this Chapter authorises the Slate Government to levy an excise duty or a countervailing duty on all excisable articles imported, exported, transported, manufactured, cultivated or collected. Section 27, which authorises the State Government to accept payment of a sum in consideration of the grant of a lease under Section 18, is as under:

'Payment for grant of leases--Instead of or in addition to any duty leviable under this Chapter, the State Government may accept payment of a sum in consideration of the grant of any lease under Section 18.'

Chapter VI of the Act deals with licences, permits and passes. Section 28 in this Chapter provides that every licence, permit or pass granted under the Act shall be granted on payment of such fees (if any), as the State Government may direct either generally by rules made under Section 62 or in any particular instance.

42. Now, there are certain propositions which can be taken to be well settled.First, that every citizen has a fundamentalright to carry on liquor business: Krishan Ku-mar v. J. & K. State, AIR 1967 SC 1363.Secondly, that the State can also engageitself in any business including liquor business in the exercise of its executive powerunaided by any law; Article 298 and RamJawaya v. State of Punjab AIR 1955 SC 549.Thirdly, the right of the citizen to carry onliquor business can he severely restricted oreven prohibited having regard to the factthat excessive consumption of liquor is injurious to the health and morals of the community and leads to untold misery: Coover-jee v. Excise Commr., Ajmer, 1954 SCR873 = AIR 1954 SC 220.

43. A perusal of the provisions contained in Sections 8 To 17 of the Excise Act, to which I have earlier referred, will go to show that a citizen's fundamental right under Article 19 of the Constitution to deal in intoxicants including liquor has been completely taken away. No person has a right to import, export, transport, manufacture or sell any intoxicant except under the authority of a permit or licence granted under the Act. The Act does not provide as to when a permit or licence can be granted and who is to grant it; these are matters left to be regulated by rules to be framed by the State Government under the Act. The Act and the rules make it clear that no person has a right to get a permit or licence for import, export, manufacture or sale of intoxicants. Thus, by the provisions contained in Sections 8 to 17 the individual's right to deal in intoxicants is entirely curbed leaving the State alone in the field to deal in intoxicants. The Act thus confers upon the State an exclusive privilege in this respect. It also enables the State to part with this privilege in favour of individuals with or without consideration by granting licences. A grant of a licence, under the Act to deal in intoxicants is grant of a privilege, for no person has a right to get a licence. In case of licensing of an ordinary trade, business or profession, a person has a right to get a licence if the conditions for its grant are satisfied and the State by granting a licence docs not confer any privilege; the trade, business or profession in such cases is merely regulated in public interests; See I. M. & M. Industries v. State of Bihar, AIR 1971 SC 1182 at p. 1186. Rut the position is different in case of intoxicants. The Excise Act having entirely taken away the right of the individual to deal in intoxicants, no one has any right to get a licence to do business in intoxicants. A licence granted under the Act is grant of a privilege which ex-clusively belongs to the State. This legal position necessarily follows from Cooverjee v. Excise Commr., Ajmer, 1954 SCR 873 = AIR 1954 SC 220 (supra) and State of Orissa v. Harinarayan, AIR 1972 SC 1816. I will refer to these cases in detail later.

44. The provisions of the Excise Act contained in Sections 8 to 17 had at no time made any distinction between country liquor and foreign liquor. Section 18 of the Act which permits grant of lease by the State of manufacturing, supplying or selling within any specified area was restricted originally to country liquor and intoxicating drugs. By amending Act 19 of 1964 the section has been made applicable to foreign liquor also. Section 18 has to be read along with Section 27 which permits the State to accept payment of a sum in consideration of the grant of a lease under Section 18. Now, Section 18 of the Act is not a provision which restricts the right of individual to deal in liquor or intoxicating drug. The individual's right is embed by the provisions contained in Sections 8 to 17 resulting in the acquisition by the State of exclusive privilege to deal in these commodities. Sections J8 and 27 enable the State farming of this exclusive privilege and to charge consideration for the same. Thus, even before the Act 19 of 1964 the State had the exclusive privilege of dealing in foreign liquor, but as thi.s commodity was not included in Section 18, it could not farm out this privilege by grant of leases to be operative in a specified area and charge consideration lor the same; it could only grant ordinary licences on payment of excise duty and lees. A person to whom a lease is granted under Section 18 gets a sort of limited monopoly within a specified area and the State recovers consideration for grant of this limited monopoly. Before the amending Act 19 of 1964 this was not possible in case of foreign liquor as it was not included in Section 18. Nevertheless, grant of a licence to deal in foreign liquor was grant of a privilege although not accompanied by a right of limited monopoly which a lessee could get under Section 18. After the amending Act 1.9 of 1964, the Suite is enabled to farm out its exclusive privilege to deal in foreign liquor also and to charge consideration for the same in the same manner as it could farm out its exclusive privilege of dealing in country liquor and intoxicating drugs.

45. The nature of payment receivable under Section 27 read with Section 18 of the Act is different irom duty and fees payable respectively under Sections 25 and 2S. In the ease of in re C. P. Motor Spirit Act, AIR 1939 FC 1 at p. 12, Gwyer, C. J., in the context of these provisions of the Act observed:

'The Advocate-General of India referred us to in Act of the Central Provinces [Central Provinces Excise Act (No. 2 of 1915)] which was said to make provision for the imposition of an excise duty on retail sales. I have been unable to find any such provision in the Act; it provides, if is true, as do other provincial Acts, for lump sum payments in certain cases by manufacturers and retailers, which may be described as payments either for the privilege of selling alcohol, or as consideration for the temporary grant of a monopoly; but these are cleuriv not excise duties or anything like them.'

These observations were quoted with approval by the Supreme Court in Shincle Brothers v. Dy. Commr. Raichur, AIB 1967 SC 1512 at p. 1521 and it was held that payment made as shop rent under the Mysore Excise Act was a payment for obtaining exclusive privilege of selling toddy arrack from certain shops by bidding at auctions in pursuance of Government notifications. The case of Shinde brothers was followed in State of Mysore v. D. Cawasji & Co., AIR 1971 SC 152.

46. It is further to be seen that Section 18 of the Act does not deal with rights in tangible property. In other words, the consideration receivable by the Government under Section 27 read with Section 18 is not for transfer of property rights in liquor or intoxicating drug owned by the Government, but for grant of lease of trading rights viz. right of manufacturing, supplying or selling any liquor or intoxicating drug. By the operation of Sections 8 to 17, these rights become the exclusive privilege of the Government and by Sections 18 and 27 the Government is permitted to lease out these rights and to charge consideration for the same.

47. 1 now turn to the decision of the Supreme Court in 1954 SCR 873 = (AIR 1951 SC 220) (supra). In that case the Supreme Court considered the constitutionality of the Ajmer Excise Regulation, 1915, the provisions of which are in pari materia with the provisions of the G. P. Ex-cise Act. In, an auction held for grant of excise contract for selling country liquor Cooverjee, who was the previous licensee, was unsuccessful. He, therefore, filed a petition under Article 32 of the Constitution alleging that his fundamental right to carry on trade or business in liquor under Article 19(1)(g) of the Constitution was infringed by the Act, that the State had no right to hold auction sales for raising revenue, and that no monopoly could be granted in the trade to selected few individuals. The Supreme Court rejected all these contentions and held that 'the provisions of the Regulation purport to regulate trade in liquor in all its different spheres and are valid.' The case was decided on the broad and general ground that having regard to the nature of the business and the dangers accompanying it, the restrictions imposed by the Regulation were reasonable under Clause (6) of Article 19 of the Constitution. In rejecting the argument that the Regulation enabled creation of monopoly in favour of individuals and was, therefore, invalid, the Court observed:

'Elimination and exclusion from business is inherent in the nature of liquor business and it will hardly be proper to apply to such a business principles applicable to trades which all could carry. The provisions of the regulation cannot be attacked merely on the ground that they create a monopoly. Properly speaking, there can be a monopoly only when a trade which could be carried on by all persons is entrusted by law to one or more persons to the exclusion of the general public. Such, however, is not the case with the business of liquor.

Reference in this connection may be made to the observations of Lord Porter in Common-Wealth of Australia v. Bank of New South Wales, 1950 AC 235, This is what his Lordship said:

'Yet about this as about every other proposition in this field a reservation mustbe made. For their Lordships do not intend to lay it down that in no circumstances would exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified. Every case must be judged on its own facts and in its own setting o time.'

Further it seems to us that this argument suffers from a fallacy. Under the rules every member of the public who wishes to carry on trade in liquor is invited to make bids. This is the only method by which carrying on of liquor trade can be regulated. When the contract is thrown open to public auction, it cannot be said thai there is exclusion of competition and thereby a monopoly is created. For all these reasons we are of opinion that the contention that the provisions of the regulation are unconstitutional as they abridge the rights of the petitioner to carry on liquor trade freely cannot be sustained.'

Further, in overruling the contention that revenue could not be raised by holding auction of excise contracts, the Court said:

'The next contention that the charge of fee by public auction is excessive and is not in the nature of a fee but a tax ignores the fact that that licence fee described as a licence fee is more in the nature of a tax than a licence fee. One of the purposes of the regulation is to raise revenue. By the provisions of Section 24, duties can be imposed on the manufacture, import, export and transport of liquor and other excisable articles. Revenue is also collected by the grant of contracts to carry on trade in liquors and these contracts are sold by auction. The grantee is given a licence on payment of the auction price. The regulation specifically authorises this. It is not a fee levied without authority of law as was the situation in Rashid Ahmad v. Municipal Board, Kairona, AIR 1950 SC 163.'

48. The full import of the decision in Cooverjee's case, 1954 SCR 873 = (AIR 1954 SC 220} is reflected in AIR 1972 SC 1816, which considered the nature of grant of excise contracts of selling country liquor under Section 22 of the Bihar and Orissa Excise Act, 1915, which corresponds to Section 18 of the C. P. Excise Act as it stood before the amending Act 19 of 1964. In dealing with the question of a citizen's fundamental right to do business in Honor and State's power to control it and to raise revenue the Court observed:

'It is true that this Court has ruled that the right to trade in intoxicating drugs is also a right to cariry on any trade or business within the meaning of Article 19(1)(g)--See (1967) 3 SCR 50 = (AIR 1967 SC 1368). At the same time, it vas held by this Court in 195 SCR 873 = AIR 1954 SC 220, that or determining reasonable restrictions within the meaning of Article 19(g) of the Constitution on the right given under Article 19(1)(g), regard must be had to the nature of the business and the conditions prevailing in a particular trade; State has power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public and there is no inherent right in a citizen to sell intoxicating liquors by retail. In that case the Court held tbat the provisions in the Excise Regulation I of 1915 purporting to regulate trade in liquor in all its different spheres are not invalid. It was further held in that case that the charge of licence fee by public auction is more in the nature of a tax than a licence fee though it is described as a licence fee. One of the purposes of the Regulation is to raise revenue. Revenue is collected by the grant of contracts to carry on trade in liquor and these contracts are sold by auction. The grantee is given a licence on payment of the auction price. The Regulation specially authorises this.

xx xx xx 'As held by this Court in CooverjeeBharucha's case, 1954 SCR 873 = (AIR1954 SC 220) (supra), one of the importantpurposes of selling the exclusive right tosell liquor in wholesale or retail is to raiserevenue. Excise revenue forms an important part of every State's revenue. TheGovernment is the guardian of the financeof the State. It is expected to protect thefinancial interest of the State, Hence quitenaturally, the legislature has empowered theGovernment to see that there is no leakagein its revenue. It is for the Government todecide whether the price offered in an auction sale is adequate. While accepting orrejecting a bid, it is merely performing anexecutive function. The correctness of itsconclusion is not open to judicial review.We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 canarise in these cases. The Government'spower to sell the exclusive privileges setout in Section 22 was not denied. It wasalso not disputed that those privileges couldbe sold by public auction Public auctionsare held to get the best possible price.'

xx xx xx 'The fact that the Government was the seller does not change the legal position once its conclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government nor can there be any infringement of Article 14, if the Govern-ment tries to get the best available price for its valuable rights. The High Court was wholly wrong in thinking that the pur-pose of Sections 22 and 29 of the Act was not to raise revenue. Raising revenue as held by this Court in Cooverjee Bharucha's case (supra) was one of the important purposesof such provisions. The fact that the price fetched by the sale of country liquor is an excise revenue does not change the nature of the right. The sale in question is but a mode of raising revenue.'

It is true that in Harinarayan's case the validity of the provisions contained in Sections 22 and 29 of the Bihar Act (corres-ponding to Sections 18 and 27 of the C. P. Act) were not challenged, but this was presumably because they were not open to challenge in view of the ruling in Coover-jee's case.

49. Cooverjee's case, 1954 SCR 873 (AIR 1954 SC 220} as also Harinarayan's case, AIR 1972 SC 1816 cannot be distinguished on the ground that they deal with pre-Constitution laws, for all laws whether enacted before or after the coming into force of the Constitution must conform to the same standard of reasonableness as prescribed by Clause (6) of Article 19. These cases cannot also be distinguished on the ground that they deal with excise contracts for vending country liquor owned by the State, for that is not the basis of the decision either in Cooverjee's case or in Harinarayan's case. It is nowhere mentioned in the reports of these cases that the excise contracts in dispute in them were in respect of country liquor owned by the State. In my opinion, to limit the authority of these cases to grant of excise contracts in liquor owned by the State is to misread them entirely. It is not open to us to make such an unwarranted limitation of the ratio decidendi of Supreme Court decisions. These cases correctly re-established that a law imposing reasonable restrictions in the interests of the general public on the fundamental right to do business in intoxicants made in exercise of the power reserved to the State under Clause (6) of Article 19 may do away with the right of individuals thereby conferring exclusive privilege on the Government to deal in these commodities and may further authorise the Government to transfer this privilege and to raise revenue. The Ajmer Regulation considered and upheld in Cooverjee's case was held to have this effect and, in my opinion, for the reasons given in that case the C. P. Excise Act, which is similarly worded, must be given the same effect and must he held to be constitutionally valid.

50. But then it is contended that it the Act is construed to confer a monopoly on the State to deal in intoxicants the State must itself engage in that business and it cannot transfer that monopoly in favour of others by holding auctions or otherwise. Reliance for this submission is placed on the case of Akadasi v. State of Orissa, AIR 1963 SC 1047. Akadasi's case was concerned with Article 19(6)(ii) of the Constitution and it was held in that case that a law relating to monopoly which permits the State to transfer the benefits of the monopoly trade cannot be upheld under that provision. Butsuch a law can still be justified if it satisfies the requirement of reasonableness under the first part of Article 19(6); Basbihari v. State of Orissa, AIR 1969 SC 1081 at p. 1088. Indeed, in Cooverjee's case, 1954 SCR R73 = (AIR 1954 SC 220) the provisions of the Ajmer Regulation regarding tbe power of The State to auction excise contracts were held to be valid under the first part of Article 19(6). In Madhavan v. Asst. Excise Commr., Palghat, ILK (1969) 2 Ker 71, Mathew, J. in dealing with a similar question under the Kerala Abkari Act observed:

'Considering the nature of the trade, I think, it was open to the Legislature to provide that the right to vend liquor could be fanned out by Government either in auction or by private treaty and that that would be a reasonable restriction on the fundamental right of citizens to carry on the trade.'

The decision of Mathew, J. in Madhavan's case was upheld by a Division Bench of the Kerala High Court in Damodaran v. State of Kerala, 1LR (1909) 2 Ker 95. I respectfully agree with the views expressed in these cases. In my opinion, Sections 18 and 27 of the C. P. Excise Act permitting the State to lease for consideration the right of manufacturing, supplying and selling liquor and intoxicating drugs impose reasonable restrictions in the interest of the general public and are valid under the first part of Article 19(6).

51. In AIR 1971 Ker 146, a FullBench of the Kerala High Court held that the Kerala Abkari Act did not create a monopoly in the State to deal in liquor and that the revenue raised in auction is not consideration received for transfer of that right. The learned Judges did not agree on this point with the opinion of the Division Bench in ILR (1969) 2 Ker 95. They, however, held that the provision in the Act permitting the State to auction excise contracts was valid as it imposed a reasonable restriction in the public interest under Article 19(6) and revenue was raised incidentally in exercise of the police power of the State. I have already analysed the relevant provisions of the C. P. Excise Act and expressed the view that the Act on a proper construction creates exclusive right in the State to trade in intoxicants and Sections 18 and 27 of the Act enable the State to farm out this exclusive privilege and to charge consideration for the same. This view is more in line with the rulings of the Supreme Court in Cooverjee's case, 1954 SCR 873 = (AIR 1954 SC 220) and Harinarayan's case, AIR 1972 SC 1816. In my opinion, tbe reasoning of the Division Bench of the Kerala High Court in ILR (1969) 2 Ker 95 and that of Mathew, J. in ILR (1969) 2 Ker 7J is preferable to the reasoning of the Full Bench in P. Ramchandran's fase. I nerd not, therefore, consider the question whether revenue can be raised incidentally by exercise of the police power.

52. We were also referred to the case of Laxmikiiut Sahu v. Snpdt. of Excise, Berhampur, 1968 SCD 14. Tn that case, having regard to tbe provisions of the Bihar and Orissa Excise Act, it was held that the licence fee for the retail vend of foreign liquor could not be fixed by auction. Section 22 of the Bihar Act empowered the Government fo make a grant of the exclusive privilege of selling retail 'any country liquor or intoxicating drug' and Section 29 enabled the Government to charge consideration for the same. As Sections 22 and 29 of the Bihar Act did not apply (o foreign liquor, fixation of licence fee by auction was held to be invalid. A reading of the judgment goes to show that had foreign liquor Been included in Section 22 (in the manner it is now included in Section 18 of ihc C. P. Excise Act), the Supreme Court would have held fixation of licence fee by auction to be valid in case of foreign liquor also. Laxmikant's case, therefore, is distinguishable.

53. I fail to see any distinction between country liquor and foreign liquor so far as the necessity of regulating the trade in these commodities is concerned. If the State choose to include foreign liquor within the ambit of Section 18, this inclusion must be upheld as reasonable restriction of the fundamental right to trade in foreign liquor in the interests of the general public on the same reasoning on which application of Section 18 to country liquor and intoxicating drugs is justified. As regards legislative competence to enact Act 19 of 1964, in my opinion, the State Legislature was fully competent to enact it in exercise of its power under the following entries in Schedule 7 of the Constitution:

LIST II

8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors.

LIST III

21, Commercial and industrial monopolies, combines arid trusts. As already seeu, a payment receivable by the Government under Sections 18 and 27 of the C. P. Excise Act is neither a tax nor fee properly so called; it is consideration receivable for transfer of the Government's exclusive privilege to deal in intoxicants. The subject-matter of these sections, therefore, does not need the support of any entry ifl Schedule 7 dealing specifically with tax or fee. These sections, as made applicable to foreign liquor by Act 19 of 1964, come within the legislative competence of the State under the above mentioned two entries in Schedule 7.

54. We were referred to the case of Sheo Pat Rai v. State of Uttar Pradesh, 1972 All LJ 1000 = (1973 Tax LR 2271) which, supports the conclusion reached by Raina, J. For the reasonsalready indicated, I respectfully differ from the view taken in that case. In my opinion, the previous Division Bench case of this Court, namely, Gulab Rai v. State of M. P., 1972 MPLJ 1066 = (1973 Tax LR 2066) to which Raina, J. was a party, correctly expresses the legal position as follows:

'On perusal of all the authorities we are of opinion that wherever the question came up for discussion, apart from the restrictions placed by the Excise Acts, it was held that trade in intoxicant liquors is also a business and a citizen has a fundamental right but that that fundamental right has always been held to be completely controllable so that nobody can deal in intoxicant liquors unless the State grants him that authority. Whenever the provisions of the Excise Acts have been taken into consideration and it was found that this power to trade in intoxicant liquors has been completely taken over by the Government, it has been held that resort to the fundamental right of trade is not open. Since the Excise Act in this State has completely taken over the trade, no citizen can claim a right to trade in it unless he obtains the authority of the State and under the Act the State is entitled to charge consideration for giving this authority.'

55. The Act No. 19 of 1964, apart from making certain amendments in the parent Act, made the following provision inSection 5:

'Subject to the rule made under Section 62 (2) (h) and published under the Government of Madhya Pradesh, Separate Revenue Department Notification No. 54-A/ V-SR, dated the 4th July 1959, the licences in Forms F. L. 1 and F. L. 2 shall be disposed of by the State Government by auction or under the 'fee per bottle system' or in such other manner as the State Government may, from time to time, by general or special order, direct. The licence fee under the auction system shall be the amount of the bid accepted by the Competent Authority at the auctions. The scale of fees under 'fee per bottle system' shall be such as may be determined by the State Government from time to time.'

The provision quoted above read along with Sections 18 and 27 clearly permits the grant of F. L. 1 licences-- (Licence for the sale of foreign liquor not to be consumed on thepremises) by auction.

56. The petitions fail and are dismissed. There shall, however, be no order as to costs and the security deposit shall be refunded to the petitioners.

Tare, C.J.

57. I have had thebenefit of going through the draft differing proposed orders written by my learned brothers, Raina J. and Singh J. The facts have been elaborately narrated by my learned brothers and it is, therefore, not necessary to repeat them. I shall straightwaycome to the questions involved in these writ petitions.

58. The first contention of the learned counsel for the petitioners was that the State Government was not competent to charge any premium for the grant of a licence for sale of foreign liquor and that only a fee commensurate with the services rendered as quid pro quo can be charged. Therefore, it is urged that increase of the premium to Rs. 5,000/- is exorbitant and unwarranted by the provisions of the Madhya Pradesh Excise Act, 1915. It is pointed out that the earlier cases of this Court relate to country liquor the property in which vested in the State Government. But as regards foreign liquor, the property does not vest in the State Government and what the State Government can charge is only the fee for granting a licence for sale of foreign liquor. It is the fundamental right of every liquor dealer under Article 19(1)(g) of the Constitution to carry on the trade of selling foreign liquor. In this view it is contended that the latest decision of this Court in 1972 MPLJ 1066 = (AIR 1973 Tax LR 2066) needs reconsiderations. It is not disputed that the power of the Government under the M. P. Excise Act, 1915, is regulatory in respect of manufacture, sale etc. of foreign liquor and the State Government has not yet taken over the trade manufacture of foreign liquor exclusively. It is also contended that the State Government has not acquired any monopoly of trade in liquor. Even assuming for a moment that it has so acquired, the same cannot be operated by auctioning a right of sale. Therefore, the validity of Sections 18 and 27 of the M. P. Excise Act, 1915, as also the Amendment and Validation Act, 1964, was challenged, in so far those provisions relate to foreign liquor. As the legislative competence is challenged in these writ petitions, it may be necessary to advert to the relevant provisions of the Act.

59. The Madhya Pradesh Excise Act, 1915, comes under List II of the Seventh Schedule, i. e. the State List and it is covered by Item No. 8, namely, intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors. In AIR 1954 SC 220, their Lordships of the Supreme Court observed that a citizen would have no inherent right to sell the intoxicants by retail and it cannot be said to be a privilege of a citizen. However, in AIR 1967 SC 1368, their Lordships observed that although the right of a citizen to carry on trade in liquor would be a fundamental right, it would only be necessary to examine whether the restrictions imposed are reasonable restrictions within the scope of Article 19(6) of the Constitution of India. That view was further approved by their Lordships of the Supreme Court in AIR 1972 SC 1863. Thus, the implication of the pronouncement of their Lordships ofthe Supreme Court is that it is the fundamental right of a citizen as per Article 19(1)(g) of the Constitution to carry on the trade in liquor and it can only be regulated by imposing reasonable restrictions in public interest, which may even go to the extent of total prohibition. In this connection reference to Article 47 of the Constitution of India, contained in Part IV, relating to directive principles of State policy, may usefully be reproduced, whereby the Article provides as follows:

'Article 47.-- The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and o drugs which are injurious to health.'

60. Therefore, the said Article contemplates even total prohibition. It is true that of late, the Prohibition Acts in different States have been scrapped and a liberal policy has been followed by the Government in the grant of liquor licences. It is true that the directive principles of State policy contained in Part IV of the Constitution are not justiciable and cannot be enforced in a Court of law. But, all the same, they are fundamental in the governance of the country and they constitute an injunction to the State to apply those principles in making laws. Therefore, if the State in the light of the directive principles of State policy contained in Article 47 of the Constitution of India, makes some laws in public interest, the law Courts would certainly uphold such laws and that at least will not be justiciable. The scope of inquiry in such a case would be limited to the question whether in making laws the State Government has followed the directive principles of State policy. If the law Courts find that effect has been given by the State while making laws to directive principles of State policy, the Court will uphold such laws. It was from this point of view that their Lordships of the Supreme Court laid down the proposition that although reasonable restrictions under Article 19(6) of the Constitution could be imposed so as to curtail the right of trade under Article 19(1)(g), the prohibition in public interest could even go to the extent of total prohibition of such a fundamental right. There can be no doubt that intoxicating liquor and drugs are a menace to the society except when they are medicinally used. Therefore, if the State places reasonable restrictions on this fundamental right; which may even go to the extent of total prohibition, the action of the State putting such restrictions cannot be said to be unconstitutional. On the other hand, it would perfectly be warranted by the provisions of the Constitution.

61. Three types of arguments have been advanced in the cases referred to by my learned brothers. One is that the State is entitled to charge a fee, which must satisfy the principle of quid pro quo and as such, any impost must be commensurate with the services rendered by the State. The second line of argument is that although trading in liquor is a fundamental right under Article 19(1)(g) of the Constitution of India, the State has the power to impose reasonable restrictions as per Article 19(6) of the Constitution to the extent of total prohibition in public interest. The third line of argument advanced in defence of such restrictions is that under the different Excise Acts enacted by the State legislature, dealing in intoxicants and drugs is the exclusive privilege of the State and if the State parts with a part of its privilege, it is entitled to charge adequate consideration for such transfer in public interest, with a view to increase the revenue and also to impose restrictions on the use and sale of the intoxicants and drugs. My learned brothers in their separate judgments have come to contrary conchisions with reference to these three lines of arguments and, therefore, I propose to examine them in some detail.

62. Section 8 of the M. P. Excise Act, 1915, reads as follows:

'Section 8.-- Power to prohibit import, export or transport.--The State Government may, by notification,--

(a) ..... prohibit, throughout the State or in any specified area thereof, the import or export of any intoxicant;

(b) prohibit the transport of any intoxicant;

(c) make suitable provisions for effective control of Mahua (Bassia Latifolia and Bassia Longifolia) or any other base which is or which can be utilized for the manufacture of liquor.'

Furtheron Section 9 of the Act is as follows:--

'Section 9.-- Restriction on import, export or transport.-- Without the sanction of the State Government no intoxicant shall be imported, exported or transported, except -

(a) after payment of any duty to which it may be liable under this Act, or execution of a bond for such payment, and

(b) on compliance with such conditions as the State Government may impose.'

Section 10 of the Act specifies the requirement of pass for import, export or transport. Section 11 mentions the authority who may issue such passes for import, export or transport. Thus, the State Government has complete control over the import, export and transport of intoxicants and without the sanction of the State Government no person can import, export or transport the intoxicants. Thereafter, Section 13 of the Act requires licence for manufacture, collection and possession of intoxicants. It is as follows:--

'Section 13.-- Licence required for manufacture, etc. of intoxicants.-

(a) No intoxicants shall he manufactured or collected;

(b) no hemp plant, shall be cultivated;

(c) no tari-producing tree shall be tapped and no tari shall be drawn from any tree;

(d) no liquor shall be bottled for sale;

(e) no distillery or brewery shall be constructed or worked; and

(f) no person shall use, keep or have in his possession any materials, still, utensil, implement or apparatus whatsoever for the purpose of manufacturing any intoxicant other than tari; except under the authority and subject to the terms and conditions of a licence granted in that behalf:

Provided that the State Government may, by notification, declare that the provisions of this section shall not apply, in any area specified in this behalf, to the tapping of tari producing trees, or to the drawing of tari subject to such conditions as it may prescribe:

Provided further that the State Government may, by notification, declare that the provisions of this section shall not apply in such areas as may be specified in this behalf to the manufacture of liquor for home consumption, subject to such conditions as it may prescribe.'

Thereafter, Section 14 of the Act provides for establishment or licensing of distilleries and warehouses. Section 15 provides for payment of duty on removal from distillery, brewery or place of storage. Section 16 of the Act authorises tbe State Government to fix the limit of possession of intoxicants and further provides that no person shall be in possession except under a licence for a particular purpose, namely, licence for the manufacture, cultivation, collection, sale or supply of such intoxicant or a pass for the import, export or transport or a permit granted under the Act. However, Subsection (3) of this Section provides that these restrictions shall not apply to foreign liquor, which is in the possession of any common earner or warehouseman. Further Sub-section (4) provides that notwithstanding anything contained in the foregoing Sub-section, the State Government may, by notification, prohibit the possession by any person or class of persons, either in the State or in any specified area, of any intoxicants, either absolutely, or subject to such conditions as it may prescribe. Thereafter Section 17 of the Act requires a licence for sale of intoxicants, which is as under:--

'Section 17.-- Licence for required sale of intoxicants.-

(1) No intoxicant shall be sold except under tbe authority and subject to the terms and conditions of a licence granted in that behalf:

Provided that-

(a) a person having the right to the 'tari' drawn from any trees may sell such 'tan' without a licence to a person licensed to manufacture or sell 'tan' under tbis Act;

(b) a person licensed under Section 13 to cultivate the hemp plant may sell without a licence those portions of the plant from which the intoxicating drug is manufactured or produced to any person licensed under this Act to deal in tbe same, or to any officer whom the Excise Commissioner rimy prescribe; and

(e) Nothing in this section shall apply to the sale of any foreign liquor lawfully procured by any person for his private use and sold by him or on behalf of his representatives in interest upon his quit (-ing a station or after his decease.

On such conditions as the Excise Commissioner may determine, a licence for sale under the Excise law for the time being in force in other States or Union territories may be deemed to be a licence granted in that behalf under this Act.'

Thus, it will be seen that the State Government has complete control over all aspects of intoxicants, namely manufacture, collection, possession, sale and consumption and as such, it can be urged on behalf of the respondents that the State Government owns the exclusive privilege in respect of intoxicants on all matters conceivable.

63. Thereafter, Section 18 of the Act would come in for consideration, which the learned counsel for the petitioners strenuously challenged. Tt is as follows:

'Section 18--Power to grant lease of right to manufacture, etc.,-- (1) The State Government may lease to any person, on such conditions and for such period as it may think fit, the right-

(a) of manufacturing, or of supplying by wholesale, or of both, or

(b) of selling by wholesale or by retail, or

(c) of manufacturing or of supplying by wholesale, or of both and selling Dy retail, any liquor or intoxicating drug within any specified area.

(2) The licensing authority may grant to a lessee under Sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits sub-letting, may, on the application of the lessee, grant a licence to any sub-lessee approved by such authority.'

64. It is to be noted that previously in place of the word 'liquor', there was the phrase 'country-liquor'. But the word 'country' was omitted by Sections 3 and 4 of M. P. Excise (Amendment and Validation) Act, 1964 (No. 19 of 1964) retrospectively with effect from 1-1-1959. Therefore, the result would be that Section 18 would be applicable to cases of foreign liquor as well and not only to cases of country liquor Arguments were advanced on behalf of the petitioners that this amendment is ultra vires. But no attempt was made to indicate that, except by contending that the property in foreign liquor does not vest in the State Government at any stage and, therefore, the State Government cannot be said to be owning any right with respect to foreign liquor and there would be no question of transferring such a right for consideration. We may observe that this line of argument is absolutely untenable. In fact the State Government owns the exclusive privilege in respect of intoxicants on all matters and the better line of reasoning, in my opinion, will be to accept the contention that for transfer of such privilege or such a right, the State Government can certainly charge consideration as it thinks fit,

65. Furtheron we are not concerned with Sections 19 to 24 of the Act. Sections 25, 27 and 28 would be relevant for our purpose. The said Sections are as follows:--

'Section 25. Duty on excisable articles.-- (1) An excise duty or a countervailing duty, as the case may be shall, if the State Government so direct, be levied on all excisable articles--aj imported; or

b) exported; or

c) transported; or

(d) manufactured, cultivated or collected under any licence granted under Section 13; or

(e) manufactured in any distillery established or any distillery or brewery licensed, under this Act:

Provided that it shall be lawful for the State Government to exempt any excisable article from any duty to which the same may be liable under this Act.

(2) Duty may be imposed under subsection (1) at different rates according to the, places to which any excisable article is to be removed or according to the strength and quality of such article.

(3) Notwithstanding anything contained in Sub-section (1),--

(i) duty shall not be imposed thereunder on any article which has been imported into India and was liable, on such importation, to duty under the Sea Customs Act, 1878 (VIII of 1878), or the Indian Tariff Act, 1894 (VIII of 1894).'

Section 25 of the Act, therefore, permits imposition of excise duty or a countervailing duty on all excisable articles, such as imported, exported, transported or cultivated. Section 26 of the Act prescribes ways of levying such duty. Section 27 of the Act is as follows;

'Section 27. Payment for grant of leases.-- Instead of or in addition to any duty leviable under this Chapter, the State Government may accept payment of a sumin consideration of the grant of any lease under Section 18.'

66. Thus, instead of or in addition to the duty leviable under this Chapter (Vide Section 25), this Section authorises the State Government to accept payment of a sum in consideration of the grant of any lease under Section 18. What Section 18 contemplates is transfer of privilege, which exclusively belongs to the State Government and if the State Government by virtue of Section 27 of the Act is empowered to charge a sum in consideration of the grant of any lease (exclusive privilege or right), Section 27 at least cannot be challenged on the ground that it does not impose any fee. It is to be noted that much argument was advanced ou the premises that what the State Government is entitled to do is to charge fees and nothing more. But, Section 27 of the Act has avoided that phrase altogether and has provided for payment of a sum in consideration of the grant of any lease.

Section 28 of the Act is as follows:--

'Section 28.-- Form and conditions of licences, etc.-- Every licence, permit or pass granted under his Act-

(a) shall be granted-

(i) on payment of such fees (if any), (ii) for such period,

(iii) subject to such restrictions, and on such conditions, and

(b) shall be in such form and contain such particulars as the State Government may direct either generally by rules made under Section 62 or in any particular instance.'

67. Thus, the arguments of the learned counsel for the petitioners were mainly based on the use of the word 'fees' in this Section. I may observe that if Section 28 alone had been relevant, the arguments advanced on behalf of the petitioner might need some serious consideration. But, Section 27 of the Act is in addition to the provisions of Section 28 of the Act, Section 28 empowers tbe State Government to charge fees for a licence; while Section 27 empowers the State Government to accept payment of a sum in consideration of the grant of any tease under Section 18. The scope of the two Sections is altogether different and they cannot be confused. Thus, the State Government is empowered not only to charge fees, which it might be contended ought to be commensurate with the services rendered, but, also to charge payment of a sum in consideration of the transfer of a lease in respect of an exclusive right or privilege and it cannot be urged on behalf of the petitioner that such consideration cannot be charged and that it should be equated with fees. It was contended that there is no such right or privilege vested in the State Government and, therefore, Section 27 is of no legal effect as itempowers the State Government to charge consideration for transfer of a privilege or a right, which is non-existent. I am unable to accept that contention. In my opinion, the exclusive right or privilege is very much there and it is difficult to see as to why consideration cannot be charged for transfer of such exclusive privilege or right in addition to the fees that may be payable under Section 28 of the Act for obtaining a licence,

68. We may next refer to the cases relied on by my learned brothers in their separate orders. It is true thaf the earlier cases of this Court related to the country-liquor and on that ground the learned counsel for the petitioners sought to distinguish those cases. Admittedly they were not cases of foreign liquor. However, the Division Bench case of Gulab Rai and Sons v. State of M.P., 1972 MPLJ 1066 = (1973 Tax LR 2066) to which my brother Raina, J. was a party along with the then Chief Justice, Bishambhar Dayal, was a case of foreign liquor and in that Division Bench case a distinction was drawn between the provisions of Section 27 and Section 28 of the Act and the provisions along with the rules were rle-Iclared to be constitutional and not invalid on the ground of excessive delegation or on the ground of the charge being excessive. I do not think that any case is made out for reconsidering that Division Bench decision and I am in agreement with the view of my learned brother, G. P. Singh, that that deci-ision lays down the view of the law correctly.

69. The learned Dy. Advocate General relied on the Full Bench case of P. Ramchandra v. The State, AIR 1971 Ker 146. In that case the learned Judges constituting the Full Bench upheld the imposition of licence fee unrelated to the services rendered on the ground that where the primary purpose of the Act is regulatory in character to control, regulate and restrict a particular activity, collection of revenue, which is incidental to such regulation, is permissible. In my opinion, consideration of this aspect might have been necessary if we had been confined to the provisions of Section 28 of the M. P. Excise Act, 1915. But, Section 27 of the Act cannot be ignor-ed, which empowers the State Government to charge consideration for the grant of any lease even in addition to any duty leviable under the Chapter. Thus, by virtue of Sections 25, 27 and 28 of the M. P. Excise Act, 1915, the State Government is entitled to charge three kinds of levies, namely (i) duty under Section 25 of the Act, (ii) payment of a sum in consideration of the grant of any lease under Section 18, and (iii) fees for granting a licence, permit or a pass. The scope of the three levies is altogether different and they ought not to be confused with each other.

70. In this connection I might observe that in AIR 1972 SC 2281, which wasa case with reference to the provisions of Section 19 of the Eastern Bengal and Assam Excise Act and Rules 91 and 92 of the Rules framed thereunder, Section 19 of that Act empowered the State Government to grant to any person, on such conditions and for such period as it may think fit, exclusive privilege of manufacturing or of supplying any country liquor or intoxicating drug within any specified area.

71. Similarly, in AIR 1972 SC 1816, their Lordships have described the right of State Government as one of exclusive right to sell liquor and to sell the said right in order to raise revenue.

72. Whether considered an exclusive privilege or an exclusive right, the latter of which phrases has been used in the M. P. Excise Act, 1915, there can be no doubt that Section 27 of the Act empowers the State Government to charge a consideration for transfer of such right in addition to duty leviable under Section 25 of the Act, and in addition to the fee for grant of a licence as per Section 28 of the Act. Therefore, it is all the more necessary that the right of the State Government to charge consideration under Section 27 ought not to be confused with the right of the Government to charge a licence fee under Section 28 of the Act. For this reason, with due respect, it is not possible to concur with the view expressed by a Division Bench of the Allahabad High Court in 1972 All LJ 1000 = (1973 Tax LR 227.1), wherein it has been stated that imposition of a licence fee cannot be justified as a tax. In the M. P. Excise Act, 1915, there is no question of justifying the licence fee as a tax, but the three Sections provide for different kinds of levy, namely, Sections 25, 27 and 28 and Section 27 merely provides for charging a consideration for transfer of a lease, which is in the nature of exclusive right or privilege. Even my brother Raina, J. has expressed the opinion that neither Section 18 nor Section 27 of the Act can be adjudged to be ultra vires even in the context of foreign liquor. But what my brother has stated is that the State Government is not competent to charge a fee unrelated to the services rendered by it. The reference, in my opinion, is to Section 28 of the Act and not to Section 27, according to which, consideration can be charged for levy of or in addition to other levies imposable under this Act. For this reason, I am unable to agree with the view of my learned brother, Raina, J.

73. Next I may deal with the reasoning of my learned brother, G. P. Singh, J. He thinks that the consideration received by the State Government under Section 27 read with Section 18 of the Act is not for transfer of property rights in liquor, but for grant of a lease of trading rights and he has held that by operation of Sections 8 to 16, these rights become the exculsive privilege of the Government and, therefore, a consideration as per Section 27 of the Act can be charged by the State Government. I may say that I am in respectful agreement with the view of my learned brother, G. P. Singh, J. It is not necessary for me to discuss in detail the several cases mentioned by my learned brother in his separate order. In passing, however, I may state that I am in agreement with the view expressed by Mathew, J. (as he then was) in ILR (1969) 2 Ker 71, which view was affirmed by a Division Beach of the Kerala High Court in Daino-daran v. State of Kerala.

74. To conclude, making a provision for creating an exclusive privilege in respect of all intoxicants on all matters would be consistent with the provision of Article 19(6) of the Constitution of India, which would be tantamount to imposing reasonable restrictions in the interest of the general public having in view the provisions of Article 47 of the Constitution of India and from that point of view I agree with my brother, G. P. Singh, J. that the levy imposed is liable to be upheld as constitutional and legal and the same cannot be challenged on any ground, whatsoever.

19. Consequently, these petitions fail and are accordingly dismissed. However, there shall be no order as to costs. The outstanding amount of the security deposit shall be refunded to the respective petitioners.

ORDER

75. As per the majority opinion this petition and Miscellaneous Petitions Nos. 391, 392, 394, 395, 399, 400, 401, 403, 404, 405, 407, 409, 413, 415, 410, 417, 420, 421, 422, 423, 424, 427 and 430 of 1970 fail and are accordingly dismissed. However, there shall be no order as to costs. The outstanding amount of security shall be refunded to the respective petitioners.


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