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Ghaio Mall and Sons Vs. the State of Delhi and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Appln. No. 11-D of 1955
Judge
Reported inAIR1956P& H97
ActsConstitution of India - Articles 19(1), 47, 226, 239; Excise Law; Punjab Excise Act, 1914 - Sections 1, 26 and 59; Government of Part C States Act, 1951 - Sections 36 and 38; Delhi Excise Rules - Rule 5.1 and 5.17
AppellantGhaio Mall and Sons
RespondentThe State of Delhi and ors.
Appellant Advocate Gurbachan Singh and; R.S. Narula, Advs.
Respondent Advocate C.K. Daphtry,; Bishambar Dayal,; S.N. Andley and;
Disposition Petition dismissed
Cases ReferredThe King v. Woodhouse
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the.....bishan narain, j.1. this writ petition under article 228 of the constitution of india has arisen in the following circumstances. 2. messrs. ghaio mall & sons, the petitioner, is a joint family firm and it is alleged in the petition that this firm had been selling foreign liquor since 1922 and before the partition of the country held licenses in forms l-l, l-2, l-10 and l-11 at amritsar, sialkot and multan. the firm applied for grant of l-2 license (wholesale and retail sale to the public) in chawri bazar delhi for 1945-46. it appears that in anticipation of formal grant of this license the firm was given permits to import foreign liquor in delhi, ultimately, however, this license was not granted for reasons that are not clear on the record. the petitioning firm was granted license in form.....
Judgment:

Bishan Narain, J.

1. This writ petition under Article 228 of the Constitution of India has arisen in the following circumstances.

2. Messrs. Ghaio Mall & Sons, the petitioner, is a joint family firm and it is alleged in the petition that this firm had been selling foreign liquor since 1922 and before the partition of the country held licenses in forms L-l, L-2, L-10 and L-11 at Amritsar, Sialkot and Multan. The firm applied for grant of L-2 license (wholesale and retail sale to the public) in Chawri Bazar Delhi for 1945-46.

It appears that in anticipation of formal grant of this license the firm was given permits to import foreign liquor in Delhi, Ultimately, however, this license was not granted for reasons that are not clear on the record. The petitioning firm was granted license in form L-l (Wholesale and retail sale of liquor to traders only) for 1951-52 on 20, Beadonpura Karolbagh Delhi.

In 1954, the firm learnt that Messrs. Army & Navy Stores, Regal Buildings, New Delhi, had closed their business and a vacancy in L-2 license had occurred there. On 21-1-1954 the petitioners applied for grant of this license in this vacancy and requested that the firm be allowed to operate this license from its existing Karolbagh place of business or from anywhere else.

By application dated 21-5-1954 the firm informed the Chief Commissioner (licensing authority) that it had secured shop No. H. 32 in Con-naught Circus, New Delhi, which is suitable for the purpose of selling foreign liquor to the public. The firm wrote again to the Chief Commissioner on 30-7-1954 that there are persistent rumours in the city that its application will not be placed before him and to see that this does not happen.

The firm again wrote on the subject, mentioning certain rival applicants and compared its own experience etc., with other applicants and particularly mentioned the rival applicants M/s Gaindamal Hemraj and stated that that firm was totally unknown to trade (vide letter dated 11-9-1954).

In this letter the Chief Commissioner was reminded of the recently acquired premises by the firm in Connaught Circus, New Delhi. At about the same time the firm applied for change of the locality of L-l license from Karolbagh to Con-naught Circus and a reminder regarding this application for change of locality of L-l license was sent on 6-11-1954.

The Chief Commissioner by his order dated 15-1-1955 allowed the petitioner to transfer its L-l license to shop No. H. 32 in Connaught Circus. Subsequently the petitioning firm filed an application Under Article 226 of the Constitution in this Court 'C. W. No. 323/D of 1954 (Punj)' (A), which was dismissed by the Circuit Court at Delhi on 22-12-1954 in limine.

Attempts were made to get this matter heard by the Supreme Court but in the meanwhile the firm came to know that on 16-12-1954 the license in form L-2 had been granted to the respondent firm Gainda Mal Hemraj for 1955-56.

On getting this information these proceedings were dropped and the present petition was filed in this Court for the relief that the license granted to Messrs Gaindamal Hemraj be set aside and for direction that the Chief Commissioner Delhi should hold proper enquiry regarding suitability of premises, etc., to hear both the parties and to decide the application of the petitioners before taking up the application of Messrs Gaindamal Hemraj. This petition is based on the allegations that:

(1) the order granting license was not passed by the Chief Commissioner who is the only person having authority in the matter;

(2) the order in question was passed in contravention of Section 36, Government of Part C States Act, 1951 (49 of 1951);

(3) the order was passed behind the petitioner's back without affording any opportunity to the petitioner firm to show cause against the grant of license to the rival candidate and without due enquiry required under Section 58 (e), Punjab Excise Act as applicable to Delhi;

(4) the Excise Act offends Article 19(1)(g) of the and finally

(5) the orders had been passed against the fundamental rights of the petitioner guaranteed under Arts. 14 and 19 of the Constitution.

3. Before discussing the arguments advanced by the learned counsel in this case it will be convenient to describe relevant provisions of the Excise Act and the rules framed under Section 59 of that Act. Section 26 of the Act lays down that nc liquor shall be sold except under a license and Section 59 authorises the Chief Commissioner Delhi to make rules by notification regulating the manufacture, supply, storage or sale of any intoxicant.

In Rule 4.2 it is stated that unless otherwise directed licenses shall be granted for one year from the 1st April to the 31st March. The Chief Commissioner shall fix the number of liquor shops in any local area (B. 4,6). Licenses, however, may not be granted to type o persons described in Rule 4.7.

The licenses are specified in Rule 5.1 which also gives the name of authority competent to grant a license. Under this rule the Chief Commissioner has the authority to grant L-2 license and the Collector is empowered to renew it. Every license is granted to a certain person in respect of certain premises (5.3).

The authority competent to renew the license shall not refuse to do so without giving notice to the licensee and without recording his objections (Rule 5.12). As far the procedure Rule 5.11 reads :

'All applications for the grant or renewal of licenses which require the orders of the Chief Commissioner under the Delhi Excisable Articles License and Sale Orders or these rules should be received in the Chief Commissioner's Office before the end of October in each year.'

And Rule 5.17 as far as it is relevant to the present case reads:

'A license in form L-2 may only be given toa firm of proved respectability in a civil station orcantonment or any other place where there is ademand for superior foreign liquor. A license inthis form may not authorise consumption on thepremises.'

4. It will be noticed from these rules that no procedure has been laid down for the guidance of a competent authority to grant a license beyond the rule that the applications should be received in the Chief Commissioner's office before the end of October each year although certain restrictions have been provided in Rule 4,6 regarding persons to whom licenses may not be granted and in Rule 5.17 the relevant portion of which has been reproduced above.

5. In the course of arguments it was urged on behalf of the petitioning firm that it had a legal right to sell liquor. This is incorrect. From the earliest times it has been found expedient to control the use and traffic in liquor and this control embraces both regulatory and prohibitory measures. This doctrine has been recognized by the Directive Principles of State policy in Article 47 of the Constitution. By now it is an accepted doctrine that manufacture or sale or its possession or even its use is not a matter of inherent or natural right vested in a person and it is a mere privilege which the Government may grant to one person and deny to another person.

This power of the Government to regulate or prohibit use and traffic in liquor includes the power to prescribe reasonable rules on which such business may be conducted. One of the recognised forms of this regulation, is to prohibit this trade except on grant of a license which is a permission to the licensee to engage in the trade on the terms laid down in the license.

Such a license is a merely personal and a temporary permit or privilege to be enjoyed as long as its terms are complied with. It follows, therefore, that the issue of a license is a matter of grace granted by the Government and is not a matter of right. The Legislature by statute generally makes the granting of a license dependent on the approval of the applicant by some officer.

It is, however, clear that no person can demand such a license as of right and cannot carry on the trade under the law of the land without first obtaining the required approval of the licensing authority. Their Lordships of the Supreme Court in their judgment in -- 'Cooverjee B. Bha-rucha v. Excise Commr Ajmer', AIR 1954 SC 220 (B), approved of the observations of Field, J. in -- 'Crowley v. Christensen', (1890) 34 Law Ed. 620 (C):

'The Police power of the State is fully competent to regulate the business -- to mitigate its evils or to suppress it entirely. There is no inherent right in a citizen to thus sell intoxicating liquors by retail; it is not a privilege of a citizen or 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,

That authority may vest in such officers as it may deem proper the power of passing upon applications for permission to carry it on, and to issue licenses for that purpose. It is a matter of legislative will only.'

6. This being the nature of the petitioner's right to sell liquor, the question arises if the petitioner has any right which has been contravened by the State. Mr. Gurbachan Singh for the applicants has argued that Rule 5.1 authorises only the Chief Commissioner to grant this license and that in the present case he has not exercised this power and the license in question has been granted to Messrs Gaindamal Hemraj by some person other than the Chief Commissioner.

The petitioner's case is that it has been granted either by the Chief Minister (respondent 2) or the Excise and Taxation Commissioner Delhi (respondent 3) and that his own application and that of Messrs Gaindamal Hemraj were never put before the Chief Commissioner for necessary orders.

Respondents in reply have produced a copy of the letter dated 14-12-1954 sent by the Under Secretary Finance (Expenditure) to Delhi State Government, to respondent 3 and its relevant portion reads :

'I am directed to say that the Chief Commissioner is pleased to approve under Rule 5.1 of Delhi Excise Manual Vol. II, the grant of L. 2 license to Messrs Gaindamal Hemraj, New Delhi, in place of L-2 license surrendered by Messrs Army and Navy Stores, New Delhi.'

It is contended by the respondents that this letter is an order authenticated under Section 38(3), Government of Part C States Act (No. 49) of 1951 and it must therefore be held that the order was made by the Chief Commissioner. I am, however, of the opinion that this provision of law has no applicability to the present dispute.

Section 38 relates to executive acts of the Government of Delhi State and does not apply to any power conferred on the Chief Commissioner under a particular or special statute. Powers conferred under the statutory rules framed under the Excise Act on the Chief Commissioner cannot be said to be powers which the Chief Commissioner)exercises by virtue of Section 38 of 1951 Act. '

J am in respectful agreement with the observations of Yahya Ali J., in -- 'In re Venkataraman', AIR 1949 Mad 578 (D), that the Constitution Act deals with the normal executive activities of the Government which are not covered by statute. The same view has been taken in -- 'Om Parkash Mehta v. Emperor', AIR 1948 Nag 199 (E).

The rules under the Excise Act give power to the Collector to grant L-9, L-10 and other licenses and it cannot be said that when the Collector exercises this power he is taking executive action of the Government of the Delhi State.

It must be mentioned here that the Chief Commissioner gets executive powers in the Delhi State under the orders of the President under Article 239 of the Constitution and it is not open to the Chief Commissioner to delegate his executive, authority to the Collector or to any other person.

I am, therefore, of the opinion that the letter under discussion does not prove by itself that the Chief Commissioner did in fact exercise the power vested in him under the statutory rules made under the Excise Act particularly when this fact is denied by the petitioner.

This is, however, not of much consequence in this case. Finance Secretary to the Delhi State Government has filed an affidavit in this Court stating that the decision regarding the grant ol license to Messrs Gaindamal Hemraj was taken by the Chief Commissioner and in this Court the learned Solicitor General stated in specific terms that the matter was in fact decided by the Chief Commissioner.

There is absolutely no reason for not accepting these statements. I therefore hold that in the present case the Chief Commissioner exercised the powers conferred on him by Rule 5.1 in granting license to Messrs Gaindamal Hemraj.

7. The above discussion also disposes of the petitioner's claim that Section 36, Government of Part C States Act (No. 49) of 1951 has been contravened as in my view that section is applicable only to I executive acts of the Government of the Delhi State.

8. The learned Solicitor General then urged that the petitioner has no legal right in the grant of a license and in the absence of any infringement of right the present petition is not competent. He has placed his reliance on 'AIR 1954 SC 220 (B)', for this purpose.

That case related to Ajmer Excise Regulation (1 of 1915) and while recognising that no person has any inherent right to sell liquor their Lordships of the Supreme Court observed :

'It is open to the petitioner under Article 226 to approach the High Court for a 'mandamus' if the officers concerned have conducted themselves not in accordance with law or if they have acted in excess of their jurisdiction.

The same is the answer to the petitioner's next contention that the sale could not be confirmed by the Minister and that under the rules it was only the Chief Commissioner who was authorised to confirm it.'

It is therefore clear that this petition cannot be dismissed on this ground and consequently this contention of the learned counsel fails.

9. The decision of the Supreme Court in 'Cooverjee B- Bharucha's case (B)', has also held that the Excise Act regulating trade in intoxicant liquor does not contravene Article 19(1)(g) and is valid. No argument was advanced before us regarding Article 14 and in any case I am unable to see how that Article is applicable to the facts of this case.

10. It has been contended on behalf of the petitioning firm that the firm's application was never placed before the Chief Commissioner and in any case the Chief Commissioner gave its partners no opportunity to put its case before him and that the discretion vested in him has been exercised arbitrarily without full knowledge of facts and circumstances relating to the applicant's claim for this L-2 license.

In short according to the petitioner the Chief Commissioner held no regular enquiry into the matter which he was bound to do and it was strenuously urged before us by Shri Gurbachan Singh that if the Chief Commissioner had considered his clients' application it could not have been rejected as his qualifications for getting the license were far superior to the qualifications of the rival applicants. There is no doubt that the Chief Commissioner held no enquiry of the kind suggested by the petitioning firm as necessary in this matter. In support of his argument the learned counsel has placed his reliance on rules already mentioned in this judgment and also on some decisions.

Now there is no doubt that the rules do not lay clown any procedure which the authority empowered to grant a license should follow when deciding the matter and it is open to him to make any kind of enquiry that he considers necessary in a particular case.

The rules only provide that all applicants for grant or renewal of a license should be received in the Chief Commissioner's office before the end of October each year (Rule 5,11). As regards L-2 licenses it is [aid down that this license is to be granted only to a firm of proved respectability (5.17). Rule 5.3 provides that every license shall be granted to a certain licensee in respect of certain premises.

Thus subject to certain restrictions and without provision of any procedure the Chief Commissioner in the present case had full authority to grant or to refuse; a license to any person he likes. It is true that under Rule 5.11 time is fixed by which an application for grant or renewal of license must be made ad inferenlially it may be stated that therefore applications are invited for that purpose but that does not mean that the license must of necessity be granted and that the choice is limited to one of the applicants.

If this were correct then once an application regarding a particular license is received that must of necessity be granted whether it be for renewal or for grant of a new license and the Chief Commissioner cannot cancel any license and cannot regulate the number of licenses that should be granted in any local area as provided in Rule 4.6. Obviously such a construction defeats the very object of regidation of trade in intoxicant liquor.

As far as I can see Rules 4.7 and 5.17 given above have been made merely for the guidance of the licensing authority and nothing more. Reliance was placed on the words 'proved respectability' in Rule 5.17 for showing that it raises a justiciable issue It is to be noticed that in the corresponding Punjab Rules which have been adopted in Delhi the word used is 'approved'.

This may or may not be due to printing mistake but I am inclined to think that the word 'proved' in Delhi Rules is not used in the sense suggested by Shri Gurbachan Singh but in the sense that the licensing authority is satisfied of the applicants' respectability and to my mind that satisfaction need not necessarily be the result of any enquiry or evidence produced by the parties.

If the argument of the learned counsel is accepted then in every case of grant of a license it should be necessary to record or hear evidence regarding respectability of every applicant and as this trade is remunerative such an enquiry may relate to considerable number of applicants and may take Considerable time to decide the matter.

This obviously could not be the intention of the Chief Commissioner when he framed this rule as it must defeat the object of the rules to grant or renew licenses before 1st April every year. If the contention of Shri Gurbuchun Singh in this mutter is accepted then it will lead to considerable inconveniences in enforcing the rules under the Act and Maxwell in his well known book on Interpretation of Statutes has recognised that the argument drawn from inconvenience is forcible in law.

In any case such a consideration cannot be ignored. I am therefore of the opinion that the word 'proved' in this rule does not contemplate any kind of enquiry. It is undoubtedly laid down in Rule 5.12 that a renewal application should not be refused without giving notice to the licensee and without recording his objections and it is also laid down that after 20th of January renewal cannot be refused for the following year without the special sanction of the Chief Commissioner.

I consider the matter of renewal to stand on a footing slightly different from that of grant of license as it affects vested interests but even in this matter there is no provision for hearing the objector or for giving a decision on his objections. The objections are merely to be recorded. In any case, the case of renewals need not be discussed here at length as it does not arise in the present case.

I am of the opinion that taking into consideration the nature of trade involved and the rules framed under the Excise Act the enquiry by the authority granting a license is not required. The matters involved do not reveal a justiciable issue.

It appears to me that no judicial or quasi-judicial duty is imposed on the Chief Commissioner by the Excise Act or by the rules framed under it. The rules do not prescribe any steps which must be taken to decide the matters. The object of the rules is to get information with a view to decide whether a license should be issued or not and if so, to whom. The object of the collection of information is not to decide any issue.

In my view the following observations of Lord Thankerton in -- 'Franklin v. Minister of Town and Country Planning', 1948 AC 87 (F), fully apply to the present case :

'In my opinion, no judicial, or quasi-judicial, duty was imposed on the respondent, and any reference to judicial duty, or bias, is irrelevant in the present case.'

And again,

'I am of opinion that no judicial duty is laid on the respondent in discharge of these statutory duties and that the only question is whether he has complied with the statutory directions * * *.'

The position is described in American Jurisprudence, Vol. 30 at page 319 thus :

'The decision of a city council refusing to grant a liquor license to an applicant on the ground that he is not fit is not rendered arbitrary by the refusal to grant him a hearing upon the application. The statute or ordinance authorizing the issuance of the license may provide for a hearing.

In the absence, however, of such a provision, where the law or ordinance regulating applications for such licenses empowers the licensing body, such as a municipal council, to issue licenses to applicants who in the opinion of the licensing authority are fit to carry on the business of selling intoxicating liquors, and leaves entirely to the licensing authority the method or means by which they may satisfy themselves of the fitness or qualification of applicants, it has been held that an applicant is not entitled to a hearing, and the refusal to grant his application is not rendered arbitrary by the refusal to grant him a hearing.'

11. Now I shall deal with the authorities relied upon by the learned counsel for the petitioner. -- 'Abdul Majid v. P. Rule Nayak', AIR 1951 Bom 440 (G), is a case in which it was held that the proceedings before the Custodian are quasi-judicial proceedings and therefore the Custodian must hold an inquiry.

The case has, however, no application to the facts of the present case because the proceedings taken by the Chief Commissioner are not quasi-judicial in nature. Similarly it was held in - 'Chandra Bhan v. Rent Control and Eviction Officer', AIR 1954 All 6 (H), that under the U. P. Act 3 of 1947, the Rent Control and Eviction Officer acts in. quasi-judicial capacity when he decides the question of fact.

This decision also has no relevancy to the present case. The last case relied upon is -- 'Ram nath Prasad v. Collector Darbhanga', AIR 1955 Pat 345 (I). This case is more in point. In this case the Collector cancelled a license and forfeited the security deposited by the licensee to Government and it was held that in the circumstances the Collector was bound as a matter of principle to give a fair opportunity to the licensee of presenting his case by making a relevant statement or by controverting any relevant statement made to his prejudice.

Cancellation of a license in the Delhi Excise Act is provided under Sections. 36 and 37 which give authority to the Chief Commissioner to do so in certain circumstances. The present case, however, relates to grant of a license and not to cancellation of it. The cancellation of a license affects vested rights and it may be that in such cases different considerations would apply but to my mind such a decision is of no assistance in the present case which relates to grant of a license.

12. It was contended by Shri Gurbachan Singh that even if the Chief Commissioner or any other competent authority to grant license had absolute discretion he could not exercise it without holding some kind of enquiry as such a discretion must be exercised according to rules of reason and justice and not according to private opinion, according to law and not humour; it is not to be arbitrary, vague & fanciful but legal and regular, vide -- The King v. Woodhouse', (1906) 2 KB 501 (J).

I have already mentioned that no person has an inherent right to the grant of a license to vend liquor and therefore its grant by the Chief Commissioner is a matter of grace and its refusal does not deprive the applicant of any right or property. In the circumstances the competent authority is free to exercise its absolute discretion in any way that in his opinion advances the object of the Excise Act and the rules made thereunder.

I may again refer to Vol. 30 of the American Jurisprudence reproduced above where it is stated that the decision of the officer refusing to grant a license to an applicant is not rendered arbitrary by the fact that he did not grant a hearing to the applicant.

I am, therefore, of the opinion that it was not incumbent on the Chief Commissioner to hold an enquiry by giving adequate hearing to the applicants'' to produce evidence in support of their case in preference to other applicants before choosing the person to whom this L-2 license should be granted. The result is that the grant of the license to Messrs Gaindamal Hemraj must be held to be in accordance with law.

13. It was then argued on behalf of the petitioners that their application was never placed before the Chief Commissioner along with the application of the successful applicant to enable him to come to a correct conclusion. There is no doubt that the petitioner suspects this to be correct as is evident from the firm's letters to the Chief Commissioner.

Assuming this to be correct it is not possible for this Court in these proceedings to direct an unknown subordinate of the Chief Commissioner to forward the petitioner's application to the Chief Commissioner to enable him to reconsider the matter if he considers it fit. This request if still available to the petitioner can be made only to the Chief Commissioner himself,

14. Now the only thing which remains to be considered is the question of costs. It appears to me that the petitioning firm has some justification to be aggrieved. The firm has possessed a L-2 license in 1945 and it holds L-l license in Delhi. This firm appears to have been in this business since a long time and considerable portion of this business has been lost to it by partition of the country.

It has not been suggested that the petitioning firm cannot be considered to be of proved respectability. Its partners heard rumours that their application has not been placed before the Chief Commissioner. In the circumstances it cannot be said that the filing of this petition under Article 229 was not wholly justified. I am, therefore, of the opinion that the petitioner should not be made to pay respondents' costs.

15. For all these reasons this petition is dismissed but the parties will bear their own costs.

Dulat, J.

16. I agree in dismissing thepetition and leaving the parties to their own costs.


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