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Gidney Club, New Delhi and anr. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 403 of 1978
Judge
Reported inAIR1980Delhi33; ILR1979Delhi45
ActsPunjab Excise Act, 1914 - Sections 24; Excise Rules - Rule 13; Constitution of India - Article 47
AppellantGidney Club, New Delhi and anr.
RespondentUnion of India and ors.
Advocates: S. Pappu,; E.X. Joseph,; K.N. Kataria,;
Cases ReferredM. R. Balaji v. State of Mysore
Excerpt:
.....to delhi) - sections 24, 26, 43 & 58--excise rules, rule 13--can directive principles of state policy embodied in article 47 in part iv of the constitution of india be enforced by administrative action by the state.....; the petitioner no. 1 gidney club held a license for the retail vend of foreign liquor in form l-19 under delhi liquor license rules, 1976 framed under section 58 of the punjab excise act, 1914 as applied to delhi was valid for one year from 1-4-1977 to 31-3-1978. on 15-3-1978 a letter was addressed by the collector of excise, delhi to all the clubs including the petitioner's club informing that the liquor license in form l-19 for retail vend of liquor would be discontinued with effect form 1-4-1978 and directing to dispose of by way of sale to the members for..........by making a law or a rule raises the fundamental question as to whether a directive principle of state policy can be enforced by executive action without resorting to the making of a law or a rule. the constitution as a whole is not only law but the supreme law of india. it is true that a distinction can be made between those provisions of the constitution like the fundamental rights embodied in part iii and certain other provisions like the preamble and the directive principles of state policy embodied in part iv of the constitution which according to article 37 'shall not be enforceable by any court'. this distinction has to be properly understood. what it means is that a writ petition cannot be filed to compel the government to put into action every objective set out in the preamble.....
Judgment:

V.S. Deshpande, C.J.

(1) Can Directive Principles of State Policy embodied in Part Iv of the Constitution (Article 47 in this case) be enforced by administrative action by the state This important question along with others is raised by this writ petition on the following facts:

(2) Petitioner No. 1 is a Club, which is the property of and an activity of the Delhi Branch of the All India Anglo-indian Association, New Delhi. Petitioner No. 2 is a member of the Club. A license for the retain vend of foreign liquor at a club (bona fide or proprietory) in form L-19 was granted to the Club under Rule I of the Delhi Liquor license Rules, 1976 made under section 58 of the Punjab Excise Act, 1914, as applied to Delhi. The license was for one year from 1-4-1977 to 31-3-1978. The relevant parts of section 58 authorising the framing of Rules regulating the sale of liquor are as follows:

'58.(1) The Lieutenant Governor of Delhi may, by notification, make rules for the purpose of carrying out the provisions' of this Act or any other law for the time being in force relating to excise revenue.

(2)In particular, and without prejudice to the generality of the foregoing provision, the Lieutenant Governor of Delhi may make rules

(E)regulating the periods and localities for which, and the persons, or classes of persons to whom licenses, permits and passes for the vend by wholesale or by retail of any intoxicant may be granted and regulating the number of such licenses which may be granted in any local area;

(F)prescribing the procedure to befollowed and the matters to be ascertained before any license is granted for the retail vend of liquor for consumption on the premises;

(O) implementing generally the policy of prohibition.

(3) On 15-3-1978 the following letter was addressed to the various clubs including the Gidney Club, petitioner No. 1.

'SUBJECT: Renewal of the license in form L-19.

Sir,

UNDERand in accordance with the Excise Policy for the year 1978-79, licenses in form L-19 for retail vend of foreign liquor at club are to be discontinued w.e.f. 1-4-1978. You are hereby requested to dispose of by way of sale to the members for consumption at the club premises the stock of liquor available with you under the said license up to , 31-3-1978. In case any stock of liquor remains unconsumed, the intimation of the same along with a consumption/receipt statement for the year 1977-78 may kindly be furnished to the undersigned for further disposal of the same, failing which necessary action as per provision of the rules will be taken.'

(4) The validity of this letter is challenged in the writ petition on the following grounds:

(1)Under the Punjab Excise Act and the Rules framed there under the regulation of sale of liquor including the grant and renewal of licenses is to be done according to law. The excise policy for the year 1978-79 given as the reason for the decision not to renew the L-19 licenses held by the Clubs is not law. The impugned letter is, thereforee, liable to be quashed.

(2)The renewal of licenses is governed by Rule 13 which is as follows:

'WHENEVERit is proposed not to renew a license which is renewable and granted on a fixed fee, the authority competent to renew it shall give notice to the holder of such license, record objections, if any, put forward. by the licensee, and pass a definite order in writing. The licensee may be given, on an application, an authenticated copy of such order.

NOTE: The Excise Inspector is responsible for laying before the Collector by the 7th January, a list of all licenses requiring renewal, in order that the Collector may decide whether to consider the question of non-renewal of any license. This list should be accompanied

(A)in the case of licenses on assessed fee, by the certificate of sales required by rule 28, and (b) in the case of bottling licenses, by a similar certificate showing the gallons, London Proof, bottled up to 31st December.'

APPLICATIONfor renewal was made by the petitioner-Club on 22-1-1978 as per annexure A-l. The procedure prescribed in Rule 13 was not followed before the renewal of the license was refused to the petitioner-Club.

(3)In so far as the policy of the Government enforcing prohibition or partial prohibition in Delhi has led to the issue of the impugned letter, it was not a relevant consideration to be taken into account by the Collector of Excise who was empowered to renew the petitioners L-19 license. The function of renewing the license is quasi-judicial under Rule 13. The quasi-judicial authority was not entitled to take into consideration such an irrelevant consideration. Hence the decision of non-renewal is illegal.

(5) The Delhi Administration has opposed grant of any relief to the petitioners. For, no person including the petitioner-Club has any fundamental right to carry on trade or business in liquor. The sale of intoxicating liquor may be absolutely prohibited by the Government. The exclusive privilege to sell liquor vests in the Government only under the Punjab Excise Act. The policy of prohibition is valid as it implements the Directive Principles embodied in Article 47 of the Constitution, which is as follows :

'DUTYof the State to raise the level of nutrition and the standard of living and to improve public health. 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 endeavor to bring about prohibition of the consumption except for medical purposes of intoxicating drinks and of drugs which are injurious to health.'

Right from 1956-57 the Union Territory of Delhi has been introducing measures to prohibit drinking in public places. On 2nd October, 1975 the Central Prohibition Committee adopted a twelve-point minimum programme for prohibition. This was given wide publicity. On 2nd October, 1977 the Delhi Administration accepted the Central Prohibition Committee and announced a number of measures to achieve total prohibition in Delhi by April, 1980. The impugned policy for the year 1978-79 is only a logical corolary and extension of the policy declared on 2nd October, 1977. The impugned letter gave sufficient notice to the petitioner Club before the decision not to renew the license became effective. The prohibition policy was a relevant consideration for the decision not to renew the license.

(1)The first ground of attack, namely, that a mere administrative policy cannot deprive the petitioners of their right to renewal of the license for vending liquor and that this can be done only by making a law or a rule raises the fundamental question as to whether a Directive Principle of State Policy can be enforced by executive action without resorting to the making of a law or a rule. The Constitution as a whole is not only law but the supreme law of India. It is true that a distinction can be made between those provisions of the Constitution like the fundamental rights embodied in Part Iii and certain other provisions like the Preamble and the Directive Principles of State Policy embodied in Part Iv of the Constitution which according to Article 37 'shall not be enforceable by any court'. This distinction has to be properly understood. What it means is that a writ petition cannot be filed to compel the Government to put into action every objective set out in the Preamble and to implement every directive principle in Part IV. This does not mean that the Preamble and the directive principles are mere homilies or pious platitudes which can be ignored while making state Policy either by legislation or by administrative action. Theoretically it may also be arguable that a statute cannot be invalidated by courts on the ground that it is contrary either to the Preamble or to the Directive Principles of State policy though this technical argument is fast losing its credibility and the trend of the development of constitutional law may soon make it untenable. In the initial period after the commencement of the Constitution emphasis was naturally laid on the fundamental rights as the people were eager to exercise the newly given fundamental rights to remedy the wrongs which till then could not be redressed. After the first flush was over awareness dawned on the state and the people that the fundamental rights were for the benefit of the individual meaning the common man or everyone and not merely for the benefit of the few or the privileged ones who were better placed financially to enforce them as compared to the common man or masses who were often unable to take advantage of them for lack of means. This imbalance was due to disparity of economic conditions. The emphasis thereupon started shifting from the enforcement of fundamental rights for the benefit of the few to the recognition of the State Policy in implementing the directive principles. This contrast is reflected in the change from the view expressed initially in The State of Madras v. Smt. Champakarn Dorairajan (1951) Scr 325, in which it was held that the directive principles have to conform to and run as subsidiary to the fundamental rights (per S. R. Das J.) to the views expressed in Kesavananda Bharati v. State of Kerala (1973) suppl. S.C.R. 1, and State of Kerala and another v. N. M. Thomas and others, : (1976)ILLJ376SC , V. R. Krishna lyer J. in a majority judgment has expressed this change in paragraph 134 as follows : 'KESAVANANDABharati has clinched the issue of primacy as between Part Iii and Part Iv of the Constitution. The unanimous ruling there is that the Court must wisely read the collective directive principles of Part Iv into the individual fundamental rights of Part Iii, neither part being superior to the other : Since the days of Dorairajan judicial opinion has hesitatingly tilled in favor of Part Iii but in Kesavananda Bharati the supplementary theory, treating both parts as fundamental, gained supremacy.'

(6) The decision in Smt. Indira Nehru Gandhi v. Raj Narain and another, : [1978]2SCR405 , was arrived at by enforcing the value considerations derived from the preamble and other so-called nonenforceable provisions of the Constitution. Just as Article 47 places a duty on the state to bring about prohibition. Article 351 places a duty on the Union Government to promote the spread of Hindi. The action of the Tamil Nadu legislature in appropriating funds to meet the costs of a pension scheme and the executive order of the State Government granting pensions from the said fund to anti-Hindi agitators was challenged in R. R. Dalvai v. The State of Tamil Nadu, : AIR1976SC1559 . The appellant contended that the spirit and the letter of Article 351 was violated by the said pension scheme. The Supreme Court held that the said scheme contained the vice of disintegration and fomenting fissiparous tendencies and that if any State is engaged in exciting emotion against Hindi or any other language such provocation has to be nipped in the bud because these are anti-national and antidemocratic tendencies.. -This decision is based on the enforcement of a directive in Article 351 which cannot be distinguished in its nature from the directive in Article 47. If Article 351 can support a decision, Article 47 also can do so.

(7) Comparative constitutional law also supports the enforceability of the Preamble, the Directive Principles of State Policy and such other values embodied in the Constitution. The Directive Principles in Part Iv of our Constitution have been inspired by the parallel provisions in the Irish Constitution of 1937. The Irish Judges have treated the Preamble and the Directive Principles as substantive bases for judicial decisions ; so also have the Canadian and the West German Judges. These decision's have been referred to in Comparative Constitutional Law, (1977) by Walter F. Murphy and Joseph Tannonhous, pp. 92, 670, 673, 94, 95 and 53. Even the French legal system which does not have a judicial review of legislation by a superior court enables the Constitutional Council to declare law an unconstitutional on the ground that the said law is contrary to certain principles embodied in the Constitution rather than, to any specific provision thereof. [Constitutional Protection of Equality, edited by T. Koopman, (1975), a study of Five Constitutions; a protection of Equality in French Public Law, pp. 141-142].

(8) Section 43 of the Punjab Excise Act makes it clear that the petitioner Club has no right to the renewal of its license. That section reads as follows:

'NOperson to whom a license, permit or pass may have been granted, shall be entitled to claim any renewal thereof and no claim shall lie for damages or otherwise in consequence of any refusal to renew a license permit or pass on the expiry of the period for which it remains in force.'

The relevant provisions of section 58 show that rules could be made there under to bring about partial or total prohibition. Sub-sections ( I ), (3) and (4) of section 24 take away the right of any person to possess intoxicating liquor except as permitted by a license. 'These provisions are as below:

'24.(1) No person shall have in his possession any quantity of any intoxicant in excess of such quantity as the Lieutenant Governor of Delhi has under section 5, declared to be the limit of retail sale, except under the authority and in accordance with the terms and conditions of

(A)a license for the manufacture, sale or supply of such articles; or

(B)in the case of intoxicating drugs, a license for the cultivation or collection of the plants from which such drugs were produced; or

(C)a permit granted by the Collector in that behalf.

(2)..................

(3)Alicensed vendor shall not have in his possession at any place, other than that authorised by his license, any quantity of any intoxicant in excess of such quantity as the Lieutenant Governor of Delhi has under section 5 declared to be the limit of sale by retail, except under a permit granted by the Collector in that behalf.

(4) Notwithstanding anything contained in the foregoing subsections the Lieutenant Governor of Delhi may by notification prohibit the possession of any intoxicant or restrict such possession by such conditions as he may prescribe.'

Section 26 forbids the sale of liquor except under the authority and subject to the terms and conditions of a license. None of these provisions can be attacked as being an unreasonable restriction on the fundamental right of the petitioner Club to sell liquor. For, by a series of decisions, which culminated in five-Judge Bench decision in Har Shankar and others v. The Deputy Excise and Taxation Commissioner and others, : [1975]3SCR254 , it has been held, per Chandrachud J that there is no fundamental right to do trade or business in intoxicants. The State under its regulatory powers has the right to prohibit absolutely every form of activity in ' relation to intoxicants its manufacture, storage, export, import, sale and possession- In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants (page 227 F.G). This decision' is based on an exhaustive analysis of the provisions of the Punjab Excise Act and, thereforee, fully applies to our case.

(9) If the petitioner Club has no fundamental right to vend liquor, the writ petition cannot be maintained unless the claim of the petitioner to the renewal of the license can be based on any of the provisions of the Punjab Excise Act. Since the petitioner Club has no claim to possess liquor or to sell liquor or to have the license renewed, there is no legal right for the enforcement of which the writ petition can be maintained. The question is whether the refusal to renew the license can be based on the policy of prohibition. The Punjab Excise Act is enacted not only for securing revenue to the State by the regulation of the business of liquor but also for bringing about prohibition as is shown by the relevant provisions of section 58 reproduced above. If so, the prohibition policy is a relevant consideration for refusal to renew the license of the petitioner Club.

(10) It is settled law that a statute can be implemented by the authority concerned either by framing rules or by issuing executive instructions. The reason is that unless the statute so says, the framing of rules is not a condition precedent to the enforcement of a statute. This may be illustrated from the Constitution itself. The provision to Article 309 enables the President or the Governor to frame rules to regulate the conditions of service of civil servants. Nevertheless, the terms and conditions of the services can be regulated by the issue of administrative notifications even if no rules are framed.

(11) Similarly, provisions can be made by the Government under Articles 15(3), 15(4) and 16(4) of the Constitution for helping womem and children, backward classes and scheduled castes and tribes by way of protective discrimination to enable them to achieve in reality equality of opportunity guaranteed by Articles 14, 15(1) and 16(1). Such provisions, even though apparently contrary to the fundamental right of equality of opportunity can be made either by legislation or by rules or by purely administrative instructions. The policy of protective discrimination has been enforced by the state by purely administrative instructions without framing rules or enacting legislation. For instance, in M. R. Balaji v. State of Mysore (1963) Supp. I Scr 439, the protective reservation was by way of administrative instructions. This method of implementing the policy was never objected to. At page 473 of the report, the Supreme Court observed as follows :

'IT is for the attainment of social and economic justice that Art. 15(4) authorises the making of social provisions for the advancement of the communities there contemplated even if such provisions may be inconsistant with the fundamental rights guaranteed under Art. 15 or 29(2). The context, thereforee, requires that the executive action taken by the State must be based on objective approach.'

THEreason is that the executive power of the Government is co-extensive with its rule making power. The basic principle is that the exercise of the executive power of the Government cannot be challenged by a petitioner unless he shows that such executive action contravenes any law. No such contravention has been shown to have been made by the implementation of the policy of prohibition. We are of the view, thereforee, that the Directive Principle embodied, in Article 47 can validly be implemented by executive action so long as it does not contravene any law or rule. Since the monopoly of regulating the liquor trade is vested in the Government, the executive policy of the Government must prevail as it does not trench on any one's legal rights.

(2)The Delhi Liquor license Rules, 1976 were made before the decision of the Delhi Administration was taken in 1977 to bring about prohibition in Delhi. Rule 13, thereforee, does not deal with non-renewal of the license on the ground of the prohibition policy. In the absence of prohibition policy, licensees whose licenses are not to be renewed have to be individually noticed and heard before an order of refusal to renew is passed. But this procedure has no application when a general policy of prohibition is adopted and the decision not to renew the licenses of the Club is not based on any consideration relating to the particular Club, but is based on a general policy. No question of giving notice to the individual Clubs and hearing their objections arises when a policy decision of general application is the reason for non-renewal of L-19 licenses of all the Clubs. The first answer to this contention is that Rule 13 has no application when non-renewal is based on the policy of prohibition.

EVENif it is assumed that Rule 13 has still to be complied with, then the question is whether the compliance has to be in spirit or according to the letter of Rule 13. The answer is not in doubt. Rule 13 embodies the natural justice principle of hearing the party before an adverse order is passed against him. It is well settled that compliance with natural justice must be looked at from the view point of substance and not of technicality. The very object of natural justice is that technicality should not defeat justice and that substantial justice must be done. The impunged letter conveys to the petitioner Club that in accordance with the prohibition policy all licenses in Form L-19 for retail vend of foreign liquor at a Club are to be discontinued with effect from 1-4-1978. Mrs. Pappu for the petitioners, contended that this is a decision already arrived at without hearing the petitioners. That would be merely a technical way of looking at it. In substance the impunged letter is a declaration of the intention of the Government communicated to the petitioner Club in advance. The non-renewal was to be effected from 1-4-1978, while the petitioner Club was informed of the intention of the Government on 15-3-1978. The petitioner Club had thus 15 days time to represent to the Government against the implementation of the intention communicated in . the impugned letter. No particular time is prescribed in Rule 13 to be given to the petitioner Club to represent against the intention of non-renewal. In fact. Rule 13 itself contemplates that the decision . of non-renewal should be taken before the objections of the licensee concerned are heard. The decision conveyed by the impugned letter is, thereforee, fully in accordance with Rule 13. In view of the fact that the petitioner Club could have little or nothing to say against the policy of prohibition, there was very little chance of the petitioner persuading the Government not to follow the policy of prohibition. In these circumstances the period of 15 days given to the petitioner Club was sufficient notice and the requirements of Rule 13 have been satisfied in spirit and substance. The mere fact that the impugned letter is not called the notice and does not invite objections from the petitioner Club is not decisive. The petitioner Club knew well that there was time for putting up objections if the petitioner Club wanted to do so. In fact the petitioner Club has filed a copy of objections put up by many Clubs to dissuade the Government from the policy of prohibition. No date is found on this copy of representation to the Government, But it shows that the Clubs had the opportunity of making a representation and they availed themselves of it. If so. Rule 13 does not invalidate the impugned letter.

(3)What is a relevant consideration for the issue of an order by the Government? If the impugned letter is issued in exercise of the executive power given by a statute it is the statute which is to be looked into to find out the considerations which would be relevant in issuing the said order. The whole scheme of the Punjab Excise Act is to take away from the individuals the right to trade in liquor and to vest it in the Government. Absolute powers are given to the Government to prohibit possession and sale of liquor by persons other than the Government. Specific intention of the legislature to bring about prohibition through the instrumentality of the Act is shown by section 58, whereunder rules to enforce that policy can be made. If the Government has the monopoly of regulating liquor trade it is not necessary for the Government to make rules to bring about prohibition. All that the Government has to do is to refuse to renew the licenses or to restrict the sale possession and consumption of liquor by appropriate changes in the licensing conditions. All this is done under the Act and the Rules. No further rules need be made. The prohibition policy is not only relevant but a fundamental consideration governing the executive action of the Government. This last contention also, thereforee, fails.

(12) Mrs. Pappu for the petitioners also urged that the licensing function has been recognised by the court to be a quasi-judicial function. The licensing authority has to consider the merits of the case of the petitioner Club as to whether its license should be renewed or not and if the state Government imposes its own view on the licensing authority then the decision not to renew the license is vitiated.

(13) While it is true that normally the licensing function is administered quasi-judicially, it is not correct to say that the quasi-judicial authority must not take into consideration the policy enunciated by the Government. It is only when quasi-judicial authority has to decide on certain limited consideration the issue before it that it is barred from deciding the said issue on other consideration even if such extraneous considerations consist of a Government directive. But neither under Rule 13 nor un,der any other rule or provision of the Punjab Excise Act is the licensing authority limited to certain fixed criteria in renewing or refusing to renew a license. Obviously the provisions of the statute and the rules furnish the guidelines in renewing or not renewing the license. Since the statute itself contemplates enforcement of a prohibition policy and such policy can be declared administratively the licensing authority was bound to take into consideration the administrative declaration of the policy and give effect to it in the performance of its function. No fault can be found with it on this account.

(14) For the above reasons, the writ petition is dismissed without order as to costs.


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