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Ajudhia Distillery and anr. Vs. Lt. Governor and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberCivil Writ Petition No. 1354 of 1984
Judge
Reported in1984(7)DRJ244
ActsDelhi Liquor license Rules, 1976 - Rule 17
AppellantAjudhia Distillery and anr.
RespondentLt. Governor and ors.
Advocates: S.N. Marwah,; K.C. Dua,; Y.K. Sabharwal,;
Cases ReferredHar Shankar v. Deputy
Excerpt:
.....rules for imposing condition no. 4, no question of infringement of any rule arises.; b. delhi liquor license rules, 1976--rule 17--does not come in conflict with condition no. 4 of the tender notice which provides that license l-9 and license l-1a can not be given to the same person.; it is well settled that though the government cannot amend or supersede a rule by any instructions but if the rules are silent, the government can fill the gap by issuing instructions not inconsistent with the rules framed vide sant ram sharma v. state of rajasthan, air 1967 sc 1910. it is precisely what has been done in the present case by filling up a lacuna in the rules. we thus find no conflict between condition no. 4 and rule 17. the challenge to the validity of condition no. 4 thereforee..........holding any licenses excepting the ones mentioned therein has now been modified in the present rule rule so that there is now no bar on the distillery itself holding all the three licenses l. i, l. 1 a and l. 9 which if correct would mean that if a principal can hold these licenses, there is no reason why principal and agent both cannot hold the same. but this assumption is erroneous. while under the unamended rule prohibition was against a holder of a license only; the prohibition now has been broadened to include a person interested an distillery or brewery which expression includes every person interested an the business of a distillery including an agent. the effect of amendment of rule 17 in fact is that it covers not only the distillery but also even the employees and agents of.....
Judgment:

Sachar, J.

(1) This petition challenges the grant of license in form L-IA issued by the Delhi Administration for the year 1984-85 to respondent No. 4. We may note that though the petition had challenged the grant of license L-IA. to one other party also namely respondent No. 8 the grievance with regard to that failed at the admission stage. We are thereforee concerned only with regard to the validity of the grant made in favor of respondent No. 4.

(2) The Punjab Excise Act of 1914 as extended to the Union Territory of Delhi deals with the possession, sale amongst others in regard to the intoxicants including liquor. Section 26 provides that no liquor shall be bottled for sale and no intoxicant shall be sold, except under the authority and subject to the terms and conditions of a license granted in that behalf. Section 35 further provides that subject to the rules made by the Excise Commissioner under the powers conferred by this Act the Collector may grant licenses for the sale of any intoxicant within his district. Section 58 of the Act empowers the Lt. Governor to make rules for the purposes of carrying out the provisions of the Act. The said rules have been framed and are known as Delhi Liquor license Rules, 1976 (to be called the Rules) which have been amended from time to time.

(3) This petition relates to the grant of license L-IA for the year 1984-85 i.e. from. 1-4-1984 to 31-3-1985. Commissioner of Excise Delhi on behalf of the President of India invited tenders for the grant of license in form L-IA in wholesale for the period 1-5-1984 to 31-3-1985. Tenders were invited from working distilleries/breweries/their authorised agent./L-1 licensees. The last date for receipt of the tenders was 25-4-1984 and they were to be opened on the same day. The terms and conditions for the grant of L-IA license for this period were also issued. It is not necessary to refer to all the conditions excepting the ones which are relevant for the decision of this petition.. Condition No. 4 reads as under :

THE Excise Department may grant not more than five L-9 licenses for the licensing period for the wholesale supply of country liquor to the Government for sale to the aforesaid retail vends. Persons granted licenses in form L-9 or persons interested in the business of licenses in form L-9 will not be eligible for licenses in form L-IA except for the supply of bear to Government. (Emphais supplied).

Rule 1 of the Rules lays down the class of licenses and authorities empowered to grant and renew licenses. It includes license L. 1 (wholesale vend of foreign liquor to L-2 and L-l licenses only).

(4) L1A deals with wholesale vend of foreign liquor to Government only for sale through its vends.

(5) L-9 wholesale vend of country liquor.

(6) Tenders had been invited for year 1984-85 for the grant of liences in the form of L-9 and L-IA. For L-9 applications were to be filed by 24-4-1984 and for L-IA applications were to be filed by 25-4-1984.

(7) It is common case that respondents No. 5 Modi Distillery, is the holder of license in form L-9 for the years 1983-84 and also for the year 1984-85. It is also common case that respondent No. 4 is a holder of L-l license for the years 1983-84 and 1984-85. The petitioner was one of the tenderers who had applied for license in form L-1A. The Delhi Administration had received a number of tenders quoting various rates. There were some negotiations later on and as a result thereof five tenderers including respondent No. 4 who were found eligible and who had agreed to reduce the rates to the lower figure suggested by the Delhi Administration were granted licenses. Though the petitioner had applied but has not been granted a license. Hence the writ petition.

(8) The challenge to the grant of license to respondent No. 4 is on the ground that it is an agent of respondent No 5. Now Explanationn to Rule 17 says that for the purposes of this rule a person interested in any distillery or brewery includes every person interested in the business of such distillery or brewer as. a member of a cooperative society, director, partner, agent or employee. If, thereforee, the respondent No. 4 is an agent of respondent No. 5 who is a holder of license in form L-9, so runs the argument, the former would not be eligible for grant of license L-1A in terms of prohibition in condition No. 4 of the tender. Mr. Sabharwal the learned counsel for the Delhi Administration does not dispute that if respondent No. 4 was an agent of respondent No. 5, the former would be ineligible for the grant of license in form L-1A. It is however maintained that respondent No. 4 had not been granted a license as an agent of respondent No. 5 but had been granted a license in the capacity of L-l licensee. It was stated that the letter of appointment of respondent No. 4 to respondent No. 5 dated 6-4-1984 had been examined and it was found by the Administration that the nature of contract is not of an agent but that of a distributor. The plea was taken that there is a difference between the status of an agent and distributor and in terms of the agreement respondent No. 4 being distributor was eligible and hence was granted a license in form L-1A. Respondent No. 4 in his affidavit has also taken a similar plea. He denied that it was an agent of respondent No. 5 and stated that its relationship as per agreement of 6-4-1984 was that of principal and distributor and that he sold the goods in his own name and in his own authority. The positive stand taken is that the answering respondent had filed the tenor as licensee in form L-1 being a distributor and not as an agent of respondent No. 5.

(9) Now the basis for the petitioner's averment that respondent No. 4 applied as an agent of Respondent No. 5 is apparently supported by the petitioners naming Modi Distillery against Column No. 1 of the application form .which requires information of the tenderer if not a distillery to name distiller of which tenderer is an agent. Mr. Rao contended that this was by way of an inadvertence and referred us to the agreement of 6-4-1984 to show respondent No. 4 was a distributor and not an agent of respondent No. 5. We had called the original record,Itrappeasr that this aspect was examined by the concerned authorities who were of the view that the arrangement between respondents No. 5 and 4 was that of distributor and not as an agent. It also noted that in the previous years also respondent No. 4 had been granted L-1A license and the arrangement between respondents 5 and 4 was in the same terms. Mr. Marwah the learned counsel for the petitioner sought to challenge the correctness of this opinion by the Delhi Administration by seeking to urge that notwithstanding that the agreement describing respondent No. 4 as a distributor, he in fact was an agent of respondent No. 5. We do not think it necessary to decide this point though prima facie we cannot fault the Delhi Administration for holding that relationship evidenced by agreement of 6-4-1984 would show that of a distributor and not as an agent ; more so when we are not sitting in appeal in these proceedings under Article 226 of the Constitution. More so is the reason for not deciding this point, when the petitioner is entitled to succeed even on the acceptance of the admitted stand of the respondent that respondent No. 4 had filed the tender in his capacity as a licensee in form L-l. But this fact instead of helping the respondent No. 4 incredibility makes the grant of L-1A license to him totally illegal. Respondent No. 4 being not a distillery and also denying to be an authorised agent of distillery could only apply in the capacity of L-l license in terms of Tender notice limiting the categories who could apply. Now Rule 4(ii) provides that license in form L-l shall only be granted to distilleries/breweries/their agents. No distillery/brewery shall be permitted to have more than one agent. Hence license in form L-l could not have been obtained by respondent No. 4 excepting as an agent of some distillery because Rule 4(ii) limits the grant of such a license either to the distillery or brewery of their agents. Respondent No. 4 thereforee necessarily had to be an agent of some distillery to be able to be eligible for grant of a license in form L-l. We have looked into the entire record. From that we find that though for 1983-84 respondent No. 4 had obtained license L-l as agent of M/s. Shivalik Distillery the position for 1984-85 is totally different. Record shows that respondent No. 4 applied for the grant of license in form L-l for the year 1984-85 on 20-4-1984. In para 2 of the application it is stated that M/s. Balbir & Sons have been appointed as an agent of M/s. Modi Distillery, Modi Nagar, U.P. and letter of appointment is enclosed. A declaration was given that the statement made is' correct to the best of knowledge. There is also a certificate from M/s. Modi Distillery dated 17-4-1984 that M/s. Balbir & Sons are their sole selling agents for all their products of Indian made Foreign Liquors including 50 degree Rum for Country liquor vends for the year 1984-85 and 1985-86 and that this is irrevocable. The certificate is said to have been issued since their agents are to secure liquor licenses in Delhi for the mentioned years. It is also shown that Modi Distillery are the distillery from which particular brand supplied by respondent No. 4 were to be imported. As a matter of fact to be fair to Mr. Rao and Mr. Lekhi the learned counsel appearing for the respondent No. 4, they fairly conceded that respondent No. 4 applied and obtained grant of license in form L-l as an agent of respondent No. 5 Modi Distillery but strenously contended that this position has no effect on the validity of the grant of L-1Alicense cannot agree. Had the respondent No. 4 applied for the grant of L-l license in his capacity as agent not of respondent No. 5 but of some other distillery which did not hold a license in form L-9 be would have remained eligible for the grant of L-1Alicense. But the admitted position is that respondent No. 5 hold license L-9. Concededly respondent No. 4 has obtained L-l license for 1984-85 in his capacity as an agent of respondent No. 5 and it is this that makes him ineligible for.grant of license in form L-1A in terms of condition No. 4.

(10) An attempt was made by Mr. Rao seeking to get out of the rigour of condition No. 4 by urging that L-1A license was issued to respondent No. 4 on 2-5-1984 while L-9 license was issued to respondent No. 5 on 3-5-1984. The argument being that on 2-5-1984 the respondent No. 4 could not be said to be interested in the business of the holders of a license in form L-9 because respondent No. 5 was issued the license only on 3-5-1984. The argument is misconceived. Both the licenses though issued on different dates are operative from 1st May, 1984 to 31st March, 1985. When condition No. 4 makes a person ineligible for the grant of L-1A license if he is interested in holder of L-9 licensee relevant period is obviously from 1st May, 1984 to 31st March 1985 for which L-IA is being issued. Now as for the very same period L-9 license is held by respondent No. 5 the rigour of the condition No. 4 cannot be avoided on the superficial ground that the date of issue of these two licenses is different, when in fact both of them operate from the same date i.e. 1st May, 1981. Moreover, it is important to note that respondent No. 5 hold L-9 license for the previous year also. Faced with this difficulty Mr. Rao urged that condition No. 4 of Tender notice was invalid as being repugnant to Rule 17 which provides that no person interested in any distillery or brewery shall hold any license under these rules except:

(A)a license in form L-l and L-1A for the vend for foreign liquor by wholesale;

(B)a license in form L-9 for the sale vend of country liquor.

(11) The argument of the counsel for the respondent No. 4 was that in terms of Rule 17 it is permissibly for an agent or any person interested in a distillery to himself hold all the three licenses and thereforee it would be anomalous to hold that a person like respondent No. 4 cannot hold L-1A licenses simply because his principal that is respondent No. 5 is a holder of license L-9. The further argument is that under this Rule 17 respondent No. 5, adistillery, could itself hold a license in form L-9 as well as L-1A and L-l there is no equity in holding that respondent No. 4 is ineligible to hold a license in form L-1A simply because respondent No. 5 holds a different license L-9. We are of the view that the assumptions underlying the argument are misplaced. Mr. Lekhi proceeds on the basis that the unamended Rule 17 which prohibited a person holding a license for distillery from holding any licenses excepting the ones mentioned therein has now been modified in the present rule rule so that there is now no bar on the distillery itself holding all the three licenses L. I, L. 1 A and L. 9 which if correct would mean that if a principal can hold these licenses, there is no reason why principal and agent both cannot hold the same. But this assumption is erroneous. While under the unamended rule prohibition was against a holder of a license Only; the prohibition now has been broadened to include a person interested an distillery or brewery which expression includes every person interested an the business of a distillery including an agent. The effect of amendment of Rule 17 in fact is that it covers not only the distillery but also even the employees and agents of the distillery. Amended Rule 17 has thus cast a wider not than the tin amended rule. Rule 17 nowhere says that all these three licenses namely L-l, L-IA and L-9 can be held at the same time by a per son interested in distillery. Rule 17 rather is a bar against such a person from holding any of the licenses mentioned in Rule I which are above 20 in numbers but carves out an exception by providing that three of them may be held by such a person. But it goes no further than providing for mere eligibility to hold any of these three licenses. This rule by itself gives no right to any person interested in distillery to hold all the three or any two of them together. As to when and under what circumstances any of these three licenses can be held together or not is not to be found in Rule 17 which is silent on this aspect. Nor is there any other rule providing for this aspect. That is why condition No. 4 which prohibits a person like respondent No. 4 from being eligible for grant of L-1A license because he is an agent of Modi Distillery which holds license L-9 cannot be said to be in any way in conflict with Rule 17 or any other rule. Rather condition No. 4 seems to be in accord with the scheme and the spirit of 1976 Rules. Rules 5 provides that no person or his authorised agent will be eligible to hold more than one license from the ones mentioned therein. Thus there is prohibition in person holding both L-l and L-9 licenses. It is true that in Rule 5 there is no prohibition as such of a person holding L-1A and L-9 licenses but it does suggest that the scheme of the rules is to prevent more than one license being held by a person or his agent. Similarly Rule 15 provides that no license shown in column No. I of the table may be held by a person holding or in any way connected with the persons holding any of the licenses shown against them in column No. 2. Thus in item No. 3 licenses in form L-9 and L-1O for the wholesale or retail vend of country liquor respectively may not be held in conjunction with any license for any dealings in foreign liquor. Now respondent No. 5 being a licenses in form L-9 it follows that it cannot hold a license in L-1A which deals in foreign liquor. Respondent No, 4 is certainly a person having interest in respondent No. 5 being his agent, in terms of Explanationn to Rule 17. Thus for the same reason respondent No. 4 could not hold both L-9 and L-1A licenses together. Condition No. 4 has only provided the same prohibition, namely that an agent (like respondent No. 4) is not eligible for grant of L-1A license if his principal (respondent No. 5) holds L-9 license. There would appear to be justification for such a prohibition in not permitting a licenses of L-9 (wholesale vend of country liquor) to be combined with L-l license which is for the wholesale vend of foreign liquor to L-2 and L-l or with license of L-1A which is for the wholesale vend of foreign liquor to government only for sale through its vends. The rationale would seem to be that country liquor and foreign liquor which are two distinct items may not be dealt with by the same licensee or any person interested in the same license because of the greater possibility of risk that there may be of mixing one with the other and which would be difficult to prevent and keep proper check on such undesirable activity. A reference to Rule 15 item No. I also would show that vend of foreign liquor (1.1) cannot be subjoined with a license in form L-9 and L-10 for the whole sale or retail vend of country liquor. The idea being that those dealing with foreign liquor themselves or through their agents may not have anything to do with the country liquor. It is in pursuance of this spirit of the rules that condition No. 4 in the tender notice provided that a person interested in the business of holder of license in form L-9 will not be eligible for grant of license in form L-1A, Now there being no rule which gives a right to a person to combine all the three licenses mentioned in Rule 17, it is apparent that this lacuna could be filled up by the authorities concerned in view of the undoubted statutory power given by section which provides that no intoxicant will be sold except-subject to the terms and conditions of license granted in that behalf. There being thus no impediment in the rules for imposing condition No. 4, no question of infringement of any rule arises. It is well settled that though the government cannot amend or supersede a rule by any instructions but if the rules are silent, the government can fill the gap by issuing instructions not inconsistent with the rules framed vide Sant Ram Sharma. State of Rajasthan : (1968)IILLJ830SC . It is precisely what has been done in the present case by filling up a lacuna in the rules. We thus find no conflict between condition No. 4 and Rule 17. The challenge to the validity of condition No. 4 thereforee fails. In that view of the matter it is not necessary to discuss C.W. 1219 of 1983; Sirshadi Lal Enterprises Ltd. v. Union of India and other, decided on 8-8-1983 which was relied upon by Mr. Sabharwal the learned counsel for the Delhi Administration to urge that Section 26 and 32(1) empower the authorities to lay down conditions which may even be repugnant to the rules, as this eventuality does not arise for consideration before us.

(12) Mr. Sabharwal had fairly conceded that in view of the admitted stand of respondent No. 4 being an agent of respondent No. 5 condition No. 4 would cover the case and the validity of the grant of license in form L-1A could not be sustained by him.

(13) There is another reason why the challenge to condition No. 4 urged by the respondent No. 4 cannot be sustained. It is well settled that No person has any absolute right to sell liquor that the purpose of the Act and the rules is to control and restrict the consumption of intoxicating liquors, such control and restriction being obviously necessary for the preservation of public health and morals and to raise revenue, vide State of Assam v. A.N. Kidwai, : [1957]1SCR295 . The Supreme Court has held and reiterated that selling intoxicant liquor is not a privilege of the citizens and that license fee fixed is the price or consideration which the Government charges to the licensees for parting with its privileges, See : Har Shankar v. Deputy E & T Commissioner, : [1975]3SCR254 . In this connection it is to be'emphasised that respondent No. 4 had applied in terms of tender notice which contained condition No. 4 and he must be deemed to have accepted all the conditions subject to which the tenders were invited. The present attempt of respondent No. 4 to urge that the grant in his favor should be up-held even if it is in violation of condition No. 4 is impermissible.

(14) A somewhat similar conduct of the liquor licensee who offered bids with full knowledge of the terms and conditions on which license would be granted, and there after tried to wriggle out of such obligations was deprecated by the Supreme Court with the observations :

THE terms and conditions of auctions were announced before the auctions were held and the bidders participated in the auctions without a demur and with full knowledge of the commitments which the bids involved. The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Government. The Government's acceptance of those bids was the acceptance of wiling contract between the bidders and the Government became concluded and a binding agreement came into existence between them.' (Har Shankar's case).

Respondent No. 4 cannot be permitted to challenge the power to impose condition No. 4 of the very authority under whose instrument it claims it obtained the license. It cannot blow hot and cold.

(15) It is needless to discuss this aspect any further as on merits we have already found that respondent No. 4 was not eligible for the grant of license in form L-IA because of the prohibition contained in condition No. 4 of the Tender which we hold to be valid.

(16) The result is that we would allow the writ petition and issue a writ of certiorari quashing the order granting license in form L-IA to respondent No. 4 for the year 1984-1985. In the circumstances of the case there will be no order as to costs.

(17) We may note that at the time of admission of the petition we had permitted the Delhi Administration to invite fresh tenders for the L-IA license only. Of course, implementation was not to be done without further orders from this court.

(18) We had permitted the issue of one tender for the reasons that if the writ petition is allowed and the Delhi Administration wishes to call for another tender, there may be saving of time. We understand that tenders had been issued. We wish to make it clear that we are saying nothing about as to how the tender is to be dealt with. The Delhi Administration may deal with it in accordance with the rules on the subject.

(19) We may also mention that we had permitted respondent No. 4 vide order dated June 1, 1984 to operate for three weeks. Later on in an appeal before the Supreme Court it had been directed that it can make supply till 9th July, 1984. As hearing was not concluded we had permitted respondent No. 4 vide our order dated 10-7-1984 to continue to make supply till further order by this court. As we are not allowing the petition, the interim direction given on 10th July, 1984 permitting the supply to be made by respondent No. 4 naturally cannot continue and is hereby vacated.


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