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Foreign Liquor (Compounding,Blending and Bottling) Rules, 1975 (for short “1975 Rules”) read with Section 14 of the Abkari Act (for short “the Act”). – whether the High Court can issue a Writ of Mandamus under Article 226 of the Constitution of India, directing the State to part with its exclusive privilege, in the matter of granting licence for establishing distilleries under the Foreign Liquor (Compounding, Blending and Bottling) Rules, 1975 (for short “1975 Rules”) read with Section 14 of the Abkari Act (for short “the Act”). = The Respondent, in our view, could lay a claim only if it establishes that a preferential treatment has been meted out to M/s Amrut Distilleries, Bangalore and M/s. Empee Distilleries, Madras while granting licences for establishing the respective distillery units in the Palakkad District on the ground of discrimination violating Article 14 of the Constitution of India. Respondent has never challenged the distillery licences granted to them, but only prayed for another licence for it as well which, in our view, cannot be claimed as a matter of right. Citizens cannot have a fundamental right to trade or carry on business in the properties or rights belonging to the State nor can there be any infringement of Article 14, if the State prefers other applicants for the grant of licence, during the pendency of some other applications, unless an applicant establishes a better claim over others.= learned single Judge as well as the Division Bench of the High Court have overlooked those vital factors while issuing a Writ of Mandamus directing the State Government/Commissioner to grant distillery licence to the respondent for setting up of a new distillery in the Palakkad District, thinking that the impugned order is nothing but old wine in new bottle. We are informed, after 1998, not even a single licence has been granted by the State Government/Commissioner for establishing distillery units anywhere in the State. That being the factual and legal position, we are of the view that the learned single Judge as well as the Division Bench of the High Court was not justified in issuing a Writ of Mandamus directing the issuance of a distillery licence to the respondent. 35. We are, therefore, inclined to allow this appeal and set aside the judgment of the learned single Judge and affirmed by the Division Bench of the High Court. Ordered accordingly.Page 34 34 However, in the facts and circumstances of the case, there will be no order as to costs.

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Secretariat building, Government of Kerala, India

Secretariat building, Government of Kerala, India (Photo credit: Wikipedia)

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1642 OF 2013
[Arising out of SLP (Civil) No. 9098 of 2009]
State of Kerala and Others .. Appellants
Versus
Kandath Distilleries .. Respondent
J U D G M E N T
K. S. RADHAKRISHNAN, J.
1. Leave granted.
2. We are, in this appeal, concerned with the question whether
the High Court can issue a Writ of Mandamus under Article 226 of
the Constitution of India, directing the State to part with itsPage 2
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exclusive privilege, in the matter of granting licence for
establishing distilleries under the Foreign Liquor (Compounding,
Blending and Bottling) Rules, 1975 (for short “1975 Rules”) read
with Section 14 of the Abkari Act (for short “the Act”).
3. M/s Kandath Distilleries, respondent herein, claimed to have
submitted an application dated 12.1.1987 before the
Commissioner of Excise for a licence to establish a compounding,
blending and bottling unit in the Palakkad District. Few others
had also filed similar applications for licence for setting up
distillery units in the State of Kerala. All of them were directed to
first obtain the approval of the Government of India for the setting
up of new blending and bottling units and, thereafter, to approach
the State Government. This Court, however, vide its judgment
dated 29.1.1997 in Writ Petition No. 322 of 1996 (Bihar
Distillery and Another v. Union of India and Others) took
the view that the power to permit the establishment of any
industry engaged in the manufacture of portable liquors, including
Indian Made Foreign Liquors (IMFLs), beer, country liquor and
other intoxicating drinks is exclusively vested in the respectivePage 3
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State Governments. Further, it was also held that the power to
prohibit and/or regulate the manufacture, production, sale,
transport of consumption of such intoxicating liquors is equally
that of the States.
4. We notice, during the year 1998 and prior to that, the
Commissioner of Excise and the State Government had received
large number of applications for setting up of distillery units in
various parts of the State. The Commissioner of Excise or the
State could not have entertained all those applications and
granted the licences for the setting up of large number of
distillery units in the State. The State Government, however,
entertained four applications favourably and accorded its
approval under Section 14 of the Act. The State Government, vide
GO (Rt.) No. 291/98/TD dated 20.5.1998, examined the
application submitted by M/s Amrut Distilleries in detail and
granted approval for issuing a licence by the Excise Commissioner
for the establishment of a distillery unit for the manufacture of
IMFLs at Kanjkode village in the Palakkad District. The
Government also, vide its order dated 6.8.1998, examined thePage 4
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application of M/s Empee Distilleries, Madras, and accorded
approval for the grant of licence by the Excise Commissioner for
establishing a distillery unit at Kanjkode village in the Palakad
District. The application submitted by M/s K. S. Distilleries,
Kannur was also considered by the State Government and
granted permission to the Excise Commissioner to issue a licence
for a distillery unit to be established at Kannur, vide order dated
18.8.1998. The application of M/s Elite Group of Companies was
also favourably considered by the Government and accorded
permission to the Excise Commissioner for issuing the necessary
licence for establishing a distillery unit at Trichur.
5. M/s Kandath Distilleries (respondent) having noticed that its
application submitted in the year 1987 for setting up the unit in
the Palakkad District was not considered, filed a Revision Petition
before the Minister for Excise on 22.11.1998 to consider its
application as well for the grant of licence for establishing a
distillery unit in the Palakkad district, though it had not raised any
dispute with regard to the grant of other two distillery licences for
setting up the units in the Palakkad District.Page 5
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6. We notice that the Excise Commissioner/State Government
had received, during the year 1998 and prior to that, large
number of applications for licences for establishing distillery units
in various districts in the State of Kerala. The Government,
therefore, constituted a Scrutiny/Selection Committee to shortlist
the applications received for setting up of IMFL Units, as per G.O.
(Rt.) No. 157/99/TD dated 3.3.1999. The Government considered
the recommendations of the Committee in detail and, vide G.O.
(Rt.)/689/99/TD dated 29.9.1999, took a policy decision not to
grant any more licences for setting up the distillery units in any
part of the State. The order was communicated to the respondent
by the Joint Excise Commissioner vide his letter dated
11.11.1999.
7. Respondent then preferred O.P. No. 7727 of 2000 before the
High Court to quash the above mentioned Government order
dated 11.11.1999 contending that its application also should have
been considered along with the applications submitted by M/s
Amrut Distilleries, Bangalore, M/s. Empee Distilleries, Madras, M/s.Page 6
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K. S. Distillery, Kannur and M/s. Elite Group of Companies,
Thrissur, in the year 1998. Respondent, however, did not
challenge the licences granted for establishing the units in the
Palakkad District, the very same district where it had applied for a
licence. Learned single Judge quashed the letter dated
11.11.1999 issued by the Joint Excise Commissioner and directed
the State Government to consider the application submitted by
the respondent in the light of the conditions prevailing in the year
1998 vide his judgment dated 23.6.2004.
8. The Excise Commissioner heard the respondent’s
representative on 18.10.2004 and, after obtaining the views of
the State Government, rejected the application based on G.O.
(Rt.) No. 689/99/TD dated 29.9.1999. Aggrieved by the
communication received from the Excise Commissioner, the
respondent filed a Representation on 20.2.2005 before the State
Government, which was rejected by the Government vide its
communication No. 4493/G3/2005/TD dated 1.9.2005.Page 7
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9. Respondent then challenged the above mentioned orders by
filing a Writ Petition No. 29092 of 2005. Learned single Judge vide
his judgment dated 25.1.2006 quashed the above mentioned
orders and passed the following order:
“So, when this Court directed the Government to
consider the claim of the petitioner under Section 14 of
the Abkari Act, with reference to the conditions obtained
in 1998, the Government decided the matter on the basis
of the G.O. issued in 1999. So, the above quoted decision
of the Government under Section 14 is unsustainable. It
is declared so. Since Ext.P12 is passed, based on the
above quoted communication, it is quashed. Though the
petitioner raised several contentions in Ext.P13 appeal,
none of them was considered in Ext.P14. Accordingly,
Ext.P14 is also quashed. The Government is directed to
reconsider the matter concerning grant of sanction under
Section 14 of the Abkari Act in accordance with law in the
light of the directions in Ext.P11 judgment and also the
above observations contained in this Judgment, within
two months from the date of receipt of a copy of this
Judgment.”Page 8
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10. State Government, in pursuance to the directions given by
the learned single Judge in Writ Petition No. 29092 of 2005, again
considered the matter and took the view that the Government has
to make an “independent assessment of eligibility” of the
applicant for the grant of licence. Holding so, the Government
passed an order on 16.3.2006. The operative portion of the order
reads as under:
“Whenever, applications for Distillery &
Compounding (Blending & Bottling) units are received,
they are processed separately. The decision taken in
each application may be based on the facts & the
circumstances akin to the individual application and may
not be a common decision. Licenses were given on the
applications of M/s Amrut Distillery, Palakkad, Empee
Distillery, Palakkad, Elite Distillery, Trissur & KS Distilery,
Kannur during the period as alleged by the petitioner. At
the same time applications from Kandath Distillery, S.R.
Distillery, Sree Chakra Distillery, Rajadhani Distilleries etc.
were rejected. Government cannot grant the privilege to
all those who had applied for such licence, for a host of
reasons. Restrictions have to be imposed, which is
permissible under the Constitution. The Government has
with effect from 29/9/99 issued Government OrderPage 9
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deciding not to grant fresh licenses for Distillery and
Compounding (Blending & bolting) unit. The granting of
licence for the Distillery & Compounding (blending &
bottling) units is a prerogative of the Government and not
the right of the petitioner. The directions and the
communications from the offices to the petitioner are only
the statutory requirements for processing the application
and do not cast any right or claim on the petitioner.
In the above circumstances, Government finds no
reasons to reconsider the request of the petitioner under
section 14 of the Abkari Act. Request of the petitioner is
settled accordingly, keeping in abeyance of the judgment
of the Hon’ble High Court read 5
th
paper.
The Excise Commissioner will pass fresh orders on
Ext.P1 within the time limit prescribed by the Hon’ble
High Court.”
11. Respondent, noticing that the Government had not followed
the directions given by the High Court while passing the order on
16.3.2006, filed Contempt Case (C) No. 521 of 2006 before the
High Court. Learned single Judge of the High Court felt that the
State Government should have considered, the claim for licence,
in the light of the conditions, which existed in the year 1998 andPage 10
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could have granted permission or rejected it, but referred to
irrelevant matters. Learned single Judge felt that the
Government had prima facie committed contempt of court by
ignoring the directions contained in its earlier judgment in O.P. No.
29092 of 2005 and passed an order on 29.6.2006, placing the
matter before the Division Bench of the High Court.
12. The Division Bench of the High Court directed personal
appearance of the Secretary to the Government who appeared
before the Court on 9.8.2006 and offered unconditional apology
and submitted that the order dated 16.3.2006 would be
withdrawn and fresh orders would be passed, in conformity with
the judgment in O.P. No. 29092 of 2005. The contempt case was
accordingly closed on 12.9.2006.
13. The Government, later, passed a detailed order dated
11.10.2006. The operative portion of the same reads as follows:Page 11
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“Government has examined the matter in detail
with all available records and filed in the light of
directions from the High Court of Kerala and it is found
that partnership came into existence only on 10.4.91 as
per clause no. 3 of the partnership deed. Therefore, the
application dated 12.11.87 cannot be treated as an
application submitted by the partnership firm. Further,
the alleged application dated 12.11.87 was already
disposed of by the Board of Revenue by letter No. XC3-
32739/93/L.Dis dated 28.6.1994. thereafter, it is stated
that the petitioner made an application on 21.11.1998
requesting to reconsider the application alleged to have
been submitted by them on 12.1.1987. It is contended
that in the year 1998, four licenses were granted on
20.5.1998, 06.08.1998 and 20.09.1998 respectively.
From the files it is seen that the above licences were
granted on applications which were submitted during
1995, 1996 and 1997 respectively.
From 3.2.1998 to 21.11.1998 Government received
52 applications for establishing compounding, blending
and bottling units of Indian made foreign liquor. The
Excise Commissioner as per letter No. XC3-15555/98
dated 25.11.1998 reported that there was an
unprecedented flow of application and the Government
constituted a scrutiny committee as per GO (Rt) No.Page 12
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157/99/TD dated 3.3.1999 to shortlist the application.
As on 21.11.1998 the date on which the petitioner
made the application for compounding blending and
bottling licence there were other 52 applications and
Government have not considered any one of them.
Moreover, the application put in by the partnership firm
byname M/s. Kandath Distilleries on 12.1.1987 cannot
be treated as an application put in by the firm based on
a partnership deed which came into existence on
10.4.1991 as per Clause 3 of the Partnership Deed.
In the above circumstances the application put in
by M/s Kandath Distilleries on 21.11.1998 does not
merit consideration for approval by Government based
on the factual conditions available as on 21.11.1998.”
14. M/s Kandath Distilleries then challenged the above
mentioned order by filing Writ Petition No. 2708 of 2007. Learned
single Judge took the view that no reason other than the
constitution of the firm and the date of its effect, was noticed in
the impugned order dated 11.10.2006 for refusing the licence and
that there was no other ground found by the Government to
refuse the licence. Consequently, learned single Judge quashedPage 13
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the Government order dated 11.10.2006 and directed the State
Government to grant licence applied for vide application dated
12.1.1987.
15. The State Government, aggrieved by the said judgment, filed
a Writ Appeal No. 716 of 2008. The Division Bench felt that the
State Government had ingenuously made a classification to weed
out respondent to the effect that, from 21.11.1998 onwards, State
had a different policy. The Division Bench noticed that the High
Court had directed the State Government to consider its
application submitted as early as in 1987. Further, it was also
pointed out that the State Government had no case that the
respondent applicant was not suitable, nor such contention had
ever been taken in the previous litigations. Further, it was also
held by the Division Bench that similarly situated persons had
already been granted licences long back. In such circumstances,
the Division Bench held that there was no illegality in the
directions given by the learned single Judge giving a positive
direction to grant the licence, which was necessary to uphold thePage 14
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majesty of rule of law. The appeal filed by the State Government
was accordingly dismissed. Aggrieved by the same, the State
Government has come up with appeal.
16. Shri C. S. Rajan, learned senior counsel appearing for the
State, submitted that the learned single Judge as well as the
Division Bench of the High Court has committed a grave error
while exercising their jurisdictions under Article 226 of the
Constitution of India in giving a positive direction to grant a
distillery licence to the respondent. Learned senior counsel
submitted that a citizen has no fundamental right to trade or
business in liquor and that the matter relating to grant of licence
for dealing in liquor or starting distillery unit is within the
exclusive domain of the State.
Learned senior counsel submitted that if the State has the right to
adopt a policy decision and, indisputably, it has the right to vary,
amend or rescind the same. Further, it was also submitted that
the application submitted by the respondent was a defective
application and, therefore, the Government was justified in notPage 15
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entertaining that application. Learned senior counsel submitted
that cogent reasons have been stated by the Government vide its
order dated 11.10.2006 rejecting the application submitted by the
respondent and the High Court was not right in issuing a Writ of
Mandamus directing the State Government to grant the licence
applied for.
17. Shri Giri, learned senior counsel and Shri George Ponthottam,
learned counsel appearing for the respondent, traced the entire
history of the case starting from 1987 till the Government passed
the order dated 11.10.2006. Learned counsel submitted that
there was a concerted effort on the part of the State not to
consider the application of the respondent for licence for starting
the distillery unit in the Palakkad District. At the same time, on
the basis of Policy which was in force in the year 1998, four
licences were granted and the respondent was discriminated.
Learned counsel submitted that, on non-compliance of the various
directions given by the High Court, the High Court found that the
Secretary to Government had committed contempt and the order
dated 11.10.2006 was nothing but a repetition of earlier ordersPage 16
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and it is under those circumstances, the High Court gave a
positive direction to grant distillery licence to the respondent,
which shall not be interfered with by this Court under Article 136
of the Constitution. Learned counsel also referred the judgment
of this Court in Comptroller and Auditor-General of India and
Anr. v. K.S. Jagannathan and Anr. (1986) 2 SCC 679 and
submitted that in order to prevent injustice, this Court can always
give direction to compel performance of a discretion by an
authority in a proper and lawful manner. Reference was also
made to the judgment of this Court in Harigovind Yadav v.
Rewa Sidhi Gramin Bank and Ors (2006) 6 SCC 145 and RBF
Rig Corporation, Mumbai v. The Commissioner of Customs
(Imports), Mumbai (2011) 3 SCC 573 and submitted that in
appropriate cases under Article 226 of the Constitution, this Court
can always mould the reliefs.
18. We may, before examining the rival contentions, examine
the scheme of the Act as well as 1975 Rules. The Act was
enacted to consolidate and amend law relating to the import,Page 17
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export, transport, manufacture, sale and possession of
intoxicating liquor and of intoxicating drugs in the State of Kerala.
Section 14 of the Act deals with the establishment and control of
distilleries, breweries, warehouses, etc, which confers power on
the Commissioner to issue a licence with the previous approval of
the Government to establish public distilleries, breweries or
wineries, or authorize the establishment of private distilleries,
breweries, wineries or other manufactories in which liquor may be
manufactured. Section 14 is given below for easy reference:
“14. Establishment and control of distilleries,
breweries, warehouses, etc.- The Commissioner
may, with the previous approval of the Government,-
(a) Establish public distilleries, breweries or
wineries, or authorize the establishment of
private distilleries, breweries, wineries or other
manufactories in which liquor may be
manufactured under a licence granted under
this Act.
Xxx xxx xxx
xxx xxx xxx”Page 18
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19. The State Government, in exercise of its powers conferred by
Section 29 of the Act framed the 1975 Rules. Rule 3 deals with
the application for licence, which requires a person who desires to
carry on operations of compounding, blending and bottling of
foreign liquor to apply in writing to the Commissioner and furnish
the necessary details as required under the Rule. Rule 3 is given
below for easy reference:
3. Application for Licence.- Any person who
desires to carry on operations of compounding,
blending and bottling of foreign liquor shall apply in
writing to the Commissioner. Every application for a
lilcence shall give details of the operation desires to
perform and shall be accompanied by –
(i) description and plan of the building in which
the operations are to be carried out in triplicate, drawn
on scale in tracing cloth;
(ii) statement specifying the number, size and
descriptions of the permanent apparatus, if any, which
are proposed to be used;
(iii) details regarding the maximum quantity in
proof litres of spirits expected to be in the store or in
the process of compounding, blending or bottling; andPage 19
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(iv) a treasury receipt for the deposit of an earnest
money of one hundred rupees.”
Rule 4 deals with the grant and renewal of licence, which
empowers the Commissioner to issue the licence applied for.
Rule 4 reads as under:
“4. Grant and renewal of licence.- (1) The
Commissioner may, if he is satisfied after making such
enquiries as he may consider necessary that the
applicant is a person to whom licence may be issued,
grant to the applicant.-
(i) a compounding and blending licence in
Form 1 on payment of a fee of
Rs.2,00,000 (Rupees two lakhs only); and
(ii) a bottling licence in Form 2 on payment
of a fee of Rs.2,00,000 (Rupees two lakhs
only).
(2) The Commissioner shall retain the original of
the description of plan and forward the duplicate to the
officer-in-charge through the Assistant Excise
Commissioner and return the triplicate to the lilcensee.
(3) The earnest money deposit shall be adjusted
towards the fees of the licence. If the licence appliedPage 20
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for is not granted, the earnest money deposit of Rs.100
shall be refunded to the applicant.
(4) The Commissioner may on application made
to him in this behalf and on payment of the fee
specified in rules renew a licence for a period of one
year at a time.”
(emphasis supplied)
Rule 5 deals with the requirements to be satisfied with regard to
building in which the compounding, blending and bottling
operations are to be carried out. Licence for compounding and
blending of foreign liquor is issued in Form No. 1 and the licence
for bottling of foreign liquor is issued in Form No. 2.
20. We may, before examining the scope of the above
mentioned provisions and the nature of jurisdiction or the powers
to be exercised by the Commissioner and the State Government,
examine the general purport of the Act in the light of Article 19(1)
(g) of the Constitution of India.
RIGHT TO CARRY ON TRADE OR BUSINESS IN LIQUORPage 21
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21. Article 47 is one of the Directive Principles of State Policy
which is fundamental in the governance of the country and the
State has the power to completely prohibit the manufacture, sale,
possession, distribution and consumption of liquor as a beverage
because it is inherently dangerous to the human health.
Consequently, it is the privilege of the State and it is for the State
to decide whether it should part with that privilege, which
depends upon the liquor policy of the State. State has, therefore,
the exclusive right or privilege in respect of portable liquor. A
citizen has, therefore, no fundamental right to trade or business in
liquor as a beverage and the activities, which are res extra
commercium, cannot be carried on by any citizen and the State
can prohibit completely trade or business in portable liquor and
the State can also create a monopoly in itself for the trade or
business in such liquor. This legal position is well settled. State
can also impose restrictions and limitations on the trade or
business in liquor as a beverage, which restrictions are in nature
different from those imposed on trade or business in legitimate
activities and goods and articles which are res commercium.Page 22
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Reference may be made to the judgments of this Court in Vithal
Dattatraya Kulkarni and Others v. Shamrao Tukaram
Power SMT and Others (1979) 3 SCC 212, P. N. Kaushal &
Others v. Union of India & Others (1978) 3 SCC 558, Krishna
Kumar Narula etc. v. State of Jammu & Kashmir & Others
AIR 1967 SC 1368, Nashirwar and Others v. State of Madhya
Pradesh & Others (1975) 1 SCC 29, State of A. P. & Others v.
McDowell & Co and Others (1996) 3 SCC 709 and Khoday
Distilleries Ltd. & Others v. State of Karnataka & Others
(1995) 1 SCC 574.
22. Legislature, in its wisdom, has given considerable amount of
freedom to the decision makers, the Commissioner and the State
Government since they are conferred with the power to deal with
an article which is inherently injurious to human health.
23. Section 14 of the Act indicates that the Commissioner can
exercise his powers to grant licence only with the approval of the
State Government because the State has the exclusive privilege
in dealing with liquor. The powers conferred on the CommissionerPage 23
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and the State Government under Section 14 as well as Rule 4 are
discretionary in nature, which is discernible from the permissible
language used therein.
LIQUOR POLICY:
24. Liquor policy of State is synonymous or always closely
associated with the policy of the Statute dealing with liquor or
such obnoxious subjects. Monopoly in the trade of liquor is with
the State and it is only a privilege that a licensee has in the
matter of manufacturing and vending in liquor, so held, by this
Court in State of Maharashtra v. Nagpur Distilleries (2006) 5
SCC 112. Courts are also not expected to express their opinion as
to whether at a particular point of time or in a particular situation,
any such policy should have been adopted or not. 1998 Policy
has life only in that year and if any rights have accrued to any
party, that have to be adjudicated then and there. Writ Petition
was moved only in the year 2000, by then, policy had been
changed because 1999 liquor policy was total ban, so also
subsequent liquor policies. It is trite law that a Court of Law isPage 24
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not expected to propel into “the unchartered ocean” of State’s
Policies. State has the power to frame and reframe, change and
re-change, adjust and readjust policy, which cannot be declared
as illegal or arbitrary on the ground that the earlier policy was a
better and suited to the prevailing situations. Situation which
exited in the year 1998 had its natural death and cannot be
revised in the year 2013, when there is total ban.
DISCRETION AND DUTY:
25. Discretionary power implies freedom of choice, a competent
authority may decide whether or not to act. The legal concept of
discretion implies power to make a choice between alternative
courses of action (Discretionary Justice Davis 1969). Statute has
conferred discretionary power on the Commissioner and State
Government but not discretion coupled with duty because they
are dealing with a subject matter on which State has exclusive
privilege. Permissive language used by the Statute in Section 14
and the rule making authority in Rule 4 gives the State
Government and the Commissioner, no mandatory duty orPage 25
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obligation to grant the licence except perhaps to consider the
application, if the liquor policy permits so.
26. Section 14 uses the expression “Commissioner may”, “with
the approval of the Government” so also Rule 4 uses the
expressions “Commissioner may”, “if he is satisfied” after making
such enquiries as he may consider necessary “licence may be
issued”. All those expressions used in Section 14 and Rule 4
confer discretionary powers on the Commissioner as well as the
State Government, not a discretionary power coupled with duty.
The powers, conferred on the Commissioner as well as the
Government, have to be understood in the light of the
Constitutional scheme bearing in mind the fact that the trade or
business which is inherently harmful can always be restricted,
curtailed or prohibited by the State, since it is the exclusive
privilege of the State. No duty is, therefore, cast on the
Commissioner to grant a licence for establishing a distillery unit
and no right is conferred on any citizen to claim it as a matter of
right. State can always adopt a “restrictive policy”, e.g., reducing
the number of licences in a particular district or a particular area,Page 26
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or not to grant any licence at all in a particular district, even in
cases where the applicants have satisfied all the conditions
stipulated in the rules and the policy permits granting of licences.
In other words, the satisfaction of the conditions laid -down in
1975 Rules would not entitle an applicant as a matter of right to
claim a distillery licence which is within the exclusive privilege of
the State.
MANDAMUS – TO ISSUE LICENCE
27. Legislature when confers a discretionary power on an
authority, it has to be exercised by it in its discretion, the decision
ought to be that of the authority concerned and not that of the
Court. Court would not interfere with or probe into the merits of
the decision made by an authority in exercise of its discretion.
Court cannot impede the exercise of discretion of an authority
acting under the Statute by issuance of a Writ of Mandamus. A
Writ of Mandamus can be issued in favour of an applicant who
establishes a legal right in himself and is issued against an
authority which has a legal duty to perform, but has failed and/orPage 27
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neglected to do so, but such a legal duty should emanate either in
discharge of the public duty or operation of law. We have found
that there is no legal duty cast on the Commissioner or the State
Government exercising powers under Section 14 of the Act read
with Rule 4 of the 1975 Rules to grant the licence applied for. The
High Court, in our view, cannot direct the State Government to
part with its exclusive privilege. At best, it can direct
consideration of an application for licence. If the High Court feels,
in spite of its direction, the application has not been properly
considered or arbitrarily rejected, the High Court is not powerless
to deal with such a situation that does not mean that the High
Court can bend or break the law. Granting liquor licence is not
like granting licence to drive a cab or parking a vehicle or issuing
a municipal licence to set up a grocery or a fruit shop. Before
issuing a writ of mandamus, the High Court should have, at the
back of its mind, the legislative scheme, its object and purpose,
the subject matter, the evil sought to be remedied, State’s
exclusive privilege etc. and not to be carried away by the
idiosyncrasies or the ipse dixit of an officer who authored thePage 28
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order challenged. Majesty of law is to be upheld not by bending
or breaking the law but by strengthening the law.
28. Respondent-applicant, in the instant case, in our view, has
failed to establish a legal right or to show that there is a legal
duty on the Commissioner or the Government to issue a distillery
licence.
DISCRETIONARY ORDER – ARTICLE 14
29. Discretionary power leaves the donee of the power free to
use or not to use it at his discretion. (refer Rani Drig Raj Kuer
v. Raja Sri Amar Krishna Narain Singh AIR 1960 SC 444). Law
is well settled that the exercise of statutory discretion must be
based on reasonable grounds and cannot lapse into the
arbitrariness or caprice anathema to the rule of law envisaged in
Article 14 of the Constitution. It is trite law that, though, no
citizen has a legal right to claim a distillery licence as a matter of
right and the Commissioner or the State Government is entitled to
either not to entertain or reject the application, they cannot enter
into a relationship by arbitrarily choosing any person they like orPage 29
29
discriminate between persons similarly circumscribed. The State
Government, when decides to grant the right or privilege to
others, of course, cannot escape of the rigor of Article 14, in the
sense that it can act arbitrarily. In such a situation, it is for the
party who complains to establish that a discriminatory treatment
has been meted out to him as against similarly placed persons
but cannot demand a licence for establishing a distillery unit, as a
matter of right.
30. In State of Madhya Pradesh v. Nandlal Jaiswal (1986) 4
SCC 566, this Court held that no one can claim as against the
State the right to carry on trade or business in liquor and the
State cannot be compelled to part with its exclusive privilege or
right of manufacturing and selling liquor. But, when the State
decides to grant such right or privilege to others the State cannot
escape from the rigor of Article 14 of the Constitution, it cannot
act arbitrarily or at its sweet will.
31. We have noticed that the application preferred by M/s
Kandath Distilleries (respondent herein) in the year 1987 was forPage 30
30
establishing a distillery unit in the Palakkad District. So also the
applications submitted by M/s Amrut Distilleries, Bangalore and
M/s. Empee Distilleries, Madras and licences were granted to
them for establishing the distillery units in the Palakkad District.
However, the respondent’s application was not considered. The
Commissioner or the State Government has to take an
independent decision in each application based on its eligibility
and there cannot be any common decision. As held in Nandlal
Jaiswal (supra) when the State Government is granting licence
for putting up new industry, it is not necessary that it should
advertise and invite offers for putting up such industry. The State
Government is entitled to negotiate with those who have come up
with an offer to set up such industry. The State Government
cannot grant the privilege to all those who have applied for such a
licence in a particular district, for a host of reasons. The State
Government could restrict the number of distillery lincences in a
particular district by two and it can also grant a third licence in a
particular district as well, but an applicant cannot claim a licence
as a matter of right. Page 31
31
32. The Respondent, in our view, could lay a claim only if it
establishes that a preferential treatment has been meted out to
M/s Amrut Distilleries, Bangalore and M/s. Empee Distilleries,
Madras while granting licences for establishing the respective
distillery units in the Palakkad District on the ground of
discrimination violating Article 14 of the Constitution of India.
Respondent has never challenged the distillery licences granted
to them, but only prayed for another licence for it as well which,
in our view, cannot be claimed as a matter of right. Citizens
cannot have a fundamental right to trade or carry on business in
the properties or rights belonging to the State nor can there be
any infringement of Article 14, if the State prefers other
applicants for the grant of licence, during the pendency of some
other applications, unless an applicant establishes a better claim
over others.
33. We have gone through the Government Order dated
11.10.2006 in extenso and we are not prepared to say that the
application of the respondent was rejected solely on the groundPage 32
32
that the application dated 12.1.1987 could not be treated as an
application put forward by a firm based on a partnership deed,
which came into existence on 10.4.1991, as per Clause 3 of the
Partnership Deed but on various other grounds as well. The State
Government, in our view, has considered the respondent’s
application dated 12.1.1987 with regard to the conditions that
existed in the year 1998. The Government letter dated 28.6.1994
would indicate that, apart from the respondent, few other
applications were also pending prior to the year 1994. Over and
above, the State Government during the year 1998, from
3.2.1998 to 21.11.1998, had received 52 applications for
establishing compounding, blending and bottling units in IMFLs in
various parts of the State. The Excise Commissioner vide his
letter dated 25.11.1998 had reported that there was an
unprecedented flow of applications, that was the situation
prevailing in the year 1998, a factor which was taken note of in
not entertaining the respondent’s application, whether it was
submitted on 12.1.1987 or on 22.11.1998. We cannot, in anyPage 33
33
way, activate an out-modeled, outdated, forgotten liquor policy of
1998, in the year 2013, by a Writ of Mandamus.
34. We are, therefore, of the view that the learned single Judge
as well as the Division Bench of the High Court have overlooked
those vital factors while issuing a Writ of Mandamus directing the
State Government/Commissioner to grant distillery licence to the
respondent for setting up of a new distillery in the Palakkad
District, thinking that the impugned order is nothing but old wine
in new bottle. We are informed, after 1998, not even a single
licence has been granted by the State Government/Commissioner
for establishing distillery units anywhere in the State. That being
the factual and legal position, we are of the view that the learned
single Judge as well as the Division Bench of the High Court was
not justified in issuing a Writ of Mandamus directing the issuance
of a distillery licence to the respondent.
35. We are, therefore, inclined to allow this appeal and set aside
the judgment of the learned single Judge and affirmed by the
Division Bench of the High Court. Ordered accordingly.Page 34
34
However, in the facts and circumstances of the case, there will be
no order as to costs.
……………………………………..J.
(K. S. RADHAKRISHNAN)
……………………………………..J.
(DIPAK MISRA)
New Delhi,
February 22, 2013.

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