Full Judgment Text
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PETITIONER:
MOHD. FIDA KARIM AND ANR.
Vs.
RESPONDENT:
STATE OF BIHAR AND ORS.
DATE OF JUDGMENT31/03/1992
BENCH:
KASLIWAL, N.M. (J)
BENCH:
KASLIWAL, N.M. (J)
REDDY, K. JAYACHANDRA (J)
RAY, G.N. (J)
CITATION:
1992 AIR 1191 1992 SCR (2) 408
1992 SCC (2) 631 JT 1992 (2) 520
1992 SCALE (1)768
ACT:
Bihar Excise Act, 1915 : Section 42 and 43.
Liquor shops-Right of vend-Mode of settlement-
Government policy-Grant of licence for five years-Licence
subject to change in policy of Government-Change of policy
to auction-cum-tender method-Change in policy held valid and
not violative of Article 14-Section 42 and 43 held
inapplicable.
HEADNOTE:
The State of Bihar took a policy decision to make
settlement of liquor shops for five years subject to yearly
renewal on fulfilling certain conditions in terms of change
in policy. The said policy was approved by Cabinet on 25 th
January, 1990. Rules were amended accordingly and published
in the official gazette. In pursuance to the said policy
the appellants deposited six months licence fee for the
first year of settlement on 7th March, 1990. The said
policy was challenged and the High Court granted interim
stay of the policy directing the Government to grant licence
on yearly basis through public auction. In the meanwhile
the State Government changed the policy under which the
settlement of liquor shops was to be made by auction-cum-
tender method for the next year and the new policy was
approved by the Cabinet on 16th August, 1990. The
appellants field writ petitions in the Patna High Court
challenging the new policy of auction-cum-tender for the
year 1991-92 which were dismissed.
In appeal to this Court, it was contended on behalf of
the appellants that (i) the period of licence already
granted cannot be curtailed without compliance of section 42
and 43 of the Bihar Excise Act; (ii) Government’s action was
arbitrary and violative of Article 14 and the Govt. was
estopped from adopting the new policy on the principle of
promissory estoppel; and (iii) the impugned order was not a
change of policy but was merely an executive order passed on
the wrong assumption as if the High Court had
409
directed the Government to review its policy.
Dismissing the appeal, this Court,
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Held : 1. The Government was fully competent to change
its policy under the terms of the grant of licence itself.
The Memorandum and the sale Notification on the basis of
which the appellants claimed the right to continue the
licence for a period of five years, clearly mentioned that
the grant of licence was on annual basis and such renewal
after every year was subject to the conditions mentioned
therein and also subject to any change in policy. Sections
42 and 43 of the Bihar Excise Act have no application in the
case of change of policy by the Government. [412E-G, 413E]
2. It is also well settled that the right of vend of
excisable articles is exclusively and absolutely owned by
the State Government. [412G]
3. The new policy of adopting the method of auction-
cum-tender is certainly a change of policy. The reason for
change of policy is that the Government realised that making
settlement for five years would give rise to monopolistic
tendency and the interest of revenue was not fully protected
in the former policy. There is nothing wrong in taking such
a view by the State Government and to change its policy in
public interest. The appellants as such have no right to
challenge the new policy. [413A-D]
4. There was neither any promise nor there is any
justification to hold that the appellants altered their
position on the basis of promise. The contention based on
the ground of promissory estoppel or under Article 14 cannot
be accepted. [413D-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1205 of
1992.
From the Judgment and order dated 6.9.91 of the Patna
High Court in C.W.J.C. No. 2102 of 1991.
Kapil Sibal, Harish N. Salve, Ranjit Kumar, G.D.
Bhandari and S.C. Patel for the Appellants.
M.L. Verma, B.B. Singh, Vikash Singh and L.R. Singh for
the Respondents.
410
The Judgment of this Court was delivered by
KASLIWAL, J. Special leave granted.
This appeal is directed against the judgment of the
Patna High Court dated 6th September, 1991. Initially Mohd.
Fida Karim and Dasrath Das had filed special leave petition
challenging the dismissal of their writ petition, C.W.J.C.
No. 2102 of 1991 by a Division Bench of the Patna High Court
by order dated 6th September, 1991. In view of the fact
that by a common decision, the Patna High Court had
dismissed many other identical writ petitions, the
petitioners in those other writ petitions also submitted
intervention applications before this Court and such
intervention applications have been allowed. 35
applicants/interveners are also supporting the present
appeal filed by Mohd. Fida Karim and Dasrath Das.
The controversy in this case relates to the mode of
settlement of the right of vend of country liquor, Indian
made foreign liquor and spiced country liquor under the
provisions of the Bihar Excise Act, 1915 (hereinafter
referred to as the ’Excise Act’) and Rules framed
thereunder. The Government changed its policy from time to
time. Prior to 1984, settlement of country liquor shops was
done by renewing the licence according to the sliding scale
of system. In 1984, the State Government decided to make
settlement of country liquor shops by public auction. This
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was done on annual basis for a period commencing from 1st of
April to 31st March of the next following year. This
practice continued upto 1989-90. During the currency of the
above licensing period 1989-90, the State Government
appointed a high power committee and according to its
recommendations made a policy to make settlement of liquor
shops for five years by renewing the existing licences,
subject to fulfilling certain conditions like, satisfactory
record of performance and enhancement of licence fee at the
rate of 10 per cent every year and also enhancement of the
minimum guaranteed quota at the rate of 5 per cent every
year. The above policy decision was taken by a Cabinet
Memorandum dated 25th January, 1990. In pursuance to the
above policy decision, the Excise Commissioner by
communication dated 8th February, 1990 informed the
licensing authorities to take steps for settlement of excise
shops as per the amended policy of the Government. On 17th
February, 1990, necessary amendments were also made in the
Rules framed under Section 89 of the Excise Act
411
inconsonance with the new policy of the Government. The
amendments were duly published in the official Gazette on
7th March, 1990, to come into force with effect from 1st
April, 1990. The case of the apellants is that in pursuance
to the aforesaid policy, the appellants agreed to the new
terms and conditions and necessary agreements were also
executed. The appellants also deposited six months’ licence
fee for the first year of settlement, on 7th March, 1990.
According to the appellants a concluded contract came into
effect on 7th March, 1990 itself, which was to come into
force with effect from 1st April, 1990.
Some of the persons not satisfied with the aforesaid
Government policy, challenged the same by filing four writ
petitions in the High Court. The High Court passed interim
orders on 9th March, 23rd March, and 13th April, 1990 in
these writ petitions. The High Court in the interim orders
granted stay on the new policy of the Government and in its
place gave directions to grant the licence on yearly basis
through public auction. Initially, it was directed that
the period of such settlements shall not exceed four months,
but subsequently it was made on monthly basis. It was also
directed that the aforesaid orders will not stand in the way
of the State Government in reviewing the policy decision. We
have only mentioned the substance of such interim orders
passed on 9.3.1990, 23.3.1990 and 13.4.1990, as the same
have been quoted in extenso by the High Court in its
impugned order dated 6th September, 1991. It appears that
the aforesaid interim orders were passed by the High Court
under the vain hope that the main writ petitions would be
disposed of soon. However, before the writ petitions could
be heard finally, the Government started the process of
reviewing the policy decision dated 25th January, 1990/8th
February, 1990. By Memorandum dated 7.7.1990 placed before
the Council of Ministers, it was proposed that the
settlement of the country liquor shops, spiced country
liquor shops and foreign liquor shops should be made by
auction-cum-tender method, according to which the persons
interested were required to submit their sealed tender and
also to participate in the public auction. The settlement
was to be made finally in favour of the person making the
highest offer whether by way to tender or at auction. The
Cabinet approved the aforesaid policy on 16th August, 1990.
The Excise Commissioner also sent necessary instructions to
all licensing authorities by letter dated 25th February,
1991 in regard to the proposed mode of settlement by
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auction-cum-tender for the year 1991-92.
412
The present appellants as well as the interveners filed writ
petitions challenging the aforesaid new policy of auction-
cum-tender for the year 1991-92.
Similar contentions have been raised before us on
behalf of the appellants, which were made before the High
Court. The challenge to the new policy has been made on the
following three grounds. Firstly, it has been submitted
that there is no provision in the Excise Act or the Rules to
review or revoke the grant of licence or to curtail or
reduce the period of licence except as provided under
Sections 42 and 43 of the Excise Act. The licence already
granted for a period of five years from 1990 to 1995 cannot
be made ineffective by the so-called new policy of auction-
cum-tender. A further limb of this ground is that the
period cannot be curtailed without compliance of the
mandatory provisions of Sections 42 and 43 of the Excise
Act. The second ground of challenge is that the Government
is estopped from doing so on the principle of promissory
estoppel. The third ground is that in any events, the
exercise of power, in the facts of the case is arbitrary,
irrational and patently unreasonable as such is violative of
Article 114 of the Constitution. The High Court has dealt
with all these contentions in detail and has rejected the
same by giving cogent reasons. We fully agree with the view
taken by the High Court.
It is important to note that the Memorandum dated 25th
January, 1990 and the letter dated 8th February, 1990 and
the sale Notification on the basis of which the appellants
are claiming the right to continue the licence for a period
of five years, clearly mentioned that the grant of licence
was on annual basis and such renewal after every year was
subject to the conditions mentioned therein and also subject
to any change in policy. Thus, the Government was fully
competent to change its policy under the terms of the grant
of licence itself. It is also well settled that the right
of vend of excisable articles is exclusively and absolutely
owned by the State Government.
Mr. Kapil Sibal, Learned Senior Counsel appearing on
behalf of the appellants did not dispute the aforesaid legal
position, but his contention was that the impugned order of
the Government made in August, 1990 cannot be termed a
change of policy, but in fact was merely an executive order
passed on a wrong assumption as if the High Court in its
interim
413
orders had given a direction to the Government to review its
policy. We do not find any substance in this contention.
The new policy of adopting the method of auction-cum-tender
is certainly a change of policy. The reason for change of
policy given by the Government is that it realised that
making settlement for five years would give rise to
monopolistic tendency, which will not be in public interest,
at the same time the interest of revenue was not fully
protected in the former policy. This clearly goes to show
that the Government wanted to adopt a new policy in public
interest to be made applicable from the year 1991-92.
Learned Counsel appearing on behalf of the State of Bihar
submitted in clear terms that the earlier policy was wrong
and the Government realised its mistake and thus adopted a
new policy to augment its revenue and to avoid monopolistic
tendency. We do not find anything wrong in taking such
view by the State Government and to change its policy
considering the same to be in public interest. It is not
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disputed that the appellants have continued the business of
sale of liquor for the whole year 1.4.1990 to 31.3.1991. The
appellants as such have no right to challenge the new policy
which has to apply for the year 1991-92, even under the
terms of their agreement. We do not find any force in the
contention raised on behalf on the appellants on the ground
of promissory estoppel or under Article 14 of the
Constitution. There is no basis at all made out in the
pleadings in support of the above grounds and the High Court
has rightly rejected the same. There was neither any
promise nor there is any justification to hold that the
appellants altered their position on the basis of promise.
Section 42 and 43 of the Excise Act have no application in
the case of change of policy by the Government.
Lastly, it was contended on behalf of the appellants
that the licensees who had taken the licence under the
earlier policy of the Government of 25th January, 1990/8th
February, 1990 had submitted National Saving Certificates by
way of security and in case the Government had changed its
policy, it was bound to return the National Saving
Certificates to the respective licensees. We consider this
submission to be just and proper. Learned Counsel for the
State appearing before us also conceded that such National
Saving Certificates would be returned to the licensees. We
accordingly direct the State Government to return to the
licensees. We accordingly direct the State Government to
return all the National Saving Certificates taken by way of
security to all the licensees who had entered in agreements
under the old policy of five years license, within two
months
414
from the date of the communication of this order. This
direction will not apply in case of such licensees who have
filed civil suits for the recovery of such amounts and their
cases would be governed by the ultimate decision in those
civil proceedings.
In the results, we dismiss this appeal with no order as
to costs.
T.N.A. Appeal dismissed.
415