1954 (1) TMI 26 - SC - Central Excise

Whether some of the provisions is to enable Government to confer monopoly rights on one or more persons to the exclusion of others and that creation of such monopoly rights could not be sustained under article 19 (6) is again without force? Whether the charge of fee by public auction is excessive and is not in the nature of a fee but a tax ignores the fact that licence fee described as a licence fee is more in the nature of a tax than a licence fee? Held that - Under the rules every member of the public who wishes to carry on trade in liquor is invited to make bids. This is the only method by which carrying on of liquor trade can be regulated. When the contract is thrown open to public auction, it cannot be said that there is exclusion of competition and thereby a monopoly is created. For all these reasons we are of opinion that the contention that the provisions of the regulation are unconstitutional as they abridge the rights of the petitioner to carry on liquor trade freely cannot be sustained. One of the purposes of the regulation is to raise revenue. By the provisions of section 24, duties can be imposed on the manufacture, import, export and transport of liquor and other excisable articles. Revenue is also collected by the grant of contracts to carry on trade in liquors and these contracts are sold by auction. The grantee is given a licence on payment of the auction price. The regulation specifically authorises this. It is not a fee levied without authority of law. Appeal dismissed.

Issues Involved:
1. Infringement of fundamental right to carry on trade or business in liquor under Article 19(1)(g).
2. Discrimination under Article 14.
3. Authority of the Minister for Excise to confirm the auction sale.
4. Summary rejection of appeal without hearing.
5. Constitutional validity of the Excise Regulation I of 1915 and auction rules under Article 19(1)(g).

Detailed Analysis:

1. Infringement of Fundamental Right to Carry on Trade or Business in Liquor under Article 19(1)(g):
The petitioner alleged that his fundamental right to carry on trade or business in liquor, as guaranteed under Article 19(1)(g) of the Constitution, was infringed due to the Collector of Excise condoning the failure of the highest bidder, Chhoga Lal, to deposit the full security amount within the prescribed time. The court addressed the broader issue of whether the Excise Regulation I of 1915, which allows for the auctioning of liquor licenses, is constitutional. The court held that the State has the power to regulate trades that are injurious to public health and welfare. The regulation of liquor trade, including the imposition of license fees through public auctions, was deemed reasonable and necessary for public safety, health, and morals. Therefore, the provisions of the Excise Regulation were upheld as valid, and the petitioner's claim under Article 19(1)(g) was dismissed.

2. Discrimination under Article 14:
The petitioner claimed that he was discriminated against because the Collector allowed Chhoga Lal to make the security deposit after the due date, which the petitioner argued abridged his right under Article 14. The court noted that the point of discrimination was not seriously argued before them. Furthermore, it was implied that the auction process, being open to public bidding, did not inherently create a monopoly or discriminatory practice. Thus, the claim of discrimination was not substantiated.

3. Authority of the Minister for Excise to Confirm the Auction Sale:
The petitioner contended that the Minister for Excise had no authority under the regulation to confirm the auction sale held by the Collector. The court found that if there were any breaches of the rules framed under the regulation by the officers concerned, the remedy was provided for within the regulation itself. The court suggested that such procedural issues did not abridge the petitioner's fundamental rights and could be addressed through other legal remedies, such as approaching the High Court under Article 226 for a mandamus. Therefore, this contention was dismissed.

4. Summary Rejection of Appeal Without Hearing:
The petitioner argued that the summary rejection of his appeal without a hearing was unjustified and abridged his right to carry on his trade. The court did not find merit in this argument, indicating that procedural irregularities in the auction process did not amount to a violation of fundamental rights under Article 32. The appropriate remedy for such grievances lay in other legal avenues, not a constitutional petition under Article 32.

5. Constitutional Validity of the Excise Regulation I of 1915 and Auction Rules under Article 19(1)(g):
The petitioner challenged the constitutional validity of the Excise Regulation I of 1915, arguing that it granted a monopoly of trade to a few individuals and was inconsistent with Article 19(1)(g). The court held that the regulation of liquor trade through licensing and auctions was a reasonable restriction in the interest of public health and safety. The court cited precedents to support the view that the State could regulate or even prohibit trades that are harmful to society. The regulation's provisions were deemed necessary to control the liquor trade and raise revenue, and the auction process was not seen as creating an unlawful monopoly. Consequently, the court upheld the validity of the Excise Regulation and dismissed the petitioner's challenge.

Conclusion:
The court dismissed the petition, finding no merit in the claims that the petitioner's fundamental rights were infringed. The Excise Regulation I of 1915 and the auction rules were upheld as constitutional, and the petitioner's grievances were deemed addressable through other legal remedies rather than a constitutional petition under Article 32. The petition was dismissed with costs.

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