1993 (11) TMI 234 - SC - Central Excise

Summary

Issues:
1. Cancellation of FL-3 licences by the Kerala Government.
2. Challenge to the cancellation orders in the High Court.
3. Renewal of licences for the year 1993-94.
4. Fundamental right to carry on trade in liquor.
5. Policy decision of the Government and its implementation.
6. Rejection of renewal applications and classification of licensees.
7. Validity of the Government Order issued on 9th November 1992.
8. Compliance with rules and uniform policy by the State.

Analysis:

1. The appeals were filed against the cancellation of FL-3 licences granted to hotel and restaurant owners in Kerala. The licences were cancelled following a policy decision by the Government in November 1992. The appellants challenged these cancellations in the High Court through writ petitions, which were dismissed. Special Leave Petitions were filed in the Supreme Court against these orders, leading to interim stays and directions for renewal applications.

2. Lengthy arguments were presented on whether the appellants had a fundamental right to engage in liquor trade. This question was referred to a Constitution bench by a three-judge bench. The appeals arising from the Special Leave Petitions were tagged with the relevant Civil Appeal numbers for further consideration.

3. The specific issue in one of the appeals was whether there was an error of law in rejecting the renewal applications for the year 1993-94. Challenges were made against the Government's policy, alleging inconsistency in its implementation and discrimination in renewing other licenses. The State defended its policy decision and the rejection of renewal applications.

4. The Court expressed disapproval of the vague and unsatisfactory affidavit filed by the Excise Secretary regarding the State's statements and decisions. The lack of clarity in the affidavit raised concerns about the decision-making process and potential external influences. The Court highlighted the importance of clear and specific averments in legal documents.

5. The Court refrained from deciding on the renewal versus fresh grant distinction but focused on the correctness of the order rejecting the renewal applications. The State's justification for not renewing the appellants' licenses was based on the prohibition policy. However, the Court found discrepancies in the State's actions, especially regarding the increase in liquor consumption and the permission for arrack import.

6. The Court noted inconsistencies in the State's policy decisions regarding liquor licenses, highlighting the lack of a uniform approach. The cancellation and rejection of licenses without valid justification were deemed contrary to the rules. The Court directed the tagging of relevant appeals for further consideration.

7. One of the appeals was allowed, restraining the respondents from interfering with the appellants' FL-3 licensee activities. The appellants were required to comply with conditions and pay annual rentals until their license applications were decided on merits or until a uniform policy decision was enforced. Each party was directed to bear its own costs.

This detailed analysis covers the various legal issues, arguments presented, and the Court's findings in the judgment.