2017 (11) TMI 1692 - HC - Indian Laws

Irrationality - Grant of licence to collect empty bottles and sell eatables in the Bar attached to the TASMAC liquor retail vending shops - first and foremost ground of challenge is that the licence fee which has been fixed is very high - Rule 9A in the Tamil Nadu Liquor Retail vending (in Shops and Bars) Rules 2003 - no malafides found. Held that - Admittedly in the instant case there is no allegation of malafides. A faint plea of legal mala fide was raised by Mr.Umapathy and to drivehome such a contention the learned counsel referred to certain statistics with regard to the number of shops which were in existence in Tiruppur District from the year 2014-15 and in how many shops there were successful bidders for the bar and the remaining shops though had a bar attached were illegally run by TASMAC themselves as there were no bidders. Irrationality - It was argued that the method of fixation of the upset price was irrational since the volume of sales in the bar has to be considered and not the volume of sales in the retail vending shops - Held that - Admittedly the exclusive right to vend liquor vest with TASMAC. The licence to be granted by TASMAC for which the impugned notification has been issued is to sell eatables and collect empty bottles in the bar attached to the shop. The normal concept of a bar cannot be adopted in the present batch of cases unlike the bars which are functioning in hotels where licence is granted in form FL-II and FL-III. Though the respondent/TASMAC states that the eatables ought to be sold in the bar attached to the shop to term the premises as a bar in the general sense as it is popularly understood as incorrect. This is so because the licensee is not permitted to vend liquor in the premises termed as bar attached to the shop. TASMAC does not vend liquor in the premises termed as bar attached to the shop - It is not for this Court to examine as to whether fixation of 3% or 2.5% or 1.5% or 1% of the turnover of the shop for computing the quantum of Security Deposit/licence fee. On a careful reading of the tender conditions it is clear that the turnover for the month of October 2017 is being taken for consideration for calculating the Security Deposit payable by the intending tenderer by calling upon him to pay 3%/2.5% or 1% of such amount. This fixation cannot be stated to be irrational as it has been shown that there should be some yardstick for the TASMAC to arrive at the quantum of Security Deposit. The respondent/TASMAC has not fixed a static amount as upset price as found in other bid documents. The petitioner cannot equate the licence which will be granted to them as any other licence issued by the Government or Government Corporations. But for the permission granted by TASMAC to create a faclity for permitting customers to consume liquor in a designated area no independent right flows in favour of the petitioners. There are specific prohibition under the Rules which prohibit establishment of shops near places of worship educational institution etc. Thus it is concluded that there is no irrationality or arbitrariness in the conditions stipulated in the impugned tender notification and the basis for calculating the Security Deposit and the monthly licence fee has been shown to be done in an appropriate manner taking into consideration the turnover of a particular retail vending shop. Apart from that the licence fee does not remain static throughout the period of licence as was earlier but would depend upon the sale in the preceding month - the petitioners have not made out any case for interference with the impugned notification and accordingly these Writ Petitions fail - petition dismissed - decided against petitioner.

Issues Involved:
1. Fixation of Upset Price
2. Compliance with Previous Court Directions
3. Transparency and Information Disclosure
4. Discrimination Among Districts
5. Applicability of Goods and Service Tax (GST)
6. Rationality and Reasonableness of Tender Conditions
7. Allegations of Monopoly and Bias
8. Legal Precedents and Constitutional Validity

Detailed Analysis:

1. Fixation of Upset Price:
The petitioners challenged the tender notices issued by TASMAC for granting licenses to collect empty bottles and sell eatables in bars attached to TASMAC liquor retail vending shops. The primary contention was that the upset price was irrationally high and should be based on sales in the bar, not the retail shop. The court noted that the fixation of tender value is a commercial decision within the purview of the tender inviting authority and should not be interfered with unless proven arbitrary or unreasonable. The court found that TASMAC's method of fixing the upset price based on the retail shop's turnover was rational and had a reasonable basis.

2. Compliance with Previous Court Directions:
The petitioners argued that TASMAC did not follow the directions issued in W.P.No.26445 of 2015, which required fixing the upset price considering the volume of sales. The court observed that TASMAC had taken into account the volume of sales in the retail shop, which was a reasonable approach. The court held that the petitioners' contention that the volume of sales should be based on consumption in the bar was incorrect.

3. Transparency and Information Disclosure:
The petitioners claimed that the upset price had not been fixed in respective shops until the last moment, keeping them in the dark. The court found that TASMAC had a consistent method for fixing the upset price and had disclosed the necessary information, thereby ensuring transparency.

4. Discrimination Among Districts:
The petitioners highlighted that different percentages were fixed for Nilgiris District compared to Chennai, Kancheepuram, and Tiruvallur, alleging discrimination. The court found that the differential percentage for Nilgiris District was justified due to lower liquor consumption in bars in that district and had been a consistent practice since 2003.

5. Applicability of Goods and Service Tax (GST):
The petitioners argued that compelling bidders to register under GST was untenable. The court did not find this argument substantial enough to affect the validity of the tender conditions.

6. Rationality and Reasonableness of Tender Conditions:
The court emphasized that the tender conditions, including the method of calculating the security deposit and monthly license fee based on the retail shop's turnover, were neither arbitrary nor irrational. The court noted that the license fee would be adjusted monthly based on sales, ensuring fairness.

7. Allegations of Monopoly and Bias:
The respondents argued that the petitioners were attempting to create a monopoly by repeatedly challenging TASMAC's notifications. The court found no evidence of bias or mala fides in TASMAC's actions and noted that the exclusive right to vend liquor vested with TASMAC, a state-owned corporation.

8. Legal Precedents and Constitutional Validity:
The petitioners cited various legal precedents to support their case. However, the court found that these precedents were not applicable to the present case. The court held that TASMAC's actions were fair, reasonable, and in compliance with the law governing liquor trade in Tamil Nadu. The court also noted that the petitioners failed to demonstrate any infringement of Article 14 of the Constitution.

Conclusion:
The court dismissed the writ petitions, holding that the petitioners failed to establish any irrationality or arbitrariness in the impugned tender notifications. The court found that TASMAC's method of fixing the upset price based on the retail shop's turnover was reasonable and justified. The conditions imposed by TASMAC were deemed fair and in accordance with the law, ensuring a balance between commercial considerations and public interest.

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