2022 (1) TMI 1450 - HC - Indian Laws

Challenge to Tender Notification dated 14.12.2021 bearing reference Na.Ka.No.A3/2242/2021 issued by the second respondent Tamil Nadu State Marketing Corporation (TASMAC) - common grievance of the petitioner is that the respondents TASMAC has floated the tenders without considering the hardship faced by the petitioners and contrary to the provisions of the Tamil Nadu Transparency in Tenders Act, 1998 (Tamil Nadu Act 43 of 1998) and the Rules made thereunder and Circular dated 22.07.2014 bearing reference Circular No.A3/19/2014 and ignoring the loss sustained by them due to closure of the business during the lockdown and during the previous licence period. HELD THAT - Section 4A was amended so as to make, the person found in a state of intoxication in any public place, and a person other than those who are permitted to consume any liquor or intoxicating drug, is found in a state of intoxication in any private place is punishable with simple imprisonment which may extend to 3 months ( 6 months prior to amendment vide Tamil Nadu Act 2 of 1989) or fine which may extend to Rs.1000/-, on both - the amendment was intended to implement the policy of the Government under the Tamil Nadu Prohibition Act, 1937. It was in consonance with the total prohibition which existed then from 1976 and Article 47 of the Constitution of India. The Bar Licence issued under Tamil Nadu Liquor (Retail Vending in Bar) Rules, 1992 was deemed to have been renewed and privilege was granted for the period from 1 st June, 1993 to 30th June, 1993. Where any licensee had paid an amount in excess of the privilege amount specified in Rule 4, such amount was to be refunded by the licensing authority to the licensee, after deducting the Government used if any, under the rescinded Rules. This was at the time when license and privileges were given to private persons to run wine shops bars. In Madras City Wine Merchants' Association and Others Vs. State of Tamil Nadu and Another, 1994 (7) TMI 366 - SUPREME COURT , the Hon ble Supreme Court held that When the State has received complaints that the consumption of liquor in bars resulted in law and order problems, woman folk being harassed, certainly, in public interest it could take a decision to repeal the grant of Bar licences. There is nothing unreasonable. As a retail seller, TASMAC may have been entitled to operate a Bar if the provisions of the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 2002 had survived with a few amendments. However, under Section 22 D (c) of the Tamil Nadu Prohibition Act, 1937, even these Rules have been completely repealed - The 2003 amendments to the Tamil Nadu Prohibition Act, 1937 which paved way for the Tamil Nadu Liquor Retail Vending (In Shops and Bars), Rule 2003 merely contemplates grant of an exclusive license to TASMAC for retail sale under Rule 4 of the aforesaid Rules under Section 17-C of the Tamil Nadu Prohibition Act, 1937. The impugned exercise, cannot be legitimized under Rule 9A, though, the attempt was made to state that the impugned Tender Notification was in line with the aforesaid provision. The respondents TASMAC has no authority under the Act, to encourage consumption of alcohol and intoxicating liquor in public place or so-called Bar for which it is auctioning rights to highest bidders - The power to grant licence to run a bar can vest only with the licencing authority namely the Commissioner of Prohibition Excise. Respondents TASMAC is a mere wholesale and retail dealer. It cannot run a Bar by itself whether directly or indirectly. It is therefore for the petitioners to approach the appropriate authority under the provisions of the aforesaid Act and the Rules made thereunder if there was any violation . Therefore, on this score also, there is no merits in these Writ petitions - Statutorily, the respondents TASMAC have been given powers merely to engage itself in wholesale and retail sale of alcoholic liquor alone. It has not been given power to consumption of liquor in public or the so called Bar. The practice of respondents TASMAC to allow mushrooming of Bar within the meaning of Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003 is contrary to the provisions of the Tamil Nadu Prohibition Act, 1937 - Till the law is amended, and proper rules are framed which are in tune and consistent with the provisions of the Tamil Nadu Prohibition Act, 1937, the respondents TASMAC shall refrain from granting licences/permits to the petitioners and others to do the support service or the business in the sale of short eats or collecting used bottles. Petition dismissed.

Summary

Issues Involved:
1. Validity of the Tender Notification dated 14.12.2021 issued by TASMAC.
2. Requirement of "No Objection Certificate" (NOC) from premises owners.
3. Compliance with the Tamil Nadu Transparency in Tenders Act, 1998.
4. Legality of TASMAC's business model and auction process.
5. Petitioners' claims of financial loss due to COVID-19 lockdown.

Issue-Wise Detailed Analysis:

1. Validity of the Tender Notification dated 14.12.2021 issued by TASMAC:
The petitioners challenged the Tender Notification dated 14.12.2021, arguing that it was issued without considering the hardships faced by them and contrary to the provisions of the Tamil Nadu Transparency in Tenders Act, 1998. They claimed that the tender process was vitiated by favoritism and lack of transparency. The Court noted that the tender process had been postponed in certain districts due to administrative reasons and inclement weather. The tender process was purportedly conducted under Rule 9A of the Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003, which allows TASMAC to grant the privilege of running bars to private parties by tender.

2. Requirement of "No Objection Certificate" (NOC) from premises owners:
The petitioners argued that the requirement of obtaining a "No Objection Certificate" (NOC) from the owners of the premises was done away with in the impugned tender, which they claimed was intended to oust them and include persons closer to the ruling dispensation. The Court referred to a Division Bench decision in The Deputy Collector/District Manager Tamil Nadu State Marketing Corporation Tiruchirapalli Vs. R.Ramkumar, which upheld the requirement of an NOC. The Court found that the deletion of the NOC requirement in the impugned tender was arbitrary and resulted in an unfair exercise of power by TASMAC.

3. Compliance with the Tamil Nadu Transparency in Tenders Act, 1998:
The petitioners contended that the tender process did not comply with the provisions of the Tamil Nadu Transparency in Tenders Act, 1998, and the Rules made thereunder. They argued that the tender forms were not readily available for download, and no drop boxes were provided for submitting tender applications. The Court noted that the petitioners were given tender forms pursuant to the Court's orders but were not allowed to submit their applications due to the absence of drop boxes. The Court emphasized that the tender process must comply with the provisions of the Tamil Nadu Transparency in Tenders Act, 1998.

4. Legality of TASMAC's business model and auction process:
The Court examined the historical background of the prohibition law in Tamil Nadu and the role of TASMAC. It noted that the Tamil Nadu Prohibition Act, 1937, aims to prohibit the manufacture, sale, and consumption of intoxicating liquors and drugs, except for medicinal, scientific, industrial, or similar purposes. The Court found that TASMAC's practice of auctioning rights to sell short eats and collect used bottles in bars attached to its retail shops was not consistent with the provisions of the Tamil Nadu Prohibition Act, 1937. The Court held that TASMAC could not encourage consumption of liquor in public places and directed TASMAC to take steps to close down the bars attached to its shops within six months.

5. Petitioners' claims of financial loss due to COVID-19 lockdown:
The petitioners claimed that they suffered huge financial losses due to the COVID-19 lockdown, which forced the bars to remain closed for about 15 months. They argued that TASMAC should have allowed them to operate their licenses for an additional 15 months to compensate for the losses. The Court acknowledged the petitioners' financial hardships but emphasized that the tender conditions clearly stated that no compensation would be provided if the liquor shop or bar was closed due to administrative reasons or changes in government policy. The Court held that the petitioners could not dictate terms to TASMAC and dismissed their claims.

Conclusion:
The Court dismissed the writ petitions, finding no merit in the petitioners' arguments. It directed TASMAC to close down the bars attached to its shops within six months and emphasized the need for compliance with the provisions of the Tamil Nadu Prohibition Act, 1937, and the Tamil Nadu Transparency in Tenders Act, 1998. The Court also highlighted the need for legislative amendments to address the inconsistencies between the current practice and the statutory provisions.