1972 (5) TMI 59 - SC - Central Excise

Whether s. 43 of the Act contemplates a show cause notice which has not been given and that in any event this section clothes the authority granting the licence with unguided and uncanalised power to withdraw the licence and is, therefore, violative of Art. 14 and also Art. 19 of the Constitution as it encroaches on the appellant s fundamental right of carrying on trade or business? - Held that - Appeal dismissed.

Issues Involved:
1. Validity of Section 43 of the Bengal Excise Act, 1909 and Rule 164A of the Tripura Excise Rules, 1962.
2. Authority of the Collector of Excise to withdraw the license.
3. Compliance with the requirement of public notice under Section 22(1) of the Act.
4. Alleged violation of Articles 14 and 19 of the Constitution.
5. Requirement of a show cause notice under Section 43 of the Act.

Detailed Analysis:

1. Validity of Section 43 of the Bengal Excise Act, 1909 and Rule 164A of the Tripura Excise Rules, 1962:

The appellant challenged the validity of Section 43 of the Act and Rule 164A of the Rules. The Court held that Section 43 merely imposes reasonable restrictions on the trade in liquor, which is a special category requiring legislative control due to its injurious effects on health. The Court also upheld Rule 164A as intra vires and within the terms of Section 86 of the Act, stating that the rule was a valid exercise of the power conferred by the Act.

2. Authority of the Collector of Excise to Withdraw the License:

The appellant contended that the Chief Commissioner, not the Collector of Excise, was the authority to withdraw the license. The Court rejected this argument, clarifying that under Section 22(2) of the Act, the Collector is the authority to issue and therefore withdraw the license. The Court pointed out that the license was issued from the office of the Collector of Excise, Agartala, and was signed by that officer, making the Collector the competent authority to withdraw the license under Section 43.

3. Compliance with the Requirement of Public Notice under Section 22(1) of the Act:

The Judicial Commissioner found that the appellant's license was granted without issuing a public notice as required by the proviso to Section 22(1) of the Act. This non-compliance invalidated the contract or the privilege of selling country liquor secured by the appellant. The Court agreed with this finding, emphasizing that public notice is a condition precedent to the grant of exclusive privilege, intended to prevent favoritism, nepotism, and corruption.

4. Alleged Violation of Articles 14 and 19 of the Constitution:

The appellant argued that Section 43 conferred unguided and uncanalized power to withdraw the license, violating Articles 14 and 19 of the Constitution. The Court held that the trade or business in country liquor is a special category requiring legislative control, and the restrictions imposed are reasonable. The Court noted that Article 47 of the Constitution directs the State to endeavor to prohibit the consumption of intoxicating drinks, which justifies the regulatory framework. The Court also dismissed the argument that the withdrawal of the license without fault on the appellant's part was unreasonable, stating that the cause for withdrawal was aligned with the policy decision of the State Government.

5. Requirement of a Show Cause Notice under Section 43 of the Act:

The appellant contended that a show cause notice was required before withdrawing the license. The Court clarified that Section 43 does not contemplate two separate notices. The order dated July 6, 1970, which provided 15 days' notice of the intention to withdraw the license, was deemed sufficient. The Court found that the appellant had ample opportunity to show cause against the withdrawal, and the procedure followed did not violate any rule of natural justice.

Conclusion:

The Supreme Court upheld the validity of Section 43 of the Bengal Excise Act, 1909, and Rule 164A of the Tripura Excise Rules, 1962. It confirmed the authority of the Collector of Excise to withdraw the license and found that the requirement of public notice under Section 22(1) was not complied with, invalidating the appellant's contract. The Court dismissed the arguments regarding the violation of Articles 14 and 19, and the necessity of a show cause notice, concluding that the withdrawal of the license was justified and lawful. The appeal was dismissed with costs.

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