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TMI Blog2006 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed the appeals and the writ petitions. The Appellant herein is a federation of trade unions of toddy tappers and workers in toddy shops situate in the State of Kerala. The Abkari Act was enacted by the Maharaja of Cochin in the year 1902. It is a pre-constitutional statute. It is applicable to the entire State of Kerala. The provisions of the said Act seek to control and regulate various categories of intoxicating liquor and intoxicating drugs including arrack, toddy, Indian Made Foreign Liquor (IMFL), country liquor and other types of foreign liquor. On or about 1.4.1996, the State of Kerala banned the sale of arrack. A policy decision admittedly was taken by the Labour and Rehabilitation Department of the State of Kerala that the workers who had been engaged in manufacture, import, export, transport, sale and possession of arrack should be rehabilitated. The State of Kerala paid compensation at the rate of Rs. 30,000/- per worker. The said workers were also paid benefits under the Abkari Workers Welfare Fund Board Act. It is not in dispute that a Welfare Board has also been constituted for the workers working in the toddy shops. The expressions "Arrack" and "toddy" ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generally, or in any particular instance in this behalf." 29. Power to make rules (1) The Government may, by notification in the Gazette, either prospectively or retrospectively, make rules for the purposes of this Act." In exercise of the said power, the Rules were framed. After a lapse of about six years, the State inserted the impugned Rules, inter alia directing that one arrack worker each must be employed in all toddy shops in the following terms: "4(2) The shops so notified under sub-rule (1) above shall be such shops as are retained after abolition of certain existing shops. Grantees of privilege of such retained shops shall undertake to engage the existing workers and such eligible workers of the abolished shops who were registered with the Toddy Workers Welfare Fund Board as on 31-3-2000 and as are redeployed to their shops. Grantee of privilege shall also undertake to engage on Arrack worker of theabolished Arrack Shops of the State as would be allotted to his shop for rehabilitation, on the basis of district level seniority." 9(10) In order to ensure that the employment of workers of abolished Toddy and Arrack Shops are protected, the licensees shall abide by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has the exclusive privilege of carrying on business in liquor but the same would not mean that while parting with the said privilege the State can impose any unreasonable restriction which would be violative of Article 14 of the Constitution of India. Mr. T.L.V. Iyer, learned senior counsel appearing on behalf of the State, on the other hand, would contend that : (i) imposition of such a condition is within the domain of the State in terms of Sections 18A, 24(c), 24(d) and 29 of the Act inasmuch as while granting a licence for sale of toddy, the State merely parts with a privilege which exclusively vested in it and in that view of the matter if in terms of the policy decision of the State, arrack workers were to be rehabilitated, it could direct employment of unemployed arrack workers and, thus, there was absolutely no reason as to why such a condition cannot be imposed while parting with the privilege by the State in terms of Section 18A of the Act which enables the State to impose such conditions or restrictions as it may deem fit for the purpose of grant of a licence to sell intoxicating liquor. (ii) As arrack and toddy both come within the purview of the Act, the State is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was enacted to consolidate and amend the law relating to the import, export, transport, manufacture, sale and possession of intoxicating liquor and/ or intoxicating drugs in the State of Kerala. While framing the Rules for the purposes of the Act, the legislative policy cannot be abridged. The Rules must be framed to carry out the purposes of the Act. By reason of Section 8 of the Act, trade in arrack was prohibited as far back as in the year 1996. By reason of the impugned Rules, the State has not laid down the terms and conditions for employment of a worker. The Act does not contain any provision therefor. Under the common law as also under the provisions of the Specific Relief Act, an employer is entitled to employ any person he likes. It is well-settled that no person can be thrust upon an unwilling employer except in accordance with the provisions of a special statute operating in the field. Such a provision cannot be made by the State in exercise of its power under delegated legislation unless the same is expressly conferred by the statute. A rule is not only required to be made in conformity with the provisions of the Act whereunder it is made, but the same must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d duty on the liquor quota which, under the terms of auctions, they were bound to lift but which in fact was not lifted by them." The said decision has no application to the fact of the present case, as therein this Court was concerned with a different question. It is, furthermore, not in dispute that Article 14 of the Constitution of India would be attracted even in the matter of trade in liquor. In State of M.P. and Others v. Nandlal Jaiswal and Others [(1986) 4 SCC 566], this Court opined: "The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants its manufacture, storage, export, import, sale and possession. No one can claim as against the State the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. It is, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inherent limitations of the statute. Such an inherent limitation is that rules framed under the Act must be lawful and may not be contrary to the legislative policy. The rule making power is contained in Section 29 of the Act. At the relevant time, sub-section (1) of Section 29 of the Act provided that the government may make rules for the purpose of carrying out the provisions of the Act which has been amended by Act No. 12 of 2003 with effect from 1.4.2003 empowering the State to make rules either prospectively or retrospectively for the purposes of the Act. Its power, therefore, was to make rules only for the purpose of carrying out the purposes of the Act and not de'hors the same. In other words, rules cannot be framed in matters that are not contemplated under the Act. The State may have unfettered power to regulate the manufacture, sale or export-import sale of intoxicants but in the absence of any statutory provision, it cannot, in purported exercise of the said power, direct a particular class of workers to be employed in other categories of liquor shops. The Rules in terms of sub-section (1) of Section 29 of the Act, thus, could be framed only for the purpose of car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof that the rules have been made and promulgated in accordance with the statutory authority, unless the statute directs them to be judicially noticed; (2) in the absence of express statutory provision to the contrary, may inquire whether the rule-making power has been exercised in accordance with the provisions of the statute by which it is created, either with respect to the procedure adopted, the form or substance of the regulation, or the sanction, if any, attached to the regulation : and it follows that the court may reject as invalid and ultra vires a regulation which fails to comply with the statutory essentials." In G.P. Singh's Principles of Statutory Interpretation, Tenth Edition, it is stated at page 916: "Grounds for judicial review. Delegated legislation is open to the scrutiny of courts and may be declared invalid particularly on two grounds: (a) Violation of the Constitution; and (b) Violation of the enabling Act. The second ground includes within itself not only cases of violation of the substantive provisions of the enabling Act, but also cases of violation of the mandatory procedure prescribed. It may also be challenged on the ground that it cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter to be done under the Cess Act. Even the language of Rule 8 does not warrant such extensive power. Rule 8 contemplates merely exempting of certain exciseable goods from the whole or any part of the duty leviable on such goods. The principle of the decision of this Court in Kesavananda Bharati v. State of Kerala applies here perfectly. It was held therein that the power of amendment conferred by Article 368 cannot extend to scrapping of the Constitution or to altering the basic structure of the Constitution. Applying the principle of the decision, it must be held that the power of exemption cannot be utilised for, nor can it extend to, the scrapping of the very Act itself. To repeat, the power of exemption cannot be utilised to dispense with the very levy created under Section 3 of the Cess Act or for that matter under Section 3 of the Central Excise Act." The law that has, thus, been laid down is that if by a notification, the Act itself stands affected; the notification may be struck down. Furthermore, the terms and conditions which can be imposed by the State for the purpose of parting with its right of exclusive privilege more or less has been exhaustively dealt with in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both toddy and former arrack workers belong to the same class, the rehabilitation of arrack workers who had been thrown out of employment because of an excise policy on the part of the State, do not have any reasonable nexus with the purpose of the Act, namely, the prohibition of grant of excise licence in relation to the trade in arrack. If a policy decision is taken, the consequences therefor must ensue. Rehabilitation of the workers, being not a part of the legislative policy for which the Act was enacted, we are of the opinion that by reason thereof, the power has not been exercised in a reasonable manner. Rehabilitation of the workers is not one of the objectives of the Act. The submission of Mr. Iyer that there exists a distinction between carrying out the provisions of the Act and the purpose of the Act, is not relevant for our purpose. The power of delegated legislation cannot be exercised for the purpose of framing a new policy. The power can be exercised only to give effect to the provisions of the Act and not de'hors the same. While considering the carrying out of the provisions of the Act, the court must see to it that the rule framed therefor is in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee may not, unless otherwise provided for in the statute itself. The rights and liabilities of a workman would fall within the purview of the provisions of the Industrial Disputes Act. What is the right of a workman in case an industry is closed is governed by Section 25(FFF) and/ or Section 25(J) of the Industrial Disputes Act. The State while pursuing its social object or policy may do something to rehabiliate the workers affected by the ban but the same would not mean that the State can thrust such employees upon an unwilling employer. It, furthermore, would not mean that the State can rehabilitate one set of workers at the cost of the other. The employees in the arrack shops had already been paid an amount of Rs. 30,000/- as compensation and other benefits under the Abkari Workers Welfare Fund Board Act. We are informed that they have also been paid a sum of Rs. 2000/- each in 1997. If they became entitled to any other benefit, the State may provide the same as a part of welfare policy but not in pursuit of an excise policy. The matter can be considered from another angle. When an employer gives employment to a person, a contract of employment is entered into. The rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Kerala and Others [(2001) 3 SCC 694], this Court again held that the contractors were liable to pay the duty on even unlifted portion of the designated quantum of rectified spirit having regard to the binding nature of the contract. "Take it or leave it" argument advanced by Mr. Chacko is stated to be rejected. The State while parting with its exclusive privilege cannot take recourse to the said doctrine having regard to the equity clause enshrined under Article 14 of the Constitution of India. The State must in its dealings must act fairly and reasonably. The bargaining power of the State does not entitle it to impose any condition it desires. In Hindustan Times and Others v. State of U.P. and Another [(2003) 1 SCC 591], wherein one of us was a member, this Court observed: "39. The respondents being a State, cannot in view of the equality doctrine contained in Article 14 of the Constitution of India, resort to the theory of "take it or leave it". The bargaining power of the State and the newspapers in matters of release of advertisements is unequal. Any unjust condition thrust upon the petitioners by the State in such matters, in our considered opinion, would attract the w ..... 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