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TMI Blog2005 (5) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Chhattisgarh Excise Act, 1915 ('the Act', for short). Section 7(e) of the Act provides that the State Government may, by notification, for the whole or for any specified part of the State, delegate to the Chief Revenue authority or the Excise Commissioner all or any of its powers under the said Act except the power conferred by Section 62 to make rules. Section 62 of the Act empowers the State to frame rules for the purpose of carrying out the provisions thereof. Without prejudice to the generality of the said provisions, the State Government, inter alia, however, may make rules : (e) regulating the periods and localities for which, and the persons or classes of persons to whom, licences for the wholesale or retail vend of any intoxicant may be granted, and regulating the number of such licences which may be granted in any local area; (f) prescribing the procedure to be followed and the matters to be ascertained before any licence for such vend is granted for any locality; (g) regulating the amount, time, place and manner of payment of any duty or fee or tax or penalty; (h) prescribing the authority by, the form in which, and terms and conditions on and subject to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application shall not be earlier than ten days with effect from the date of publication of the advertisement in the newspapers." Eligibility conditions for applicant are laid down in Rule 9 which read as follows : "Eligibility conditions for applicant. The applicant has to fulfil the following conditions for obtaining the licence for shop/Group of shops of Country/foreign liquor. (a) Should be a citizen of India or a partnership firm whose partners are citizens of India. No change in partnership shall be allowed after settlement of shop(s) /group of shops except with the permission of the Excise Commissioner. (b) Should be above 21 years of age. (c) Should not be a defaulter/blacklisted or debarred from holding an excise licence under the provisions of any rules made under the Act. (d) Has to submit an affidavit duly verified by public notary as proof of the following namely : (1) That he possesses or has an arrangement for taking on rent suitable premises in that locality for opening the shops in accordance with the rules. (2) That he possesses good moral character and have no criminal backgroun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arred from holding any excise licence in future, anywhere in the State and his applications fee shall also stand forfeited. A consolidated list of such defaulters under this rule, along with their complete addresses shall be forwarded by the District Excise officer/Assistant Commissioner to the Excise Commissioner, who will circulate the consolidated list of the State to all the licensing authorities of the State." Rule 23 provides for suspension and cancellation of the licence, in the event any of the conditions laid down therein is violated; clause (c) whereof is as follows : "If the affidavit submitted by the licensee at the time of application is found incorrect and assertions made therein are found to be false. In terms of the provisions of the said Rules, a format in which an application is to be filed is prescribed providing for filing of an affidavit duly verified by a public notary. AMENDMENT IN THE RULES AND CIRCULARS ISSUED BY THE COMMISSONER OF EXCISE : On or about 9.3.2004, clause (c) of Rule 8 of the Rules was amended in the following terms : "(c) the application form and affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE CHHATTISGARH EXCISE SETTLEMENT OF LICENCES FOR RETAIL SALE OF COUNTRY/FOREIGN LIQUOR RULES, 2002 : For settlement of retail shops/groups of country/foreign liquor for the year 2005-06, under application system, aforesaid directions are being issued and accordingly proceedings shall be ascertained, even then where amendment is to be done in the Chhattisgarh Excise Settlement of Licences for retail sale of country/foreign liquor Rules, 2002, for that notification shall be sent severally. Similarly, for licence fees prescribed for the year 2005-06 for licence of F.L. 2 & F.L. 3, notification shall be sent separately." TENDER PROCESS : A notice inviting applications for grant of licence under the Act and the Rules was issued on 14.2.2005, clauses (2), (3), (4), (5) and (9) whereof are as under : "2. As per the above programme, the Collector concerned shall publish the notice in his district on the date fixed, wherein in respect of retail country/foreign liquor shop/group, the minimum surety amount, duty amount, amount of licence fee annual revenue, 1/12th part of licence fee and 1/12th part of the duty am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use(2) of sub-clause (3) of clause 62 of the Chhattisgarh Excise Act, 1915 (No.II of 1915), the State Government hereby makes the following amendment in the Chhattisgarh Excise Settlement of Licenses for retail sale of Country/Foreign Liquor Rules, 2002, namely : AMENDMENT In the said rules, in rule 8, - (i) The existing clause (C) shall be substituted by the following clause (C), namely :- (C) The application form under rule-6 along with prescribed application fee shall be submitted to the Licensing Authority of the concerned district within prescribed date & time for grant of licence for retail shop/group of country/foreign liquor in the proforma prescribed by the Excise Commissioner. (ii) After clause (C) the following clause (C-1) shall be added, namely : (C-I) The first, second & third applicant selected for retail shop/group of country/foreign liquor by the selection committee after lottery drawn by computer must submit affidavit verified by the Notary in the prescribed proforma the next day during office hours. 2. This amendment shall be effective for the settlement of Licenses for retail sale shops of Country/Foreign liquor for the year 2005-06." WRIT PROCEEDINGS : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also mention that several intervention applications were also filed by the alleged successful bidders. HIGH COURT JUDGMENT : The High Court upon analyzing the provisions of the Act and the Rules framed thereunder was of the opinion that the State was entitled to make the selection of the eligible candidates through computer. It was, however, opined that the District Level Committees did not make any scrutiny whatsoever to find out as to whether the applicants concerned satisfied the eligibility conditions laid down in Rule 9 or not, as no information was required to be furnished in the format prescribed by the Commissioner of Excise in that behalf. The High Court was further of the opinion that the disclosure of such information by the applicants even before the submission of applications were necessary so as to enable the authorities to satisfy themselves about the fulfillment of different eligibility conditions mentioned in Rule 9. Consequently, it was directed that a fresh selection be made in terms of the extant rules. The High Court while rejecting the wider challenge on the legal policy, held : (a) The circular letter dated 14.2.2005 issued by the Commissioner of Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Rules with retrospective effect, issued the Notification dated 22.3.2005 which was retrospective in nature. [Reliance, in this connection, has been placed on The State of Madhya Pradesh and Others vs. Tikamdas (1975) 2 SCC 100]. It was contended that the High Court also failed to construe properly the effect of amended Rule 8 (c) in terms whereof affidavit to be verified before the public notary in the prescribed format was required to be filed on the day following the selection and, thus, the requirement of filing the affidavit along with application in terms of the said rule was dispensed with. In any view of the matter, the learned counsel would urge that having regard to the fact that all candidates including the writ petitioners before the High Court understood the rule in the same manner, namely, the affidavits were required to be filed after the selection process was over and, thus, did not choose to file any affidavit whatsoever and, thus, the rules should have been construed in such a manner. The learned counsel placed on strong reliance, in this connection, on G.J. Fernandez vs. State of Karnataka and Others [(1990) 2 SCC 488). In any event, the same would amount t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selection. Drawing our attention to the fact that the mode of selection through lottery is permissible in view of the decision of this Court in Rajendra Singh vs. State of M.P. and Others [(1996) 5 SCC 460], Mr. Prasad would contend that the requirement to comply with the rules should have been considered having regard to the changed mode of selection in terms of Rule 11(b). Public Interest Litigation, Mr. Prasad would urge, should not be entertained whereby the economic policy adopted by the State in the matter of vending liquor is challenged. Reliance, in this connection, has been placed on Nandlal Jaiswal (supra). Mr. Prasad also placed strong reliance upon Balco Employees' Union (Regd.) vs. Union of India and Others [(2002) 2 SCC 333] in support of his contention that if the petitioner was not aggrieved, he cannot have locus standi to maintain a writ petition. Mr. C.S. Vaidyanathan, the learned Senior Counsel appearing on behalf of the Appellants in Civil Appeal arising out of SLP (CC No.4579), would submit that the object of the Act and the rules framed thereunder being to augment the revenue and preventing adulteration of liquor; the state action can be challenged only if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionaries of the State and/or the Selection Committees, having regard to the nature of transaction were required to verify the applications before selection. It was pointed out that despite the fact that the High Court by an order dated 7.3.2004 prohibited the State from disclosing the list of selected candidates, the socalled selected candidates filed applications for grant of special leave to appeal before this Court on the premise that they had been selected. It was submitted that the amendment carried out in Rule 9 on or about 9.3.2004 was wholly irrelevant. Drawing our attention to the judgment of the High Court, the learned counsel would submit that it has rightly been found that sub-rule (3) of Rule 9 compared to the old provisions contained therein in view of the language thereof clearly demonstrates that Rule 9 is mandatory in nature. The amendment made in Rule 9 by reason of the notification dated 22.3.2005, Dr. Singhvi would argue, cannot put the clock back as the entire selection process was completed by then. Mr. G.L. Sanghi, the learned Senior Counsel appearing on behalf of some of the Respondents would submit that keeping in view the fact that while exercising its ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Committee to weed out the unwanted applicants. PUBLIC INTEREST LITIGATION : It may not be necessary for us to consider as to whether the public interest litigation should have been entertained by the High Court or not. The High Court did entertain the public interest litigation without any objection and ultimately allowed the same. Furthermore it is well settled that even in a case where a petitioner might have moved the court in his private interest and for redressal of personal grievances, the court in furtherance of the public interest may treat it necessary to enquire into the state of affairs of the subject of litigation in the interest of justice. [See Guruyayoor Devaswom Managing Committee and Anr. Vs. C.K. Rajan and Others [(2003) 7 SCC 546 para 50] and Prahlad Singh vs. Col. Sukhdev Singh (1987) 1 SCC 727] ACQUIESCENE : When a public interest litigation was entertained the individual conduct of the writ petitioners would take a backseat. There cannot be any doubt whatsoever that in a given case a party may waive his legal right. In an appropriate case, the doctrine of acquiescence or acceptance sub silentio may also be invoked. [See Haryana State Coop. Land D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enable the statutory authorities to consider their cases for grant of licence. The advertisement issued by the State calls upon only such persons to file applications who are suitable therefor, which in turn would mean that the applicants must satisfy the authorities that they are eligible for grant of licence. The applicants must also demonstrate that they are suitable for grant of licence as in the event of their being found unsuitable, steps are required to be taken by the committee for resettlement of the shops, wherefor procedures laid down in Rule 8 were required to be complied with again. Stricter restriction is contemplated in the matter of compliance of the terms and conditions of the licence. Rule 4 of the Rules permits not more than two groups to a single licensee. Rule 9 provides that the eligibility conditions should be scrutinized before an application is made. Rule 9 is in two parts. It deals with the eligibility conditions of the applicant. It does not make any exception as regard fulfilment of different clauses inasmuch as the said rules begin with the expression "the applicant has to fulfil the following conditions". Such conditions are required to be fulfilled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement to comply with the provisions of clause (1) of sub-rule (d) of Rule 9. Clause (b) of Rule 11, therefore, presupposes that before a licence is granted the requirements contemplated therein should be complied with. A candidate before selection must be found to be eligible therefor. It postulates that before the actual licence is granted, the conditions precedents as contained therein are required to be fulfilled, failing which the Committee must take steps for resettlement of shops or group of shops. The question of payment of licence fee or security amount arises when an applicant is selected for grant of licence in terms of Rule 13. The Scrutiny Committee is also enjoined with a duty to see as to whether a person was a defaulter or not. Rule 9, as it originally stood, thus, on proper construction must be held to have laid down that an affidavit was required to be filed by the applicant which is fortified by the fact that Rule 23(1)(c) contemplates that if the affidavit submitted by the licensees at the time of application is found incorrect and assertions made therein are found to be false, the Licensing Authority would be empowered to suspend or cancel the licence. The ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the deponent can be proceeded against but his licence would also be liable to be cancelled. Filing of an affidavit under the Rules is, therefore, mandatory in character. The Commissioner of Excise issued a circular letter dated 14.2.2005 which power evidently he did not possess in terms of Section 7 of the Act. Although the State may delegate its power to the Commissioner of Excise, such a delegation cannot be made in relation to the matters contained in the rule making power of the State. The matters which are, therefore, outside the purview of the rules only could be the subject-matter of delegation in favour of the Commissioner of Execise. The Commissioner of Excise is a statutory authority. He is bound to exercise his power only within the fourcorners of the Act or the rules framed thereunder and not de' hors the same. Mr. Desai is also not correct in his submission that clause 22 of the said circular contemplates a future amendment in the rules. Even if the same contemplates a future amendment, the same would not sub-serve the statutory requirements inasmuch as the Commissioner of Excise was not supposed to know as to how the existing rules would be amended and whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement for License for Retail Sale of Country/Foreign Liquor Rules, 2002." (6) That the Deponent bears good moral character. He has not been held guilty of non-bailable offence under Chhattisgarh Excise Act, 1915 or Narcotics Drugs and Psychotropic Substances Act, 1985 or any other procedure or law promulgated that time." A bare comparison of the said clauses with Rule 9 would demonstrate that the same do not satisfy the statutory requirements ARE THE AMENDING RULES RETROSPECTIVE : At this juncture, we may notice the effect of the amendment effected in terms of the notification dated 22.3.2005. But before we proceed to do so, it may be noticed that indisputably the entire selection process was over by 16.3.2005. By reason of the said notification, clause (c) of Rule 8(1) was substituted. The substituted provisions lay down that the application form prescribed in terms of Rule 6 together with the prescribed application fee shall be submitted in the proforma prescribed by the Commissioner of Excise. Yet again clause (C-1) was added after clause (c) providing that the first, second and third applicants selected must submit an affidavit duly verified by the public notary in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an vs. T.P.M. Sahir and Others (2003) 8 SCC 498] We have noticed hereinbefore that despite the fact that the order of injunction was issued by the High Court while modifying the interim order on 7.3.2005, the State was asked not to publish the selection list. The contentions raised in the petitions for grant of special leave to appeal, however, leave no manner of doubt that such selection list whether in violation of the order of the High Court or otherwise had been published. If the said rules are considered to be retrospective, admittedly, the affidavits had not been filed on the next day of such selection and, thus, the rules are not capable of being implemented. Different situations may arise in different cases in the matter of grant of injunction as was noticed by this Court in Deoraj vs. State of Maharashtra and Others [(2004) 4 SCC 697] stating : "12. Situations emerge where the granting of an interim relief would tantamount to granting the final relief itself. And then there may be converse cases where withholding of an interim relief would tantamount to dismissal of the main petition itself; for, by the time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard compliance of conditions, licences were granted on 11.4.2005 and 12.4.2005. The affidavit of the State reveals : "That the process of selection of Applicants under the Circular dated 14.2.2005 had already been completed on 16.3.2005 and a list of the Applicants selected after the draw of lotteries had been submitted before the Hon'ble Chhattisgarh High Court on 22.3.2005. A typed copy of the list of successful Applicants as submitted before the Hon'ble Chhattisgarh High Court is annexed hereto and marked as Annexure "RCG-2". That, accordingly based on the result of the selection process, the Collectors of all Districts in the State called upon the selected Applicants to submit affidavit in the prescribed format. The affidavits submitted were duly processed/scrutinized by the District Level Committee constituted in each district as per Rule 10 of the 2002 Rules (comprising of the Collector as the Chairman and Assistant Commissioner/District Excise Officer as the Member Secretary). The licences were thereafter granted on 11.4.2005/12.4.2005 subject to the condition that the same were only temporary and were grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce whereas a directory statute requires substantial compliance. Even if a statute is directory, the State cannot say that the requirements contained therein do not envisage compliance thereof. The authorities of the State cannot raise a plea that they would not even notice the inherent defects contained in the application. They could not proceed on a presupposition, for which there is no legal sanction, that contents of the affidavit would be correct. No summary report required to be prepared by the Member Secretary for its placement before the Committee appears to have not been prepared. The Rules postulate that each and every application must be examined carefully. Mere fact that a large number of applications have been filed, as a result whereof the State had been able to obtain crores and crores of rupees by itself did not entitle the State to dispense with the statutory requirements. The application fees were not meant to be utilized for the purpose of earning revenue but to meet the administrative charges required therefore. Application fees cannot be equated with tax. Undoubtedly, the state has the exclusive privilege to deal in liquor but it has also to be borne in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may notice that in terms of the Civil Procedure (Amendment) Act, 2002, a plaint must be verified by an affidavit, which is mandatory in nature. In Nain Sukh Das (supra) this Court was concerned with a case where the election of the municipal member was sought to be set aside on the ground of alleged violation of Article 15(1) of the Constitution. In that case it was held that the petitioners therein never asserted their rights by taking appropriate proceedings to get the bar under Article 15(1) removed and in that situation, this the Court did not exercise its jurisdiction under Article 32 of the Constitution stating: "It may be, as we have already remarked, that the petitioners could claim such relief as rate-payers of the Municipality in appropriately framed proceedings, but there is not question of enforcing petitioners' fundamental right under article 15(1) or article 14 in such claim. There is still less ground for seeking relief on that basis against respondent 3 who is only a nominated member" The said decision has no application in the instant case. In K.N. Guruswamy (supra), the appellant therein sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her vs. Union of India and Others [(2004) 7 SCC 68]. The State while exercising its power of parting with its exclusive privilege to deal in liquor has a positive obligation that any activity therein strictly conforms to the public interest and ensures public health, welfare and safety. Strict adherence to the requirement to comply with the statutory provisions must be considered from that angle. CONCLUSION : The question, however, which now falls for consideration is as to what order should be passed in the peculiar facts and circumstances of this case. In this case the mode of selection is in question. All the parties participated in the selection process. Some of them became successful. They had not complied with the statutory requirements not because they were not willing to do so but because the statutory authorities were not correctly advised. The conduct of the statutory authorities although must be deprecated but that by itself, in our opinion, may not come in the way of the successful candidates in getting the just relief. Keeping in view the peculiar facts and circumstances of this case, we intend to issue the following directions : i) The Member Secretary shall scru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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