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TMI Blog2006 (4) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... not direct refund of the huge amount collected by it by way of application fees. We would, however, expect the State and its officers to scrupulously follow the constitutional mandate in future. It was with this intention we have dealt with these matters at some detail. We hope and trust that the State of Chhattisgarh and its authorities would not commit the same mistakes in the coming years keeping in mind the mandate of Article 47 of the Constitution of India and scrupulously observe the rules for disposal of liquor shops. With the aforementioned observations and directions, these appeals are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation of the selection of the select candidates. 7.2 The respondents 1 to 12 be directed to satisfy this Hon'ble Court regarding the compliance of the mandatory directions as given by the Hon'ble Apex Court in the case of Ashok Lanka Vs. Rishi Dikshit. 7.3 That the Hon'ble Court may be pleased to issue a writ in the nature of mandamus quashing and annulling the entire selection of respondents 13 to 89 and also quashing the temporary licences by issuing a writ in the nature of certiorari. That, the Hon'ble Court may be pleased to issue a writ in the nature of mandamus commanding the respondents 1 to 12 to make selection strictly in accordance with law, rules and the directions of the Hon'ble Supreme Court, afresh. 7.4 That the contempt' proceedings be initiated against the respondents 2 to 12 for the non- compliance of the order of the Hon'ble Apex Court." Before the High Court, the questions raised by the parties inter alia were: (i) The permanent addresses of the persons in whose favour licences were granted were not property verified. (ii) The temporary addresses given by them were wrong and in that view of the matter scrutiny of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State on 23.02.2006 but apparently the contents thereof had not been taken into consideration on the ground that the same was by way of sur- rejoinder to the rejoinder filed by the writ petitioners and, as such, such pleadings are impermissible without permission of the court. It was furthermore held that in the said additional return, untenable defences were set up covering up serious lapses committed by Respondent Nos. 1 to 12. The High Court thereafter proceeded to cite examples in support of its findings. It was noticed that the official respondents wrongly placed the burden of proof on the objectors like the writ petitioners to prove that the applicants for grant of licences did not possess the prescribed eligibility, as the writ petitioners objectors were not supposed to prove the negative facts by producing evidence. The responsibility cast on the statutory authorities has, thus, been sought to be placed on the objectors which constituted a serious flaw in the enquiry vitiating the selection process. Before the High Court, a chart was produced by the writ petitioners showing common addresses of a number of licensees. The High Court in detail noticed the findings of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were taken into consideration. (v) The High Court, in arriving at the conclusion as regards purported non-compliance of the rules, failed to notice various documents and drew inferences which were contrary to the records. (vi) So far as the alleged non-compliance of Rule 9(c) of the Rules is concerned, a consolidated list of defaulters along with their complete addresses was available with all the licensing authorities and the same had been relied upon while scrutinizing the various applications. (vii) As regards, alleged compliance of Rule 9(d) of the Rules, it was submitted that the Superintendent of Police of the respective districts where the applicant was a resident of more than one district and one State had issued character certificates. (viii) In terms of Rule 12, in the case where there had been multiplicity of applications, a lottery was held which was completely above board being a computer generated programme operated by a Central Government organization, viz. National Informatics Centre. (ix) The High Court had wrongly held that certificates were to be granted only by the Revenue Authorities of Chhattisgarh inasmuch as nothing in the excise rules or the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the admitted fact that several persons have shown the same addresses, fictitious persons might have been granted licences. STATUTORY PROVISIONS The Act was enacted to consolidate and amend the Excise Law in the State of Chhattisgarh. 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. Rule 4 provides for formation of groups of liquor shops; clause (iii) whereof prohibits an applicant/firm/company from obtaining licences for more than two groups of shops. Rule 5 provides for the period of licence which would be for an excise year or part thereof. Rules 6 and 7 of the Rules read as under: "6. Application fee with application - The application fee with the application for licence of groups of liquor shops shall be as shown in the table below- S. No. Reserve Price of the group Prescribed application fee 1. For group of shops of Rs. 5 lakh to 1 crore Rs. 1,000/- 2. For group of shops of Rs. 1 crore to 2 crore Rs. 3,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shops in accordance with the rules. (2) That he possess good moral character and have no criminal background and have not been convicted of any offence punishable under the Act or Narcotic Drugs and Psychotropic Substances Act, 1985 or any other law for the time being in force or any other cognizable and non-bailable offence. (3) That in case he is selected as licensee, he will furnish a certificate issued by Superintendent of Police of the district of which he is the resident, showing that he as well as his family members possess good moral character and have no criminal background or criminal record, within thirty days of grant of licence. (4) That he shall not employ any salesmen or representative who has criminal background as mentioned in clause (iii) or who suffer from any infectious or contagious disease or is below 21 years of age or a woman. (5) That no government dues are outstanding against him." Rule 10 envisages formation of a district-level committee; whereas Rule 11 provides for selection of licensees, clauses (b) and (c) whereof read thus: "(b) The said Committee shall select licensees from the list of applicants. In case more than one applicants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulation and control over the trade in intoxicating drinks so as to enable the State to curb or minimize, as far as possible, the consumption thereof. The State may or may not prohibit manufacture, sale or consumption of liquor but it is vital that while parting with its exclusive privilege to deal with intoxicating liquor, the provisions of the Act and the Rules for which the same had been enacted must be strictly complied with. The Act and the Rules deal only with control and regulations. There was no provision which gives any discretion to the authorities concerned to relax the provisions of the Rules. The Rules in this behalf again must be framed upon taking into consideration of all relevant factors. The State in making the rules and formulating the policy decisions must be guided by public interest. In such matters, the State has a positive obligation to ensure that any activity contemplated, strictly conforms to the requirements of public good and is not otherwise derogative of public health. The State parts with its exclusive privilege on certain statutory conditions such as payment of excise fee. When it lays down criteria for selection of persons who would become qual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to describe the same effects contrary to the popular belief that it is a stimulant. It is not mere accident that intoxicating liquor and dangerous drugs have been clubbed together in entry 8, List II." Article 47 has a unique feature in the sense that the first part refers to public health, whereas the second part specifically refers to prohibition of liquor. Similar provisions are found in the Constitution of U.S. and Lithuania as well. It is of some significance to note that Section 70 was inserted in the draft Constitution after the first part was suggested by Shri B.N. Rau derived from the recommendations of the U.N. Conference on Food and Agriculture, 1943 as several members, including Seth Govind Das and Shri Bishwanath Das specifically wanted that prohibition should find specific mention at a suitable place in the Constitution. One of the members, Kazi Sayed Karimuddin expressed his desire that such a provision should be included in a separate Article having regard to the preachings of Mahatma Gandhi and also having regard to the fact that the same has been approved by all communities. In Article 47, however, only liquor was specifically mentioned at the instance of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and a vocabulary of values that links directly with societal structure and function, can be useful to the work of public health. [See Jonathan M. Mann, Public Health and Human Rights, American Bar Association Journal on Human Rights, Fall 1998, Vol. 25 No.1, pp. 2,3 and 4.] Grant of licence as a measure of control of intoxicating liquor is an age-old phenomenon. Even in England several statutes have been enacted therefor including the current one which was enacted in 2003. (See Halsbury's Laws of England, 4th Ed. Volume 26 p.5.) Regulation of liquor under the Act The Chhattisgarh Act provides for a unified regulation of sale and supply of alcohol. It seeks to promote fundamental licencing objectives. It enjoins several duties upon the licensing authorities, namely, (i) prevention of crime and disorder, (ii) public safety; (iii) prevention of public nuisance; and (iv) the protection of children from harm. In view of Article 47 of the Constitution, indisputably, public health in society plays a vital role. By the said expression, the makers of the Constitution refer both to the goal of health of the public and the attending promotion of healthy practices. Prohibition of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason or the other, did not intend to part with its exclusive privilege to deal in liquor. It is also not a case where the State has acted in such an arbitrary manner which would attract the wrath of Article 14 of the Constitution of India. All the licensees in relation to whom allegations had been made, thus, were necessary parties in the writ petition and in their absence the same could not have been decided. Furthermore, it would be a travesty of justice if the parties against whom serious allegations were made and are said to have been found had not been made the parties to the writ petition as by reason thereof they in terms of the High Court judgment were not allowed to carry on their businesses in terms of the licences granted in their favour. All such persons whose licences had been cancelled were, thus, necessary parties. EN-MASSE CANCELLATION - PRINCIPLES OF In law it is permissible to cancel the entire selection process if it is held that the same is tainted to such an extent that it may not be possible to separate the innocent from the tainted ones. As, for example, in a case of mass cheating adopted by the students in a Board Examination, it may be permissible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Distributors as a result whereof unequals were said to have been clubbed by reason of arbitrary exercise of executive power, the same was held to be impermissible stating: "The solution by resorting to cancellation of all was worse than the problem. Cure was worse than the disease. Equal treatment to unequals is nothing but inequality. To put both the categories - tainted and the rest -on a par is wholly unjustified, arbitrary, unconstitutional being violative of Article 14 of the Constitution" It was further held: "The aforesaid observations would apply with equal if not more force to DSBs if media exposure that the allotments were made either to the high political functionaries themselves or their near and dear ones is correct, the authorities would not only be justified in examining such cases but it would be their duty to do so. Instead of fulfilling that duty and obligation, the executive cannot unjustly resort to cancellation of all the allotments en masse by treating unequals as equals without even prima facie examining any cases exposed by the media" It was also not a case where the writ petitioners had impleaded the private respondents in their r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also the terms and conditions of the licences. Eligibility clause contained in the advertisement was, therefore, required to be considered applying a rigorous standard. Emphasising the necessity to verify the requisite documents by the District Level Committees and the mode and manner in which the selection processes were to be adverted to in terms of Rule 11 of the Rules, it was held that the Scrutiny Committee was entrusted with the duties to oversee as to whether the conditions have been complied with or not. The expression "has to submit an affidavit" contained in Rule 9 ex facie was found to be mandatory in nature. It was opined: "Furthermore, filing of an affidavit in the prescribed format is a statutory requirement under the Rules. Filing of such an affidavit is necessary as in the event the same on verification is found to be incorrect, not only 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." This Court noticed from the chart filed on behalf of the writ petitioners that different persons belonging to different communities had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may consider the said objections and, if necessary, may call for further or better particulars from the selected candidates so as to satisfy themselves about their eligibility, etc. (vi) The respective district-level committees shall strictly verify and scrutinise the affidavits as also other documents furnished by the said applicants so as to arrive at a decision that the statutory requirements have been complied with upon application of their mind. (vii) The members of the Committee are made personally liable to see that all statutory requirements are complied with. They would strictly apply the statutory provisions as regards eligibility and suitability of the candidates. (viii) The aforementioned exercise by the Committee should be completed within one month. In the event, any affidavit filed by a selected candidate either pursuant to this order or filed earlier in the format prescribed by the Commissioner of Excise is found to be incorrect, strict action in accordance with law shall be taken against him. (ix) The Superintendent of Police of each district within whose jurisdiction the selected candidates ordinarily reside shall verify the antecedents and other relevant part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en placed before us indicating how each of the directions issued by this Court in para 90 are said to have been complied with, which is as under: I The Member-Secretary shall scrutinise all the applications of the successful candidates afresh and prepare a summary report within one week from date. ? On 16.05.2005 the Excise Commissioner convened a meeting of all the Assistant Commissioner Excise and District Excise Officers for instructing them to comply with the Order passed by the Hon'ble Supreme Court within the prescribed time. In this meeting the officers were also appraised as to how the scrutiny is to be conducted, the affidavits are to be obtained and the eligibility criteria have to be checked and further as to how the objections are to be dealt with. ? The Member - Secretary, who is the District Excise Officer scrutinized all the applications of the successful candidates afresh and prepared a summary report within one week. Ii Irrespective of the format prescribed by the Commissioner of Excise, each of the selected candidates must file an appropriate affidavit, which would be in strict compliance with the requirement of Rule 9. ? Each of the selected candidates f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittees strictly verified and scrutinized the affidavits and supporting documents furnished by the said applicants so as to arrive at a decision that the statutory requirements have been complied. ? The Committee also personally interviewed each of the successful Applicants before the Licenses were confirmed. Vii The members of the Committee are made personally liable to see that all statutory requirements are complied with. They would strictly apply the statutory provisions as regards eligibility and suitability of the candidates. SOME INDIVIDUAL CASES Before us, various instances had been shown as to how the provisions of the mandatory rules have been flouted in the selection process. The eligibility of the candidates was also questioned. Rule 9 provides for affirmation of an affidavit by the applicant categorically stating that in the event he is selected, he shall furnish the information specified therein within 30 days from the date of grant of licence including a certificate issued by the Superintendent of Police of the district of which he is the resident. The learned counsel for the Appellant has placed before us a chart, as noticed hereinbefore, showing the mode an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents have failed to carry out the directions issued by this Court in the manner expected of them and in conformity with the mandatory rule 9 and 11 of the Rules. The High Court in paragraph 23 also found that the burden was wrongly shifted on objectors to prove the negative facts by evidence which was a serious flaw in enquiry. In paragraph 24, it also took notice of a chart and found that vague and incomplete address such as 'resident of Raipur' and 'resident of Saja' which is an assembly constituency, has been accepted by the authorities. The aforesaid findings of the High Court establish that the licences might have been issued in fake names and to the ineligible applicants. Our attention has furthermore been drawn to the fact that some of the applicants are facing criminal trials, veracity whereof is not established. The contention of the learned counsel appearing on behalf of the Appellant that this Court has placed burden of proof on the objector may not be entirely correct. The initial burden was on the applicants themselves for grant of licences to satisfy the members of the District Level Committees that they fulfill the eligibility and other criteria. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention has not been raised but we are satisfied about the bona fide of the State in this behalf. In that view of the matter, it was not necessary for the District Level Committee or the State to verify the criminal background of the family members of the applicants. Presumably, character certificates were required to be issued by the respective Superintendents of Police in respect of the candidates concerned. Of course, if they had been residing at different places at different points of time, such character certificates were required to be issued by the Superintendent of Police of each such place. But the same would not mean that character certificates were required to be produced by the candidates in respect of their family members also particularly when it was not certain as to who would come within the purview of the said term. It was in that sense the Notification dated 15.3.2005 was a clarificatory one, and, therefore, could be given a retrospective effect. CHARACTER CERTIFICATES In view of the directions contained in sub-paragraph (xi) of Paragraph 90, we do not accept the contention of Mr. Desai that only certificate issued by the Superintendent of Police of the plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idents of the State of Jharkhand either on a temporary or permanent basis, they would not be shown to be residents of such places wherefrom their antecedents cannot be verified. Such applicants, therefore, should not be allowed to furnish an address only for the purpose of communication and if so, the same should clearly be stated in the application. In the Act or the Rules, again no particular authority had been mentioned as having been authorized to issue certificate. No particular method of verification of proof of address and identity had also been shown to exist. It will be appropriate if a clarification is issued in this behalf. The Scrutiny Committee appears to have relied upon certificates issued by Tahsildars, Municipal Counsellors, etc. which had not been objected to by the writ petitioners. It is stated that most of the applicants are income tax payees. They have been granted a PAN Card. In future, however, the authorities should insist that the applicants must enclose Xeroxed copies of their PAN Cards along with their applications. CONCLUSION The period for which licences had been granted is over. For all practical purposes, the State and the licensees have succeede ..... X X X X Extracts X X X X X X X X Extracts X X X X
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