C.L. Kalappa vs Deputy Commissioner (Excise)

Shivashankar Bhat, J.—The petitioner is a licensee to vend Indian made Foreign Liquor. The licence is called C.L.2 licence. The licence was obtained under the provisions of the Karnataka Excise (Sale of Indian made Foreign Liquor) Rules, 1968 (for short ''the Liquor Rules''). Originally, the licenced premises was situated near the Bus Stand and it belonged to the Municipality. Since the Municipality decided to demolish the building, the petitioner approached the Licensing Authority to claim permission to shift the shop to the premises which is situate near I.B. Road, Kushalnagar. Accordingly, the permission to shift shop to D.No. 4-8(2), I.B. Road, Kushalnagar was granted on 15-10-1981. Subsequently, it seems certain objections were raised by the members of the public that the said shop was very close to Ganapathy Temple and sought the shifting of the shop from the said premises at No. 4-8(2). Consequent on this, the Deputy Commissioner made an order on 30-10-1981 as per Annexure-B directing the petitioner to select an alternative place to shift the C.L.2 premises within seven days from the date of receipt of the said notice. The petitioner filed the above Writ Petition and obtained an interim order against the enforcement of the said notice. Obviously by virtue of the interim order, the petitioner continued in the same premises.

Sri A. Jagannatha Shetty, learned Counsel for the petitioner contended that there is no power in the Deputy Commissioner to direct the shifting of the premises. According to the learned Counsel, an elaborate enquiry is contemplated before the licence is issued and the suitability of the shop also has to be considered by the Licensing Authority at the time of issuing the licence; and, having issued the licence after being satisfied about the suitability of the area in which the shop is to locate, it is not open to the authority to direct the shifting of the premises in the absence of any specific provisions in the Act and in the Rule. According to the petitioner, when a licensee is granted the licence, he invests large sums on the shop licenced and if in the middle of the year if a licensee is to shift the shop, he will have to undergo great hardship and has to suffer irreparable injury. In this regard the learned Counsel referred to certain provisions of the Karnataka Excise Act (''the Act'' for short) and the two statutory Rules. One is already referred to as the Liquor Rules and the other is Karnataka Excise Licences (General Conditions) Rules, 1967 ("the General Rules" for short). As per Section 15 of the Act, it is imperative that a licence should be obtained for vending the liquor, either wholesale or retail. u/s 21, the power is vested in the District Magistrate to direct the closure of a shop in which any intoxicant is sold and the shop shall be closed at such times and for such period as he may think necessary for the preservation of the public peace. Under Sub-section (2) thereof a limited power is also given to the Police Officer concerned to direct the closure of a shop. u/s 29 a power to cancel or suspend the licence etc., is given, subject to such restrictions as the State Government may prescribe and this power is to be exercised for the reasons stated in the said Section. It may not be relevant for the present purpose. Section 30 empowers the Licensing Authority to withdraw the licence, for any cause other than those specified in Section 29, subject to the condition that 30 days notice in writing of the intention to direct the withdrawal is given. Sub-section (2) provides for adjustment of payments in case, the licence is withdrawn. u/s 31, a licensee may surrender the licence. Section 30 does not specifically enumerate the causes for the withdrawal of the licence and therefore, it Is clear that such a cause should be relevant one as contemplated by the provisions of the Act and it should be to further the intentions of the legislative measure.

The General Rules contemplates that an application for the licence shall select a suitable site outside but adjacent to a village for locating his shop. The Rule itself says that this provision is applicable to the licensees other than those in Town and other places where more than one shop is sanctioned. As per Sub-rule (2) Rule 5 of the General Rules, the Deputy Commissioner shall, after consulting the Village Panchayat and making such enquiry as he thinks fit, approve the site so selected. As per Rule 23, the licensees shall not shift the licensed premises from one place to another without prior approval of the Deputy Commissioner. It is also necessary to note that as per Rule 5(4), the licensee shall sell liquor only in the approved shop and shall not sell any other article in the said premises.

Under the Liquor Rules, again, provisions are made for the issuance of the licence and the procedure to be followed prior to the grant of licence. Under Rule 4 thereof an applicant desiring to obtain the licence shall specify the location of the premises where he intends to conduct the business under the licence. As per Rule 5 thereof the Deputy Commissioner on receipt of the application or the Excise Commissioner, as the case may be, make enquiries for verification of the particulars furnished by the applicant and only thereafter if he is satisfied that there is no objection to grant the licence applied for, the licence may be granted on payment of the prescribed fee. Rule 6 says that no premises shall be used for the sale of the liquor concerned unless it is approved by the Deputy Commissioner of the District. Thus it is clear that Rule 6 specifically provides for the approval of the shop premises by the Deputy Commissioner. On a reading of these Rules, the learned Counsel contended that there is no specific Rule at all which empowers any of the authority to direct the shifting of the premises once the licence is granted. Particular emphasis was laid on Rule 5 of the General Rules which enables the licensee to shift the premises after obtaining the approval of the Deputy Commissioner as per Rule 23 thereof. The learned Counsel also pointed out that there is a power to suspend the licence or even to withdraw the licence and also there is a power to close the shops for a particular period; if so, it was contended that the legislature and the Rule making Authority thought it unwise to vest a power with any authority to direct the shifting of the premises during the licence period. It is contended that this particular omission to empower the shifting of premises was with a view to safeguard the interest of the licensee who would have invested large amounts and would have chosen a particular premises having regard to his trading interest as well as the interest of the public and it will be unfair to direct him to shift '' the premises during the current year of that licence.

No doubt there is considerable force in the contention of the learned Counsel. But I am unable to agree with this line of reasoning having regard to the nature of the trade involved and the purpose of the legislation. There is no inherent power in anyone to trade in liquor; the licence granted under the Act confers a privilege on the licensee to carry on the trade. No doubt, by virtue of the licence, the licensee would have invested in the licensed premises and it may result in hardship to the licensee, if he has to shift the premises in the middle of the year. But in the matter of excise legislation, public interest is the sole criterion to be applied while considering any scope of the power in the statutory authority. It is possible that a Licensing Authority approved a particular premises on the basis of the enquiry held by him. But human beings as they are, mistakes do occur and the authority may realise the mistake later on. The members of the public may bring out the damage to the public interest by the grant of the licence to carry on the business in the particular premises. It will be contrary to the public interest to hold that in such a situation, the Licensing Authority would have no power at all to direct the licensee to shift the premises. I am of the view that the power to direct the shifting of the premises is inherent in the Licensing Authority and it is part of the original power which vested in him to approve a shop at the time of granting the licence. In fact, the learned Counsel for the petitioner did not dispute the power of the Licensing Authority to disapprove the shop chosen by the licensee at the time when he applied for the licence. If so, having regard to the scheme of the Act and the purpose sought to be achieved by the Act, I am of the view that this power to direct the shifting the shop from one premises to another flows out of the very power to approve or disapprove the premises at the time of granting the licence.

Either it may be stated as the inherent power vested in the Licensing Authority or as a power which is incidental to the original power vested in the Licensing Authority.

The learned Counsel for the petitioner also contended that this is nothing but a power to review an original order approving the shop and cannot be implied. It may be a power necessitated to rectify a mistake. The nomenclature of the power is not material; substance of the power has to be seen. This grant of power is purely an administrative master and there is nothing inherently wrong in vesting a power to review an administrative order, if circumstances justify. As I have already observed at the outset to question of public interest is the main consideration and key to the interpretation of this legislation. I cannot agree with the learned Counsel for the petitioner on this question.

The next question is the scope of the power and the procedure to be followed by the authority before exercising this power. A direction to shift the shop in the middle of the year certainly affects the interest (of the petitioner. Therefore, It is implicit that the principles of natural justice will have to be followed by the authority and the licensee will have to be given an adequate opportunity to place his view point and his case before the authority. When the authority comes to the conclusion that the premises will have to be shifted, a reasonable time will have to be given to the licensee. This requirement also is part of the power which I have read Into the original power of the Licensing Authority.

In the instant case, it is stated that the petitioner had no opportunity and the decision was taken by the Licensing Authority without issuing him a prior notice. On this short ground the Writ Petition is entitled to succeed.

Consequently, the Writ Petition is allowed, the impugned notice (Annexure-B) is set aside with liberty to the respondent to proceed afresh according to law.

Rule is made absolute.