Orgee Chemicals IMFL vs State of M.P.

S.K. Dubey, J.

The Petitioner, a registered partnership firm having its office and principal place of business at Gwalior, has set up a Small Scale Industry of manufacturing Indian-made foreign liquor and bottling plant in the Industrial Area of Narsinghgarh, District Rajgarh, which commenced its production from October 1990. A licence in Form D-2 (Annexure P.2) was issued to Petitioner by Respondents No. 1 and 2 under Rule IV of the Distillery and Warehouse Rules framed u/s 18(1), Section 62(2)(g), (e) and (h) of the M.P. Excise Act, 1915 (for short, the ''Act"). Licence (Annexure P.3) in Form FL-8 under Clause (viii) of Rule II of the Foreign Liquor Rules framed u/s 62(2)(a), (d), (g) and (h) was also issued to the Petitioner authorising commencement, manufacturing and bottling of liquor. The State Government in exercise of the powers conferred by Section 62(2)(g), (h) (ii) and (iii), vide Notification No. B-l-4-91-C.T.V. dated 25th January 1991, published in M.P. Rajpatra, dated 28th January 1991 (Annexure R.1), made amendments in the Distillery and Warehouse Rules in Madhya Pradesh Excise Rules, 1960, whereby in R.V. for the figure of Rs. 1,000/- the figure of Rs. 50,000/-, for issuing a licence in Form D-2 for the construction and working of a distillery, was substituted with effect from Ist April 1991. Vide Notification of the said date (Annexure R.2) the State Government in exercise of the powers conferred by Clause (g) of Sub-section (2) of Section 62 of the Act, made amendments in the Foreign Liquor Rules, published on 7th January 1960, and in licence Forms FL-2, FL-3, FL-4, FL-8 and FL-11, which are quoted as under:

Amendments.

In the said rules:

(1) in licence Form FL-2 for letters and figures "Rs. 36,000/-" and "Rs. 48,000/-", the letters and figures Rs. 72,000/-" and "Rs. 96,000/-" shall respectively be substituted.

(2) in licence Form FL-3 for letters and figures "Rs. 48,000/- and Rs. 60,000/-", the letters and figures "Rs. 96,000/-" and "Rs. 1,20,000/-" shall respectively be substituted.

(3) in licence Form FL-4 for letter and figure "Rs. 500/-", the letter and figure "Rs. 1,000/-" shall be substituted.

(4) in Form FL-8 for letter and figure "Rs. 1,000/-", the letter and figure "Rs. 2,000/-" shall be substituted.

(5) in Form FL-11 for letter and figure "Rs. 60,000/-". the letter and figure "Rs. 1,20,000/-" shall be substituted.

The State Government also issued a Notification (Annexure R.3) dated 25.1.1991. by which yearly fee of Rs. 25,000/- was substituted by Rs. 1,00,000/- w.e.f. 1.4.1991 for issue of licence in Form FL-10. The fee so enhanced was made applicable from Ist April 1991.

The Petitioner challenged all these Notifications and enhancement of fee, inter alia, on the ground that the enhancement of various fees is without affording an opportunity of hearing, arbitrary, mala fide, unconstitutional and beyond the powers vested in the Respondents, is a device to restrict the right of trade and to deprive the new small scale enterpreneurs of their means of earnings. It was averred that there is no element of quid pro quo. The Petitioner in para 12 Further contended that the rules provide charging of fee in 12 monthly instalments but the act of the Respondents in compelling the Petitioner to pay in a lumpsum is illegal and unwarranted; if the Petitioner is not allowed to pay the fee in instalments, the Small Scale Industry will have to be closed down which will result in a forced unemployment of the workers employed in the factory.

The Respondents in their reply raised two preliminary objections that the vires of the Notifications cannot be challenged before this Bench and it is the Main Seat where the question can be considered and decided. The factory of the Petitioner is situated in Rajgarh District, which falls within the jurisdiction of Indore Bench, therefore, the Petitioner cannot approach this Court. On merits, the contentions were denied, and it was contended that the State Government in exercise of the powers conferred by Section 62(2)(g), (h) (ii) and (iii) of the Act, is empowered to make amendments in R.V. of the Distillery and Warehouse Rules and so also in the Foreign Liquor Rules; the fee prescribed has to be paid every year in advance for issuance of various licences.

Learned Counsel Shri N.P. Mittal on 13.7.1991 stated that the Petitioner does not challenge the validity of the Notifications issued. Shri P.N. Kelkar, learned Deputy Advocate General, raising the preliminary objection in relation to jurisdiction of this Bench, submitted that as the Petitioner has confined his grievance to the licence fee being demanded in lumpsum when, in fact, it is payable in monthly instalments, relying on Section 18(c) and the Rules framed u/s 62(2)(a), (d), (g) and (h) of the Act, the petition be heard and disposed of finally. Counsel were heard and order was reserved. In the meantime, as counsel for Petitioner wanted to make additional submissions, on 15.7.1991 the case was ordered to be listed on 24.7.1991. On that date Shri Mittal restricted his grievance to the payment of licence fee in relation to licences in Form D-2 and Form FL-8.

Chapter IV of the Act deals with manufacturing, possession and sale of intoxicants. Section 17 lays down the requirement of a licence for sale of intoxicants; Section 18 deals with the power to grant lease of right to manulacture. etc., of the State Government, on such conditions and for such period as it may think fit. S.18 reads as under:

Power to grant lease of right to manufacture etc. (1) The State Government may lease to any person on such conditions and for such period as it may think fit, the right

(a) of manufacturing, or of supplying by wholesale, or of both, or

(b) of selling by wholesale or by retail, or

(c) of manufacturing or of supplying by wholesale, or of both, and selling by retail,

any liquor or intoxicating drug within any specified area.

(2) The licensing authority may grant to a lessee under Sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits subletting, may, on the application of the lessee. grant a licence to any sub-lessee approved by sued authority.

Instead of or in addition to any duty leviable under Chapter IV. Section 27 gives power to the State Government to accept payment of a sum in consideration of grant of licence. Sub-section (2) of Section 27 further gives power to State Government to enhance or reduce the sum received in consideration of a grant of any lease u/s 18 during the course of a financial year even retrospectively not earlier than the commencement of the financial year.

Section 62 gives power to State Government to make rules for the purposes of carrying out the provisions of the Act.

A look at the various provisions of the Act shows that the State Government has exclusive right of manufacturing, selling or possessing of intoxicants or liquor, and the said right can be transferred by issue of a licence on such terms and conditions as may be imposed in accordance with the rules framed u/s 62 of the Act. It is clear by reading Sections 17 and IS, that the privilege or right to sell liquor can be granted by the State by a lease or licence. In case of Nashirwar and Others Vs. State of Madhya Pradesh and Others, while considering the provisions of M.P. Excise Act, 1915, the Apex Court held in para 10:

...the citizens cannot have the right to carry on trade in liquor except to the extent and subject to such conditions as may be imposed by the Legislature under its regulatory powers. The Acts deal with four principal forms of activities pertaining to liquor. First. the import, export and transportation of liquor is regulated by providing for passes on terms and conditions mentioned in the Act. A fee is also prescribed for such passes. Second, the manufacture of liquor is dealt with by providing for licences from the Stale Government and fees are prescribed for such licences. Third, the possession of liquor requires a permit from the Government and a fee therefor. Fourth, the sale of liquor is dealt with by Sections 17 and 18 of the Madhya Pradesh Act...

Therefore, there is no fundamental right in any one to carry on the trade or business of manufacturing and/or sale of liquor, as it is the exclusive right of the State, and that privilege, which cannot he claimed as a matter of right, can be granted to a lessee or licensee by issuing a lease or licence in accordance with the provisions of the Act and the Rules. [See Nashirwar''s case (supra); Bishnu Ram Borah and Another Vs. Parag Saikia and Others, and State of M.P. and Others Vs. Nandlal Jaiswal and Others,

The Petitioner has now confined his grievance to the payment of lees by instalments, placing reliance on general licence conditions [under Section 62(2)( f), (g) and (h)]. Condition No: II prescribes payment of fees which reads as under:

II. Payment of fees - (1) The licence fees for all intoxicant shall be payable at the treasury or, in outlying tahsils, at the sub-treasury, on or before the first working day of each month.

(2) The licence fees for intoxicating drugs and country liquor shall be paid in twelve equal monthly instalments. If a licence fee be not exactly divisible by 12, the remainder left over after division by 12 shall be paid with the first instalment

(3)...

(4)...

A look at Clause (2) of Condition No. II clearly indicates that it speaks of payment of licence lees in 12 equal monthly instalments in relation to intoxicating drugs and country liquor and not foreign liquor. Admittedly. foreign liquor and country liquor are two different types of liquors. ''Liquor'' is defined in Section 2(13) of the Act which reads:

In this Act. unless there is anything repugnant in the subject or context:

...

(13) ''Liquor'' means intoxicating liquor, and includes spirit of wine, spirit wine, tari, beer, all liquid consisting of or containing alcohol, and any substance which the State Government may, by notification, declare to be liquor for the purposes of this Act.

For the purposes of the Act the State Government has issued a Notification (No. 54-A-V-SR), dated 4th July 1959, whereby the following will be deemed to be liquor:

I. Methyl alcohol -- Methyl alcohol shall be deemed to be an intoxicating drug.

II. Foreign liquor and country liquor -- (i) liquor of every description other than rectified spirit, denatured spirit, medical and toilet preparation as defined in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (Central Act No. 16 of 1955).

(a) which is imported by sea, land or air into the State of India and is liable on importation to a duty under Indian Tariff Act, 1894 or Sea Customs Act, 1878; or

(b) which is manufactured in India and make in colour or flavour to resemble liquor imported as abovesaid.

shall be deemed to be foreign liquor; and

(ii) Liquor other than foreign liquor, rectified spirit, denatured spirit, medicinal and toilet preparation as defined in the Medicinal and Toilet Preparation (Fxcise Duties) Act, 1955 (Central Act No. 16 of 1955) shall be deemed to be country liquor.

Therefore foreign liquor and country liquor are two different types of liquors. In respect of country liquor and intoxicating drugs a provision has been made for payment of licence fee in 12 monthly equal instalments. If licence fee is not exactly divisible by 12. the remainder left over after division by 12. shall be paid with first instalment.

Distillery and Warehouse Rules framed u/s 18(1) and Section 62(2)(g), (e) and (h) of the Act apply to all the distilleries in Madhya Pradesh, heading B of which deals with the grant of licences. Clause V of the Rules states that subject to the sanction of the State Government the Excise Commissioner may issue a licence in Form D-2 for the construction and working of a distillery on payment of a fee of Rs. 1.000/- (which figure is now substituted by the figure of Rs. 50.000''-). No provision has been made in these Rules or in the licences (Annexures P.2 & P.3) for making payment of fee in instalments. On the other hand, the opening words in the licence in Form D-2(Annexure P.2), issued under R. V of the Distillery and Warehouse Rules are: "on consideration of the payment of a lee of Rs. 1,000/- .... licence is hereby issued to...". Similar are the words in the licence issued in Form FL-8 (Annexure P.3).

Shri Mittal''s contention placing reliance on sub-clauses (g) and (h) of Section 62. is that Section 62 gives a general power to State Government for carrying out the provisions of the Act, therefore, even if there is no specific rule or general condition in the licences the Respondents can grant the facility of payment of fee-by instalments, the prayer of which on approach of the Petitioner having been refused, this Court under Article 226 of the Constitution of India can grant the relief to the Petitioner even though it arises out of a contractual obligation, as this Court''s jurisdiction is wide enough and the Court knows where to grant and where to deny the relief. It is also submitted that the relief can be moulded in the facts of the case to which the circumstances require. Reliance was placed on two decisions of the Apex Court in Lamba Industries Vs. Union of India (UOI) and Others, and The Scheduled Caste and Weaker Section Welfare Association (Regd.) and anothers Vs. State of Karnataka and others, Otherwise, the Petitioner, a Small Scale Enterpreneur having no means, will have to close down his factory and will be ruined.

True, Section 62 gives a general power to the State Government to make rules for the purpose of carrying out the provisions of the Act. Within its general power, the State has the right to impose liability to pay consideration for the right which the Government grants to a lessee u/s 18. Clause (g) of Sub-section (2) of Section 62 authorises the State Government to make rules for regulating the amount, time, place and manner of payment of any duty or fee or tax or penalty. Sub-clause (ii) of Clause (h) of Sub-section (2) of Section 62 prescribes the scale of fees or the manner of fixing the fees payable in respect of any such licence, permit or pass, and for exercise of such power the State Government has to frame rules for grant of licences, the State Government while exercising its power u/s 62(2)(g) and (h) from time to time has framed rules and laid down conditions.

The general power conferred on State Government is to prescribe the terms and conditions not covered by the matters enumerated in any of the clauses of Section 62(2), as the words ''among other matters'' which precede the enumeration of five matters in Clause (h), clearly postulate that enumeration is not exhaustive and general power of prescribing the terms and conditions is not taken away. (See Sharma & Company''s case 1981 JLJ 463). A provision has been made in general licence conditions in respect of payment of fees in relation to intoxicating drugs and country liquor in monthly instalments, but there is no such provision for payment of fee in monthly instalments in relation to any other liquor. Condition No. IV of Distillery and Warehouse Rules clearly states, "the Collector may issue on payment of a fee...". "On" when used as a preposition, has a well understood meaning, is used to connect the descriptions of two possible acts; "on" may imply that the one to which it relates is a condition upon which the other depends. Where one party to an instrument promises to do a thing "on" the performance of a given act by the other, as a general rule, the word, so used, imports mutually dependent covenants to do, respectively, the acts so connected in the description. Therefore, there is no other go but to make the payment in advance. Hence, the payment of consideration for issue of licences (Annexurc P.2 and P.3) is a pre-condition, if the Petitioner wishes to carry on the liquor trade on grant of privilege by the State Government and, unless he complies with the general conditions of licence, he cannot compel the State to allow him to carry on business or to issue him licence on the plea that his factory will be closed down and there will be a forced unemployment. Therefore, in our opinion, as rightly contended by Shri Kelkar. learned Deputy Advocate General, the Petitioner has to make payment of the fees as substituted by the figures in Annexures P.2 and P.3; the Petitioner''s case is not such where this Court can exercise its extraordinary jurisdiction to grant the relief, as prayed, even if the Petitioner may have an alleged financial hardship or there may be an alleged existence of unemployment to the workers employed in the factory. Therefore, we are of the opinion that the Petitioner is bound to pay the licence fee as stipulated under the contract.

In the result, the petition has no merit and is dismissed with costs. Counsel''s fee Rs. 300/- if already certified.