R. Mahadevan vs State of Tamil Nadu

S.S. Subramani, J.—Petitioner seeks issuance of writ of mandamus forbearing Respondents 1 to 3 from in any manner changing and/or shifting Shop No. 88 from block number 4 as notified The Writ Law Reporter, January, 2000 33 in the notice of auction on any ground and issue licences for shops only in the blocks as provided for in the notice of auction, and pass such further or other orders as this Court may deem fit and proper.

Petitioner is the successful bidder to conduct IMFL Shop No. 83 in Block No. l or 2 of Huilical Town Panchayat. The auction was conducted on 5.5.1998, and Petitioner being the highest bidder for Rs. 12,02,000/- , his offer was accepted, and licence was given to him. It is his case that even though the upset price was only Rs. 4,00,000/- , he offered such a huge amount only taking into consideration that the shop was mainly intended to cater to the needs of the people in Kilinzada, Kenthala, Koderi and Kunna-kombai.

4th Respondent is the successful bidder for Arrack Shop No. 88 in Block No. 4 of Adigaratty Town Panchayat at Katteri. Even though 4th Respondent is eligible to open the shop only in Katteri Village within Block No. 4, he has applied for licence to open a Shop in Block No. 12 at Kilinzada. Such a request for shifting the shop after confirmation of sale is contrary to the provisions of the Tamil Nadu Prohibition Act, and also the Tamil Nadu Liquor (Retail Vending) Rules. It is the grievance of the Petitioner that if the demand of the fourth Respondent is accepted, Petitioner will be put to very great hardship. It is his case that if he had known of such deviation at the time of notice of auction, he would not have offered such a huge amount for Shop No. 83. It is his further case that Shop No. 83 was more valuable than Shop No. 88 would also be evident from a perusal of the notice of the auction itself as the upset price for Shop No. 83 was Rs. 4 lakhs where as the upset price for Shop No. 88 was Rs. 2/2 lakhs. It is also said that neither at the time of issuance of the notice of tender nor sub-sequent to the confirmation of auction and grant of licence, Petitioner was informed about any possible change in the establishment of shops in various blocks which would affect Petitioner''s right or interest. According to Petitioner, he was induced to believe by the conduct of the Respondents-Authorities that Petitioner would enjoy exclusivity in Block No. l or 2 of Huilical Town Panchayat as there would not be any subsequent induction of shops after conclusion of auction in respect of all the shops.

Before filing the writ petition, Petitioner also wrote to the Commissioner (Excise), Chepauk, Madras about the possible shifting of shop by 4th Respondent. He moved such a representation on 29.5.1998, wherein he has given all the details.

When this writ petition came up lor admission, I ordered notice of motion, and learned Additional Government Pleader was also directed to take notice. Interim injunction was also granted restraining the Respondents from opening a shop in an area which was not included within the area of 4th Respondent

Fourth Respondent has filed a counter affidavit. From the counter, it is seen that he has bid Shop No. 88 in Block No. 4, at Adhigaratty Revenue Village falling under Adhigaratty Town Panchayat. It is said that when he made arrangements to locate his shop in 4th Block to commence retail vending business, local residents raised serious objections for the proposed location. 4th Respondent, therefore, could not open a shop in Block No. 4, and he made representation to first Respondent about the objections raised by the local residents, and he wanted to commence business at Block No. 12 falling in Kilinzada but within Adhigaratty Panchayat. Petitioner objected to the same and fourth Respondent also gave his remarks to the objection on 30.5.1998. After considering the representation sent by 4th Respondent, and also after considering the objections of Petitioner, the Tahsildar was of the opinion that Petitioner had no locus standi to object. Local inspection was also made by officials and thereafter the Tahsildar issued Form No. 3 countersigned by Revenue Divisional Officer, and it is now pending consideration by the Licensing Authority. It is under these circumstances, Petitioner has moved this Court to prohibit the granting of licence to start a shop in Block No. 12.

Learned Additional Government Pleader placed the entire file relating to this case before court and also submitted his arguments on that basis.

From the file, it is seen that as between the shop of Petitioner and the shop proposed to be opened by the fourth Respondent, the distance is only 4/2 kms. But one thing which is admitted by learned Additional Government Pleader is that the fourth Respondent is proposing to establish a shop not within the notified area. It is also seen from the file that the proposed shop is not within the notified area and therefore licence was not granted to fourth Respondent. At the same time, Respondents also question the locus standi of the Petitioner on the ground that the Petitioner will not be affected if licence is issued to the fourth Respondent to open a shop at Block No. 12 falling within Kilinzada of Adigaratty Town Panchayat, since the Petitioner''s notified area is only Block No. 2 of Hullical Town Panchayat.

1 heard learned Counsel for all the parties in detail. As per Tamil Nadu Liquor (Retail Vending) Rules, 1989, establishment of shops would be as regulated therein. Rule 2 of the said Rules gives definition for words and expressions. Rule 2(b) gives the definition for the word ''area''. According to that, ''Area'' means the locality determined by the Collector within which a retail vending shop shall be opened. According to Rule 2(p), ''licence'' means a licence granted under Sub-section (2) of Section 17C of the Act to any person who has been granted the privilege of vending liquor, by retail. Rule 3 provides for grant of privilege and Rule 4 deals with fixation of number of shops. As per the said Rules, the maximum number of shops to be established in the State shall be determined by the Government. After fixing the number of shops to be established, the Commissioner shall, in consultation with the District Collector, and after taking into consideration the needs of the District, fix the number of shops for each district.

2000 W.L.R. 3 Thereafter the areas in which the shops are to be opened shall be determined by the Collector. Rule 5 deals with notice of auction. Rule 17 deals with shifting of shop. It says that a licence holder shall not change the premises in which he carries on business under his licence except with the previous permission of the licensing authority. Provided that, no permission to shift the business place outside the area shall he granted.

10, There are also certain statutory Forms, and Form of Tender is prescribed by Rule 5 Column 3 of Form No. 4 provides for area of the liquor shop for which tender is given. Form 6 is application form for issue of licence and privilege for retail vending in IMFL.

There also, Column 3 deals with area of the retail shop for which applicant has applied for privilege of licence. Form VIII A deals with application form for change of business premises of licence-holder for Indian-made Foreign Liquor Retail Vending. Clauses 3 to 8 are relevant for Our purpose. They read thus:?

Area of the shop for which privilege for retail vending in Indian-made Foreign liquor was granted to hint.

Address of the licensed premises in which he carries on business, at present, under his licence.

Address of the premises for which he intends to change the business place (length, breadth, area and boundaries of the shop should be specified) 6. Reasons for changing the Indian-made Foreign Liquor Retail Vending Business place to the address at column (5) above.

Whether the premises selected for change the place of business satisfies Rule 18 of the Tamil Nadu Liquor (Retail Vending) Rules. 1989.

Whether the building at column (5) above lies in the area of the shop in which he intends to shift the Indian-made Foreign Liquor retail vending business.

On the basis of these Rules and Forms, the question to be considered is, whether the fourth Respondent is entitled to do business in an area for which he has not filed his tender. -

From the office-note of the Government, it is clear that Block No. 12 is not within the notified area for which the fourth Respondent submitted his tender. At the same time, the locus standi of the Petitioner is challenged by Respondents on the ground that he has established his shop only in Block No. 2, and, as between his shop and the proposed shop of 4th Respondent, the distance is nearly 4 /2 kms. and they are situated in two different Panehayats.

I will first consider the question whether the fourth Respondent is entitled to seek for a change regarding the area of his business: Whatever may be the reason for seeking a change, the Authorities are also bound by the Rules and Forms. The Rules are statutory and Section 55 of the Prohibition Act declares that all Rules and Notifications shall have the effect as if they were enacted in the Act itself. The various Forms are also statutory in nature.-

Learned Counsel for Petitioner submitted that even a shifting could be allowed only if fourth Respondent has obtained a licence. So, when fourth Respondent has not obtained licence for shifting, he cannot seek shifting under Rule 17. Why learned Counsel for Petitioner relied on Rule 17 is that fourth Respondent wants to open a shop outside the area for which he bid the auction. Auction is conducted by the Government taking into consideration the need of the locality. Area for which the shops are to be open is also determined by the Collector. ''Area'' has been defined as ''a locality determined by the Collector within which a retail shop shall be open''. After confirmation of sale, when the auction purchaser applies for getting a licence, he can seek licence only to establish a shop within the area for which he has bid in auction. If the fourth Respondent can apply for licence only for the area for which he has participated in auction and if the building is not situated within that area, the Authorities cannot, on the ground of sympathy, allow him to do business in some other area -i.e., outside the area for which he bid in auction. It is a statutory requirement, and the Authorities under the Act are also bound by the same. Even at the time of submitting his tender, the proposed auction purchaser has to inform the Authorities the area of the liquor shop for which tender was given, and the retail liquor shop number for which he was tendering. When the auction purchaser'' himself submits his tender for an area and also identifies the liquor shop in which he wants to run his business, the location of the shop will have to be within that area only and not outside. It is also submitted that even though the entire State and all the Districts have been divided into various areas tor the purpose of establishing shops, an intending bidder takes into consideration the need of the locality and also expects a reasonable return for his investment. Even though he cannot establish a shop outside the area, at least he can expect that people from a particular locality will come to his shop as customers, which is not prohibited. If the prohibition applies to the Petitioner that he shall not establish a shop outside the area, ;i similar prohibition will apply equally to the fourth Respondent also. It is not the case of difference between the two shops or that the shops are located in two different Panchayats. But the only question is, whether the Authorities have jurisdiction to permit fourth Respondent to establish his shop outside the area for which he has bid in auction.-

I find substance in the said argument. There are certain restrictions under the Prohibition Act for the manufacture of liquor, possession and sale of IMFL. Provisions under the Prohibition Act will have to be construed strictly, and the provisions therein do not depend upon the discretion of the Authorities. Equity or sympathy has no place, and person who bids in auction takes the risk.

What is the nature of an excise contract, came for consideration in the decision reported in Assistant Excise Commissioner and Others Vs. Issac Peter and Others, .In paragraph 26 of the judgment, Their Lordships have held thus:

...We are, therefore, of the opinion that in case of contracts freely entered into with the State, like the present ones, there is no room for invoking the doctrine" of fairness and reasonableness against one party to the contract (State) for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts (which may be -statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of lenders or by negotiation. There is no compulsion on anyone to enter into these contracts. It is voluntary on both sides. There can be no question of the State power being involved in such contracts. It bears repetition to say that the State does not guarantee profit to the licensees in such contracts. There is ho warranty against incurring losses. It is a business for the licensees. Whether they make profit or incur loss is no concern of the State. In law. it is entitled to its money under the contract. It is not as if the licensees are going to pay more to the State in case they make substantial profits. We reiterate that what we have said herein above is in the context of contracts entered into between the State and its citizens pursuant to public auction, floating of tenders or by negotiation.....

In this case, even though licence has not been granted there is a concluded contract between fourth Respondent and the State, and the fourth Respondent, merely for the reason that he is prevented from doing business in a particular area, cannot choose another area for which he has not bid in auction. The State also cannot show any sympathy to the fourth Respondent since he has voluntarily participated in the auction.

An argument was taken by the Slate that the distance between the two shops is nearly 4 1/2 kms. and the Petitioner is not going to be affected by the business. I he submission cannot be accepted. As I said earlier, even though the Petitioner may not be in a position to establish a shop outside the area, the customers could not be prevented from coining to the area, where the Petitioner has established his shop. The locations of a shop in a particular area is of primary importance which the Petitioner can lake into consideration while he bids in auction. In tins case, even the Authorities knew that the areas where the fourth Respondent has to establish his shop and where the petitione has commenced his shop are different in nature. That is why even the upset price fixed is different. When the upset price in respect Of Petitioner''s shop is Rs. 4 lakhs, the upset price in respect of fourth Respondent''s shop is only Rs. 2''/2 lakhs.

The Authorities udder the Act have Interpreted the area, location and the Panchayat as the same. The said contention cannot be accepted. As rightly contended by learned Counsel for Petitioner, ''locality'' has a meaning. It is not a larger area, Learned Counsel for Petitioner brought to my notice the decision reported in Sri Murugan Theatre, Madurai Vs. The Commissioner of Land Revenue, Settlement of Estates and Transports, Board of Revenue, Madras and Others, which relates to a case under the Tamil Nadu Cinemas (Regulation) Act. The Division Bench held that ''local area'' means adjacent village, Panchayat or town, and ''locality'' would also mean the same thing.

Under the Kerala Rent Control Act, eviction on the ground of own use of a non residential building will not be allowed if the tenant is depending on the income which he earns from that building, and if he cannot gel air accommodation in that locality. While considering the meaning of the expression ''locality'', Kochu Thommen, J., as he then was, held thus:

"Locality" is an expression which does not necessarily coincide with the extent of a city or town or village. Dependent on the size of the city or town or village, "locality" has to be considered with reference to the reasonable distance from the location of the building in question. The tenant has by reason of his business built up a reputation and goodwill centred round the place of his business, .i.e., the building in question. To shift to a place far away from where he had earned a goodwill might put him at a disadvantage. It is, therefore, the legislative intent to protect the tenant by allowing him to remain within a reasonable radius of the centre of his business so that he may continue to reap the benefit of the business reputation. In other words, "locality" must be understood as any place within a reasonable radium of his business activity. This is a question of fact which varies from case to case, depending on the size of the town, the size and nature of the business, etc. It may be co- extensive in a particular case with a village or town.

(Emphasis supplied)

In Ramanatha Iyer''s ''Law Lexicon'', on the basis of certain decisions of various Courts, the meaning of the word ''locality'' is given as a place with an area which is sufficiently small and compact, so that naming it amounts to a notice to all inhabitants of that area". If this is the meaning for the word ''locality'', Respondents cannot say that merely because the two shops are located in two different Panchayats, Petitioner cannot be aggrieved. If the interpretation of the Authorities is accepted, then it means that they are considering ''area'' as equivalent to a Panchayat. Such an understanding by the Authorities cannot be accepted in view of the clear indications to the contrary in the Statute itself I have already extracted the columns in various Forms that have to be filled up by the applicant before and after getting licence, and also the powers of the Collector in defining the area. This makes it clear that the Authorities will have to act within four corners of the act and no auction purchaser could do his business outside the area for which he has bid. He cannot go outside that area. It is a statutory mandate.

It. cannot be said that the Petitioner is not aggrieved. Petitioner has taken note of this village as one of the considerations for bidding the shop for more than Rs. 12.00 lakhs. If only the change of area was made known to the Petitioner before the auction, Ik-would not have bid for the amount or participated in the auction. Any change in the area after confirmation is likely to affect the auction purchaser. The State being a party to the contract, it is equally bound by the representation and terms of the contract. When it sells its privilege and when it conducts the auction and subsequently confirms it, it comes within the realm of contract. Both parties are bound by the contract. The State represents to each and every bidder that he will be allowed to do business only in the area for which he bid in auction and the statutory conditions will not be violated, by any one including the State. The State cannot go beyond its representation, which is acted upon by the Petitioner.

An argument was taken by learned Counsel for Respondents that the order is appealeable under Rule 31 and there is an effective alternative remedy.

I do not think that such an argument could be accepted. Petitioner has come to this Court even before an order was passed. It could be seen from the file produced by the learned Additional Government Pleader that no order has been given to the fourth Respondent, or passed against the Petitioner. Again, when question of jurisdiction of the authorities to issue licence outside the notified area is a matter in issue, I do not think that the Petitioner must be compelled to file an appeal. That apart, when both parties have argued the matter on merits and have also raised all legal contentions, 1 do not think that the Petitioner could be driven to the Statutory Authority. When the matter to be considered is only a legal submission with respect to the jurisdiction of the Authorities, and no disputed facts are involved, I do not think there could be any prohibition for invoking Article 226 of the Constitution of India, in such cases.

In the decision reported in Dr Bal Krishna Agarwal Vs. State of U.P. and Others, , in paragraph 10, Their Lordships has held thus:

Having regard to the aforesaid facts and circumstances, we are of the view that the High Court was not right in dismissing the writ petition of the Appellant on the ground of availability of an alternative remedy u/s 68 of the Act especially when the writ petition that was filed in 1988 had already been admitted and was pending in the High Court for the past more than five years. Since the question that is raised involved a pure question of law and even if the matter is referred to the Chancellor u/s 68 of the Act it is bound to be agitated in the court by the party aggrieved by the order of the Chancellor. we are of the view that this was not a case where the High Court should have non-suited the Appellant on the ground of availability of an alternative remedy?.

(Emphasis supplied)

As has been held by the Honourable Supreme Court, if the same question of law raised before the Appellate Authority, is likely to be agitated before this Court also, I do not think that the so called alternative remedy is a bar for entertaining the writ petition.

In this connection learned Counsel for Respondents also brought to my notice my own Order in W.P. No. 7677 of 1998 (M.K. Nataaj v. District Collector, Nilgiris District and Ors.) Order dated 9.6.1998). I dismissed the writ petition on the ground that an alternative effective remedy was available to the Petitioner. The question of jurisdiction was not a matter in issue in that case and, therefore, I directed the writ Petitioner therein to move the Appellate Authority. I do not think that the finding rendered therein will be of any assistance to the Respondents in this case.

In the result, the writ petition is allowed. Fourth Respondent is entitled to do business only within the block or the area for which he has bid in auction, and the Authorities are prohibited from issuing licence to the fourth Respondent outside that area. No costs. Connected W.M.P. 12618 of 1998 for interim injunction is closed.