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Judgment
K.G. Balakrishnan, C.J.—These writ appeals have been filed against the common order passed by the learned single Judge, dated 1.9.1999
in Writ Petition Nos. 12717 of 1999 etc.
The appellants participated in the auction held for the year 1998-99 for grant of licence for running Indian Made Foreign Liquor (IMFL) shops
and the licences were granted in their names for running shops in their respective notified area. The licensees have been given liberty to renew the
licence for the next year, on payment of the original licence fee plus 15 per cent enhancement and all these appellants have accordingly renewed
their licences for the year 1999-2000, by paying the enhanced licence fee. Some of the licensees who had been given licence to run IMFL shops
for the year 1998-99 did not renew their licence for the year 1999-2000. There are about 4700 retail vending IMFL shops and only 3721
licensees had renewed their shops for the year 1999-2000. The respondents, therefore, took steps to re-auction these shops and the original
licensees were also permitted to have their shops in the re-notified areas. On 18.6.1999, the Commissioner of Prohibition and Excise issued orders
to the effect that the non-renewed shops and unsold shops in one notified area could be shifted to another notified areas subject to certain
conditions. The conditions were that the area to which the unsold shop is to be shifted should not have any shop and if the proposed area has
shop, it should be ensured that the existing licensees of the proposed area should have no objection. It was also made a condition that the upset
price of the shops transferred should be determined based on the privilege amount plus 15 per cent of the shop of the original place or the privilege
amount plus 15 per cent of the shop which was not renewed in a place proposed to the shifting, whichever is higher. Pursuant to these orders,
some shops were put on auction and the licensees were given new notified areas to have their IMFL shops. The appellants in these appeals
contended that allowing these licensees to have their shops in the new notified area would seriously prejudice the business prospects of the
appellants. It was contended by the appellants that they renewed the licences for the year 1999-2000 as they were aware that there would not be
any shops near their place of business and if the neighbouring area is declared as notified area and fresh licensees are allowed to start business
there, the appellants business would be seriously affected. They also contended that the 5th respondent passed the impugned order for extraneous
reasons and Rule 34 of the Tamil Nadu Liquor (Retail Vending) Rules 1989 has been used for colourable exercise of power. The appellants also
contended that the order passed by the 5th respondent is bad on account of the principles of promissory estoppel.
The learned single Judge, after elaborately considering the contentions raised by the appellants, held that the impugned order was legal and the
appellants are not entitled to the reliefs prayed for. It was also held that these appellants were not really affected by the impugned order as the new
shops were ordered to be located only outside their area. The writ petitions were thus dismissed by the learned single Judge. Aggrieved by the said
order, these appeals have been filed.
The learned Counsel for the appellants mainly contended that the impugned order is purported to have been passed under Rule 34 of the Tamil
Nadu Liquor (Retail Vending) Rules 1989 and going by the said Rule, the authority could not have exercised such power. It was argued that the
notified area was fixed by the authorities and only thereafter the renewal of licence for shops in that area was permitted and, as such, the purported
exercise of power is illegal as no exemption is granted in favour of ""any person"" or ""class of persons"". It is argued that as the rule was not invoked
in respect of any specified ""person"" or ""class of persons"", the impugned order based on that provision is illegal and ex-facie bad in law.
Rule 34 reads as follows:
The Government may by notification, and subject to such conditions, if any, as they may specify in such notification, exempt any person or class of
persons from the operation of the provisions of all or any of these rules.
It is true that in the impugned order, a reference has been made to Rule 34 of the Rules. But, the authorities have not issued the order as such by
invoking the power under Rule 34. Rule 34 is the general provision, which gives power to the Government to exempt any person, or class of
persons from the operation of the Rules, if it is found that application of any of the Rules causes any injustice or hardship. It is true that in the instant
case, the 5th respondent notified the area and allowed the licensees to have their shops there and the shops were allowed to be renewed and
conducted. Therefore, Rule 34 as such do not come into play for exercise of power. It is important to note that Rule 17 says that no licensee shall
change the premises in which he carries on business under his licence except with the prior permission of the licensing authority. Rule 18 also says,
no shop shall be established in Municipal Corporations and Municipalities within a distance of 50 metres and in other areas 100 metres from any
place of worship or educational institutions"".
Rule 2(b) defines the area, which means the locality determined by the Collector within which a retail vending shop shall be opened. The
Collector has been given the right to grant privileges and to notify such areas. Rules 3 and 4 are the relevant provisions. A reading of these
provisions would clearly show that the Collector has got power to notify the area and also to grant privileges to run the shop in that area. Rule 14
says that the licence should be renewed for the 2nd year and the procedure is prescribed as hereunder.
(1) If a licensee intends to renew the licence for the second year he shall apply at least sixty days before the date of expiry of the licence for
renewal in Form VIII after remitting.
(i) An application fee of Rs. 100 (Rupees one hundred only);
(ii) the licence fee of Rs. 2,500 (Rupees two thousand and five hundred only); and (iii) the privilege amount determined at fifteen per centum more
than the privilege amount at which the sale of the privilege was confirmed in the previous year. Provided that the licensing authority may entertain an
application of renewal of licence made beyond the period specified in this rule if there are valid reasons for the delay on payment of an additional
fee of twenty-five per centum of the licence fee. Renewal applications shall not be entertained after the expiry of the licence.
(3) If the licensing authority decides not to renew the licence, he may refuse renewal by an order recording the reasons for refusal.
Provided that the licensing authority shall give a reasonable opportunity of being heard to the licensee before such refusal.
(4) If a licence is not renewed, the licence fee remitted by the licensee shall be refunded to him.
The area was notified by invoking these provisions and permission was given to have the IMFL shops within that area. The appellants have no
case that the respondents have no such power. Their only contention is that the impugned order should not have been passed as it adversely affects
their business and they plead the principle of promissory estoppel.
Learned Counsel for the appellants contended that at the time when they renewed their licences, for the year 1999-2000 they were under the
impression that the notified area will not be changed and that some others would not be allowed to operate their shops in areas where there were
no shops. No materials have been produced before us to show that any such undertaking was given by any of the respondents. The contention of
the appellants is that they believed that the state of things which existed would continue to exist and while effecting changes adverse to the interest
of the appellants they should have been heard and, therefore, principles of natural justice have been violated. It is admitted that within the notified
area given to the appellants no new shops have been established. It is true that some neighbouring areas have been re-notified and new licensees
have been allowed to run the shops. The appellants had been given the privilege to vend liquor only within the notified area assigned to them. If
only any new shops are started in that area, the appellants would have a right to question. It cannot be said that they had a legitimate expectation
that new shops would not be started in the neighbouring areas.
Learned Counsel for the 6th respondent drew our attention to a decision reported in State of M.P. and Others Vs. Nandlal Jaiswal and Others,
, wherein the Supreme Court has emphatically said that the trade or business in liquor is so inherently pernicious that no one can claim any
fundamental right in respect of it and, therefore, Article 14 cannot be invoked by the affected persons for grant of licence for manufacture and sale
of liquor. The Supreme Court, as early as in the year 1975 has held in Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and
Others, , that there is no fundamental right in a citizen to carry on trade or business in liquor.
It is also observed by the Supreme Court, that while adjudicating the constitutional validity of an executive decision relating to economic
matters the court must grant a certain measure of freedom or play in the joints to the executive and that the court cannot strike down a policy
decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or
logical.
In Shrijee Sales Corporation and Another Vs. Union of India (UOI), , a reference, at paragraph 2, at page 401, has been made to Bombay
Conductors and Electricals Ltd. and another Vs. K. Chandramouli, Under Secretary to the Govt. of India and others, and also to Motilal
Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, , wherein the Supreme Court has held that where the Government owes a
duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so and the Government cannot
be prevented from acting in discharge of its duty under the law and if the Government act in the interest of the public, plea of estoppel will not be
available to any party.
The Supreme Court has also held in the above case as follows:
It is only if the court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the
Government should not be held bound by the promise but should be free to act unfettered by it, that the court would refuse to enforce the promise
against the Government. The court would not act on the mere ipso dixit of the Government, for it is the court which has to decide and not the
Government whether the Government should be held exempt from liability. This is the essence of the rule of law. The burden would be upon the
Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it
would be inequitable to hold the Government bound by the promise and the court would insist on a highly rigorous standard of proof in the
discharge of this burden.
In the instant case, it is submitted by the learned Additional Advocate General that out of the 4700 shops, only 3721 shops had been renewed
and 195 shops were sold in public auction and the Government expected a revenue of 595 crores for the year 1999-2000. However, the privilege
amount realised was less than that and it is also submitted that all these shops, as there were nobody to renew the shops, had to be put in auction
to fetch more revenue and that is how the new policy was evolved to have new notified areas. This in our view it cannot be said to be illegal
exercise of power but can only be construed as an act in the interest of public. The Government being the absolute holder of the privilege to vend
foreign liquor, while giving out this privilege to others, can very well evolve a policy to see that more revenue is obtained.
The appellants have challenged the impugned order on the ground that it has caused a serious loss of income and earning to them. As already
noticed, no new shops are proposed to be conducted in their areas. Moreover, it has been well established that there cannot be any kind of
infringement of fundamental right guaranteed under Article 19(1)(g) of the Constitution and it is also equally well established that Article 19(1)(g)
does not guarantee a monopoly to a particular individual or association to carry on any occupation and if other persons are also allowed the right
to carry on the same occupation and an element of competition is introduced in the business, that does not, in the absence of any bad faith on the
part of the authorities, amount to a violation of the fundamental right guaranteed under Article 19(1)(g) of the Constitution.
The appellant''s counsel also based arguments on the principle of legitimate expectation. It is true that the concept of legitimate expectation is
now considered as a valid ground to challenge an administrative decision. This doctrine is to be confined mostly to the right of fair hearing before a
decision which results in withdrawing an undertaking given or negativing a promise already made. A case of legitimate expectation would arise
when a body by representation or by past practice arounded expectation which it would be within its powers to fulfill. The Supreme Court in
Union of India and others Vs. Hindustan Development Corpn. and others, observed as follows:
In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be
found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts
cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would
primarily be a question of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next
question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken has resulted in
failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relief is again a matter which
depends on several factors. The courts jurisdiction to interfere is very much limited and much less in granting any relief in a claim based purely on
the ground of legitimate expectation.
We do not think that a policy decision which is made in public interest to augment revenue could be challenged on the above principle and as the
appellants'' right are not directly violated it cannot be said that they should have been heard before the decision was taken.
The learned Counsel for the appellant further contended that in the present case, since new areas have been notified and fresh persons are
allowed to start shops some of the shops are now operating very near to the shops owned by the appellants. Even though there is no distance rule
as such, regarding the operation of these two IMFL shops, if any of the appellants have any grievance that new shops have been started very near
to their place of business, they may make application to the Collector seeking adjustment or shifting of the shop to any other nearby place and if
any such applications are received, the Collector shall consider such applications having due regard to the locality and the business potential and
issue appropriate directions. With the above observation, we dispose of these writ appeals. Consequently, the connected C.M.Ps. are dismissed.