Citation Codes

Equivalent Citations

citation codes

Case Number

W.P 5814 to 5833 of 1989 W.P 5893 and 5894 of 1989, W.P 5915 and 5916 of 1989. W.P 5938 and 5939 of 1989.

Attorney(S)

Mr. G R. Edmund. Mr. S. Vaddhelu and Mrs. Nalini Chidambaram for petrs.
Mr. P. Sridevan, Govt. Pleader, for respts.

Judges

S. Ramalingam, J.

Acts

Nadu Prohibition Act 1937 like S. 17(1) of the Tamil Nadu Excise Act 1971,
provisions of the Tamel Nadu Act 10 of 1937 and the Rules
Sec. 20(B) of tee Tamil Nadu prohibition Act. That Section
S. 17(C)(1) of the Tamil Nadu Prohibition Act 1937,
provisions of the Tamil Nadu Act 10 of 1937
Sec. 20(B) of the Tamil Nadu Act 10 of 1937,
S. 17(1) of the Tamil Nadu Excise Act 1971.
provisions of Tamil Nadu Act 10 of 1937.
S. 17 of the Tamil Nadu Excise Act,
S. 17-C(1) of Prohibition Act
S. 4 of the Prohibition Act.
Nadu Prohibition Act 1937
provision of Rule 9(1) (e)
3 of 1989 Rules. R. 3(1)

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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

The petitioner held a retail licence in Form FL.1 under the Tamil Nadu Liquor (Licence and Permit) Rules, 1981, for the retail sale of bottled Indian-made foreign spirits (IMFL). The current licence period was due to expire on 31-3-1989. In response to a notice, the petitioner paid Rs. 20,600 and applied for renewal of the licence for 1989-90.

The State government promulgated the Tamil Nadu Liquor (Retail Vending) Rules, 1989 (the "1989 Rules"), published in G.O. Ms. No. 596 Prohibition and Excise, dated 15-4-1989. Rule 33 of the 1989 Rules repealed the provisions of the 1981 Rules insofar as they related to retail vending of IMFL; Rule 33 was to come into force on 1-6-1989. As a consequence, existing FL.1 retail licence-holders (including the petitioner) would, on and after June 1989, become disentitled to continue operating their retail shops under the old regime.

The petitioner and other similarly situated persons filed writ petitions challenging the validity of the 1989 Rules. The opinion records multiple contentions raised by the petitioners and additional petitioners' counsel and sets out the court's responses to those contentions.

Legal Issues Presented

Whether the Proviso to Rule 3(1) of the 1989 Rules (allowing the Commissioner to direct the licensing authority to grant up to 40% of retail privileges by nomination to certain state bodies) is valid.
Whether the Tamil Nadu State Marketing Corporation Ltd. (and similar state bodies) can lawfully be granted the privilege of retail vending of Indian-made foreign spirits, or whether that is outside the scope of S.17-C(1) (and related provisions) of the Tamil Nadu Prohibition Act, 1937.
Whether conferring retail vending privileges to Cooperative Societies under the Proviso to Rule 3(1) is inconsistent with Section 20-B of the Tamil Nadu Prohibition Act (i.e., whether Section 20-B limits a cooperative society's entitlement to only a preference when applying for a licence).
Whether conferring privileges to the Tamil Nadu Civil Supplies Corporation Ltd. is beyond the scope of the Tamil Nadu Prohibition Act (i.e., whether the Act prohibits such conferment).
Whether conferring privileges on state bodies (Marketing Corporation, Civil Supplies Corporation, cooperative societies) violates Article 14 of the Constitution by creating an impermissible classification or by vesting unbridled power in the Commissioner.
Whether the petitioner is entitled to relief by promissory estoppel because he paid Rs. 20,600 believing the licence would be renewed for a full year.
Whether renewal provisions (second and third year at higher percentages over bid amount) create an unconstitutional monopoly in favour of successful bidders.
Whether the distance restriction (50 meters from places of worship/educational institutions) and the Proviso to Rule 18(1) (excepting designated Commercial/Industrial areas) are void for vagueness, particularly the expressions "development" and "town planning authorities."
Whether the State, by nominating its agencies to trade in liquor, violates Article 47 of the Constitution (duty to endeavour to bring about prohibition).
Whether Rule 9(1)(e) of the 1989 Rules (concerning auction continuation where quoted amount exceeds maximum bid amount and allowing participation of only the highest bidder and those above the highest bid) is invalid or unnecessary in view of the definition of "sale officer."

Arguments of the Parties

Petitioner's Arguments

Challenge to the validity of the Proviso to Rule 3(1) of the 1989 Rules that permits nomination of up to 40% of retail shops to certain state bodies (Tamil Nadu State Marketing Corporation, Tamil Nadu Civil Supplies Corporation, or Cooperative Societies).
Reliance on S.17-C(1) of the Tamil Nadu Prohibition Act, 1937: argued that the State may grant exclusive privilege for manufacturing or selling by retail IMFL, but that the Tamil Nadu State Marketing Corporation cannot be given retail vending privileges (contention that S.17-C(1-A) contemplates wholesale privilege for the Corporation, not retail).
Argued that because the Excise Act contains provisions (S.17(1) of the Tamil Nadu Excise Act, 1971) allowing certain privileges, and the Prohibition Act lacks a similar clause, the State lacks jurisdiction to confer retail vending privileges to the Corporation.
Contended that the Proviso to Rule 3 is ultra vires Section 20-B with respect to Cooperative Societies, asserting that Section 20-B provides only a preference on application and does not contemplate grant of exclusive privilege.
Asserted that conferring privileges to the Civil Supplies Corporation is beyond the scope of the Prohibition Act.
Argued that the classification favouring state bodies over private individuals gives rise to discrimination and that the Commissioner's nomination power is unbridled and liable to abuse, violating Article 14.
Claimed promissory estoppel because the petitioner paid Rs. 20,600 for renewal and was led to believe the licence would be renewed for a full year.
Challenged renewal provisions permitting renewal for second and third years at higher percentage payments as creating a monopoly in favour of successful bidders (unconstitutional).
Contended that distance restriction terms and the Proviso to Rule 18(1) are vague (uncertainty as to "development" and "town planning authorities").

Additional Contentions by Other Petitioners' Counsel

Mrs. Nalini Chidambaram: Argued that the State should not trade directly or indirectly in intoxicating liquors because Article 47 enjoins the State's duty to impose prohibition; giving trading privileges to State nominees violates Article 47.
Mr. Edmund: Contended that Rule 9(1)(e) is not valid or necessary, because the definition of "sale officer" in Rule 2(x) suffices to regulate auctions and there is no need for R.9(1)(e).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court considered each contention in turn and applied statutory text, rule interpretation, and constitutional principles as follows:

On the question whether the State Marketing Corporation could be given retail vending privileges (challenge to Proviso to R.3(1) and reliance on S.17-C(1) and S.17-C(1-A) of the Prohibition Act): the court held that the argument was "wholly misconceived." The court reasoned that S.17-C(1-A) allowing wholesale privilege to the Corporation does not imply a prohibition on granting retail privileges to that same Corporation. The court found no bar in the Tamil Nadu Prohibition Act, 1937, preventing the Government from conferring retail vending privileges on the State Marketing Corporation.
On the contention that absence of a provision analogous to S.17(1) of the Tamil Nadu Excise Act, 1971 in the Prohibition Act prevents the grant of retail privilege to the Corporation: the court rejected this contention. It held that S.17-C(1) of the Prohibition Act is sufficiently comprehensive to permit the State Government to grant exclusive or other retail privileges in IMFL to any person or persons, including the State Marketing Corporation, and that the absence of a mirror provision in the Prohibition Act does not prohibit such a grant.
Regarding the effect of a grant of privilege to state agencies on penalties under S.4 of the Prohibition Act: the court observed that possession and sale by the State Marketing Federation and other bodies, when authorized by grant of privilege, would be saved from penalties by the Proviso to S.4(1), which exempts acts done under the Act or terms of rules, notifications, licences or permits.
On whether the Proviso to R.3 insofar as it benefits Cooperative Societies violates Section 20-B: the court held that Section 20-B is an enabling provision requiring preference to cooperative societies when they apply for licence, but that it does not preclude the State Government from conferring exclusive privileges under rules made by it. Consequently, Section 20-B does not prohibit granting exclusive privileges to cooperative societies, and the petitioner's contention fails.
On the contention that the Civil Supplies Corporation could not receive such privileges: the court concluded, after examining the provisions of the Prohibition Act, that there is no embargo in the Act prohibiting the State Government from conferring retail vending privileges on the Civil Supplies Corporation.
On Article 14 and classification/unbridled power arguments: the court found that the State Marketing Corporation, Civil Supplies Corporation and Cooperative Societies can be reasonably classified as responsible public bodies distinct from private individuals. Conferment of special privileges on such bodies would not be hit by Article 14. Regarding the argument that nomination power vested in the Commissioner is uncanalised and unbridled, the court rejected the contention: the Commissioner is a high-ranking official and the Prohibition Act and the Rules provide guidelines for exercising the power to grant the privilege; hence the power was not unbridled in a way offending Article 14.
On promissory estoppel (payment of Rs. 20,600 and expectation of full-year renewal): the court applied the 1981 Rules to note that if an application for renewal is made and not disposed of, the applicant is entitled to continue operating for two months beyond the expiration date. The petitioner, having paid Rs. 20,600, was entitled to operate two months beyond 31-3-1989, but the petitioner had not been promised renewal for the full year 1989-90; therefore, the plea of promissory estoppel failed.
On the alleged monopoly produced by renewal provisions (renewal for second and third years at higher payments): the court noted there is no provision for renewal beyond the third term and that the State had ensured higher revenue for second and third years than the first year. The court found the petitioner's monopoly contention to be incorrect.
On vagueness of distance restriction terms and the Proviso to R.18(1): the court rejected the contention that "development" or "town planning authorities" are vague. It interpreted "development authority" in cities like Madras to mean the Metropolitan Development Authority and "town planning authority" to mean the Directorate of Town and Country Planning, concluding there was no doubt as to those expressions in the rules.
On Article 47 and the contention that the State should not trade in intoxicating liquor: the court observed that the Prohibition Act (whose validity the court notes has been upheld by the Supreme Court) provides for grants of privileges by way of permits and licences and includes elaborate provisions for wholesale and retail vending. The court reasoned that it is the State's duty to ensure no misuse of the privilege and that granting vending privileges to responsible state bodies would enable effective supervision and control. Therefore, there was no violation of Article 47 in conferring such privileges.
On the challenge to Rule 9(1)(e): the court recorded Mr. Edmund's contention that R.9(1)(e) may be unnecessary because Rule 2(x)'s definition of sale officer suffices, but held that even if R.9(1)(e) were unnecessary, that would not render the 1989 Rules violative of the Parent Act or ultra vires the Constitution.

Holding and Implications

Final Holding: The court rejected all the petitioners' contentions and dismissed all the writ petitions.

Implications:

Direct effect: The validity of the key challenged provisions of the Tamil Nadu Liquor (Retail Vending) Rules, 1989 (including the Proviso to Rule 3(1), the provisions allowing nomination of up to 40% of retail privileges to specified state bodies, the distance restrictions, renewal provisions, and Rule 9(1)(e)) was upheld in so far as the petitioners' challenges were concerned; petitioners' claims (including promissory estoppel and Article 47) were rejected and the petitions were dismissed.
The court did not record or rely upon any judicial precedents in the provided opinion (no precedents were cited), and the opinion does not announce that it is creating any new legal precedent beyond its application of the statutory text and rules to the petitioners' challenges.
No broader change to constitutional doctrine or statutory interpretation beyond the specific issues in the petitions is articulated by the court in the opinion provided.

VCS/RR.

This summary is prepared solely from the content of the provided opinion. No information beyond that text has been introduced.

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Egmore Nungambakkam Taluk Wine Merchants Association, Madras-35, Rep. By Its President G. Ramanujam v. State Of Tamil Nadu, Rep. By Commissioner And Secretary Home, Prohibition & Excise Dept. Madras-9.

1. Under the Tamil Nadu Liquor (Licence and Permit) Rules 1981, the petitioner was granted a licence in Form No. FL. 1 for the retail sale of bottled Indian made foreign spirits. The period of the current licence was to expire on 31-3-1989. In pursuance of a notice issued to him, the petitioner paid a sum of Rs. 20,600 and applied for renewal of the licence for the year 1989-90.

2. The Government of Tamil Nadu made the Tamil Nadu Liquor (Retail Vending) Rules, 1989, and published the same in G.O Ms. No. 596 Prohibition and Excise, dated 15-4-1989. R. 33 of these 1989 Rules states that the provisions of the Tamil Nadu Liquor (Licence and Permit) Rules 1981 in so far as they relate to the retail vending of Indian-made foreign liquor shall be repealed. R. 33 shall come into force on the first of June 989.

3.The effect is that on and after June 1989, the persons like the petitioners who had been granted a retail licence in Form FL 1, under the 1981 Rules would become disentitled to continue to run their retail shops. Hence the petitioner and others similarly placed have filed these writ petitions challenging the validity of the Tamil Nadu Liquor (Retail and Vending) Rules 1989, hereinafter called the ‘1989 rules’.

4. The first contention of the petitioner is regarding the validity of the proviso to R. 3 of 1989 Rules. R. 3(1) states that the privilege for retail vending in liquor shall be granted to any person by auction in accordance with the provisions of the said Rule. The Proviso to R 3(1) reads as follows—

“R 3(1)…Provided that, where the Commissioner considers it necessary, he may direct the licensing authority to grant, on payment of such sum or fee or both as may be fixed by the Commissioner, the privilege in relation to not exceeding forty per centum of the maximum number of retail shops permitted by the Government and distributed as far as possible among the various districts by nomination to the Tamil Nadu State Matketing Corporation or the Tamil Nadu Civil Supplies Corporation or Cooperative Societies.”

5. In attacking the validity of this Proviso, the petitioner contends that under S. 17(C)(1) of the Tamil Nadu Prohibition Act 1937, the State Government may grant to any person the exclusive privilege of (a) manufacturing Indian-made foreign spirits, or (b) selling by retail India-made foreign spirits, within any local area. He refers to S. 17(C) (1-A) and states that under the said sub-section, the Tamil Nadu State Marketing Corporation Ltd, may be granted exclusive privlege of suppling, by wholesale, Indian made foreign spirits, for the whole of the State of Tamil Nadu, and no other person.

6. An argument is developed that the Tamil Nadu State Marketing Corporation Ltd, cannot be given the privilege of sale of Indian made foregin spirits in retail. This argument is wholly misconceived. Merely because S. 17(C) (1-A) confers power on the Government to grant exclusive privilege for wholesale vending of IMFL in favour of Tamil Nadu State Marketing Corporation Ltd., it cannot be considered that the State Government cannot give the privilege of retail vending of Indian made foreign spirits to the Tamil Nadu State Marketing Corporation Ltd. There is no prohibition or bar under Tamil Nadu Prohibition Act, 1937, disabling the Government from conferring upon the Tamil Nadu State Marketing Corporation Ltd., the privilege of retail vending of IMFL.

7. The contention of the petitioner that retail supply of Indian made foreign spirits by the Tamil Nadu State Marketing Corporation Ltd., is ultra vires the Tamil Nadu Act 10] of 1937 is, therefore to be rejected.

8. The second contention of the petitioner is that under S. 17(C), the State Government can confer the exclusive or other privilege of manufacturing Indian made foreign spirit or selling of Indian made foreign spirits (emphasis supplied). He refers to S. 17 of the Tamil Nadu Excise Act, where it is provided that the State Government may grant any person the exclusive or other privilege of supplying by wholesale and selling by retail any liquor other than foreign liquor. He states that the licensing provision under the Tamil Nadu Prohibition Act 1937 is similar to S. 17(1) of the Tamil Nadu Excise Act 1971. He contends that the State Government has no jurisdiction to confer on the Tamil Nadu Marketing Corporation Ltd., the privilege of retail vending of IMFL. This contention is also devoid of merits. Merely because there is no corresponding provision in the Tamil Nadu Prohibition Act 1937 like S. 17(1) of the Tamil Nadu Excise Act 1971, it cannot be concluded that the State Government cannot give the privilege of retail vending to the Corporation like the Tamil Nadu State Marketing Corpoiation Ltd. Even under S. 17-C(1) of Prohibition Act it is lawful for the State Government to grant the exclusive or other privilege of selling by retail Indian made foreign spirits to any person or persons on such conditions and for such period as it deems fit. This S. 17-C is comprehensive enough to include the power on the State Government to grant the privilege to sell by retail Indian made foreign spirits to Tamil Nadu State Marketing Corporation or such other bodies as the Government may from| time to time decide.

9. The possession and sale of liquor by the State Marketing Federation and the other bodies on the grant of a privilege by the State Government would save them from the penalties provided under S. 4 of the Prohibition Act. The Proviso to S. 4(1) states that nothing contained in this sub-Section shall apply to any act done under, and in accordance with, the provisions of the Act or the terms of any rule, notification, order, licence or permit, issued thereunder.

10. The next contention of the petitioner is that the Proviso to Rule 3 in so far as it enables the State Government to confer the privilege of retail sale of IMFL in favour of the Co-operative Socieites is violative of Sec. 20(B) of tee Tamil Nadu prohibition Act. That Section reads as follows—

“20-B. Where any co-operative society registered or deemed to have been registered under any law in force for the time being, makes an application for the grant of a licence under Clause (d) of S. 20, the authority competent to grant such licence shall, in granting such licence, give preference to such cooperative society over every other applicant.”

11. The argument advanced is that under Sec. 20(B) of the Tamil Nadu Act 10 of 1937, the Co-operative Society is entitled only to a preference where it applies along with others for the grant of a licence. When the Act does not contemplate the conferment of exclusive privillege to the Co-operative Society, it is contended that the Proviso to rule 3 is ultra vires Sec- 20 (B).

12. This contention of the petitioner cannot be sustained. S. 20(B) is only an enabling provision. It states that when a Co-operative Society applies for licence under S. 20(B) of the Act it must be given preference over the other applicants. That would not mean or exclude the power of the State Government to act in accordance with the rules made by it under which the State Government is enabled to confer an exclusive privilege of retail vending of IMFL, for local areas, subject to the conditions prescribed in the Proviso of R. 3. S. 20(B) does not prohibit the grant of any exclusive privilege to a Cooperative Society.

13. The next contention is that the Proviso to R. 3 which enables the State Government to confer a benefit in the form of a privilege to the Civil Supplies Corporation Ltd., is beyond the scope of the provisions of Tamil Nadu Act 10 of 1937. But a careful study of the provisions of the Tamil Nadu Act 10 of 1937 would show that they donot contain an embargo on the State Government prohibiting it from conferring any privilege of retail vending in favour of Civil Supplies Corporation.

14. Tamil Nadu State Marketing Corporation or the Tamil Nadu Civil Supplies Corporation or Co-operative Societies can be reasonably classfied as responsible public bodies which are distinct and different from private individuals. The conferment of any special privilege in favour of such bodies would not be hit by Art. 14 of the Constitution of India.

15. The next contention of the petitioner is that the Proviso to Rule 3 which enables the Commissioner to nominate the State Marketing Corporation or the Tamil Nadu Civil Supplies Corporation or Cooperative Societies is an uncanalised and unbridled power which is likely to be abused and therefore, the said conferment of power on the licensing authority without any guidelines is violative of Art 14 of the Constitution, Here again, the contention of the petitioner is devoid of merits, The Commissioner holds a high and responsible poistion in the hierarchy of officialdom and is vested with powers to decide. The provisions of the Tamel Nadu Act 10 of 1937 and the Rules there after provide guidelines in the exercise of power to grant the privillge. Therefore, the contention of the petitiners that the Proviso to Rule 3 cenfers unbridled powers cannot be sustained.

16. The next contention is that the petitioner had already paid a sum of Rs. 20,600 towards renewal fee. At the time of payment of the said fee, the petitioner was led to believe that the licence would be renewed for a full year. Hence it is contended that the respondents are bound by the principle of promissory estoppel. Here again, the plea of the petitioner cannot be sustained.

17. Under the Rules of 1981, the application for renewal can be made and if such an application is made and is not disposed of, the applicant is entitled to continue to run the shop for a period of two months beyond the date of the expiry of the current licence. The petitioner has paid a sum of Rs. 20,600. By reason of such payment, the petitioner is privileged to continue to run the shop for a period of two months beyond 31-3-1989. The petitioner was never given any promise that the licence for the year 1989-90 would be renewed in favour of the petitioner. In such circumstance, the plea of the petitioner is promissory estoppel cannot be sustained.

18. The last of the submissions of the petitioner is that the provisions of the Rules relating to grant of renewal of the shop for the second and third year on payment of 10 per cent or 15 per cent more than the bid amount allows a monopoly in favour of the successful bidder and are therefore unconstitutional. It could immediately be seen that there is no provision for renewal beyond the third term. The State has also taken care to see that for the second and third year more revenue than what was secured in the first year is obtained and therefore the submission of the petitioner that a monopoly is created in favour of the successful bidder is not correct.

19. One more contention of the petitioner has to be referred i.e under the rules it is provided that no shop can be located within a distance of 50 meters, etc. from any place of worship or educational institution and the Proviso to R. 18(1) of the 1989 rules states that the distance restriction shall not apply to areas designated as ‘Commercial’ or ‘Industrial’ by the Development of Town Planning authorities. The petitioners statement that the word ‘development’ or ‘town planning authorities’ is vague is hardly acceptable The ‘development authority’ in cities like Madras would mean the Metropolitan Development authority and the world ‘town Planning authority’ would mean the Directorate of Town and Country Planning. There can be no doubt about the above expressions occurring in these rules and this contention of the petitioner is rejected.

20. In addition to the aforesaid contentions urged by Thiru S. Vadivelu, the learned counsel appearing for the petitioner in a batch of writ petitions, Mrs. Nalini Chidambaram, urged the following contentions-According to Mrs. Nalini Chidambaram the State should not trade either directly or indirectly in intoxicating liquors because Art. 47 of the Constitution enjoins on the State the duty to impose prohibition and therefore when the State itself appoints nominees like the State Marketing Corporation or Civil Supplies Corporation to trade in liquor, there is a violation of Art. 47. This contention is devoid of merits. The Prohibition Act, the validity of which has already been upheld by the Supreme Court, provides for the grant of privilege by way of permits and licences. Elaborate provisions had been made under the prohibition Act for the wholesale vending and retail vending of intoxicating liquors. It is the duty of the State to see that no misuse of this privilege is committed. In order to have an effective supervision and control over the proper enforcement of the Prohibition Act, it would be fair and proper for the Government to give the privilege of wholesale or retail vending of intoxicating liquoer to such responsible bodies as the State Marketing Corporotion or the Tamil Nadu Civil Supplies Corporation or selected Co-operative societies. Therefore, the contention of the petitioner that the State is violating the Constitutional mandate of Art. 47 is not correct.

21. Mr. Edmund, appearing for some other petitioners contended that the provision of Rule 9(1) (e) is not valid. The said Rule states—

“If the amount quoted in the highest tender is higher than the maximum bid amount recorded, the sale Officer shall continue the auction allowing the participation of only the highest bidder and the tenderers who have quoted above the highest bid.”

22. He contends that the definition of a sale officer' occurring in rule 2(X) which defines the sales officer as a person authorised by the Commissioner or Collector to conduct auction and accept the bid or tender, is sufficient and there is no need for a rule like R. 9(e). Even assuming that the contention of the petitioners were to be accepted that R. 9(e) is not necessary that would not make the 1989 Rules either violative of the Parent Act or ultra vires the Constitution. Hence all the contentions of the petitioner are rejected and all the writ petitions are dismissed.