1. The petitioner is the holder of a number of licences issued under the Karnataka Excise (Lease of the Right of Retail Vend of Liquors) Rules, 1969 (hereinafter referred to as ‘the Rules’), for selling liquor in retail in several shops in the district of S. Kanara during the excise year 1973-1974 ending with the 30th of June, 1974. He has presented this writ petition questioning the validity of the Notification published in Karnataka Gazette (Exy.) dt. Mar. 19, 1974 by the Excise Commr. under Rule 4 of the Rules stating that the privilege to vend liquor in retail in the State of Karnataka would be disposed of by public auction by the Deputy Commrs. of the districts concerned on the dates and at time and places specified in Sch. V thereof.
2. The contentions of the petitioner are: (1) that the Notification issued in so far as the district of S. Kanara is concerned, stating that the privilege would be disposed of both on shopwise basis and groupwise basis is not in conformity with Rule 4 of the Rules;
(ii) that the State Government was not competent to issue any instruction to the Excise Commr. regarding the manner in which the privilege should be disposed of in the several parts of the State; and
(iii) that the Notification issued in the case of the Dist. of S. Kanara, is violative of Art. 14 of the Constn., because, in the case of district of Bangalore, there is a provision for disposing of the privilege on Talukwise basis and districtwise basis also, in addition to shopwise basis and groupwise basis, whereas in the case of district of S. Kanara, the privilege can be disposed of either on shopwise or on groupwise basis only.
3. Sec. 17 of the Karnataka Excise Act authorises the State Govt. to lease to any person, the exclusive right of selling liquor in retail.
4. The States Govt. has framed the rules in exercise of the powers vested in it under S. 71 of the Act providing for the procedure to be followed in connection with the disposal of the privilege to vend liquor in retail. Rules 3 and 4 of the Rules which are relevant for the purpose of this case, read as follows:
“3(1). Lease of Right of Retail Vend—The right of retail vend liquors may be disposed of—
(i)) by tender; (ii) by auction; (iii) by tender-cum-auction; (iv) in any other manner; as the State Govt. may, by order, specify;
Provided that if the disposal is not finalised in any one manner, the State Govt. may, by order, direct that it may be done in any other manner.
(2) …………..
4. Notification by the Excise Commissioner—After an order under Rule 3 is made, the Excise Commr. shall issue a Notification containing the following particulars, namely:—
(i) the name or names of shops or group of shops of liquors in taluk or taluks or district or districts to be disposed of;
(ii) where the disposal is by tender, the last date for receipt of tenders, the time and place of their consideration;
(iii) where the disposal is by auction, the date on which the time at which and the place in which the auction will be held;
(iv) Where the disposal is by tender-cum-auction, the last date for receipt of tenders and the time at which and the place in which the auction will be held;
(v) the period of lease;
(vi) the general conditions governing the tender, auction or tender-cum-auction.”
5. The first contention urged on behalf of the petitioner is that it was not permissible to issue a Notification under Rule 4 of the Rules stating that the auction would be held both on shopwise basis and on groupwise basis (the expression ‘group’ means ‘group of shops’). Reliance, is placed in support of the above contention by Shri Mohandas N. Hegde on the word ‘or’ appearing between ‘shops’ and ‘group of shops’ in Rule 4(i) of the Rules. The question for consideration is whether the presence of the word ‘or’ in Rule 4(i) make it obligatory on the part of the Excise Commr. to issue a Notification to auction the excise privilege in question, either on shopwise basis or on groupwise basis and not in both the ways. It is asserted on behalf of the State Govt. that Rule 4(i) should be read as permitting the Excise Commr. to hold auction in all the modes permissible linger Rule 4(i) so that the State Govt. might accept the bids in respect of either shops or group of shops, depending upon the total amount realised at the auction. The auctions are held under the Rules for the purposes of realising excise revenue and the Govt. is vitally interested in realising the highest revenue from any particular area or shop or group of shops. In that process, if the Commissioner publishes a Notification calling for bids both on shopwise basis and on groupwise basis, so that he could accept higher of the two depending upon the bids ultimately offered by the bidders, it cannot be said that the procedure adopted by him is contrary to Rule 4(i). Although ordinarily the expression ‘or’ is used to understand the word preceeding it and the word following it disjunctively, it cannot be said that the said expression conveys the meaning that one excludes the other in all cases. In interpreting the said expression, the Court should bear in mind the nature of the legislation, the interest that are affected by it and the object with which it is enacted. The legislation in question is one enacted with the object of regulating the consumption of liquor in the State of Karnataka. The object of S. 17 of the Act and the rules made thereunder is to see that the State's exchequer is able to realise the maximum excise revenue possible in any area or place. It is well known that in the case of an excise licence, under which liquor is sold in retail, the person who would be affected would not be certainly the licence but the consumer. The person before the Court is not at all affected because any duty to be paid ordinarily would be passed on to the consumer. The petitioner is not certainly representing the class of consumers before the Court in this petition. If these facts are borne in mind, it is clear that the Excise Commr. is entitled under Rule 4 to advertise the auction of the privilege in all the possible ???, so that, ultimately, he can dispose of it in one of those methods by which, he is able to collect the highest excise revenue in any area or from any shop. I, therefore, reject the contention urged on behalf of the petitioner that it was not permissible for the Excise Commr. to issue the Notification providing for auction on shopwise basis as well as groupwise basis in the case of the district off South Kanaka.
6. The next submission made an behalf of the petitioner is that the Govt. was not entitled in law to issue instructions to the Excise Commissioner in accordance with Ext. ‘A’ dt. 13-3-1974. The relevant part of the said letter reads as follows:
From: The Commr. for Home Affairs and Secy. to the Govt. of Karnataka, Home Dept., Bangalore
To: The Excise Commr. in Karnataka, Bangalore
Sub: Disposal of lease of right of retail vend of liquors in Karnataka State for 1974-1975.
With reference to your letter No. EXE EXS 1 293/73-74 dated 1-3-74 on the above subject. I am directed to enclose herewith a copy of Notification of even number dated for information and necessary action.
I am also to convey approval of the Govt. to the following:
(a) In the case of S. Kanara and Bellary Districts, Arrack shops may be sold by auction shopwise and groupwise but not talukwise.”
7. The contention urged on behalf of the petitioner that the said letter is devoid of all authority cannot be accepted in view of Rule 15 of the Rules, which reads as follows:
“15. Confirmation—(1) Whenever the Deputy Commr. or the Divl. Commr. has accepted provisionally a tender offer or bid he shall, forthwith submit to the State Govt. through the Excise Commr. the records of the proceedings conducted by him for confirmation.
(2) The State Govt. shall, on a consideration of the records under sub-rule (1) and the interest of revenue pass an order confirming the disposal of the right to retail vend of liquor or refusing to confirm it.
The order shall forthwith be communicated to the person concerned.”
8. From the above rule, it is clear that the Govt. has the ultimate voice in the matter of disposal of the right of retail vend of liquors and in order to effectively exercise the said right vested in it, the Govt. having regard to the experience it had gained in the previous years in the matter of disposal of the excise privilege, wrote the letter dt. 13-3-1974 to the Excise Commr. indicating the modes in which the auction should be held. It cannot therefore, be sad that the letter dt. 13-3-1974, is wholly, unauthorised.
9. The last contention urged on behalf of the petitioner is that there has been violation of Art. 14 of the Constn. in view of the discrimination in the matter of disposal of the right of retail vend of liquors in the Dist. of South Kanara on the one hand and in the district of Bangalore on the other. In the case of South Kanara District, auction can be held only on shopwise basis and groupwise basis. In the case of the Dist. of Bangalore, it is stated that auction can be held on shopwise basis, groupwise basis talukwise or districtwise basis. At this stage, it has to be observed that even when auction is held talukwise or districtwise basis, in reality it amounts to holding an auction on groupwise basis only as the groups include in these cases all the shops in a Taluk or in a District as the case may be. It is argued that in the Dist. of S. Kanara also, the privilege should have been auctioned on talukwise basis and districtwise basis also. On behalf of the respondents, it is stated that in the case of S. Kanara, the right to vend liquor on retail basis, was permitted to be held either on Shopwise basis or groupwise basis having regard to the past experience and similarly, in the case of Bangalore, the four modes were adopted again on the basis of past experience. It is stated that in the year 1972-1973, when auction was held in S. Kanara on Talukwise basis, the revenue realised was Rs. 13,99,850 per month, but, in the year 1973-1974, the revenue was Rs. 18,70,887 per month, when auction was held on shopwise and groupwise basis. In so far as Bangalore Dist. is concerned, it is submitted at the time of hearing by Sri Mohandas Hegde that even though auction was held during this year on shopwise basis, no bidders were there to offer bids to purchase the privilege accordingly. It is, therefore, clear that it was necessary for the authorities concerned to adopt that mode which would realise the highest revenue possible in any particular area having regard to the prevailing conditions and past experience. The petitioner was not in any way prevented from offering bids in Bangalore Dist. in any one of the four modes by which it was notified that the privilege would be sold in Bangalore Dist. Similarly, all the persons were eligible to offer bids in the Dist. of S. Kanara in all the modes in which privilege was disposed of pursuant to the Notification. Classification of an area on the geographical basis for the purpose of realising the highest revenue, cannot be considered to be discriminatory. The contention based on Art. 14, therefore, fails.
10. No other contention is urged.
11. This writ petition is dismissed with costs. Advocate's fee Rs. 100.
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