@JUDGMENTTAG-ORDER
B. Subhashan Reddy, C.J.@mdashThese matters are filed assailing the constitutional validity of Tamil Nadu Prohibition Act, 1937 as amended by Act 31 of 2003, which was preceded by Ordinance No. 8 of 2003. Since last two decades the wholesale business in Indian Made Foreign Liquor (IMFL) was being conducted by Tamil Nadu State Marketing Corporation Limited (TASMAC) and the privilege of retail vending was being conferred on the individuals on application and complying with such formalities as were prescribed every year. Cooperative Societies were also entrusted with retail trade to some extent. We need not go into those details and suffice it to state the events from 2001, as this litigation traces to the period commencing from excise year 2001- 2002. Changing the excise policy of the preceding year 2000-2001, G.O. Ms. Nos. 113 and 115, Prohibition and Excise Department dated 22.06.2001 were issued creating a block period of 3 years from 2001 to 2004. The difference between yearly lease and block period lease is that while the yearly lease expires soon after the end of the excise year, the lease relating to block period will not lapse ipso facto and the licensees have got a right of renewal subject to payment of increase in privilege amount for the 2nd and 3rd years, as prescribed therefor. Applications were called for and according to the procedure prescribed, lots were drawn and successful tenderers have taken up shops for retail vending. 6000 retail vending shops were identified and later on Government increased it to 7000 during November 2001, which was questioned by the licensees in this Court, but unsuccessfully. Then came the Excise year 2002-2003, and this time the Government wanted to change the policy discontinuing the block period and also recategorised and re-classified the shops for the purpose of augmenting more revenue. The licensees of the previous year, who had opted for block period were not granted renewal as of right, but were sought to be subjected to fresh drawal, ignoring their rights for block period. Writ petitions were filed questioning the action of the Government in G.O.Ms. No. 128, 129 and 130, Prohibition and Excise Department dated 08.07.2002, which formulated the new policy and this Court by Judgment dated 24.07.2002 See Secretary to Government of T.N. v. K. Vinayagamurthy / W.A. No. 2209 of 2002. dated 24.7.2002 has upheld the increase in shops, the re- categorisation and re-classification which aimed at mobilising more financial resources, but set at naught the policy of not renewing the licences of the block period licensees who were willing to pay even the enhanced licence fee and accommodating more shops than notified earlier. The Government went in appeal to the Supreme Court in SLP No. 14735 of 2002, but by its Judgment dated 22.08.2002
"All the existing licensees (the previous licensees) for the block period who had remitted the whole year''s licence fee by 31st of July 2002, as well as all of them who were granted licence for a period of six weeks subsequent to the impugned order of the High Court dated 25.09.2002 and in pursuance of the order of this Court dated 03.10.2002 on payment of the proportionate licence fee will be granted licence for the balance period of the Excise Year 2002-2003 culminating on 15th September, 2003. By way of clarification, we hold that those of licensees who dropped out, even though applied for pursuant to the High Court''s order dated 25.09.2002 as well as those of the licensees who had participated in the fresh lot in accordance with the new Excise Policy will not be entitled to get advantage of this order. It is further clarified that all those licensees who might have deposited the whole year''s fee though were granted licence for a period of six weeks pursuant to the order dated 03.10.2002 will also be entitled to get the licence for the balance period of the Excise Year.
We would also observe that it will be open for any of the existing licensees as well as the new allottees on the basis of the draw of the lots to opt out if they find the continuance of the privilege to be onerous in any area, where the number of shops exceeds the number of notified shops on account of adjustment required to be made. The appeal stands disposed of on aforesaid terms."
2. Excise Year 2002-2003 had to lapse on 15th September 2003, but it was extended till 22nd October and again to 16th November and then finally to 28th November, 2003. Meanwhile, for the excise year 2003-2004, policy was evolved by issuance of G.O.Ms. No. 243, Prohibition and Excise Department dated 04.10.2003. Now, the system of selection by drawal of lots is given a go-by, by inviting applications under selection method on the basis of merits of the respective candidates taking into consideration the following criteria;-
ELIGIBILITY CRITERIA FOR THE GRANT OF PRIVILEGE OF RETAIL VENDING OF IMFL
Sl. No. --DESCRIPTION OF THE ELIGIBILITY CRITERIA -- MARKS
1. New Entrants to IMFL business --10
2. Educational Background of the applicant--10
3. Financial capability--20
4. Business ability and aptitude--20
5. Infrastructure facilities--20
6. Ability to give exclusive attention to IMFL business--20
Total --100
3. The number of retail shops has been increased to 8500 and the duration of the licence is fixed as one year. Each applicant was made entitled to apply for only one shop. What is relevant for these cases is Clause (iv) of Paragraph - 2 of G.O.Ms. No. 243, Prohibition and Excise Department, dated 04.10.2003, which reads as follows:
"(iv) The Government direct that as per the orders of the Hon''ble Supreme Court of India, those licensees who were granted renewal of license in 2002-2003 in terms of the orders of the Supreme Court of India will be entitled to get renewal of license, on application by them for the year 2003-2004, commencing from 16.11.2003, on payment of an amount equivalent to the privilege amount for the year 2002-2003 plus 10% of the same. (The word privilege amount referred to in this para is the privilege amount as referred to in the Rules as they existed in the year 2002-2003."
In G.O.Ms. No. 244 dated 4.10.2003 the rules were amended to suit the new excise policy, and in G.O.Ms. No. 245 dated 4.10.2003, elaborate procedure has been prescribed.
4. We also feel it apt to extract the relevant portion of G.O.Ms. No. 245, Prohibition and Excise Department, dated 04.10.2003, which reads as follows:
"ABSTRACT
Prohibition and Excise - Tamil Nadu Liquor (Retail Vending) Rules, 1989 - Licensing of Indian Made Foreign Liquor retail vending shops during the year 2003-2004 - Certain amendments to Rules - Ordered - Notification issued.
PROHIBITION AND EXCISE (VI) DEPARTMENT
G.O.Ms. No. 245 Dated: 04.10.2003
Read again:
1. G.O.(Ms)No. 128, P&E (VI) dt. 8.7.02
2. G.O.(Ms)No. 129, P&E (VI) dt. 8.7.02
3. G.O.(Ms)No. 130, P&E (VI) dt. 8.7.02
4. G.O.(Ms)No. 243, P&E (VI) dt. 4.10.02
Read also:
5. From the Commissioner of Prohibition and Excise Lr.Roc.P&E IX(1)/13295/03 dt. 14.08.2003.
6. From the ADGP, Lrs. C. No. 10/ADGP/ Campt/2003
Dt. 16.09.2003 & C. No. 81 /ADGP/(Enft) /Campt/2003 dt. 4.9.2003.
******
ORDER
5. In the year 2001, based on a study of the then existing policy of tender-cum-auction of IMFL retail Vending Shops and with the view to increasing the Excise Revenue, the Government issued orders in G.O.(Ms)No. 113 P&E (VI) dated 22.06.2001, introducing a new licensing system in which the IMFL shops were notified on local area basis, with privilege rates being fixed for each category of local area. A new system of allotment of shops by drawal of lots was also introduced in the G.O.(Ms)No. 115 P&E (VI) dated 22.06.2001. In the G.O. first read above, the Government, issued orders in 2002-2003 to continue the system of allotment of shops by drawal of lots while increasing the number of shops to 7000 based on reports of the Collectors. The Government also increased the privilege amount for IMPL shops and introduced new features like the re-categorisation of shops located in areas adjoining Corporations and Municipalities, treating them on par with the Corporations and Municipalities for purpose of fixation of privilege amount and also deleted the Rule relating to renewal.
2. These policy changes and the deletion of the rule relating to renewal of licenses were challenged in the High Court, Madras. Based on the Orders of the Supreme Court, renewal of license for the year 2002-2003 was granted to such of those persons who had paid the privilege amount in full for the entire year by 31.07.2002.
3. Following the Supreme Court''s orders, the Government have now decided that the licensees who were granted renewal of their licence in 2002-2003 will be granted renewal for the year 2003- 2004 also, on payment of privilege fee of an amount equivalent to the privilege amount for the year 2002-2003 plus 10% of the same. (The word privilege amount referred to in this para is the privilege amount as referred to in the rules as they existed in the year 2002-2003.) Orders for this will be issued separately.
4. In the current year, the entire question of procedure for allotment of shops has been reviewed afresh by the Government in the light of disturbing reports received from the Additional Director General of Police (prohibition Enforcement Wing) regarding several and continuing instances of sale of contraband liquor sourced from adjoining States like Karnataka, Pondicherry and Goa even in some licensed premises. The government have viewed these reports with concern, since, the consumption of such contraband liquor would affect the health of the consuming public in Tamil Nadu, apart from resulting in loss of revenue to the State.
5. It has also been brought to the notice of the Government that during 2002-2003, the number of IMFL shops that were finally licensed was around 5300, including Co-operatives and Tamil Nadu Civil Supplies Corporation Shops, leaving 1700 shops vacant, and that there were a number of cases of persons withdrawing after getting allotment of the IMFL shops and seeking refunds. There were still indications that cartelisation had not been eliminated by the lot system and that there were withdrawals after getting allotment, vacancies in shops, dislocation of the IMFL sales and loss in revenue.
6. In order to prevent instances of sale of spurious and contraband liquor even in licensed premises and taking note of the defects of cartelisation and cornering of shops being continued, leading to vacancies in IMFL shops, as well as other irregularities in the shops by unscrupulous elements, the Government consider that the entire system of allotment of privilege should be subjected to an overhaul. Since, the lot system did not ensure any check on the ability or suitability of the applicants, a stringent and transparent system of selection that would go into the background of the applicants based on information and documents obtained from them should be introduced. The selection procedure should pick out suitable persons from the point of view of educational background, business ability, financial capacity and being without any previous record of malpractices etc.,
7. The Government consider that the process of selection should be entrusted to District Level Selection Committees consisting of two Retired Judicial Officers of the rank of District Munsiff, apart from the Assistant Commissioner of Prohibition and Excise/Deputy Commissioner of Prohibition and Excise of the District or an Officer of the rank of Deputy Collector of the Tamil Nadu Civil Service as member Secretary. The Committee should personally interview the applicants after a scrutiny of the documents filed by them, with a view to selecting suitable applicants for the grant of IMFL licence. The Government consider that this would go a long way towards preventing malpractices like the sale of illicit and contraband liquor sourced from adjoining States in licensed premises and also eliminate other malpractices like cornering of shops etc., noticed in the earlier procedure.
8. The Government consider that the constitution of the District Level Selection Committees, Regional Level Appellate Authorities and State Level Revisionary Authority will subject the selection process to the strictest standards of fairness and transparency, apart from providing an in-built system of appeal and review by erstwhile members of the judiciary, without giving room for any complaint whatsoever. It will achieve the objective of the State to put in place licensees of IMFL shops who will not stoop to any illicit practices in the IMFL trade that would affect the people''s lives and public health.
9. The Government have, therefore, decided to constitute District Level Selection Committees in every District to scrutinize and select suitable persons for the grant of privilege of vending IMFL in retail from the Excise Year 2003-2004 onwards. The composition of the District Level Selection Committee will be as follows:
(i) Two Retired Judicial Officers of the rank of District Munsif.
(ii) Assistant Commissioner of Prohibition and Excise/Deputy Commissioner of prohibition and Excise of the District concerned or an officer in the rank of Deputy Collector of the Tamil Nadu Civil Service to be appointed by the Government (Member Secretary)
10. All applications fro grant of IMFL in 2003-2004 shall be made to the licensing authority in Form-VI, furnishing the information called for in the application, supported by documentary evidence. The selection by the District Level Selection Committee would be made by a system of marks to be allotted to the different suitability criteria provided for in the Rules, after a personal interview of the applicants, ensuring that an open and transparent selection by a Competent Committee or erstwhile judicial officers is established.
11. To ensure that this selection system also has a built in procedure for a quasi-judicial review of appeal and revision, the Government have decided that applicants aggrieved by the grant of licence by the licensing authority may file an appeal to the Regional Level Appellate Authorities, each consisting of two Retired District Judges. Revisions against the orders of the Regional Level Appellate Authorities shall lie to a State Level Revisionary Authority consisting of a Retired Judge of High Court of Madras.
12. Orders regarding the constitution, composition and functions of the District Level Selection Committees, Regional Level Appellate Authorities and State Level Revisionary Authority will be issued separately.
13. Accordingly, the following Notification will be published in an Extraordinary issue of the Tamil Nadu Government Gazette, dated the 4th October 2003.
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5. The last date set for filing applications was 13.10.2003 and it is stated that applications have been filed with Application Fee of Rs. 500/- and 50% of the privilege amount. The applicants included the licensees of the Block Period for the years 2001-2004, as also others. In so far as the applicants other than of block period are concerned, they are bound by the new Excise Policy and had to be judged in the light of what is stated in the Governmental Orders of undergoing selection by the Selection Committee with rights of appeal to the Regional Committees and then Revisionary Committee. The District Level Selection Committees are headed by two retired Judicial Officers of the rank of District Munsif, apart from the Assistant Commissioner of Prohibition and Excise/Deputy Commissioner of Prohibition and Excise of the District or an Officer of the rank of Deputy Collector of the Tamil Nadu Civil Service as Member Secretary. The Regional Level Appellate Authorities each consists of two Retired District Judges and State Level Re-visionary Authority consists of a retired Judge of Madras High Court. The Government intended to constitute the above Committees conferring quasi-judicial functions so as to see that there is no malpractice or any room for complaint for any arbitrary or illegal action and see that the licensing system runs smoothly and efficiently, both benefiting the Government, in terms of revenue, as also the general public avoiding the illegal sales of spurious liquor.
6. Challenging the above Policy, Writ Petitions have been filed and particularly by the licensees of the Block Period and that resulted in filing of some Writ Appeals against the orders of the learned single Judge and they were heard and reserved for judgment. Meanwhile Ordinance No. 8 of 2003 was promulgated on 26.10.2003 inserting sub-Section 1B and clauses (a),(b) and (c), after sub-Section 1A, in Section 17C of the Tamil Nadu Prohibition Act, 1937, vesting TASMAC with the privilege of selling IMFL by retail, in addition to wholesale. It may be relevant to extract the whole of the new provision.
2. In Section 17C of the Tamil Nadu Prohibition Act, 1937 (hereinafter referred to as the Principal Act), after sub-Section (1A), the following sub-Section shall be inserted, namely:-
"(1-B) (a) Notwithstanding anything contained in this Act, the Tamil Nadu State Marketing Corporation Limited, which is a Corporation wholly owned and controlled by the State Government, shall have the exclusive privilege of selling, by retail, Indian made foreign spirits, for the whole of the State of Tamil Nadu and no other person shall be entitled to any privilege of selling, by retail, Indian made foreign spirits for the whole or any part of the State.
(b) Notwithstanding anything contained in this Act, Tamil Nadu State Marketing Corporation Limited shall be granted the licence by the Commissioner for the exercise of the exclusive privilege referred to in clause (a) and such licence shall be subject to the rules made by the Government in this behalf and to such conditions and restrictions as the Commissioner may, from time to time, specify.
(c) (i) The Tamil Nadu State Marketing Corporation Limited shall, as soon as may be, after the grant of the licence under clause (b) for the exercise of the exclusive privilege referred to in clause (a), fix, locate and open as many shops as may be necessary to effectively carry on the business of sale, by retail, of Indian made foreign spirits in the State and the said Corporation in so fixing the shops, shall take into account the population of the locality, the needs of the locality and other relevant factors.
(ii) The Tamil Nadu State Marketing Corporation Limited shall carry on the business of selling, by retail; Indian made foreign spirits-
(A) either directly by the said Corporation; or
(B) through Cooperative Societies appointed by the said Corporation as agents to act on its behalf and on such terms and conditions as the said Corporation may specify; or
(C) by both the methods specified in subitems (A) and (B) of this item.
(iii) Any dispute between the said Corporation and the Co- Operative Society, appointed as its agent, in respect of any matter, shall be referred to the Commissioner or an officer not below the rank of District Revenue Officer specially empowered by the State Government in this behalf, whose decision thereon shall be final and such decision shall not be called in question in any Court.
Explanation.-For the purposes of this Act, a Co-Operative Society appointed as agent by the Tamil Nadu state Marketing Corporation Limited for selling on its behalf, by retail, Indian made foreign spirits, shall not be deemed to be exercising any privilege of selling, by retail, Indian made foreign spirits and accordingly the provisions of this Act relating to the grant of such privilege and licence for selling, by retail, Indian made foreign spirits shall not apply to such agent."
7. While the insertion of the above provision makes it mandatory that TASMAC shall have the exclusive privilege of selling IMFL by retail, insertion of another new provision Section 22D nullifies the subsisting licences with effect from 29.11.2003. For such of those licensees, who had opted drawal system for the Excise Year 2002-2003 are concerned, there cannot be any complaint of the above provision as their licences expired on 15th September 2003 and in fact, they had an extended period of more than two months. But situation is entirely different in the case of Block Period licensees. In the case of Block Period licensees, renewal of licence for the excise year 2003-2004 is a matter of right subject to the payment of 10% increase over last year''s privilege amount. But block period licensees are affected. The said provision reads:
"3. After Section 22C of the principal Act, the following Section shall be inserted, namely:-
''22-D. Licence granted for selling, by retail, Indian-made foreign spirits to cease to be valid.- (a) Notwithstanding anything contained in this Act or in any judgment, decree or order of any Court, every licence granted or renewed in respect of any privilege of selling, by retail, Indian-made foreign spirits (other than the licence granted or renewed for supply in hotels, clubs and stores and depots run by the Defence Department, Government of India) and which is valid on the 26th day of October 2003 shall cease to be valid on the expiry of the 28th day of November 2003 on which date the validity of the said licence shall, under the existing rules, expire and any licence renewed for any period beyond 28th day of November 2003 shall cease to be valid and in such cases, all fees (including the licence fee and the privilege amount) paid for renewal of licence shall be refunded.
(b) Notwithstanding anything contained in this Act or in any judgment, decree or order of any Court, every application made for the grant or renewal of licence for selling, by retail, Indian-made foreign spirits and pending before the Commissioner or before the State Government or any other Authority on the 26th day of October 2003 and every action taken, or enquiry made, in respect of such application, shall abate and all fees in connection with such application (including the application fee and the licence fee, if any), already paid shall be refunded.
(c) The Tamil Nadu Liquor (Retail Vending) Rules, 1989 and the Tamil Nadu Liquor (Retail Vending in Bar) Rules, 2002, are hereby repealed with effect from the 29th day of November 2003:
Provided that such repeal shall not affect any offence committed or any fine, penalty or forfeiture incurred before the 29th day of November 2003.
(d) (i) Notwithstanding anything contained in sub-Section (1-B) of Section 17C and without prejudice to the provisions contained in Section 54, the State Government may make rules for grant of licences to such hotels, clubs and stores and depots run by the Defence Department, Government of India, as may be prescribed and for the purpose of carrying into effect the provisions of this section and sub-section (1-B) of section 17C.
(ii) Within a period of one month commencing on and from the 29th day of November 2003, the State Government shall, on payment of the price, take over the entire stock of Indianmade foreign spirits, if any, which on the 29th day of November; 2003, is in possession of any holder of a licence which shall cease to be valid under clause (a).
Explanation. - For the purposes of item (ii) of this clause, the expression ''stock of Indianmade foreign spirits'' shall include stocks in movement on the 29th day of November, 2003, consequent on the orders placed by such holder with the suppliers in pursuance of permits granted by the Competent Authority under this Act.''
8. The above Ordinance was substituted by the Tamil Nadu Act 31 of 2003, hereinafter referred to as the Amending Act, retaining the above stated newly inserted provisions in tact.
9. Assailing the above Amending Act, Writ Petitions have been filed and even in the Writ Petitions, which were earlier filed assailing the Ordinance, amendments were sought for seeking to question the Amending Act and the said amendment petitions were allowed.
10. Mr. K.M. Vijayan, Mr. R. Krishnamurthi, Mrs. Nalini Chidambaram, Mr. R. Gandhi and Mr. T.R. Rajagopalan, senior counsel, and Mr. K. Selvaraj, Mr. AR. L. Sundaresan, Mr. K. Selvaraj, Mr. Palani Selvaraj, Mr. R. Saravana Kumar, Mr. V. Kathiravan, Mr. A.V. Somasundaram, Mr. K. Kannan and Mr. M. Kamalanathan, learned counsel, have submitted their arguments on behalf of some of the petitioners and other learned counsel, appearing for the other petitioners, have adopted their arguments.
11. On behalf of the State, both Mr. N.R. Chandran, learned Advocate General, and Mr. R. Muthukumaraswamy, learned Additional Advocate General have defended the Governmental action in enacting the amendment.
12. Batches of cases, which have been filed after reserving the judgment on 28.11.2003 have also been clubbed along with this batch as the learned counsel appearing for the petitioners in those writ petitions have adopted the arguments already addressed earlier.
13. Instead of separately referring to each of the arguments addressed by the learned counsel for the petitioners and to avoid over-lapping and repetition, we summarise the contentions of the petitioners'' counsel as hereunder:
(i) Right to trade in liquor is a fundamental right traced to Article 19 (1) (g) of Indian Constitution unless there is a total prohibition imposed by the State;
(ii) TASMAC is not a State within the meaning of Article 12 of the Indian Constitution and cannot be termed as an instrumentality of the State and so also, the Cooperative Societies, and the Government cannot run the liquor trade either through TASMAC or through Co-operative Societies
(iii) Co-operative Societies have laudable objects in consonance with the co-operative movement and liquor trade cannot be entrusted to Co-operative Societies;
(iv) The Government has acted arbitrarily violating Article 14 of Indian Constitution as TASMAC and Cooperative Societies even though legal persons, are equal to individuals and while granting retail vending to TASMAC and Cooperative Societies, the petitioners cannot be kept away from liquor trade and this action of the Government is not only arbitrary but is also mala fide so as to entrust the liquor trade to choosy ones under the guise of a further delegation to the Cooperative Societies:
(v) There is a rank discrimination in not granting licenses to the individuals while granting the same to hotels, clubs, stores and depots run by the Defence Department, Government of India, as the above categories are nothing but a group of persons and there is no valid classification made between individual persons and group of persons.
(vi) The Government has abdicated essential legislative functions by delegating the power to TASMAC either to do the liquor trade by itself or further appoint Co-Operative Societies for that purpose;
(vii) The Objects and Reasons, which have been stated for enacting the amendment, are non-existent and as such/the Amending Act is a colourable piece of legislation and is unconstitutional and bad;
(viii) Having invited applications pursuant to G.O.Ms. Nos. 243, 244 and 245, Prohibition and Excise Department dated 4.10.2003, and accepted the application fees and 50% of the privilege amount, the Government had no power to turn back and has to proceed further in consonance with the above governmental orders;
(ix) The Amending Act is an affront to the judicial verdict of this Court, as affirmed by the Supreme Court, protecting the Block Period licensees and is thus Constitutionally invalid as it encroaches on the judicial powers of the State.
(x) Even if the outgoing licensees, other than the Block Period licensees, are not having the right for the grant of licenses for the Excise Year 2003 - 2004 as of right, the State cannot continue its monopoly in liquor trade through TASMAC and Cooperative Societies because of inseverability, as monopoly of the State is unworkable in scattered parts after parting privilege of retail vending to block-period licensees.
14. Countering the above arguments, the learned Advocate General and the learned Additional Advocate General submit that there is no fundamental right to trade in intoxicants, that Article 19(1)(g) of the Indian Constitution is not at all applicable, that as no other individual has been granted the privilege of vending the IMFL liquor in retail, the question of invocation of Article 14 also does not arise, that the State has got monopoly in the trade of intoxicants, that the State can either impose prohibition or do the business by itself or through its agents or, in its discretion, part with the privilege of vending the liquor, be it wholesale or retail, to the private individuals but there is no right for any private individual or a body corporate to force the Government to part with the privilege of liquor vending. They further submit that TASMAC is a company wholly owned by the Government and is a State under Article 12 of Indian Constitution and so also the Cooperative Societies, that in any event, TASMAC and Cooperative Societies act only as agents of the Government to vend liquor, that the writ petitioners have got no say in the said discretion of the Government and cannot interfere with the decision of the Government in that regard and that so long as the liquor vending is not entrusted to any individual, the petitioners have got absolutely no locus to challenge the Governmental action. It is also contended that doctrine of severability has no application. It is further submitted by them that the action of the Government in enacting the amendment is absolutely valid and is not ultra vires the Constitution, that there is no annulment of the judicial verdict relating to Block Period Licensees, that the Legislature has got Constitutional authority to remove the basis of any judgment rendered by the Court, that the cessation of any licence of Block Period by virtue of the newly inserted Section 22D of the Act only removes the basis of the judgment rendered by this Court relating to Block Period Licensees and as such, there is no in-road made into the domain of the judiciary.
15. Plethora of precedents have been cited on either side and a day before conclusion of arguments, i.e. on 27.11.2003, an order was passed keeping the commencement of trade by TASMAC and Cooperative Societies in abeyance by one week, but on the concluding day of the arguments i.e. on 28.11.2003, the pleas of the Advocate General and the Additional Advocate General were again considered in the context of balance of convenience and the order of the preceding day was modified to the following effect.
"The arguments have been concluded. As already stated above, the judgment cannot be handed out to-day, as the time is now 11.45 a.m. Learned Advocate General and learned Additional Advocate General have strenuously contended that the Government have made all preparations for commencement of the business from tomorrow (29.11.2003) by investing huge amount, and that if the order passed yesterday (27.11.2003) is not modified, then irreparable injury will ensue, and that the Government be permitted to vend IMFL in retail, jointly with the licensees, who are claiming the renewal as of right.
2. Mr. K.M. Vijayan, learned senior counsel and Mr. S.S. Sunder, learned counsel appearing for some of the petitioners submitted that the order passed by this Court yesterday should continue to operate.
3. We are mainly going on the balance of convenience factor. In the event of writs being allowed, then the entire Government staffs have to be withdrawn and the shops, which are established, have to be taken off. On the other hand, if a modified interim order is passed enabling such of the licensees, who are claiming renewal of licenses as of right, to operate then there should not be any difficulty in restoring the shops to the Government in the event of dismissal of the writ petitions. Such persons shall only include 284 (who had remitted the privilege amount before 31.07.2002) and 595 (who had remitted the amount within 30.09.2002), and their contentions that they are entitled for the renewal of licenses for the remaining block period have got to be considered and adjudicated upon. The other licensees, prima facie, have no such right to continue, as they were granted licenses only for one year i.e., 2002-2003.
4. In that view of the matter, we modify our order dated 27.11.2003 to the following effect:
(i) The IMFL retail vending shops, which are in operation as on to-day, and run by the above 284 plus 595 totally 879 persons, shall continue the business of vending IMFL in retail and for the rest of the areas, the Government is at liberty to either vend itself or through TASMAC or Co-operative societies.
(ii) We make it clear that so long as the above 879 persons conduct their IMFL retail vending, the proportionate amount shall be tapped daily from the security deposit.
Responding to Mr. K.M. Vijayan''s apprehension that TASMAC may not release the stocks, the learned Advocate General and the learned Additional Advocate General assured before this Court that IMFL stocks, as indented by the above 879 persons, shall be made available to them on payment of cost thereof."
The above order was assailed by the Government in SLP (Civil) No. 23026 of 2003 in the Supreme Court and the Supreme Court by its order dated 3.12.2003 has passed the following order:
"Issue notice. Notice on the prayer for interim relief also.
Shri Venugopal, learned senior advocate states that only Tamil Nadu State Marketing Corporation Limited would carry on the retail vending of Indian made foreign liquor in the State of Tamil Nadu under the Ordinance hereinafter.
In view of this statement, we suspend the operation of the order under challenge in this special leave petition.
This order shall cease to have effect as and when any judgment is delivered by the High Court. We further clarify that this order shall not be construed by the High Court as an expression of opinion on merits by this Court. The same shall not come in the way of the High Court to decide the matter on merit in any way."
16. POINT (i) RELATING TO ART. 19 (1) (g): As early as in 1954, a Constitutional Bench of the Supreme Court in
In
"39. The contention that a citizen of this country has a fundamental right to trade in intoxicating liquors refuses to die in spite of the recent Constitution Bench decision in Khoday Distilleries (1995 (1) SCC 575). It is raised before us again. In Khoday Distilleries (supra), this Court reviewed the entire case- law on the subject and concluded that a citizen has no fundamental right to trade or business in intoxicating liquors and that trade or business in such liquor can be completely prohibited. It held that because of its vicious and pernicious nature, dealing in intoxicating liquors is concerned to be res extra commercium (outside commerce). Article 47 of the Constitution, it pointed out, requires the State to endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and all drugs, which are injurious to health. For the same reason, the Bench held, the State can create a monopoly either in itself or in an agency created by it for the manufacture, possession, sale and distribution of liquor as a beverage. The holding is emphatic and unambiguous. Yet an argument is sought to be built upon certain words occurring in clauses (e) and (f) of the summary contained in para 60 of the decision. In these clauses, it was observed that creation of a monopoly in the State to deal in intoxicating liquors and the power to impose restrictions, limitations and even prohibition thereon can be imposed both under clause (6) of Article 19 or even otherwise. Seizing upon these observations, Shri Ganguly argued that this decision implicitly recognises that business in liquor is a fundamental right under Article 19(1)(g). If it were not so asked the learned counsel, reference to Article 19(6) has no meaning. We do not think that any such argument can be built upon the said observations. In clause (e), the Bench held, a monopoly in the State or its agency can be created "under Article 19(6) or even otherwise". Similarly, in clause (f), while speaking of imposition of restrictions and limitations on this business, it held that they can be imposed "both under Article 19(6) or otherwise". The said words cannot be read as militating against the express propositions enunciated in clauses (b), (c), (d), (e) and (f) of the said summary. The said decision, as a matter of fact, emphatically reiterates the holding in
In view of the above authoritative pronouncement of the Supreme Court, which is law under Article 141 of Indian Constitution, the contention of the learned counsel for the petitioners that the petitioners have got fundamental right to claim for the licenses for vending liquor if there is no total prohibition is rejected.
17. POINTS (ii) TO (v) RELATING TO ART. 14: The question whether TASMAC or a Cooperative Society is a ''State'' under Article 12 of Indian Constitution does not arise for consideration. TASMAC is a company owned by the Government and it need not even be an instrumentality of State and suffice it to state that TASMAC is a company registered under Companies Act and there is no bar under Companies Act for the company with objects to trade in liquor, be it wholesale or retail. The Cooperative Societies act as agents.
A company under Companies Act or a Society registered under the Cooperative Societies Act is not a citizen and the petitioners, who are the citizens, cannot compare themselves to either TASMAC or Cooperative Societies. Even though a Company or Cooperative Society are legal persons and are body corporates to hold or dispose of property and conduct business, subject to limitations stated under the statute governing them, stricto senso, they are not equated to ordinary natural citizens and as such, there is absolutely no legal embargo either for TASMAC or Cooperative Societies to act as agents of the State Government. In fact, there are some judgments rendered by this Court wherein the rights of TASMAC and Cooperative Societies to trade in liquor on preferential basis were upheld. In Egmore & Nungambakkam Taluk Wine Merchants'' Association v. State of Tamil Nadu (1989 WLR 105), the provisions contained in Section 17C (1) of the Tamil Nadu Prohibition Act conferring exclusive privilege of wholesale vending of IMFL on TASMAC and also preferences to be given to cooperative societies u/s 20B, were upheld. The ratio laid down in the said judgment was upheld by a Division Bench of this Court in V.R. Govindaswamy v. State Of Tamil Nadu (1991 WLR 275). In M.P. Mariappa Nadar & Ors. V. State of Tamil Nadu rep. by its Secretary, Prohibition & Excise Department (1997 Writ L.R. 814) a Division Bench of this Court while affirming the judgment of the learned single Judge held that there is nothing wrong in giving preference to cooperative societies by nomination for the upset price. It was further held that loss of revenue is no concern for the citizen as the Government, in the context of the co-operative societies, considered the welfare of the members of the co-operative societies and that profit making alone is not the criterion for the conferment of benefit on the co-operative societies. In
3. Grant of privilege. - The privilege shall be granted to any person in accordance with the provisions of these rules :
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 vending shops including shops for which eligible applications are not received, permitted by the Government and distributed as far as possible among the various, districts by nomination to the Tamil Nadu State Marketing Corporation or the Tamil Nadu Civil Supplies Corporation or Cooperative Societies. The Tamil Nadu State Marketing or the Cooperative Society interested in the grant of the privilege may apply to the licensing authority in Form VI together with an affidavit in Form II:
Provided further that the licensing authority shall, before nominating any Cooperative Society for the grant of the privilege, cause such verification as it may deem necessary to be made and satisfy itself as to the suitability of that society for the grant of the privilege.
Now that the privilege is done away with from this excise year, the Cooperative Societies are appointed only as agents on payment of commission and that is so clear from the Explanation to the newly inserted Section 17C(1-B)(c)(iii). The Explanation reads as follows:
Explanation.-For the purposes of this Act, a Co-Operative Society appointed as agent by the Tamil Nadu state Marketing Corporation Limited for selling on its behalf, by retail, Indian made foreign spirits, shall not be deemed to be exercising any privilege of selling, by retail, Indian made foreign spirits and accordingly the provisions of this Act relating to the grant of such privilege and licence for selling, by retail, Indian made foreign spirits shall not apply to such agent.
The petitioners cannot be termed as equals to either TASMAC or Cooperative Societies. Even the hotels, clubs and stores and depots run by the Defence Department of Government of India are a class apart and cannot be equated to the citizens like the petitioners as there being a valid classification.
In the circumstances, we find no infraction of equality clause enshrined in Article 14 of Indian Constitution.
18. POINT (vi) RELATING TO ABDICATION OF ESSENTIAL LEGISLATIVE FUNCTIONS: (a) In
(b) In
(c) Dealing with the permissibility of the extent of delegation of legislative powers a two Judge Bench of the Supreme Court in
In the light of the above stated principles, we shall now examine as to whether there is an abdication of essential legal functions by the State. As seen from the above legal principles enunciated, the State itself need not run the business through its officers. It can entrust to another agency to deal on its behalf. TASMAC is a company registered solely for that purpose. Firstly, entire wholesale liquor was entrusted to it and the challenge to such an action was already negatived. It is not that State has completely left the matter to the whims and fancies of TASMAG. In Section 17C(1-B)(b), it is specifically stated that the Commissioner of Excise shall be the authority to grant licence to TASMAC and such licence shall be subject to the Rules made by the Government in this behalf and also to such restrictions and conditions as the Commissioner may, from to time, specify. There are also guidelines indicated in Section 17C(1-B)(c) that TASMAC shall fix, locate and open as many shops as may be necessary to effectively carry on the business of sale, by retail, of Indian Made Foreign Spirits in the State by taking into account the population of the locality, the needs of the locality and other relevant factors. Even while empowering TASMAC to entrust the retail vending to Cooperative Societies, as agents, sufficient guidelines have been set. It cannot be said that any uncanalised, uncontrolled and unguided power has been delegated to TASMAC or for that reason, to the Cooperative Societies. In the circumstances, we are unable to accede to the contention that there is an abdication of essential legislative functions by the State.
19. POINT (vii) RELATING TO OBJECTS AND REASONS: No statute enacted by any legislative body needs to contain any objects and reasons. What is necessary is the body of the statute and the approval of the same by the majority in the legislative bodies, be it Parliament or in the State Legislature. This is of course subject to the legislative competence and the statute being in conformity with Part III of Indian Constitution. We have already held that there is no infraction of fundamental rights. Legislative competence is not doubted. While the learned Additional Advocate General relies upon the judgment rendered by the Supreme Court in
In
In
From the above propositions laid down by the Supreme Court, it is clear that when the Statute is clear and unambiguous and it does not admit of any doubt, then we need not look into Objects and Reasons and even if there are some aspects mentioned under Objects and Reasons, they should not be taken as guidance for the interpretation of the provisions in the Statute.
The proposition laid down by the Supreme Court in
20. POINT (viii) RELATING TO ACCRUAL OF RIGHTS: Legislation can be prospective or retrospective and can sustain the constitutional onslaught provided the same is within the legislative competence, in consonance with fundamental rights enshrined in Part III of the Constitution and overall, in tune with constitutional scheme. While considering the rights of the citizens, the relevant factor is whether the rights are defeasible or indefeasible. No doubt, the State has invited applications by issuing G.O.Ms. Nos. 243, 244 and 245 dated 4.10.2003 pursuant to which the petitioners have submitted applications with Rs. 500/-and also deposited 50% of the privilege amount. But that itself cannot create any indefeasible right in the applicants as the State is not cancelling the above G.Os. for the purpose of inviting fresh applications. As the State has got right to create monopoly for itself, it has enacted a law by which all applications abate. But the applicants are entitled not only for refund but also reasonable interest on the above amounts and the State cannot deny the same. While the State has the right not to proceed further with the applications and decide to refund the amount before the accrual of any right to the applicants, it cannot be unreasonable to leisurely refund the amount and that too without any interest. If the amounts have already been refunded it is fine. But if they have not been refunded, then they have to be refunded with interest at 15% from the date of deposit till the date of payment. But this we are speaking of only the applicants other than block-period licensees.
21. POINT (ix) WHETHER A COLOURABLE LEGISLATION: Independence of judiciary is a basic feature of the Constitution. Article 50 read with Articles 245 and 246 of the Constitution imposes a bar on a legislative action encroaching upon the judicial functions or enacting law annulling judicial verdict. But when a judicial decision points out lacunae in any of the Acts, be it of the Parliament or the State Legislature, the said legislative bodies can legislate even with retrospective effect filling up the said lacunae and validating the actions which otherwise would remain invalid. Such legislative acts shall be subject to possessing legislative competence, not violating Part III of the Constitution or any of the constitutional provisions or the constitutional scheme. If any executive or legislative action is annulled by the Court and a mandamus is issued, there cannot be any legislative Act to interdict the said direction. There is a catena of decisions on this point but it is not necessary to burden this judgment with all the said precedents. Suffice it to mention some important judgments rendered by the Supreme Court on this point.
(a) In
(b) In
(c) In
"11. Validation.- (1) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court, the levy and collection of surcharge by the Board or other licensees on or after the 1st day of October, 1984 and before the 1st day of August, 1988 under the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order, 1984, shall be deemed to be, and deemed always to have been validly levied and collected as if the said order was a notified order u/s 3....."
The said validating provision was upheld by the Kerala High Court and affirmed by the Supreme Court.
(d) In
5. Certain provisions of Tamil Nadu Act 7 of 1974 not to have effect. - (1) Notwithstanding anything contained in the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Sixth Amendment Act, 1972 (Tamil Nadu Act 7 of 1974), or in any judgment, decree or order of any court or other authority, sub-Section (2) of Section 3 of the 1972 Act shall be omitted and shall be deemed always to have been omitted....."
(e) In the latest judgment of the Supreme Cour
(f) To the same effect is the another latest judgment of the Supreme Court in
From the above decisions it is clear that whenever Courts pointed out that something is wanting in the statutes, then that can be set right by removing the deficiency by amending the laws, even retrospectively.
22. We shall now refer to another line of judgments where it was held that the Amendment Acts were an affront to the judicial verdicts thus encroaching on the judicial power of the State and were held to be impermissible in our constitutional scheme.
(a) In
(b) In
"Notwithstanding anything contained in this Act or in the principal Act or in any judgment, decree or order of any Court no assessment or re-assessment or collection of any tax due on any payment for admission to any entertainment or any cinematograph exhibition, which has escaped assessment to tax, or which has been assessed at a rate lower than the rate at which it is assessable, u/s 4 or 4A of the principal Act, made at any time after the date of the commencement of the principal Act and before the date of the publication of this Act in the gazette shall be deemed to be invalid or ever to have been invalid on the ground only that such assessment or re-assessment or collection was not in accordance with law and such tax assessed or re-assessed or collected or purporting to have been assessed or re- assessed or collected shall for all purposes, be deemed to be and to have been always validly assessed or reassessed or collected".
It was held that the said amended Section 7 of the Act did not change the law retrospectively and that the effect of the said provision is to over rule the decision of the Madras High Court as the provision reads that notwithstanding any judgment of the court, the re-assessment invalidly made must be deemed to be valid. The offending provision was thus set aside.
(c) In
(d) In the
(e) In
(f) In
(g) In
(h) In
23. In the light of the decisions which have been referred to in paragraphs 22 and 23 (reported in
24. POINT (x) RELATING TO DOCTRINE OF SEVERABLITY: The Cooperative Societies had been conducting their business in liquor trade and it is not new. We have already mentioned above the origin and details, including the judicial precedents upholding the right of the cooperative societies to trade in liquor. We have also upheld the agency which TASMAC may ultimately confer on the cooperative societies. Whether it is TASMAC or Cooperative Societies, a specified number of shops are going to be set up and in fact have been set up in most of the areas. In the matter of selling the liquor by retail, there should not be any difficulty for TASMAC or Cooperative Societies to sell in their respective shops while other shops in which 284 Block Period Licensees have set up the shops will continue their retail liquor vending. The renewal of the licence to 284 Block Period Licensees will not render the policy of the Government to run the remaining shops either through TASMAC or Cooperative Societies invalid. In the result, while upholding the Amending Act, we hold that for the Excise Year 2003 - 2004, the State Government is liable to renew the licenses in favour of 284 Block Period Licensees. As already stated above, for the remaining applicants, the amounts shall be refunded with 15% interest as stated above, if not already refunded. All the writ petitions are disposed of accordingly.
