@JUDGMENTTAG-ORDER
C.V. Nagarjuna Reddy, J.@mdashThis writ petition is filed for a writ of mandamus to declare order passed in Rc. No. 928/2006/A5 dated 29.9.2007 by respondent No. 2, wherein he declined to renew Form-2B licence under the A.P. Excise (Grant of Licence of Selling by Bar and Conditions of Licence) Rules, 2005 (for short, ''the Rules''), as illegal. The petitioner also sought for a consequential direction to respondent No. 2 to consider its application for renewal of bar licence.
2. The facts in a nutshell are as follows:
The petitioner was a lessee of the premises in question, namely, Door No. 26-3-128 NRP Road, Ghandi Nagar, Vijayawada, in which it was running a bar and restaurant. It approached respondent No. 2 for renewal of its bar licence for the year 2007-2008. While the petitioner''s application for renewal was pending, respondent No. 2 received representation dated 16.6.2007 from respondent No. 3, wherein the latter objected to the petitioner''s application for grant of renewal on the ground that he purchased the building of which the premises in question is a part under registered sale deed dated 4.12.2006 from its original owners Sri J.M. Patel and five others and that the petitioner has not obtained any lease agreement from him, who has become the absolute owner of the said premises. On receipt of the said representation, respondent No. 2 evidently issued memo bearing Rc. No. 928/06/A5 dated 6.7.2007, wherein he informed the petitioner that his application for renewal suffers from a lacuna in view of non-production of lease deed. Thereafter, respondent No. 2 vide his proceedings dated 29.9.2007 rejected the petitioner''s application for renewal on the ground that he failed to produce the lease deed executed by the owner of the property. This order is assailed in this writ petition.
3. Separate counter-affidavits have been filed on behalf of respondent Nos. 1 and 2 and 3.
4. In the counter-affidavit filed by the Prohibition and Excise Inspector, Vijayawada (West Circle), Krishna District, on behalf of respondent Nos. 1 and 2, it is stated that rejection of renewal was sought to be justified on the ground of non-production of lease deed by the petitioner. It is asserted that all the conditions applicable for grant of licence equally apply for renewal of licence.
It is averred that under Sub-rule (4) of Rule 9-A of the Rules, the licensee is required to enter into a counterpart agreement in Form-4B, which in turn stipulates that the licensee shall abide by the Rules and that Rule 6(vi) of the Rules stipulates that the applicant shall produce the lease deed on a stamp paper for the proposed licensed premises from its owner.
5. In the counter-affidavit filed by respondent No. 3, he termed the petitioner''s claim that it purchased the property in question from its original owners under an oral agreement of sale as being far from the truth and hard to believe. He described the five civil suits, namely, O.S. Nos.869 to 873 of 2007 filed by the petitioner against the original owners as frivolous and vexatious. He contended that unless and until the petitioner succeeds in the said suits, he will not be entitled to any relief in the writ petition. Respondent No. 3 claimed that he purchased the entire building in which the disputed premises located under seven registered sale deeds on 4.12.2006 and that the same was within the knowledge of the petitioner as evident from letter 18.5.2007 addressed by the original owner to the petitioner. He pleaded that there is no order passed in favour of the petitioner in the pending suits in respect of the premises in dispute and that the interim order of injunction granted in O.S. No. 578 of 1995 is in respect of 700 square feet and that the said suit was filed on behalf of Vikram Travels and the petitioner has nothing to do with the same. Respondent No. 3 adopted the stand of respondent No. 2 with regard to the requirement of existence of a lease deed for renewal of the licence.
6. At the hearing, Sri O. Manohar Rcddy, learned Counsel for the petitioner advanced the following contentions.
1. Under Rule 9-A of the Rules it is not necessary for the licensee to produce the lease deed for renewal of licence.
2. Respondent No. 2 has no power to reject renewal of licence since such power is vested in respondent No. 1 and hence the impugned order passed by respondent No. 2 is without jurisdiction, and
3. Even assuming that respondent No. 2 has jurisdiction to pass impugned order, the same is in violation of principles of natural justice.
7. Learned Government Pleader for Prohibition and Excise and Sri S. Satyanarayana Prasad, learned Senior Counsel representing respondent No. 3 reiterated the stand taken in the respective pleadings of respondent Nos. 1, 2 and 3 respectively.
8. Sri S. Satyanarayana Prasad, apart from filing brief written submissions, relied upon the Full Bench judgment of this Court in
9. I have carefully considered the respective submissions of the learned Counsel for the parties and perused the record.
10. Before adverting to the contentions advanced by the learned Counsel, it is necessary to remember that by a plethora of authoritative judicial pronouncements, the law is well settled that a citizen has no fundamental right to carry on trade in liquor, which is considered as a pernicious trade. (See the Constitution Bench judgments of the Supreme Court in
11. The Courts, however, held that when once the privilege is conferred to deal in liquor, the State and its officers are subjected to the constitutional limitations prescribed by Article 14 of the Constitution of India. Keeping this settled legal position in mind, I shall now consider the submissions of the learned Counsel.
12. Section 13 of the A.P. Excise Act, 1968 (for short, ''the Act'') prohibits the manufacture, sale etc., of excisable articles (alcohol, liquor for human consumption or any intoxicating drug) except under the authority and subject to the terms and conditions of a licence granted by such officer as may be prescribed.
13. Section 72 of the Act empowers the State Government to make rules for carrying out all or any of the purposes of the Act. In exercise of the said rule making power, the State Government has been making rules from time to time. The present case concerns itself with the 2005 Rules notified in G.O. Ms. No. 997 dated 24.5.2005 and as amended by G.O. Ms. No. 868 Revenue (Excise II) dated 21.6.2007. These rules deal with grant and renewal of licences for selling liquor by bar. To resolve the contentious issues, it is necessary to refer to some of the rules relevant for this purpose.
14. Rule 4 provides for grant of licence for service of food and sale of Indian made liquor and Foreign Liquor in glasses or pegs for consumption within the licensed premises. The licence is granted in Form-2B.
15. Under Rule 5(1), the person intending to establish a bar, may submit an application in Form-1A to the Commissioner along with challan for Rs. 1,000/- to get prior clearance. Under Sub-rule (2), the Commissioner having due regard to the requirement and other factors as he deems fit, may grant a prior clearance in Form-2A. Proviso to the said sub-rule, however, contains a caveat that grant of prior clearance shall not confer any right on the applicant for grant of licence in Form-2B. Sub-rule Nos. 3 to 7 provide for procedure for applying for and grant of Form-2B licence in favour of the holder of prior clearance.
16. Rule 6, which is very much relevant for the present case, envisages restrictions on the grant of licence. The said rule starts with a negative mandate "Licence in Form-2B shall not be granted unless the premises has". Various sub-clauses of the said rule prescribe a number of requirements to be satisfied for grant of Form-2B licence.
17. Rule 6(1)(vi) on which the whole controversy is focused envisages that the applicant shall produce the lease deed on a stamp paper for the proposed licensed premises from the owner of the premises.
18. Till 21.6.2007 when the rules were amended, there was no separate provision for renewal of Form-2B licence. Obviously, in the absence of such a clause for renewal, fresh licences appeared to have been given on the expiry of the validity of the previous licences. However, by the said amendment a separate provision for renewal of the licences is introduced and for convenience the said provision is reproduced below:
9-A. Renewal of 2B Licence: (1) Before 15 days of expiry of the licence the licensee May apply for renewal of 2B licence to the Deputy Commissioner of Prohibition and Excise concerned.
(2) An application for renewal of licence shall bear a Court fee stamp of the requisite value as per the provisions of Indian Stamp Act, 1899 and shall be submitted to the Deputy Commissioner of Prohibition and Excise together with a challan in original for Rs. 1,000/- towards renewal fee and a challan in original in support of having paid the requisite licence fee as prescribed in Rule-10.
(3) In case the application for renewal of licence is made as prescribed in Sub-rule (2) and the licence is not duly renewed and returned before the licence expired, the licensee shall have the right to carry on business till the renewal is refused and the fact intimated. If the application is not made within the time it shall not however be open to the licensee to continue the business on the expiry of the licence.
(4) Before the issue of licence, the licensee shall execute a counterpart agreement in Form 4-8 on the stamp paper of requisite value as per provision of Indian Stamp Act, 1899.
19. The primordiam of the contention of Sri O. Manohar Reddy is that Rule 9-A, which specifically deals with renewal, does not envisage the requirement of production of a lease deed as a condition for renewal of Form-2B licence. According to him, the rule making authority purposely omitted to prescribe prior conditions for renewal of licence unlike in the case of fresh grant and hence rejection of the petitioner''s application for renewal on the ground of non-production of lease deed is in violation of the Rule. I have given my serious thought to this submission, but I have not felt persuaded to accept the same.
20. A careful reading of the entire scheme of the Act and the Rules leaves me no doubt that a person''s entitlement for grant of a licence and its renewal is hedged with many conditions and restrictions. They are in tune with the well-settled legal principle that no person has any fundamental right to carry on trade in liquor. Thus, unless a person satisfies all the conditions envisaged in Rule 6, he cannot claim to have any right to run a bar and restaurant.
21. A close examination of the requirements envisaged in Rule 6 reveals that these conditions are stipulated in public interest. In prescribing these conditions, the rule making authority wanted to ensure that the public shall have proper facilities such as spacious premises, good sanitary conditions, air-conditioning or air cooling, adequate vehicle parking space etc. The conditions such as maintenance of minimum distance from the educational institutions, places of public worship, churches and hospitals and predominantly residential areas, are conceived in public interest. Similarly, production of lease deed in respect of the licensed premises is obviously envisaged to ensure that the customers, who visit the premises, are not put to inconvenience on account of any dispute between the owner and the lessee. Therefore, it is obligatory for a person, who seeks to establish a bar and restaurant, to fulfil all the conditions contained in Rule 6. A fortiori it is equally obligatory for a licensee to satisfy the licensing authority that he continues to comply with all those conditions, which are envisaged in Rule 6, if his licence is renewed and so long as he continued to run the Bar and Restaurant.
22. Though Rule 9-A is introduced for the purpose of renewal, a careful reading of the said provision reveals that the same is procedural unlike Rule 6, which is substantive in nature. It provided for time limit within which an application for renewal is required to be made, prescribed Court fee stamp of the requisite value as per the provisions of the Indian Stamp Act, 1899, a challan for Rs. 1,000/- towards renewal fee, the authority to which the application can be submitted and execution of a counterpart agreement in Form-4B on the stamp paper. The only substantive part of this rule is contained in Rule 9-A(3) under which the licensee is conferred with the right to carry on business till the renewal is refused and the fact intimated. This right is, however, subject to the rider that if the application for renewal is not made within the time, the licensee is not entitled to continue the business on expiry of the licence.
23. Understood from the above mentioned perspective that Rule 9-A is introduced for the purpose of providing for renewal instead of granting fresh licence every time and laying down the procedure in applying for renewal, the conclusion is inescapable that to claim renewal of the existing licence, it is incumbent on the applicant to satisfy all the conditions which are envisaged in Rule 6 for grant of licence. Any contra view would lead to an anomalous situation where after grant of licence a licensee may violate any or all of the conditions stipulated in Rule 6 and still claims his right for renewal on the ground that Rule 9-A does not envisage any such conditions. In my considered view, the conditions contained in Rule 6 shall be read into Rule 9-A. Otherwise, Rule 6 will be rendered nugatory with Jhe expiry of the initial period for which the licence is granted.
24. This issue can be examined from another angle. It is legally well settled that renewal is nothing but continuation of the previous licence. It therefore necessarily follows that what is required for granting a fresh licence is equally required for granting renewal, unless such a requirement is specifically excluded by the provision dealing with the renewals. As noted hereinabove, Rule 9-A, which deals with renewal, does not specifically exclude any of the requirements contained in Rule 6.
25. In
26. The Full Bench in Smt. Y. Anasuya ''s case (supra), considered an almost identical issue arising under the provisions of the A.P. Cinemas (Regulation) Act, 1955 and the rules made thereunder. Therefore, it is necessary to discuss the facts of that case. The petitioner therein was-a lessee under a registered lease deed on the basis of which he was granted B-Form licence for running the theatre. In the context of renewal, the owner of the theatre raised objection for renewal of the licence. The Licensing Authority vide his order dated 18.4.1992 declined to renew the licence on the ground that the petitioner was not in ''lawful possession'' of the theatre. The said order having been confirmed by the Government, the lessee filed a writ petition, which was referred to the Full Bench in view of the conflicting views of two Division Benches of this Court in W.A. No. 562 of 1987 dated 23.4.1987 and
11. We shall now take up the crucial question whether the Licensing Authority can refuse to renew the licence in the absence of proof of lawful possession in the sense in which it has been interpreted by the Supreme Court. As already noticed, the argument on behalf of the petitioner is that it is only at the time of grant of licence that there could be an enquiry into ''lawful possession'' but not at the stage of renewal. The omission of the words ''lawful possession'' in the new Rule 12-B in juxtaposition to Rule 11-B is being projected as a clinching factor to support the contention of the petitioner. It is also contended that the Rule-making authority intentionally dispensed with the need to go into the question of lawful possession at die time of renewal.
12. After examining the point at issue from different angles, we are unable to uphold the contention of the learned Counsel for the petitioner. It is no doubt true that the words ''lawful possession'' are not found in Rule 12-B whereas they are specifically mentioned in Rule 11-B. It may prima facie lead to an inference that the expression ''lawful possession'' is only relevant at the time of grant of licence under Rule 11-B but not at the stage of renewal under Rule 12-B. However, on a conspectus of the various rules, the object and purpose behind the requirement of ''lawful possession'' and the consequences that would otherwise follow, we do not think that the prima facie impression reflects the correct legal position.
13. It is to be noted that if the application is in order, that is to say, if it is in accordance with Rule 12-A, and there are valid electrical, fire and longevity certificates covering the period of renewal, the licence "may be renewed for the period applied for". That is what Clause (b) of Rule 12-B lays down. The use of the word ''may'' in the context of exercise of power normally and prima facie denotes that a discretion is vested with the authority. Unless the word ''may'' is read as ''shall'', the renewal of licence on the fulfilment of the conditions laid down in Clause (b) of Rule 12-B is not compulsive but discretionary. The second proviso contained in the very rule would negative any inference that the renewal is automatic on fulfilment of the conditions specified in Sub-rule (b). The said proviso is an indicator that Rule 12-B by itself is not exhaustive and the licence can be rejected for non-fulfilment of ''these rules''--which expression according to us, should mean not only the rules contained in Rule 12-A and 12-B, but also various other rules meant to secure public safety, public convenience, public health, etc. We shall deal with this aspect in more detail a little later. At this stage, we would like to say that the expression ''these rules'' cannot be given truncated meaning and it should cover rules other than those contained in Rules 12-A and 12-B. If so, it cannot be contended that the mere satisfaction of the conditions specified in Clause (b) would ipso facto entitle the applicant to obtain renewal. Apart from the clue we get from the proviso to Rule 12-B itself, a reference to Rule 13 will make it crystal clear that the renewal of licence is only discretionary and the fulfilment of the conditions stipulated in Clause (b) viz., filing of proper application and valid certificates mentioned therein are the minimum that is required for renewal and that those requirements are not exhaustive. Rule 13(6-A) categorically lays down that "any licence granted may, from time to time, be renewed at the discretion of the Licensing Authority" for the periods mentioned in Clauses (a) and (b). Naturally, Rule 12-B has to be read along with this rule. If so read, there can be no doubt whatever that the discretion is left to the Licensing Authority not to renew the licence even if the conditions laid down is Clause (b) are satisfied by the applicant. In exercising this discretion, the Licensing Authority is expected to take into consideration relevant factors. These relevant factors may be expressly set out in the rules or they may be implicit in the very exercise of the power of renewal or, they may be such considerations as are germane to the exercise of power of renewal of licence. The question is whether ''lawful possession'' is not one such relevant consideration. In our view, lawful possession is a very relevant factor that could be legitimately taken into account by the Licensing Authority in the matter of renewal of licence. In this context, we will revert back to Rule 13 Sub-rule (6-A) of Rule 13 which was inserted in the year 1976 mandates that "a renewed licence shall be deemed to be a continuation of original licence." This rule, in express terms embodies the general principle that renewal is virtually a fresh grant.
The Full Bench further observed:
The word ''renewal'' is not used anywhere in the Act evidently because the Legislature thought that renewal is only a facet of grant and it partakes of the same character as the grant. The rule in express terms reaffirms the same idea by saying that the renewed licence is a continuation of the original licence. That lawful possession is very much in the forefront of the mind of the rule making authority at all crucial stages is evident from the fact that proof of lawful possession is insisted upon at the stage of grant of No Objection Certificate for construction as well as at the stage of grant of licence for exhibition of films. As there is no qualitative difference between grant and renewal, as the rule (Rule 13(6-A) itself indicates, it would be consistent with the intention of the rule maker to infer that lawful possession should also be regarded as a relevant consideration for the purpose of renewal.
27. The Full Bench also rejected the contention of the Counsel for the petitioner--lessee that an enquiry into the lawful possession at the stage of renewal encourages needless litigation and gives a handle to the landlord to "extract unconscionable bargain" and observed as under:
We do not find any basis for these presumed intentions of the rule-making authority. We do not think that the rulemaking authority wanted to come to the rescue of recalcitrant lessees who do not wish to honour their commitments. We do not also think that the intention of the rule making authority was to disregard the contractual terms and to preserve the possession of the lessee until such time as he is forcibly evicted. We do not also see any basis for the assumption that nonrenewal of licence on the ground that the applicant did not have lawful possession, would encourage needless litigation. While we do not rule out the scope for litigation, we can only say that the possibility of litigation is perhaps more if mere possession is taken as the basis for renewal.
28. On a careful analysis of the judgment of the Full Bench, I am of the view that the ratio laid down therein applies in all fours to the instant case, probably with more vigor, because while the judgment of the Full Bench was rendered in a case to which Article 19(1)(g), which guaranteed every citizen the fundamental right to carry on business is attracted, a licensee under the Act has no such right. As held by the Full Bench that the requirement of lawful possession shall be read into the provision dealing with renewal, all the conditions contained in Rule 6 must necessarily be read into Rule 9-A for the purpose of considering an application for renewal. This apart, as rightly pointed out by the learned Government Pleader that Rule 9-A(4) stipulated that before renewal of licence the licensee shall execute a counterpart agreement in Form-4B. Clause III of Form-4B reads as under:
That, I/We shall abide by all general conditions applicable to the sale of intoxicants and also the instructions issued by the Commissioner of Prohibition and Excise, in this regard from time to time.
29. The licensee seeking renewal is therefore bound to follow all the rules, which necessarily include Rule 6 under which he is bound to produce the lease deed. This is similar to the second proviso to Rule 12-B discussed by the Full Bench which envisaged that if the provisions of ''these rules'' have not been fulfilled, the renewal will be rejected.
30. After an in-depth analysis, I have no doubt in my mind that an applicant seeking renewal of Form-2B licence shall necessarily comply with all the conditions envisaged in Rule 6 and existence of lease deed being one of the conditions so stipulated by the said rule, the petitioner''s failure to produce such a lease deed from the owner of the premises disentitles him to the renewal of Form-2B licence. I do not therefore find any illegality in the order of respondent No. 2 in rejecting the petitioner''s application for renewal. As regards the contention of the petitioner that respondent No. 2 has no jurisdiction to dispose of his application and that it is only respondent No. 1, who is vested with such a jurisdiction, it is necessary to point out that the petitioner has not raised any such plea in its affidavit. No doubt, under Rule 9-A, it is respondent No. 1, who is competent to renew the licence, learned Government Pleader invited my attention to Circular dated 22.6.2007 issued by the Commissioner of Prohibition and Excise, wherein he authorized the Prohibition and Excise Superintendents to dispose of the applications for renewal and submitted that subsequently the rule was amended with retrospective effect.
31. In his written submissions filed by Sri S. Satyanarayana Prasad on behalf of respondent No. 3, it is stated in Para 12 as under:
It is submitted that the State Government by G.O. Ms. No. 175 dated 18.2.2008 amended the relevant rule with retrospective effect. Therefore, the Circular issued by the Commissioner in exercise of the powers under Rule 9-A empower him to issue such a circular and in that view of the matter there is no illegality in the order of rejection passed by the second respondent.
32. Though the learned Counsel for the petitioner initially advanced this contention, he has not denied the above-mentioned pleas raised on behalf of respondent Nos.2 and 3. In view of the amendment as pleaded by the respondents, I reject the contention of the learned Counsel for the petitioner that respondent No. 2 has no jurisdiction to pass the impugned order.
33. As regards the last contention, namely, that the impugned order was passed in violation of principles of natural justice, it is not necessary for me to decide whether the impugned order is administrative or quasi-judicial in nature and a notice and an opportunity of hearing is required before rejecting the petitioner''s application, because in the counter-affidavit filed on behalf of respondent Nos. 1 and 2, it is specifically pleaded that respondent No. 2 issued memo in Rc. No. 928/2006/A5 dated 6.7.2007, wherein he pointed out the lacuna of non-production of lease deed. The petitioner has not filed any rejoinder controverting this plea. Therefore, even assuming that the petitioner was entitled to a notice, such a requirement is satisfied by respondent No. 2 by issuing the said memo and the petitioner was given an opportunity of making good the deficiency of non-production of the lease deed. I am therefore of the considered view that the petitioner was afforded a fair and reasonable opportunity before rejecting his application for renewal.
34. For the above-mentioned reasons, the writ-petition is dismissed. As a sequel to dismissal of the writ petition, WPMP. Nos. 27637 and 27638 of 2007 filed by the petitioner for interim reliefs are also dismissed.
