Holding

Rule 9(d)’s affidavit requirement is mandatory, the Commissioner’s circular cannot dispense with it, the selection process is vitiated and must be re‑scrutinized, and the amendment cannot be given retrospective effect.

Summary

The State of Chhattisgarh invited applications for retail liquor licences and, after receiving over 2.6 lakh applications, selected candidates by computer‑drawn lottery. Several applicants challenged the process, contending that Rule 9(d) of the 2002 Rules required a notarised affidavit at the pre‑selection stage and that the Commissioner’s circular and subsequent rule amendments unlawfully dispensed with this mandatory requirement. The Supreme Court examined whether the affidavit clause was mandatory or directory, whether the Commissioner could amend the rules retrospectively, and whether licences granted without proper scrutiny were valid. It held that the affidavit requirement is mandatory, the Commissioner lacked authority to waive it, and the amendment could not operate retrospectively to validate the already‑completed selection. Consequently, the Court ordered a fresh scrutiny of all successful applicants’ eligibility and directed compliance with the statutory requirements before licences could stand.

Issues considered

The nature of the affidavit requirement under Rule 9(d): mandatory or directory.
Whether the Commissioner of Excise could, by circular or amendment, dispense with the affidavit requirement.
Whether the selection process conducted without proper eligibility scrutiny is vitiated.
Whether the amendment to the Rules can have retrospective effect to validate licences already granted.
The jurisdiction of the High Court to entertain the public‑interest litigation.

Legislation cited

Code of Civil Procedure, 1908s. Order 6 Rule 15
Constitution of Indias. Entry 51 of List II, Seventh Schedule, s. Entry 8 of List II, Seventh Schedule

Subjects

liquor licensingpublic interest litigationmandatory vs directory statutory provisionaffidavit requirementrule making powerretrospective amendmentselection processadministrative lawexcise law

Judgment

ASHOK LANKA AND ANR. A
v.
RISHI DIXIT AND ORS.

MAY I 1, 2005

[N. SANTOSH HEGDE ANDS. B. SINHA, JJ.] B

Chhatisgarh Excise Act, 1915; Ss. 7(e), 62 and 63/Chhatisgarh Excise
Settlement of Licences for Retail Sale of CountJy/foreign Liquor Rules, 2002;
Rules4, 8, 9, JO, JI, 13and23/Constitutionoflndia, 1950; Entries8and51 C
of List-fl of the Seventh Schedule.

Allotment of Country/Foreign liquor shops-Applications for grant of
licence-Licence granted without proper scrutiny of the applications-
Procedural requirements in terms of Rule 9-Mandatory or directory-Held:
1915 Act is regulatory in nature-Before a licence is granted, applicant must D
satisfy the eligibility requirements-An affidavit is required to be filed disclosing
all the requisite information to enable the authorities to verify the same-
A uthorities could even cancel the licence on ground of non filing ofaffidavit-
Thus, requirement of.filing of such affidavit is mandatory-Authorities are not
empowered to dispense with the statutory requirement offiling ofan affidavit-
Some of the candidates did not fulfil the statutory requirements, even then E
licences were granted to them-Hence, the entire exercise ofscrutiny as regards
ascertainment of eligibility vis-a-vis selection processes required to be
undertaken by the selection committee afresh-However, candidates already
selected could carry on the trade in liquor in terms ofthe directions-Directions
issued
F
Jurisdiction/Power of High Court to deal Public Interest Litigation-
Discussed

Administrative Law-Subordinate Legislation:

Amendment in the Rules by the States in exercise of its rules making G
power-Held: State is not empowered to amend the Rules in order to justify
the illegal order on the part of the authorities.

The State Government of Chhatisgarh had invited applications for
299 H
300 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A grant of li~ences for Country/Foreign liquor shops under the provisions
of Chhatisgarh Excise Act and Rules made thereunder. A large number
of applications were received and selection process began. In the meantime,
some of the candidates challenged the selection process on the ground that
the selection process was vitiated as affidavit was not filed by the applicants
B which was a mandatory requirement under the Rules; and that the
selection was made by drawing a lot through the computer and not
manually. The High Court held that the State was entitled to make use of
computer in the selection process; and that since the selection committee
did not make any scrutiny as regards eligibility conditions/requirement
of filing of affidavit in terms of the Rules, a fresh selection be made in
C terms of the extant rules. Hence the present appeals. Disposing of the
appeals, the Court

HELD: 1.1. It may not be necessary for this Court to consider as to
whether the public interest litigation should have been entertained by the
High Court or not. The High Court did entertain the public interest
D litigation without any objection and ultimately allowed the same.
Furthermore it is well settled that even in a case where a petitioner might
have moved the court in his private interest and for redressal of personal
grievances, the court in furtherance of the public interest may treat it
necessary to enquire into the state of affairs of the subject of litigation in
E the interest of justice. [321-D-F)

Guruyayoor Devaswom Managing Committee and Anr. v. C. K. Rajan
and Ors., 12003) 7 SCC 546 and Prahlad Singh v. Col. Sukhdev Singh, 11987)
1 sec 727' relied on.

F 1.2. When public interest litigation is entertained the individual
conduct of the writ petitioners would take a backseat. There cannot be
any doubt whatsoever that in a given case a party may waive his legal
right. In an appropriate case, the doctrine of acquiescence or acceptance
sub silentio may also be invoked but the High Court, in the instant case,
has gone into the question with a wider perspective. This Court is not only
G required to construe the provisions of the statute but also to take into
consideration the subsequent events which took place vis-a-vis the action
on the part of the State after passing of the interim order. The issue as
regards application of acquiescence or waiver, therefore, has become
irrelevant. [321-G-H; 322-A]

H Haryana State Coop. Land Dev. Bank v. Nee/am, (2005) (2) SCALE
ASHOK LANKA v. RISH! DIXIT 301
434, relied on. A
2.1. The Chhattisgarh Excise Act, 1915 and the Rules framed
thereunder are regulatory in nature. They are being so enacted so as to
ensure public health, as trade in liquor is considered to be obnoxious one.
The State has a duty to see that its people do not consume spurious or
adulterated liquor. The Act and the rules no doubt contain provisions for B
cancellation and/or suspension of the licence in the event the conditions
laid down therein are violated, but it is beyond any cavil that before a
licence is granted, the applicant must satisfy all the statutory conditions
and meet the eligibility requirements. [322-B-C]

Ramana Dayaram Shetty v. The International Airport Authority ofIndia C
and Ors., [1979) 3 SCR 1014 and R. Prabha Devi and Ors. v. Government
of India, Through Secretary, Ministry of Personnel and Training,
Administrative Reforms and Ors., [1988] 2 SCC 233, referred to.

2.2. The persons who fulfill the eligibility criteria and satisfy the
requirements laid down under the Act and the Rules only could file the D
applications which required scrutiny thereof so as to enable the statutory
authorities to consider their cases for grant of licence. The advertisement
issued by the State calls upon only such persons to file applications who
are suitable therefor, which in turn would mean that the applicants must
satisfy the authorities that they are eligible for grant of licence. The
applica~ts must also demonstrate that they are suitable for grant of licence E
as in .the event of their being found unsuitable, steps are required to be
taken by the committee for resettlement of the shops, wherefor procedures
laid down in Rule 8 were required to be complied with again. Stricter
restriction is contemplated in the matter of compliance of the terms and
conditions of the licence. Rule 4 of the Rules permits not more than two p
groups of liquor shopsto a single licensee. (322-G-H; 323-A]

2.3. Rule 9 provides that the eligibility conditions should be
scrutinized before an application is made. It does not make any exception
as regard fulfilment of different clauses inasmuch as the said rules begin
with the expression "the applicant has to fulfil the following conditions". G
Such conditions are required to be fulfilled for obtaining the licence.
f
Whereas clauses (a), (b) and (c) thereof are essential conditions which, if
not fulfilled, would debar a person from filing an applicatmn and if such
an application is filed, the same would be liable to be rejected at the outset;
an applicant having regard to the expressions used in clause (d) has to
file an affidavit. Filing of such.affidavit, therefore, is mandatory, which is H
302 5UPR£ME COURT REPORTS (2005] SUPP. I S.C.R.

A fortified by the fact that Rule 23(1)(c) contemplates that if the affidavit
submitted by the licensee at the time of application is found incorrect and
assertions made therein are found to be false, the 1:-icensing Authority
would be empowered to suspend or cancel the licence. The rule read as a
whole, therefore, provided for filing of an affidavit at the time of grant of
l~cence. Furthermore the vary fact that a circular was issued by the
B Commissioner of Excise asking the applicants to file an affidavit after the
selection process is over itself is a pointer to the fact that filing of such an
affidavit along with the application was c1msidered by all concerned to
be necessary. The advertisement was also required to be issued in
consonance with the rules and not in derogation thereof. It would,
C therefore, be not correct to contend that whereas clauses (a) to (c) of Rule
9 postulate compliance thereof at a pre-selection stage, clause (d) postulates
compliance at the post-selection stage. [323-B-D; 324-D-G)

2.4. The question as to whether a statute is mandatory or directory
would depend upon the statutory scheine. It is now well known that use
D of the expression "shall" or "may" by itself is not decisive. The court while
construing a statute must consider all relevant factors including the
purpose and object the statute seeks to achieve. Furthermore, filing of an
affidavit in the prescribed format is a statutory requirement under the
Rules. Filing of such an affidavit is necessary as in the event the same on
E verification is found to be incorrect, not only the deponent can be
proceeded against but his licence would also be liable to be cancelled. Filing
of an affidavit under the Rules is, therefore, mandatory in character.
[325-CJ

P.T. Rajan v. T.P.M Sahir, [2003) 8 SCC 498 and U.P. State Electricity
p Board v. Shiv Mohan Singh and Anr., (2004) 8 SCC 402, referred to.

3.1. It is not correct to say that clause 22 of the circular dated 14. 2.
2005 issued by the Revenue contemplates a future amendment in the Rules.
Even if the same contemplates a future amendment, the same would not
sub serve the statutory requirements inasmuch as the Commissioner of
G Excise was not supposed to know as to how the existing Rules would be
amended and whether the same would be applied prospectively or
retrospectively. The Court cannot draw a presum·ption that the
Commissioner of Excise could proceed on a pre-supposition that his action
in issuing a circular contrary to Rules would stand ratified by retrospective
H operation of the Rules. A statutory authority, it is trite, must exercise his
ASHOK LANKA v. RISHI DIXIT 303
jurisdiction with the four-corners of the statute and cannot deviate or A
depart therefrom. [325-G-H)

J.2. The rule making power should be exercised having regard to
the policy to be adopted by the State. Such a policy may vary from time
to time. Having regard to the exigency for the situation, rule may also be
amended, but there exists no reason as to why an attempt should be made B
to amend the rule only with a view to justify an illegal action on the part .
of the Commissioner of Excise. Although the validity of the rules has not
been challenged, the Court cannot shut its eyes from considering this
aspect of the matter. This Court is not oblivious of the fact that framing
of rules is not an executive act but a Iegislat_ive act; but there cannot be C
any doubt whatsoever that such subordinate legislation must be framed
strictly in consonance with the legislative intent as reflected in the rule
making power contained in Section 62 of the Act. (326-B-D]

3.3. By reason of the amendment carried out in the rules in terms of
the notification dated 9.3.2004, ~he Commissioner of Excise was D
empowered to prescribe a format of the application form and affidavit.
Such an application or affidavit could be filed within the date and time
stipulated by him but the same would not mean that while prescribing a
format in respect of an application form or affidavit, he became authorized
to dilute the statutory requirements or dispense with the same. No
exception can although be taken as regards the format relating to the E
applications, strong exception has to be taken as regards the format of
the affidavit. (326-E)

4.1. Clause (C-1) was added after clause (c) of Rule 8 ofChhatisgarh
Excise Settlement of Licences for Retail Sale of Country/Foreign Liquor
Rules, 2002 providing that the first, second and third applicants selected F
must submit an affidavit duly verified by the public notary in the
prescribed proforma next day during office hours. The notification does
not state that the amendment will have a retrospective effect. In absence
of any express provisions contained in the notification, the court will not
ordinarily presume the same to be retrospective in nature. [327-D\
G
4.2. A rule may not be challenged as ultra vires the Act, but its
interpretation can certainly be an issue. The rule if given retrospective
effect would become unworkable and would not be capable of being given
effect to. A rule cannot be framed keeping in view that the Commissioner
has issued certain circular which is illegal. By r~ason of a rule making
power, an invalid action ·on the part of the Commissioner of Excise cannot H
304 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

A be validated. If a selection process is over upon following a procedure
which is illegal, by reason of a rule making power the same cannot be
rendered valid simply by directing that the same shall govern the selection
of applicants for grant of licence under the Act. The question as to whether
it can be given effect to or not is, thus, required to be judged on its own
B without reference to the circular issued by the Commissioner of Excise.
Casus Omissus, it is well known, cannot be supplied by the Court.
[327-H; 328-A, B, CJ

P. T. Rajan v. T.P.M Sahir and Ors., [2003) 8 SCC 498, referred to.

4.3. This Court fails to understand as to how without making a
C scrutiny as regards compliance of conditions, licences were granted. That
even in the notice, the selected candidates had not been asked to submit
affidavits in the prescribed format. It is not expected of the statutory
functionaries to ask the selected candidates to comply with the
requirements orally. It is beyond this Court's comprehension as to why
D such a post haste action was taken by the State. [329-F]
5.1. Having regard to the actions of the statutory functionaries, the
entire exercise of the scrutiny as regards ascertainment of the eligibility
of the candidates vis-a-vis selection process is required to be undertaken
again by the Selection Committee. Furthermore, this Court is entitled to
E take into consideration subsequent-events so as ·to do the complete justice
to the parties. When this Court passed an interim order it was expected
that the statutory requirements therefor, shall be complied with. Even if
Rule 9 is held to be directory, substantial compliance thereof was
necessary. A mandatory statute requires striet compliance whereas a
directory statute requires substantial compliance. Even if a statute is
F directory, the State cannot say that the requirements contained therein
do not envisage compliance thereof. (336-C, DJ
5.2. The Rules postulate that each and every application must be
examined carefully. Mere fact that a large number of applications, have
been filed, as a result whereof the State had been able to obtain crores
G and crores of rupees by itself did not entitle the State to dispense with the
statutory requirements. The application fees were not meant to be utilized
for the purpose of eanting revenue but to meet the administrative charges
required therefor. Application fees cannot be equated with tax.
[336~E, F]

H Board of Control for Cricket, India and Anr. v. Netaji Cricket Club and
ASHOK LANKA v. RISH! DIXIT 305
Ors., (2005) 1 SCALE 121, relied on. A
5.3. Undoubtedly, the state has the exclusive privilege to deal in liquor
but it has also to be borne in mind that it has a constitutional and legal
duty to safeguard the public interest and public health. The conditions for
grant of licence as laid down in the statute are required to be observed
only with a view to subserve the constitutional goal and not to subverse B
the same. [336-G-H)

5.4.. An affidavit required to be filed, in whatever format it may be
must disclose all the informations required under the law which would
enable the statutory authorities to verify the same. Licences to deal in C
liquor cannot be granted on mere asking by a person and only because
he is in a position to fulfil the requirements as regards deposit of licence
fee and other charges. Undoubtedly, the State is entitled to raise its revenue
but it is also obligated to fulfil its constitutional and statutory duties.
[337-A-B)
D
State of M.P. and Ors. v. Nandlad Jaiswal and Ors., [1986) 4 SCC 566,
relied on.

G.J. Fernandez v. State of Karnataka and Ors., [1990) 2 SCC 488,
distinguished.
E
Mahachandra Prasad Singh etc. v. Chairman, Bihar Legislative Council
and Ors., [2004) 8 SCC 460; Nain Sukh Das and Anr. v. The State of Uttar
Pradesh and Ors., (1953) SCR 1184; KN. Guruswamy v. The State of Mysore

•
f
and Anr., [1955) 1 SCR 305 and Ba/co Employees' Union (Regd) v. Union
of India and Ors., [2002] 2 SCC 333, held inapplicable.
F
Rajendra Singh v. State of M.P. and Ors"., (1996) 5 SCC and Cellular
Operators Association of India and Ors. v. Union of India and Ors., [2003) 3
sec 186, referred to.
5.4. The State while exercising its power of parting with its exclusive G
privilege to deal in liquor has a positive obligation that any activity therein
strictly conforms to the public interest and ensures public health, welfare
and safety. Strict adherence to the requirement to comply with the
statutory .provisions must be considered from that angle. [339-D)

The State of Bombay'· R.M.D. Chamarbaugwala, (1957) SCR 874; H
306 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R .

.A Mis Fatehchand Himmatlal and Others etc. v. State of Maharashtra etc.,),
[19771 2 SCC 670; Khoday Distilleries Ltd and Ors. v. State of Karnataka
and Ors., (1995) 1 SCC 574; B.R. Enterprises etc. v. State of UP. and Ors.
etc., [1999) 9 SCC 700; State of A.P. and Ors. v. Mcdowell & Company and
Ors., [19961 3 SCC 709; State of Punjab and Anr. v. Devans Modern
'Breweries Ltd and Anr., [2004) 11 SCC 26 and Godawat Pan Masala
B Products J.P. Ltd and Anr. v. Union of India and Ors.: (2004) 7 SCC 68,
referred to.

CIVIL APPELLATE JURISDICTION : I.A. Nos. 1-2 In Civil Appeal
No. 3279 of 2005.
c From the Judgment and Order dated 31.3.2005 of the Chhattisgarh
High Court at Bilaspur in W.P.No. 956 of 2005.
WITH
C.A. No. 3280/2005, I.A. No. 1 In C.A. No. 3281/2005, I.A. No. 1 in
D C.A. No. 3282/2005, I.A. No. 1 in C.A. No. 3283/2005, C.A. Nos. 3284, . ,.t-
.
3285/2005, I.A. No~. 1-2 in C.A. No. 3286/2005, C.A. Nos. 3287, 3288,
. 3289, 329012095, I.A. No. 1 in C.A. No. 3291/2005, I.A. No. 1 in C.A. No.
3292 of 2005.
f
C.S. Vaidyanathan, Mukul Rohtagi, Dr. Rajiv Dhawan, Kanak Tiwari,
E Soli J. Sorabjee, Dr. A. M. Singhvi, G.L. Sanghi, Ravindra Shrivastava,
Vivek Tankha, Ashok Desai, Arun Jaitley, K.K. Venugopal, Rohit K.Singh,
Satish K. Agnihotri, Sunil K.Jain, S.Porthakur, Prashanto Chandra Sen,
Ms.Meenakshi Grov(!r, Ms. Ruby Singh Ahuja, Lakshmi Raman Singh, Vivek
Singh, Ravi Prabsh, Prakash Shrivastava, Akshat Shrivastava, Manish
F Chaudhary, Ardendu Kumar Prasad, Kuna! Verma, Prashant Mishra, Rajesh
Srivastava, Ms. Suparna Srivastava, Ms. Deepti Singh, P.H. Parekh, Rohit M.
Alex, Ghanshyam Joshi, Sanjit Kr. Saxena and Partha Sil with them for the
appearing parties.
if
The Judgment of the Court was delivered by·
G
S.B. SINHA, J. Permission to file spe~ial leave petitions is granted.

Leave granted in all the special !~ave petitions.

INTRODUCTION
H
The trade in country/foreign liquor is said to be res extra commercium.
ASHOK LANKA v. RISH! DIXIT [SINHA, J.] 307
A citizen does not have any fundamental right to deal therewith. The State A
alone has the exclusive privilege to deal in liquor from manufacture to
distribution and from sale to consumption. It is for the State to pa1t with its
exclusive privilege for a price which is loosely called as 'excise duty'. The
power of the State to control and regulate the trade.in liquor is envisaged
under Entry 8, List II of the Seventh Schedule of the Constitution of India. B
It may also impose excise duty as also countervailing duty in exercise of its
legislative power under Entry 51, List 2 of the Seventh Schedule of the
Constitution.

ACT AND THE RULES :

Trade in Country/Foreign Liquor is governed by the Chhattisgarh Excise C
Act, 1915 ('the Act', for short).

Section 7(e) of the Act provides that the State Government may, by
notification, for the whole or for any specified part of the State, delegate to
. the Chief Revenue authority or the Excise Commissioner all or any of its D
powers under the said Act except the power conferred by Section 62 to make
rules.

Section 62 of the Act empowers the State to frame rules for the purpose
of carrying out the provisions thereof. Without prejudice to the generality of
,-: the said provisions, the State Government, inter alia, however, may make E
rules :

(e) regulating the periods and localities for which, and the persons
or classes of persons to whom, licences for the wholesale or
retail vend of any intoxicant may be granted, and regulating the
number of such licences which may be granted in any local area; F
(t) prescribing the procedure to be followed and the matters to be
· ascertained before any licence for such vend is granted for any
locality;

(g) regulating the amount, time, place and manner of payment of
any duty or fee or tax or penalty; G·

(h) prescribing the authority by, the form in which, and terms and
conditions on and subject to which any licence, permit or pass
shall be granted, any by such rules, among other matters

H
308 SUPREME COURT REPORTS [2005] SUPP. I S.CR.

A (i) fix the period for which any licence, permit or pass shall
continue in force,

(ii) prescribe the scale of fees or the manner of fixing the fees
payable in respect of any such licence, permit or pass.

(iii) prescribe the amount of security to be deposited by holders
B
of any licence, permit or pass for the performance of the
conditions of the same,

(iv) prescribe the accounts to be maintained and the returns to be
submitted by licence-holders, and
c (v) prohibit or regulate the partnership in, or the transfer of,
licenses."

Section 63 of the Act provides that all rules made and notifications
issued thereunder shall be pubiished in the Official Gazette, and shall have
D effect from the date of such publication or from such other date as may be
specified in that behalf.

On or about 15.3.2002, the State Government in exercise of its
aforementioned power made rules known as 'Chhattisgarh Excise Settlement
of Licences for Retail Sale of Country/Foreign Liquor Rules, 2002' ('the
E Rules', for short). "Excise Year" has been defined in the Rules to mean the
financial year commencing from lst April to 3 lst March of the calendar year.
Rule 4 provides for formation of groups of liquor shops; dause (iii) whereof
prohibits an applicant/firm/company from obtaining licences for more than
two groups of shop~. Rule 5 provides for the period of licence which would
be for an excise year or part thereof. Rule 8 provides for procedure for grant
F of licence, which reads as under :

"Procedure for grant of licence -

(a) Whenever a new licence is proposed to be granted in an area or
locality, the licensing authority shall invite the applications for
G this purpose after giving wide publicity through daily newspapers
having circulation in that area.

(b) A list of shops of country/foreign liquor for which the licensing
authority proposes to grant licence shall be exhibited along with
shopwise licence fee minimum monthwise guaranteed quantity,
H security amount, and annual quantity in office of Collector, Tehsil,
ASHOK LANKA v. RISH! D!XIT [SINHA. J.] 309
District Excise Officer/Asstt. Commissioner excise and Deputy A
Commissioner Excise (Flying squad)

(c) Application for grant of license with application fee shall be
submitted in the prescribed form as appended to these rules as
annexure-4.

(d) The last date to be fixed for the receipt of application shall not B
be earlier than ten days with effect from the date of publication
of the advertisement in the newspapers."

Eligibility conditions for applicant are laid down in Rule 9 wh!ch read
as follows :
c
"Eligibility conditions for applicant. The applicant has to fulfil the
following conditions for obtaining the licence for shop/Group of shops
of Co.untry/foreign liquor.

(a) Should be a citizen of India or a partnership firm whose partners
a.re citizens of India. No change in partnership shall be allowed D
after settlement of shop(s) /group of shops except with the
permission of the Excise Commissioner.

(b) Should be above 21 years of age.

(c) · Should not be a defaulter/blacklisted or debarred from holding E
an excise licence .under the provisions of any rules made under
the Act.

(d) Has to submit an affidavit duly verified by public notary as
proof of the following namely :

(I) That he possesses or has an arrangement for taking on rent suitable F
premises in that locality for opening the shops in accordance
with the rules.

(2) That he possesses good moral character and have no criminal
background and have not been convicted of any offence
punishable under the Act or Narcotic Drugs And Psychotropic G
Substances Act, 1985 or any other law for the time being in
force or any other cognizable and non-bailable offence.

(3) That in case he is selected as licensee he will furnish a certificate
issued by Superintendent of Police of the district of which he is
the resident, showing that he as well as his family members H
310 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A possess good moral character and have no criminal background
or criminal record, within thirty days of grant of licence.

(4) That he shall not employ any salesman or representative who has
criminal background as mentioned in clause (iii) or who suffer
from any infectious or contagious disease or is below 21 years
B of age or a woman.
(5) That no government dues are outstanding against him."

Rule 10 envisages formation of a District Level Committee; whereas
Rule 11 provides for selection of licensees, clauses (b) and (c) whereof read
thus :
c
"(b) The said committee shall select licensees from the list of
applicants. In case more than one applicants are found suitable
for any particular group of shops the committee shall select the
licensee for such group of shops by lottery. In case the selected
applicant does not deposit the required amount according to rule
D
13 and does not fulfil the prescrib~d formalities or is unable to
arrange suitable premises for the shops within stipulated period,
the licensing authority shall cancel the allotment and take steps
for resettlement of the shops/group of shops ..
(c) In case thee is no application for a particular group ·of shops or
E no applicant is found suitable for a group ot shops the licensing
authority shall take immediate steps for resettlement as per
procedure laid down in rule 8."

Rule 13 provides for payment of licence fee and security amount, which
F reads as undyr :

"Payment of licence fee and security amount In case an applicant is
selected as licensee, he shall deposit one month's amount of license
fee and the security amount within three days of being informed of
his selection. If he fails to deposit the amount of one month licence
G fee and security amount within prescribed period, his selection shall
stand cancelled and the said licensee shall be debarred from holding
any excise licence in future, anywhere in the State and his applications
fee shall also stand forfeited. A consolidated list of such defaulters
under this rule, along with their complete addresses shall be forwarded
by the District'Excise officer/Assistant Commissioner to the Excise
H Commissioner, who will circulate the consolidated list of the State to
ASHOK LANKA v. RISH! DIXIT [SINHA, J.] 311

all the licensing authorities of the State." A
Rule 23 provides for suspension and cancellation of the licence, in the
event any of the conditions laid down therein is violated; clause (c) whereof
is as follows :

"If the affidavit submitted by the licensee at the time of application B
is found incorrect and assertions made therein are found to be false.

In terms of the provisions of the said Rules, a format in which an
application is to be filed is prescribed providing for filing of an affidavit duly
verified by a public notary.

AMENDMENT IN THE RULES AND CIRCULARS ISSUED BY THE
c
COMMISSIONER OF EXCISE :

On or about 9.3.2004, clause (c) of Rule 8 of the Rules was amended
in the following terms :
D
"(c) the application form and affidavit as per format prescribed by
the Excise Commissioner, along with application fee fixed under Rule
6 shall be submitted to the licensing authority of concerning district
or grant of license for retail shops/group of c~untry/foreign liquor,
within the stipulated date and time.''
E
Pursuant to or in furtherance of the said power conferred upon him, the
Commissioner of Excise prescribed formats of application form and affidavit
to be furnished with the application for country/foreign liquor shops/groups:
•'
On or about 14.2.2004, a circular came to be issue~ by the Commissioner
of Excise whereby and whereunder it was directed that the applicants were F
not required to file affidavits along with their applications as was laid down
in the P,ules; but such affidavits may be filed after their selection was made.
Sub-clauses (1), (2) of clause 8 and clause 22 of the said circular read as
follows :

"8. APPLICATION FOR ALLOTMENT OF COUNTRY/FOREIGN G ,
LIQUOR SHOP/GROUP :

(1) Application form for the year 2005-06 for country/foreign .,
liquor retail shops/groups which has been amended and published in
notification issued by this office is being enclosed· and sent. Application
H
312 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.

A for country/foreign liquor retail shop can be made by any applicant
in the specified enclosed format only. Separate applications will be
accepted for every group. Application fee in accordance with the cost
price of the concerned group should be in the 'form of bank draft/
bankers cheque/bank's cash order form a nationalized bank/scheduled
commercial bank or challan received after submitting the cash in the
B treasury is mandatory to be produced in original with the application.
Applicant should not make any change or amendment in the format
of application form and application form will be accepted in prescribed
format only.

(2) For the year 2005-06, the Select Committee will make a draw
c using a computer and select first, second and third applicant. It will
be mandatory for those selected first, second and third applicants to
immediately produce an affidavit duly verified by a notary. Selected
applicants should not make any changes or amendments to the format
of the affidavit and the affidavit will be accepted in the specified
D format only. Format of the affidavit will be in accordance with the
known format of 2004-05."

"22. AMENDMENT JN THE CHHATTISGARH EXCISE
SETTLEMENT OF LICENCES FOR RETAIL SALE OF COUNTRY/
FOREIGN LIQUOR RULES, 2002 :
E
For settlement of retail shops/groups of country/foreign liquor for
the year 2005-06, under application system, aforesaid directions are
being issued and accordingly proceedings shall be ascertained, even
then where amendment is to be done in the Chhattisgarh Excise
Settlement of Licences for retail sale of country/foreign liquor Rules,
F 2002, for that notification shall be sent severally. Similarly, for licence
fees prescribed for the year 2005-06 for licence of F.L. 2 & F.L. 3,
notification shall be sent separately."

TENDER PROCESS:

G A notice inviting applications for grant of licence under the Act and the
Rules was issued on 14.2.2005, clauses (2), (3), (4), (5) and (9) whereof are
as under :

"2. As per the above programme, the Collector concerned shall
publish the notice in his district on the date fixed, wherein in
H respect of retail country/foreign liquor shop/group, the minimum
ASHOK LANKA v. RISH! DIXIT [SINHA, J.] 313
surety amount, duty amount, amount of licence fee annual A
revenue, I/12th part of licence fee and I/12th part of the duty
amount on minimum surety amount and one month licence fee
shall be mentioned.

3. For allotment of the country/foreign liquor retail shops/groups,
only those persons/firms/companies shall submit the applications B
who are entitled for getting the excise licence under the C.G.
Excise Act, 1915.

4. The applicants for allotment of country/foreign liquor retail shops/
groups for the year 2005-06 shall get the prescribed proforma
from the office of Assistant Excise Commissioner/District Excise
Officer. On the prescribed proforma only, the applicant bytyping
c
or handwriting regarding the country/foreign liquor retail shop
of the concerned district shall apply. For each group, the separate
application will be accepted. Along with the application form, as
per the cost, the application fees through the Draft/Bankers
cheque/Cash Order of Bank of Nationalised Bank/Scheduled D
Commercial Bank or by cash, shall be submitted in the Treasury
through original challan. The applicant shall not make any change
or amendment in the prescribed proforma and the applications in
prescribed form will be accepted only.

5. For the year 2005-06, the selection of first, second and third E
candidates will be made by computer through lottery system and
they have to submit immediately the affidavit certified by the
notary. The selected candidate shall not make any change or
amendment in the affidavit and the affidavit will only be accepted
in the prescribed form.
F
9. The allotment of shops/groups and their running for the year
2005-06 shall govern as per the C.G. Excise Act, 1915 and the
rules framed thereunder and the Chhattisgarh Excise Settlement
of Licences for retail sale of country/foreign liquor Rules, 2002
and the amended terms and conditions and the orders of the
State Govt./Commissioner, Excise/Collector/Assistant Excise G
Commissioner/District Excise Officer."

Pursuant to or in furtherance of the said notice inviting applications,
about 2,64,703. Applications were filed out of which about 3000 applications
were rejected. Selection process began in different districts by the District H
314 SUPREME COURT REPORTS [2005] SUPP. I S.C . R.

A Level Committees between the period from 9.3.2005 and 16.3.2005.
The Excise Rules were further amended on or about 22.3.2005 in the
following terms :

"Raipur, the 22nd March, 2005
B NOTIFICATION

No.F-10/6/2005/CT/V(4).-In exercise of the powers conferred under
Section (d), (e), (f), (g) and (h) of sub-clause(2) of sub-clause (3) of
clause 62 of the Chhattisgarh Excise Act, 1915 (No.II of 1915), the
State Government hereby makes the following amendment in the
C Chhattisgarh Excise Settlement of Licenses for retail sale of Country/
Foreign Liquor Rules, 2002, namely :

AMENDMENT

In the said rules, in rule - 8, -
D (i) The existing clause (C) shall be substituted by the following
clause (C), namely :-

(C) The application form under rule-6 along with prescribed
application fee shall be submitted to the Licensing Authority
of the concerned district within prescribed date & time for
E grant of licence for retail shop/group of country/foreign liquor
in the proforma prescribed by th~ Excise Commissioner.

(ii) After clause (C) the following clause (C-1) shall be added, namely:

(C-I) The first, second & third applicant selected for retail shop/
F group of country/foreign liquor by the selection committee
after lottery drawn by computer must submit affidavit verified
by the Notary in the prescribed proforma the next day during
office hours.

2. This amendment shall be effective for the settlement of Licenses
G for retail sale shops of Country/Foreign liquor for the year 2005-"
06."

WRIT PROCEEDINGS :

The instant case originally arose out of a public interest litigation in
H Jitendra Pali v. State of Chhattisgarh, (WP No.706 of 2005). Subsequently,
ASHOK LANKA v. RISH! DIXIT [SINHA J.] 315

the other petitions came to be filed by candidates including Rishi Dixit v. A
State of Chhattisgarh, (WP No. 956 of 2005). Both the writ petitions were
heard together and separate judgments were delivered in each of them. The
judgment in WP No.956 of 2005 came to be passed by the High Court on
31.5.2005, which is the subject matter of appeal arising out of SLP (Civil)
CC No 4529; while the judgment and order in WP No. 706 of 2005 came to
be passed by the High Court on 8.4.2005 which is the subject matter· of B
appeal arising out of SLP (Civil) No.8575 of 2005.

Originally in the said writ application the changes made in the selection
process, namely, from manual to computer was in question; but an application
for amendment of the writ petition was made on 9.3.2005 wherein it was C
contended that the selection process adopted by the State was vitiated, inter
alia, on the premise that no affidavit was filed by the applicants as was
I mandatorily required by Rule 9 of the Rules.

The contention raised on behalf of the State after the amendment dated
22.3.2005 before the High Court was that Rule 9 was directory in nature and D
not mandatory and in any event, as the said rule was amended in consonance
with the powers of the State regarding retrospective amendment of the Rules,
the selection process was not vitiated. Now, this amendment validates with
retrospective effect, the filing of affidavits after the selections are made. ·

Before we consider the judgment passed by the High Court, we may E
notice that an interim order was passed in the writ petition on 3.3.2005. On
or about 7.3.2005, however, the said interim order was modified by the High
Court directing :

"As mentioned above, in view of the return has been filed and the
matter is to_ be heard and disposed of finally, we modify the earlie_r F
order of M. W.P. No. 593/2005, to the extent that the respondents
may continue with the process of selecting the licensees, however, if
before the disposal of this writ petition the process of selection of the
licensees is completed, the respondents should not communicate the
order of their selection to the selected licensees." G
With a view to complete the narration of facts, we may also mention
that several intervention applications were also filed by the alleged successful
bidders.

H
316 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A HIGH COURT JUDGMENT:
The High Court upon analyzing the provisions of the Act and the Rules
framed thereunder was of the opinion that the State was entitled to make the
selection of the eligible candidates through computer. It was, however, opined
that the District Level Committees did not make any scrutiny whatsoever to
B find out· as to whether the applicants concerned satisfied the eligiqility
conditions laid down in Rule 9 or not, as no information was required to be
furnished in the format prescribed by the Commissioner of Excise in that
behalf. The High Court was further of the opinion that the disclosure of such
information by the applicants even before the submission of applications
C were necessary so as to enable the authorities to satisfy themselves about the
fulfillment of different eligibility conditions mentioned in Rule 9.
Consequently, it was directed that a fresh selection be made in terms of the
extant rules.

The High Court while rejecting the wider challenge on the legal policy,.
D held : (a) The circular letter dated 14.2.2005 issued by the Commissioner of
Excise was contrary to the Rules insofar as eligibility criteria laid down in
Rule 9 thereof were dispensed with. (b) The applications filed by the applicants
were not properly scrutinized, except the requirement o~ Rule 9(c), namely,
whether the applicants were black-listed or otherwise not eligible. (c) While
holding that the application fees to the extent of 77 crores earned by the State
E need not be refunded, it directed scrutiny of about 2.65 lakhs applications by
the respective District Level Committees for their satisfaction that all eligibility
requirements stand satisfied whereafter only the draw of lottery may take
place.

F The High Court, however, for the reasons stated in its judgment although
not directed for calling for fresh applications but mandated the State to consider
the necessary informations required from the applicants by way of affidavit
before the candidates are selected for grant oflicjuor licence.

PROCEEDINGS BEFORE THIS COURT:
G
Applications for grant of special leave to appeal have been filed by the
State of Chhattisgarh as also by several selected candidates. By an order
dated 8.4.2005, this Court stayed the operation of the impugned order subject
to the condition that if the Government desires to award the contract as an
interim arrangement to the successful bidders, it shall do so only after obtaining
H the necessary approval of the Committee already constituted for consideration
ASHOK LANKA v. RISH! DIXIT [SINHA, J.] 317
of these applications. A
The said order was communicated on 9.4.2005. The applications of the
selected candidates were scrutinized on 10.4.2005 and 11.4.2005 and licences
were granted to the so-called successful bidders on 11.4.2005 and 12.4.2005.

SUBMISSIONS : B
Mr. Ashok Desai, the learned Senior Counsel appearing on behalf of
the State, would submit that the High Court fell in grave error in interpretation/
construction of Rule 9 of the Rules inasmuch as it failed to take into
consideration that whereas clauses (a) to (c) contained therein are mandatory
in nature, clause (d) is directory in nature as the same was required to be C
fulfilled only upon the selection of the candidates concerned. The learned
counsel placed strong reliance, in this J:>ehalf, on a decision of this Court in
Dr. Mahachandra Prasad Singh etc: v. Chairman, Bihar Legislative Council
and Ors., [2004] 8 SCC 747. According to the learned counsel, the State,
h~ving the requisite power to amend the Rules with retrospective effect, D
issued the Notification dated 22.3.2005 which was retrospective in natwe.
[Reliance, in this connection, has been placed on The State of Madhya Pradesh
and Ors. v. Tikamdas, (1975] 2 SCC 100. It was contended that the High
Court also failed to construe properly the effect of amended Rule 8 (c) in
terms whereof affidavit to be verified before the public notary in the prescribed
format was required to be filed on the day following the selection and, thus, E
the requirement of filing the affidavit along with application in terms of the
said rule was dispensed with. In any view of the matter, the learne~ counsel
would urge that having regard to the fact that all candidates including the
writ petitioners before the High Court understood the rule in the same manner,
namely, the affidavits were required to be filed after the selection process
F
was over and, thus, did not choose to file any affidavit whatsoever and, thus,
the rules should have been construed in such a manner. The learned counsel
placed cin strong reliance, in t~is connection, on G.J. Fernandez v. State of
Karnataka and Ors., (1990] 2 SCC 488. In any event, the same would amount
to acquiescence on the part the writ petitioners. Strong reliance in this behalf
has been placed on Nain Sukh Das and Anr. v. The State of Uttar Pradesh G
and Ors., [1953] SCR 1184. It was submitted that the validity of the rules/
circulars having not been challenged by the writ petitioners, the High Court
fell in error in passing the impugned judgment. The learned counsel would
argue that one of the applicants was a lawyer and others being interested
persons, the writ petition in the nature of public interest litigation was not H
318 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

A maintainable. The learned counsel would submit that having regard to the
well-settled principles of law that the State despite Article 14 of the
Constitution of India has a greater play in the joints while parting with its
exclusive privilege, non-compliance of Rule 9 could not be held to have
vitiated the entire selection process. Reliance, in his behalf; has been placed
B on State of MP. and Ors. v. Nandlad Jaiswal and Ors., [1986] 4 SCC 566.

In any view of the matter, Mr. Desai, would argue that it is not a fit
case where the court should grant any relief in favour of tl:ie writ petitioners ..
Strong reliance, in this connection, has been placed on K.N. Guruswamy v.
The State of Mysore and Anr., [1955] 1 SCR 305.
c Mr. Dushyant A. Dave, learned Senior Counsel appearing on behalf of
the Appellants in Civil Appeal arising out S.L.P. (CC No. 4571), while
supplementing· the arguments of Mr. Desai, pointed out that the amending
rules having not been challenged and having regard to the fact that the
requirement of filing an affidavit has not been given up, the High Court fell
D in error in holding Rule 9 as mandatory, despite the fact that the said
requirement was to be complied with only at a later stage.

Mr. Ravi Shanke.r Prasad, the learned Senior Counsel appearing on
behalf of the Appellants in Civil Appeal arising out of SLP No. 10653 of
2005 would contend that even the unamended Rule 9. envisaged filing of an •
E affidavit at a post selection stage as would appear from the language used in
clauses (a), (b) and (c) as contrasted from clause (d) thereof. The amendment
in the rules, the learned counsel would contend, made the position patent
when it was latent. Rule 9, as Mr. Prasad would argue, was required to be
read with Rule 13 and so read it would be evident that the nature ofrequirement
for filing an affidavit was only post selection.
F
Drawing our attention to the fact that the mode of selection through
lottery is permissible in view of the decision of this Court in Rajendra Singh
v. State of MP. and Ors., [1996] 5 SCC 460, Mr. Prasad would contend that
the requirement to comply with the rules should have been considered having
G regard to the changed mode of selection in terms of Rule 11 (b ). Public
Interest Litigation, Mr. Prasad would urge, should not be.entertained whereby
'•
the economic policy adopted by the State in the matter of vending liquor is
challenged. Reliance, in this connection, has been placed on Nandla/ Jaiswal
(supra). Mr. Prasad also placed strong reliance upon Ba/co Employees' Union
(Regd.) v. Union of India and Ors., [2002] 2 SCC 333 in support of his
H contention that if the petitioner was not aggrieved,. he cannot have locus
ASHOK LANKA v. RISH! DIXIT [SINHA. J.J 319
~tandi to maintain a writ petition. A
Mr. C.S. Vaidyanathan, the learned Senior Counsel appearing on behalf
of the Appellants in Civil Appeal arising out of SLP (CC No.4579), wo_uld
submit that the object of the Act and the rules framed thereunder being to
augment the revenue and preventing adulteration of liquor; the state action
can be challenged only if it is unfair in the sense that nobody was given an B
opportunity to participate in the auction. As in this case all persons were
treated similarly in pursuance of or in furtherance of the advertisement, insofar
as no applicant had filed any affidavit, it cannot be said that anybody was
prejudiced by reason of non-compliance of Rule 9. The learned counsel
would also contend that the writ petitioner having himself not filed any C
affidavit, he is estopped and precluded from questioning the alleged violation
of Rule 9, which only provides for compliance of a procedural requirement.

Mr. ·Mukul Rohtagi, the learned Senior Counsel appearing ori behalf of
the Appellants in Civil Appeal arising out of SLP (CC No.4569) would also
contend that requirement of Rule 9(d) was only post selection. D

Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf of
the Respondents, on the other h'and, would take us through various documents
with a view to show that the District Level Committees after passing of this
Court's order dated 8.4.2005 proceeded to consider the applications filed by· E
the successful candidates in a post haste manner which would clearly
.·demonstrate non-application of mind on their part. The learned counsel pointed
out that in many cases there had been hardly any deliberation amongst the
members of the committee; while in some cases even affidavits were not
filed. Drawing.our attention to Rule 11, the learned counsel would su.bmit
that in no case a summary report was prepared so as to enable the Scrutiny F
Committee to scrutinize the eligibility conditions. Mr. Sorabjee would argue
that Rule 9 is mandatory in nature and, thus, all applications for grant of
liquor licence would call for scrutiny. Even if such a consideration is read to
be directory, no substantial compliance thereof having been made, it was
argued, the entire selection process must be held to be vitiated in law. The G
learned counsel would contend that from the affidavit filed by the State, it
would appear that the contents of the affidavits had not been verified in
accordance with law and the contents thereof had ex-facie been accepted on
a pre-supposition that they were correct although there exists no statutory
rule empowering the Committee to raise such a presumption.
H
'
"
320 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

A Dr. A.M. Singhvi, the learned Senior Counsel appearing on behalf of
the some of the Respondents would urge that the functionaries of the State
and/or the Selection Committees, having regard to the nature of transaction
were required to verify the applications before selection. It was pointed out
that despite the fact that the High Court by an order dated 7.3.2004 prohibited
B the State from disclosing the list of selected candidates, the so-called selected
candidates filed applications for grant of special leave to appeal before this
Court on the premise that they had been selected. It was submitted that the
amendment carried out in Rule 9 on or about 9.3.2004 was wholly irrelevant.
Drawing our attention to the judgment of the High Court, the learned counsel
would submit that it has rightly b'een found that sub-rule (3) of Rule 9
C compared to the old provisions contained therein in view of the language
thereof clearly demonstrates that Rule 9 is mandatory in nature. The
amendment made in Rule 9 by reason of the notification. dated 22.3.2005, Dr.
Singhvi would argue, cannot put the clock back as the entire selection process
was completed by then.
D
Mr. G.L. Sanghi, the learned Senior Counsel appearing on behalf of
some of the Respondents would sµbmit that keeping in view the fact that
while exercising its jurisdiction under the Act, the State is concerned with the
maintenance of public health and, thus, Rule 9 should be held to be mandatory
particularly having regard to the fact that such affidavit is also necessary for
E the purpose of exercise of power by the State for suspension and cancellation
of licence in terms of Rule 23(1) (c) of the Rules.

Conditions conceived in Rule 9 being in public interest, Mr. Sanghi
would contend, are mandatory in character. It was pointed out that whereas
in terms of amendment dated 9 .3 .2004, the Commissioner of Excise had been
F
empowered to prescribe the format, he 'had no jurisdiction to do away with .
or dilute the statutory requirements to file an affidavit as required by Rule 9
of the Rules.

Mr. Ravindra Shrivastava, the learned Senior Counsel appearing for the
G some of the respondents, would urge that the eligibility clauses contained in
the Rules must be held to be mandatory in nature and. in support thereof
reliance has been placed on Ramana Dayaram Shetty v. The International
Airport Authority of India and Ors., [1979] 3 SCR 1014 and R. Prabha Devi
and Ors. v. -Government of India, Through Secretary, Ministry of Personnel
H and Training, Administrative Reforms and Ors., [1988] 2 SCC 233.
ASHOK LANKA v. RISHI DIXIT [SINHA. J.] 321
Dr. Raj iv Dhawan, the learned Senior Counsel appearing on behalf of A
the writ petitioners/Appellants, would, inter alia, submit that the interpretation
and/or construction of the rules must be made having regard to Article 47 of
the Constitution of India vis-a-vis the doctrine of 'res extra commercium'.
The learned counsel would contend that before the High Court a contention
was raised that a solvency certificate should be directed to be filed along with B
the application for grant of licence as it would help in prevention of investment
of black money in the trade. The learned counsel would urge that the courts
in a situation of this nature will apply cautionary principles having regard to
the fact that the activities of the State must be responsible in nature. Dr.
Dhawan would submit that the rules have to be read as a whole and not in
a manner which would give undue advantage to persons who were not fit to C
carry on the trade in liquor keeping in view the obnoxious nature thereof.
The rules were required to be applied from stage to stage, it was argued,
having regard to the purport and object thereof so that effective step may be
taken by the Committee to weed out the unwanted applicants.

PUBLIC INTEREST LITIGATION : D
.:• It may not be necessary. for us to consider as to whether the public
interest litigation should have been entertained by the High Court or not. The
High Court did entertain the public interest litigation without any objection
and ultimately allowed the same. Furthermore it is well settled that even in
a case where a petitioner might have moved the court in his private interest E
and for redressal of personal grievances, the court in furtherance of the public
interest may treat it necessary to enquire into the state of affairs of the subject
of litigation in the interest of justice. [See Guruyayoor Devaswom Managing
Committee and Anr. v. C.K. Rajan and Ors., [2003] 7 SCC 546 para 50 and
Prahlad Singh v. Col. Sukhdev Singh, [1987] 1 SCC 727] F
ACQUIESCENE :

When a public interest litigation was entertained the individual conduct
of the writ petitioners would take a backseat. There cannot be an·y doubt
whatsoever that in a given case a party may waive his legal right. In an G
appropriate case, the doctrine of acquiescence or acceptance sub silentio may
also be invoked. [See Haryana State Coop. Land Dev. Bank v. Nee/am,
(2005) 2 SCALE 434], but the High Court, in the instant case, has gone into
t\\e question with a wider perspective. This Court is not only required to
construe the provisions of the statute but also to take into consideration the
subsequent events which took place vis-a-vis the action on the part of the H
322 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A State after passing of the interim order. The issue as regard application of
acquiescence or waiver. Therefore in our opinion has become irrelevant.

ANALYSIS OF THE RULES:

The Chhattisgarh Excise Act, 1915 and the rules framed thereunder are
B regulatory in nature. They are being so enacted so as to ensure public health
as trade in liquor is considered to be obnoxious one. The State has a duty to
see that its people do not consume spurious or adulterated liquor. The Act
and the rules no doubt contain provisions for cancellation and/or suspension
of the licence in the event the conditions laid down therein are violated, but
it is beyond any cavil that before a licence is granted, the applicant mu~t
C satisfy all the statutory conditions and meet the eligibility requirements. [See
Ramana Dayaram Shetty (supra) and R. Prabha Devi (supra). Rule S(e)]
provided for a requirement to furnish a bank draft from '" nationalized bank
as earnest money. Rule 9 of the Rules preserves all other eligibility
requirements. The Circular dated 15.3.2003 dispensed with the requirements
D as contained in Rule S(e) of the Rules. The number of outlets were increased
by 92 from 812 to 904. The High Court has noticed that none of the eligibility
requirements except those as contained in Rule 9(c) of the Rules had been
observed by the Committee. The State has earned Rs. 77 crores from 2.65
lakhs applicants whose eligibilities were not verified. Indisputably, the State
E while granting a licence in favour of a person dealing in liquor should ensure
. that the same is granted to a person who would be otherwise eligible to deal
therewith.
t
The provisions of the Act and the Rules framed thereunder contain
several restrictions and limitations which are imposed upon the applicants.
.it
F The procedures for selection must be fair and in consonance with the provisions
of the Act and the Rules.

The persons who fulfill the said eligibility criteria and satisfy the
requirements laid down under the Act and the Rules only could file such
applications which required scrutiny thereof so as to enable the statutory
G authorities to consider their cases for grant of licence. The advertisement
issued by the State calls upon only such persons to file applications who are
suitable therefor, which in turn would mean that the applicants must satisfy
the authorities that they are eligible for grant of licence. The applicants must
also demonstrate that they are suitable for grant of licence as in the event of
their being found unsuitable, steps are required to be taken by the committee
H for resettlement of the shops, wherefor procedures laid down in Rule 8 were
ASHOK LANKA v. RISHI DIXIT [SINHA, J.] 323
required to be complied with again. A
Stricter restriction is contemplated in the matter of compliance of the
terms and conditions of the licence. Rule 4 of the Rules permits not more
than two groups to a single licensee.

Rule 9 provides that the eligibility conditions should be scrutinized B
before an application is made. Rule 9 is in two parts. It deals with the
eligibility conditions of the applicant. It does not make any exception as
regard fulfilment of different clauses inasmuch as the said rules begin with
the expression "the applicant has to fulfil the following conditions". Such
conditions are required to be fulfilled for obtaining the licence. Whereas C
clauses (a), (b) and (c) thereof are essential conditions which would debar a
person from filing an application and if such an application is filed, the same
would be liable to be rejected at the outset. An applicant having regard to the
expressions used in clause (d) has to file an affidavit. Filing of such affidavit,
therefore, is mandatory. However, affidavit is required to be filed by the
applicant to show that : (i) he possesses or may arrange for taking on rent D
suitable premises; (ii) he possesses good moral character and has no criminal
background and has not been convicted of any offence punishable under the
Act or Narcotic Drugs and Psychotropic Substances Act, 1985 or any other
law for the time being in force or any other cognizable and non-bailable
offence. Clause (3) of sub-rul~ (d) of Rule '9 enjoins a duty upon the authorities
to get the same verified whereupon only a certificate is required to be issued E
by the Superintendent of Police of the district of which he is the resident in
the event his selection as a licensee showing that he as well as his family
members possess good moral character and there is no criminal background
or criminal record against them. Such certificate is required to be filed within
t~irty days from the grant of licence. He also in terms of the said clause (5) F
of sub-rule {d) of Rule 9 is to state that no government dues are outstanding
against him.

Keeping in view that a large number of applications are required to be
dealt with, the rules contemplate constitution of a committee comprising the
Collector of the District and the District Excise Officer/Assistant Commissioner G
of the District, who would be the enforcing agency. Rule 11 provides for the
mode and manner in which selection is to take place. Clause (a) thereof
provides for preparation of a summary report by the Member Secretary for
the purpose of placing it before the District Level Committee. Clause (b)
thereof provides that in the event the Committee selects licensees from the H
324 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

A list of the applicants and in the event more than one "applicants are found
suitable for any particular group of shops, the Com~ittee shall select the
licensee for. such group of shops by lottery, in which event the selected
applicant has to deposit the required amount according to Rule 13 and fulfill
the other prescribed formalities including the requirement to comply with the
provisions of clause (I) of sub-rule (d) of Rule 9. Clause (b) of Rule 11,
B therefore, presupposes that before a licence is granted the requirements
contemplated therein should be complied with. A candidate before selection
must be found to be eligible therefor. It postulates that before the actual
licence is granted, the conditions precedents as contained therein are required
to be fulfilled, failing which the Committee must take steps for resettlement
C of shops or group of shops. The question of payment of licence fee or security
amount arises when an applicant is selected for grant of licence in terms of
Rule 13.
I
The Scrutiny Committee is also enjoined with a duty to see as to whether
a person was a defaulter or not.
D
Rule 9, as it originally stood, thus, on proper construct,on must be held
to have laid down that an affidavit was required to be file<l by the applicant
which is fortified by the fact that Rule 23(l)(c) contemplates that if the
affidavit submitted by the licensees at the time of application is found incorrect
and assertions made therein are found to be false, ti\!:: Licensing Authority
E wo~ld be· empowered to suspend or cancel the licence. The rule read as a
whole, therefore, provided for filing of an affidavit at the time of grant of
licence. Furthermore the vary fact that a circular was issued by the
Commissioner of Excise asking the applicants to file an affidavit after the
,
selection process is over itself is a pointer to the fact that filing of such an '
F affidavit along with the application was considered by all concerned to be
necessary. The advertisement was also required to be issued in consonance
with the rules and not in derogation thereof. It would, therefore, be not
correct to contend that whereas clauses (a) to (c) of Rule 9 postulates
compliance thereof at a pre-selection stage, clause (d) postulates compliance
at the post-selection stage. The distinction between compliance of requirements
G at pre-selection and post-selection is also evident from reading Rule 9(d)(l)(2)
and Rule 9(d)(3) separately, inasmuch whereas the former clearly postulates
compliance at pre-selection stage, the latter deals with a situation which is
post-selection.

The expression "has to submit an affidavit" ex facie is mandatory in
H
ASHOK LANKA v. RISH! DIXIT [SINHA, J.] 325
nature and such affidavit necessarily has to deal with the requirements A
contained in clauses (I) and (2). If the rule making authority was of the
opinion that such an affidavit was required to be filed at a later date and not
with an application, it could have said so in express terms; as has been done
in the case of sub-rule (3) of Rule 9. In fact, all the sub clauses were to be
a part of affidavit as clauses (3), (4) and (5) would be only by way of B
un.dertaking, although the requirements of clauses (3) and (4) can be fulfilled
after the grant of licence. The same should appear from the format of the
affidavit itself.

The question as to whether a statute is mandatory or directory would
_, depend upon the statutory scheme. It is now well known that use of the C
1 expression "shall" or "may" by itself is not decisive. The court while construing
a statute must consider all relevant factors including the purpose and object
the statute seeks to achieve. (See P.T Rajan v. TP.M Sahir, (2003] 8 SCC
498 and U.P. State Electricity Board v. Shiv Mohan Singh and Anr., (2004]
s sec 40i].
D
Furthermore, filing of an affidavit in the prescribed format is a statutory
requirement under the Rules. Filing of such an affidavit is necessary as in the
event the same on verification is found to be incorrect, not only the deponent
can be proceeded against but his licence would also be liable to be cancelled.
Filing of an affidavit under the Rules is, therefore, mandatory in character.
E
The Commissioner of Excise issued a circular letter dated 14.2.2005
which power evidently he did not possess in terms of Section 7 of the Act.
Although the State may delegate its power to the Commissioner of Excise,
such a delegation cannot be made in relation to the matters contained in the
rule making power of the State. The matters which are, therefore, outside the F
purview of the rules only could be the subject-matter of delegation in favour
of the Commissioner of Execis.e~ The Commissioner of Excise is a statutory
authority. He is bound to exercise his power only within the four-corners of
the Act or the rules framed thereunder and not de' hors the same.

· Mr. Desai is also not correct in his submission that clause 22 of the said G
circular contemplates a future amendment in the rules. Even if the same
contemplates a future amendment, the same would not sub-serve the statutory
requirements inasmuch as the Commissioner of Excise was not supposed to
know as to how the existing rules would be amended and whether the same
would be applied prospectively or retrospectively. The Court cannot draw a
presumption that the Commissioner of Excise could proceed on a pre- H
I
326 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.

A supposition that his action in issuing a circular contrary to rules would stand
ratified by retr9spective. operation of the rules. A statutory authority, it is
trite, must exercise his jurisdiction with the four-corners of the statute and
cannot devi_ate or depart therefrom. ·..

It is interesting to note that the Rules were amended only for one excise
B year. The rule making power should be exercised having regard to the policy
to be adopted by the State. Such a policy may vary from time to time: Having
regard to the exigency for the situation, rule may also be amended but we do
.. not see any reason as to why an attempt should be made to amend the rule
only with a view to justify an illegal action on the part of the Commissioner
C of Excise for the year 2005-06. Although the validity of the rules have not
been challenged, the court cannot shut its eyes from considering this aspect
of the matter. We are not oblivious of the fact that framing of rules is not an
executive act but a legislative act; but there cannot be any doubt whatsoever
- '
that such subordinate legislation must be framed strictly in consonance with
the legislative intent as reflected in the rule making power contained in
D Section 62 of the Act.
By reason of the amendment carried out in the rules in terms of the
notification dated 9.3.2004, the Commissioner of Excise was empowered to
prescribe a fonnat of the application form and affidavit. Such an application
or affidavit could be filed within the date arid time stipulated by him but the
E same would not mean that while prescribing a format in respect of an
application fonn or affidavit, he became authorized to dilute the statutory
requirements or dispense with the same. No exception can although be taken
as regard the fonnat relating to the applications, strong exception has to taken
as regard the fonnat of the affidavit. Clauses 5 and' (6) of the affidavit are as
p under :

"(5) That the Deponent neither owes any dues to the government or
public works nor his name exists in the black list and neither he
has been debarred to acquire excise licence under Chhattisgarh,
Excise Act, 1915 and rules ·made thereunder and amended
G Chhattisgarh Excise Settlement for License for Retail Sale of ·
Country/Foreign Liquor Rules, 2002 . "
(6) That the Deponent bears good moral character. He has.not been
held guilty of non-bailable offence under Chhattisgarh Excise
Act, 1915 or Narc!>tics Drugs and Psychotropic Substances Act,
H 1985 or any other procedure or law·promulgated that time."
ASJ-IOK LANKA v. RISI-II DIXIT [SINHA, J.] 327
A bare_ comparison of the said clauses with Rule 9 would demonstrate A
that the same do not satisfy the statutory requirements

ARE THE AMENDING RULES RETROSPECTIVE:

At this juncture, we may notice the effect of the amendment effected
in terms of the notification dated 22.3.2005. But before we proceed to do so, B
it may be noticed that indisputably the entire selection process was over by
16.3.2005.

By reason of the said notification, clause (c) of Rule 8(1) was substituted.
The substituted provisions lay down that the application form prescribed in
terms of Rule 6 together with the prescribed application fee shall he submitted C
in the proforma prescribed by the Commissioner of Excise.

Yet again clause (C-1) was added after clause (c) providing that the
first, second and third applicants selected must submit an affidavit duly verified
by the public notary in the prescribed proforma next day during office hours. D
The notification does not state that the amendment will have a retrospective
effect. In absence of any express provisions contained in the notification, the
cour~ will not ordinarily presume the same to be retrospective in nature.

A statute must be read reasonably. A statute should not read in such a
manner which results in absurdity. A statute, on its plain language, although E .
postulates a prospective operation, it cannot be held to be retrospective only
because it would apply for the excise year for which applications were invited
despite the fact that the selection process made thereunder is over. The State
is bound by the terms of the advertisement and the rules existing at that time.
The statutory authorities and the applicants are expected to follow the law as F
it stood thence. No step could be taken on the pre-supposition that the rule
would be amended. It is also not a case where draft rules were already in
existence and such draft rules had been applied, which could otherwise be
permissible in law. But a situation of this nature is not contemplated in law.

Mr. Desai would argue that as amendment has to be effective for the G
settlement of licence for country/foreign liquor retail shops for the year 2005-
06, the same may be held to be retrospective iri nature. Even for the said
purpose, it was expected of the rule making authority to say so expressly.

A rule may not be challenged as ultra vires the Act, but its interpretation
can certainly be an issue. The rule if given retrospective effect would become H
328 SUPREME COURT REPORTS (l005] SUPP. I S.C.R.

A unworkable and would not capable of being given effect to. A rule cannot be
framed keeping in view that the Commissioner has issued certain circular ..
which is illegal. By reason of a rule making power, an invalid action on the
part of the Commissioner of Excise cannot be validated.

If a selection process is over upon following a ·procedure which is
B illegal, by reason of a rule making power the same can~ot be rendered valid
simply by directing that the same shall govern the selection.of applicants for
grant of licence under the Act for the year 2005-06.

The question as to whether it can be given effect to or not is, thus,
C required to be judged on its own without reference to the circular issued by
the Commissioner of Excise. Cassus Omissus, it is well known, cannot be
supplied by the court. [See P. T. Rajan v. T.P.M Sahir and Ors., [2003] 8
sec 498.]
We. have noticed hereinbefore that despite the fact that the order of
D injunction was issued by the High Court while modifying
• ! • •• y.. t
the interim order
on 7.3.2005, the State. ·~as asked not to 'publish th_e selection list. The
contentions rajsed in the petitions for grant of special leave to appeal, however,
leave no manner of doubt that such selection list whether in v.iolation of the
order of the High Court or otherwise had been publishe.d. If the said rules are
E considered to be retrospective, admittedly, the affidavits had not been filed
on the. next day of such selection and, thus, the rules ar~ not capable of being
implemented.

Different situations may arise in different cases in the matter of grant
of injunction as was noticed by this Court in Deoraj v. State of Maharashtra
F and Ors., [2004] 4. sec 697 stating :

"12. Situations emerge where the granting of an interim relief would
tantamount to granting the final relief itself. And then there may be
converse cases where withholding of an interim relief would
tantamount to di~missal of the main p~tition itself; for, by the time
G the main matter coines up for hearing there would be nothing left to
be allowed as relief to the petitioner though ail the findings may be
in his fav~ur. In such cases the availability of a very strong prima
facie case of a standard much higher than just prima facie case, the
considerations of balance of convenience and ir,reparable injury
forcefully tilting the balance of the case totally in favour of the
H applicant may persuade the court to grant an interim relief though it
/l

ASHOK LANKA v. RISHI DIX IT [SINHA, J.] 329
amounts to granting the final relief itself. Of course, such would be A
rare and exceptional cases. The court would grant such an interim
relief only if satisfied that withholding of it would prick the conscience
of the court and do violence to the sense of justice, resulting in
injustice being perpetuated throughout the hearing, and at the end the
court would not be able to vindicate the cause of justice. Obviously B
such would be rare cases accompanied by compelling circumstances,
where the injury complained of is immediate and pressing and would
cause extreme hardship. The conduct of the parties shall also have to
be seen and the court may put the pa:iies on such terms as may be
prudent."

Even the manner in which the interim order of this Court is given effect
c
leaves a lot to be desired. It is not in dispute that the order of this Court dated
8.4.2005 was communicated on 9.4.2005. J0.4.2005 was a Sunday and,
therefore, it was not·expected that the services of the public notary would be
available, or the stamp would be available on that day for affirming affidavits.
The affidavit filed on behalf of the State clearly shows that on 09.04.2005 D
itself , that is the day on which the order by this Court was communicated,
the concerned persons were informed as regard their selection, if not prior
thereto. The State's letter dated 9.4.2005 relating to Application No.01010140
shows that thereby one Ramesh Prasad Dheemar was informed that he had
been selected for Desi/English wine shop/Circle Tikrapara Circle as a first E
licensee. Even the Wlnecessary stipulations had not been scored out therefrom.
He was not asked to file an affidavit by 10.4.2005. He was merely asked to
deposit I/12th part of the payable duty as yearly security within three days
and I/12th part of yearly licence fee by 30.4.2005, whereafter licence was to
be granted to him. We fail to understand as to how without making a scrutiny
as regard compliance of conditions, licences were granted on 11.4.2005 and F
12.4.2005. The affidavit of the State reveals :

"That the process of selection of Applicants under the Circular
dated 14.2.2005 had already been completed on 16.3.2005 and a list
of the Applicants selected after the draw of lotteries had been submitted
before the Hon'ble Chhattisgarh High Court on 22.3.2005. A typed G
- copy of the list of successful Applicants as submitted before the
' Hon'ble Chhatti-sgarh High Court is annexed hereto and marked as
Annexure "RCG-2".

That, accordingly based on the result of the selection process, the
Collectors of all Districts in the State called upon the selected H

I
330 SUPREME COURT REPORTS f2005] SUPP. I S.C.R.

A Applicants to submit affidavit in the prescribed format. The affidavits
submitted were duly processed/scrutinized by the District Level
Committee constituted in each district as per Rule lO of the 2002
Rules (comprising of the Collector as the Chairman and Assistant
Commissioner/District Excise Officer as the Member Secretary). The
licences were thereafter granted on 11.4.2005/12.4.2005 subject to
B the condition that the same were only temporary and were granted
under an interim arrangement and were subject to further orders to be
passed by this Hon'ble Court. Thus, the temporary licences for the
year 2005-06 for running country/foreign liquor retail shops in the
State have been issued after following the process prescribed in the
c 2002 Rules and after scrutiny of affidavits and consequent approval
by the Committee already fonned under the Rules, as had been directed
by this Hon'ble Court. An English translated copies of the information
received from each of the 16 districts in the State granting temporary
licences to the successful Applicants .is enclosed hereto and filed as
Annexure "RCG-3 (Colly.)".
D
We have noticed hereinbefore that even in the notice, the selected
candidates had not been asked to submit affidavits in the prescribed format.
It is not expected of the statutory functionaries to ask the selected candidates
to comply with the requirements orally. It is beyond our comprehension as
E to why such a post haste action was taken by the State.

Our attention has been drawn to the following charts prepared by the
Respondents :
"EXAMPLES OF SAME ADDRESS OF DIFFERENT FAKE SELECTED APPLICANTS OF RAIGARH, CHAMPA
JANJGIR AND KAWARDHA DISTRICTS
3, Shankar Nagar Near Dr Anoop Behind Prince 27, Kholi Vikas H. N o.15/262
Raipur Verma, Katora Hotel, Katora Nagar, Bilaspur Near Chandnia
Talab, Civil Talab, Civil - Para, Canal,
Lines Raipur Lines Raipur Janjgir
Pg Names Pg Nai:nes Pg Names Pg Names Pg Names

77 Raj Kr. 79 Rajendra 222 Vikas 82 Rakesh 86 Ram
Singh Prajapati Jaiswal Singh Bachan
Yadav
78 Munna 84 Surendra 87 Jitendra 82 Bab loo 88 Santosh
Gupta Lal Singh Kr. Rai Kumar
78 Jai 90 Shiv 259 Urmila 220 Jitendr
Prakash Narayan Devi Singh
Singh Jaiswal
80 Guddu 260 Satish 222 Vinay
Moar Singh Gupta
81 Raghvendra
Kumar Singh
w
w
N

258 Vinod Pandey
258 Avadh
Narayan
. Shukla
258 Shyam Lal
Gupta
259 Jagdish
Yadav

259 Bunty Singh

Jamat Mandir 30, Block B, Lochan Nagar, Punjabi Nehru Nagar,

-

; . "'
I.
I

Para, Quarter P.S. Dist. Colony, Dayal Bilaspur
Kavardha Mohalla, RSB Chakradhar Band, Bilaspur
Tower, Nagar,
Taarbahar, Raigarh
Bilaspur
Pg Names Pg Names Pg Names Pg Names Pg Names

79 Pramod 91 Parikh a 92 Ashok 93 Surjit 80 Sushil
Singh Paswan Kumar Singh Kumar
Singh Bhatia
83 Shailendra 222 Stayender 92 Lakshmi 94 Ravindr 80 Manoj
Singh Singh Prasad Nath Singh
Upadhya
85 Santosh Shiv 227 Umesh 258 Dharme
Kumar Kumar Singh mdra
Jaiswal Singh
223 Munna
Singh
H.No.7/279 Shankar Nagar, 1173, Near 5/12, Bazar H. No.190 Pratap
Pursuram Ward Dist. Janjgir Ranjit Singh Para, Dhara Ganj Thana
FCI Gowdown Dhaba, Dwar, Dist. Samgarh,
Bhatapara, Shivrinarayan, Janjgir Chanpa Raigarh
Raipur Tehsil Navagarh,
Dist. Janjgir
Pg Names Pg Names Pg Names Pg Names Pg Names
85 Sanjiv 83 Raja 83 Mahendra 228 Parmesh 228 Santosh
Kumar Piyush Singh war Kr.
Gupta Narayan '
Singh Singh

87 Dash rat
Yadav
92 Kamakhya
Narayan
91 Arv ind
Singh
228
. Santu
Singh
.229· Dilipdas .
Singh -

222 Sanjiv Kr. 90 84 Lakshmi
Pd
Gunta
224 Vishnu
Singh

226 Uday
Singh

227 Abhimanu
Gupta
336 SUPREME COURT REPORTS [2005) SUPP. I S.C.R.

A From a perusal of the aforementio~ed charts, it would appear that
different persons belonging to different communities had filed different
applications showing the same address. Even persons having the same name
had filed more than one application.

Mr. Desai submitted that these allegations give rise to separate cause of
B actions. We do not agree.
Although we do not intend to put a seal of finality on the said issue,
we are constrained to observe that having regard to the actions of the statutory
functionaries, the entire exercise of the scrutiny as regard ascertainment of
C the eligibility of the candidates vis-a-vis selection ,process is required to be
undertaken again by the Selection Committee. Furthermore, this Court is
entitled to take into consideration subsequent events so as io do the complete
justice to the parties. [See Board of Control for Cricket, India and Anr; v.
Netaji Cricket Club and Ors., (2005) I SCALE 121]."When this Court passed
an interim order it was expected that the statutory 'requirements therefore,
D shall be complied with. Even if Rule 9 is held to be directory, substantial
compliance thereof was necessary. A mandatory statute requires strict
compiiance whereas a directory statute requires substantial compliance. Even
if a statute is directory, the State cannot say that th_e requirements contained
therein do not envisage compliance thereof. The authorities of the State cannot
raise a plea that they would not even notice the inherent defects contained in
E the application. They could not proceed on a presupposition, for which there
is no legal sanction, that contents of the affidavit would be correct. No
summary report required to be prepared by the Member Secretary for its
placement before the Committee appears to have not been prepared. The
Rules postulate that each and every application must be examined carefully.
F Mere fact that a large number of applications have been filed, as a result
whereof the State had been able to obtain crores and brores of rupees by itself
did not entitle the State to dispense with the statJtory requirements. The
application fees were not meant to be utilized for the purpose of earning
revenue but to meet the administrative charges requir~d therefore. Application
1
fees cannot be equated with tax.
G
Undoubtedly, the state has the exclusive privilege to deal in liquor but
it has also to be borne in mind that it has a constitutional and legal duty to
safeguard the public interest and public health. The conditions for grant of
licence as laid down in the statute are required to be observed only with a
H view to sub serve the constitutional goal and not to subverse the same.
ASHOK LANKA v. RISHI DIXIT [SINHA, J.] 337

An affidavit required to be filed in whatever. fonnat it may be must A
disclose all the infonnations required under the Jaw which would enable the
statutory authorities to verify the same. Licences to deal in liquor cannot be
granted on mere asking by a person and only because he is in a position to
fulfil the. requirements as regard deposit of licence fee and other charges.
Undoubtedly, the State is entitled to raise its revenue but it is also obligated B
to fulfil its constitutional and statutory duties.

PRECEDENTS RELIED UPON ON BEHALF OF THE APPELLANTS :

In the Nandlal Jaiswal (supra), whereupon Mr. Desai placed strong
~
reliance, this Court was concerned with grant of licences for running distilleries. C
·' Therein, this Court observed that the legislature should be allowed some play
in the joints because it has to deal with complex problems but it did not say
that a statutory authority while exercising its statutory functions may do
away with or dilute the statutory mandates.

' In G.J. Fernandez (supra), again this Court was interpreting the D
conditions of NIT and not the statutory rules. It is only in the fact situation
obtaining therein it was observed that the way in which the tender documents
issued by it had been understood and implemented by the KPC had been
explained in its 'note', which sets out the general procedure which the KPC
was foJlowing in regard to NITs issued by it from time to time. The said
decision has no application in a case requiring ~ompliance of statutory E
requirements.

In Dr. Mahachandra Prasad Singh (supra), this Court was concerned
'
' with interpretation of an election of the Bihar Legislative Council Members
(Disqualification on Ground of Defection) Rules, 1994. While considering
-p
the submission that an affidavit which is required to be filed in tenns ofsub,.
rule (6) of Rule 6 of the Rules, the Court held that the provisions thereof are
not so mandatory in nature that even a slight infraction of the Rules- would
render the entire proceedings initiated by the Chainnan invalid or without
jurisdiction. It was in that sense the provisions were held to be directory in
nature. We may notice that in terms of the Civil Procedure (Amendment) G
Act, 2002, a plaint must be verified by an affidavit, which is mandatory in
nature.

In Nain Sukh Das (supra) this Court was concerned with a case where
the election of the municipal member was sought to be set asid_e on the
ground of alleged violation of Article 15(1) of the Constitution. In that case H
338 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

' A it was held that the petitioners therein never asserted their rights by taking ~
appropriate proceedings to get the bar under Article 15(1) removed and in
that situation, this the Court did not exercise its jurisdiction under Article 32
of the Constitution stating:

" ...... It may be, as we have already remarked, that the petitioners
B could claim such relief as rate-payers of the Municipality in
appropriately framed proceedings, but there is not question of enforcing
petitioners' fundamental right under article 15(1) or article 14 in such
claim. There is still less ground for seeking relief on that basis against
respondent 3 who is only a nominated member ....."
c The said decision has no application in the instant case.

In K.N Guruswamy, (supra), the appellant therein sought to enforce his
right in obtaining a contract to which he was entitled to but no relief was ·.:,_
granted as the excise year had already expired. Issuance of such a writ was
D found to be resulting in futility. Such is not the case herein. >.

In Rajendra Singh, (supra), this Court held that the jurisdiction of the
High Court under Article 226 is not intended to facilitate avoidance of
r
obligations voluntarily incurred, though the licensees are not precluded from
seeking to enforce the statutory provisions governing the contract.
E
The writ petitioners herein filed a writ at a pre-selection stage and
furthermore have nN sought for enforcement of the contract.

In Balco Employees' Union (supra), this Court was concerned with an
economic policy of the State which is not the 'Case herein.
F
Furthermore, it is now beyond any cavil that economic policies of the
State although ordinarily would not be interfered with, but the same is not
beyond the pale of judicial review. (See Cellular Operators Association of
India and Ors. v. Union of India and Ors., (2003] 3 SCC 186.

G It is also not a case where no relief can be granted to the writ petitioners,
as was done in the case of KN. Guruswamy, (supra), having regard to the
fact situation obtaining therein.

SHOULD WE ISSUE GUIDELINES :

H Before parting, we make it clear that in these appeals we did not go into
ASHOK LANKA v. RISHI DIXIT (SINHA, J.] 339
the larger question raised by Dr. Dhawan that the State must insist for a A
solvency certificate keeping in view the similar provisions contained in the
statutes enacted by the other States, nor this Court, as at present advised, is
inclined to issue the requisite guidelines therefor.

There cannot, however, be any doubt or dispute that having regard to
the several decisions of this Court, e.g. The State of Bombay v. R.MD. B
Chamarb.iugwala, [1957] SCR 874, Mis Fatehchand Himmat/a/ and Ors.
etc. v. State of Maharashtra et<!., [1977] 2 SCC 670, Khoday Distilleries Ltd
and Ors. v. State of Karnataka and Ors., [1995] 1 SCC 574, B.R. Enterprises
t etc. v. State of U.P. and Ors etc., [1999] 9 SCC 700, State of A.P. and Ors.
v. Mcdowell & Company and Ors., [1996] 3 SCC 709, State of Punjab and C
Another v. Devans Modern Breweries ltd. and Anr., [2004] 11 SCC 26, trade
.in liquor is considered to be res extra commerciumalthough tobacco produce
has not been declared so. [See Godawat Pan Masala Products J.P. Ltd and
Anr; v. Union ofIndia and Ors., [2004] 7 SCC 68]. The State while exercising
its power of parting with its exclusive privilege to deal in liquor has a positive
• · obligation that any activity therein strictly conforms to the public interest and D
ensures public health, welfare and safety. Strict adherence to the requirement
to comply with the statutory provisions must be considered from that angle.

CONCLUSION :

The question, however, which now falls for consideration is as to what E
order should be passed in the peculiar facts and circumstances of this case.

In this case the mode of selection is in question. All the parties
participated in the selection process. Some of them became successful. They
had not complied with the statutory requirements not because they were not
willing to do so but because the statutory authorities were not correctly F
advised. The conduct of the statutory authorities although must be deprecated
but that by itself, in our opinion, may not come in the way of the successful
candidates in getting the just relief.

Keeping in view the peculiar facts and circumstances of this case, we G
intend to issue the following directions :

(i) The Member Secretary shall scrutinize all the applications of the
successful candidates afresh and prepare a summary report within
one week from date.
(ii) Irrespective of the format prescribed by the Commissioner of H
340 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.
¥'

A Excise, each of the selected candidates must file an appropriate '
affidavit, which would be in strict compliance of the requirement
of Rule 9.
(iii) Such affidavits must be filed before the respective committees -
within one week from date, the contents whereof would be verified
B in terms of Order 6 Rule 15 of the Civil Procedure Code. The
said affidavits shall be scrutinized by the Committee so as to
enable them to arrive at a finding as to whether the applicants
fulfil the eligibility criteria and are otherwise suitable for grant
of licence under the Act and the rules. ..

c (iv) The writ petitioners or any other person in the locality may file
appropriate applications before the said Committee with a view
to show that the selected candidates do not fulfill the eligibility
criteria or are debarred or are otherwise unsuitable from obtaining
a licence under the Act.

D (v) Such objections may also be filed within two weeks from date. •
The Committee may consider the said objections and, if necessary,
may call for further or better particulars from the selected
candidates so as to satisfy themselves about their eligibility etc.
(vi) The respective District Level Committees shall strictly verify
and scrutinize the affidavits as also other documents filrnished
E "'
by the said applicants so as to arrive at a decision that the -statutory
requirements have been complied with upon application of their
mind.
(vii) The members of the Committee are made personally liable to see (

that all statutory requirements are complied with. They would
F
strictly apply the statutory provisions as regard eligibility and
suitability of the. candidates.
/

(viii) The afor-ementioned exercise by .the Committee should be
con(J)Ieted within one month. In the event, any affidavit filed by
a selected candidate either pursuant to this order or filed earlier
G in the format prescribed by the Commissioner of Excise is found
to be incorrect, strict action in accordance with law shall be
taken against him

(ix) The Superintendent of Police of each district within whose I
\
jurisdiction the selected candidates ordinarily 1eside shall verify
H

..
. -.
I

ASHOK LANKA v. RISHI DIXIT [SINHA, J.] 341
the antecedents and other relevant particulars of the selected A
candidates vis-a-vis their eligibility/suitability to obtain a licence
and submit a report to the Committee by 12.6.2005 which would
be strictly in terms of sub-rule (3) of Rule 9. While issuing su_ch
a certificate in favour of the selected candidates by 12.6.2005, he
shall also file a copy of the report before the Committee.
B
(x) We direct the Chief Secretary of the State and Commissioner of
Excise to act strictly in accordance with law and oversee the
functioning of the Scrutiny Committees.

(xi) If the State and the Commissioner of Excise come across
misconduct on the part of any of the officers including the C
members of the Committee, strict action must be taken against
the concerned officer.
(xii) The selected candidates in the meanwhile may carry on the trade
in liquor pursuant to the licence granted in their favour but the
same shall be subject to this order as also the decision of the D
Scrutiny Committee.

The Writ Petitioners and the Respondents shall be at liberty to mention
before the High Court for appropriate order(s).

These appeals are disposed of on the aforementioned terms. No costs.
E
S.K.S. Appeal disposed of.