Holding

The permission to shift the liquor shop was in accordance with the latest circular and not arbitrary, so the High Court's order quashing it was set aside.

Summary

Chhotu Singh, holder of a C.L. III country liquor licence in Village Sawli, applied to shift his shop to Village Narsi Chaurasta due to low demand. The District Collector, after making enquiries as per the Government circular dated 27 April 1984, recommended the shift, and the State Government eventually granted permission. Respondent No.5, already operating a liquor shop in Narsi Chaurasta, challenged the permission before the High Court, alleging violation of earlier circulars and that the decision was arbitrary. The High Court quashed the permission, but the Supreme Court held that the Collector had complied with the latest circular, which superseded earlier guidelines, and that the decision was not arbitrary. Consequently, the Supreme Court set aside the High Court’s order and allowed the appeals, confirming the validity of the permission to shift the shop.

Issues considered

Whether the State Government's permission to shift the country liquor shop complied with the guidelines of the latest Government circular dated 27 April 1984.
Whether the permission was arbitrary or in breach of earlier circulars, particularly the 1973 circular.
Whether the latest circular superseded the earlier circulars for purposes of shifting an existing liquor shop.

Legislation cited

Maharashtra Country Liquor Rules, 1973s. 23, s. 24

Subjects

licensingcountry liquoradministrative lawarbitrarinessgovernment circulareconomic viabilityshifting of liquor shopspecial leave petition

Judgment

•

CHHOTU SINGH
A
v,
STATE OF MAHARASHTRA&, ORS.

SEPTEMBER 22, 1987

[A.P. SEN AND B.C RAY, JJ.) B

Permission granted by State Government for shifting country
liquor shop from the village to another-Whether arbitrary or in breach
.. of guidelines contl!ined in Government Circulars on the subject-High
Court qUl!Shed the Government order granting permission. ·

The appellant Chhotu Singh, who had been granted C.L. III C
licence for vending country liquor in Village Sawli, applied for pennis·
sion to shift his liquor shop from Village Sawli to Village Narsi
Chaurasta as there was very little demand for country liquor in Sawli
with a small population. The Collector recommended the transfer of the
shop of the appellant after making due enquiries contemplated in the D
guidelines laid down in the government circular dated April 27, 1984
for shifting shops. The State Government granted the permission
applied for by the appellant.
Upon the appellant's shop being shifted to Narsi Chaurasta, the
respondent No. 5 in the appeals, who already ha.d a liquor shop in Narsi
Chanrasta, challenged by a Writ Petition the pennlssion granted by the E
Government to the appellant to shift his liquor shop to Narsi

- Chaurasta. The High Court allowed the Writ Petition, quashing the
order of the Government granting permission for shifting the liquor
shop, on the ground that the said permission had been granted without
the criteria laid down ill the Government circular dated March 18, 1982
being duly considered. A review petition against the Order of the High F
Court, allowing the Writ Petition, was dismissed.
The appellant Chhotu Singh has moved the Court by special leave
against the Orders of the High Court, allowing the Writ Petition and
dismissing the review application, and the only question for considera·
tion in the matter is whether the permission granted by the State G
Government for shifting the appellant's C.L. III liquor shop from
Village Sawli to Village Narsi Chaurasta is supported by the guidelines
laid down in the latest government circular dated April 27, 1984, which
has sui>erseded all the previous such circulars.

Allowing the appeals, the Court, H
.303
304 SUPREME COURT REPORTS [1988] 1 S.C.R.

HELD: The Collector had recommended permission for shifting
A
the liquor shop of the appellant from Village Sawli to Village Narsi
i
Chaurasta after making due enquiries, with regard to the shifting of the
said shop, in accordance with the guidelines contained in the latest
government circular on the subject, dated April 27, 1984, which had
superseded the guidelines in the previous such circulars. The sanction
B accorded to the shifting of the appellant's shop is not in breach of the
said latest circular dated April 27, 1984 and it cannot be assailed as
arbitrary. 1306G, B; W7E, B-Cl

c
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2331-
32 of1987. -
From the Judgment and Order dated ·; .4.1986 of the Bombay
High Court in Review Petition No. 837 of 1986. {
Dr. Y.S. Chitale and Ranjit Kumar for the Appellant.

D T.S. Krishnamoorthy Iyer, D.M. Nargolkar, A.M. Khanwilkar
and A.S. Bhasme for the Respondents.

The Judgment of the Court was delivered by

B.C. RAY, J. Specialleave granted. Arguments heard. )..
E
The subject matter of challenge in this appeal is the order dated

-
7th April, 1986 made by the High Court of Bombay allowing the writ
petition No. 189 of 1986 quashing the permission granted in favour of
the petitioner by the Government by its order dated 24.12.1985 per-
milting the shifting of the country liquor shop from Mouza Sawli to
F Mouza Narsi Chaurasta as well as the order of the High Court dated
17.7.1986 rejecting the review petition No. 837 of 1986. The petition- '
er's father had a licence to run the country liquor shop in village Narsi
\-
in Taluka Biloli, District Nanded, Maharashtra. In 1983 the said
licence was transferred in the name of the petitioner (respondent No. 5
in this appeal). The. appellant was granted a licence, commonly known
G as C.L. III licence for vending country liquor in village, Sawli, Taluka
Biloli, District Nanded. In November, 1984, the appellant was permit-
ted to join one Ataullah as his partner to run the said country liquor
shop in village Sawli. The appellant found considerable difficulty in ~
running the shop in village Sawli as there was very little demand for
country liquor in the said village having small population of about 1800
H and as such the appellant sustained heavy loss. The appellant therefore
CHHOTU SINGH v. STATE OF MAHARASHTRA !RAY, J.] 305

r applied on 2.2.1985 before the District Collector, Nanded for permis-
sion to shift his shop from village Sawli to village Narsi Chaurasta
A
situated within the same Taluka. The Collector of Nanded after
making necessary enquiries in accordance with the guidelines of the
circular dated 27.4.1984 regarding the shifting of the shops, recom-
mended the transfer of the shop of the appellant from village Sawli to
village Narsi Chaurasta. The Government of Maharashtra, however, B
by order dated 25.7.1985 rejected the application of the appellant for
"y shifting the shop. The appellant again made a representation against
the said order of rejection. This representation was duly considered by

- the Government and permission was granted to the appellant to trans-
fer his country liquor shop C.L. III from village Sawli to village Narsi
Chaurasta. In accordance with the said permission granted to the
appellant, the appellant shifted his shop on 17 .2.1986 to village Narsi c
~ Chaurasta. The respondent No. 5 who has got a country liquor shop in
that village, questioned the permission granted by the Government in
favour of the appellant by writ petition No. 189 of 1986 and prayed for
qnashing of the said order granting permission on the ground that
there has been a violation of the circular No. CLR. 1173(III) Gen/K D
dated 27th February, 1973 in as much as the total population of the
said village did not exceed 10,000 and as such the permission for shift-
ing the said shop of the appellant to the village Narsi Chaurasta was
illegal and bad.
_.
The writ petition No. !89/86 was heard by the High Court, E
Bombay and it was allowed by holding that without duly considering
the criteria laid down in the circular dated 18.3.1982 i.e. economic

- viability of the proposed shop and the likely volume of consumption of
country liquor, the purported permission for shifting the shop was
granted. Accordingly, the rule was made absolute and the order grant-
ing permission by the Government was quashed. An application for F
r review of the said order was filed by the appellant and the same was
1 rejected· by order dated July 17, 1986 in Review Petition No. 837 of
1986. Aggrieved by the said two orders the special leave petition was
filed out of which this appeal has arisen.

The only question that falls for consideration in this appeal is G
whether the permission granted by the State of Maharashtra i.e.
Respondent No. 1 for shifting of C.L. III liquor. shop of the appellant
~ from village Sawli to village Narsi Chaurasta is in accordance with the
guidelines laid down by the latest circular dated 27th April, 1984 which
is annexed as annexure P-7 to this appeal. It has been urged on behalf
of respondent No. 5 by drawing the notice of the Court to the circular H
306 SUPREME COURT REPORTS [1988] 1 S.C.R.

A dated 27 .2.1973 (annexure P-2) that the permission that was accorded
for shifting Of the appellant's shop from Mouza Sawli to Mouza Narsi is
in infringement of the aforesaid circular in as much as the total popula-
tion of Mouza Narsi did not exceed 10,000 and as such no additional
shop could be permitted in the said Mouza nor any permission could
be accorded for shifting of the appellant's liquor shop in the said
B Mouza. This argument advanced on behalf of respondent No. 5 is
devoid of merit in as much as the aforesaid circular was superseded by
the guidelines laid down by the Government as is evident from the
order No. CLR 1480/ 1101/PR0-3 dated 2nd October, 1980 wherein it
has been stated in clauses 4 and 5 that permission for additional shop
can be granted only if it would be economically viable. It is also evi-
..
dent from the circular dated March 18, 1982 that rules 23 and 24 of the
c Maharashtra Country Liquor Rules, 1973 were amended by Govern-
ment Notification dated 26th February, 1982 and guidelines have been
laid down for grant of a licence for shops for the retail sale of country
liquor. One of the guidelines to be considered is that due consideration
has to be given to the likely volume of consumption of country liquor
D and economic viability of the proposed shop before granting any
permission for a new shop. This circular was followed by another
circular dated September 16, 1983 wherein it has been mentioned that
in granting additional licences for country liquor shop, the Collector
should use the discretion and propose shops at such places taking into
consideration the likely volume of consumption, economic viability,
E menace of illicit distillation etc. This circular is annexed as annexure
P-5 to the appeal. By the latest circular dated April 27, 1984 the
Government in supersession of the guidelines in the previous circulars
had laid down certain guidelines of which clause 6 is relevant for our
consideration which is to the following effect:

"Whether additional shop at the new place would be
-
F
economically feasible."

In the instant case the District Collector of Nanded made due
enquiries in accordance with the guidelines contained in circular dated
April 27, 1984 (annexure P-7 to this appeal) with regard to the shifting
G of country liquor shop of the appellant and recommended the permis-
sion for shifting the shop stating that the population of Mouza Narsi is
about 3738 and it is a commercial place. There is a lot of crowd of
people at this place and as such if the country liquor shop is shifted ~
from Mouza Sawli to Mouza Narsi the financial condition of the
licence-holder would improve resulting in his being able to pay the
H licence fee and incur the other expenses of the shop. It has been
CHHOTU SINGH v. STATE OF MAHARASHTRA [RAY, J.[ 307

r further stated that the sale of country liquor at Mouza Narsi is 1300 A
litres and starting of another shop at this place is feasible. This report
was forwarded to the Secretary, Home Department, Government of
Maharashtra, a copy of which is annexed as P-1 to this appeal. The
Government of Maharashtra had first rejected the application of the
appellant for the shifting of the shop on 25. 7. 1985 and on representa-
lion being made by the appellant had re-considered its earlier decision B
and accorded sanction to the proposal of shifting of country liquor
't shop of the appellant from village Sawli to village Narsi Chaurasta,
Taluka Biloli. This order according permission cannot be assailed as

- arbitraty or in breach of the latest circular issued by the Government
laying down the guidelines in 1984. The Government duly considered
the guidelines laid down in the said circular namely the economic c
viability and also the volume of consumption of liquor in the particular
/ y. Mouza as is evident from the report of the Collector, Nanded. It is also
pertinent to mention in this connection that the State of Maharashtra,
respondent No. 1 filed a retum to this appeal wherefrom it is manifest
that the respondent No. 1 duly considered the report of the Collector
recommending permission to transfer the country liquor shop of the D
appellant. It has also been stated in the said counter that the guidelines
contained in the circular dated February 27, 1973 are in respect of the
grant of new country liquor licence. These guidelines cannot be made
applicable in respect of the shifting of any country liquor shop existing
already in one village to another village. It has further been stated that
-I after the permission was granted the appellant shifted his country E
liquor shop to village Narsi Chaurasta and he has been running the
country liquor shop there since February, 1986. The sanction accorded

- to the shifting of the shop of the appellant is not in breach of the latest
circular dated April 27, 1984 annexed as P-7 to this appeal.
F
For the reasons aforesaid there is no merit in the submissions
made on behalf of respondent No. 5 and the same cannot be sustained.
f The appeals are therefore allowed. The impugned judgment and order
passed by the High Court of Bombay dated April 7, 1986 in Writ
Petition No. 189/86 as well as the order dated July 17, 1986 made in
Review Petition No. 837/86 are quashed and set aside-. There will,
however, be no orders as to costs. G

S.L. Appeals allowed.
-4