R. VIJAY KUMAR AND ORS.versusTHE COMMISSIONER OF EXCISE AND ORS.

...                         R.VIJAY KUMAR AND ORS.
                                            v.
                  THE COMMISSIONER OF EXCISE AND ORS.

                                 NOVEMBER 5, 1993.
                                                                                       B
                 [S.RATNAVEL PANDIAN AND R.M. SAHAI, JJ.J

             kerala Excise Act, 1944/Kerala Foreign Liquor Rules, 1974-Rule
       13(3)-Renewal of licences and grant or fresh licences-Distinction be-
      twee1t-Held-Kerala State Government policy issued on November 9, 1992,           C
      for cancellation/non-grant of Foreign liquor licences after 1.4.1993, was con-
      trary to rules without any valid justification.

            Practice and procedure-Affidavit-Contents of Avennents should be
      clear and specific.
                                                                                       D
            The appellants were owners or proprietors of hotels and restaurants.
      they were granted FL-3 licences under Rule 13(3) of Kerala Foreign Liquor
      Rules, 1974, in October 1992 for the year 1992-93, but these licences were
      cancelled soon thereafter, in view of .the policy decision taken by the
      Government to cancel all Foreign Liquor (Hotel/Restaura~t) Licences              E
      granted to hotels/Restaurant/tourist homes during·the nnanclal year 1992·
      92. Writ Petitions filed by the appellants challenging the cancellation order
      were dismissed by the High Court.

             In the Special Leave petitions ftled before this Court against the
      High Court Orders, this Court granted interim stay to enure only upto            F
      31.3.93, with liberty to the petitioners to approach the concerned
      authorities for renewal of the licence, for the year 1993-94 and a direction
      to the concerned authorities to dispose of the applications in accordance
      with law and on merits. However, on the basis of an alleged statement made
      on behalf of the State to the Press that the licences of the appellants would    G
      not be renewed, the appellants approached the High Court for issue of
      directions to the respondents to renew their licences for the year 1993-94.
      The High Court directed the respondents to dispose of the appellants'
      applications for renewal of licences, as directed by this Court. The Excise
      Commissioner rejected the applications in the light of G.O. dated 9th            H
                                           607
    608                  SUPREME COURT REPORTS (1993] SUPP. 3 S.C.R.

A November, 1992.

         In the appeal, before this Court, on behalf of the appellants it was
  contended that the Government's policy of prohibition was .iot in con-
  sonance with practice, and it was denying the right to carry on business to
  the appellants for extraneous reasons, and that renewal of 381 licences, of
B
  the Iicencees who were similarly situated as the appellants, was contrary
  both to the policy decision of the Government and directive principles of
  the Constitution. It was also urged that the State being in contemp~, for
  making statement to the Press, in direct conflict with the earlier order of
  this Court and for rejecting the appellants applications, without examining
C it on merits, it was not entitled to be heard.

          The respondents contended that the appellants formed a separate
    class inasmuch as they were issued licences in 1992-93 and, therefore, they
    could not claim to be in the same group as other licensees who were
D   operating from before. It was also urged that normally renewal and fresh
    grant were not dealt with by the same yardstick.

          Allowing the appeal, this Court

          HELD : 1.1. Classification which can be sustained must have a
E
    reasonable nexus with objective sought to be achieved by the impugned
    action. Except for the appellants, who are 21 in number, the State could
    not point out any circumstance which could establish that the policy of
    prohibition was being enforced or implemented. The validity of the State
    action has to be judged on positive steps taken by the State. for enforcing
F   the policy. The appellants, who were granted licence in 1992-93 and those
    who are granted licences and are operating, from before are hoteliers and
    are required under rules to conform to two star hotel standard. Both are
    required to promote tourism. [613-C-F, 614-B]

G         1.2. The State is not following consistent and uniform policy. First,
    it announced its intention not to issue any licence. 'afresh' from 18th
    September 1991 but it did not adhere to it and within a month it issued
    another order in February 1992 deciding to grant the privilege of selling
    liquor promotion of tourism. In November 1992 it decided to cancel all
H   licence issued in current year. If the licences issued in 1993-94 to
              VIJAYAKUMAR v. COMMR. OF EXCISE (SAHAI,J.]                       609

      licensees operating from before and to the appellants were issued afresh A
      as the rules do not making distinction between renewal and fresh grant,
      then all licencees were on same footing and the attempt to pick and
      choose the appellants, was contrary to rules without any valid justifica·
      tion. [614-C-D]



--           2. The rules do not appear to make any distinction between renewal
      of a licence and its grant. It is true that normally renewal and fresh grant
      are not dealt with by the same yard stick. However, no pronouncement is
      made about it. The validity of G.O. Issued on November 9, 1992 is the
                                                                                      B



      subject matter of challenge in another appeal, pending before Constitution
      Bench. [612-F-H]                                                                c
            3. The affidavit filed by the Respondent was not only vague but highly
      unsatisfactory. The averments in the affidavit should be clear and specific.
      In the affidavit it was not clarified, if the alleged stateirent to the press
      was made or not. It is capable of creating reasonable apprehension in the       D
      mind of an ordinary citizen that the respondents did not decide the
      appellant' applications on objective considerations but on invisible yet
      apparent pressure from extraneous source. [612-D-F]

            CIVIL APPELLATE JURISDICTION : Civil Appeals No. 6042 of


---   ~

           From the Judgment and Order dated 30.3.93 of the Kerala High
      Court in C.M.P. No. 7947/93 in O.P.No. 42825 of 1993.
                                                                                      E



            G.Ramaswamy, E.M.S. Anam and George Poonthothan for the Ap-
      pellants.                                                                       F
            V.R. Reddy Additional Solicitor General, A.S. Nambiar and M.A.
      Firoz for the Respondents.

           The Judgment of the Court was delivered by
                                                                                      G
            R.M. SARAI, J. These are four appeals directed against judgment
      and order of the High Court of Kerala. The appellants are owners or
      proprietors of hotels and restaurants who were granted FL-3 licences
      under Rule 13(3) of the Kerala Excise Act in October 1992 for the year
      1992-93. Their licences were cancelled soon thereafter as in November           H
     610                  SUPREME COURT REPORTS [1993] SUPP. 3 S.C.R.

A 1992 the Government had taken a policy decision to cancel all I'.oreig'il
     Liquor (Hotel/Restaurant) Licences under Rule 13(3) of the Kerala
     Foreign Liquor Rules 1974 to hotels/restaurant/tourist homes during the
     financial year 1992- 93. They challenged the orders in the High Court by
     way of writ petitions. The petitions were dismissed on 1st February 1993.
B    Two Special Leave Petitions were filed against this order. One was num-
     bered as 2310-17 of 1993 and the other as 3391 of 1993. Some of other
     petitions came up for hearing before the Higli Court on 4th March 1993
     which were decided on 10th March 1993. This order was challenged by
     Special Leave Petition (Civil) No. 4152 of 1993. In Special Leave Petition
C    Nos. 2310-17of1993 and 3391of1993 a bench of this Court on 1st March
     1993 passed following order :

                 "Issue notic~ both on special leave petitions as well as on
             petitions for stay. Mr. John Joseph on behalf for Mr. P.K. Pillai
             accepts notice on behaH of Respondent No, 6. Dasti service is
·D           permitted additionally. There will be an interim stay which will
             enure only upto 31.3.93 in respect of FL-3 licence for the year
             1992-93 and the stay will not enure beyond that period.

                 It is open to the petitioners to approach the concerned
E            authorities for renewal of the licence, if they are so entitled and
             the concerned authorities thereupon shall dispose of the applica-
             tion in accordance with law and on merits."

     On 2nd March 1993 it is alleged that a statement was made on behalf of
p the State to the press th~t the licence of the appellants shall not be
  renewed. However, since on 1st March 1993 this Court had permitted the
  appellants to approach the concerned authorities and yet a statement had
  been issued on behalf of the State Government the appellants approached
  the High Court, once again, for issue of direction to opposite parties to
G renew licences of the appellants for the years 1993-94. This petition was
  disposed of on 30th March 1993 directing the respondents to dispose of
  the applications for renewal filed by the appellants as directed by this
  Court in accordance with law and on merits. In pursuance. of this order
  applications filed by the appellants for renewal of their licence for 1993-94
  appears to have been forwarded by the Excise Commissioner to the Board
H of Revenue which in its turn returned it with instructions to dispose of them
        VIJAYAKUMARv. COMMR.OFEXCISE(SAHAl,J.)                           611

in the light of G.D. No. 179/92ffD dated 9th November 1992. On 24th May         A
1993 the Excise Commissioner rejected the applications for renewal in the
light of G.0. dated 9th November 1992 as directed by the Board. This
order has been challenged by a separate Special Leave Petition (C) No.
5808 of 1993 in which notice was issued on 13th May 1993.

      Lengthy arguments were advanced by learned counsel for both the           B
sides. One the questions that was raised was if the appellants have a
fundamental right to carry on trade in liquor. This question has been
referred to a constitution bench by a bench of three judges of this Court
in Civil Appeal Nos. 4708-12 1989. The Civil Appeal Nos. 6043-50 of 1993
arising out of S.L.P. (C) Nos. 2310-17 of 1993; Civil Appeal No. 6051 of        C
1993 arising out of S.L.P. (C) 3391 of 1993; and Civil Appeal No. 6052 of
1993 arising out of S.L.P. (C) No. 41..'i2 of 1993 are therefore directed to
be tagged with Civil Appeal Nos. 4708-12 of 1989.

       The appeal arising out Special Leave Petition (C) No. 5808 of 1993       D
is however confined to the short question if the opposite parties committed
any error of law in rejecting the application filed by appellants for renewal
of licence for 1993-94. Two basic attacks were made on the correctness of
the order dated 24th May 1993. One, that the policy of the Government
is not in consonance with practice. It was claimed that even though the
State claimed implementation of directive principle of the Constitution it      E
had liberalised import of arrack from outside the State. It was claimed that
 this unmistakenly demonstrate that the State was not interested in enforc-
ing the policy of prohibition but only denying the right to carry on business
 to the appellants for extraneous reason. The other ground was that the
 renewal of 381 licences who were similarly situated as the appellants was      p
contrary both to the policy decision of Government and directive principles
of the Constitution. It was also urged that the State being in contempt as
it not only made statement to the press which was in direct conflict with
the order issued by this Court but even rejected the applications filed by
 the appellants without examining it on merits was not liable to be heard.
The State defended both its policy decision and the order.                      G

      Although we do not propose to decide if any statement was made on
behalf of the State Government and it purported to interfere with the
courts of justice as sufficient material has not been placed on record but
we consider it necessary to record our disapproval of the nature of affidavit   H
                                                                                       --
    '.6U                  SUPREME COURT REPORTS [1993) SUPP. 3 S.C.R:

A filed by the Secretary (Excise) on such and important issue. Paragraph 11
     of the counter-affidavit is reproduced below:

              "I submit that the allegation in Pa,ra 5 of Special Leave Petition
              No. 5808 of 1993 that "the Government have made its mind clear,
           .· on  the very next day of the order of this Hon'ble Court which was
B             prominently flashed in all Malayalam Newspapers in headline
              news, by the Hon'ble Chief Minister of the State making a state-
              ment to the Press that the licences of the petitioners will in no case
              be renewed for the year 1993-94"., is a vague allegation. Since no
              paper report has been produced, the deponent is not in a position
c             to verify the veracity of the allegation. However, I deny the im-
              putation that the Government had a closed mind."

     It has been repeatedly emphasised by this Court that averments in the
     affidavit should be clear and specific. To our diSmay it is not only vague
D    but highly unsatisfactory. An officer ·of such high stature has not cared to
     discharge his duty -with responsibility. He did not come out clearly if the
     statement made or not. A very flimsy pretext was advanced that the
     appellants did not produce newspaper reports. Even this much is not stated
     that the no newspaper published in Malayalam carried such statement. We
     are constrained to observed that such affidavits instead of assisting in
E    resolving the issues .complicate them. It is capable of creating reasonable
     ~pprehension in mind of an ordinary citizen, that the opposite party did
     not decide their applications on objective considerations but on invisible
     yet apparent pressure from extraneous source. We stop here and say no
     more as in our opinion it is not necessary, for purpose of deciding this
p    appeal.

        The rules do not appear to make any distinction between renewal of
  licence and it grant. We find some merit in the submission of the learned
  Additional Soljcitor General that .renewal of fresh grant normally are not
  dealt with by the same yardstick, yet we do not consider it necessary to
G pronounce on it as validity of the G.p, issued on 9th November 1992 is               .....
  subject ma~ter of challenge in other appeals which we have directed to be
  heard along with other appeals pending before C~nstitution Bench. As
  stated e.arlier we are concerned ill this appeal only with correctness of the
  order dated 24th-May 1993. The opposite parties have rejected the applica-
H tioDs filed by the petitioners on the ground that the State GovernmeBt
       VIJAYAK.UMAR v. COMMR. OF EXCISE (SAHAI,J.)                    613

having taking a policy decision on 9th November 1992 not to issue licences A
the appellants were not entitle to claim renewal. The order was attempted
to be justified by the learned Additional Solicitor General as according to
him the appellants formed a separate class inasmuch as they were issued
licences in 1992-93 and, therefore, they could not claim to be in the same
group as other licensees who were operating from before. According to B
him since there were two groups or class of persons, one, who were
operating from before and the other who were granted licences in the year
1992, the opposite party did not commit any error of law in rejecting the
applications of appellants or acted discriminatcly in renewing the licences
of other. We again do not propose to decide this issue in detail or examine
it extensively as the validity of the G.O. has been referred to the Constitu- C
tion Bench. Suffice it to say that the classification which can be sustained
must have a reasonable nexus with objective sought to be achieved by the
impugned action. The reason for not renewing the licence of the appellants
was the prohibition p0licy that the State is envisaging to enforce. We may
agree that this is a valid ground for reducing the number of licensees in D
the State. We may also agree that such steps can be taken in stages and ~·
not at one stroke, but the facts are otherwise. As stated earlier the
consumption of liquor has gone up. The volume of imported arrack has
been enhanced. Therefore except for the appellants who arc 21.number
the State could not point out any circumstance which could establish that
the policy of prohibition was being enforced or implemented in the State. E
True, that some public in~erested persons arc agitating but the validity of
the State action has to be judged on positive steps taken by the State for
enforcing the policy. But in the affidavits filed by the State no material has
been brought on record to show that any concrete step has bean taken in
this regard. Moreover the appellants are hoteliers who granted licence for F
promoting tourism. No figure has hr.en furnished about traffic in these
hotels. The agitation must be against consumption of liquor. How is the
State curtailing it by permitting import of arrack has not been explained.
In fact it is not disputed in the affidavit filed by the Excise Secretary that
import was pcqnittcd under new Abkari policy adopted from 1.4.1993 as
the State presumed that contractors were purchasing spirit clandestinely G
and such clandestine imports were adversely affecting State revenue. The
affidavit asserts that it 'was to get over the above problem in a logical
manner that government desired to make a realistic assumption of
consumption'. So on the one hand the Government is taking the realistic
                                                                            H
    614                   SUPREME COURT REPORTS [1993) SUPP. 3 S.C.R.

A view by permitting import of arrack which is consumed more by ·common
  man and its quota in 1992-93 was one crore bulk litre and on the other
  cancelling licence of 21 persons in the entire State of Kerala who were
  granted licence for promoting tourism as it would help in achieving the
  prohibition policy. We do not comment any furthei on it. The appellants
B who were granted licence in 1992-93 and those who are granted licence
  and are operating from before are hoteliers and are required under rules
  to conform to two star hotel standard. Both are required to promote
  tourism. In all respects their licences are same. Further the State does not
  appear to follow the consistent and uniform policy. In June 1992 it an-
  nounced its intention not to issue any licence, 'afresh' from 18th September
C 1991 but it did not adhere to if and within a month it issued another order
  in February 1992 deciding the grant the privilege of selling liquor for
  promotion of tourism. In November 1992 it decided to cancel all licences
  issued in current year. If licences issued in 1993-. 94 to licensees operating
  from before and to the appellants were issued afresh as the rules do not
D make distinction between renewal and fresh grant then all licensees were
  on same footing and the attempt to pick and those the appellants, in our
  opinion, was contrary to rules without any valid justification.

          For these reasons appeals arising out of spe~..al leave petition nos.
    2310-17/93, 3391193 and 4152/93 are directed to be tagged with Civil
E   Appeal Nos. 4708-12/89.

           Civil Appeal No .. 6042 of 1993 arising out of S.L.P. (Civil) No. 5808
    of 1993 is allowed. The respondents are restrained from interfering in
    carrying on of appellants as FL-3 licensees subject to complying with other
    conditions and payment of annual rental proportionately till their applica-
F   tion for grant of licence are decided on merits as directed by this Court on
    1st March 1993 without adverting to order dated 9th November 1992 or till
    the policy decision is enforced uniformally. Parties have to bear their own
    costs.

    I.S.G.                                                      Appeal allowed.