Holding

The court held that, having failed to submit a tender under the new licensing policy and with licences already granted to other parties, it could not direct the State to issue a licence to the petitioner.

Summary

Doongaji & Co., a partnership with a 40‑year history of operating a distillery at Ujjain, sought renewal of its licence under the Madhya Pradesh Excise Act, 1915 after its last licence expired in 1981. The licence for the 1981‑86 period was awarded to Rajdhani Distillery Corporation, and subsequent applications by Doongaji in 1982, 1986 and 1987 were rejected by the State Government. The petitioner relied on a 1984 cabinet policy that promised existing licencees a chance to obtain new licences and on an undertaking by the State that its application would be considered promptly. The State argued that the new licensing policy required tender submissions, which the petitioner had not made, and that licences for the 1991‑93 period had already been granted to other parties. The Supreme Court held that the petitioner had not participated in the tender process, that the licences were already allotted, and that the court could not direct the State to create a new policy or grant a licence, thereby dismissing the writ petition.

Issues considered

Whether the State Government's refusal to grant a licence to Doongaji & Co. violates the 1984 cabinet policy and the undertaking given before the court.
Whether the petitioner is entitled to a writ of mandamus directing the issuance of a licence under the Madhya Pradesh Excise Act, 1915.
Whether the non‑grant of licence infringes the petitioner's fundamental rights under Articles 14 and 32 of the Constitution.
Whether the court can interfere with the tender‑based licensing procedure adopted under the new policy.

Legislation cited

Madhya Pradesh Distilleries, Breweries and Warehouses Ruless. Rule III, s. Rule IV, s. Rule V, s. Rule XXII
Madhya Pradesh Excise Act, 1915s. 13, s. 14

Subjects

licensingexcise lawdistilleryfundamental rightsArticle 14Article 32administrative policytender processmandamus

Judgment

DOONGAJI AND CO.
A
v.
STATE OF M.P. AND ORS.

AUGUST 9, 1991

B [N.M. KASLIWAL AND K. RAMASWAMY, JJ.]

Madhya Pradesh Excise Act, 1915 and Madhya Pradesh Distil-
leries, Breweries and Warehouses Rules-Order refusing to grant
licence under sections 13 and 14 of the Act-Whether valid.

c U.ijainThe petitioner and its predecessors had licence for distillery at
to manufacture rectified spirit and the last of such licence held
by the petitioner was for the period 1.4.1976 to 31.3.1981. For the
licensing period commencing from l.4.1981to31.3.1986, the petitioner
was unsuccessful and the licence was granted in favour of Rajdhani
Distillery Corporation. The petitioner impugned the same but failed
D both before the High Court as also before the Court. Thereafter, the
petitioner filed a writ petition in the High Court claiming restitution of
the distillery but failed and an appeal against the High Court's order
was preferred before this Court, which has been disposed of whereby
this Court has declined to grant restitution bot directed that the
petitioner should move an application before the State Government to
E have the value of the plants & machinery etc. fixed. The petitioner
applied for grant of licence on February 19,1982 and reiterated his
request by number of reminders including the one in November 3, 1986.
In the interregnum, the Government policy was changed by a cabinet
sub-committe policy decision dated 30.12.1984, whereby they decided
to grant licence to the e>:isting licensees of the distilleries and that they
F should construct the factories at their expenses on the land allotted by
the State Government or acquired and allotted by the State Govern-
ment and that they shift the business to new factories and the licence
would be for a period of five years. Several writ petitions including the
one by the petitioner were filed in the High Court challenging the
policy. The High Court quashed part of the policy decision. Against
G that order, petitions were filed by the State and the unsuccessful
petitioners including the petitioner in this Court. Those petitions were
disposed of by this Court by its judgment in the case of State of M. P. v.
Nandlal Jaiswal and Ors., [1987] l, SCR I. The court upheld the vali-
dity of the Government policy. During the course of the arguments, the
Attorney General of India conceded that if the petitioner makes an
H application for grant of licence, it would be considered by the Govern-

492
DOONGAJI v. STATE OF M.P. 493

ment and disposed of quickly. Pursuant thereto the petitioner made an
A
application on December ~5, 1987. The State Government rejected the
application by letter dated February 8, 1988, which among other things
is impugned in this petition under Article 32 of the Constitution.

It is contended on behalf of the petitioner that the intention
behind the solemn undertaking given by the State in /1iandlal Jaiswa/"s B
case clearly showed that the intention was to grant the licence to the
petitioner rejection is contrary to the undertaking and violating the
fundamental right of the petitioner to establish and trade in the
manufacture and distribution of the liquor; further it is discriminatory
is as much as licences have been issued to others similarly placed.
Alternatively, it is contended that if it is not found feasible to grant
licence for Ujjain, the same be granted for Ratlam Distillery. Counsel
c
for the State urged that it has not been found feasible to grant licence to
the petitioner due to grounds stated in the order which are in con-
fermity with the change in policy and the court should not interfere. On
behalf of Rajdhani Distillery Corpn. it was urged that unless there is cut
in the supply area of the operation of the existing licences and a separate D
supply area is carved out, no licence could be issued to the petitioner;
that new policy is in vogue for the succeeding licensing period of 1991 to
1993, and the licences having been issued to persons, who are not rep-
resented in this court, the court should not grant the relief asked for in
the writ petition.
r:
Dismissing the writ petition, this Court,

HELD: There is a change in the new policy which is in vogue. The
licensing period is for two years commencing from 1.4.1991 to
"3t.3.1993. Admittedly, the petitioner had not submitted any tender in
terms of the new policy for manufacture of rectified spirit or liquor for F
grant of D-2 and D-1 licences, the licences have already been granted to
the third parties and they are not before this court. Any direction in this
regard would not only interfere with the licences granted to them, but
also create a hiatus in operational system. This Court cannot direct the State
Government to create a new policy of receiving private applications or
to direct the Commissioner of Excise to carve out a new policy area and G
to grant licence to the petitioner. It is not possible to give such a direc-
tion for the reasons that the petitioner, admittedly, did not offer himself
as a candidate for consideration when tenders were called for lkensing
period commencing from 1.4.1991. As regards the Government Distil-
leries at Ratlam is concerned for grant of D-l(s) licence, as requested
for, we have no sufficient material whether any arrangements have H
494 SUPREME COURT REPORTS [1991] 3 S.C.R.

A been made to any other parties for supply area in that regard. Under
these circumstances, it is extremely difficult to accede to the request
made by the counsel for the petitioner,. [498E-499A]

ORIGINAL JURISDICTION: Writ Petition No. 729 of 1988.

B (Under Article 32 of the Constitution of India).

R.F. Nariman and P.H. Parekh for the Petitioners.

V.N. Ganpule. V.M. Tarkunde, S.K. Agnihotri, S.K. Sinha,
Rajlncler Narain, R.S. Singh and Rameshwar Nath for the Respondents.
c
The Judgment of the Court was delivered by

K. RAMASWAMY, J. In this writ petition under Art. 32 of the
Constitution, the petitioner, a partnership firm seeks reliefs of
mandamus to direct the State Government and the Commissioner of
D Excise of M.P. to allow the petitioner to set up a distillery pursuant to
the cabinet policy dated December 30, 1984 and to grant D-2 licence;
to declare the letter dated February 8, 1982 as unconstitutional, illegal
and of no effect in law and to direct the respondent Nos. 1 and 2 to
grant a licence to manufacture potable Alcohol within the state of
Madhya Pradesh and to grant D-1 licence to supply country made
E liquor, etc. This case has behind it chequered history which is neces-
sary to adumbrate.

In the State of M.P. v. Nandlal Jaiswal & Ors., [1987) I SCR 1
this court considered the legality of the policy, the subject matter in
the writ petition. It was held therein that nine distilleries in the State of
F Madhya Pradesh including the one at U jjain were set up on the lands
and buildings belonging to the Government. The plants and machinery
therein initially were of the Government, but in course of time the
licensees installed or replaced the plants and machinery and became
the owners. The petitioner and its predecessors had licence for the
distillery at Ujjain for well over 40 years to manufacture rectified
G spirit. The last of the licences held by the petitioner was for the years
April l, 1976 to March 31, 1981. The period of licence wasat that time
for five years. The practice as per the provisions of the M.P. Excise
Act 1915 for short 'the Act' and M.P. Distilleries, Breweries and
Warehouses Rules for short 'the rules' issued in exercise of the powers
under s. 62 was to call for the tenders to manufacture and supply the
H rectified spirit or denatured.spirit, spirit (country made) to the retail vendors
DOONGAJI v. STATE OF M.P. [RAMASWAMY. J.I 495

within the area attached to the distillery. Rajdahani Distillers Corpo-
ration, for short 'RDC' became the successful tenderer for the licens- A
ing period starting from April 1, 1981 to March 31, 1986. The
-i petitioner challenged in Misc. Petition No. 701/81 in the M.P. High
Court under Art. 226. Initially stay was granted, but later it was
vacated on August 20, 1981. Licence was granted for the period start-
ing from August 25, 1981 to March 31, 1986 to RDC and the distillery, B
plant and machinery at Ujjain was handed over to RDC on August 28,
1981. Thereafter the petitioner filed another writ petition No. 169/82
on March 16, 1982 for redelivery Of the plant and machinery and the
.. ~
warehouses and other consequential reliefs. That writ petition was
dismissed by the High Court against which Civil Appeal No. 5483/83
was filed, which is just now disposed of. The petitioner had applied for
grant of licence on February 19, 1982 and he reiterated his request in c
number of reminders including one on November 3, 1986. In the inter-
regnum the Govt. changed the policy by a Cabinet Sub Committee
policy decision dated December 30, 1984 under which they decided to
grant licence to the existing licensees of the distilleries and that they
should construct the factories at their expenses on the land allotted by D
the State Govt. or acquired and allotted by the State Govt. and that
they shift the business to new factrories and the licence would be for a
period of five years. Calling in question of that policy several writ
petitions including the one by the petitioner were filed in the M.P.
High Court. The Division Bench partly allowed the writ petition and
quashed part of the policy decision. Against it appeals and special E
leave petitions were filed by the State and the unsuccessful petitioners
including the petitioner. It was disposed of by this court reported in
... Jaiswal's case. During the hearing of the writ petition, the Attorney
General of India conceded that if the petitioner makes any application
"' for grant of licence it would be considered by the State Govt. and be
disposed of quickly. That concession was noted and the argument was F
founded thereon to hold that the Govt. did not intend to create any
monopoly in favour of the existing licensees. This court upheld the
policy of the Govt. and allowed the appeals and dismissed the special
leave petitions of the petitioner and other. Pursuant thereto the
petitioner made an application on December 25, 1987 followed by
several reminders. Ultimately the State Govt. rejected the petition by G
~
..., letter dated February 8, 1988, which is impugned in this writ petition.

Under s. 13 of the Act, the State Govt. is empowered to grant
licence to manufacture, possession and sale of rectified spirit and the
liquor in the distilleries or the breweries. Under s. 14 and Rule XXll
the licensee should also have licence to establish distillery to distil H
496 SUPREME COURT REPORTS [ 1991] 3 S.C.R.

A
rectified spirit or denatured spirit or liquor and a warehouse wherein
any intoxicant be deposited and kept without payment of duty. but
subject to payment of the fee to the State Govt. as it may direct. No
intoxicant shall be sold by operation of s. 17, except under the autho-
rity and subject to the terms and conditions of the licence granted in
that behalf. Rule XXII provides the method of disposal of the licence
B which reads thus:

"XXII. Disposal of licences-(!) Licence for the manufac-
ture or sale of intoxicants shall be disposed of by tender.
auction, fixed licence fee or in such other manner as the
State Govt. may, by general or special order, direct.
+
c Except where otherwise prescribed, licence shall be
granted by the Collector or by an Officer authorised by him
in that behalf.··

Rule III to V of the Distillery and Warehouse Rules also made inter.
D alia under sub-section 2(h) of s. 62 deal with the subject of grant of
licence and provide, in the following terms, for different kinds of
licences which may be issued, viz., licences in Forms D-1, D-l(s) and
D-2:

"III. Subject to the sanction of the State Government, the
E Excise Commissioner may grant a licence in Form D-1 and
, Form D-l(s) for the wholesale supply of country spirit to
retail vendors.

IV. The Collector may issue, on payment of a fee of
Rs.1000 a licence in Form D-2 for the construction and
F working of a distillery to any person to whom a wholesale
supply licence has been issued.

V. Subject to sanction of the State Government the Excise
Commissioner may issue a licence in Form D-2 for the
construction and working of a distillery on payment of a fee
G of Rs. 1000."

The State Govt. rejected application of the petn10ner on three
grounds. namely, ( 1) that the petitioner requested to issue a licence at
the old place at Ujjain Distillery which is no longer available; (2)
present policy of the State and the Central Govt. was to discourage
" H manufacture of liquor for drinking purpose, except for molasses. (3)
DOONGAJI v. STATE OF M.P. [RAMASWAMY, J.J 497

However, if it is manufactured from other raw materials other than the
A
Mahua, his application would be considered. If the petitioner makes
an application for establishment or manufacturing denatured spirit at
ot,her places and if they produce a No Objection Certificate from Cent-
ral Government and Environmental Department, his application
would be considered.
B
The contention of Sri Nariman, the learned counsel for the
petitioner; is that the State Govt. having made solemn undertaking
before this court and the arguments were heard in Nandlal Jaiswal's
case on the basis that the application of the petitioner would be con-
sidered and disposed of, it was with an intention to grant licence to the
petitioner, but rejection is contrary to the undertaking given to this C
court. It was also contended that the petitioner have a long, clean and
commendable history of 40 years in manufacturing country made
liquor in the distillery and supply thereof within the area attached to
Ujjain Distillery. The State Government's non grant of licence thereto
is only a rouse to defeat the fundamental rights of the petitioner to
establish and trade in the manufacture and distribution of the liquor in D
terms of the provisions of the Act and the rules and the instructions of
the Govt. in that regard. Having given the licence to the other distil-
leries, the petitioner being similarly placed, non-grant thereto is
arbitrary, discriminatory and violating Art. 14 of the Constitution. It
was also further contended that the petitioner if for any reason canuot
be granted D-2 licence at Ujjain, D-2 licence may be granted on ·E
Government distillery at Ratlam and supply area attached to it under
D-l(s) so as to do complete justice to the petitioner. It was resisted by
Sri Ganpule, learned senior counsel for the State contending that
pursuant to the undertaking given to this court, the application was
considered and found not feasible to grant the licence to the petitioner
due to grounds stated in the impugned order which are relevant and F
existant being in conformity with the change of the policy, and so this
Court cannot interfere and may not issue the writ as prayed for.

Though rule nisi was ordered on March 17, 1989, despite notice
of the Registry dated April 24, 1989, neither copies of the writ peti-
' tion, nor the requisite process fee for service of the rule nisi on the G
respondents were deposited in the court. As a result the rule nisi was
not issued to the contesting respondents Nos. 3 to 10. Along with the
connected appeal which is just disposed, Sri Tarkunde, the learned
senior counsel appearing for RDC which was impleaded as 5th respon-
dent to whom licence was given for Ujjain Distillery, contended that
unless there is cut in the supply area of the operation of the existing H
498 SUPREME COURT REPORTS [19911 3 S.C.R.

A licences and a separate supply area is carved out, no D-2 licence could
be issued to the petitioner. The licensing period of 1986 to 1991 had
expired by efflux of time. New policy is in vogue for the succeeding
licensing period of 1991 to 1993. The licences having been granted to
the respective persons, who are not represented in this court, the relief
asked for cannot be granted in their absence.
B
In our view there is force in the contentions of the re~pondents.
The only question for consideration is whether it is a fit case for
interference by this court due to the aforestated sequence of events.
Undoubtedly the learned Attorney General assured this court that the
application, if filed by the petitioner, would be considered. Obviously
in accordance with the provisions of the Act and the rules. The policy
c of 1984 was upheld by this court under which nine distilleries were
granted D-2 licences to manufacture rectified spirit and liquor and to
supply to the retailers under D-1 licence within the area attached to
each of the distilleries. The petitioner admittedly made application to
grant licence to manufacture country mad~ liquor, obviously with
D Mahua flowers or molasses at Ujjain. The RDC established new distil-
lery at Ujjain in terms of the new policy, at its expense, and is
manufacturing and supplying the liquor. It vacated the old distillery at
Ujjain which we are informed that the building is still existing. RDC
had manfactured the spirit and country made liquor in terms of D-2
licence and supplied in terms of D-1 Jicence. The period of the licence
E also expired by efflux of time. Again there is change in the new policy
which is in vogue. The licensing period is for two years commencing
from April 1, 1991 to March 31, 1993. Admittedly, the petitioner had
not submitted any tender in terms of the new policy for manufacture of
rectified spirit or liquor for grant of D-2 and D-1 licences, the licences
have already been granted to the third parties and they are not before
F this court. Any direction in this regard would not only interfere with
the licences granted to them, but also create a hiatus in operational
system. This court cannot direct the State Govt. to create a new policy
of receiving private applications or to direct the Commissioner of
Excise to carve out a new supply area and to grant licence to the
petitioner. It is not possible to give such a direction for the reasons that
G the petitioner, admittedly, did not offer himself as a candidate for
consideration when tenders were called for licensing period commenc- y
ing from April l, 1991. As regards the Govt. Distilleries at Ratlam is
concerned for grant of D-1 (S) licence as requested for, we have no
sufficient material whether any arrangements have been made to any
other parties for supply area in that regard. Under these circums-
H tanccs, it is extremely difficult to accede to the request made by the
DOONGAJ! v. STATE OF M.P. (RAMASWAMY, J,] 499

counsel for the petitioner, Though the petitioner had established long A
career in the field to manufacture, supply and distribution of intoxi-
cants in the State of Madhya Pradesh for about 40 years, we cannot
issue any direction as asked for.

Under these circumstances we are constrained to dismiss the writ
B
petition, but without costs.

Y.L. Petition allowed.

,.