Supreme Court of India
STATE OF BIHAR AND OTHERSversusNIRMAL KUMAR GUPTA
- Citation
- 2013 INSC 20
- Decided
- 8 January 2013
- Disposal
- Appeal(s) allowed
- Bench
- K S RADHAKRISHNAN
Holding
The Supreme Court held that the default cannot be condoned and the licence fee liability arises from the date of settlement, not from the date of licence issuance.
Summary
The State of Bihar settled a group of excise shops for retail sale of country liquor in favour of Nirmal Kumar Gupta on 5 June 2006. Under the Bihar Excise (Settlement of Licences for Retail Sale of Country/Spiced Country Liquor) Rules, 2004, Gupta was required to deposit one‑fourth of the annual licence fee as advance security within ten days, but he paid the amount in three instalments, thereby defaulting under Rule 19. The licence was nevertheless issued on 5 July 2006 and the High Court held that the default was condoned, making Gupta liable for licence fee only from the date of issuance. On appeal, the Supreme Court held that Rule 20 mandates cancellation of settlement and licence for such default, and Rule 24 expressly makes the licence period commence from the date of settlement when settlement occurs mid‑year; consequently, the fee liability accrues from 5 June 2006 and the default cannot be condoned. The Court set aside the High Court judgment and restored the Excise Commissioner’s order.
Issues considered
- The default in payment of advance security under Rule 19 can be condoned by conduct.
- The licence fee liability under Rule 24 accrues from the date of settlement or from the date of licence issuance when settlement occurs mid‑excise year.
- The effect of Rules 19, 20 and 24 on cancellation of settlement and commencement of licence period.
Subjects
Excise lawLicence feeAdvance securityDefaultCondonationRule interpretationLiquor tradeAdministrative lawStatutory construction
Judgment
[2013] 1 S.C.R. 916
A STATE OF BIHAR AND OTHERS
v.
NIRMAL.KUMAR GUPTA
(Civil Appeal No. 128 of 2013)
JANUARY 08, 2013
B
[K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]
Bihar Excise (Settlement of Licences for Retail Sale of
Country/Spiced Country Liquor) Rules, 2004 - rr. 19, 20 and
C 24 - Settlement of excise shops in favour of auction-
purchaser - Default in payment of advance security - Despite
the default, licence issued - In view of the default, demand
for licence fee raised from the date of settlement till the date
of issuance of licence - High Court held that default would
D be deemed to be condoned as the licence was issued despite
the default - Held: The purchaser failed to comply with r. 19 -
The default cannot be deemed to be condoned in view of the
nature of trade in question - As per r. 24, the purchaser is
required to pay licence fee from the date of settlement -
E Hence, the demand for licence fee is justified.
Pursuant to sale notification, excise shops were
settled in favour of the respondent on 5th July, 2006. The
respondent was required to pay 1/4th of the annual
licence fee as advance security money. He failed to do
F so in time. He deposited the requisite amount in three
instalments. Licence was issued on 5th July, 2006. Since
the respondent failed to comply with the conditions of the
licen.ce ie. delay in payment of advance deposit, a
demand for licence fee was raised for the period
G commencing 5th June, 2006 to 5th July, 2006. High Court
allowed the writ petition of the respondent holding that
the default in payment of advance security amount would
be deemed to have been condoned in view of the fact
that despsite the default, licence was issued; and that the
H 916
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 917
respondent was liable to pay from the date of issuance A
of licence and not from the date of settlement. Hence the
present appeal.
Allowing the appeal, the Court
HELD: 1. The respondent was required to pay 1/4th B
of the annual licence fee as advance security money but
he failed to do so in time. He deposited the requisite
amount in three instalments. Thus, the respondent failed
to comply with r. 19 of Bihar Excise (Settlement of
Licences for Retail Sale of Country/Spiced Country C
Liquor) Rules, 2004. [Para 19] [926-D-F]
2. Rule 20 of 2004 Rules clearly lays the postulate
that if the advance security amount is not deposited in
accordance with the time limit prescribed u/r. 19, the D
settlement and the licence, if issued, shall stand cancelled
and the deposited sum, if any, shall be forfeited to the
Government. Thus, there is a distinction between
settlement and issue of licence. [Para 14] [924-G]
3. The principle of condonation of default by way of E
conduct cannot be attracted in the present case. On the
touchstone of the nature of the trade, the role of the StatE1;
the economic concept of the policy, limited attractability
of Article 14 of the Constitution as regards the legislation
or policy, the restriction inherent in the policy and the F
duty of the court, there could not have been condonation
of default. Such a concept is alien to the present nature
of trade and a licencee cannot claim any benefit under
the same, as the whole thing is governed by the
command of the Rules. [Paras 21 and 31] [927-G; 931-A- G
8, D]
Har Shandar and Ors. etc. v. ·The Deputy Excise and
Taxation Commissioner and Ors. etc. AIR 1975 SC 1121:
1975 (3) SCR 254; Mis. Khoday Distilleries Ltd. v. State of H
918 SUPREME COURT REPORTS [2013] 1 S.C.R.
A Karnataka (1995) 1 SCC 574: 1994 (4) Suppl. SCR 477 -
followed.
Amar Chandra Chakraborty v. The Collector of Excise,
Govt. of Tripura, Agarta/a and Ors. AIR 1972 SC 1863: 1973
B (1) SCR 533; Nashirwaretc. v. State of Madhya Pradesh and
Ors. AIR 1975 SC 360: 1975 (2) SCR 861 ; State of M.P.
and Ors. etc. v. Nandlal Jaiswal and Ors. etc. AIR 1987 SC
251: 1987 (1) SCR 1; Mis. Ugar Sugar Works Ltd. v. Delhi
Administration and Ors. AIR 2001 SC 1447: 2001 (2) SCR
630 ; State of M.P. and Ors. etc. etc. v. Nand/al Jaiswal and
C Ors. etc. etc. AIR 1987 SC 251: 1987 (1) SCR 1; P.N. Krishna
Lal and Ors. v. Govt. of Kera/a and Anr. 1995 Supp (2) SCC
187: 1994 (5) Suppl. SCR 526; Secretary to Govt., Tamil
Nadu and Anr. v. K. Vinayagamurthy AIR 2002 SC 2968:
2002 (1) Suppl. SCR 683; State of Punjab and Anr. v.
D Devans Modern Breweries Ltd. and Anr. (2004) 11 SCC
26: 2003 (5) Suppl. SCR 930 - relied on.
4. The interpretation placed by the High Court that
the auction-purchaser is liable to pay from the date of
E issuance of licence but not from the date of the settlement
cannot be accepted, as that runs counter to the plain
language of Rule 24. The respondent had availed the
benefit of the licence being fully aware of the Rules,
Notification and the terms incorporated in the licence.
F The Rules provide that he has to pay from the date of the
settlement and in the instant case, the settlement took
place on 5th June, 2006. In view of what has been
engrafted in the Rules, there cannot be any trace of doubt
that the respondent has to be made liable to pay the
G licence fee from the date of the settlement. [Para 31) [931-
B-E]
Case Law Reference:
1973 (1) SCR 533 relied on Para 21
H 1975 (2) SCR 861 relied on Para 22
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 919
1975 (3) SCR 254 followed Para 23 A
1987 (1) SCR 1 relied on Para 24
1994 (4) Suppl. SCR 477followed Para 25
2001 (2) SCR 630 relied on Para 26 B
1987 (1) SCR 1 relied on Para 27
1994 (5) Suppl. SCR 526 relied on Para 28
2002 (1) Suppl. SCR 683relied on Para 29
c
2003 (5) Suppl. SCR 930 relied on Para 30
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 128
of 2013.
From the Judgment & Order dated 18.11.2008 of the High D
Court of Judicature at Patna in C.W.J.C., No. 16577 of 2008.
Gopal Singh for the Appellants.
Shantanu Sagar, Priti Rashmi, Smarhar Singh, T. Mahipal
for the Respondent. E
The Judgment of the Court was delivered by
DIPAK MISRA, J. 1. Leave granted.
2. The pivotal issue that emerges for consideration in this F
appeal is whether the Division Bench of the High Court of
Judicature at Patna has correctly interpreted the effect and
impact of the Bihar Excise (Settlement of Licences for retail sale
of country/spiced country liquor) Rules, 2004 (for short "the
Rules") and the sale notification published by the Collector of G
Kishanganj in Excise Form 127 for various excise shops in
groups in the said district for the year 2006-07 and the terms
of licence.
3. As the factual matrix would exposit, the Collector, H
920 SUPREME COURT REPORTS [2013] 1 S.C.R.
A Kishanganj, got the sale notification in Excise Form 127 issued
for settlement of various excise shops in various groups in the
district of Kishanganj for the financial year 2006-07 which
stipulated that the settlement shall be made on 23rd March,
2006 on auction-cum-tender basis and, accordingly,
B applications were invited from interested persons. As the
settlement could not be effected in respect of group 'ka' shops
in the said district, the Collector issued a second notification
on 17th May, 2006 for the said group 'ka' which consisted of
six country spirit shops and three spiced country spirit shops.
C On 5th June, 2006, the group 'ka' excise shops were settled
in favour of the respondent at a monthly licence fee of
Rs.8,29,600/-. The respondent deposited the advance security
of Rs.8,29,594/- on 7th June, 2006 and further Rs.8,29,600/-
on 22nd June, 2006. The Collector, Kishanganj moved the
Commissioner for his approval and the same was granted on
D 1st July, 2006 in the office of the Collector on 5th July, 2006
and on that day itself, the licence was issued in favour of the
respondent-licencee. It is the case of the appellant that as the
respondent did not deposit the requisite 1/4th amount of the
annual licence fee as advance security as prescribed under the
E Rules but did so in three instalments, there was delay in
obtaining the approval from the Excise Commissioner in terms
of Rule 17(kha) of the Rules. Despite the delay in the payment
of the advance deposit, the Collector had recommended his
case for approval and, eventually, the Commissioner approved
F the grant of licence in respect of group 'ka' shops and,
ultimately, the licence was issued, as stated earlier, on 5th July,
2006.
4. As there was breach of the conditions of the licence, a
G demand was raised for the period commencing 5th June, 2006
to 5th July, 2006 by the Excise Superintendent, Araria-cum-
Kishanganj on 27th March, 2007. On receipt of the demand
notice, the respondent moved the Excise Superintendent on
29th April, 2007 asking him to withdraw the demand on the
H ground that he had not utilized the privilege during that period.
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 921
[DIPAK MISRA, J.]
Thereafter, he challenged the demand notice before the Excise A
Commissioner, who rejected the application vide order dated
18th September, 2008. Being grieved by the said order he
moved the High Court invoking the writ jurisdiction in CWJC
No. 16577 of 2008.
B
5. The High Court referred to Rules 16, 17, 20, 22 and 24
and recorded its opinion in the following manner: -
"That group of shops have been settled in favour of the
petitioner in the midst of excise year, is not in dispute. It
is also a fact that on 5th June, 2006, the bid made by the C
petitioner for group 'ka' excise shops of Kishanganj
District was highest and accepted by the auctioning
authority by such acceptance is subject to approval of the
Excise Commissioner. There also does not seem to be
any dispute that there was some default on the part of the D
petitioner in payment of the advance security amount.
However. the default seems to have been condoned as
despite the said default. his bid dated 5th June. 2006 was
not cancelled and licence was issued in Form 26C of the
Rules on 5th July. 2006. Rules 16 and 17 of the Rules, E
·when read together, would show that the final acceptance
of the bid by the auctioning authority, by itself, does not
entitle the bidder to get the licence as the said bid has to
be accepted by the Commissioner of Excise and only after
it is accepted by the Commissioner, then the licence is F
issued. In the backdrop of the aforesaid legal position,
when we turn to the facts of the present case, it would be
seen that although highest bid of the petitioner was
accepted on 5th June, 2006 but it was only on 30th June,
. 2006 that the Licensing Authority recommended to the G
Commissioner of Excise for approval of settlement and it
was approved by the Excise Commissioner, Bihar on 1st
July, 2006 and after receipt of the approval from the Excise
Commissioner on 5th July, 2006, the licence was issued
by the Licensing Authority on that date. Surely. in the H
922 SUPREME COURT REPORTS [2013] 1 S.C.R.
A backdrop of the facts that the licence was issued on 5th
July, 2006 the petitioner could not have been fastened with
the liability to pay licence fee from 5th June. 2006."
[Underlining is ours]
B 6. Questioning the correctness of the aforesaid conclusion,
it is submitted by Mr. Gopal Singh, learned counsel for the State
of Bihar, that the High Court has fallen into error by construing
that the default has been condoned though there is no concept
of condonation in such a trade. It is urged by him that as the
C requisite advance licence fee was not deposited as per the
Rules, the approval could not be obtained earlier and hence,
the Department, not being at fault, should not suffer the loss of
revenue more so when the licencee had accepted the
conditions enumerated in the licence. That apart, submits Mr.
D Singh, as per the Rules, in such a situation, the respondent was
legally bound to pay the licence fee from the date of settlement.
7. Mr. Shantanu Sagar, learned counsel appearing for the
respondent, per contra, has submitted that the High Court has
E correctly determined the controversy that the liability would be
from the date of issue of the licence and not earlier than that,
for unless the licence is issued, he cannot trade in liquor and
further it cannot be said that the State has parted with the
exclusive privilege.
F 8. To appreciate the controversy, it is necessary to refer to
certain Rules. Rule 16 of the Rules deals with the acceptance
of bid or tenders. It reads as follows: -
"16. Acceptance of bid or tenders.- (1) The Auctioning
G
Authority shall not be bound to accept the highest bid or
tender or any bid. If the highest bid or tender is not
accepted, the licensing officer shall instantaneously declare
the date of fresh auction, mentioning the reasons. In such
a circumstance, the entire deposited advance money will
be refunded to those applicants who do not want to
H
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 923
[DIPAK MISRA, J.]
participate in subsequent auction. A
(2) If the bid amount in any" auction is finally accepted, any
subsequent offer with regard to that bid sh~ll not be
considered. No further negotiation shall be entertained by
the Licensing Authority or the officer conducting the
8
auction."
9. Rule 17 of the Rules which provides for final acceptance
of the bid is as follows: -
"17. Final acceptance of bid. - (a) The recommendation c
to grant exclusive privilege of retail sale for the shop or
group of shops to the person bidding highest, and
acceptance under Rule 16, shall be sent to the
Commissioner of Excise by the Licensing Officer, and
after his acceptance a licence will be issued. 0
(b) The amount of highest bid, accepted will be the annual
amount of licence fee."
10. On a perusal of the aforesaid two Rules, it is vivid that
the Licensing Officer conducting auction accepts the bid and, E
thereafter, sends his recommendation for grant of exclusive
privilege of retail sale for the shops or group of shops to the
Commissioner and after his acceptance, the licence is issued.
The pertinent part of this Rule is that the amount of highest bid
accepted would be the annual amount of licence fee. F
11. Rule 19 provides for payment of advance security in
the manner prescribed therein. The said Rule is reproduced
hereinbelow: -
"19. Payment of Advance Security. - After the G
declaration of acceptance of the highest bid the Licensing
Authority, one fourth, portion of the annual licence fee shall
be paid by the highest bidder as advance security in the
following manner for due execution of a contract: -
H
924 SUPREME COURT REPORTS [2013] 1 S.C.R.
A (a) An amount equivalent to sixth portion of annual
licence fee shall be immediately deposited in cash
or in the form of Bank Draft. The amount of cash/
Bank Draft and that of advance money deposited
previously under Rule 11 (a) and Rule 11 (c)
B respectively, shall be adjusted in part from security
amount.
(b) The payable remaining amount on account of
advance security shall have to be deposited within
ten days of auction or before commencement of the
c licence whichever is earlier."
12. On a plain reading of the said Rule, it is manifest that
the highest bidder has to immediately deposit one fourth of the
annual licence fee as advance security money in the manner
D provided in sub-clauses (a) and (b) of the Rule.
13. Rule 20 deals with the consequences of default in
advance security. It reads as under: -
"20. Default in advance security. - In case of failure to
E deposit the amount of advance security, as mentioned in
Rule 19, within the prescribed time, the settlement and the
licence, if issued, shall stand cancelled and the deposited
amount, if any, shall be forfeited to the Government. In such
a circumstance, a re-auction or alternative arrangement
F shall be made by the Licensing Authority."
14. The aforesaid Rule, when properly scrutinized, clearly
lays the postulate that if the advance security amount is not
deposited in accordance with the time limit prescribed under
G Rule 19, the settlement and the licence, if issued, shall stand
cancelled and the deposited sum, if any, shall be forfeited to
the Government. Thus, there is a distinction between settlement
and issue of licence.
15. Rule 23 deals with adjustmenUrefund of advance
H
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 925
[DIPAK MISRA, J.]
security amount. It stipulates that the security amount referred A
to in Rule 19 shall be refunded at the end of the settlement
period if all the dues and claims of the State Government with
regard to the auctioned shop or group of shops have already
been paid by the licencee.
B
16. Rule 24 deals with the commencement of the period
of licence. It is as follows: -
"24. Commencement of the period of licence. - A
licence issued in favour of any auction-purchaser shall be
effective from 1st April of the excise year unless the C
Licensing Authority orders otherwise. The auction-
purchaser shall be liable to pay the bid money from the first
day of the licence period, even if the licence has been
issued thereafter.
D
Provided that if any shop or a group of shops is
settled in the midst of the excise year, the licence
shall commence from the date of settlement of the
shop or the group of shops.
The Licensing Authority shall mention details of the shops/ E
licences to be settled and annual minimum guaranteed
quantity to be lifted under those licences and the reserved
fee thereof, in the sale notification for every excise year."
17. The said Rule has to be carefully x-rayed and F
understood. It clearly lays down that the licence shall be
effective from 1st April of the excise year and the auction-
purchaser shall be liable to pay the bid money from the first day
of the licence period, even if the licen~e has been issued
thereafter. The proviso further stipulates that if any shop or a G
group of shops is settled in the midst of the excise year, the
licence shall commence from the date of settlement of the shop
or the group of shops.
18. The High Court, interpreting the Rule position, has
opined that the shops were settled in favour of the respondent H
926 SUPREME COURT REPORTS [2013] 1 S.C.R.
A in the midst of the year, i.e., on 5th June, 2006, and after
obtaining the approval on 1st July, 2006 from the Excise
Commissioner, the licence was issued by the Licensing
Authority on 5th July, 2006, and, therefore, the demand of
licence fee for the period from 5th June, 2006 to 5th July, 2006
s is not sustainable.
19. As the factual matrix would reveal, the notification in
Form No. 127 was issued on 23rd March, 2006. The terms and
conditions of the settlement of excise shops were duly
incorporated in the sale notification and as per Rule 8, the terms
C and conditions mentioned in the notification are deemed to be
included in the conditions of the licence. As per the first
notification, all the three country spirit shops could not be settled
and further steps were taken for settlement and, eventually, the
bid of the respondent was accepted on 5th June, 2006 with the
D annual licence fee of Rs.99,55,200/- or at a monthly fee of
Rs.8,29,600/-. The respondent was required to pay 1/4th of the
annual licence fee as advance security money but he failed to
do so in time. He deposited the requisite amount in three
instalments, i.e., first on 7th June, 2006, second on 22nd June,
E 2006 and third on 17th July, 2006. As per Rule 19(a), he was
required to deposit 1/6th portion of the annual licence fee
immediately in cash or in the form of bank draft. The remaining
amount of advance security was to be deposited within ten days
of the auction or before the commencement of the licence.
F Thus, the respondent failed to comply with the said Rule.
However, the Collector recommended his case on 30th June,
2006 which was accepted on 1st July, 2006 and the licence
was issued on 5th July, 2006. It is worthy to note that thereafter,
demand notice of Rs.16,03,893/- was issued by the Excise
G Superintendent. The Commissioner took note of the fact that
out of Rs.74,36,071/-, the licencee had paid Rs.66,36,794/-
and, hence, a sum of Rs.7,99,277/- remained to be paid. Be it
noted, on 3rd March, 2007, the licence was cancelled for
breach of other conditions and in the present case, we are not
H concerned with those conditions, for the controversy in
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 927
[DIPAK MISRA, J.]
praesenti only relates to the demand commencing 5th June, A
2006 to 5th July, 2006.
20. The High Court has opined that the State had not
parted with the exclusive privilege till the licence was issued.
Under Rule 24, a licence issued in favour of the auction-
8
purchaser is effective from 1st April of the excise year unless
the Licensing Authority orders otherwise and the auction
purchaser is liable to pay the bid money from the first day of
the licence period even if the licence has been issued
thereafter. That apart, he is supposed to pay the licence fee C
from the commencement of the settlement period and the
licence commences from the date of the settlement. In the case
at hand, it was settled on 5th June, 2006. The licence was
issued on 5th July, 2006. The principle of condonation of default
has been taken recourse to by the High Court on the foundation
that despite default in making deposit of advance security, the D
licensing officer recommended his case for approval to the
Commissioner of Excise. The default, as we perceive, comes
into play if there is violation of Rule 19 which stipulates for
advance security. There is no dispute over the fact that there
was delay. The respondent was clearly responsible for the E
same. The licensing officer thought it appropriate to recommend
his case and the Excise Commissioner did approve it and on
receipt of the approval, the licence was issued on the same
day. The respondent accepted the licence knowing fully well the
terms and conditions of the licence and that he has to pay the F
licence fee from the date of the settlement.
21. At this juncture, we may usefully address to the issue
whether in a case of this nature, the principle of condonation
of default by way of conduct can be attracted. First of all, under G
the Rules, the authorities are entitled to forfeit the amount
deposited when there is non-compliance of the Rules. It is to
be borne in mind that the nature of the trade has also its own
significance. In Amar Chandra Chakraborty v. The Collector
H
928 SUPREME COURT REPORTS [2013] 1 S.C.R.
A. of Excise, Govt. of Tripura, Agarta/a and Others1, this Court
held thus: -
"Trade or business in country liquor has from its inherent
nature been treated by the State and the society as a
special category requiring legislative control which has
B
been in force in the whole of India since several decades.
In view of the injurious effect of excessive consumption of
liquor on health this trade or business must be treated as
a class by itself and it cannot be treated on the same basis
as other trades while considering Article 14."
c
· 22. In the case of Nashirwar etc. v. State of Madhya
Pradesh and Others2, this Court opined that the State has the
exclusive right or privilege in manufacturing and selling of liquor
and a citizen has no fundamental right to do business in liquor.
o It has been further ruled that it is within the police power of the
State to enforce public morality by prohibiting trade in noxious
or dangerous goods.
23. In Har Shandar and Others etc. v. The Deputy Excise
E and Taxation Commissioner and Others etc. 3 , the Constitution
Bench reiterated the principles that there is no fundamental right
to do trade or business in intoxicant and the State has the
authority to prohibit every form of activity in relation to intoxicant
including manufacture, storage, export, import, sale and
possession. It has also been laid down that a wider right to
F prohibit absolutely would include the narrower right to permit
dealings in intoxicants in such terms of general application as
the State deems expedient.
24. In State of M.P. and Others etc. v. Nandlal Jaiswa/ and
G Others etc. 4, this Court held that trading in liquor is inherently
punitive in nature.
1. AIR 1972 SC 1863.
2. AIR\1975 SC 360.
3. AIR 1975 SC 1121.
H 4. AIR 1987 SC 251.
STATE OF BIHAR v. NIRMAL KUMAR GUPTA 929
[DIPAK MISRA, J.]
25. In M/s. Khoday Distilleries Ltd. v. State of Karnataka 5, A
the Constitution Bench has ruled that the right to carry on
occupation, trade or busin(;'!ss does not extend to trade or
business or any activities which are injurious and against the
welfare of the general public. It is further held therein that a
citizen has no fundamental right to do business in intoxicant as B
liquor:
26. In M/s. Ugar Sugar Works Ltd. v. Delhi Administration
and Others6 , this Court reiterated the said principle and
emphasized on the regulatory powers of the State.
c
27. In State of M.P. and Ors. etc. etc. v. Nandlal Jaiswa/
and Ors. etc. etc. 7, a two-Judge Bench, while expressing the
view that Article 14 of the Constitution is attracted to grant of
exclusive right or privilege for manufacture and sale of liquor
as it involves the State largesse, has stated thus:- D
"33. But, while considering the applicability of Article 14
in such a case, we must bear in mind that, having regard
to the nature of the trade or business, the Court would be
slow to interfere with the policy laid down by the State E
Government for grant of licences for manufacture and sale
of liquor. The Court would. in view of the inherently
pernicious nature of the commodity allow a large measure
of latitude to the State Government in determining its policy
of regulating, manufacture and trade in liquor. Moreover. F
the grant of licences for manufacture and sale of liquor
would essentially be a matter of economic policy where the
Court would hesitate to intervene and strike down what the
State Government had done, unless it appears to be
plainly arbitrary, irrational or ma/a fide."
G
[emphasis supplied]
5. (1995) 1 sec 574.
6. AIR 2001 SC 1447.
7. AIR 1987 SC 251. H
930 SUPREME COURT REPORTS [2013] 1 S.C.R.
A 28. In P.N. Krishna Lal and Ors. v. Govt. of Kera/a and
Anr. 8, the Court expressed thus:-
"28 .... dealing in liquor inherently pernicious or dangerous
goods which endangers the community or subversive of
morale, is within the legislative competence under the Act.
B
The State has thereby the power to prohibit trade or
business which is injurious to the health and welfare of the
public and the elimination and exclusion from the business
is inherent in the nature of liquor business. The power of
the legislature to evolve the policy and its competence to
c raise presumptive evidence should be considered from
this scenario."
[emphasis supplied]
D 29. In Secretary to Govt., Tamil Nadu and Anr. v. K.
Vinayagamurth-y9, it has been held as follows:
"7 .... So far as the trade in noxious or dangerous goods are
concerned, no citizen can claim to have trade in the same
and the intoxicating liquor being a noxious material, no
E citizen can claim any inherent right td sell intoxicating liquor
by retail. It cannot be claimed as ~ privilege of a citizen of
a State. That being the position, any restriction which the
State brings forth, must be a reasonable restriction within
the meaning of Article 19(6) and reasonableness of the
F restriction would differ from trade to trade and no hard and
fast rule concerning all trades can be laid down .... "
30. In State of Punjab and Anr. v. Devans Modern
Breweries Ltd. and Anr. 10, it has been reiterated that trade in
G liquor is considered inherently noxious and pernicious.
31. We have referred to the aforesaid decisions to
8. 1995 Supp (2) sec 187.
9. AIR 2002 SC 2968.
H 10. (2004) 11 sec 26.
. STATE OF BIHAR v. NIRMAL KUMAR GUPTA 931
[DIPAK MISRA, J.]
accentuate the nature of the trade, the role of the State, the A
economic concept of the policy, limited attractability of Article
14 of the Constitution as regards the legislation or policy, the
restriction inherent in the policy and the duty of the court. On
the aforesaid touchstone, we are required to see whether the
doctrine of condonation by conduct, especially in the present B
case, could have been taken recourse to by the High Court. The
respondent had availed the benefit of the licence being fully
aware of the Rules, notification and the terms incorporated in
the licence. The Rules provide that he has to pay from the date
of the settlement and in this case, the settlement took place on c
5th June, 2006. In view of what has been engrafted in the Rules,
there cannot be any trace of doubt that the respondent has to
be made liable to pay the licence fee from the date of the
settlement. There could not have been condonation of default.
Such a concept is alien to the present nature of trade and a
0
licencee cannot claim any benefit under the same as the whole
thing is governed by the command of the Rules. That apart, we
are unable to subscribe to the interpretation placed by the High
Court that the auction-purchaser is liable to pay from the date
of issuance of licence but not from the date of the settlement
as that runs counter to the plain language of Rule 24. Reading E
the Rules in a comprehensive manner in juxtaposition with the
notification which forms the terms and conditions of the licence
and the nature of the trade, the irresistible conclusion is that
the liability accrued from the date of the settlement and,
therefore, we find that the order passed by the Excise F
Commissioner was just and proper and there was no warrant
on the part of the High Court to interfere with the same.
32. Consequently, the appeal is allowed, the order passed
by the High Court is ~et asid~ and that of the Excise - G
Commissioner is restored. The parties shall bear their
respective costs.
K.K.T. Appeal allowed.
H
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