STATE OF KERALA AND OTHERSversusKANDATH DISTILLERIES

                     [2013] 4 S.C.R. 1053


             STATE OF KERALA AND OTHERS                                A
                                v.
                  KANDATH DISTILLERIES
               (Civil Appeal No. 1642 of 2013)
                     FEBRUARY 22, 2013
                                                                       B
    [K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]

     Liquor - Application for licence for setting up distillery unit
- Non-consideration of - After intervention of the Court,
application considered and then rejected by competent                  C
authority - Courts below quashed the rejection order directing
grant of the licence - On appeal, held: Courts below wrongly
directed grant of distillery licence by issuing writ of mandamus
- Grant of the same was within the discretionary power of the
competent authority - Court should not have interfered with the        D
same, unless the applicant established a better claim over
others, which the applicant failed - Abkari Act - s. 14 - Foreign
Liquor (Compounding, Blending, Bottling) Rules, 1975 - r.4.

      Constitution of India, 1950 - Art.19(1)(g) and Art.47 -          E
Fundamental right to trade or business in liquor - Held: In view
of the directive principles provided under Art.47, State has
exclusive right or privilege in respect of portable liquor - A
citizen has, therefore, no right to trade or business in liquor
as a beverage and the activities, which are res extra
commercium.                                                            F

     Writ - Mandamus - A Writ of Mandamus can be issued
only when a legal right is established against an authority who
has legal duty emanating in discharge of public duty or
operation of law - Court to issue the writ of mandamus keeping         G
in mind the legislative scheme, its object and purpose, the
subject matter, the evil sought to be remedied, State's
exclusive privilege etc.

                               1053                                    H
    1054     SUPREME COURT REPORTS                (2013] 4 S.C.R.


A       Administrative Law:

         Policy decision - Liquor policy of State - Judicial review
    of - Held: Monopoly in the trade of liquor is with the State -
    State has the power to frame and reframe, change and
    rechange, adjust and readjust its policy, which cannot be
8
    declared as illegal or arbitrary by the Court on the ground that
    earlier Policy was better - Judicial Review.

        Statutory discretion - Exercise of - Exercise of the
  discretion must be based on reasonable grounds and cannot
C lapse into the arbitrariness or caprice anathema to the rule
  of law envisaged under Art.14 of the Constitution - However,
  the onus to prove the discrimination is on the complainant -
  Abkari Act - s.14 - Foreign Liquor (Compounding Blending,
  Bottling) Rules, 1975 - r.4. - Constitution of India, 1950 - Art.
D 14 - Evidence Act, 1872 - s.10 - Onus to prove.

      Judicial review - Of discretionary decision - Court cannot
  impede the exercise of discretion of an authority acting under
  the Statute by issuing writ of Mandamus - Writ - Writ of
E mandamus.

       The respondent applied on 12.1.1987, for licence for
  establishing distillery unit in a particular district. In the
  year 1998 and prior thereto, large number of applications
  for setting up of distillery units were received. State
F Government granted licence to 4 applicants. Out of them
  two licences, were for the establishment of the unit, in the
  district for which the respondent had applied for.
      Respondent challenged the non-consideration of his
G application. Initially the State communicated the
  respondent that his application would not be considered
  in view of the policy decision not to grant further
  licences. After intervention of the Court, the State
  considered the application of the respondent and rejected
H the same. Respondent challenged the rejection of his
  STATE OF KERALA v. KANDATH DISTILLERIES               1055


application. Single Judge of High Court allowed the writ        A
petition and directed the State to grant licence applied for,
by the respondent. In writ appeal, Division Bench of High
Court upheld the order of Single Judge. Hence the
present appeal.
                                                                B
    Allowing the appeal, the Court

     HELD: 1. Article 47 is one of the Directive Principles
of State Policy which is fundamental in the governance
of the country and the State has the power to completely
prohibit the manufacture, sale, possession, distribution        C
and consumption of liquor as a beverage because it is
inherently dangerous to the human health. Consequently,
it is the privilege of the State and it is for the State to
decide whether it should part with that privilege, which
depends upon the liquor policy of the State. State has,         D
therefore, the exclusive right or privilege in respect of
portable liquor. A citizen has, therefore, no fundamental
right to trade or business in liquor as a beverage and the
activities, which are res extra commercium, cannot be
carried on by any citizen and the State can prohibit            E
completely trade or business in portable liquor and the
State can also create a monopoly in itself for the trade or
business in such liquor. State can also impose
restrictions and limitations on the trade or business in
liquor as a beverage, which restrictions are in nature          F
different from those imposed on trade or business in
legitimate activities and goods and articles which are res
commercium. [Para 21] [1072-G-H; 1073-A-D]

    1.2. Legislature, in its wisdom, has given considerable
amount of freedom to the decision makers, the                   G
Commissioner and the State Government since they are
conferred with the power to deal with an article which is
inherently injurious to human health. The powers
conferred on the Commissioner and the State Government
under s.14 of the Abkari Act as well as Rule 4 are              H·
    1056    SUPREME COURT REPORTS               (2013] 4 S.C.R.


A discretionary in nature. [Paras 22 and 23] [1073-F-H]

       Vithal Dattatraya Kulkarni and Ors. vs. Shamrao
  Tukaram Power SMT and Ors. (1979) 3 SCC 212: 1979 (3)
  SCR 572; P.N. Kaushal and Ors. vs. Union of India and Ors.
  (1978) 3 SCC 558: 1979 {1) SCR 122; Krishna Kumar
8
  Narula etc. vs. State of Jammu and Kashmir and Ors. AIR
  1967 SC 1368: 1967 SCR 50; Nashirwarand Others vs. State
  of Madhya Pradesh and Ors. (1975) 1 SCC 29: 1975 (2) SCR
  861; State of A. P. and Ors. vs. McDowell and Co and Ors.
C (1996) 3 SCC 709: 1996 (3) SCR 721; Khoday Distilleries
  Ltd. and Ors. vs. State of Kamataka and Ors. (1995) 1 SCC
  574: 1994 (4) Suppl. SCR 477 - relied on.

         2. Liquor policy of State is synonymous or always
    closely associated with the policy of the Statute dealing
D   with liquor or such obnoxious subjects. Monopoly in the
    trade of liquor is with the State and it is only a privilege
    that a licensee has in the matter of manufacturing and
    vending in liquor. Courts are also not expected to
    express their opinion as to whether at a particular point
E   of time or in a particular situation, any such policy should
    have been adopted or not. In the instant case, 1998 Policy
    had life only in that year and if any rights accrued to any
    party, that had to be adjudicated then and there. Writ
    Petition was moved only in the year 2000, by then, policy
F   had been changed because 1999 liquor policy was total
    ban, so also subsequent liquor policies. It is trite law that
    a Court of Law is not expected to propel into "the
    unchartered ocean" of State's Policies. State has the
    power to frame and refrarne, change and re-changt-,
    adjust and readjust policy, which cannot be declared as
G   illegal or arbitrary on the ground that the earlier policy
    was a better and suited to the prevailing situations.
    Situation which exited in the year 1998 had its natural
    death and cannot be revised in the year 2013, when there
    is total ban. [Para 24] [1074-A-E]
H
  STATE OF KERALA v. KANDATH DISTILLERIES             1057


   State of Maharashtra vs. Nagpur Distilleries (2006) 5      A
sec 112 - relied on.
    3.1. Discretionary power implies freedom of choice,
a competent authority may decide whether or not to act.
The legal concept of discretion implies power to make a
                                                              B
choice between alternative courses of action. Statute has
conferred discretionary power on the Commissioner and
State Government but not discretion coupled with duty
because they are dealing with a subject matter on which
State has exclusive privilege. Permissive language used
by the Statute in Section 14 of the Act and the rule          C
making authority in Rule 4 of Foreign Liquor
(Compounding, Blending, Bottling) Rules, 1975 gives the
State Government and the Commissioner, no mandatory
duty or obligation to grant the licence except perh.fps to
consider the application, if the liquor policy permits so.    D
(Para 25) [1074-F-H]
     3.2. The powers, conferred on the Commissioner as
well as the Government, have to be understood in the
light of the Constitutional scheme bearing in mind the        E
fact that the trade or business which is inherently harmful
can always be restricted, curtailed or prohibited by the
State, since It is the exclusive privilege of the State. No
duty is, therefore, cast on the Commissioner to grant a
licence for establishing a distillery unit and no right is
                                                              F
conferred on any citizen to claim it as a matter of right.
State can always adopt a "restrictive policy", e.g.,
reducing the number of licences in a particular district or
a particular area, or not to grant any licence at all in a
particular district, even in cases where the applicants
have satisfied all the conditions stipulated in the rules     G
and the policy permits granting of licences. In other
words, the satisfaction of the conditions laid down in
1975 Rules would not entitle an applicant as a matter of
right to claim a distillery licence which is within the
exclusive privilege of the State. [Para 26) [1075-B-E]        H
    1058    SUPREME COURT REPORTS               [2013] 4 S.C.R.

A      3.3. Discretionary power leaves the donee of the
  power free to use or not to use it at his discretion. The
  exercise of statutory discretion must be based on
  reasonable grounds and cannot lapse into the
  arbitrariness or caprice anathema to the rule of law
B envisaged in Article 14 of the Constitution. It is trite law
  that, though, no citizen has a legal right to claim a
  distillery licence as a matter of right and the
  Commissioner or the State Government is entitled to
  either not to entertain or reject the application, they
c cannot enter into a relationship by arbitrarily choosing
  any person they like or discriminate between persons
  similarly circumscribed. In such a situation, it is for the
  party who complains to establish that a discriminatory
  treatment has been meted out to him as against similarly
  placed persons but cannot demand a licence for
0
  establishing a distillery unit, as a matter of right. [Para 29]
  [1076-G-H; 1077-A-C]
      Rani Orig Raj Kuer vs. Raja Sri Amar Krishna Narain
  Singh AIR1960 SC 444: 1960 SCR 431; State of Madhya
E Pradesh vs.Nandlal Jaiswal (1986) 4 SCC 566: 1987 (1)
  SCR 1 - relied on.
       3.4. The Respondent could lay a claim only if it
  establishes that a preferential treatment has been meted
  out to other two applicants, while granting licences for
F establishing the respective distillery units on the ground
  of discrimination violating Article 14 of the Constitution
  of India. Respondent has never challenged the distillery
  licences granted to them, but only prayed for another
  licence for it as well which cannot be claimed as a matter
G of right. Citizens cannot have a fundamental right to trade
  or carry on business in the properties or rights belonging
  to the State nor can there be any infringement of Article
  14, if the State prefers other applicants for the grant of
  licence, during the pendency of some other applications,
H unless an applicant establishes a better claim over
  STATE OF KERALA v. KANDATH DISTILLERIES              1059


others. [Para 32] [1078-8-E]                                   A
     3.5. Legislature when confers a discretionary power
on an authority, it has to be exercised by it in its
discretion, the decision ought to be that of the authority
concerned and not that of the Court. Court would not
                                                               8
interfere with or probe into the merits of the decision
made by an authority in exercise of its discretion. Court
cannot impede the exercise of discretion of an authority
acting under the Statute by issuance of a Writ of
Mandamus. A Writ of Mandamus can be issued in favour
of an applicant who establishes a legal right in himself       C
and is issued against an authority which has a legal duty
to perform, but has failed and/or neglected to do so, but
such a legal duty should emanate either in discharge of
the public duty or operation of law. Since there is no legal
duty cast on the Commissioner or the State Government          D
exercising powers under Section 14 of the Act read with
Rule 4 of the 1975 Rules to grant the licence applied for,
the High Court cannot direct the State Government to part
with its exclusive privilege. At best, it can direct
consideration of an application for licence. If the High       E
Court feels, in spite of its direction, the application has
not been properly considered or arbitrarily rejected, the
High Court is not powerless to deal with such a situation
that does not mean that the High Court can bend or break
the law. Before issuing a writ of mandamus, the High           F
Court should have, at the back of its mind, the legislative
scheme, its object and purpose, the subject matter, the
evil sought to be remedied, State's exclusive privilege
etc. and not to be carried away by the idiosyncrasies or
the ipse dixit of an officer who authored the order            G
challenged. Majesty of law is to be upheld not by bending
or breaking the law but by strengthening the law. [Para
27] [1075-F-H; 1076-A-E]
    4. In the facts of the case, it cannot be said that the
application of the respondent was rejected solely on the       H
    1060    SUPREME COURT REPORTS                [2013] 4 S.C.R.


A ground that the application could not be treated as an
  application put forward by a firm based on a partnership
  deed, which came into existence on 10.4.1991, as per
  Clause 3 of the Partnership Deed but on various other
  grounds as well. The State Government considered the
B respondent's application dated 12.1.1987 with regard to
  the conditions that existed in the year 1998. The
  Government letter dated 28.6.1994 would indicate that,
  apart from the respondent, few other applications were
  also pending prior to the year 1994. Over and above, the
C State Government during the year 1998, received 52
  applications for establishing compounding, blending and
  bottling units in IMFLs in various parts of the State. This
  Court cannot activate an out-modeled, outdated,
  forgotten liquor policy of 1998, in the year 2013, by a Writ
  of Mandamus. Single Judge as well as the Division Bench
0
  of the High Court have overlooked the vital factors while
  issuing a Writ of Mandamus directing the State
  Government/ Commissioner to grant distillery licence to
  the respondent. [Paras 33 and 34] [1078-F-H; 1079-A-C]

E     Bihar Distillery and Anr. vs. Union of India and Ors. 1997
  (1) SCR 680; Comptroller and Auditor-General of India
  and Anr. vs. K.S. Jagannathan and Anr. (1986) 2 SCC 679:
  1986 (2) SCR 17; Harigovind Yadav vs. Rewa Sidhi Gramin
  Bank and Ors. (2006) 6 SCC 145: 2006 (2) Suppl. SCR 116;
F RBF Rig Corporation, Mumbai vs. The Commissioner of
  Customs (Imports), Mumbai (2011) 3 SCC 573: 2011 (2)
  SCR 691 - referred to.
                        Case Law Reference:
G       1997 (1) SCR 680           referred to          Para 3
        1986 (2) SCR 17            referred to          Para 17
        2006 (2) Suppl. SCR 116 referred to             Para 17
        2011 (2) SCR 691           relied on            Para 17
H
   STATE OF KERALA v. KANDATH DISTILLERIES                    1061

    1979 (3) SCR 572               relied on             Para 21       A
     1979 (1) SCR 122              relied on             Para 21
    "1967 SCR 50· -                refle1fon ·           Para 21
     1975 (2) SCR 861              relied on             Para 21       B
     1996 (3) SCR 721              relied on             Para 21
     1994 (4) Suppl. SCR 477 relied on                   Para 21
     2006 (1) Suppl. SCR 603 relied on                   Para 24
                                                                       c
     1960 SCR 431                  relied on             Para 29
     1987 (1) SCR 1                relied on             Para 30

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1642 of 2013.                                                          D
    From the Judgment & Order dated 22.01.2009 of the High
Court of Kerala at Emakulam in W.A. No. 716 of 2008.

     C.S. Rajan, Ramesh Babu M.R. for the Appellants.
                                                                       E
    George Poonthottam, George Mathew, Dileep Pillai, Usha
Nandini, Biju Raman, Ajay K. Jain, M.P. Vinod for the
Respondent.

     The Judgment of the Court was delivered by
                                                                       F
     K.S. RADHAKRISHNAN, J. 1. Leave granted.

     2. We are, in this appeal, concerned with the question
whether the High Court can issue a Writ of Mandamus under
Article 226 of the Constitution of India, directing the State to       G
part with its exclusive privilege, in the matter of granting licence
for establishing distilleries under the Foreign Liquor
(Compounding, Blending and Bottling) Rules, 1975 (for short
"1975 Rules") read with Section 14 of the Abkari Act (for short
"the Act").
                                                                       H
    1062     SUPREME COURT REPORTS                  [2013) 4 S.C.R.


A       3. Mis Kandath Distilleries, respondent herein, claimed to
  have submitted an application dated 12.1.1987 before the
  Commissioner of Excise for a licence to establish a
  compounding, blending and bottling unit in the Palakkad
  District. Few others had also filed similar applications for
B licence for setting up distillery units in the State of Kerala. All
  of them were directed to first obtain the approval of the
  Government of India for the setting up of new blending and
  bottling units and, thereafter, to approach the State Government.
  This C'Jurt, however, vide its judgment dated 29.1.1997 in Writ
c Petition No. 322 of 1996 (Bihar Distillery and Another v. Union
  of India and Others) took the view that the power to permit the
  establishment of any industry engaged in the manufacture of
  portable liquors, including Indian Made Foreign Liquors
  (IMFLs), beer, country liquor and other intoxicating drinks is
D exclusively vested in the respective State Governments. Further,
  it was also held that the power to prohibit and/or regulate the
  manufacture, production, sale, transport of consumption of such
  intoxicating liquors is equally that of the States.

          4. We notice, during the year 1998 and prior to that, the
E   Commissioner of Excise and the State Government had
    received large number of applications for setting up of distillery
    units in various parts of the State. The Commissioner of Excise
    or the State could not have entertained all those applications
    and granted the licences for the setting up of large number of
F   distillery units in the Sta.te. The State Government, however,
    entertained four appliqations favourably and accorded its
    approval under Section, 14 of the Act. The State Government,
    vide GO (Rt.) No. 291/98/TD dated 20.5.1998, examined the
    application submitted by M/s Amrut Distilleries in detail and
G   granted approval for issuing a licence by the Excise
    Commissioner for the establishment of a distillery unit for the
    manufacture of IMFLs at Kanjkode village in the Palakkad
    District. The Government also, vide its order dated 6.8.1998,
    examined the application of M/s Empee Distilleries, Madras,
H   and accorded approval for the grant of licence by the Excise
   STATE OF KERALA v. KANDATH DISTILLERIES                      1063
           [K.S. RADHAKRISHNAN, J.]
Commissioner for establishing a distillery unit at Kanjkode              A
village in the Palakad District. The application submitted by M/
s K. S. Distilleries, Kannur was also considered by the State
Government and granted permission to the Excise
Commissioner to issue a licence for a distillery unit to be
established at Kannur, vide order dated 18.8.1998. The                   B
application of Mis Elite Group of Companies was also
favourably considered by the Government and accorded
permission to the Excise Commissioner for issuing the
necessary licence for establishing a distillery unit at Trichur.

       5. Mis Kandath Distilleries (respondent) having noticed           C
that its application submitted in the year 1987 for setting up the
unit in the Palakkad District was not considered, filed a
Revision Petition before the Minister for Excise on 22.11.1998
to consider its application as well for the grant of licence for
establishing a distillery unit in the Palakkad district, though it       D
had not raised any dispute with regard to the grant of other two
distillery licences for setting up the units in the Palakkad District.

      6. We notice that the Excise Commissioner/State
Government had received, during the year 1998 and prior to               E
that, large number of applications for licences for establishing
distillery units in various districts in the State of Kerala. The
Government, therefore, constituted a Scrutiny/Selection
Committee to shortlist the applications received for setting up
of IMFL Units, as per G.O. (Rt.) No. 157/99/TD dated 3.3.1999.           F
The Government considered the recommendations of the
Committee in detail and, vide G.O. (Rt.)/689/99/TD dated
29.9.1999, took a policy decision not to grant any more
licences for setting up the distillery units in any part of the State.
The order was communicated to the respondent by the Joint
Excise Commissioner vide his letter dated 11.11.1999.                    G

     7. Respondent then preferred O.P. No. 7727 of 2000
before the High Court to quash the above mentioned
Government order dated 11.11.1999 contending that its
application also should have been considered along with the              H
    1064     SUPREME COURT REPORTS                  [2013] 4 S.C.R.


A   applications submitted by Mis Amrut Distilleries, Bangalore, M/
    s. Empee Distilleries, Madras, M/s. K. S. Distillery, Kannur and
    M/s. Elite Group of Companies, Thrissur, in the year 1998.
    Respondent, however, did not challenge the licences granted
    for establishing the units in the Palakkad District, the very same
8   district where it had applied for a licence. Learned single Judge
    quashed the letter dated 11.11.1999 issued by the Joint Excise
    Commissioner and directed the State Government to consider
    the application submitted by the respondent in the light of the
    conditions prevailing in the year 1998 vide his judgment dated
c   23.6.2004.

       8. The Excise Commissioner heard the respondent's
  representative on 18.10.2004 and, after obtaining the views of
  the State Government, rejected the application based on G.O.
  (Rt.) No. 689/99/TD dated 29.9.1999. Aggrieved by the
D communication received from the Excise Commissioner, the
  respondent filed a Representation on 20.2.2005 before the
  State Government, which was rejected by the Government vide
  its communication No. 4493/G3/2005/TD dated 1.9.2005.

E        9. Respondent then challenged the above mentioned
    orders by filing a Writ Petition No. 29092 of 2005. Learned
    single Judge vide his judgment dated 25.1.2006 quashed the
    above mentioned orders and passed the following order:

                "So, when this Court directed the Government to
F        consider the claim of the petitioner under Section 14 of the
         Abkari Act, with reference to the conditions obtained in
         1998, the Government decided the matter on the basis of
         the G.O. issued in 1999. So, the above quoted decision
         of the Government under Section 14 is unsustainable. It is
G        declared so. Since Ext.P12 is passed, based on the above
         quoted communication, it is quashed. Though the
         petitioner raised several contentions in Ext.P13 appeal,
         none of them was considered in Ext.P14. Accordingly,
         Ext.P14 is also quashed. The Government is directed to
H        reconsider the matter concerning grant of sanction under
   STATE OF KERALA v. KANDATH DISTILLERIES                    1065
           [K.S. RADHAKRISHNAN, J.]

      Section 14 of the Abkari Act in accordance with law in the A
      light of the directions in Ext.P11 judgment and also the
      above observations contained in this Judgment, within two
      months from the date of receipt of a copy of this.
     Judgment."
                                                                    B
      10. State Government, in pursuance to the directions given
by the learned single Judge in Writ Petition No. 29092 of 2005,
again considered the matter and took the view that the
Government has to make an "independent assessment of
eligibility" of the applicant for the grant of licence. Holding so, C
the Government passed an order on 16.3.2006. The operative
portion of the order reads as under:

       "Whenever, applications for Distillery & Compounding
 (Blending & Bottling) units are received, they are processed
separately. The decision taken in each application may be              D
based on the facts & the circumstances akin to the individual
application and may not be a common decision. Licenses were
given on the applications of Mis Amrut Distillery, Palakkad,
 Empee Distillery, Palakkad, Elite Distillery, Trissur & KS
 Distilery, Kannur during the period as alleged by the petitioner.     E
At the same time applications from Kandath Distillery, S.R.
Distillery, Sree Chakra Distillery, Rajadhani Distilleries etc. were
rejected. Government cannot grant the privilege to all those who
had applied for such licence, for a host of reasons. Restrictions
have to be imposed, which is permissible under the                     F
Constitution. The Government has with effect from 29/9/99
issued Government Order deciding not to grant fresh licenses
for Distillery and Compounding (Blending & bolting) unit. The
granting of licence for the Distillery & Compounding (blending
& bottling) units is a prerogative of the Government and not the       G
right of the petitioner. The directions and the communications
from the offices to the petitioner are only the statutory
requirements for processing the application and do not cast any
right or claim on the petitioner.

     In the above circumstances, Government finds no reasons           H
    1066     SUPREME COURT REPORTS                   [2013] 4 S.C.R.


A   to reconsider the request of the petitioner under section 14 of
    the Abkari Act. Request of the petitioner is settled accordingly,
    keeping in abeyance of the judgment of the Hon'ble High Court
    read 5th paper.

              The Excise Comm;ssioner will pass fresh orders on
B
        Ext.P1 within the time limit prescribed by the Hon'ble High
        Court."

        11. Respondent, noticing that the Government had not
  followed the directions given by the High Court while passing
C the order on 16.3.2006, filed Contempt Case (C) No. 521 of
  2006 before the High Court. Learned single Judge of the High
  Court felt that the State Government should have considered,
  the claim for licence, in the light of the conditions, which existed
  in the year 1998 and could have granted permission or rejected
D it, but referred to irrelevant matters. Learned single Judge felt
  that the Government had prima facie committed contempt of
  court by ignoring the directions contained in its earlier judgment
  in O.P. No. 29092 of 2005 and passed an order on 29.6.2006,
  placing the matter before the Division Bench of the High Court.
E
        12. The Division Bench of the High Court directed personal
  appearance of the Secretary to the Government who appeared
  before the Court on 9.8.2006 and offered unconditional apology
  and submitted that the order dated 16.3.2006 would be
F withdrawn and fresh orders would be passed, in conformity' with
  the judgment in O.P. No. 29092 of 2005. The contempt case
  was accordingly closed on 12.9.2006.

        13. The Government, later, passed a detailed order dated
    11.10.2006. The operative portion of the same reads as follows:
G
               "Government has examined the matter in detail with
         all available records and filed in the light of directions from
         the High Court of Kerala and it is found that partnership
         came into existence only on 10.4.91 as per clause no. 3
         of the partnership deed. Therefore, the application dated
H
  STATE OF KERALA v. KANDATH DISTILLERIES                 1067
          [K.S. RADHAKRISl!NAN, J.]

    12.11.87 cannot be treated as an application submitted         A
    by the partnership firm. Further, the alleged application
    dated 12.11.87 was already disposed of by the Board of
    Revenue by letter No. XC3-32739/93/L.Dis dated
    28.6.1994. thereafter, it is stated that the petitioner made
    an application on 21.11.1998 requesting to reconsider the      B
    application alleged to have been submitted by them on
    12.1.1987. It is contended that in the year 1998, four
    licenses were granted on 20.5.1998, 06.08.1998 and
    20.09.1998 respectively. From the files it is seen that the
    above licences were granted on applications which were         c
    submitted during 1995, 1996 and 1997 respectively.

           From 3.2.1998 to 21.11.1998 Government received
    52 applications for establishing compounding, blending
    and bottling units of Indian made foreign liquor. The Excise
    Commissioner as per letter No. XC3-15555/98 dated              D
    25.11.1998 reported that there was an unprecedented flow
    of application and the Government constituted a scrutiny
    committee as per GO (Rt) No. 157/99!TD dated 3.3.1999
    to shortlist the application. As on 21.11.1998 the date on
    which the petitioner made the application for compounding      E
    blending and bottling licence there were other 52
    applications and Government have not considered any
    one of them. Moreover, the application put in by the
    partnership firm byname M/s. Kandath Distilleries on
    12.1.1987 cannot be treated as an application put in by        F
    the firm based on a partnership deed which came into
    existence on 10.4.1991 as per Clause 3 of the Partnership
    Deed.

          In the above circumstances the application put in by
    M/s Kandath Distilleries on 21.11.1998 does not merit          G
    consideration for approval by Government based on the
    factual conditions available as on 21.11.1998."

   14. M/s Kandath Distilleries then challenged the above
mentioned order by filing Writ Petition No. 2708 of 2007.          H
     1068     SUPREME COURT REPORTS                  (2013] 4 S.C.R.


 A Learned single Judge took the view that no reason other than
   the constitution of the firm and the date of its effect, was noticed
   in the impugned order dated 11.10.2006 for refusing the
   licence and that there was no other ground found by the
   Government to refuse the licence. Consequently, learned single
 B Judge quashed the Government order dated 11.10.2006 and
   directed the State Government to grant licence applied for vide
   application dated 12.1.1987.

           15. The State Government, aggrieved by the said
     judgment, filed a Writ Appeal No. 716 of 2008. The Division
 C   Bench felt that the State Government had ingenuously made a
     classification to weed out respondent to the effect that, from
     21.11.1998 onwards, State had a different policy. The Division
     Bench noticed that the High Court had directed the State
     Government to consider its application submitted as early as
 D   in 1987. Further, it was also pointed out that the State
     Government had no case that the respondent applicant was not
     suitable, nor such contention had ever been taken in the
      previous litigations. Further, it was also held by the Division
      Bench that similarly situated persons had already been granted
 E   licences long back. In such circumstances, the Division Bench
      held that there was no illegality in the directions given by the
     learned single Judge giving a positive direction to grant the
      licence, which was necessary to uphold the majesty of rule of
      law. The appeal filed by the State Government was accordingly
 F   dismissed. Aggrieved by the same, the State Government has
     come up with appeal.

         16. Shri C. S. Rajan, learned senior counsel appearing for
   the State, submitted that the learned single Judge as well as
.G the Division Bench of the High Court has committed a grave
   error while exercising their jurisdictions under Article 226 of the
   Constitution of India in giving a positive direction to grant a
   distillery licence to the respondent. Learned senior counsel
   submitted that a citizen has no fundamental right to trade or
   business in liquor and that the matter relating to grant of licence
 H
   STATE OF KERALA v. KANDATH DISTILLERIES                         1069
           [K.S. RADHAKRISHNAN, J.]
for dealing in liquor or starting distillery unit is within the exclusive   A
domain of the State.

      Learned senior counsel submitted that if the State has the
right to adopt a policy decision and, indisputably, it has the right
to vary, amend or rescind the same. Further, it was also                    8
submitted that the application submitted by the respondent was
a defective application and, therefore, the Government was
justified in not entertaining that application. Learned senior
counsel submitted that cogent reasons have been stated by
the Government vide its order dated 11.10.2006 rejecting the                C
application submitted by the respondent and the High Court
was not right in issuing a Writ of Mandamus directing the State
Government to grant the licence applied for.

       17. Shri Giri, learned senior counsel and Shri George
Ponthottam, learned counsel appearing for the respondent,                   D
traced the entire history of the case starting from 1987 till the
Government passed the order dated 11.10.2006. Learned
counsel submitted that there was a concerted effort on the part
of the State not to consider the application of the respondent
for licence for starting the distillery unit in the Palakkad District.      E
At the same time, on the basis of Policy which was in force in
the year 1998, four licences were granted and the respondent
was discriminated. Learned counsel submitted that, on non-
compliance of the various directions given by the High Court,
the High Court found that the Secretary to Government had                   F
committed contempt and the order dated 11.10.2006 was
nothing but a repetition of earlier orders and it is under those
circumstances, the High Court gave a positive direction to grant
distillery licence to the respondent, which shall not be interfered
with by this Court under Article 136 of the Constitution. Learned           G
counsel also referred the judgment of this Court in Comptroller
and Auditor-General of India and Anr. v. K. S. Jagannathan
and Anr. (1986) 2 SCC 679 and submitted that in order to
prevent injustice, this Court can always give direction to compel
performance of a discretion by an authority in a proper and                 H
lawful manner. Reference was also made to the judgment of
    1070         SUPREME COURT REPORTS                [2013] 4 S.C.R.


A this Court in Harigovind Yadav v. Rewa Sidhi Gramin Bank
  and Ors. (2006) 6 SCC 145 and RBF Rig C_orporation,
  Mumbai v. The Commissioner of Customs (Imports), Mumbai
  (2011) 3 sec 573 and submitted that in appropriate cases
  under Article 226 of the Constitution, this Court can always
B mould the reliefs.

         18. We may, before examining the rival contentions,
  examine the scheme of the Act as well as 1975 Rules. The Act
  was enacted to consolidate and amend law relating to the
  import, export, transport, manufacture, sale and possession of
C intoxicating liquor and of intoxicating drugs in the State of
  Kerala. Section 14 of the Act deals with the establishment and
  control of distilleries, breweries, warehouses, etc, which confers
  power on the Commissioner to issue a licence with the previous
  approval of the Government to establish public distilleries,
D breweries or wineries, or authorize the establishment of private
  distilleries, breweries, wineries or other manufactories in which
  liquor may be manufactured. Section 14 is given below for easy
  reference:

E             "14. Establishment and control of distilleries,
        breweries, warehouses, etc.- The Commissioner may.
        with the previous approval of the Government,-

           (a)    Establish public distilleries, breweries or wineries,
                  or authorize the establishment of private distilleries,
F                 breweries, wineries or other manufactories in which
                  liquor may be manufactured under a licence
                  granted under this Act.

                  Xxx             )()()(                            )()()(

G
                  )()()(          )()()(                           xxx"

      19. The State Government, in exercise of its powers
  conferred by Section 29 of the Act framed the 1975 Rules. Rule
  3 deals with the application for licence, which requires a person
H who desires to carry on operations of compounding, blending
   STATE OF KERALA v. KANDATH DISTILLERIES                   1071
           [K.S. RADHAKRISHNAN, J.]

and bottling of foreign liquor to apply in writing to the             A
Commissioner and furnish the necessary details as required
under the Rule. Rule 3 is given below for easy reference:

          3. Application for Licence.- Any person who
    desires to carry on operations of compounding, blending
                                                                      8
    and bottling of foreign liquor shall apply in writing to the
    Commissioner. Every application for a lilcence shall give
    details of the operation desires to perform and shall be
    accompanied by -

          (i) description and plan of the building in which the       C
    operations are to be carried out in triplicate, drawn on
    scale in tracing cloth;

          (ii) statement specifying the number, size and
    descriptions of the permanent apparatus, if any, which are        D
    proposed to be used;

           (iii) details regarding the maximum quantity in proof
    litres of spirits expected to be in the store or in the process
    of compounding, blending or bottling; and
                                                                      E
        (iv) a treasury receipt for the deposit of an earnest
    money of one hundred rupees."

Rule 4 deals with the grant and renewal of licence, which
empowers the Commissioner to issue the licence applied for.
Rule 4 reads as under:                                                F

          "4. Grant and renewal of licence.- (1) The
    Commissioner may. if he is satisfied after making such
    enquiries as he may consider necessary that the applicant
    is a person to whom licence may be issued, grant to the           G
    applicant.-

           (i) a compounding and blending licence in Form 1
    on payment of a fee of Rs.2,00,000 (Rupees two lakhs
    only); and                                                        H
    1072    SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A             (ii) a bottling licence in Form 2 on payment of a fee
        of Rs.2,00,000 (Rupees two lakhs only).

              (2) The Commissioner shall retain the original of the.
        description of plan and forward the duplicate to the officer-
        in-charge through the Assistant Excise Commissioner and
B
        return the triplicate to the lilcensee.

               (3) The earnest money deposit shall be adjusted
        towards the fees of the licence. If the licence applied for
        is not granted, the earnest money deposit of Rs.100 shall
c       be refunded to the applicant.

              (4) The Commissioner may on application made to
        him in this behalf and on payment of the fee specified in
        rules renew a licence for a period of one year at a time."
D                                             (emphasis supplied)

  Rule 5 deals with the requirements to be satisfied with regard
  to building in which the compounding, blending and bottling
  operations are to be carried out. Licence for compounding and
E blending of foreign liquor is issued in Form No. 1 and the licence
  for bottling of foreign liquor is issued in Form No. 2.

       20. We may, before examining the scope of the above
  mentioned provisions and the nature of jurisdiction or the
F powers to be exercised by the Commissioner and the State
  Government, examine the general purport of the Act in the light
  of Article 19(1)(g) of the Constitution of India.

    RIGHT TO CARRY ON TRADE OR BUSINESS IN LIQUOR

G      21. Article 47 is one of the Directive Principles of State
  Policy which is fundamental in the governance of the country
  and the State has the power to completely prohibit the
  manufacture, sale, possession, distribution and consumption of
  liquor as a beverage because it is inherently dangerous to the
H human health. Consequently, it is the privilege of the State and
   STATE OF KERALA v. KANDATH DISTILLERIES                    1073
           [K.S. RADHAKRISHNAN, J.]

it is for the State to decide whether it should part with that         A
privilege, which depends upon the liquor policy of the State.
State has, therefore, the exclusive right or privilege in respect
of portable liquor. A citizen has, therefore, no fundamental right
to trade or business in liquor as a beverage and the activities,
which are res extra commercium, cannot be carried on by any            B
citizen and the State can prohibit completely trade or business
in portable liquor and the State can also create a monopoly in
itself for the trade or business in such liquor. This legal position
is well settled. State can also impose restrictions and
limitations on the trade or business in liquor as a beverage,          c
which restrictions are in nature different from those imposed
on trade or business in legitimate activities and goods and
articles which are res commercium. Reference may be made
to the judgments of this Court in Vithal Dattatraya Kulkarni and
Others v. Shamrao Tukaram Power SMT and Others (1979)                  0
3 SCC 212, P.N. Kaushal & Others v. Union of India & Others
(1978) 3 SCC 558, Krishna Kumar Narula etc. v. State of
Jammu & Kashmir & Others AIR 1967 SC 1368, Nashirwar
and Others v. State of Madhya Pradesh & Others (1975) 1
SCC 29, State of A. P. & Others v. McDowell & Co and Others
(1996) 3 SCC 709 and Khoday Distilleries Ltd. & Others v.              E
State of Kamataka & Others (1995) 1 SCC 574.

    22. Legislature, in its wisdom, has given considerable
amount of freedom to the decision makers, the Commissioner
and the State Government since they are conferred with the             F
power to deal with an article which is inherently injurious to
human health.

      23. Section 14 of the Act indicates that the Commissioner
can exercise his powers to grant licence only with the approval        G
of the State Government because the State has the exclusive
privilege in dealing with liquor. The powers conferred on the
Commissioner and the State Government under Section 14 as
well as Rule 4 are discretionary in nature, which is discernible
from the permissible language used therein.
                                                                       H
    1074     SUPREME COURT REPORTS                    [2013] 4 S.C.R.


A LIQUOR POLICY:
         24. Liquor policy of State is synonymous or always closely
    associated with the policy of the Statute dealing with liquor or
    such obnoxious subjects. Monopoly in the trade of liquor is with
    the State and it is only a privilege that a licensee has in the
B   matter of manufacturing and vending in liquor, so held, by this
    Court in State of Maharashtra v. Nagpur Distilleries (2006) 5
    sec 112. Courts are also not expected to express their opinion
    as to whether at a particular point of time or in a particular
    situation, any such policy should have been adopted or not.
C   1998 Policy has life only in that year and if any rights have
    accrued to any party, that have to be adjudicated then and
    there. Writ Petition was moved only in the year 2000, by then,
    policy had been changed because 1999 liquor policy was total
    ban, so also subsequent liquor policies. It is trite law that a Court
D   of Law is not expected to propel into "the unchartered ocean"
    of State's Policies. State has the power to frame and reframe,
    change and re-change, adjust and readjust policy, which cannot
    be declared as illegal or arbitrary on the ground that the earlier
    policy was a better and suited to the prevailing situations.
E   Situation which exited in the year 1998 had its natural death
    and cannot be revised in the year 2013, when there is total ban.
    DISCRETION AND DUTY:
       25. Discretionary power implies freedom of choice, a
  competent authority may decide whether or not to act. The legal
F concept of discretion implies power to make a choice between
  alternative courses of action (Discretionary Justice Davis
  1969). Statute has conferred discretionary power on the
  Commissioner and State Government but not discretion
  coupled with duty because they are dealing with a subject
G matter on which State has exclusive privilege. Permissive
  language used by the Statute in Section 14 and the rule making
  authority in Rule 4 gives the State Government and the
  Commissioner, no mandatory duty or obligation to grant the
  licence except perhaps to consider the application, if the liquor
H policy permits so.
   STATE OF KERALA v. KANDATH DISTILLERIES                     1075
           [K.S. RADHAKRISHNAN, J.]
      26. Section 14 uses the expression "Commissioner may",            A
"with the approval of the Government" so also Rule 4 uses the
expressions "Commissioner may", "if he is satisfied" after
making such enquiries as he may consider necessary "licence
may be issued". All those expressions used in Section 14 and
Rule 4 confer discretionary powers on the Commissioner as               B
well as the State Government, not a discretionary power
coupled with duty. The powers, conferred on the Commissioner
as well as the Government, have to be understood in the light
of the Constitutional scheme bearing in mind the fact that the
trade or business which is inherently harmful can always be             C
restricted, curtailed or prohibited by the State, since it is the
exclusive privilege of the State. No duty is, therefore, cast on
the Commissioner to grant a licence for establishing a distillery
unit and no right is conferred on any citizen to claim it as a
matter of right. State can always adopt a "restrictive policy",
e.g., reducing the number of licences in a particular district or
                                                                        0
a particular area, or not to grant any licence at all in a particular
district, even in cases where the applicants have satisfied all
the conditions stipulated in the rules and the policy permits
granting of licences. In other words, the satisfaction of the
conditions laid down in 1975 Rules would not entitle an                 E
applicant as a matter of right to claim a distillery licence which
is within the exclusive privilege of the State.

MANDAMUS - TO ISSUE LICENCE
                                                                        F
     27. Legislature when confers a discretionary power on an
authority, it has to be exercised by it in its discretion, the
decision ought to be that of the authority concerned and not that
of the Court. Court would not interfere with or probe into the
merits of the decision made by an authority in exercise of its          G
discretion. Court cannot impede the exercise of discretion of
an authority acting under the Statute by issuance of a Writ of
Mandamus. A Writ of Mandamus can be issued in favour of an
applicant who establishes a legal right in himself and is issued
against an authority which has a legal duty to perform, but has
                                                                        H
    1076     SUPREME COURT REPORTS                   [2013] 4 S.C.R.


A   failed and/or neglected to do so, but such a legal duty should
    emanate either in discharge of the public duty or operation of
    law. We have found that there is no legal duty cast on the
    Commissioner or the State Government exercising powers
    under Section 14 of the Act read with Rule 4 of the 1975 Rules
B   to grant the licence applied for. The High Court, in our view,
    cannot direct the State Government to part with its exclusive
    privilege. At best, ii can direct consideration of an application
    for licence. If the High Court feels, in spite of its direction, the
    application has not been properly considered or arbitrarily
C   rejected, the High Court is not powerless to deal with such a
    situation that does not mean that the High Court can bend or
    break the law. Granting liquor licence is not like granting licence
    to drive a cab or parking a vehicle or issuing a municipal licence
    to set up a grocery or a fruit shop. Before issuing a writ of
    mandamus, the High Court should have, at the back of its mind,
D   the legislative scheme, its object and purpose, the subject
    matter, the evil sought to be remedied, State's exclusive
    privilege etc. and not to be carried away by the idiosyncrasies
    or the ipse dixit of an officer who authored the order challenged.
     Majesty of law is to be upheld not by bending or breaking the
E    law but by strengthening the law.

         28. Respondent-applicant, in the instant case, in our view,
    has failed to establish a legal right or to show that there is a
    legal duty on the Commissioner or the Government to issue a
F   distillery licence.

    DISCRETIONARY ORDER - ARTICLE 14

       29. Discretionary power leaves the donee of the power free
  to use or not to use ii at his discretion. (refer Rani Orig Raj
G Kuer v. Raja Sri Amar Krishna Narain Singh AIR 1960 SC
  444). Law is well settled that the exercise of statutory discretion
  must be based on reasonable grounds and cannot lapse into
  the arbitrariness or caprice anathema to the rule of law
  envisaged in Article 14 of the Constitution. It is trite law that,
H though, no citizen has a legal right to claim a distillery licence
   STATE OF KERALA v. KANDATH DISTILLERIES                     1077
           [K.S. RADHAKRISHNAN, J.)

as a matter of right and the Commissioner or the State                  A
Government is entitled to either not to entertain or reject the
                                       a
application, they cannot enter into relationship by arbitrarily
choosing any person they like or discriminate between persons
similarly circumscribed. The State Government, when decides
to grant the right or privilege to others, of course, cannot escape     B
of the rigor of Article 14, in the sense that it can act arbitrarily.
In such a situation, it is for the party who complains to establish
that a discriminatory treatment has been meted out to him as
against similarly placed persons but cannot demand a licence
for establishing a distillery unit, as a matter of right.               c
      30. In State of Madhya Pradesh v. Nandlal Jaiswal (1986)
4 sec 566, this Court held that no one can claim as against
the State the right to carry on trade or business in liquor and
the State cannot be compelled to part with its exclusive
privilege or right of manufacturing and selling liquor. But, when       D
the State decides to grant such right or privilege to others the
State cannot escape from the rigor of Article 14 of the
Constitution, it cannot act arbitrarily or at its sweet will.

      31. We have noticed that the application preferred by Mis         E
Kandath Distilleries (respondent herein) in the year 1987 was
for establishing a distillery unit in the Palakkad District. So also
the applications submitted by M/s Amrut Distilleries, Bangalore
and Mis. Empee Distilleries, Madras and licences were granted
to them for establishing the distillery units in the Palakkad           F
District. However, the respondent's application was not
considered. The Commissioner or the State Government has
to take an independent decision in each application based on
its eligibility and there cannot be any common decision. As held
in Nandlal Jaiswal (supra) when the State Government is                 G
granting licence for putting up new industry, it is not necessary
that it should advertise and invite offers for putting up such
industry. The State Government is entitled to negotiate with
those who have come up with an offer to set up such industry.
The State Government cannot grant the privilege to all those            H
    1078     SUPREME COURT REPORTS                  [2013] 4 S.C.R.


A who have applied for such a licence in a particular district, for
  a host of reasons. The State Government could restrict the
  number of distillery lincences in a particular district by two and
  it can also grant a third licence in a particular district as well,
  but an applicant cannot claim a licence as a matter of right.
B
        32. The Respondent, in our view, could lay a claim only if
  it establishes that a preferential treatment has been meted out
  to M/s Amrut Distilleries, Bangalore and Mis. Empee
  Distilleries, Madras while granting licences for establishing the
  respective distillery units in the Palakkad District on the ground
C of discrimination violating Article 14 of the Constitution of India.
  Respondent has never challenged the distillery licences granted
  to them, but only prayed for another licence for it as well which,
  in our view, cannot be claimed as a matter of right. Citizens
  cannot have a fundamental right to trade or carry on business
D in the properties or rights belonging to the State nor can there
  be any infringement of Article 14, if the State prefers other
  applicants for the grant of licence, during the pendency of some
  other applications, unless an applicant establishes a better
  claim over others.
E
        33. We have gone through the Government Order dated
  11.10.2006 in extenso and we are not prepared to say that the
  application of the respondent was rejected solely on the ground
  that the application dated 12.1.1987 could not be. treated as
F an application put forward by a firm based on a partnership
  deed, which came into existence on 10.4.1991, as per Clause
  3 of the Partnership Deed but on various other grounds as well.
  The State Government, in our view, has considered the
  respondent's application dated 12.1.1987 with regard to the
G conditions that existed in the year 1998. The Government letter
  dated 28.6.1994 would indicate that, apart from the respondent,
  few other applications were also pending prior to the year 1994.
  Over and above, the State Government during the year 1998,
  from 3.2.1998 to 21.11.1998, had received 52 applications for
  establishing compounding, blending and bottling units in IMFLs
H
   STATE OF KERALA v. KANDATH DISTILLERIES                   1079
           [K.S. RADHAKRISHNAN, J.]

in various parts of the State. The Excise Commissioner vide           A
his letter dated 25.11.1998 had reported that there was an
unprecedented flow of applications, that was the ·situation
prevailing in the year 1998, a factor which was taken note of in
not entertaining the respondent's application, whether it was
submitted on 12.1.1987 or on 22.11.1998. We cannot, in any            B
way, activate an out-modeled, outdated, forgotten liquor policy
of 1998, in the year 2013, by a Writ of Mandamus.

     34. We are, therefore, of the view that the learned single
Judge as well as the Division Bench of the High Court have
overlooked those vital factors while issuing a Writ of Mandamus       C
directing the State Government/Commissioner to grant distillery
licence to the respondent for setting up of a new distillery in the
Palakkad District, thinking that the impugned order is nothing
but old wine in new bottle. We are informed, after 1998, not
even a single licence has been granted by the State                   D
GovernmenUCommissioner for establishing distillery units
anywhere in the State. That being the factual and legal position,
we are of the view that the learned single Judge as well as the
Division Bench of the High Court was not justified in issuing a
Writ of Mandamus directing the issuance of a distillery licence       E
to the respondent.

     35. We are, therefore, inclined to allow this appeal and set
aside the judgment of the learned single Judge and affirmed
by the Division Bench of the High Court. Ordered accordingly.         F
However, in the facts and circumstances of the case, there will
be no order as to costs.

K.K.T.                                          Appeal allowed.