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REPORTABLE  

 IN THE SUPREME COURT OF INDIA  

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO. 9533 OF 2018  

INTERNATIONAL SPIRITS AND WINES   ASSOCIATION OF INDIA     ....APPELLANT(S)  

 VERSUS  

 STATE OF HARYANA AND OTHERS        ...RESPONDENT(S)    

JUDGMENT  

NAVIN SINHA, J.  

The appellant having been unsuccessful in its challenge to  

Rule 24(i-eeee) of the Haryana Liquor License Rules 1970 (as  

amended by the Haryana Liquor License (Amendment) Rules  

2017), (hereinafter referred to as ‘the Rules’) as being ultra vires the  

Punjab Excise Act, 1914 (hereinafter referred to as ‘the Act’), is in  

appeal before this Court.  The amended Rule provides for a single  

L-1BF license for the entire State to deal in imported foreign liquor,  

bottled outside India and imported into the country in a bottled  

form (i.e. bottled in original).  Under challenge is also clause 9.5.1.2  

of the State Excise Policy for the year 2017-2018 to that extent,

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carried forward to the year 2018-2019 also.  The procedure for  

grant of the single license under the amended Rule is through  

tender by e-bidding, with a reserve price of Rs. 50 crores.    

2. Sri Gopal Subramanium, learned senior counsel for the  

appellant, submitted that the creation of a monopoly by the State  

in favour of a private entity, to trade in liquor, is contrary to Article  

19(6) of the Constitution of India. The impugned order  

acknowledges that it would lead to serious distortions in the  

market, yet erroneously declines interference holding that once the  

matter moves from State control into the hands of private  

enterprise, the restrictions applicable to the State cease to apply.   

Reliance was placed on Akadasi Padhan vs. State of Orissa, AIR  

1963 SC 1047, to contend that if a monopoly is created by the State  

in its favour, the same cannot be constitutionally permitted if the  

private agents appointed pursuant thereto, act as independent  

entities. Sri Subramanium also relied on Khoday Distilleries Ltd.  

vs. State of Karnataka (I), (1995)1 SCC 574, to submit that once  

the State parts with its privilege to trade in liquor, in favour of  

private individuals, the rigours of Article 14 will continue to apply  

to provide equal opportunity to all desirous to do so.  Alternatively,  

it was submitted that the absence of sufficient checks and balances

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gives untrammeled and uncanalised powers to the sole licensee  

which again is constitutionally impermissible. Sri Subramanium  

further relied on Khoday Distilleries Ltd. vs. State of  

Karnataka (II) (1996) 10 SCC 304, to submit that the  

interpretation of Section 58 (2)(e) and 59(a) of the Act by the High  

Court was flawed.   Rule 24 (i-eeee) was ultra vires the Act. The  

interpretation put by the High Court grants wider powers to the  

Financial Commissioner, than the State Government itself. The  

single monopolistic L-1BF license was also discriminatory and  

violative of Article 14 of the Constitution in so far as no such  

requirement was stipulated for wholesale trade in Indian made  

foreign liquor or country liquor in the State.  There was no rational  

or reasonable classification for this distinction between licensees,  

having any rationale or nexus with any object to be achieved.   

3. Ms. Pinky Anand, learned Additional Solicitor General,  

submitted that the appellant never participated in the bidding  

process for the L-1BF license.  A mere apprehension that a single  

L-1BF license for the entire State may affect market dynamics,  

when the reality was otherwise, resulting in rise of revenue, negates  

the challenge laid out by the appellant.  The issue of monopoly in  

the hands of a private entity is devoid of merit as the process is

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through public auction, open to participation by all, and not  

tailored to suit any particular person or activated by malafides,  

relying on Association of Registration Plates vs. Union of India,  

(2005) 1 SCC 679.   Trade in original bottled foreign liquor was only  

a fraction of the entire liquor trade in the State, ranging between  

0.64 percent to 1.98 per cent.  The aim and object of the  

amendment was to increase revenue, curb pilferage, control illicit  

trade in the State of Indian made foreign liquor and bottled in  

original bottled foreign liquor. The Financial Commissioner was  

competent under Section 59(a) read with Section 13 to amend Rule  

24 by incorporation of Rule 24 (i-eeee) providing for a single L-1BF  

license for the entire State, as the competence of the State for  

issuance of license under Section 58(2)(e) was limited to a local  

area only.      

4. Sri M.K. Dutta, learned counsel for the sole L-1BF licensee for  

2017-2018, submitted that the appellant was not even a bidder.   

The question of any apprehension on its part simply does not arise.  

There are sufficient checks and balances in the excise license  

providing for cancellation also if the conditions of the license were  

not followed.  The grant of a monopolistic license as the agent of  

the State Government was permissible in the law for trade in liquor.

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5. We have considered the submissions on behalf of parties.  The  

appellant assails the amended Rule 24(i-eeee) as ultra vires the  

provisions of the Act.  Integral to the issue is whether the state  

government is competent to issue licences for a local area alone  

under Section 58(2)(e) of the Act, while the Excise Commissioner,  

a sub-delegate of the Financial Commissioner is competent under  

Section 13(b) read with Section 59(a) to issue L-1BF licence for the  

entire state under the amended rule, notwithstanding the  

prohibition in Section 13(a) to the delegation of powers under  

Section 58 by the State Government.  The amended Rule 24(i-eeee)  

relevant to the controversy reads as follows:  

“ (xiv) for clause (i-eeee), the following clause  

shall be substituted, namely: -    

(i-eeee)  For a license in form L-1BF –    

(a) Reserve price shall be Rs.50,00,00,000/-.    

(b) The license in form L-1BF shall be allotted  through e-bidding to the highest bidder.  

 (c) There shall be only one L-1BF license in the  

State.”  

6. Under Section 8 of the Act, the State government exercises  

general superintendence and control of Excise Administration and  

Excise Officers. Section 9 provides for vesting powers of the

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Financial Commissioner in the Excise Commissioner by the State  

Government. Section 13 dealing with delegation of powers  

provides:  

“Delegation:  

(a) The State Government may by notification  delegate to the Financial Commissioner or  

Commissioners all or any of its powers under  this Act, except the powers conferred by sections  14, 21,22, 31, 56 and 58 of this Act.  

 (b) The State Government may by notification  

permit the delegation by the Financial  Commissioner, Commissioner or Collector to  

any person or class of persons specified in such  notification of any powers conferred by this Act  

or exercised in respect of excise revenue under  any Act for the time being in force.”  

The Financial Commissioner is therefore competent to delegate  

only such powers to the Excise Commissioner which the State  

Government can delegate to the former under the Act, in view of  

the prohibition contained in Section 13(a) of the Act.   

7. Section 58 of the Act, in its relevant extract reads as follows:  

“Power of State Government to make Rules:  

(1) The State Government may by notification  make rules for the purpose of carrying out the  

provisions of this Act or any other law for the  time being in force relating to excise revenue.     

(2) In particular and without prejudice to the  generality of the foregoing provisions, the State  

Government may make rules:   ……

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(e) Regulating the period and localities for which,  

and, the persons or classes of persons, to whom  licenses, permits and passes for the vend by  

wholesale or by retail of any intoxicant may be  granted and regulating the number of such  

licenses which may be granted in any local area;    

(3) Previous publication of rules: - The power  conferred by this section of making rules is  

subject to the condition that the rules be made  after previous publication;  

 Provided that any such rules may be made  without previous publication if State  

Government consider that they should be  brought into force at once.”  

Under Section 58(2)(e) of the Act, the State Government alone has  

the power to regulate the number of licenses which may be granted  

in any local area for wholesale or retail sale.   

8. Relevant to the discussion are also Rules 3 and 4 which  

provide as follows :  

“3. The authority given by these rules to grant  and renew licenses is, in each case, subject to  the restrictions contained in the Punjab  

Intoxicants License and Sale Order as to the  localities in which licenses may be granted and  

the number of licenses which may be granted in  any local area, and to such reservations from the  

general superintendence of the Financial  Commissioner as the State Government may  

notify under Section 8 of the Punjab Excise Act,  1914.   

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4. Every license shall be granted to a particular  

licensee in respect of particular premises/area.”  

9. Chapter D of the Punjab Intoxicants License and Sales  

Orders, 1956 (hereinafter referred to as ‘the Order’) provides for the  

number of licences and reads as under :  

“6. The number of liquor vends except vends  licenced in form L-2 for the wholesale and retail  

sale of foreign liquor to the public only and drug  shops, which may be licenced in any local area,  shall be the number which the Financial  

Commissioner, subject to the control of the  State government considers necessary.  The  

number of L-2 vends, which may be licenced in  any local area, shall be the number of such  

licences granted by the Collector under the  rules.”   

10. In the scheme of the Act, the Rules and the Order read  

together it is apparent that a liquor license is to be granted for a  

local area only.  The power to determine the number of licences  

that may be granted in any category in a local area is exclusively  

vested in the State Government under Section 58(2)(e) of the Act.  

The delegation of this power by the State Government to the  

Financial Commissioner is prohibited by Section 13(a). This is only  

in consonance with the general power of superintendence vested in  

the State Government under Section 8.    

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11.  In Khoday Distilleries vs. State of Karnataka (II) (supra),  

a similar provision under the Karnataka Excise Act 1965 fell for  

consideration therein:   

“71(1): The State Government may, by  

notification and after previous publication,  make Rules to carry out the purposes of this Act.  

 (2) In particular and without prejudice to the  generality of the foregoing provision, the State  

Government may make Rules –  …..  

(e)  regulating the periods and localities in  which and the persons or classes of persons to  

whom, licenses for the wholesale or retail sale of  any intoxicant may be granted and regulating  

the number of such licenses which may be  granted in any local area:  

 (f) ……  

(g) ……    

(h) prescribing the authority by which, the  form in which and the terms and conditions on  

and subject to which any license or permit shall  be granted, and may, by such Rules, among  

other matters.”    This Court held as follows :-  

 “11. ….The Act itself provides that the number  

of licenses can be regulated by the State.  If the  State chooses to regulate licenses by providing  

that the license shall be granted only to a  company owned by the State, it cannot be said  

that such a license is something which is outside  the purview of the Act or the rule-making  

authority of the State under the Act.”  

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12. The Act maintains a clear distinction between a local area as  

the unit for grant of licence, and the entire State for other purposes.  

The State government is the sole repository of these other powers  

with regard to the entire State evident from Sections 5 and 6 which  

read:  

“5. Power of State Government to declare  

limit of sale by retail and by wholesale- The  State Government may by notification declare  

with respect either to the whole of Punjab or to  any local area comprised therein, and as regards  

purchasers generally or any specified class of  purchasers, and generally or for any specified  

occasion, the maximum or minimum quantity or  both of any intoxicant which for the purposes of  

this Act may be sold by retail and by wholesale.    

6. Power to limit application of  notifications, permits, etc., made under this  Act.- Where under this Act any notification is  

made, any power conferred, any appointment  made or any license, pass or permit granted, it  

shall be lawful to direct –    

(a) That it shall apply to the whole of Punjab or  to any specified local area or areas;  

             xxxxx"  

The power to declare by notification that a licence granted shall be  

applicable to the entire State is exclusively vested in the State  

Government under Section 6(a) of the Act.  

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13. The High Court has held that in contradistinction to Section  

58(2)(e) of the Act, which limits the powers of the State Government  

to grant of licence for a local area, the Excise Commissioner, as the  

delegatee of the Financial Commissioner, was competent under  

Section 59(a) to grant a single L-1BF licence for the entire State.   

“59. Powers of Financial Commissioner to  make rules:-  

 The Financial Commissioner may, by notification,  

make rules,-    

(a) regulating the manufacture, supply, storage or  sale of any intoxicant, including-  

(i) the character, erection, alteration, repair,  inspection, supervision, management and  

control of any place for the manufacture,  supply, storage or sale of such article and  

the fittings, implements, apparatus and  registers to be maintained therein;   

(ii) the cultivation of the hemp plant and the  collection of spontaneous growth of such  

plant and the preparation of any  intoxicating drug;   

(iii) the tapping or drawing of tari from any tari  producting tree;    

(b)  regulating the bottling of liquor for purposes of  sale;  

 (c)  regulating the deposit of any intoxicant in a  

warehouse and the removal of any intoxicant  from any warehouse or from any distillery or  

brewery;    

(d)  prescribing the scale of fees or the manner of  fixing the fees payable in respect of any license,  

permit or pass or in respect of the storing of any  intoxicant;

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(e)  regulating the time, place and manner of  payment of any duty or fee;  

 (f) prescribing the authority by, the restrictions  

under, and the conditions on, which any license,  permit or pass may be granted, including  

provisions for the following matters-    

(i) the prohibition of the admixture with any  intoxicant of any substance deemed to be  noxious or objectionable;  

(ii) the regulation or prohibition of the  reduction of liquor by a licensed  

manufacturer or licensed vendor from a  higher to a lower strength;  

(iii) the strength at which intoxicant shall be  sold, supplied or possessed;  

(iii-a) the fixing of the price below and above which  any intoxicant shall not be sold or supplied  

by the licenced vendor.  (iv) the prohibition of sale of any intoxicant  

except for cash;  (v) the fixing of the days and hours during  

which any licensed premises may or may not  be kept open, and the closure of such  

premises on special occasions;  (vi) the specification of the nature of the  

premises in which any intoxicant may be  sold, and the notice to be exposed at such  premises;  

(vii) the form of the accounts to be maintained  and the returns to be submitted by license-

holders; and   (viii) the prohibition or regulation of the transfer  

of licenses;    

(g)  (i) declaring the process by which spirit shall                           be denatured;  

(ii) for causing spirit to be denatured through  the agency or under the supervision of its  

own officers;

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(iii) for ascertaining whether such spirit has  

been denatured;    

(h)  providing for the destruction or other disposal of  any intoxicant deemed to be unfit for use;  

 (i)  regulating the disposal of confiscated articles;  

 (j) prescribing the amount of security to be  

deposited by holders of leases, licenses, permits  or passes for the performance of the conditions of  the same.”  

14.  The nature of powers conferred under Section 59 of the Act,  

make it manifest that it is but a regulatory power available only  

after a license is granted to the licensee for a local area, to ensure  

supply, storage, sale or otherwise that the conditions of the license  

are adhered to and necessary directions can also be given for the  

purpose.    

15. The Excise Commissioner, a sub-delegate of the Financial  

Commissioner, in exercise of the powers conferred under section  

59 of the Act by virtue of the Haryana Government Excise and  

Taxation notification dated 01.04.2016, made the impugned  

amendment to the Haryana Liquor License Rules, 1970.  The same  

were notified on 29.03.2017.   These rules were called the Haryana  

Liquor License (Amendment) Rules, 2017.  Rule 1(2) stated that  

they shall come into force with effect from 01.04.2017. Rule 3 of

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the amendment substituted Rule 24 (i-eeee) which provided that  

there shall be only one L-1BF license in the State.  The amendment  

with regard to the number of licenses that could be issued for the  

entire State is in teeth of Sections 6 and 58(2)(e), delegation of  

which by the State Government is expressly prohibited by Section  

13(a).    

16. The distinction sought to be drawn by the High Court with  

regard to the term ‘local area’ under Section 58(2)(e) of the Act as  

being confined to small compact area only and that the Financial  

Commissioner by virtue of the power to regulate supply, storage  

or sale of any intoxicant had the power to determine the number  

of licenses to be granted for the entire State in a particular  

category, in our view, is not only unreasonable but also in teeth of  

the statutory Scheme and its provisions. To hold that the power of  

Financial Commissioner under Section 59(a) of the Act to regulate  

sale of liquor, and that sale could be regulated through grant of  

licence, the Financial Commissioner was vested with the power to  

determine the number of licences, to our mind is not only  

unreasonable but also unsustainable.  Such an interpretation  

amounts to reading words into the statute which the legislature  

itself never intended.  The amendment notified by the Excise

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Commissioner as a delegate of the Financial Commissioner was  

per se ultra vires the powers of the latter under Section 6 and 13(a)  

read with Section 58(2)(e) of the Act. The unreasonableness and  

incongruity in the reasoning by the High Court would vest wider  

powers in the Excise Commissioner than the State Government  

itself. While the State Government would have the power to  

determine the number of licences and to issue licence for a local  

area only, the Excise Commissioner would have a superior power  

to determine the number of licences and issue licences for the  

entire State.   

17. The meaning and scope of a regulatory power fell for  

consideration in Deepak Theatre vs. State of Punjab, 1992 Supp  

(1) SCC 684,    

“4. The power to regulate includes the power  to restrain, which embraces limitations and  restrictions on all incidental matters  

connected with the right to trade or business  under the existing licence. Rule 12(3)  

regulated entry to different classes to the  cinema hall and it was within the rule making  

power of the State Government to frame such  rule. The court further held that fixing limit of  

rate of admission was an absolute necessity  in the interest of the general public and the  

restriction so placed was reasonable and in  public interest….”  

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18. The Financial Commissioner was therefore not competent to  

amend the Rules with regard to grant of number of licences for the  

entire state, and which power was exclusive to the State  

Government under Section 6 read with Section 13(a) and 58(2)(e)  

of the Act.   In conclusion, we hold that Rule 24(i-eeee) as amended  

by the Financial Commissioner in exercise of powers under Section  

59(a) of the Act is ultra vires the powers of the Financial  

Commissioner under the Act and is therefore struck down. In view  

of Rule 24(i-eeee) itself having been struck down, it is not  

considered necessary to discuss or consider the other grounds of  

challenge raised.   

19. The appeal is allowed.    

………............................CJI.  [RANJAN GOGOI]  

…………............................J.  [NAVIN SINHA]  

NEW DELHI  FEBRUARY 12, 2019.  

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                                  Reportable  

IN THE SUPREME COURT OF INDIA  

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO.9533 OF 2018  

 INTERNATIONAL SPIRITS AND WINES  

ASSOCIATION OF INDIA          ..APPELLANT(S)  

VERSUS  

STATE OF HARYANA AND ORS.         ..RESPONDENT(S)  

JUDGMENT  

K.M. JOSEPH,J.  

 1.  Having perused the judgment authored by  

brother Justice Navin Sinha notwithstanding the  

highest respect that I maintain for him, I express my  

inability to accept the reasoning given in support of  

the conclusion on the point which has been dealt with  

by him and the consequent verdict.    

2.  The appellant is the writ petitioner before  

the High Court in writ petition No.6870 of 2017 which  

came to be decided along with another writ petition.   

Appellant is a company registered under Section 25 of  

the Companies Act.  It claims to be a representative  

body of International spirits and wines companies

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doing business in India.  On 06.03.2017, the excise  

policy for the State of Haryana came to be announced  

for the period 01.04.2017 to 31.03.2018.  Under clause  

9.5.1.1, a wholesale licence in the form of L-1BF for  

imported foreign liquor (BIO) was prescribed.  The  

licensee was authorized to import IFL (BIO) including  

beer from other countries and supply it to L-1s, L-4  

and L-5s, L-12Cs and L-12Gs of the State.  Clause  

9.5.12, however, provided that there will be only one  

wholesale licence in the form of L-1BF in the State.   

It was contemplated that licence was to be settled by  

e-tenders through the Departmental Portal in a  

completely secure and transparent manner.  The reserve  

price was fixed at Rs.50 crores.  Under the general  

conditions provisions for L-1BF it was provided as  

follows:  

“(vi) The licensee will have to submit pricing  

of each brands at the time of approval of the  

brand and department will approve his maximum  

sale price factoring in the landing price,  

expenses, profit margin, prevalent rates of  

same or equivalent brands in the neighboring  

States and the Government levies.  The licensee  

shall do this preferably in the first quarter  

of the financial year.”        

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3.  Originally Clause 9.5.1.2 was challenged.   

The third respondent had been appointed as exclusive  

licensee and declaration was sought that the  

appointment was invalid.  While the Writ Petition was  

pending, the Haryana Liquor License (Amendment) Rules,  

2017 was introduced.  The rules came into effect on  

01.4.2017.  Thereupon the appellant challenged Rule  

24 (i-eeee) of the 1970 Rules introduced by the  

amending Rules.  The said Rule reads as follows:  

“3. In the said rules, in rule 24, -    …....  

(xiv) for clause (i-eeee), the following  clause shall be substituted, namely:-  “(i-eeee) For a license in form L-1BF -  (a) Reserve price shall be Rs. 50,00,00,000/-  

 (b) The license in form L-1BF shall be    

allotted through e-bidding to the highest   

bidder  

(b) There shall be only one L-1BF license in  the State.  

 (d) In case no eligible bid equal to or above  

the reserve price is received for the lone L-

1BF license, the same shall be allotted   

exclusively to a Government owned entity on  

the terms and conditions as decided by the  

Government. The permit and brand label fee  

shall be levied as under to procure Stock of  

liquor by the L-1BF licensee.”  

4.  The ground which failed to persuade the  

Division Bench of the High Court but which has found  

acceptance at the hands of my learned Brother Sinha J.

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is that the impugned rule is ultra vires, the power  

of the Finance Commissioner under Section 59 of the  

Punjab Excise Act, 1914 (hereinafter referred to as  

“the Act”).  The argument of the appellant is that the  

power to make a rule regarding number of licenses is  

with the State Government and it is said power which  

has been usurped by the Financial Commissioner in  

purported exercise of the power under Section 59 of  

the Act. To put it differently, the question would be  

whether the power is vested with the State Government  

under Section 58 or with the Financial Commissioner  

under Section 59 of the Act.  It is but natural that  

I set out the provisions of Section 58 and 59 of the  

Act.  

“58. Power of State Government to make Rules  

– (1) The State Government may by notification  

make rules for the purpose of carrying out the  

provisions of this Act or any other law for the  

time being in force relating to excise revenue.  

(2) In particular and without prejudice to the  generally of the foregoing provisions, the  

State Government may make rules: -  

 (a) prescribing the duties of excise officers;  

 (b) regulating the delegation of any power by  

the Financial Commissioner, Commissioner or  

Collector, under Section 13, Clause (b);  

(c) prescribing the time and manner of  presenting  and the procedure for dealing

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with appeals from  orders of excise  

officers;  

(d) regulating the import, export, transport or  possession of any intoxicant or Excise bottle  

and the transfer, price or use of any type of  

description of such bottle.  

 (e) regulating the period and localities for  

which, and, the persons or classes of persons,  

to whom licenses, permits and passes for the  

vend by wholesale or by retail of any  

intoxicants may be granted and regulating the  

number of such licenses which may be granted in  

any local area;  

 (f) prescribing the procedure to be followed  

and the matters to be ascertained before any  

license is granted for the retail vend of liquor  

for consumption on the premises;  

 (g) for the prohibition of the sale of any  

intoxicant to any person or class of persons;  

 (h) regulating the power of excise officers to  

summon witnesses form a distance;  

 (I) regulating the grant of expenses to  

witnesses and compensation to persons charged  

with offences under this Act and subsequently  

released, discharged or acquitted.  

 (j) for the prohibition of the employment by a  

license holder of any person or class of persons  

to assist in his business in any capacity what  

so ever;  

 (k) for the prevention of drunkness, gambling  

and disorderly conduct in or near any licensed  

premises and the meeting or remaining of  

persons of bad character in such premises;  

 (l) prohibiting the printing, publishing or  

otherwise displaying or distributing any  

advertisement or other matter commending or  

soliciting the use of, or offering any  

intoxicant calculated to encourage or incite  

any individual or class of individuals or the  

public generally to commit an offence under  

this Act, or to commit a breach or evade the  

provisions of any rule or order made there under,

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or the conditions of any license, permit or pass  

obtained there under:-  

 (m) prohibiting within the State the  

circulation, distribution or sale of any  

newspaper, book, leaflet, booklet, or other  

publication printed and published outside the  

State which contains any advertisement or  

matter of the nature described in clause (1);  

 (n) declaring any newspaper, book, leaflet,  

booklet or other publication, wherever printed  

or published, containing any advertisement or  

matter [of the nature described in clause (1)]  

to be forefeited to the State Government; and  

 (o) implementing generally the policy of  

prohibition.  

(3) Previous publication of rules – The power  conferred by this section of making rules is  

subject to the condition that the rules be made  

after previous publication.  

  Provided that any such rules may be made  

without previous publication if State  

Government consider that they should be brought  

into force at once.  

59.  Powers of Financial Commissioner to make  rules – The Financial Commission may, by  

notification, make rules.  (a) regulating the manufacture, supply, storage  

or sale of any intoxicant, including:-  

  (i) the character, erection, alteration,  

repair, inspection, supervision, management  

and control of any place for the manufacture,  

supply storage or sale of such article and  

the fittings, implements apparatus and  

registers to be maintained therein;  

 (ii) the cultivation of the hemp plant and  

the collection of spontaneous growth of such  

plant and the preparation of any intoxicating  

drug.  

 (iii) the tapping of drawing of tari from any  

tari producting tree.

7    

 (b) regulating the bottling of liquor for  

purposes of    sale.  

 (d) regulating the deposit of any intoxicant in  

a warehouse and the removal of any  

intoxicant from any warehouse or from any  

distillery or brewery.  

 (e) prescribing the scale of fees or the manner  

of fixing the fees payable in respect of any  

license, permit or pass or in respect of the  

storing of any intoxicant;  

 (f) regulating the time, place and manner of  

payment of any duty or fee;  

(g) prescribing the authority by, the  restrictions under, and the conditions on  

which any license, permit or pass may be  

granted including provision for the  

following matters: -  

 (i)The prohibition of the admixture with any  

intoxicant of any substance deemed to be  

noxious or objectionable;  

 (ii) The regulation or prohibition of the  

reduction of liquor by a licensed manufacture  

or licensed vendor from a higher to a lower  

strength;  

 (iii) [the strength at which intoxicant shall  

be sold], supplied or possessed;  

 (iii-a) the fixing of the price below and  

above which any intoxicant shall not be sold  

or supplied by the licensed vendors;  

 (iv) The prohibition of sale of any  

intoxicant except for cash;  

 (v) The fixing of the days and hours during  

which any licensed premises may or may not be  

kept open, and the closure of such premises  

on special occasions;  

 (vi) The specification of the nature of the  

premises in which any intoxicant may be sole,  

and the notice to be exposed at such premises;  

8    

(vii)The form of the accounts to be  

maintained and the return to be submitted by  

license holders; and  

 (viii) The prohibition or regulation of the  

transfer of licenses;  (g-i) declaring the process by which spirit  

shall be denatured;  

 (ii) for causing spirits to be denatured  

through the agency or under the supervision of  

its own officers;  

 (iii) for causing spirits to be denatured  

through the agency or under the supervision of  

its own officers;  

 (h) providing for the destruction or other  

disposal of any intoxicant deemed to be  

unfit for use;  

 (i) regulating the disposal of confiscated  

articles;  

 (j) prescribing the amount of security to be  

deposited by holders of leases, licenses,  

permits or passes for the performance of the  

conditions of the same.”  

5.  The case of the appellant is built around the  

provisions contained in Section 58(2)(e) of the Act.   

6.  The Punjab Excise Act, 1914 as extended to  

the State of Haryana contains the following provisions  

inter alia:  

Section 5 of the said Act reads as follows:  

“5. Power of State Government to declare limit of  

sale by retail and by wholesale. –   

The [State] Government may by notification declare  

with respect either to the whole of [Haryana] or  

to any local area comprised therein, and as regards

9    

purchasers generally or any specified class of  

purchasers, and generally or for any specified  

occasion, the maximum or minimum quantity or both  

of any [intoxicant] which for the purposes of this  

Act may be sold by retail and by wholesale.”  

      (emphasis supplied)  

The expression “any local area” stands out in the said  

statutory provision as distinct from the whole of  

Haryana.  It is to be noted that Section 5 does not  

deal with the rule making power of the State.  In  

fact, it relates to the maximum and minimum quantity  

or both of any intoxicants which may be sold by retail  

and by wholesale.  Similarly, Section 6(a) reads as  

follows:   

“6. Power to limit application of  

notifications, permits, etc., made under this Act.-  

Where under this Act any notification is made, any  

power conferred, any appointment made or any  

license, pass or permit granted, it shall be lawful  

to direct –  

(a) that it shall apply to the whole of [Har- yana] or to any specified local area or  

areas;  (b) …..  (c) …..  

(d) …..”  

(emphasis supplied)  

Equally Section 6 also does not deal with the power  

to make rules.  

7.  It is apparent that the legislature has  

maintained a distinction between the whole and a part

10    

and the part is what is captured in the expression  

“local area”.  Further Section 8 of the said Act reads  

as follows:  

“8. Superintendence and control of excise  

administration and excise officers. -  

(a) Subject to the control of the [State] Gov- ernment and unless the [State] Government  

shall by notification otherwise direct,  

the general superintendence and admin-

istration of all matters relating to ex-

cise shall vest in the Financial Commis-

sioner.”  (b) ….  (c) ….”  

  (emphasis supplied)  

8.  Section 9 of the said Act provides for  

appointment of an Excise commissioner and it reads as  

follows:  

“9. Excise Commissioner. - The State Government  

may by notification appoint an Excise Commissioner,  

and, subject to such conditions and restrictions  

as it may deem fit, may invest him with all or any  

of the powers conferred on the Financial  

Commissioner by this Act.”  

9.  In terms of the notification vesting powers  

of the finance Commissioner apparently under Section  

59 it is that the Excise Commissioner has made the  

rules “Haryana Liquor Licence Rules 1970.  It is  

undoubtedly true that Section 13 forbids delegation

11    

of power under Section 58 inter alia on the Financial  

Commissioner or Commissioner.  Section 34 comes under  

Chapter VI and is relevant.  It reads as follows:  

“34. Fee for terms, conditions and form of, and  

duration of licenses, permits and passes. –  

(1) Every licence, permit or pass granted under  

this Act shall be granted, -  

(a) On payment of such fees, if any;    

(b)  Subject to such restrictions and on such  conditions;  

(c) In such form and containing such partic- ulars;  

(d) For such period;    

as the Financial Commissioner may direct.  

(2) …..  

(3) …..”  

10.  Section 35 speaks about grant of licences for  

sale.  Sub-section (1) of the said provision reads as  

follows:  

“35. (1) Grant of lincenses for sale. - Subject to  

the rules made by the Financial Commissioner under  

the powers conferred by this Act, the Collector may  

grant licenses for the sale of any [intoxicant]  

within his district.”  

      (emphasis supplied)  

12    

11.  Coming to Section 58 undoubtedly what is  

pressed before us by the appellant is a specific  

provision contained in Section 58(2)(e). Breaking down  

the said sub-section, in my view produces the  

following inevitable result.  The State Government has  

the power to frame rules.  

1) To regulate the periods of licences, permits and  

passes either wholesale or retail;  

2) To regulate the localities for which wholesale or  

retail licences, permits or passes may be granted.  

3) To regulate the persons or classes of persons to  

whom the licences, permits or passes may be  

granted either by way of a wholesale or retail  

licence;  

12.  The latter part of Section 58(2)(e) on the  

other hand also permits the Government to regulate by  

rules, the number of such licences which may be  

granted in any local area.  Therefore, it is clear  

that it is in respect of the licences which are  

referred, be it wholesale or retail mentioned earlier

13    

in the provision which can be regulated but however  

limited to any local area.  As against this and  

immediately following Section 58 in Section 59,  

legislature has also empowered the financial  

Commissioner to make rules inter alia to regulate the  

manufacture, supply, storage or sale or any  

intoxicant.  

13.  It is relevant to notice that the High Court  

in the impugned judgment has specifically dealt with  

the expression “local area” by adverting to a judgment  

of this Court reported in 1995 (1) SCC 351.  The  

expression “local area” has been designedly employed  

and it has to be given full play.  It certainly cannot  

mean the whole of the State.  Any other interpretation  

would render the word ‘local area’ in Section 58(2)(e)  

meaningless and, in fact, it would involve doing  

complete violence to the plain meaning of the words  

“local area”.  It may be true that the whole may  

include the part (see in this regard the maxim in  

Brooms Legal Maxims Omne Majus Continet in Se Minus)  

but I do not think that the converse namely the part  

would include the whole could hold good.  Thus, the

14    

expression “local area” as used in Section 58(2)(e)  

would appear to convey the impression that the  

legislature intended to confer power on the State to  

place restrictions on the number of licences which are  

to be given qua any local area. In fact, in the written  

submission given by the State of Haryana, a definite  

case is set up that the State in its wisdom can  

conclude that a particular local area owing to the  

special conditions should be protected from the  

harmful effects of alcohol consumption. An example of  

tribal sub plan area is enlisted where the State may  

be carrying on a special programme. I would think that  

this view finds support also from another circumstance  

in the form of Rule 3 of Haryana Liquor Licence Rules,  

1970.  The said Rule reads as under:  

“3. The authority given by these rules to  

grant and renew licenses is, in each case,  

subject to the restrictions contained in the  

Punjab Intoxicants License and Sale Order as  

to the localities in which licenses may be  

granted and the number of licenses which may  

be granted in any local area, and to such  

reservations from the general superintendence  

of the financial commissioner as the State  

government may notify under Section 8 of the  

Punjab Excise Act, 1914.  

       (emphasis supplied)  

15    

14.  Thus, the said rule reinforces the view that  

the expression “number of licences” which may be  

granted in the local area is within the exclusive  

domain of the State Government and reliance placed by  

the appellant on the number of licences which may be  

granted in Section 58(2)(e) to strike at the impugned  

rule which is otherwise sourced under Section 59 is  

without any basis.  In other words going through both  

the Act and the Rules, a distinction is made between  

the whole of the State and the local area.  In regard  

to rule making power, undoubtedly, the legislature has  

specifically conferred rule making power qua the  

number of licences in any local area upon the State.   

Unless it can be reasoned that the powers to regulate  

sale of liquor within the meaning of Section 59 which  

is undoubtedly placed on the shoulders of the  

financial Commissioner would not include the power to  

make rules in regard to the number of licences for the  

State as a whole, the argument of the appellant must  

fail.   

16    

15.  The word `regulate’ in fact came to be  

considered by the decision of this Court in D.K.  

Trivedi and Sons v. State of Gujarat  1986 (Suppl.)  

SCC 20.  The matter arose under Section 13 inter alia  

of the Mines and Minerals (Regulation & Development)  

Act, 1957.  This Court went on to hold inter alia as  

follows :  

“30. Bearing this in mind, we now turn to  

examine the nature of the rule-making power  

conferred upon the State Governments by Section  

15(1). Although under Section 14, Section 13 is one  of the sections which does not apply to minor  

minerals, the language of Section 13(1) is in  pari materia with the language of Section 15(1).  Each of these provisions confers the power  

to make rules for "regulating". The Shorter  

Oxford English Dictionary, Third Edition,  

defines the word "regulate" as meaning "to  

control, govern, or direct by rule or  

regulations; to subject to guidance or  

restrictions; to adapt to circumstances or  

surroundings". Thus, the power to regulate  

by rules given by Sections 13(1) and 15(1) is a  power to control, govern and direct by rules  

the grant of prospecting licences and mining  

leases in respect of minerals other than  

minor minerals and for purposes connected  

therewith in the case of Section 13(1) and the  grant of quarry leases, mining leases and  

other mineral concessions in respect of minor  

minerals and for purposes connected  

therewith in the case of Section 15(1) and to  subject such grant to restrictions and to  

adapt them to the circumstances of the case  

and the surroundings with reference to which  

such power is exercised. It is pertinent to  

bear in mind that the power to regulate

18    

17.  However, having regard to the connotation of  

the word ‘regulate’ it would include power to control  

the sale of liquor under the Act.  Control of sale is  

possible by providing for licences as it is through  

licencing that the authority can provide for  

conditions under which the sale could be best  

controlled.  If the power to regulate include the  

power to stipulate licences it undoubtedly also would  

include power to provide for number of licences qua  

the State as a whole a matter which I have reasoned  

does not fall under Section 58(2)(e) of the Act.  

18.  In the judgment of this court in Khoday  

Distilleries Ltd. and Others v. State of Karnataka and  

Others reported in 1996 (10) SCC 304, the issue arose  

under the Karnataka Excise Act, 1965.  Undoubtedly,  

there is a provision therein which is pari materia  

with Section 58(2)(e) of the Punjab Excise Act in the  

Karnataka Excise Act, 1965 which has been extracted  

at para 8 of the said judgment.  The case in fact  

related to a distributor licence and not wholesale or  

retail licence which is what the provision speaks of.   

19    

19.  The Court was not dealing with the specific  

question which is posed before us as is clear from the  

judgement.  I have in fact, gone through the Karnataka  

Excise Act and I find that while Section 71 confers  

power on the State Government to make rules there is  

no provision akin to Section 59 of the Punjab Excise  

Act which confers power on any other authority in  

which case it could not possibly be contended that  

sub-section (2) of Section 71 would in any manner cut  

down the width of the general power of Section 71(1)  

for the State Government to make rules for the purpose  

of the Act.  

20.  In such circumstances, I would respectfully  

disagree with the majority view as expressed in the  

judgment of my learned Brother Justice Navin Sinha.   

I would confirm the finding by the learned Division  

Bench of the High Court that the Financial  

Commissioner has power to decide upon the number of  

licenses.  

21.  Having expressed my disagreement with regard  

to the finding of the sole issue which has been dealt  

with in the majority judgment I must necessarily

21    

business is obviously subject to such reasonable  

conditions as may be deemed by the governing  

authority of the country essential to the safety,  

health, peace, order and morals of the community.  

Some occupations by the noise made in their  

pursuit, some by the odours they engender, and  

some by the dangers accompanying them require  

regulation as to the locality in which they may  

be conducted. Some, by the dangerous character  

of the articles used, manufactured or sold,  

require also special qualification in the  

parties permitted to use them, manufacture or  

sell them. The Court in this connection referred  

to the observations of Field, J. in P. Crowley  

v. Henry Christensen; 34 L ED 620 : 137 US 86  

(1890) a part of which is as follows:  

"The sale of such liquors in this way has,  

therefore been, at all times, by the courts  

of every State, considered as the proper  

subject of legislative regulation. ... Their  

sale in that form may be absolutely  

prohibited. It is a question of public  

expediency and public morality and not of  

federal law. The police power of the State  

is fully competent to regulate the business  

to mitigate its evils or to suppress it  

entirely. There is no inherent right in a  

citizen to thus sell intoxicating liquors by  

retail; it is not a privilege of a citizen  

of the State or of a citizen of the United  

States. As it is a business attended with  

danger to the community, it may, as already  

said, be entirely prohibited, or be  

permitted under such conditions as will  

limit to the utmost its evils. ... It is a  

matter of legislative will only."  

(b)The elimination and exclusion from business  

is inherent in the nature of liquor business and  

it will hardly be proper to apply to such a  

business principles applicable to trade which  

all could carry on. The provisions of the law  

cannot be attacked merely on the ground that they  

create a monopoly. Properly speaking, there can  

be a monopoly only when a trade which could be  

carried on by all persons is entrusted by law to  

one or more persons to the exclusion of the  

general public. Such, however, is not the case  

with the business of liquor. The Court for this  

purpose relied upon the following observations  

of Lord Porter in Commonwealth of Australia v.

22    

Bank of New South Wales; 1950 AC 235 : (1949) 2  

AII ER 755:  

"Yet about this, as about every other  

proposition in this field, a reservation  

must be made, for their Lordships do not  

intend to lay it down that in no  

circumstances could the exclusion of  

competition so as to create a monopoly either  

in a State or Commonwealth agency, or in some  

other body, be justified. Every case must be  

judged on its own facts and its own setting  

of time."  

(c)When the contract is thrown open to public  

auction, it cannot be said that there is  

exclusion of competition and thereby monopoly is  

created.  

      (Emphasis supplied)  

22.  I may also refer to the judgment of this Court  

in Maninderjit Singh Bitta v. Union of India and  

others  reported in 2005(1)SCC 679.  In this case  

undoubtedly the rule provided that there will be only  

one license of the nature concerned.  However, the  

right to the license was settled by way of e-tender.   

It was open to any person who is otherwise eligible  

to participate in the e-tender.  Undoubtedly the  

guarantee of fairness of the State action and the  

taboo against arbitrariness must inform the State  

action once it decides to permit trade in liquor.  It  

is to be noticed that the introduction of the rule was

25    

24. I would not lose sight of in the facts of this  

case one dimension in this regard.  The appellant is  

an association of companies.  Article 19 provides for  

various fundamental freedoms.  However, unlike Article  

14 and 21, these freedoms are not conferred on non-

citizens.  In other words, Article 19 is confined to  

citizens. It is well settled that a company though a  

juristic person but not being a natural person is not  

a citizen within the meaning of Article 19.  The writ  

petition is filed without joining any shareholder who  

is a citizen.  I would also take the view that  

therefore reliance placed on Article 19 may not hold  

good.  

25.   Judicial review of policy is justified  

only if the policy is arbitrary or unfair or  

violative of fundamental rights.  Courts must be  

loathe to venture into an evaluation of State  

policy.  I have noticed the principles enunciated  

in paragraph 25 and also noted the view taken by  

this Court in paragraph 27 of the Kerala Bar Hotel  

Cases Supra.  I may also notice that the question

26    

which actually fell for consideration was in a  

different factual matrix.  I do not think that the  

earlier view taken by this Court both in Cooverjee  

B. Bharucha Vs. Excise Commissioner and the Chief  

Commissioner, Ajmer and Others AIR 1954 SC 220 and  

Khodays’ case (supra) in relation to the effect of  

throwing open the right to obtain an exclusive  

privilege not flowering into a monopoly has not been  

overridden.  

26.  The third complaint of the appellant is  

this. The assumption of the monopolistic position  

by the licensee would lead to arbitrary and unfair  

practices which would leave the members of the  

appellant without redress. The High Court, it is  

pointed out has rejected the contention by  

essentially reasoning that the licensee as long as  

it confirms to the conditions and law is a free  

agent and shut out the prospect of judicial review.  

This is what the High Court finds:-  

“32.  There may be some safeguards within the  

policy which protect the rights of the upstream  

licenses such as manufacturers as well as the  

downstream licenses i.e. the purchasers, such as,  

retailers and holders of licences for bars, clubs  

and restaurants.  There is no doubt, however,  

that a sole wholesaler can pick and choose the

27    

parties that he wishes to deal with and, in  

effect, refuse to deal with those he does not  

wish to deal with including by devising various  

strategies.  In doing so, the sole wholesaler can  

also effectively promote and encourage a  

particular brand or brands in preference to  

others.  For instance, he may grant a particular  

dealer or a dealer in particular brands different  

payment facilities and not grant the same to  

others or others who deal in certain other  

brands.  There is nothing that stops him from  

doing so.  The question is whether that would  

render the appointment of a sole wholesaler  

illegal.  

33. The State, we will presume, even in the  

trade and business of liquor must act fairly and  

impartially and not arbitrarily.  We will presume  

that in granting liquor licences and permits the  

State cannot adopt a pick and choose policy and  

must throw the field open to all those who are  

otherwise eligible.  In the present excise  

policy, the State has permitted every eligible  

party to bid.  It has not discriminated against  

or in favour of any party.  The essential  

criteria for the appointment of the wholesaler  

is the value of the bid.  

34. The challenge to the policy and to the  

rule on the ground that the appointment of a sole  

wholesaler in respect of an L-1BF Licence would  

adversely affect the commercial interests of  

those who he deals with or those who must deal  

with him, such as, the petitioners is not well  

founded.  As we noted earlier, theoretically it  

is possible that the commercial interests of  

certain dealers and manufacturers will be  

affected, in as much as, the sole wholesaler will  

have the choice of who it would deal with.  The  

sole wholesaler would also be entitled to grant  

better facilities to some of the dealers.  That,  

however, would not render the policy illegal.  A  

private party is entitled to deal with any person  

or enterprise.  The State, absent special  

circumstances, cannot do so.  We will presume it  

cannot do so, even in so far as the trade and  

business of liquor is concerned.  However, once  

a matter moves from the control of the State or  

the instrumentalities of the State into the  

hands of private enterprises, the restrictions  

applicable to the State and its  

instrumentalities cease to be applicable.  This

28    

is invariably the case in auctions and tenders.   

Take for instance, a case where the State decides  

to construct a building or a group of buildings.   

It can do so itself to the exclusion of all  

others.  It is also entitled to engage private  

parties to do so.  The State cannot pick and  

choose who to deal with.  Absent any special  

circumstances, the State would be bound to  

consider the claim of every party that is  

otherwise eligible to undertake the work.   

However, once the State parts with its rights to  

construct a building and hands it over to a  

private enterprise, the matter ends there so far  

as it concerns the work that it has contracted  

to the private party.  The contractor is not  

bound to call for tenders in respect of every  

item involved in the construction.  The  

contractor is not bound to consider the  

application of every party for the supply of  

material required for the construction of the  

buildings.  The contractor is entitled to obtain  

the material from such parties as it desires and  

on such terms and conditions that the contractor  

desires.  The suppliers of the material would  

not be entitled to compel the contractor to  

afford them an opportunity of supplying the  

material.  The rules of the game that apply to  

a State or an instrumentality of the State do  

not apply to such contractors.”  

27.  In this case, in fact, Mr. Gopal Subramanium,  

learned senior counsel for the appellant drew our  

attention to the fact that the figures would show that  

the licensee has indeed being acting unfairly.  It is  

the case of the appellant that the sole licensee can  

misuse his position in at least three ways.  It is  

contended that it is possible that the licensee  

prefers certain brands to others inasmuch as it  

concerns negotiation, longer credit period and other

29    

terms and conditions.  BIO suppliers would be at the  

mercy of the licensee and they would have no option  

but to reconcile with the terms and conditions which  

would be laid down by the licensee.  Secondly, it is  

contended that failure to adhere with the terms and  

conditions set out may result in a situation where a  

particular brand would not be made available in the  

State of Haryana.  It is further contended that in  

view of the monopolistic position enjoyed by the  

licensee it may choose to promote certain brands over  

others on account of unfair negotiating position made  

available to it by the license.  There are no checks  

and balances to ensure that interest of other stake  

holders is taken care of.  Though the conditions  

provide that the licensee will have to supply goods  

demanded there are no means by which the actual demand  

can be ascertained.  It is further pointed out that  

it is open to the licensee to offer discounts to the  

retailers it seeks to favour.  This results in  

neutralizing the condition relating to the maximum  

sale price being fixed by the excise authority.   

Onerous conditions can be placed upon purchasers as

30    

well as suppliers by the sole licensee and the lack  

of checks and balances renders the same violative of  

Article 14.    

28.  The guarantee of Article 14 against the State  

undoubtedly embraces all spheres of its activities.   

If the action falls foul of the mandate of Article 14  

it is vulnerable, though different yardsticks may  

operate.  Undoubtedly the expression ‘state’ would  

also include within its sweep an instrumentality of  

the State as it would fall under the expression “other  

authorities” in Article 12 of the Constitution.  The  

matter relating to which authorities fall under  

Article 12 has been the subject matter of a catena of  

decisions of this Court.  The principles have been  

culled out with sufficient clarity and I do not see  

any occasion or any reason to dwell more upon the same  

as the appellant even does not have a case that the  

licensee would be an instrumentality of the state  

within the meaning of Article 12 of the Constitution.   

It is a trite law that an effort at bringing a body  

within Article 12 must originate specifically in the  

pleadings.

31    

29.  Pleadings in this case on this point is  

conspicuous by its absence.   

30.  The appellant would point out that in fact,  

after the new regime has been put in place, 5 star  

hotels were not being provided sufficient stocks of  

BIO products being supplied by the members of the  

appellant.  Further it is pointed out that immediately  

upon grant of the licence in 2017, there has been a  

sudden decline in the sales of BIO prod8ucts supplied  

by the members of the appellant.  The reason for this  

decline is sought to be placed at the door step of  

the sole licensee.  The appellant has pointed out that  

there has been sudden decline of 25% in the supply of  

BIO brands of United Spirits Ltd..  There is a  

reference of 30% decline of BIO products of Pernod  

Ricard as well.  There has been significant rise of  

the product of Pernod Ricard in the neighboring states  

of Rajasthan and Delhi, it is pointed out.  

31.  I would notice that many of the contentions  

of the appellant are in the form of apprehensions  

about what may happen in future.  In fact, there is  

a case for the respondents that no complaint as such

32    

was moved against the licensee during the period.     

The licensee is duty bound under the terms and  

conditions of licence to submit pricing of each  

brand at the time of approval of the brand.  The  

department is bound to approve the maximum sales  

price factoring in various elements.  The licensee  

must indicate among other things, the landing price,  

expenses, profit margin.  The price is also  

determined based on the prevalent rates of the same  

and equivalent rate at the neighboring states and  

the Government levies.    

32.  Furthermore, the exclusive licensee is  

under the condition required to keep sufficient  

stock of all brands as are demanded by the procuring  

licensees and all such brands as were registered  

with the department in 2016-17.  Thus at least two  

restrictions exist as in built safeguards which  

operate against the exclusive licensee. The licensee  

is obliged to keep sufficient number of stock of  

all brands which are demanded by the procuring  

licensees.  In this case, the members of the  

appellant would fall within the expression

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‘procuring licensees’. Secondly, there is a  

regulation of the maximum price which the exclusive  

licensee can demand as the price is to be fixed by  

the State itself.  A question however, no doubt,  

arises as to what would happen if the exclusive  

licensee himself also operates retail outlets and  

he promotes certain brands and/ or dampens the trade  

in others.  In the first place I would think that  

ordinarily on the principle that a person would act  

in his own self interest there would be no reason  

for the licensee to deny himself the proceeds of  

the higher turnover based on more sales as by  

seeking to dampen the sale of certain brands it is  

the licensee who would suffer a loss.  Let me assume  

however that he is placed in a situation where there  

is a conflict of interest and by suppressing the  

sale of certain brands and permitting the sale of  

other brands the exclusive licensee is placed in a  

more advantageous position, and therefore, he  

prefers it.  I must remind myself that the complaint  

of the individual company would be that brand which  

it wishes to import and deal in is not made

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available. Quite clearly if there is any such  

concrete incident which is pointed out, it would be  

an infraction of the condition of the licence.   

Certainly it would give rise to power with the  

authorities to take suitable action as available in  

law including in appropriate cases, cancellation of  

the licence.  If such provisions are not already  

there I would observe that the State may devise  

suitable provisions so that an individual who acts  

as the licensee of the state would not do what the  

State itself would be forbidden from doing under  

the Constitution.  I must also remind myself that  

at the same time, the State has apparently gained  

by way of enhanced collection of revenue by the new  

regime put in place.  The State’s power to  

experiment in economic matters shall not suffer  

invalidation at the hands of the Court.  Such power  

must be premised solely on State action falling foul  

of the Constitution and the laws.  State would  

however do well to provide for a suitable mechanism  

by which it can provide appropriate safeguards so  

that there is fair dealing by the exclusive

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licensee.  Subject to the above observations I would  

dismiss the appeal with no order as to costs.  

………………………………….J.  

                          (K.M. Joseph)  

New Delhi;  

February 12, 2019