Dakshin Kalikata Sansad and Another vs The State of West Bengal and Others

Sanjib Banerjee, J.—The Dakshin Kalikata Sansad is a sports club. Like many of its ilk dotting the Maidan and the area around the Dhakuria Lakes, the Sansad apparently set about to expand the area of its activity. In addition ''to the tennis courts, it added a watering whole - a swimming pool. It then ventured to the edge of sports to serve alcoholic refreshments to its apparently sporting members and ran into a volley of opposition from the municipal corporation.

In W.P. No. 825 of 2008 the Sansad and its secretary challenge letters dated April 30, 2008 and May 7, 2008 issued by the Collector of Excise, Kolkata (South). On May 16, 2008 an interim order was made on the first petition directing the excise authorities to not coerce the petitioners to close down the bar. By an order of June 3, 2008 the petitioners were granted liberty to appear before the relevant collector in pursuance of the notice dated May 7, 2008, without prejudice to the petitioners'' rights and contentions. The collector was permitted to pass an order but "the final decision, if adverse to the interest of the petitioner(s), (was) not (to) be given effect to without obtaining leave from Court." On July 1, 2008 the interim order was extended for a month and the excise authorities were directed to produce the complaint lodged by the corporation on the basis of which an order of June 20, 2008 was made by the relevant collector. The interim order stood extended on July 18, 2008 and was continued till the disposal of the petition by an order of September 19, 2008. Some of the respondents have applied, by G.A. No. 226 of 2009, for the collector''s order to be enforced.

The second petition contains the challenges carried in the first petition and, additionally, assails the order of June 20, 2008. The second petition is the more comprehensive and it is such matter which has been extensively heard after affidavits.

The first petitioner is a registered society tracing its history to the year 1928 and claiming to be affiliated to the Indian Football Association, the Cricket Association of Bengal, the Bengal Tennis Association and the Bengal Table Tennis Association. The petition says that "since its inception the petitioner No. 1 took over a land within Deshapriya Park (Western side) from the ... Corporation ... and has been continuing in possession from 1928 as a long term Lessee." The petitioners say that the club has regularly paid in rent of Rs. 1980/- per year. The eulogy in the opening paragraphs of the petition recounts the perceptible achievements of the club and builds up the apparent coup in the club obtaining a licence for its watering hole in the year 2005. The petitioners say that due permission was obtained from the Commissioner of Kolkata Police for such purpose and refer to the renewal for the subsequent years granted by the excise authorities.

On April 30, 2008 the relevant collector issued the following letter to the club which, the petitioners state, came as a bolt from the blue:

It has been brought to the notice of the undersigned that the Kolkata Municipal Corporation, as the owner of the property where the premises of the Club is situated, has expressed serious objection to the running of Bar in the said premises in as much as no prior NOC was obtained from the Kolkata Municipal Corporation for operating an Excise License in the Club premises.

I would request you to remain present personally at 12.00 hours on 5.5.2008 in the office chamber of the undersigned, for hearing regarding the above mentioned matter and for submission of the NOC related to running of the Bar in the Club from the Kolkata Municipal Corporation.

The petitioners declare that they subsequently obtained a copy of the corporation''s letter of April 29, 2008 which had prompted the relevant collector to issue the notice of April 30, 2008. The corporation''s letter, issued by its Joint Municipal Commissioner (Dev.) is brandished by the petitioners in support of the contention that a completely extraneous consideration had been taken into account by the collector who jumped the gun to immediately issue the notice of April 30, 2008. The petitioners suggest that the promptitude with which the collector responded to the corporation''s command betrayed a fawning servility to a political diktat, unbecoming of an authority empowered by a statute to possess the exclusive jurisdiction to decide on the matter. The corporation''s letter ran thus:

Kindly refer to this office No. 831/Land/07-08 dated 12th March 2008 wherein it was brought to your notice that Dakshin Kalikata Sansad, a club being run inside Deshapriya Park, a KMC owned park, is running a Bar at their premises and has also entered into an arrangement with a brewery viz. SKOL Breweries Ltd regarding service of alcohol at the said premises without any authorisation from the Kolkata Municipal Corporation, the owner of the property. You were also requested to immediately cancel the excise licence issued by your office in favour of the said Dakshin Kalikata Sansad. You will kindly appreciate that such licence should not have been issued in the first place without any reference to, and any consent from, the owner of the premises viz. the KMC.

Unfortunately, there has been no response from your office till date in this regard. The Hon''ble Mayor of Kolkata desires immediate cancellation of the excise licence mentioned hereinabove. So, this is to request you once again to take immediate steps for cancellation of such licence with an intimation to the Kolkata Municipal Corporation.

Without then having the benefit of the corporation''s letter of April 29, 2008, the petitioners responded to the collector''s letter of April 30, 2008 on May 2, 2008, requesting three weeks'' time. A more formal notice of May 7, 2008 followed from the collector. The substance of the notice was to require the club''s secretary to present himself before the collector on a specified date, but the fanfare preceding such direction cannot be missed:

Whereas in response to letter bearing No. 232 RE dated 30.4.2008 regarding submission of NOC from the Kolkata Municipal Corporation for running of Bar in the club premises your authorised representative learned advocate Sri Pushan Kar appeared on 5.5.2007 (sic. 2008).

And

Whereas Sri. Kar on 5.5.2008 submitted an application praying for an adjournment of meeting/hearing for three weeks for submission of relevant documents from the Kolkata Municipal Corporation for running of bar in the club premises.

On the basis of the said application you are allowed three weeks time for submission of NOC from the Kolkata Municipal Corporation for running of Bar in the club premises. So you are hereby requested to remain present in the office of the undersigned personally on 4.6.2008 at 12:00 Hrs for submission of the said NOC positively.

The collector''s order came to be made on June 20, 2008. The official referred to the objection of the corporation, the request made by him to the club to submit a no objection certificate from the corporation and the club''s stand that the collector had no authority to ask for the same. The collector cited sections 42 and 43 of the Bengal Excise Act, 1909 and recorded that the failure to produce a no objection certificate from the corporation qualified as a reasonable cause for withdrawal of the licence upon the belief formed on the club''s conduct that no permission had been obtained from the corporation to run the bar. Since it is such order that is at the heart of the petitioners'' attack, it may be seen in its entirety:

The Hony General Secretary of the said club and learned advocate Sri Pushan Kar appeared before the Collector of Excise Kolkata (South). The learned Advocate pointed out that as requested on 4.6.2008 vide his letter bearing No. PK/ 3469 the impugned copy of letter of the KMC was not supplied to them. As such they failed to prepare the written statement regarding their earlier, observation that the Collector of Excise, Kolkata (South) has no authority to ask them to submit the NOC. He therefore prayed time for submission of his written argument in this regard and requested the fixation of a date of hearing of the matter the next week.

Heard the arguments of the learned advocate. It has been made clear to the learned advocate that the substance and nature of objection raised by the Kolkata Municipal Corporation was intimated to them by the letter bearing No. 232 RE dated 30.4.2008 and they were asked to submit the NOC of the Kolkata Municipal Corporation to run the Bar in the Club premises. However when asked to furnish the required NOC from the Kolkata Municipal Corporation, the learned Advocate stated that the Collector has no authority to ask for the same. The contention of the learned Advocate is not well founded as any excise license can be withdrawn for any cause other than those specified in section 42 of the Bengal Excise Act, 1909. Under the facts and circumstances of the case. I am satisfied that the failure to produce NOC on demand qualifies as a reasonable cause for withdrawal of the license. From the actions of the club there is every reason to believe that they have not procured any NOC from the KMC to run the bar since otherwise they would hand over a copy of the same, instead of challenging the authority of the Collector to ask for it. In view of the above submission I am of the opinion that it is a fit case to withdraw the license for the retail sale of foreign liquor in the club namely ''Dakshin Kalikata Sansad'' at 93/IB Rash Behari Avenue, Kolkata-29 in exercise of the power vested u/s 43 of the Bengal Excise Act, 1909. However the Hon''ble High Court has held that if any decision is adverse to the interest of the petitioner, it shall not be given effect to without obtaining leave from the Court. Under the circumstances, it is being ordered that my decision to withdraw the license shall remain inoperative till the production of this order before the Hon''ble Court.

The petitioners argue that it is only the collector''s order and the reasons contained therein that need to be seen for the assessment in the present proceedings. Whether or not there were good grounds otherwise for the collector to arrive at the conclusion than is reflected in the order of June 20, 2008, it has only to be tested against the reasons contained therein. The petitioners say that there was neither any basis for the collector to act upon the corporation''s letter of April 29, 2008 nor any rationale in withdrawing the licence by the order of June 20, 2008. The petitioners insist that beyond the contents of the two notices of the collector leading up to the impugned order and the impugned order itself, the other reasons proffered at the Bar to sustain the collector''s conduct should be disregarded.

The petitioners contend that the corporation has singled out this club for hostile discrimination as the corporation has overlooked various other clubs where alcoholic beverages are served. In particular, the petitioners have referred to sporting clubs around the Lakes and the Maidan and cite at least one other tennis club occupying a part of a park that engage in retail sale of foreign liquor to their members and their members'' guests.

According to the petitioners, section 42 of the Bengal Excise Act (the said Act) had not been invoked as it was a case of the licence being withdrawn. The petitioners refer to section 43 of the said Act and stress on the restrictions prescribed in the exercise of the power u/s 43 by rules framed u/s 85 thereof. The petitioners cite the West Bengal (Foreign Liquor) Rules, 1998 which have been framed in pursuance of section 85 of the Act and refer to Chapter X of the 1998 Rules. The petitioners submit that the restriction on the operation of section 43 of the Act, in this context, is found in Rule 185 of the 1998 Rules. They argue that since the reasons for suspending or Withdrawing or cancelling a licence are enumerated in Rule 185 and the ground cited by the collector is not covered thereby, the exercise of jurisdiction by the collector was patently erroneous and is liable to be set aside. Sections 42 and 43 of the Act and the relevant provisions of Chapter X of the 1998 Rules need to be seen:

Sections 42 and 43 of the Bengal Excise Act, 1909:

Power to cancel or suspend license, permit or pass. - (1) Subject to such restrictions as the State Government may prescribe, by rule made u/s 85, sub-section (2), clause (i) the authority who granted any license, permit or pass under this Act may cancel or suspend it-

(a) if it is transferred or sublet by the holder thereof without the permission of the said authority; or

(b) if any duty, tax or fee payable by the holder thereof be not duly paid; or

(c) in the event of any breach by the holder thereof, or by any of his servants, or by any one acting on his behalf with his express or implied permission, of any of the terms or conditions thereof; or

(d) if the holder thereof is convicted of any offence punishable under this Act or any other law for the time being in force relating to revenue, or of any cognizable and non-bailable offence, or of any offence punishable under the Dangerous Drugs Act, 1930 (2 of 1930) or under the Trade and Merchandise Marks Act, 1958 (43 of 1958) or under any of sections 479 to 489 of the Indian Penal Code (XLV of 1860), or under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955); or

(e) if the holder thereof is subjected to any penalty under Chapter XIV of the Customs Act, 1962 (52 of 1962), or;

(f) where a license, permit or pass has been granted on the application of the holder of an exclusive privilege granted u/s 22, on the requisition in writing of such holder; or

(g) if the conditions of the license, permit or pass provide such cancellation or suspension at will.

(2) When a license, permit or pass held by any person is cancelled under clause (a), clause (b), clause (c), clause (d) or clause (e) of sub-section (1) the authority aforesaid may cancel any other license, permit or pass granted to such person by, or by the authority of, the State Government under this Act, or under any other law for the time being in force relating to excise, or under the Opium Act, 1878 (I of 1878).

(3) The holder of a license, permit or pass shall not be entitled to any compensation for its cancellation or suspension under this section, or to the refund of any fee paid or deposit made in respect thereof.

Power to withdraw license, etc. - (1) Whenever the authority which grated any license, permit or pass under this Act considers that the license, permit or pass should be withdrawn for any cause other than the specified in section 42, it may, subject to such restrictions (if any) as the State Government may prescribe by rule u/s 85, withdraw the license, permit or pass either-

(a) on the expiration of fifteen days'' notice in writing of its intention to do so, or;

(b) forthwith, without notice, after recording its reasons in writing for doing so

(2) When a license, permit or pass is withdrawn under sub-section (1) there shall be paid to the holder of the license, permit or pass, as the case may be, the amount (if any) deposited as security or in advance as fees in respect of the unexpired period of the license, permit or pass together with compensation amounting to fifteen days'' average fees payable in respect of the license, permit or pass calculated in the manner specified in subsection (3):

Provided that where a license, permit or pass is withdrawn without notice the amount of such compensation shall be twice the amount of such average fees.

(3) The amount of fifteen days'' average fees referred to in sub-section (2) shall be calculated in the following manner, that is to say,-

(i) where the fees in respect of the license, permit or pass have been fixed by auction, the amount of fifteen days'' average fees shall bear to the total amount of fees so fixed the same proportion as the period of fifteen days bears to the total period of the license, permit or pass; and

(ii) in other cases the amount of fifteen days'' average fees shall be the average for fifteen days of the fees actually paid in respect of the license, permit or pass during a period of three months or during the actual period whichever is less, immediately preceding the withdrawal of the license, permit or pass.

Rules 163 and 185 of the West Bengal (Foreign Liquor) Rules, 1998:

Definitions. - In this chapter, unless there is anything repugnant in the subject or context,-

(i) "club" means a club desiring to obtain or holding a licence for the sale of foreign liquor under these rules and includes a mess, institute, society, lodge or other similar organisation by whatever name called;

(ii) "club premises" means the lands and buildings owned or occupied by the club.

Suspension, withdrawal, cancellation. - A licence granted to a club under these rules may be withdrawn or suspended by the Collector and may be cancelled by him for breach of any of the terms and conditions of the licence or of any provision of the Act, or the rules and orders thereunder, for the time being in force, or for any of the following reasons:

(a) if the club has ceased to exit, or

(b) if it is not conducted in good faith as a club or if it is kept or habitually used for any unlawful or immoral purpose, or

(c) if there is drunkenness on the club premises, or

(d) if any person who is not a member or has not been accepted by the club as a guest of a member in accordance with these rules is admitted to the club for the purpose of obtaining of drinking liquor.

The petitioners have relied on the judgments reported at Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, Pavanendra Narayan Verma Vs. Sanjay Gandhi P.G.I. of Medical Sciences and anr, , Union of India (UOI) and Another Vs. G.T.C. Industries Limited., Bombay, and Commissioner of Police and Others Vs. Acharya Jagadishwarananda Avadhuta and Another, for the proposition that the validity of a quasi-judicial order has to be tested on the basis of the reasoning contained therein and not on the basis of the plea of the person seeking to sustain the order. The principle is best captured in Mohinder Singh Gill at paragraph 8 of the report:

The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J: in Gordhandas Bhanji:

Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

Orders are not like old wine becoming better as they grow older.

The petitioners rely on the judgment reported at The Purtabpore Co., Ltd. Vs. Cane Commissioner of Bihar and Others, to suggest that the authority required to perform a quasi judicial duty under a statute has to apply his personal judgment and not follow the command of any person who may even be his superior. Paragraphs 11 and 12 of the report are relevant:

In the matter of exercise of the power under Rule 6(1) the State Government and the Cane Commissioner are concurrent authorities. Their jurisdiction is co-ordinate. There was some controversy before us whether a Cane Commissioner who had reserved an area for a sugar factory for a particular period can alter, amend, or modify the area reserved in the middle of the period fixed. As seen earlier 208 villages with which we are concerned in this case were reserved for the appellant for two seasons (sic) 1966-67 and 1967-68. The contention was that the Cane Commissioner could not have interfered with that reservation within that period. The High Court has come to the conclusion that the Cane Commissioner who had the power to make the reservation in question must be held to have hail the power to alter or modify that reservation. But it is not necessary for us to pronounce on this question as we are of the opinion that the impugned orders though purported to have been made by the Cane Commissioner were in fact made by the Chief Minister and hence they are invalid. We have earlier seen that the Cane Commissioner was definitely of the view that the reservation made in favour of the appellant should not be disturbed but the Chief Minister did not agree with that view. It is clear from the documents before us that the Chief Minister directed the Cane Commissioner to divide the reserved area into two portions and allot one portion to the 5th respondent. In pursuance of that direction, the Cane Commissioner prepared two lists "Ka" and "Kha". Under the orders of the Chief Minister, the villages contained in list "Ka" were allotted to the appellant and in list "Kha" to the 5th respondent. The Cane Commissioner merely carried out the orders of the Chief Minister. It is true that the impugned orders were issued in the name of the Cane Commissioner. He merely obeyed the directions issued to him by the Chief Minister. We are unable to agree with the contention of Shri Chagla that though the Cane Commissioner was initially of the view that the reservation made in favour of the appellant should not be disturbed, he changed his opinion after discussion with the Chief Minister. From the material before us, the only conclusion possible is that the Chief Minister imposed his opinion on the Cane Commissioner. The power exercisable by the Cane Commissioner under Clause 6(1) is a statutory power. He alone could have exercised that power. While exercising that power he cannot abdicate his responsibility in favour of anyone - not even in favour of the State Government or the Chief Minister. It was not proper for the Chief Minister to have interfered with the functions of the Cane Commissioner. In this case what has happened is that the power of the Cane Commissioner has been exercised by the Chief Minister, an authority not recognised by clause (6) read with clause (11) but the responsibility for making those orders was asked to be taken by the Cane Commissioner.

The executive officers entrusted with statutory discretions may in some cases be obliged to take into account considerations of public policy and in some context the policy of a Minister or the Government as a whole when it is a relevant factor in weighing the policy but this net absolve them from their duty to exercise their personal judgment in individual cases unless explicit statutory provision has been made for them to be given binding instructions by a superior.

The manner in which the statutory duty has to be discharged by the relevant authority has been sought to be demonstrated by reference to the judgments reported at Commissioner of Police, Bombay Vs. Gordhandas Bhanji, , Khudiram Das Vs. The State of West Bengal and Others, and Indian Railway Construction Co. Ltd. Vs. Ajay Kumar, The rule in Gordhandas Bhanji has been unreservedly applied upto the recent times. The essence of Mohinder Singh Gill is based on Gordhandas Bhanji as is Khudiram Das.

The petitioners say that section 43 of the said Act requires the collector to form an opinion that the licence, permit or pass should be withdrawn whereupon the power may be exercised. They say that the jurisdictional fact is the consideration by the collector and refer to the judgments reported at The Barium Chemicals Ltd. and Another Vs. Sh. A.J. Rana and Others, and Bhikhubhai Vithlabhai Patel and Others Vs. State of Gujarat and Another, . for such purpose. Paragraph 14 of the Barium Chemicals judgment requires a quasi judicial order to reflect that there was proper application of mind and thinking:

The words "considers it necessary" postulate that the authority concerned has thought over the matter deliberately and with care and it has been found necessary as a result of such thinking to pass the order. The dictionary meaning of the word "consider" is "to view attentively, to survey, examine, inspect (arch), to look attentively, to contemplate mentally, to think over, meditate on, give heed to, take note of, to think deliberately, bethink oneself, to reflect" (vide Shorter Oxford Dictionary). According to Words and Phrases - Permanent Edition Vol. 8-A "to consider" means to think with care. It is also mentioned that to "consider" is to fix the mind upon with a view to careful examination; to ponder; study; meditate upon, think or reflect with care. It is therefore, manifest that careful thinking or due application of the mind regarding the necessity to obtain and examine the documents in question is sine qua non for the making of the order. If the impugned order were to show that there has been no careful thinking or proper application of the mind as to the necessity of obtaining and examining the documents specified in the order, the essential requisite to the making of the order would be held to be non-existent.

Finally, the petitioners claim that the principle of promissory estoppel would come into play upon the original licence being granted by the collector and refer to the judgment reported at Union of India (UOI) and Others Vs. Indo-Afghan Agencies Ltd., for such purpose.

The State assails the basis of the collector granting the initial licence. The State, suggests that by 2005, the West Bengal Excise (Selection of New Sites and Grant of License for Retail Sale of Liquor and Certain Other Intoxicants) Rules, 2003 had been put in place and the collector committed a jurisdictional error in overlooking such Rules, and particularly, Rule 9 thereof in granting the licence. The State has relied on Rule 9(1) of the said Rules:

Procedure for selection of new site for grant of licenses. - (1) Subject to such instructions as may be issued by the State Government or Excise Commissioner from time to time, if the Collector is of the opinion, having regard to the general trend of consumption of liquor and other intoxicant as specified in sub-rule (1) of rule 2 in a local area or its adjoining areas that it is necessary to grant license(s) of any number and any category referred to in clauses (a) and (c) to (m) of rule 4 at certain new sites within a local area in order to meet the demand of such area or adjoining areas, he shall, for the purpose of selection of new sites by the State Government u/s 30, prepare a preliminary list of such local areas within which, in his opinion, license of any category should be granted.

Provided that in preparing a preliminary list, the Collector shall not include therein the sites for the grant of the licenses of the categories specified in clauses (f) to (m) of rule 4 unless a person or company, or firm, the owner of a hotel, restaurant, club, sites, theatre or other places of public resort and entertainment who is eligible under the provisions of these rules, or any person duly authorised by him, makes an application in Form I or Form II (appended to these rules) as the case may be, with the requisite court-fee:

Provided further that at the time of processing the proposal for grant of the categories of licenses mentioned in clauses (f) to (m) of rule 4, the Collector may process the proposal before completion of the proposed site according to the blue-print plan, but before issuing license, after obtaining approval of Government for selection of site, the Collector shall ask the applicant to acquire the premises or complete the construction within thirty days of receipt of the communication and only after acquisition or completion within the stipulated time, as the case may be, the Collector shall issue the license.

The State says that since the present matter is governed by the second proviso to Rule 9(1), as a club is covered by Rule 4(1) of the 2003 Rules, it was incumbent on the club to acquire the premises before the licence could be issued to it. The state submits that the word "acquire" in the second proviso to the sub-section would only admit of a construction of outright ownership or a long-term exclusive right of possession. The State argues that since the collector had failed in his duty to ascertain at the time of the grant of the licence for the first time as to whether the club had the right to the property whereat the licence was sought, it was open to the collector to rectify his mistake. The State contends that the word "acquire" has to be seen in the sense of absolute or near absolute ownership as a landlord or a lessor may have let or leased out a property intending it to be used as a bar; and, at any rate, even if the applicant does not exclusively own the premises whereat the licence is sought, the applicant should have the landlord or the lessor''s concurrence to operate a bar thereat. The State says that the notice issued by the collector and the order passed by him were upon his realisation of a jurisdictional error committed at the outset; and the fact that the corporation reminded the collector of his faulty issuance of the permission was of no consequence and is a mere argument of prejudice.

The State points out that all that the collector required the club to do was to present a written permission from the landlord or otherwise satisfy the collector that the club had "acquired" the premises. The club could produce no deed or document in support of its right to occupy the premises. The State emphasises that even after the order the club has made no attempt to demonstrate its right to the premises and there are only passing references in the second /petition to there being a lease executed by the corporation in the club''s favour. The State refers to a judgment reported at Bharat Singh and Others Vs. State of Haryana and Others, to assert that the fact that there is a lease in the club''s favour should have been averred and established by the petitioner. A passage from paragraph 13 of the report has been placed:

...In our opinion, when a point which is ostensibly a point of law is required to be substantiated by facts, the party raising the point, if he is the writ petitioner, must plead and prove such facts by evidence which must appear from the writ petition and if he is the respondent, from the counter-affidavit. If the facts are not pleaded or the evidence in support of such facts is not annexed to the writ petition or to the counter-affidavit, as the case may be, the court will not entertain the point. In this context, it will not be out of place to point out that in this regard there is a distinction between a pleading under the CPC and a writ petition or a counter- affidavit. While in a pleading, that is, a plaint or a written statement, the facts and not evidence are required to be pleaded, in a writ petition or in the counter-affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it. So, the point that has been raised before us by the appellants is not entertainable. But, in spite of that, we have entertained it to show that it is devoid of any merit.

The State has relied on the decision reported at Smt. Shrisht Dhawan Vs. M/s. Shaw Brothers, to suggest that an error in a jurisdictional fact vitiates an order and renders it ultra vires. The State suggests that the initial licence granted by the collector was illegal and upon the corporation bringing it to the notice of the collector that the club had no authority to run a bar on corporation land, the collector merely rectified the mistake.

The State submits that the 1998 Rules have no manner of application and, for all practical purposes, stand repealed. The argument is that the 2003 Rules which have also been framed u/s 85 of the said Act, are not confined to choosing sites for grant of licence but cover all matters relating to retail sale of liquor. The State refers to the definition of license in Rule 3(1)(vi) of the 2003 Rules and distinguishes such general definition against the specific definitions of canteen licence, club licence and the like in Rule 2 of the 1998 Rules. The State says that the categories of licences have been redefined in Rule 4 of the 2003 Rules and refers to clause 4(1) which is relevant for the present purpose:

Categories of licenses....

(1) foreign liquor for consumption ''on'' the premises of any theatre, club, canteen, dak bungalow, railway refreshment room, dining car, steamer, customs, airport or any other places of public resort and entertainment and attached bar;

The State says that Rule 17 of the 2003 Rules leaves no manner doubt that the 1998 Rules have to be seen as redundant or, at the very leas have to be read down upon the 2003 Rules coming into effect. Rule 17 of the 2003 Rules provides as follows:

Overriding effect of rules. These rules shall have effect notwithstanding anything to the contrary contained in any other rules or orders relating to the selection of new sites and the grant of license for the time being in force and all such rules or orders shall be subject to these rules.

There has been considerable banter at the Bar as to the extent of submission made on behalf of the State and submission made on behalf of the petitioners not being founded on the pleadings. The petitioners and the State have referred to Bharat Singh for arguments at the final hearing being de hors the State''s affidavit and the petition, respectively. The petitioners criticise the State''s effort to question the initial grant and the State''s suggestion that the licence was void ab initio upon the jurisdictional fact in the second proviso to Rule 9(1) of the 2003 Rules not being considered. The State urges that the petitioners'' argument that the licence was issued under the 1998 Rules be disregarded since the original licence at page 54 of the petition bears a reference to a certain Rule 9 and notwithstanding the 2003 Rules not being specified, it is Rule 9 of the 2003 Rules that had been referred to; and, the petitioners had not made out a case of mistaken reference to such rule in the petition. The petitioners have, of course, cited the judgment reported at J.K. Steel Ltd. Vs. Union of India (UOI), for the principle that the mistaken reference to the source of the power would not detract from the exercise of the power if it is recognised that the authority otherwise possessed the jurisdiction.

The initial licence of December 5, 2005 is entitled "Licence for the sale of foreign liquor by a club to its members." Above the heading, the licence refers to "Form 1 (See Rule 9)." The petitioners refer to appendix-G relating to Rule 170 (which is in Chapter X) of the 1998 Rules and demonstrate that the licence is in the exact form as annexure-G to the 1998 Rules. The petitioners say that the reference to an unspecified "Form 1 (see Rule 9)" is an aberration and the State cannot take advantage of the stray reference to Rule 9 in the licence to claim that the reference is to the relevant rule of the 2003 Rules or that the grant was made under the 2003 Rules and not under the 1998 Rules. The petitioners reiterate that the extent of inquiry herein must be restricted to the notice of the collector and his order and matters not apparent therefrom need not be taken into account.

The corporation, almost a bit player in these proceedings, says that it was well within its domain as the owner of the park to apprise the collector of the anomaly in the grant of the licence and require the collector to revisit the matter. The corporation says that there is nothing in the papers that the petitioners have brought to suggest that a long term lease for 99 years as claimed by the petitioners had been granted by the corporation in favour of the club. It suggests that despite a minimal rate that the club has tendered, it has arrogated unto itself the right of absolute ownership of the premises, the corporation submits that its munificence in according permission for (sic) a sports club has been misused by the club to run a veritable business. The corporation repeats a ground put forth by the State that in the bar-having been allowed to be run by another party, the petitioners have acted in derogation of the permission to run the bar accorded by the Commissioner of Police. Such violation of the police permission, according to the corporation and the State, amounts to a violation of the said Act and is specifically recognised by section 6 of the Act.

The corporation has referred to a judgment reported at 62 CWN 186 (Suhrit Mitra v. Corporation of Calcutta & Ors.) to assert that parks are public places that vest in the corporation. Another judgment reported at Shree Madhusudan Mills Ltd. Vs. Corporation of Calcutta and Others, has been placed for the principle that in public streets and public places the public would have the right of way and the privilege to use the same unobstructed. The decision was rendered in the context of a challenge to advertisement hoardings being put up pursuant to licences issued by the corporation. A Division Bench of this Court held that if the hoardings did not interfere with public user of footpaths or pavements, the corporation''s decision to issue licences for the hoardings could not be faulted.

Since the petition has already been noticed, the affidavits used by the parties need to be seen. The State has categorically averred at paragraph 7 of its affidavit that the club had applied for a licence for sale of foreign liquor to its members "under the Bengal Excise Act, 1909, category 4(n) of notification No. 80-EX dated 29/07/2003 as amended." In the relevant reply, the petitioners have glossed over such matter though the number of the notification and the reference to the category in the State''s affidavit appear to be mistaken. The notification bears No. 800-EX and the relevant category is clause (1) of Rule 4 and not as indicated. Yet, the assertion is certainly there that the application was received under the 2003 Rules.

The State has referred to the letters issued by the corporation and has contended in the affidavit that the corporation as owner of the premises had a right "to voice objection to alcohol being served at a premises owned by it." Paragraph 7 of the State''s affidavit clearly demonstrates that the collector was goaded into action by the corporation. The affidavit speaks of the club failing to produce any document in support of its assertion of a 99 year lease and denies the legal grounds canvassed in the petition.

The corporation''s affidavit asserts that the club had no right "to establish, open and run a Bar at Deshapriya Park and there is no scope even to establish and run a Bar in any Park." The affidavit repeats at several places that the club had no permission from the corporation to operate a bar. There are some murmurs of money remaining due from the club to the corporation and an assertion that a token licence fee had been fixed for a huge area of land only for the development of sports and cultural activities, but the club had made illegal structures and indulged in activities unrelated to sports and culture. The affidavit speaks of a corporation official having required the club to furnish a copy of the agreement between the corporation and the club a a copy of the agreement that the club executed in favour of Skol Brewer Ltd. for running the bar, which the club had completely disregarded. The affidavit says that the licence for the bar was obtained in a clandestine manner and the initial grant, without the corporation''s sanction, was improper and as such the collector was required not to continue the same. The corporation has said that the collector "understood the mistake committed by ... granting the excise licence in favour of the petitioner No. 1 for selling liquor in the (sic) irrespective of the requirement of provision of the NOC from the (sic) corporation."

The only germane issue appears to be as to the propriety of the collector''s order of June 20, 2008. At the end of the day it is the reasonableness of the order that has to be tested. As to whether the order was reasonable or not would depend on the decision-making process, which is what is principally assessed in judicial review. The three primary concerns in this matter are as to whether the collector had the jurisdiction to make the order and whether such jurisdiction has been properly exercised; whether the collector complied with the principles of natural justice in making the order; and, as to whether the collector acted on his judgment and applied his mind rather than acting at the dictates of any other.

The notice of April 30, 2008, which is necessarily to be included in the decision-making process for that is the foundation of the order, referred to the corporation''s objection and required a no objection certificate from the corporation to be furnished for running the bar. Such letter, as in almost all show cause notices preceding a quasi judicial order, set the contours for the decision-making process. Ostensibly, the collector has remained assessed in judicial the notice in passing the order of June 20, 2008. The question that arises upon the State''s argument is whether the order is to be taken at face value or the intrinsic philosophy or underlying rationale thereof needs to be inquired into.

Clearly, the collector did not inherently lack jurisdiction in initiating the process for withdrawing the licence. But the withdrawal was only to be upon the satisfaction of the statutory preconditions set in section 43 of the Act. If the parties were ad idem on the applicability of the 1998 Rules, the expression "subject to such restrictions (if any) as the State Government may prescribe by rule u/s 85" in section 43 would not pose any problem of construction. In such event the omnibus power conferred on the issuing authority by section 43 of the Act would be circumscribed by Rule 185 of the 1998 Rules that permits suspension or withdrawal or cancellation of licence on one or more of the four grounds enumerated therein.

The State says that Rule 185 of the 1998 Rules would operate if a licence were to be granted to a club under such Rules, as the opening words of the Rule stipulate. It is the State''s argument that since the licence refers to Rule 9 and that is an obvious reference to the relevant rule in the 2003 Rules; the licence was not issued under the 1998 Rules. The sequitur to such argument is that the restriction on the general authority to withdraw a licence u/s 43 would not be there unless the licence was demonstrably issued under the 1998 Rules. The State has not produced the form of a licence issued under the 2003 Rules and the form of the grant in the Sansad''s favour does not conform to any of the forms appended to the 2003 Rules. The Petitioners seek to sustain their argument that the licence was issued under the 1998 Rules by referring to annexure-G to such Rules.

The words "Form 1 (See Rule 9)" do not refer to any specific provision, while is logical, as the State contends, that any application for a new licence for retail sale of foreign liquor made after the 2003 Rules came into effect had necessarily to be made under such Rules, the form of the grant bearing verisimilitude to appendix-G to the 1998 Rules would suggest otherwise. The 1998 Rules have not been repealed, whether by the 2003 Rules or otherwise. There is no provision governing withdrawal of a licence in the 2003 Rules, though Rule 185 is specific to such issue in the 1998 Rules. The effect of an overriding provision as Rule 17 of the 2003 Rules would be to obliterate any oilier provision contrary to anything contained in the 2003 Rules, but the relevant field is left uncovered in the 2003 Rules. Though there is no specific denial in the petitioners'' reply to the State''s assertion in its affidavit that the club''s application had been made under the 2003 Rules, it would be harsh to single this out to wish Rule 185 of the 1998 Rules away since the form of the grant conforms to the one found in the 1998 Rules.

The preamble to the 2003 Rules speaks of rules on similar lines framed in 1993 being replaced and does not refer to the 1998 Rules:

In exercise of the powers conferred by sections 85 and 86, read with sections 30, 31, 36, 37 and 37A of the Bengal Excise Act, 1909 (Ben. Act V of 1909), the Governor is pleased hereby to make, with immediate effect, the following rules in supersession of the West Bengal Excise (Selection of New Sites and Grant of License for Retail Sale of Spirit and Certain Other Intoxicants) Rules, 1993 published with this Department notification No. 148-EX., dated the 22nd March, 1993 as subsequently amended:

That the 1998 Rules were, in fact, not repealed and the State Government continued to think that such Rules were in currency would appear from the fact that even after the 2003 Rules were notified in July, 2003 as many as 21 notifications had been issued by the State amending the 1998 Rules till the year 2007. Of the amending notifications, the one of March 6, 2006 modified a key provision. Rule 181 of the 1998 Rules prior to the amendment of March 6, 2006 prohibited the sale of foreign liquor for cash or for coupons by a club. The modified rule permits the sale of foreign liquor by a club to its members or their guests for cash or for coupons exchanged for cash in the manner approved by the collector in writing. The State''s contention that the 1998 Rules became dead wood upon the 2003 Rules being framed is belied by the State Government''s contemporaneous understanding of the matter.

There would be other serious difficulties faced by the State if it were to be allowed to proceed on the implied repeal of the 1998 Rules. Without referring to the several other salutary provisions in the 1998 Rules that apparently continue to rule the field, the discussion here may be restricted to Chapter X of the 1998 Rules. Apart from a club being defined in the 1998 Rules and not being defined in the 2003 Rules, there are certain conditions imposed by the 1998 Rules for an entity to be deemed as a club entitled to apply and obtain a licence for retail sale of foreign liquor. There are no comparable provisions in the 2003 Rules. Rule 164 of the 1998 Rules provides for the objects of an organisation for it to be deemed to be a club and sets down basic guidelines for a club''s rules and bye-laws. Clause 1(b)(v) of Rule 164 stipulates that a club''s rules or bye-laws must incorporate a provision for "the supply of liquor to members only for consumption by themselves and by their guests, if any, admitted under the rules of the clubs." Rule 165 imposes restrictions on membership and guests. Rule 167 bars a club from remunerating any person for sales of liquor or distributing any profits to its members except on liquidation. If the State''s argument is to be accepted, the laudable conditions imposed for an organisation to be regarded as a club and the provisions relating to the conduct of its business would be lost.

Rule 170 of the 1998 Rules is entitled, "Forms to applications and of licence." It stipulates that a licence granted under those Rules shall be in Form I and an application by a club for grant of licence shall be in Form II at appendix G. The State has not produced the club''s application. There is a reference to Form I in the licence granted to the Sansad and the form of the grant is as under appendix G to the 1998 Rules. There is a Form I appended to the 2003 Rules, but that is a form of application by an individual for grant of a license for the retail sale of liquor and other intoxicants. Form II appended to the 2003 Rules is the form of application by a company/corporation/ firm/ co-operative society for grant of a licence for the retail sale of liquor and other intoxicants. There are 11 forms of licences at the end of the 2003 Rules. Licence form No. 1 is in respect of licence for the retail sale of country spirit for consumption off and/or on the site. Licence form No. II is in respect of licence for the retail sale of coloured and flavoured spirit for consumption off and/or on the site. Licence form No. Ill is in respect of licence for the retail sale of coloured and flavoured spirit, beer and 50� UP foreign liquor for consumption off the site from the opium depots/erstwhile opium depots/ erstwhile ganja licensees. Licence form No. IV is in respect of licence for the retail sale of bhang for consumption off the site. Licence form No. V is in respect of licence for the manufacture and retail sale of pachwai for consumption off and/or on the site. Licence form No. VI is in respect of licence for the retail sale of beer for consumption on the site. Licence form No. VII is in respect of licence for the retail sale of beer, wine and low alcoholic beverage (LAB) for consumption off the site. Licence form No. VIII is in respect of licence for the retail sale of foreign liquor for consumption off the site. Licence form No. IX is in respect of licence for the retail sale of beer, wine and low alcoholic beverage (LAB) from department stores for consumption off the site. Licence form No. X is in respect of licence for the retail sale of foreign liquor for consumption on the site (without hotel and restaurant). Licence form No. XI is in respect of licence for the retail sale of foreign liquor in hotel/restaurant/

bar/bar attached to any hotel or restaurant/ approved rooms of any hotel, to be consumed on the site.

If there are 11 forms of licences found in the 2003 Rules, but none that is relevant for the present purpose and if the-one relevant form of licence that may be issued to a club is found in the 1998 Rules, it may safely be gathered that the licence granted to the Sansad was under the 1998 Rules, the reference therein to an unspecified Rule 9 notwithstanding. The effect of such conclusion is that for the withdrawal of such licence the restrictions under Rule 185 would apply.

There are several anomalies apparent in the 2003 Rules and the forms thereunder. There are two forms for applications for grant of licence. The first form is for individuals. As to who would be treated as individual applicants may be gauged from Rule 11 (a) of the 2003 Rules which specifies an individual to be "any person of or above the age of twenty one years who is a citizen of India or a Person of Indian Origin (PIO)." A club would, thus, not qualify to be an individual eligible to file an application for grant of a licence under the said Rules in Form I thereunder. Other than individuals, firms and companies and societies are also eligible to apply for grant licence under Rule 11 of the 2003 Rules. Yet, Form II of the 2003 Rules recognises only companies, firms, corporations and co-operative societies as applicants. Then there is a Form III which is referred to in Rule 14 of the 2003 Rules, but there is no Form III appended to the Rules (at least not in the book relied upon by the State). It makes one wonder that in the general carelessness and lack of clarity relating to the rules-not the least of them being the State''s understanding that the 1998 Rules stand impliedly repealed by the 2003 Rules when the State has merrily gone about amending the apparently repealed Rules-whether the expression "under these rules" have also been needlessly allowed to remain in Rule 185 of the 1998 Rules, despite it being apparent that the 1998 Rules continue to operate.

Technicalities apart, there is a more substantial ground that has been urged by the petitioners. Even if it is assumed that the wide powers of the collector u/s 43 of the said Act were not circumscribed by the provisions of any rules made by the State u/s 85 of the Act, whether by the principles of natural justice or on account of reasonableness, the collector was required to inform the club as to why its licence was liable to ''be withdrawn. The scope of the "why" in the notice of April 30, 2008 needs to be assessed since it is apparent that the club understood the notice to be harbinger of imminent withdrawal of the licence. The charge that is evident in the notice is that the club had not obtained permission from the corporation for "operating an Excise Licence in the Club premises." The notice did not indicate, despite the State''s argument to the contrary, that the failure to produce the corporation''s approval would have disentitled the initial grant. The order of the collector has necessarily to be seen in the context of the notice that preceded it.

It is indisputable that a quasi-judicial order that has been called into question has to sustain itself on the reasons that it contains. There was no indication in the show cause notice that the grant itself was irregular, though the State has laboured on the initial licence being without jurisdiction it is not necessary to assess whether or not the initial grant was illegal or improper since the notice initiating the process did not refer to such matter. A grant had been made, an objection had been received - albeit from as resourceful and powerful a lessor or licensor as the corporation - and the collector required the corporation''s approval to be furnished. Neither the notice nor the order speaks of the initial grant having been irregular in the absence of the corporation''s permission to run the bar. Even though the notice of April 30, 2008 did not indicate that the licence could be withdrawn, the immediate conduct of the petitioners would show that they had understood the notice as a precursor to the licence being withdrawn. But if the collector had intended to prospectively annul the initial grant on the ground of non-compliance with any statutory requirement, the notice ought to have referred to the same. In the absence of the notice having alluded to such matter, the unstated reasoning of the order cannot be justified by recognising it to be an acknowledgement of the collector''s mistake in failing to adhere to a statutory precondition at the time of the initial grant.

The show cause notice has merged in the order. Reasons not found in the order or in the show cause notice-including the alleged violation of the conditions imposed by the police commissioner''s permission-that culminated in the order cannot now be cited in support of the order. On such count, the order appears to be unreasonable.

The petitioners have gone to town on the assertion in the corporation''s letter that the "Mayor of Kolkata desires immediate cancellation of the Excise Licence ..." There are no discernable grounds of mala fides found in the petition and no more need be read into the Joint Commissioner''s letter of April 29, 2008 than an exuberance on his part to refer to the Mayor''s desire in emphasising on the licence being required to be cancelled. There is no evidence to show the Mayor''s direct or personal involvement or to infer that the Mayor intended to goad the collector to act in the manner that the collector did.

But there is a sense conveyed by the collector''s notice of April 30, 2008 that it was the corporation''s insistence that prompted him to issue such notice. There is an overwhelming reference to the corporation both in the notice and in the order. There arises a question as to whether the collector issued the notice and made the order on the appreciation that a landlord or a licensor had protested its premises being used by the tenant or licencee as a bar; or as to whether the collector accorded the courtesy to the corporation since it was the corporation. It is possible, as the petitioners suggest, that the corporation''s overwhelming clout-what, with a reference to the Mayor''s desire in its letter of April 29, 2008-may have clouded the collector''s application of his independent judgment that the statute commands him to exercise.

Since the principal challenge in these proceedings is now to the order of withdrawal of licence made by the collector and since the notices that preceded the order have merged therein, it is not necessary to assess the corporation''s conduct in the matter. It may only be observed that the corporation may have missed the wood for the trees in seeking to get at the club through the collector.

The result is that the order of June 20, 2008 cannot be sustained and is set aside. W.P. No. 825 of 2008 and G.A. No. 226 of 2009 are disposed of in view of W.P. No. 131 of 2009 being allowed. The State will pay costs assessed at 1000 GM to the petitioner club.

Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.