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V. Sivaraman Nair, J.—Dealers in Indian Made Foreign Liquor are the petitioners. They assail the amendment to the A.P. Foreign Liquor & Indian Liquor Rules, 1970 by issue of G.O.Ms. No. 948, Revenue (Excise-III), Department, dt.30-9-1993, as arbitrary, unreasonable, discriminatory illegal, and devoid of jurisdiction.
Petitioners hold licences issued under Rule 23 of the A.P. Foreign Liquor & Indian Liquor Rules, 1970; such licences were issued prior to the impugned amendment. The period of validity of the licences is five years from 1-10-1992 to 30-9-1997. Some of the petitioners hold F. L. 15 licences issued under Rule 23(i) - wholesale licence for the sale of all kinds of Indian/Foreign Liquor and/or Beer not to be consumed on the premises (''Off licence): F.L. 17 licence under 23(iii) - Bar Licence for the sale of all kinds of Indian liquor, Foreign liquor and / or Beer to be consumed on the premises of Bars, hotels and restaurants (''On'' licence): F.L. 20 licences - issued under Rule 23(vi) - licence for the sale of all kinds of Indian liquor, Foreign liquor, and/or Beer to the members of the Club to be consumed on the premises of the club (''on'' licence): F.L. 27 licence issued under Rule 23(i) - Distributor''s licence for the sale of all kinds of Indian liquor, Foreign liquor and or Beer not to be consumed on the premises (''Off licence) etc. They submit that the licences were granted to them for a period of five years effective from 1-10-1992. They had paid licence fee for the year 1992-93 as also for the next Excise year 1993-94 at the rates prescribed by the A.P. Foreign Liquor & Indian Liquor Rules, 1970, (hereinafter called the ''unamended Rules'') on or prior to 20th September, 1993 as required by the rules. They submit that the grant of licences for a period of five years on payment of the then existing licence fee and acceptance of the licence fee payable ten days prior to the commencement of the Excise year enable the petitioners to claim that their licences shall be effective during the period of their validity. Counsel for some of the petitioners argued that issue of licences for a period of five years and acceptance of the licence fee for two Excise years evidence the promise on the part of the respondents to allow the petitioners to trade in liquor under the relevant licences for the whole period of licences and disable the respondents from interfering with the licences in any manner. Counsel put the above submission on the basis of equitable or promissory estoppel. Some other Counsel put their case on ''legitimate expectation''. It is also submitted that the licences having been issued way back in 1992 and the licence fee having been received in terms of the unamended rules, any amendment in the terms of the licences by amending the Rules will be bad as authorising a retrospective fiscal impost, which is not authorised by the A.P. Excise Act, 1968. Yet another submission is that the amendments make inroads into the rights of the petitioners, which are guaranteed by Article 19 of the Constitution of India in an arbitrary and unreasonable manner. It is also stated that the professed purpose of introducing prohibition of consumption of intoxicating liquors will not be advanced in any manner either by the reduction in the period of licences or enhancement of licence fee, as sought to be effected by the impugned amendment. Counsel submits that the only purpose of the amendments was to increase the Revenue of the State by encouraging inebriation to a larger extent and at a cost far in excess of what was prevailing at the time of the amendment, and this motive invalidates the Government order amending the Rules.
To understand the controversy involved in these Writ Petitions, it is necessary for us to refer to the provisions in the A.P. Excise Act (hereinafter called ''the Act'') and the unamended Rules of 1970.
The A.P. Excise Act, 1968 was enacted "to consolidate and amend the law relating to the production, manufacture, possession, transport, purchase and sale of intoxicating liquors and drugs, the levy of duties of excise and countervailing duties on alcoholic liquors for human consumption and opium, Indian hemp and other narcotic drugs and narcotics and to provide for matters connected therewith in the State of Andhra Pradesh". Section 17 of the Act declared that-
"Subject to the provisions of Section 28 and any rules made in this behalf, the Government may, subject to such conditions as they may deem fit to impose, grant for a fixed period, to any person at any place, a lease or licence or both, either jointly or severally for the exclusive privilege-
(i) of manufacturing or of supplying by wholesale or of both: or
(ii) of selling by wholesale or by retail; or
(iii) of manufacturing or of supplying by wholesale, or of both, and of selling by retail, any liquor or other intoxicant within any such area in the State as may be specified in the said order."
Section 28 of the Act deals with Forms and conditions of licences. It provides that-
"Every permit issued or licence granted under this Act shall be issued or granted on payment of such fees, or such period, subject to such res frictions and conditions; and shall be in such form and shall contain such particulars, as may be prescribed."
The other relevant sections are - Section 32 which deals with power to withdraw licence and Section 33 which deals with the right of the holder of such licence to surrender the same subject to certain conditions. Section 72 contains the rule-making power which admittedly enables the State Government to make rules for "regulating issue of licences - the wholesale or retail sale or buying of any intoxicant and other incidental matters including prescription of the licence fee". It was in exercise of such powers that the A.P. Indian Liquor & Foreign Liquor Rules, 1970 were enacted. We are concerned mainly with Rules, 23, 24, 25 and 37 of the old Rules in which substantial amendments have been introduced by promulgation of G.O. 948, Revenue dt.30-9-1993.
Rule 23, as it stood prior to the amendment provided for licences for sale of foreign liquor and Indian liquor of different categories. Sub-rule (1) provided for Distributors licence in Form F.L.27 for sale of such liquor in quantity not less than 72 litres in sealed or capsuled bottles at any one time and in any signle transaction to a wholesale (F.L.15) licencee only: Sub-rule (ii) permits such sale of quantities not less than 9 litres in sealed or capsuled bottles at any one time and in any single transaction to licensees holding licence in form F.L.24, F.L.17, F.L.18, F.L.20 and F.L.22 only. He shall not sell liquor to a holder of Distributors licence (F.L.27) or to a holder of another wholesale licence (F.L.15) or carry on retail sale or allow consumption of liquor on the licenced premises. We are not concerned with Refreshment Room licence, Storage licence, Occasional licence, Military Canteen Retail Licence, Military Canteen Stores Department Distributor-cum-wholesale licence etc. Rule 24 prescribed the period of licence, ordinarily to be a block period of five Excise Years, subject to payment of annual licence fee as prescribed. The rule also provided that the licence issued at any time during the said block period of five excise years shall be operative upto the end of the block period, subject to payment of the prescribed licence fee.
Rule 25 prescribed the licence fee and was in the following terms:
"25. Licence fees: (1) The annual licence fee for each of the licences referred to in Rule 23, shall be at the rates as shown in the schedule appended to these rules:
The annual licence fee for an excise year shall be paid 10 days before the commencement of the Exicse year to which it relates either in full in advance, or in the alternative, in six monthly instalments under Sub-rule (2) together with a Bank Guarantee of a Scheduled Bank situated in A.P. in Form F.L.30 or Fixed Deposit Receipt/National Savings Certificate for an amount equal to 10 months proportionate licence fee. The Bank Guarantee shall be valid for a period of 12 months and shall be from time to time 2 months before its expiry.
(The proviso is not relevant for our present purposes and it is threfore omitted).
Sub-rule (2) provided that "the bi-monthly instalment shall be paid through challan into Government Treasury 10 days prior to the commencement of the 2 months block period for which it relates as specified in Column (4) of the Table shown below, and with a late fee of Rs. 100/- per day upto the date specified in Coloumn (5) thereof."
9 The table provided for payment of the 1st instalment by 20th September without late fee and 30th September along with late fee at the rate of Rs. 100 per day. Correspondingly, dates have been fixed for the subsequent instalments for payment of the licence fee without late fee as also with late fee. Sub-rule (4) of the above rules which is relevant provided that-
''In the event of failure to remit the instalment with the late fee by the last date specified in Col. (5) of the table under Sub-rule (2), the licence shall stand cancelled automatically on the expiry of such last date for payment of instalment and all the deposits/Bank Guarantees shall stand forfeited to Government.''
Sub-rule (5) provided -
"Where the licence automatically stands cancelled under Sub-rule (4), the Commissioner of Excise may in his discretion restore the licence, if a representation is made by the licensee, provided sufficient cause is established to the satisfaction of Commissioner of Excise for non-payment of instalment in due date. In case the licence is restored, the licensee shall pay the instalment due together with a penalty of Rs. 200/- (Rupees two hudred) per day from the date of instalment till the due date of making such representation and in any case the maximum penalty to be paid by the licensee shall not exceed Rs. 3,000/- (Rupees three thousand). On payment of such instalment in full together with the penalty levied by the Commissioner of Excise into the Government Teasury through a challan, the licence stands restored and the licensee shall be entitled to carry on business from the date of such restoration.
Provided that where the licence stands restored under this rule, the forfeiture of deposits/Bank Guarantee under Sub-rule (4) shall stand revoked.
(6) If a licence is surrendered in the middle of an Excise Year, the licence fee shall be payable upto the 30th September of that Excise year in which the surrender becomes effective.
(7) In case a licence is refused, the fee paid shall be refunded.
(8) The licence fee shall be paid into the concerned Government Treasury in the District in which the licenced premises is located.
Rule 31 contains the procedure for grant of licence and Rule 32 provides for rejection of application for licences in case of failure to comply with the directions issued by the licencing authority. Rule 37 deals with the hours of business at the premises of the licencee and is in the following terms:
"37. Hours of Business: The licensee shall transact business from 7.00 A.M. to 10.00 P.M. in the case of licences where consumption is not involved in the licenced premises.
(2) No bar, Hotel, Hostel, restaurant or club, or military canteen or an occasional licensee holding a licence for sale of liquor for consumption on premises shall transact business or shall be kept open after 11.00 p.m.
The Schedule of licence fee as prescribed by Rule 25 has been enhanced substantially and new regulatory provisions have been prescribed by the impugned amendment to the Rules. We will deal with the extent of such enhancement and the effect of such conditions now.
In G.O.Ms.No. 948, Revenue (Excise-III) Department, dt. 30-9-1993, the State Government introduced certain amendments to the A.P. Foreign Liquor and Indian Liquor Rules, 1970. Rule 3 (i) (bb), (cc), and (gg) introduced definitions of ''Dry Day'', ''Foreign Liquor'', and ''Highway'' respectively. Rule 23 was amended by substituting Sub-rule (iii) thereof by introducing a condition for ''Bar Licence'' in Form FL-17 to the effect that- ''the licensee shall not purchase or stock Indian Liquour and Foreign Liquor in bottles of size less than 750 ml. except in case of ''Beer''. Sub-rule (vi) was similarly substituted providing for the same condition in respect of ''Club Licence'' in Form FL-20. In Rule 24, a proviso was introduced to the effect that ''licences issued on or after the 1st October, 1993, shall be valid for a period of one year only commencing from the 1st October, 1993". This was in substitution of licences for block periods of five years. Rule 25 (1) was amended to cast obligation on the licensees to pay licence fee as per the Schedule "as amended from time to time". Paragraph 2 of Rule 25 was substituted making it clear that ''the annual licence fee for an excise year shall be paid before the commencement of the excise year to which it relates either in one lumpsum, or in the alternative, in four equal (alternative) instalments under Sub-rule (2) together with a Bank Guarantee of a Scheduled Bank situated in Andhra Pradesh in Form FL-30 or fixed Deposit receipt/ National Savings Certificate for an amount equal to three quarterly instalments". Sub-rule (2) was substituted by a new provision providing for the manner in which late fee shall be paid upto a specified date in respect of each of the four instalements. Consequential amendments providing for quarterly instalments in the place of bi-monthly instalements was provided in Sub-rule (3). In Rule 29, Clause (v) was introduced precluding grant of licences within 50 metres of a ''Highway''. After Sub-rule (2) Clause (dd) was added preventing grant of licence in Form FL-24 within 50 metres of a ''Highway''. Rule 37 was amended prescribing hours of work in the case of ''Off licence'' from 10.00 a.m. to 9.00 p.m. and ''On licence'' from 11.00 a.m. to 11.00 p.m. with discretion to the Commissioner to bring about any change in the hours of business and obligation on the licensees to observe such changed timings. Rule 37-A which has been newly introduced provided for ''Dry Days'' requiring the licensee not to transact business on Tuesday of the week, on the three national Holidays viz., 26th January (Republic day), 15th August (Independence day) and 2nd October (Gandhi Jayanthi), and on First day of every Calendar month or the day declared as pay-day by the Collector in respect of Industrial areas. It was also provided that the licensee shall not be entitled to any compensation whatsoever for the closure of the shop on ''dry days''. The Schedule has been so amended as to enhance licence fee from Rs. 1,32,500/- to Rs. 2,00,000/- and from Rs. 4,00,000/- to Rs. 6,00,000/- in respect of serial number (1). In respect of Serial Number (2), it was enhanced from RS. 37,500/- to Rs. 75,000/-, from Rs. 63,000/- to Rs. 1,25,000/-, and from Rs. 2,00,000/- to Rs. 4,00.000/-. In respect of serial number (4) the enhancement was from Rs. 10,000/- to Rs. 30,000/- in respect of entries (a), (b) and (c) thereof. In respect of serial number (5) it was increased from Rs. 15,000/- to Rs. 25,000/-, from Rs. 21,000/- to Rs. 50,000/- from Rs. 33,000/- to Rs. 75,000/-, from Rs. 45,000/-to Rs. 1,00,000/- and from RS. 1,00,000/- to Rs. 2,00,000/-. Similar enhancement was made in the third proviso to serial number (5) from Rs. 3,240/- to Rs. 7,500/-, from Rs. 4,320/- to Rs. 10,000/- from Rs. 6,480/- to Rs. 15,000/- and from Rs. 8,640/- to Rs. 20,000/- respectively. In serial numbers (6) (7) and (9) enhancement was from Rs. 450/- to Rs. 1,000/-, from Rs. 600/- to Rs. 1,500/-, from Rs. 900/- to Rs, 2,000/- and from Rs. 1,200/- to Rs. 2,500/-. In serial number (8) licence fee was enhanced from Rs. 28,750/- to Rs. 75,000/-, from Rs. 45,000/- to Rs. 1,25,000/-, from Rs. 78,750/- to Rs. 2,50,000/- and from Rs. 1,40,000/- to Rs. 4,00,000/-. The enhancement in respect of serial numbers (10) and (11) was from Rs. 2,15,000/- to Rs. 6,50,000/- and from Rs. 24,000/- to Rs. 30,000/-. Form 30 was amended substituting ''quarterly instalment'' in the place of ''Bi-monthly instalment" and ''3 months'' in the place of "2 months''. In the counter-part agreement in form FL-28, condition VII was substituted to the effect that the annual licence fee at the rates shown in the schedule to the Rules shall be paid either in full, or in advance or in the alternative, in four quarterly instalments with a Bank Guarantee/Fixed Deposit Receipts/National Savings Certificates for an amount equal to nine months'' proportionate licence fee. Consequential amendment was also made providing for payment of late fee. These provisions are now under challenge in these petitions. As we have indicated above, the main challenge is against the amendment to Rule 23, 24, 25, and 37-A and the enhancement as indicated in the Schedule and the table attached to the Rules.
Petitioners claim that they had applied for and obtained licences in the appropriate form for conduct of their trade for the block period from 1-10-92 to 30-9-1977. It is asserted that they had paid the required licence fee or had given an undertaking to pay the same instalments as prescribed in the Rules. In all cases, it is asserted that for the excise year 1993-94, atleast the 1st instalment was paid on or before 20th September, 1993 at the rates which were prescribed in the rules then in force. Petitioners submit that with the payment of the first instalment 10 days prior to the commencement of the Excise year at the then prevailing rates of licence fee, a right to trade in accordance with the terms of the licence has crystalised, and the same shall not be impaired by any action -legislative or administrative -which takes place subsequent to the crystalisation of their rights by complying with their obligation to pay the licence fee 19 clays prior to the commencement of the excise year. Petitioners submit that the alteration of the terms of their licences by notification dt. 30-9-1993 amounts to an unconstitutional invesion of their rights, since that violates Articles 14, 19(1)(g) and 21 of the Constitution of India. This is one of the main submissions which we have to consider.
The alternative submission is that the notification dt. 30-9-93 can be operative if at all, only from the next excise year commencing on 1-10-94 and not the excise year 1993-94. It is also submitted that the enhancement of licence fee is so unreasonable, arbitrary and unconscionable, that it violates the fundamental rights of the petitioners under Article 19(1)(g) and Article 14 of the Constitution of India. An incidental submission is that the enhancement of licence fee is capricious and expropriatory, since its effect is to deprive the petitioners of reasonable and legitimate return on their investments. Petitioners also submit that the result of enhancement in licence fee will be to make Indian Made Foreign Liquor costlier and thereby make the poor poorer, and cannot, in any manner, help the proclaimed aim of prohibition. It is also submitted that the increase in licence fee can only encourage illicit distillation and sale of spurious liquor which will affect the health of the people and this violates the mandate contained in Art. 47 of the Constitution of India.
There has been a sea-change in the policy of the State regarding distribution and sale of alcoholic liquor within the State of Andhra Pradesh in recent times. The State introduced the Andhra Pradesh (Regulation of wholesale Trade and Distribution and Retail Trade in Indian Liquor, Foreign Liquor, Wine and Beer) Act, 1993 by which the State proclaimed its intention to take over the wholesale trade and distribution of Indian Liquor and Foreign Liquor, Wine and Beer. The Act was promulgated on 4-9-93. That Act and its precursor, A.P. Excise (Amendment) Ordinance, 1993 (Ordinance 5 of 1993) were challenged in a series of Writ Petitions viz., W.P.No. 10820/93 and batch. Pending final disposal of the above Writ Petitions, the Act was not implemented. Prescription of the Rules in aid of the Act was also kept in abeyance pursuant to an undertaking which the Advocate-General had given to the Court. The Judgment upholding the validity of the Act was pronounced on 30-9-93. On the same day, the State Government promulgated the Rules which are impugned in these Writ Petitions.
Even earlier, there had been attempts to enhance the licence fee for various categories of licences by amending Rules 24, 25 and 65 of the A.P. Foreign Liquor and Indian Liquor Rules, 1970 by issue of G.O.No. 160, Revenue (Excise-IV), Department dt. 3-3-1990. The enhancement in licence fee was to the extent of 25% in most cases. Those amendments were challenged in a series of Writ Petitions in this Court. The power of the Government to increase the licence fee during the block period of the five years was upheld by a division bench of this Court in Deluxe Bar and Others Vs. The Excise Superintendent and Others, . But the notification dt. 3-3-90 was held to be operative only from the next excise year commencing from 1-10-1990. The challenge therein - as in the present case - was that the enhancement in licence fee invaded the rights of the petitioners under Article 19(1) and Article 14 of the Constitution of India. This Court held that the petitioners had no right to trade in liquor, since that was an exclusive privilege of the State Government, as was held by the Supreme Court repeatedly. Specific reference was made to the decisions in Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, , Krishna Kumar Narula etc. Vs. The State of Jammu and Kashmir and Others, , State of Orissa v. Harinarayana Jaiswal, AIR 19872 SC 1816, Sat Pal and Co. and Others Vs. Lt. Governor of Delhi and Others, , P.N. Kaushal and Others Vs. Union of India (UOI) and Others, , Kalyani Stores Vs. The State of Orissa and Others, and State of M.P. and Others Vs. Nandlal Jaiswal and Others, . Reference was also made to an earlier decision of a Division Bench of this Court in Paradise Bar v. Govt. of A.P. 1989 (1) APLJ 13, and Sree Durga Wines v. Excise Superintendent 1988 (1) ALT 585. The Division Bench repelled the contention raised on behalf of the petitioners that during the course of the five year period of validity of the licences, there could not be any enhancement in the licence fee. The Court held that
"the quantum of fee to be charged from a licencee in consideration of parting with the exclusive privilege of the State is essentially within the discretion of the State, and so long as such discretion is exercised in furtherance of public interest and the State does not make any irrational classification or hostile discrimination, there is hardly any scope for invalidating the same."
The Court also held that the mere fact that the increase in the licence fee makes an erosion of profits by the licensees or makes their business less lucrative is not a ground to strike down the law as unreasonable, offending Art. 14 of the Constitution of India. Dealing with the contention that increased licence fee can apply only after the expiry of the period of five Excise Years for which licences were granted, the Division Bench held that -
''it would not have been the intention of the legislature or the Rule making authority that the licence fee once fixed initially at the stage of granting licence should remain static for five long years nor does it preclude the rule making authority to except the existing licences from the burden of increase in the licence fee under the impugned amendment."
However, the Court held that enhancement in licence fee can be operative only if such enhancement was introduced prior to the commencement of the Excise year. It is interesting to note that the amendment impugned therein enhanced Storage licence fee to Rs. 10,000/- which was about 3 to 5 times more than the fee charged earlier. The Court held that such enhancement was neither unconscionable nor arbitrary.
Rule 4 (2) and 11(2) of the A.P. Foreign and Indian Liquor Rules, 1979 and Rule 66 (12) of the A.P. Distillery Rules, 1970 were amended by G.O.Ms .No. 187, Revenue, (Eexcise-III(2)), Department dt. 18-3-1991 enhancing the label fee from Rs. 100/- to Rs. 25,000/-. That was challenged in series of Writ Petitions viz., W.P. No. 14856/90 and batch in Rajaheel Wine Merchants and Others Vs. The Commissioner of Excise and Others, . Upholding the validity of the rules, another division bench repelled almost the same contentions which are raised in these Writ 2. Petitions and held that licence fee was really the price or consideration, for which, the State parted with its exclusive right or privilege to trade in Liquor; and enhancement thereof was within the powers of the State.
The first question which we have to consider is whether the enhancement of licence fee can be effected during the period of the licence, namely 1992-1997 and secondly whether, the enhancement can be effected for the Excise Year 1993-94. The emphatic submissions made by Counsel for the petitioners was that the obligation to pay the licence fee can be related only to the rates prevailing at the time of issue of the licence and in any case, the licence fee for 1993-94 being payable ten days in advance of the commencement of the Excise Year, and the petitioners having discharged that obligation, any enhancement effected subsequent to that date cannot impair their rights to conduct the trade in accordance with the terms of the licences issued to them and the conditions of which relating to payment of licence fee they had complied with. Even though it was stated that the licence fee applied to entire licence period, that point was not pressed seriously before us for obvious reasons. The decision of the Division Bench in M/s. Deluxe Bar (1 supra) had definitely ruled otherwise. We respectfully agree with the above pronouncement and see no reason to reconsider it.
Counsel placed considerable reliance on the following observations contained in Deluxe Bar (1 supra) that-
"The enhanced licence-fee introduced by the impugned G.O. will only be operative after the end of the excise year i.e., after 30-9-1990 and for the excise year beginning from 1st October, 1990 the Licensees have to pay the increased licence fee ten days before the commencement of the excise year (1990-91) as enjoined by Rule 25."
It is submitted that in the present case the enhanced licence fee can be operative only after the end of the Excise Year i.e., 1993-94 (30-9-94) and that the licensees have to pay the increased licence fee ten days before the commencement of the Excise year 1994-95.
We are of the opinion that the observations contained in M/s. Deluxe Bar (1 supra) have to be related to the facts of that case. The amendment of the Rules enhancing the licence fee was introduced by G.O.160, Revenue (Ex.IV), Department dt. 3-3-1990. The excise year had commenced on 1-10-1989. It was long thereafter that the rates of licence fee were amended by the above Government order. Naturally therefore, the Court held that the licence fee which was notified prior to the commencement of the Excise year alone would be operative. In the present case, undeniably, the increase in licence fee was effected by notification dt. 30-9-1993 prior to the commencement of the Excise year 1993-94. The only fact that the petitioners had paid the pre-existing licence fee applicable in 1992-93, ten days in advance of the commencement of the Excise year 1993-94 as was obligatory under the rules, cannot have the effect of taking away the power of the Government to increase the licence fee by amending the schedule to the rules within a period of ten days prior to the commencement of the Excise year. We do not find anything in the decision in M/s. Deluxe Bar (1 supra) which militates against this legal position. We therefore repel that contention.
We do not find much force in the contention that G.O.Ms .No. 948 could have been made only after the judgment in W.P.No. 10820/93 and batch on 30-9-1993 and could actually have been promulgated only on 1st October, 1993 or later. Section 24 of the A.P. General Clauses Act, 1891 is a sufficient answer to this submission. A division bench of this Court consisting of one of us (Sivaraman Nair, J.,) had occasion to consider the effect of Section 21 of the above Act with reference to W.P.No. 3328/91 and batch dt. 8-11-1991. We therefore hold that the amended rules had been promulgated and actually came into force on 30-9-1993 prior to the commencement of the Excise year 1993-94.
The argument that the enhancement of licence fee in the present case is from cent per cent and upto 600% and therefore the same is unreasonable, arbitrary and unconscionable cannot be countenanced in the light of the decisions of two separate Division Benches in M/s. Deluxe Bar (1 supra) and M/s. Rajsheel Wine Merchants (11 supra). In respect of storage licences dealt with in Deluxe Bar, the enhancement was 3 to 5 times more than the previous existing rates. The Court upheld such enhancement, since it was not shown any materials or relevant data to hold that the enhancement in licence fee operated harshly or oppressively against the petitioners. In the present case also, the petitioners have not placed any data to prove the oppressive effect of the enhancement. We are not persuaded to accept the vague and general assertions as sufficient proof that the increase in licence fee operates or is likely to operate harshly or oppressively against the petitioners. In M/s. Rajsheel Wine Merchants (11 supra) the enhancement of lable fee was from Rs. 100/- to Rs. 25,000/-. The Court repelled the contention that such enhancement was unreasonable, oppressive and harsh and therefore unconstitutional. Petitioners have not placed any positive data before us to help us adjudicate upon the reasonableness or otherwise of the enhancement in licence fee. We therefore reject this submission.
Another fact which we have to notice is that there is no price control for Indian Made Foreign Liquor/Foreign Liquor or Beer. The enhancement in licence fee can thus be made good by increasing the price. Petitioners have not shown that this is not possible in the facts and circumstances of the present case. On the other hand, the State has pleaded that the prices of Indian Made Foreign Liquor have been enhanced to such an extent that the licences earn far more than the amount necessary to make good the enhancement in licence fee. We cannot decide the case on the basis of conjectures. In the absence of price control, It is reasonable to assume mat the trade will adjust itself to enhancement in licence fee by increase in the price of the produce.
The contention of the petitioners that the State has no competence to alter the licence fee for the block period of five years for which licences have been granted is unsustainable. The same question was considered in Har Shankar (2 supra). The Supreme Court rejected a similar contention in paragraph 65 of the judgment in the following words.
"65. It is true that the amendments under which the appellants have been called upon to pay fixed fees were made after the licences were renewed. But the licences, though renewed in January 1968, were to be effeetive from April 1, 1968. The amendments having come into force before April 1 would govern the appellants'' licences and they are therefore, liable to pay the fixed fees under the amended Rules. Licences are granted u/s 54 of the Act subject to the payment of such fees as the Financial Commissioner may direct. The rules made u/s 59 (d) authorise the imposition of additional fees and such authorisation would operate on all licences to be effective thereafter."
It is significant to note that the order granting renewal of licences in Har Shankar (2 supra) was passed on 26th January, 1968. Renewal was effective from 1st of April, but the enhanced licence fee was levied between 22nd and 30th March, 1968. The argument was that the right of the licensees having crystalised by orders of renewal passed on 20th January, 1968, any amendment made subsequent thereto could not impose any additional burden on them. That contention was rejected as above. In the present case also, even assuming that the petitioners have acquired any right by payment of the licence fee or its instalment on 20th September, 1993, they are bound to pay the licence fee as per the amended rules for the Excise year commencing on 1st October, 1993.
The State has taken sufficient power by amending Rule 25 (1) of the Rules providing that the annual licence fee for each licence shall be at the rates shown in the Schedule appended to the rules ''as amended from time to time''. Petitioners are not entitled to challenge the correctness of the above amendment in the light of the observations contained in the judgment in Har Shankar (2 supra) and that of the Division Bench in Deluxe Bar (1 supra).
A specific contention was raised before us that had the enhancement been notified prior to the last date for payment of licence fee i.e. 20th September, 1993, such of the licencees who felt that they could not continue the trade on payment of higher fee could have surrendered the licences as provided u/s 33 of the A.P. Excise Act and such opportunity was denied to them by the promulgation of the amendment allegedly on30-9-1993 but actually only on 1-10-1993. Section 33 of the A-P- Excise Act is in the following terms:
"33. Surrender of licence: (1) Any holder of a licence granted under this Act to sell an excisable article may surrender his licence on the expiration of one month''s notice in writing given by him to the Excise Superintendent of his intention to surrender the same but the licence fee proportionate to the unexpired portion of the term of the licence for which it would have been current but for such surrender shall not be refunded.
(2) Sub- section (1) shall not apply in the case of any licence issued in respect of a lease granted u/s 17."
The State countered stating that with the promulgation of Ordinance No. 5 of 1993, and the later introduction of A.P. Excise Amendment Bill No. 9 of 1993, the licencees had sufficient notice of the proposal of the State to take over the trade in Indian made Foreign Liquor and they could have exercised their right u/s 33 of the A.P. Excise Act. They did not choose to do so and obtained orders of stay from this Court at their own risk. It is therefore submitted that there is no merit in the above submission.
28 On the promulgation of Ordinance No. 5 of 1993, introduction of Bill No. 9 of 1993 and enactment of Act No. 15 of 1993, the licencees could as well have . issued notices u/s 33 or could have effected payment of licence fee on 20th September under protest and subject to their rights u/s 33 of the Act. They did not do so. On the other hand, they continued business on payment of the old licence fee hoping that the result of the litigation would be in their favour. They took a calculated risk and have only themselves to blame for the consequences. Even now it is open to the licencees to opt for surrender of licences as provided u/s 33. We do not find any provision in the amended rules which precludes any of the licencees from doing so. The Advocate General submitted that in such cases where the petitioners have sought specific relief relating to Section 33, requests, if any made, for surrender of licences will be considered on merits and appropriate orders will be issued to grant relief, if the facts and circumstances justify the same.
Counsel for the petitioners objected to the provisions of Rule 23 (iii) to the effect that the holder of FL-17 licence shall not purchase or stock Indian Liquor and Foreign Liquor in bottles of size less than 750 ml. except in case of ''Beer''. They also objected to similar provisions contained in Rule 23 (vi) to the same effect in respect of Club Licence in Form FL-20. Counsel submits that the above provisions have introduced restriction in the right of the licensees to trade in liquor and is in that sense, arbitrary and unreasonable. It is submitted that the restriction has no reasonable nexus to any possible objective to regulate the trade in liquor or to control the habit of inebriation by the customers of Bars and members of the clubs.
It has to be remembered that Bars and Clubs are expected to serve the customers and members who take liquor in the premises. The provisions in the rules as they stood prior to the amendment themselves indicated that FL-17 and 20 licensees "shall sell Foreign Liquor and Indian Liquor in glasses or pegs for consumption within the licenced premises - Hotels, restaurents and Bars and shall not sell the liquor for moving out of the licenced premises". It is to effectuate that restriction, particularly in the context of resumption of its privilege by the State Government, that this additional restriction was imposed. We do not find anything unreasonable or arbitrary or annihilative of the trade of the licencees in the restriction which is now engrafted to the licences. Nor are we impressed by the submission that the above provision affects the drinking habits of the licensees. There is nothing wrong in the State seeking to regulate such habits by reasonable provisions. We should also state that the petitioners have no right to trade in intoxicants except under the licences, if at all, and it is open to the State to impose restrictive conditions before the commencement of the Excise year, for which alone, licences are operative at present.
Objection was taken to die introduction of Rule 37-A relating to Dry Days. Rule 3 (bb) defines ''dry day'' as meaning "a day on which the licenced premises shall be kept closed and no business shall be transcted in the case of ''off licences'' and in the case of ''on licences'' the bar counter shall be kept closed and no liquor shall be served''. Rule 37-A which has been introduced provides that "the licenced premises shall be closed and no business transacted on the following days declared as dry days:
(a) Every Tuesday of the week
(b) the following days during the year:
(i) 26th January (Republic day)
(ii) 15th August (Independence day)
(iii) 2nd October (Gandhi Jayanthi)
(c) First day of every calendar month or the day declared as pay day by the Collector in respect of Industrial areas.
Provided that the licensee shall not be entitled to any compensation whatsoever for the closure of the shop."
Submission of the petitioners is that the normal year consists of 365 days, and on all such days, they are entitled to conduct business as per the unamended rules. The effect of Rule 37-A is to close down the shops for 52 Tuesdays + 3 National Holidays and 12 pay days (67 days) with the result that there will be only 298 working days on which business can be transacted. They submit that prior to the amendment, the licence fee was related to the year consisting of 365 days, from which 67 days are reduced by introduction of Rule 37-A; and there is no corresponding provision to compensate the licensees for such reduction in working days introduced by the State.
The constitutional validity of introduction of ''Dry days'' by amendment of Rule 37 (9) of Punjab Liquor Licence Rules, 1956 was challenged before the Supreme Court in P.N. Kaushal (6 supra). It provided for "dry days" only in respect of licensees and not governmental outlets. The Court held that provision was in furtherance of Article 47 of the Constitution of India, since the State conceded that ''dry days'' would be observed by the liquor outlets manned by the Government as much as by private licensees. We do not agree that introduction of ''dry days'' imposes a bar on the right of the petitioners to trade in liquor. The effect of Rule 37-A is to introduce a ban on the sale and consumption of Foreign liquor and Indian Liquor on specified days. The provision that the pay-days, which may either be the 1st day of every calendar month or the day declared as pay-day by the Collector in respect of Industrial areas, as a ''dry day'' is definitely a measure which regulates and restricts consumption of liquor by the wage-earners. To that extent, it is a measure which is definitely in public interest. Petitioners cannot object to the 3 National Holidays being declared as ''dry days''. We are also of the opinion that declaration of one day out of a week as a dry day is in furtherance of an anxiety to reduce inebriation among the people and is therefore relatable to the constitutional objective contained in Article 47 of the Constitution of India. Another division bench of this Court had considered the same contention with reference to Rules 4, 5, 12, 13, 14 and 20 of A.P. Excise (Lease of Right to Sell Indian Liquor and Foreign Liquor in Retail) Rules, 1993. The division bench in Sona Liquors Pvt. Ltd. v. Union of India (W.P.No. 10289/93 and batch) had upheld Rules 12, 13 and 20 regarding dry days, hours of business and prohibition of sale of liquor to persons under the age of 21 years. We are in entire agreement with the reasoning in that decision, In fact, many of the present Writ Petitioners were parties to that decision and are bound by it. We therefore uphold the validity of Rule 37-A of the Rules.
We do not find any substance in the submission that the enhanced licence fee must be related to any year consisting of 365 days; and in so far as it is reduced by 67 days which constitute more than 1/6 th of the year, there shall be reduction of licence fee to that extent. The enhancement in licence fee was introduced simultaneously with the introduction of ''dry days'' under Rule 37-A of the Rules, which also incidentally provides that the licensees will not be entitled to compensation for stoppage of business on those days. In the context of Rule 3 (bb) and 37-A of the Rules, the year has to be treated not as an year consisting of 365 days, but as reduced by the obligatory ''dry days'' as provided in Rule 37-A. The enhanced licence fee is relatable not to 365 days, but to an year consisting of lesser number of days as is obligatory under the rules. The claim for compensation is therefore unstistainable. Nor are we in a position to agree to the submission that the licence fee which is granted for an Excise year consisting of 365 days cannot be justified since the State has, on its volition, reduced the Excise year to consist of only far lesser number of days.
Counsel for the petitioners in W.P.No. 16321/93 supplemented by stating that the State is in the same position as any other trader in dealing with intoxicants and cannot claim any special privilege. Reliance was placed on the decision of the Supreme Court in Vij Resins Pvt. Ltd. and Others Vs. State of Jammu and Kashmir, . He also submitted that the State was estopped from enhancing the licence fee or the block period for which the licences were granted. Reliance was also placed on the decision in Mumbai Mazdoor Sabha Vs. Bennet Coleman and Co. Ltd. and Others, . We are not inclined to agree. It is elementary that the State cannot be estopped against its legislative powers. There cannot be any estoppel against a statute, nor can there be an estoppel against the legislative power of the State. The fact that the State has got an exclusive privilege of trade in intoxicating liquors and that it may sell such privilege for prices of its choice is no reason to hold that the State is not entitled to exercise its legislative power. We do not find any justification for the specious plea that the State, being a trader in intoxicating liquors and alcoholic beverages, can be estopped from altering its policy regarding grant of licences or enhance the licence fee during the period of validity of the licences. Such contentions were urged unsuccessfully before the Supreme Court in Har Shankar (2 supra) and they were thrown over board. The very question whether the State can alter its policy of issuing licences for 5 years block periods by auction-cum-tender method was considered in the context of the plea of estoppel in Mohd. Fida Karim and another Vs. State of Bihar and others, . The Court held that the licences having been granted subject to charge of policy, there was no illegality nor was the State estopped from adopting a new method of grant of licences. In Deluxe Bar (1 supra) this Court held that the State has the power to alter the licence fee from time to time. By amending Rule 25 of the Rules, the State has taken specific power in that regard. We therefore repel this contention.
Nor do we find much force in the submission that the petitioners had ''legitimate expectations'' that they will be allowed to trade in liquor for five years on the same terms and conditions as prevailed at the time of grant of licence and the enhancement of licence fee, reduction of hours of business and number of working days and restriction in the conduct of the trade run counter to such ''legitimate expectations'' which have to be protected. We find that there is no substance in this plea in view of the fact that the amended rules are admittedly the product of the change of excise policy by the State.
On a review of all decisions and other materials bearing on the theory of ''legitimate expectations'' the Supreme Court held in Union of India and others Vs. Hindustan Development Corpn. and others, that -
"If it is a question of policy, by way of change of old policy, the Courts cannot interfere with a decision".
In Sri Srinivasa Theatre and Others Vs. Government of Tamil Nadu and Others, the Supreme Court held that -
"It may, at the most be used against an administrative action, and even there, it may not be an indefeasible right. No case has been brought to notice of the Court where a legislation has been invalidated on the basis that it offends the legitimate expectation of the persons affected thereby."
In State of Himachal Pradesh v. Kailashcand Mahajan AIR 1992 SC 1227 the Supreme Court reiterated that position and held that -
"it will be clear even legitimate expectation cannot preclude legislation"
We cannot therefore countenance the submission based on legitimate expectation against a subordinate legislation reflecting change of policy of the State.
We are not very much concerned with the general submission that the enhancement in licence fee may not promote the clear intention of the State to introduce prohibition in stages. It is submitted that the only intention or enhancement in licence fee is to make good the loss of revenue caused by the introduction of prohibition of sale and consumption of arrack. Counsel submits that if Indian made Foreign Liquor is priced out of reach of the consumers, the chances are that they will go in search of cheap liquor, even if it is illicitly distilled or brewed. It is for the State to take effective measures to implement the declared policy of prohibition of consumption of arrack to free the poorer sections of the people from the evils of consumption of alcoholic beverages. It is not a change of brand or change of name or the change of venue or the change of the character of the sale that is important. If the intention is to put cheap liquor out of the reach of the people, it shall be effectively monitored and implemented as was pointed out in Sona Liquors Ltd. Case (W.P.No. 10820/93 and batch). It is the obligation of the State to see that adventures do not indulge in the production and sale of illicit liquor in an effort to capitalise on the miseries of the poor or their addiction to alcohol. Introduction of prohibition of sale and consumption of arrack shall not be an occasion for such people to profit from the gullibilities of the poor.
We hold that the above possibilities do not justify interference by this Court on the ground that the enhancement in licence fee shall be struck down if such a measure incidentally results in or is deliberately devised to enhance public revenue. Once we accept the position that licence fee is price which the State collects for parting with its privilege, fixation of any price, which is not shown to be manifestly wrong or excessive or unreasonable cannot be effectively challenged. This is more so when it is almost admitted that the income is meant to make good loss of revenue sustained by the State in introducing partial prohibition. There is no immorality in the State tapping sources of revenue to the maximum extent without doing violance to the constitutional rights of citizens and without imposing undue burden on them as a consequence of such exactions. It is elementary that tax is always a burden on people but that burden is justified due to the obligation of the people to support the State which ensures collective welfare and collective security. Even in cases of taxation statutes, undue burden is perhaps the only reason to strike down such enactments. In the case of trading activity, the person who claims that in an anxiety to enhance revenue, the State is making undue exactions, has to make out his submissions on the basis of discernible and positive materials. We have noted that in none of the cases, petitioners have made even an attempt to do so. We are not in a position to hold that the anxiety of the State to enhance revenue shall be a reason to strike down the enhancement in licence fee. We therefore repel that contention.
The submission that the amendments shall be struck down because of the ''bidden motive'' or ''covert intention'' of the State to enhance revenue by dubious methods, can only be rejected. A division bench of this Court in Sona Liquors (supra) had occasion to consider the same submission. The Bench held-
"It is axiomatic that the motive behind a legislative enactment cannot be subjected to scrutiny by Courts. Ordinarily, scrutiny must be confined to legislative competence, and invasion of any constitutional or other enforceable right or interest. The Court cannot go beyond those well defined limits and stray into forbidden regions of bona fides or otherwise of the legislature in introducing an enactment or promulgating rules thereunder."
We respectfully follow the observations and hold that petitioners are not entitled to challenge the rules on the assumption that the apparent is not the real reason for promulgating those rules.
In the same decision, the division bench had to deal with the contention that the proclaimed objective of the State contained in Article 47 of the Constitution of India viz., prohibition of consumption of alcoholic liquors except for medicinal purposes will not be achieved by the impugned legislation since it does not impose total prohibition. The Bench found that though it may be desirable to impose prohibition all at once, it could as well be introduced in gradual stages. This Court followed the observations contained in the judgment in P.N. Kaushal (6 supra). We have to remember that the impugned amendments are perhaps the fifth in the series of steps taken by the State allegedly for the purpose of introducing prohibition gradually. The first was prohibition of production, distribution and consumption of arrack in Nellore District with effect from 15-4-1993. The second step was the total prohibition of production, sale and consumption of arrack in the whole State from 1st October, 1993. The third step was the takeover of the whole-sale trade in liquor for the purpose of enforcing more effective control and for liquidating illicit trade in intoxicating liquors. The next step was the promulgation of the A.P. Excise (Lease of Right to Sell Indian Liquor and Foreign Liquor in Retail) Rules, promulgation on 28th August, 1993. That introduced various letters and restrictive conditions in relation to hours of work, dry days, strength of liquor and also introduced the prohibition of sale of liquor to persons below the age of 21 years. The present set of rules promulgated in G.O.Ms.No. 948 dt. 30-9-1993 introducing further regulatory and restrictive provisions cannot but be considered as a step in aid of prohibition as was found in P.N. Kaushal (6 supra). Dealing with a contention that the enactment which does not introduce prohibition all at once runs counter to Article 47 of he Constitution of India, the Supreme Court held -
"The obvious object is to balance temperance with tax, to condition and curtail consumption without liquidating the liquor business, to experiment with phased and progressive projects of prohibition without total ban on the alcohol trade or individual intake. The temperance movement leaves the door half-closed, not wide ajar; the prohibition crusade banishes wholly the drinking of intoxicants. So it follows that the limited temperance guideline writ large in the Act will monitor the use of the power. Operation Temperance, leading later to the former, may be a strategy within the scope of the Abkari Act."
We are therefore not impressed by the submission that the impugned rules have to be invalidated for the reason that they do not introduce or promote total prohibition.
In the result the Writ Petitions fail and the same are hereby dismissed. No costs.
On the request of the Counsel for the petitioners we grant time for payment of deficiency in the instalment which had fallen due on 20th September in respect of payment of licence fee as also the next instalment of the quarterly payment which has already fallen due and direct the same to be paid within a period not exceeding two weeks from today.
Immediately after the judgment was pronounced, Counsel for the petitioners made an oral application under Article 134-A of the Constitution of India for grant of leave for appeal to the Supreme Court. We have rendered our decision entirely on the basis of precedents including those of the Supreme Court. We do not find any point of law which requires to be decided by the Supreme Court. Therefore, we refuse leave.