Case Note & Summary
The appellant, Gwalior Distilleries Pvt. Ltd., is a manufacturer of spirits holding a D-1 licence granted in 2017. A tender notice was issued for supply of country spirit in sealed bottles in Madhya Pradesh for 2018-2019, requiring tenderers to possess a CS-1 licence for manufacturing, bottling and wholesale supply. The appellant challenged Clause 2(i) of the tender notice in Writ Petition No.6525 of 2018, arguing that a CS-1 licence could not be obtained without first being allotted an area through the tender process, contrary to Rule 3 of the Madhya Pradesh Country Spirit Rules, 1995. The High Court dismissed the writ petition but observed that allotment of an area was not a pre-requisite for grant of CS-1 licence under the Excise Act, 1915 or the Rules. Thereafter, the appellant applied for a CS-1 licence on 9 April 2018, which was rejected on 26 July 2018 on the ground that the appellant did not participate in the tender process. The appellant filed another writ petition challenging the rejection, which was dismissed by the High Court, holding that allotment of an area was an imperative pre-condition for grant of CS-1 licence and that there was no fundamental right to trade in liquor. The Supreme Court examined Section 18 of the Excise Act, 1915 and Rule 3 of the Rules and found no condition requiring participation in a tender process for grant of CS-1 licence. The Court noted that the High Court's earlier observation that allotment of area was not a pre-requisite was not considered in the impugned judgment. The Court also noted that the appellant's contention of hostile discrimination, as eight other similarly situated distillers without CS-1 licence were allowed to participate in the tender, was not addressed by the High Court. Relying on State of M.P. v. Nandlal Jaiswal (1986) 4 SCC 566, the Court held that while there is no fundamental right to trade in liquor, the State cannot act arbitrarily and must comply with Article 14 when granting licences. The Supreme Court set aside the High Court's judgment and directed the respondents to consider the appellant's application for CS-1 licence in accordance with the Act and Rules, without insisting on participation in tender or allotment of area.
Headnote
A) Excise Law - Grant of Licence - Section 18, Madhya Pradesh Excise Act, 1915; Rule 3, Madhya Pradesh Country Spirit Rules, 1995 - The appellant, a D-1 licence holder, applied for a CS-1 licence for manufacture, bottling and wholesale supply of country spirit. The application was rejected solely on the ground that the appellant did not participate in the tender process for 2018-19. The Supreme Court held that neither Section 18 of the Act nor Rule 3 of the Rules requires participation in a tender as a condition for grant of CS-1 licence. The rejection was arbitrary and contrary to law. (Paras 5-7) B) Constitutional Law - Article 14 - Discrimination - The appellant alleged hostile discrimination as eight other similarly situated distillers without CS-1 licence were allowed to participate in the tender. The High Court did not deal with this contention. The Supreme Court, relying on State of M.P. v. Nandlal Jaiswal (1986) 4 SCC 566, held that while there is no fundamental right to trade in liquor, the State cannot act arbitrarily and must comply with Article 14 when granting licences. (Para 6) C) Excise Law - Interpretation of Rules - Rule 3(1), Madhya Pradesh Country Spirit Rules, 1995 - The High Court had earlier observed that allotment of an area is not a pre-requisite for grant of CS-1 licence. The Supreme Court clarified that Rule 3(1) provides for allotment of an area to a person who is given a CS-1 licence, but participation in tender is not a condition. The respondents were directed to consider the application without insisting on participation in tender or allotment of area. (Paras 4-7)
Issue of Consideration
Whether the rejection of the appellant's application for a CS-1 licence on the ground that he did not participate in the tender process was arbitrary and contrary to Section 18 of the Excise Act, 1915 and Rule 3 of the Madhya Pradesh Country Spirit Rules, 1995.
Final Decision
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and directed the respondents to consider the appellant's application for issuance of CS-1 licence in accordance with the Act and Rules, without insisting on the condition that the appellant should have participated in a tender and should have been allotted an area of operation.
Law Points
- No fundamental right to trade in liquor
- but State must comply with Article 14 when granting licences
- CS-1 licence can be granted without prior participation in tender process
- Allotment of area is not a pre-condition for grant of CS-1 licence under Section 18 of the Excise Act
- 1915 and Rule 3 of the Madhya Pradesh Country Spirit Rules
- 1995.
