G H M/S CEE CEE & CEE CEE versus K. DEVAMANI & ORS. on 18 December 2019

1. The Appellant is an F.L.- 1 License holder issued onH26.10.2016 by the Deputy Commissioner, Excise, Mahe under the Puducherry Excise Act, 1970 (“Excise Act”). Under the F.L. - 1License, the Appellant is permitted to sell Indian Made Foreign Liquor(“IMFL”) to other License holders, and not in retail.

2. On 28.02.2017, the Appellant filed an Application before theDeputy Commissioner (Excise), Mahe for shifting his licensed LiquorShop from Mahe to Karaikal under Rules 163 and 209 of thePuducherry Excise Rules, 1970 (“Excise Rules”).

3. The Deputy Commissioner (Excise), Mahe forwarded theApplication to Respondent No. 3 – the Deputy Commissioner (Excise),Karikal vide letter dated 07.03.2017, and requested Respondent No. 3to conduct an inspection to assess the suitability of the site at Karaikal.

4. Respondent No. 1, a resident of Karaikal, submitted anobjection dated 02.06.2017 before the Sub – Collector (Excise),Collectorate, Karaikal to oppose the shifting of the liquor shop toKaraikal. Respondent No. 1 inter alia submitted that pursuant to theJudgement dated 15.12.2016 passed in State of Tamil Nadu v. Balu[1],various liquor shops had been shifted from other regions to theresidential areas in Karaikal. The Court had directed that no shop forthe sale of liquor could be situated within a distance of 500 meters ofthe outer edge of the National or State Highways or of a service lanealong the Highway.

It was submitted that shifting of the shop was contrary to publicinterest of the residents of Karaikal. For about 35 houses in Nedunkaducircle, Karaikal, there were 35 liquor shops already operational.

It was further submitted that the Madras High Court vide Orderdated 07.03.2003 in K. Murali v. Commissioner (Excise)-cum-Secretary in W.P. (Civil) No. 39661/2002 had interpreted the expression‘from one place to another’ in Rules 163 and 209 of the Excise Rulesto mean that shifting was permissible only within a particular local area,panchayat or commune, and not from one region to another in the UnionTerritory.

In view of the restrictive meaning of the word ‘place’, theLicensing Authority could not grant permission to shift the licensed shopof the Appellant from one region to another i.e. from Mahe to Karaikal,which is at a distance of 650 kilometers.

1 (2017) 2 SCC 281 : AIR 2017 SC 262 : 2017 (1) SCJ 586.

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AThe shifting of liquor shops from one region to another wouldbe in contravention of Rules 163 and 209 of the Excise Rules.

5. Respondent No. 1 and one K. M. Baskar filed W.P. (Civil)Nos. 13081/2017 and 15953/2017 before the Madras High Court forthe issuance of a writ of mandamus restraining Respondent No. 2 andB4 - Excise Authorities from shifting liquor shops from Mahe to Karaikal.

The Madras High Court vide Order dated 26.02.2018 directedthe Excise Authorities to consider the objections raised by RespondentNo. 1 along with the Application for shifting filed by the Appellant inaccordance with law.

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6. Respondent No. 3 - Deputy Commissioner (Excise), Karaikalgranted a personal hearing to Respondent No. 1 on 01.03.2018.

7. Respondent No. 3 - Deputy Commissioner (Excise), Karaikalvide Order dated 27.03.2018 rejected the objections raised byDRespondent No. 1, on the ground that the Order dated 07.03.2003passed by a single judge of the Madras High Court in K. Murali (supra)was set aside by a division bench vide Order dated 06.09.2005.

8. Respondent No. 1 filed a 2[nd] W. P. (C) No. 11767/2018 beforethe Madras High Court to quash the Order dated 27.03.2018, andErestrain Respondents No. 2 to 4 - Excise Authorities from permittingthe re-location of liquor shops from Mahe to Karaikal, and granting liquorlicenses in Karaikal.

9. Respondent No. 2 – Deputy Commissioner (Excise),Puducherry vide Order No. 2239/DCE/S2/FL-1/2017 – 2018/251 datedF07.06.2018 granted permission to the Appellant to shift the liquor shopfrom Mahe to Karaikal, subject to the fulfillment of the conditionscontained in Rule 209 of the Excise Rules.

10. The Deputy Commissioner (Excise), Mahe vide Order dated13.06.2018 conveyed the permission granted by Respondent No. 2 –GDeputy Commissioner (Excise), Puducherry to the Appellant. Theapproval was made subject to the following two additional conditions:

(i) there will be one entrance and exit only; and

(ii) the boundary of the proposed site should be protectedHproperly.

11. Respondent No. 3 – the Deputy Commissioner, Excise,Karaikal vide Order dated 15.06.2018 granted permission to theAppellant to commence his business of wholesale vending of IMFL atKaraikal.

12. Respondent No. 1 filed a 3[rd] W. P. (Civil) 15661/2018 beforethe Madras High Court to quash the Order dated 15.06.2018, andrestrain Respondent Nos. 2 to 4 - Excise Authorities from shifting liquorshops from Mahe to Karaikal, on the grounds similar to those raised inthe 2[nd] W.P. (Civil) No. 11767/2018.

The High Court vide Order dated 05.07.2018 granted interim stayof the Order dated 15.06.2018 passed by Respondent No. 3.

13. The Excise Authorities supported the case of the Appellant– License holder in W.P (Civil) Nos. 11767/2018 and 15661/2018.

14. A division bench of the Madras High Court vide ImpugnedJudgement and Order dated 14.02.2019 allowed W.P. (Civil) Nos.11767/2018 and 15661/2018, and quashed the Orders dated 27.03.2018and 15.06.2018 passed by Respondent No. 3. The permission grantedby Respondent No. 2 to 4 to shift the Licensed Shop of the Appellantfrom Mahe to Karaikal was set aside.

The division bench held that the disposal of the representationby Respondent No. 3 – Deputy Commissioner (Excise) Karaikal wasnot in accordance with the Order dated 26.02.2018 passed in W.P.(Civil) Nos. 13081/2017 and 15953/2017.

The word / phrase / term “place” in the Excise Act and ExciseRules had a restrictive meaning. The area defined by Section 2 (22) ofthe Excise Act was restricted to the “area” in which the liquor shopwas located. The order which permitted shifting of the wholesale liquorshop of the Appellant from Mahe to Karaikal had to be confined to theregion of Mahe, and not to Karaikal, which is an entirely different regionin the Union Territory of Puducherry.

15. Aggrieved by the Order dated 14.02.2018, the Appellant –Licensed holder has filed the present Special Leave Petition.

We have heard Mr. Mahesh Jethmalani, Senior Counsel for theAppellant, Mr. R. Venkataramani, Senior Counsel for the UnionTerritory and office bearers, and Mr. S. Thananjayan, Counsel forRespondent No. 1.

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16. The issue which arises for our consideration is whether thepermission granted by Respondent Nos. 2 to 4 - Excise Authorities totransfer the licensed shop from one region to another in the UnionTerritory of Puducherry was permissible under the Excise Act andRules.

B17.RELEVANT STATUTORY PROVISIONS

The Puducherry Excise Act, 1970 provides a uniform law relatingto the production, manufacture, possession, import, export, transport,purchase and sale of liquor, and intoxicating drugs in the Union Territoryof Puducherry.

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17.1. Section 1(2) extends the applicability of the Excise Act tothe whole of the Union Territory of Puducherry.

17.2. The word ‘place’ is defined in Section 2 (22) as follows:

“2. – DefinitionsD…

(22) “place” includes a house, building, shop, booth, tent,vessel, raft, and vehicle.”

The word ‘place’ does not indicate the territorial limits withinwhich the Licensing Authority could grant shifting of a licensed shop.ESection 2(22) describes the type of structure or establishment of thelicensed shop, which could either be a house, building, shop, booth, tent,vessel, raft, or vehicle in which the licensed premises is situated.

17.3. Section 14 of the Excise Act provides that no liquor orintoxicating drug will be sold without a license issued by the LicensingFAuthority i.e. the Deputy Commissioner or Excise Commissioner.

17.4. Section 70 of the Excise Act empowers the Governmentto frame rules for carrying out the functions of the Act. TheGovernment has enacted the Puducherry Excise Rules, 1970 in exerciseof the powers under Section 70.G

Rule 1(2) extends the applicability of the Excise Rules to thewhole of the Union Territory of Pondicherry.

i) Rule 22A (a) of the Excise Rules defines ‘region’ as anyof the 4 regions of the Union Territory viz, Pondicherry,HKaraikal, Mahe and Yanam.

“CHAPTER-IIA

Control of inter-State Transport of Liquor

22. A. Definitions — In this Chapter, unless there is anythingrepugnant in the subject or context—

(a) “Region” means any of the regions known asPondicherry, Karaikal, Mahe and Yanam in the Unionterritory of Pondicherry.”

ii) Rule 113 of the Excise Rules provides for the grant of an F.L.- 1 license for wholesale vending of liquor.

“CHAPTER – VI

Sale of Indian or Foreign liquors

113. Licences. — Licences for the sale of Indian liquor orforeign liquor or both shall be of the following descriptions,and shall be granted by the Excise Commissioner or DeputyCommissioner, as the case may be, in accordance with theprovisions of sub-section (2) of section 14 of the Act,namely:—

(1) F.L. 1 Licence:— The holder of this licence shall bepermitted to sell foreign liquor or Indian liquor, or both, inquantities of not less than 9 litres in sealed or capsuledbottles 2[***] at any one time and in any single transactionto any other licensee under this chapter and also in sealedor capsuled bottles in quantities not exceeding 3 [4.5 litresof all liquors other than beer and 9 litres of beer] at anyone time and in any single transaction to an unlicensedperson. But he shall not allow the consumption of the liquorat the licensed premises:

Provided that such licensees may issue another licenseddealer samples of liquors, in quantities not exceeding 0.180litres.”

iii) The procedure for transfer of a licensed liquor shop isprovided under Rule 209 of the Excise Rules.

“CHAPTER—XIII

Excise Licences (General Conditions)

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A209. Shifting of shops: — The licensee shall not shift thelicensed premises from one place to another without the priorapproval of the Licensing Authority.

Provided that the licensing authority may permit, subject tothe fulfilment of conditions of licence, shifting of licensedBpremises on payment of one-fourth of the license fee for suchshifting”

iv) The term ‘shop’ is defined by Rule 189 of the Excise Rules,as follows:

C“CHAPTER—XIII

Excise Licences (General Conditions)

…

189. Definition — In this chapter, “shop” means the licensedDpremises where liquor is sold.”

(emphasis supplied)

18. DISCUSSION & ANALYSIS

18.1. Rule 113 under Chapter VI of the Rules pertains to theEsale of Indian or foreign liquors. It provides that the ExciseCommissioner or Deputy Commissioner may issue an F.L. – 1 Licensefor the sale of Indian liquor or foreign liquor, or both, in accordancewith the provisions of Section 14 (2) of the Excise Act.

18.2. Chapter XIII of the Excise Rules contains the GeneralFConditions of Excise Licenses. Rule 188 states that Chapter XIII willapply to all Licenses issued under the Excise Act for sale of liquors,and every license is deemed to include the conditions prescribed herein.

Rule 189 of the Excise Rules describes “shop” as the licensedpremises from where liquor is sold.

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Rule 191 (2) provides that the applicant of a license shall selecta site, and intimate the licensing authority, who may, after making suchenquiry as he thinks fit, approve the site selected.

Rule 191 (4) provides that the Licensee shall sell the liquor onlyHfrom the approved shop.

19. The Appellant is the holder of an F.L. – 1 License issued bythe Licensing Authority viz. the Deputy Commissioner, Excise, Mahefor carrying out vending of IMFL.

An F.L.-1 Licensee is permitted to sell liquor only to otherLicensees, and not in retail.

19.1. The Petitioner was carrying out his wholesale business fromMMC, No. 1/40,41 Main Road, Mahe.

19.2. The Appellant filed an Application dated 28.02.2017 forshifting his liquor shop from Mahe to Karaikal under Rules 163 and209 of the Excise Rules before the Deputy Commissioner, (Excise),Mahe.

19.3. Rule 209 in Chapter XIII of the Excise Rules provides forShifting of Shops of all license holders, whether wholesale or retail.

Rule 209 permits shifting of the liquor shop from one “place” toanother, subject to approval by the Licensing Authority on the termsand conditions contained therein.

The proviso to Rule 209 states that the Licensing Authority maypermit shifting of the licensed premises, subject to the fulfillment of theconditions of license, and payment of 1/4[th] of the license fee for suchshifting.

There is no restriction or prohibition either in the Excise Act orRules on the Licensing Authority from granting permission to shift thelicensed shop from one region to another, subject to the conditions beingcomplied with.

A fortiori, a licensee can shift a liquor shop from one region toanother within the Union Territory of Puducherry, subject to the priorapproval of the Competent Authority.

20. We are of the view that the expression ‘from one place toanother’ is not restrictive, and does not curtail the power of theLicensing Authority to grant permission for shifting the licensed shopfrom one region to another in the Union Territory of Puducherry solong as the conditions stipulated by the Excise Act and Excise Rules,as also the conditions for grant of a license are complied with. Theshifting should not result in the increase in number of liquor shops beyondthe maximum number of licenses which may be fixed for a particulararea under Rule 122 of the Excise Rules.

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21. Given the peculiar demography of the Union Territory ofPuducherry, which comprises of four unconnected regions, it would becontrary to the object and purpose of the Excise Act, if a restrictivemeaning was to be given to Rule 209 of the Excise Rules. The Actmust be read as a whole to ascertain the intent of the legislature.

If the intention of the legislature was to restrict the shifting of aliquor shop to a region, locality, municipality, or commune, Rule 209 ofthe Excise Act would have expressly contained such a prohibition, whichis absent.

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22. The Excise Act and the Excise Rules use the expression ‘localCarea’ in contra-distinction with the word ‘place’, whenever it is intendedto confine the area in which the liquor shop is located. For instance,Section 9 of the Excise Act prohibits the transportation of intoxicantsfrom one ‘local area’ to another. Similarly, Section 10 of the ExciseAct restricts the movement of intoxicants beyond a certain quantitywhich is stipulated for a ‘local area’.D

23. We find from the Counter Affidavit filed by the State thatsimilar proposals for shifting 5 shops to Karaikal from other regionswere granted by the Licensing Authority, as per details givenhereinbelow :

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24. The Counsel for the State submitted that Respondent Nos.2 to 4 – Excise Authorities have assessed the pros and cons of theshifting, and sought the view of the police authorities prior to grantingGpermission to the Appellant. The Report of the Excise Officer wasobtained, which stated that the site of the Appellant at Karaikal is notlocated on the National or State Highway. There are no religious oreducational institutions which are located within the 100 meters radiusof the site at Karaikal. There would be no hindrance to the traffic inHthe area. The Superintendent of Police confirmed that there would be no law and order problem if the licensed shop of the Appellant is shifted.

25. In the present case, the Licensing Authority i.e. the DeputyCommissioner (Excise) vide Letter dated 07.06.2018 has grantedpermission to shift the F.L.1 Licensed premises of the Appellant fromMahe to Karaikal, subject to compliance with the conditions laid downin Rule 209 of the Excise Rules. The Deputy Commissioner (Excise),Mahe permitted shifting of the premises subject to two additionalconditions viz.

(i) There shall be one and the same entrance and exit only;

(ii) The boundary of the building should be properly protected.

We have been informed by the Counsel for the Appellant andthe State that all conditions under the Excise Act and Rules havecomplied with.

26. Consequently, Respondent No. 3 - the Deputy Commissioner(Excise), Karaikal vide letter dated 15.06.2018 granted permission tothe Appellant to run the F.L.-1 business from the location designatedin Karaikal.

27. We find no prohibition in the Excise Act or Rules for shiftingthe F.L.1 Licensed premises from one place to another. The permissiondated 07.06.2018 for shifting the licensed shop from Mahe to Karaikalgranted by Respondent No. 3 is legal and valid.

28. We allow the Civil Appeals and set aside the Order dated14.02.2019 passed by the division bench of the Madras High Court inW.P. (Civil) Nos. 11767/2018 and 15661/2018.

29. Ordered accordingly.

Pending applications, if any, are accordingly disposed.

Ankit Gyan

Appeals allowed.

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