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Gwalior Distilleries Pvt. Ltd. Vs. The State of Madhya Pradesh and Ors. - (Supreme Court) (15 Feb 2019)

Allotment of an area was not a pre-requisite for grant of CS-1 licence



The Appellant is a manufacturer of spirits and holds a licence in the form of D-1 granted in the year 2017. A tender notice was issued for supply of country spirit in sealed bottles, in the State of Madhya Pradesh for the year 2018-2019. The condition imposed for participating in the tender was that the tenderer must have a licence for manufacturing, bottling and wholesale supply of country spirit in the State of Madhya Pradesh, issued in the form of CS-1 licence.

Clause 2(i) of the tender notice dated 3rd February, 2018 was challenged by the Appellant on the ground that, the stipulation pertaining to possession of CS-1 licence was contrary to Rule 3 of the Madhya Pradesh Country Spirit Rules, 1995, since such licence could not be granted unless the distiller has participated in the tender process. According to Rule 3, a successful tenderer is granted an area for supply of country spirit which would enable him to claim a CS-1 licence and CS-1-1B licence. The Appellant submitted an application for grant of CS-1 licence on 9th April, 2018. By an order, the application filed by the Appellant for grant of CS-1 licence was rejected. Aggrieved by the said rejection, the Appellant filed a Writ Petition which was dismissed by the High Court. Hence, present appeal.

The order by which the request for issuance of CS-1 licence was rejected by the Respondent No. 2 was challenged by the Appellant as being in violation of Articles 14 and 19(1) (g) of the Constitution of India. The Appellant alleged discrimination since eight other distillers in the State of Madhya Pradesh who were similarly situated to the Appellant, not possessing CS-1 and CS-1-1B licence were allowed to participate in the tender process. The Appellant relied upon the observations of the High Court in its judgment in Writ Petition No. 6525 of 2018 filed by the Appellant, that neither the Act nor the Rules made thereunder required allotment of an area for grant of CS-1 licence.

There is no condition either in Section 18 or Rule 3 that, CS-1 licence will be granted only to a person who participated in the tender process. The order passed by the Respondent No. 2 is arbitrary and contrary to Section 18 of the Act and Rule 3 of the Rules. By the impugned judgment the High Court held that, allotment of an area is a pre-condition for issuance of the CS-1 licence without examining the judgment in Writ Petition No. 6525 of 2018.

Rule 3(1) provides for allotment of an area to a person who is given a CS-1 licence. Participation in the process of tender as a condition for applying for a CS-1 licence is not found in the Rules. The High Court dismissed the Writ Petition by holding that there is no fundamental right to trade of liquor. However, the other contention raised by the Appellant that there is hostile discrimination against the Appellant as other similarly situated distillers were permitted to participate in the tender, has not been dealt with by the High Court.

Present Court in State of M.P. and Ors. v. Nandlal Jaiswal and Ors. has held that no one can claim as against the State the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others, the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality Clause while granting the exclusive right or privilege of manufacturing or selling liquor. The Appellant's request for grant of a CS-1 license requires to be considered strictly in accordance with law.

The Respondents are directed to consider the application of the Appellant for issuance of CS-1 licence in accordance with the Act and the Rules made thereunder. The Respondents should not insist on the condition that the Appellant should have participated in a tender and should have been allotted an area of operation. The judgment of the High Court is set aside. Appeal is allowed.

Relevant : M.P. and Ors. v. Nandlal Jaiswal and Ors. MANU/SC/0034/1986


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