LexCHAITANYA KUMAR versus STATE OF KARNATAKA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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409
CllAITANYA KllWI.
v.
STATE OF KARNATAltA & ORS.
APRIL 9, 1986
[O. CHINNAPPA REDDY AND K.N. SINGH, JJ.]
Karnataka Excise Act,
1965, ss. 2(2) and 13(1)(e)/
Karnataka Excise (Bottling of Liquor) Rules, 1967, r. 3(2) :
Contracts for bottling arrack -
Awarding of -
Whether
arbitrary and capricious.
Constitution of India, Arts. 14, 32 and 226 :
Goverrunent Contracts - Distribution of State largesse -
Arbitrariness - When arises.
A
B
c
Public Interest Litigation - Balancing of interests -
D
Role of the Court.
Words & Phrases : "to bottle" - "Bottle liquor for sale"
-;. -
Meaning of -
Karnataka Excise Act, 1965, ss. 2(2) and
13(l)(e).
Section 13(l)(e) of the Karnataka Excise Act, 1965
prescribes that no person shall bottle liquor for sale except
under the authority and subject to the terms and conditions of
~ a licence. Rule 3(2) of the Karnataka Excise (Bottling of
Liquor) Rules, 1967, as it stood at the relevant time,
t provided that no person shall be granted a licence to bottle
liquor, unless he was a lessee of the right of retail vend of
arrack, or he held a licence for the distillation or
1181lufacture of liquor, or trade and import licence or a
licence for CCllljX>unding, blending or reducing of liquors or
any other licence which required possession of bottling
licence. Rule 4 provided that a lessee of the right of retail
vend of liquor or a person holding any of the licences
i
specified in rule 3 and desirous of
obtaining a licence to
bottle liquor 1111y lllllke an application for licence.
Pursuant to the decision of the State Government to
E
F
G
supply liquor in sealed bottles, the Excise Comissioner by a
H
A
B
c
D
E
F
G
H
410
SUPREME COURT REPORTS
!1986] 2 s.c.R.
Gazette
Notification
dated
April
11,
1984
invited Jt·
applications from intending persons/firms for bottling arrack,
though according to the rules it was to be confined to persons
already connected with the liquor trade.
Out of the one hundred thirty one applications received
the Excise Colllllissioner rejected twenty eight on the ground
that the applicants were distillers, ninety on the ground that-'
they were connected with the liquor trade and five on the
ground that there was no ·proof that they had a base in
Karnataka. The remaining eight applications were recoDmended
for the award of the bottling contracts.
The Secretary to the Government being dissatisfied with -ll:
the manner of selection, made adverse observations in his note.~
to the Excise Minister. ·But all the same, the Minister
accepted
the
recoDmendation
of
the
Coomissioner
in
consultation with the Chief Minister. The Deputy Secretary to
the Finance Department in his note to the Home Department also
observed that it was not clear from the file as to how the
Excise
Coomissioner
had
selected
the
contractors,
The
Government, however, by its order dated September 2 7, 1984
allotted the bottling contracts to the persons recoDmended by -t
the Excise Collllllissioner.
Aggrieved by the said order some of the unsuccessful
applicants filed writ petitions in the High Court alleging
arbitrariness in selecting contractors. The Government at this
stage on November 23, 1984 issued a notification, containing a ~
draft amendment of r. 3(2) by addition of the words "or to
persons entrusted with the bottling of arrack by the Govern- ;
ment" after the words "reducing of liquors", and inviting ·
objections, if any, by the public before November 28, 1984 -
barely five days' time. This amended
rule
making persons
unconnected with the liquor trade eligible for grant of
licences, was published on November 30, 1984. Later, r.4 waa
also amended to· bring it in line with the amended rule 3. More
writ petitions were thereafter filed, including some by public
spirited citizens, one of them alleging malafides on the part r
of the Chief Minister whose son-in-law waa stated to be
interested in some of the firms to whom the contracts had been
awarded.
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CHAITANYA KUMAR v. STATE
411
'f
The petitions were contested by the Stste Government
contending in their counter affidavit that it was thought
desirable to award the bottling contracts to persons un-
connected with the manufacture or sale of arrack as that would
prevent the possibility of its adulteration and short measure-
A
ment, and evasion of excise duty.
B
,{
The High Court while allowing the two writ petitions,
struck down the impugned orExcerpt shown. Read the full judgment & AI analysis in Lexace.