HAR SHANKAR & ORS. ETC. ETC. versus THE DY. EXCISE & TAXATION COMMR. & ORS.

Citation: [1975] 3 S.C.R. 254 · Decided: 21-01-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 27 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

254 
HAR SHANKAR & ORS. ETC. ETC. 
A 
v. 
THE DY. EXCISE & TAXATION COMMR. & ORS. 
January 21, 1975 
[A. N. RAY, c.:r., K. K. MArnEw, Y. v. CHANDRAcHuo, 
A. ALAGIRISWAMl AND A. C. GUPTA, JJ.] 
B 
Constitution of India, 1950, Art. 226-Petition under reciprocal righrs and 
obligatiol!S arising out of contract, if could be enforced. 
Constitution of India, 1950, Art. 226 and P1111jab Excise Act, 1914 and Punjab 
Liquor Licence Rules, 1956-Appellants applying for and accepting licences to 
vend foreign. liquor Appella11ts, if co11ld question tlze validity of Rules while 
a11empti111? to exploit lice11ces, 
Constit11tio11 of India, 1950, Art. 19(1) (g)·-Business i11 i11toxicants-~·Cirize11, 
C 
if has a fundamental right to trade i11 i11toxicants-State, if has power to prohi· 
bit absolutely el'ery form of activity relating to intoxicants. 
The Pu11jab Acr. 1 of 1914, Sections 27 and 34-Levy of 'licc11ce fe.~' and 
·'fixed fee' 011 traders in liquor-'fee', if fee in technical sense of the expressio11, 
Pu11jab Excise Act, 1 of 1914, S. 34 and Punjab Liquor Licence Rules, 1956, 
Rules 35 and 59(d)-Grant of licence to the sale of liquor-Fee, if can be fixed 
by auction. 
D 
Punjab Excise Act, 1 of 1914, Ss. 3(9), 34, 59(d) and 60 and l'u11jab Liq11or 
Licence Rules, 1956, Rules 11, 12 and 31-Levy of 'fixed fee' and additional fee 
on persons lwlding licences for sole of foreign liquor, if illegal. 
The appellants are retail vendors of country liquor holding licences for the 
sale of liquor in specified vends. Those licences were granted to them on accep-
tance of their bids, in the auctions held by the Excise Department, Government 
of Punjab. The appellants in Civil Appeals Nos. 485 and 2205 of 1969 held 
E 
licences for the retail sale of foreign liquor for consumption on the premises of 
their respective establishments. 
Facts in Civil Appeal: No. 365 of 1971 are as follows : 
Consequent on the judgment dated March 12, 1968 of the High Court of Pun· 
jab and Haryana in Civil Writ No. 1376 of 1967 (!age Ram and Ors. v. State of 
Haryana & Ors.), holding that the auctions for granting the right tci ·sell country 
liquor for the year 1968-69 had become ineffective, the first respondent held on 
March 23, 1968 an auction for granting the right to sell coµntry liquor at the 
'Town Hall Vend' and 'Kailash Cinema Chowk Vend', Ludhiana. The appellants 
gave bids in the sum of Rs. 34,01,000 and Rs. 12,02,000 respectively for two 
vends, and those bids were duly accepted by the first respondent. The appellants 
were then granted licences in Form L. 14-A of the Punjab Liquor Licence Rules, 
1956. 
The appellants 
deposited Rs. 1,41,708 for the Town Hall Vend aPd 
Rs. 50,091 for the Kailash Cinema Chowk Vend being 1 /24th of the licence fee 
required to be deposited by way of security. They were, however, unable f[O meet 
their obligations uniler the conditions of auction and fell in arrears. The State 
Government demanded the payment, threatened to cancel the licen~s gra:nted to 
the appellants and declared its· intention to resell the vends at the risk of the 
appellants. On August 22. 1968, the appellants filed their writ petition in the 
High Court of Punjab and Haryana. They prayed for a direction quashing the 
auction held on Murch 23, 1968 and secondly, they asked that the respondents 
be 
restrained form 
enforcing the 
obfigations 
arising under the terms 
and 
conditions of the auction. 
The High Court held that the State Legislature was competent to regu'late the 
business of vending intoxicating liquors, that various provisions of the Act showed 
that the State Government had the exclusive right to manufacture or sell intoxi· 
cants, that the Financial Commissioner held the jurisdiction to determine the 
method of disposal of country liquor vends, that the rules under which the 
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HAR SHANK.AR v. DY. EXCISE OFFICER (Chandrachud, J.) 
255 
impugned auctions were held are substantially different from those under which 
the auctions challenged in !age Ram's case were held, that s. 34 of the Act is 
not an instance of delegated legislation and that the fixation of the maximum 
price of country liquor was a part of the power to regulate the trade in liquor. 
On the main contention that the levy in th.e shape of licence fee was un-
constitutional, the High Court held that licences granted for regulating trade in 
intoxicating liquors stand in a class by themselv~s and that the consideration 
which g

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