Case Note & Summary
The appellant, International Spirits and Wines Association of India, challenged Rule 24(i-eeee) of the Haryana Liquor License Rules, 1970, as amended in 2017, which provided for a single L-1BF license for the entire State of Haryana to deal in imported foreign liquor bottled outside India and imported in bottled form. The license was to be granted through e-bidding with a reserve price of Rs. 50 crores. The appellant also challenged clause 9.5.1.2 of the State Excise Policy for 2017-2018, carried forward to 2018-2019. The High Court had dismissed the challenge, and the appellant appealed to the Supreme Court. The core legal issue was whether the amended Rule was ultra vires the Punjab Excise Act, 1914, because the power to regulate the number of licenses in any local area is exclusively vested in the State Government under Section 58(2)(e) and cannot be delegated to the Financial Commissioner under Section 13(a). The appellant argued that the creation of a monopoly in favor of a private entity violated Article 19(6) and Article 14 of the Constitution, and that the Rule was beyond the rule-making power of the Financial Commissioner. The respondents contended that the appellant had not participated in the bidding process, that the aim was to increase revenue and curb illicit trade, and that the Financial Commissioner was competent under Section 59(a) read with Section 13 to amend the Rule. The Supreme Court analyzed the scheme of the Act, Rules, and the Punjab Intoxicants License and Sales Order, 1956, and held that under Section 58(2)(e), the State Government alone has the power to regulate the number of licenses in any local area. This power cannot be delegated to the Financial Commissioner due to the prohibition in Section 13(a). The Court found that the amended Rule 24(i-eeee) was ultra vires the Act because it was made by the Financial Commissioner without authority. The Court allowed the appeal, set aside the impugned judgment of the High Court, and declared the amended Rule and the corresponding clause in the Excise Policy as ultra vires. The Court did not consider the constitutional challenges under Articles 14 and 19(6) as the appeal was decided on the ground of ultra vires.
Headnote
A) Excise Law - Ultra Vires - Delegation of Powers - Section 58(2)(e) read with Section 13(a) of the Punjab Excise Act, 1914 - The State Government alone has the power to regulate the number of licenses in any local area. This power cannot be delegated to the Financial Commissioner under Section 13(a). The amended Rule 24(i-eeee) providing for a single L-1BF license for the entire State was held ultra vires the Act as it was made by the Financial Commissioner without authority. (Paras 5-12) B) Excise Law - License for Local Area - Section 58(2)(e) of the Punjab Excise Act, 1914 - The Act maintains a clear distinction between a local area as the unit for grant of license and the entire State for other purposes. The State Government is the sole repository of power to determine the number of licenses in any local area. (Paras 10-12) C) Constitutional Law - Article 14 - Discrimination - The appellant's challenge under Article 14 was not considered as the appeal was allowed on the ground of ultra vires. (Para 12)
Issue of Consideration
Whether Rule 24(i-eeee) of the Haryana Liquor License Rules, 1970, providing for a single L-1BF license for the entire State for imported foreign liquor, is ultra vires the Punjab Excise Act, 1914, and whether the Financial Commissioner could delegate such power to the Excise Commissioner despite the prohibition in Section 13(a) of the Act.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of the High Court, and declared Rule 24(i-eeee) of the Haryana Liquor License Rules, 1970, and clause 9.5.1.2 of the State Excise Policy for 2017-2018 (carried forward to 2018-2019) as ultra vires the Punjab Excise Act, 1914. The Court held that the State Government alone has the power under Section 58(2)(e) to regulate the number of licenses in any local area, and this power cannot be delegated to the Financial Commissioner under Section 13(a). The amended Rule was made without authority.
Law Points
- Ultra vires
- Delegation of powers
- Exclusive rule-making power
- Local area license
- Monopoly in liquor trade
- Article 14
- Article 19(6)
