KRISHNA KUMAR NARULA ETC. versus THE STATE OF JAMMU AND KASHMIR & ORS.

KRISHNA KUMAR NARULA ETC.

THE STATE OF JAMMU

AND KASHMIR & ORS.

March 1, 1967

[K. SuBBA RAo, C.J., J. C. SHAH, S. M. SUCRI, V. RAMASWAMI AND C. A. VAIDIALINGAM, JJ,)

Co11!Jtit11tion of India, 1950, Art. 19(1) (g):__R/ght to ctlfry on busi· ness In liquor-If fundamental right.

The Jammu and Kashmir Excise Act, 1958, s, 20-Lfcence for Cllfl'1· ing on business in liquor-Objections by lnhoblrants for location of bar- Applicant asked to shift premises as condition for ls.•ue of llcenc~ Validity of order under A.rt. 19(6) of the Constitution.

in liquar in his hotel

The appellant, who was carrying on business in liquar in his hotel under an annual licence issued by the Excise and Taxation Commissioner under s. 20 of the Jammu and Kashmir Excise Act, 1958, had applied for fresh licenoe for another year. Meanwhile, the Excile Dcpartmebt received complaints from the inhabitants of tho locality objoctinjl to the location of the bar in that locality. The complaints were· inquired Into and the appellant was informed by the Commissioner that the licence would not be issued unless he shifted the premises of his hotel : to some other approved locality. · writ petition filed by the appellant for quash-ing the order was dismissed by the High Court.

In appeal to this Court,

HELD : ( i) Dealing in liquor is liusiness, and citizen has funda· mental right to do that business under Art. 19(1) (g) of the Constitu-tion. But the State can make law imposing reasonable restrictlona on· the right, in public interests, under Art, 19(6). [S7 D·EJ

Dealing in noxious and dangerous goods does not oease to be busi-ness, though the nature of the goods may be ground for imposing restriction on the activity. (53 P; 54 CJ

T. B. Ibrahim v. Regional Transport Authority, Tan/ore, [1953) S.C.R. 290, Coover/ee B. Bharucha v. The Excise Commissioner and the Chief Commissioner, A/mer, [1954J S.C.R. 873, State of Assam v. A. N. KldwaJ, Commlsrioner of Hills Division and Appeals, Shillong, [19S7J S.C.R. 295, Nagendra Nath v. Commissioner of H/11.r Div/sion and Appeals, Asram, (1958) S.C.R. 1240, explained.

Narain Swadesh Weaving Mills v. The Commissioner of Excess Profits Tax, (1955] I S.C.R. 952, State of Bombay v. R. M. D. Chomarbaugwala, [1957] S.C.R. 874 and Ranchhorlalfl v. Revenue j)ivlslonai 9ommissloner, Northern Division, Sambalpur, A.I.R. 1960 Otissa 88, referred to. .

licence, s. 20 of the Taxation Commissioner bad

Since the instant case was one of issuing licence, s. 20 of the Excise Act applies. As the Excise and Taxation Commissioner bad made bona fide onquiry and carlie to the conclusion that the locality was not suitable far carrying on business in liquor, for relevant ...-. it could not be said that his order was arbitra:ry or unreasonable. [SS BJ

(ii) Section 22 of the Act deals with cancellation of licence and does not control s. 20. [58 CJ

K. K. NARULA v. J. & K. STATE (Subba Rao, C.J.)

C1v1L APPELLATE JURISDICTION : Ch·il Appeals Nos: 65 and 66 of 1967.

Appeals from the judgment and order dated September 16. 1966 of the Jammu and Kashmir High Court in Writ Petitions Nos. 2 and 4 of 1966.

S. T. Desai, S. K. Dholakia, Vineet Kumar and Inder Das Grover, for the appellants (in both the :ippeals).

Raja Jaswant Singh, Advocate-General, Jammu and Kashmir, R. N. Sachthey for S. P. Na.vyar, for the respondents (in both the· appeals).

The Judgment of the Court was delivered by

Subba Rao, C.J. These two appeals arise out of common judgment of Division Bench of the High Court of J ammu & Kashmir dismissing the two petitions filed by the appellants for the issuance of writ quashing the order passed by the Taxing and Excise Officer, Jammu, refusing to renew their licences for the year 1966-67 in respect of their liquor shops.

The facts giving rise to these two appeals may be briefly and separately stated.

Civil Appeal No. 65 of 1967 relates to Glory Restaurant situ· ated in Moti Bazaar, Jammu. The appellant in the said appeal, who is the proprietor of the said restaurant, after taking the requisite licence from the Government, had been carrying on for the last 7 y~.ars the business of retail sale of country and foreign liquor in the said restaurant. The licence was an annual licence and it was. being renewed from .year to year. On December 11, 1965, the Deputy Excise and Taxation Commissioner, J ammu, issued notice to the appellant ordering the shifting of the premises of the said re~taurant to. some other locality on the ground that the inha-F bitants of the locality had complained against the location of the appellant's bar and restaurant there. As the licence for 1965-66 would expire on March 31, 1966, the appellant·applied for fresh licence for 1966-67 and deposited the prescribed licence fee in the Government treasury.

The appellant in Civil Appeal No. 66 of 1967 was carrying on business in liquor in his hotel, named Bliss Hotel and Bar, situated in Parade Ground, Jammu, under licence issued by the Government of the said State. He obtained licence for the first time in 1964. After obtaining the licence, it is alleged, he had spent about Rs. 70,000/ • in furnishing the Hotel and Bar, but for unavoidable reasons he could not do business during the finan-H cial year 1964-65. For the year 1965-66 he made an application for the renewal of the licence and on December 11, 1965, he received letter from the Deputy Excise and Tllltation Commis· sioner, Jammu, desiring the appellant to shift the premises of his

Hotel and Bar to some other suitable place after getting it approv· ed by the Department on the ground that he had received com· plaints from the inhabitants of the locality ~gainst the location of the bar there; At the. instance of the 2nd respondent, the Bxcise and Taxation Commissioner, J ammu, his licence, along with those of other licensees, was co:Iected by the 3rd respondet. As he was not given licence to do business in liquor in the same loca-lity, this appellant also filed writ petition in the High Court for relief similar to that claimed by the appellant in Civil Appeal No. 65 of 1967. ·

To both the petitions, the State of Jammu and Kashmir, through its Cliief Secretary, the Excise and Taxation Commissioner, Jammu & Kashmir, and the Deputy Excise and Taxation Commis· sioner, Jammu, were made respondents 1, 2 and 3 respectively.

The respondents opposed the petitions and pleaded, inter alia, that the localities wherein the petitioners were ·carrying on the business were the most congested and frequented parts of the city and that, as complaints were made against their carrying on the business in the said localities, the respondents refused to renew their licences to carry on the said buiiness in the said localitie.~. They also pleaded that under The Excise Act, 1958, hereinafter called the Act, the issuing of licence was at the discretion of the Excise Commissioner and he had, having regard to the complaints received, bona fide. in exercise of his discretion, refused to give licence to the appellants to carry on business in the said localities.· In the High Court the Writ petitions, along with others, were decided by Division Bench consisting of Chief Justice and Justice Syed Murtaza Faz! Ali. They gave concurrent but separate judg· ments. Both the Judges agreed on merits in dismissing the peti· tions, but expressed different views on the question whether the petitioners had fundamental right to do business in liquor. Hence the appeals.

Mr. Desai, learned counsel for the appellants, contended as follows :-( 1) ·If s. 20 of the Act was construed as conferring an absolute discretion on the Commissioner of Excise and Taxa-tion to issue or not to issue licence to do business in liquor, it would be void on the ground that it infringed Art. 19 of the Constitution. (2) The licence being renewable as matter of course, the Commissioner of Excise and Taxation could not refuse to renew the same on ground other than those similar to the grounds contained in s. 22, els. (a), (b), (c) and (d) of the Act. ( 3) In any case, as the licences were renewable as matter of course, the appellants were entitled to notice and an opportu· nity to explain why the licence should be renewed. ( 4) The ground relating to objections as to locality was not in substance accepted by the High Court.

The first point, namely, the constitutional validity of s. 20 of the Act was not raised in the High Court. We cannot permit the appellant to raise that question for the first time before us. But we should not be understood to have expressed our view one way or other on the said question.

As we have pointed out earlier, the learned Chief Justice and Ali, J., expressed different views on the question whether the appellants had fundamental right to do business in liquor. To avoid further confusion in the inatter it is necessary to make the position clear. Article 19 of the Constitution qua the right to do business reads thus :

(i) All citizens shall have the right-

(g) to practise any profession, or to carry on any occupation, trade or business.

( 6) Nothing in sub-clause ( g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any Jaw imposing, in the interests of the general public, reason-able restrictions on the exercise of the right conferred by the said sub-clause, ....... .

combined reading of els. (1) and ( 6) of Art. 19 makes it clear that citizen has fundamental right to carry on any trade or business, and the State can make law imposing reason-able restrictions on the said right in the interests of the general public. It is, therefore, obvious that unless dealing in liquor is not trade or business, citizen has fundamental right to deal in that commodity. The learned Advocate General contended that dealing in liquor was not business or trade, as the dealing in noxious and dangerous goods like liquor was dangerous to the community and subversive of its morals. The acceptance of this broad argument involves the position that the meaninJ!: of the ex-particular point of time in our country. Such an approach leads general acceptance of the standards of morality obtaining at particular point of. time in our country. Such an approach leads to incoherence in thought and expression. . Standards of morality can afford guidance to impose restrictions, but cannot limit the scope of the right. So too, Legislature can impose restrictions on, or even prohibit the carrying on of particular trade or busi-H ness and the Court, having regard to the circumstances obtaining at -particular time or place may hold the restrictions or prohibi-tion reasonable. The question .. therefore. is. what is trade or business ? Though the word "business" is ordinarily more com-prehensive than the word "trade", one is used as synonymous with the other. It is not necessary to bring put the finer points of distinction between the said two concepts in ·this case. In the words of S. R. Das, J., as he then was, in Narain Swadeshi Weav-L~g Mills v. The Commissioner of Excess Profits Tax('), the word "business" connotes some real, substantial and systematic or organised course of activity or conduct with set purpose. Even accepting this test, if the activity of dealer, say, in ghee is busi-ness, then how does it cease to be business if it is in liquor ? Liquor can be manufactured, brought or sold like any other com-modity. It is consumed throughout the world, though some cc,>Untries restrict or prohibit the same on economic or moral ,grounds. The morality or otherwise of deal does not affect the quality of the. activity _though i~ may be ground for imposing restriction on the said activity. The illegality of an activity does not affect the character of the. activity but operates as restriction on it. If law prohibits dealing in liquor, the dealing ·does not cease to be business, but the said law imposes restric-tion on the said dealing. But it is said that the decisions of this ·Court have held that.dealing in liquor is not business or trade within the meaning of Art. 19 of the Constitution. In T. B. Ibrahim v. Regional Transport Authority, Taniore([2 ]) it was held that restriction placed upon the use of the bus-stand for the pur-pose of picking up or setting down passengers to or from outward journeys could not be considered to be an unreasonable restric~ tion on the righ~ to carry on any profession, trade or business of the appellant and, therefore, Art. 268 was not in any way re-pugnant to Art. 19 (1) ( g) of the Constitution. In that context, Ghulam Hasan, J., speaking for the Court, observed :

"There is no fundamental right in citizen to carry on business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the interest of public conveni-ence."

This Court did not say that there was no fundamental right to do business but only held that citizen could not claim that his fundamental right could not be restricted in public interests. Nor did the decision in Cooveriee B. Bharucha v. The Etcise Commis-sioner and the Chief Commissioner Ajmer([8 ]) !av down any such proposition. There the question was whether the Excise Regu-lation 1 of 1915 imposed reasonable restriction . within the meaning of Art. 19(6) of the Constitution on the right given under Art. 19 (I )(I?) thereof to carrv on the business in intoxi-cating liquors. This Court held that the said Regulation was Teasonable restriction within the meaning of Art. 19 ( 6) of the (I) (1955] I S.C.R. 952, 961. (2) (1953] S.C.R. 290, 299. (3) (1954] S.C.R. 873, 880.

Constitution. But in the course of the judgment Maha.ian, C. J .. who spoke for the Court, gave an extract from the judgment of Field, J., in Crowley v. Christensen('). In that extract the following passage is found :-

"The police power of the State is fully competent to regulate the business to mitigate its evils or to suppress it II entirely. There is no inherent right in citizen to thus sell intoxicating liquors by retail; it is not privilege of citizen of the State or·of citizen of the United States. As it is business attended with danger to the commu-nity, it may, as already said, be entirely prohibited, or be pennitted under such conditions as will limit to the utmost its evil."

After citing the entire passage, this Court concluded thus :

"These observations have our entire concurrence and they completely negative the. contention raised on behalf of the petitioner. The provisions of the regula-tion purport to regulate trade in liquor in all its diffe-rent spheres and are valid."

It will be seen that the said passage from the judgment of Field, J., has nothing to do with the construction of Art. 19 ( l )( g) of the Constitution of India. The learned Judge was considering the scope of the "police power" and in that context the said observa-tions were made. This Court applied those observations in considering the reasonableness of the restrictions imposed on the fundamental rights. Indeed, perusal of the entire judgment shows that the Court conceded the fundamental right but held that the said regulation operated as reasonable restriction on the said right. The decision of this Court in The State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals, Shillong([2 ]) has no relevance to the present enquiry. The follow-ing passage from the said judgment is relied upon :

"A perusal of the Act and rules will make it clear that no person has any absolute right to sell liquor and that the purpose of the Act and the rules is to control and restrict the consumption of intoxicating liquors, such control and restriction being obviously necessary fo[ the preservation of public health and morals, and to raise revenue.''

This Court only said that on the provisions of the Act no absolute right to sell liquor was given to any person and that the said right was controlled by the provisions of the said Act. These obser-H vations have nothing to do with the question whether person has fundamental right to do business in liquor. Nor can the (I) 34 L.Ed. 62", 623. 623. (2) [19S7J S.C.R, 295, 301,

respondents draw any supp01t from the de,;ision of this Court in Nagendra Nath v. Commissioner of Hills Division and Appeals, Assam('). There, the question was in regard to the scope of Arts. 226 and 227 of the Constitution vis-a-vis the orders passed by the appropriate authorities under the East Bengal and Assam Excise Act, 1910. There incidentally two decisions of this Court, namely, Cooveriee B. Bharucha v. The Excise Commissioner and the Chief Commissioner, Ajmer(') and The State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals, Shillong([8 ]) were noticed and it was observed that there was no inherent right to the settlement of liquor shops .. No question of fundamental right under Art. 19 ( 1) arose in that case. This Court in The State of Bombay v. R. M. D. Chamarbaugwa/a(') upheld the validity of the Bombay Lotteries and Prize Competition Control and Tax Act, 1948 (Born. LIV of 1948), as amended by the Bombay Lotteries and Prize Competition Control and Tax (Amendment) Act (Bombay Act XXX of 1952). One of the questions raised was whether gambling was business or trade or commerc_e within the meaning 9£ Art. 19(1)(g) of the Constitu-tion or Art. 301 thereof. Das, C. J., after considering the various decisions, observed thus :

"We find it difficult to accept the contention that those activities which encourage spirit of reckless pro-pensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undis-cerning and improvident · common man and thereby lower his standard of living and drive him into chronic state of indebtedness and -eventually disrupt the peace and happiness of his humble home could possibly have been intended by our Constitution makers to be raised to the status of trade, commerce or intercourse and to be made the subject-matter of fundamental right guaranteed by A1i. 19(1)(g)."

This decision only lays down that gambling is not business or trade. We are not concerned in this case with gambling.

division Bench of the Orissa High Court in Rnnchhor/alji v. Revenue Divi~ional Commissioner, Northern Division, Sambal-pur ( •) maintained the validity of the provisions of the Orissa Cinema (Regulation) Act. 1954, on the ground that it did not infringe th.e fundamental right guaranteed under Art. 19(1 )(g), read with Art. 19(6) of the Constitution. The learned Judges observed:

"It is only when no policy or prindple has been ____ laid do~n eithe_!__in _the Preamble or in the other provi-

(I) [!958] S.C.R. 1240, (3) [!957] S.C.R. 295. (5) A.l.R. 1960 Orisa 88, 92.

(21 [1954] S.C.R. 873 (4) [1957] S.C.R. $74_ 925.

sions of the statute or statutory rules, and the impugned provision confers arbitrary or excessive powers on the authority, that it is liable to be struck down. The nature of the restrictions imposed will necessarily vary with the nature of the business. Restrictions on the carrying on of business in respect of 'normally availa-ble' commodities should not be as drastic as those in respect of business or occupation which is likely to cause nuisance or danger to the public."

This decision also does not say that there is no fundamental right to do business which is likely to cause nuisance or danger to the public, but stated that the nature of the restrictions would depend upon the nature of the trade.

scrutiny of these decisions does not support the contentien that the courts held that dealing in liquor was not business or trade. They were only considering the provisions of the various Acts Which conferred restricted right to do business. None of them held that right to do business in liquor was not funda-mental right.

We, therefore, hold that dealing in liquor is business and citizen has right to do business in that commodity; but the State can make jaw imposing reasonable restrictions on the said right, in public interests.

The next question is whether s. 20 of the Act infringes the fundamental right under Art. 19 of the Constitution. This ques-tion, as we have said earlier, was not raised before the High Court. We do not, therefore, allow the learned counsel to raise this ques-tion before us for the first time. We assume, therefore, without deciding !bats. 20 of the Act does not infringe Art. 19(l)(g) of the Constitution.

Even so it was contended that the order of the Commissioner of Excise and Taxation was arbitrary and in violation of the prin-ciples of natural justice and,_ therefore, it operated as an un-reasonable restriction on the appellant's fundamental right to do business.

This argument was sought to be sustained on the following grou'!ds : .( 1) Though under the Act yearly leases were issued, in practice-renewal was matter of course. (2) On the basis of the tssuance of licence heavy expenditure had been incurred by the appel~ants. (3) No ~pportunitY, was given to the appellants to estabhsh that the locahty was smtable for carrying on the said business and that the complaints made against them were false. An~ ( 4) Even the High Court held that in regard to licensees agamst whom there were no complaints further inquiry should M4 Sup. Cl/67-S

be held. In support of the contention we were taken through all the necessary correspondence. The learned Judges on conside· ration of the entire material placed before them, held that the Commissioner of Excise and Taxation made bona fide enquir>' and foun~ that the locality was not suitable for carrying on busi-ness in liquor in view of the various circumstances mentioned in the counter-affidavit. We do not think we are justified in inter· fering with the finding of fact arrived at by the High Court on the material placed before it. On the said finding it cannot be held that the order of the Commissioner was arbitrary or unreasonable.

We cannot agree with the learned counsel that s. 22 controls s. 20 of the Act for the former deals with the cancellation of licence and the latter with the issuance of fresh licence : they deal with two different subject-matters.

Lastly, the learned counsel for the appellants contended that the order was mala fide. But this point was not pressed before the High Court and we cannot allow it to be raised for the first time before us.

In the result the appeals fail and are dismissed with costs.

Appeal dismissed.