KOTHAMARAM NAGI REDDY Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) The order under challenge, in these petitions, are the proceedings of the Commissioner of Prohibition & Excise, Hyderabad dated 04.08.2012, whereby the Deputy Commissioners of Prohibition & Excise were informed that, in order to stabilize the maximum retail price (MRP) for sale of Indian made foreign liquor (IMFL) and Foreign liquor (FL), and to control illicit distillation, in certain areas/localities it was decided to permit A.P. Beverages Corporation Limited (APBCL) to open outlets for the sale of IMFL & FL in public interest. The Deputy Commissioners were directed to identify suitable premises to locate the outlets, and make all the outlets operational. The Commissioner of Prohibition and Excise ("Commissioner" for short), by proceedings dated 20.07.2012, had earlier conveyed his decision to open 51 outlets at 50 places in certain Districts where notified shops could not be allotted, in the drawal of lots, as no applications were received. However, none of the petitioners in these petitions are aggrieved by the Commissioner's action in this regard or by his action in permitting APBCL to open retail outlets with a view to control illicit distillation. Their grievance is limited to the permission accorded to APBCL to open outlets in areas in which licences were granted to the petitioners after drawal of lots. It would suffice to note the facts in W.P. No. 26957 of 2012. The District Collector, Prakasam invited applications for grant of licenses for retail outlets, for the licence year 2012-2013, through drawal of lots. The petitioners applied for the shops at Darsi village, and were selected through drawal of lots. They were, thereafter, granted licences. For the year 2012-2013 the annual licence fee was fixed at Rs. 34,00,000/- for each shop in Darsi village. The petitioners claim to be running the licensed shops; to have paid 1/3rd of the licence fees; and to have furnished bank guarantees for the balance. The Director of Enforcement, by his proceedings dated 23.07.2012, informed the Deputy Commissioner of Prohibition & Excise, Prakasam of the proposal to open three outlets by APBCL in Prakasam District to ensure stabilization of MRP. One of these outlets was proposed to be opened in Darsi village. Thereafter, by the impugned proceedings dated 04.08.2012, the Commissioner conveyed his decision to permit APBCL to open outlets in certain areas which he considered necessary to stabilize MRP, and to control illicit distillation.

(2.) In the counter affidavit, filed on behalf of the Commissioner, it is stated that prior to 01.07.2012 retail liquor vends were given in public auction; the auction system bred many unintended and undesirable results such as retailers violating the MRP, forming cartels, and disregarding consumer interests; the Government, heeding to public demand, had constituted a cabinet sub-committee to examine the policy of retail vending of liquor in the State; after due deliberations with the stake holders, such as manufacturers, retailers and social organizations, the cabinet sub-committee decided to do away with the system of auction of liquor vends; owing to the sensitivity of the subject, and the responsibility thrust on the Government by the directive principles of state policy, the Government formulated a new Excise policy in G.O. Ms. No. 390, Revenue Ex. II Department, dated 18.06.2012, for the year 2012-2013 commencing from 1st July, 2012, not to continue with the auction system of retail vends; one of the main objectives of the new policy was to ensure that retailers did not increase the price of liquor, and adhered to the MRP printed on the labels of liquor bottles; to achieve this objective, the government accepted a reduction of Rs. 1000 crores per annum as lease amounts, and introduced a fixed licence fee for retail shops at reasonable levels; while fixing the licence fee, care was taken to ensure that the licence holder made a reasonable profit, after payment of the licence fee to the Government, and still sell at MRP; due allowance was given to operational expenses such as transport charges, rent of shops, salaries of workers, electricity charges, interest on capital, and all other expenses normally associated with the liquor trade; the interests of the consumer was paramount; to ensure that the public get true value for the money, and traders do not sell liquor at higher prices, it was decided in public interest to permit APBCL to open outlets at strategic places; opening of such outlets would not only act as a deterrence to liquor being sold at prices higher than MRP, but the consumers would also have the alternative of purchasing IMFL and FL from APBCL outlets; several MRP violations were noticed, and cases booked, during the years 2010-2012; in the State of Karnataka retail vending by the Karnataka State Beverages Corporation, along with private enterprise in retail vending, has been successfully implemented; it is only after a detailed examination of the field situation that a decision was taken to permit APBCL to run additional outlets; the contention that the petitioners would suffer financial loss if APBCL outlets were opened is without basis as is evident from the fact that the licence fees for retail shops was drastically reduced from Rs. 501 lakhs during 2011-2012, to Rs. 204 lakhs during the year 2012-2013.

(3.) In its counter affidavit, the Andhra Pradesh Beverages Corporation Limited (APBCL) would submit that it was incorporated under the Companies Act, 1956 on 23.07.1986 with the object of manufacturing, purchasing, importing, exporting alcohol and all other beverages suitable for human consumption; under Rule 4 of the Andhra Pradesh (Regulation of trade in Indian Made Foreign Liquor, Foreign Liquor) Rules, 1993, APBCL, a company wholly owned and controlled by the State Government, has been conferred exclusive privilege of importing, exporting and carrying on wholesale trade and distribution of IMFL and FL on behalf of the Government for the entire State of Andhra Pradesh; Rule 14 thereof enables APBCL to sell IMFL and FL through its permitted wholesale depots only to the holders of a licence issued under the Andhra Pradesh Excise (Lease of Right of selling by Shop, Bars, Licence and Conditions) Rules, 2012 (hereinafter called the "rules"); the decision taken to identify suitable areas and locations for sale of IMFL and FL by APBCL was in the public interest of stabilizing MRP, and to control illicit distillation.