V R RAJKUMAR Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) In this writ petition the petitioner seeks for the issuance of a writ of mandamus directing the respondent to accord the necessary sanction of letter of intent under Rule 9 of the Andhra Pradesh Distillery Rules, 1970 for the establishment of a Distillery at Hyderabad for manufacturing Indian made foreign liquors.

(2.) The petitioner submitted an application dated 7-3-1975 under Rule 9 of the Andhra Pradesh Distillery Rules 1970 (hereinafter called the "Rules") in Form D-1 (A) together with a challan in original in support of payment of Rs. 200/- as prescribed in the said Rules for establishing a distillery at Hyderabad as notified in the scheme submitted by the applicant. The petitioner submits that after he submitted the application dated 7-3-1975 for granting the letter of intent for establishing a distillery at Hyderabad, the Director of industries called upon the petitioner to clarify whether the proposed distillery requires any allotment of alcohol from the State for which the petitioner replied that he does not require alcohol from Andhra Pradesh State and that he will make his own arrangements for procuring alcohol Thereafter the respondent by their Memo No. 810/E/75-8 dated 23-6-1976 required the petitioner to indicate whether the production in the proposed scheme will be 100% export oriented or not, for which the petitioner requested the respondent to grant some time to survey the market potentiality for export of the products. After careful study of the market conditions, the petitioner informed the respondent that the proposed unit may be treated 100% export oriented and requested the respondent for granting the letter of intent immediately. The Commissioner of Excise also by his proceedings dated 12-6-1979 recommended the petitioners case for the grant of letter of intent without any commitment for alcohol. The Director of Industries also by his proceedings dated 31 -8-1979 recommended to the Government to grant the letter of intent to the petitioner. The application of the petitioner requesting for the letter of intent under Rule 9 filed in 1975 has been kept pending for more than five years. But ultimately the respondent by Memo. No. 841/E-9/79-7 dated 8-9-1980 rejected the application of the petitioner on the ground that there is acute scarcity of alcohol. The petitioner submits that the molasses, which is the raw material required for manufacturing the alcohol, are available in abundance. As a matter of fact, large quantities of molasses which is the by-product in sugar industry is being wasted away at several hundreds of sugar factories and thousands of Khandasari sugar factories as the Government is not lifting the quantities and utilising the same in proper time. The petitioner contends that as the impugned order is based on an incorrect statement of fact, the jurisdiction vested in the respondent under Rule 9 has been exercised in an arbitrary and capricious manner and consequently the impugned order of rejection is illegal. The power conferred under Rule 9 of the Rules is coupled with a mandatory duty to exercise the said power fairly for the purpose for which it is conferred. The petitioner further contends that while rejecting the application of the petitioner filed in the year 1975 after keeping it pending for more than five years, the respondent by order dt. 8-9-1980 has granted letters of intent to Messrs. Jemini Distillery and Sri Adikesavulu who applied for the letter of intent recently in the year 1979 and this amounts to an invidious discrimination shown by the respondent while exercising the power conferred under Rule 9, and the impugned order is therefore liable to be struck down.

(3.) Opposing this writ petition the respondent contends in the counter affidavit that the molasses is a by-product of sugar industry both vacuum pan and open pan process, otherwise known as khandasari. In vacuum pan sugar industry the yield of molasses will be 4% and under open pan process i.e., in khandasari sugar factories, the yield will be about 5% of the sugar cane crushed and in our State we have nearly 28 vacuum pan sugar factories having a total daily crushing capacity of 60,000 M Ts. of cane. Similarly there are about 200 Kh. units having daily crushing capacity of about 19,000 M Ts. of cane. But all the khandasari sugar factories are not working. The molasses is the basic raw material for manufacturing alcohol and it is a controlled commodity and governed by the provisions of the Molasses Control Order 1961. The Commissioner of Excise is also the Molasses Controller for the State. The capacity of the existing distilleries in the State to process molasses is 2.40 lakhs M Ts. Three new distilleries are under construction. They are expected to add another 60,000 M Ts. to the existing capacity before the end of this calendar year the total distillation capacity that was expected by the end of the calendar year 1980-81 was 3 lakh M Ts. of molasses. The production of molasses during the last 5 years i.e. from 1975-76 to 1980-81 has not exceeded 2.56 lakh M Ts In order to produce 3 lakh tonnes of molasses 70 to 75 lakh M Ts. of sugar cane has to be crushed per year. As against this, in the past, sugar factories, both vacuum pan and khandasari units, crushed only 64 lakh tonnes in the year 1977-78 which was supposed to be the best year. The respondent therefore contends that it is highly improbable that the performance of crushing of the sugar factories will increase by 40% to 50% within the next 5 years. This depends upon the rate of sugar cane offered fo cane growers by sugar factories which will in turn depends upon the prevailing rate of sugar in the country. If the sugar prices are not remunerative the cane growers direct the cane to jaggery manufacture. The respondent therefore contends that there is no scope or need to set up any new distillaries in the near future. The respondent contends that there is no fundamental right to trade or do business in intoxicants. The State under its regulatory powers has the right to prohibit absolutely every form of activity in relation to intoxicants its manufacture, storage, export, import, sale and possession. These rights are vested in the State and the wider right to prohibit absolutely would include the narrow right to permit dealings in the intoxicants on such terms of general application as the State deem expedient. Hence the petitioner cannot demand as a matter of right for licence to manufacure rectified spirit or Indian made Foreign liquors, merely because he filed an application for grant of licence after observing necessary formalities. The molasses which is the base for production of rectified spirit is also a controlled commodity. There is scarcity of molasses and consequently the production of the rectified spirit in the State is very much limited. The rectified spirit now produced in the State is not sufficient to feed the existing pharmaceutical and other industries. Therefore the State is not in a position to give some more licences either to manufacture the rectified spirit or Indian made liquors as the molasses available in the State is not sufficient to meet the requirements of the existing rectified spirit distilleries both in private and public sector. Due to this reason the petitioner's application for grant of the letter of intent in Form D-9 was rejected.