- (1.) R. A. Sharma, J. The Excise Commissioner, U. P. invited tenders by notice dated 21-12-1995 from distilleries for supplying country liquor to the retail licensees m various districts for the year 1996-97. The petitioner, the respondent No. 4 and various other distilleries submitted their tenders. The Government accepted the tenders districtwise. Vide order dated 27-2-1996 the petitioner was allotted ten districts, whereas the respondent No. 4 was allotted only one district of Ghazipur for supplying country liquor. The allotment in favour of respondent No. 4 was subject to the condition that till it starts manufacturing country liquor, the petitioner will supply the liquor to district Ghazipur. Such a condition was imposed, because in the absence of affluent treatment plant the manufacturing of the country liquor in M/s P. V. K. Distillery (respondent No. 4) was stopped under the orders of the U. P. Pollution Control Board, dated 25-1-1993. By a letter dated 30-5-1996 of the Excise Commissioner/controller of Molasses, the respondent No. 4 was permitted to manufacture the country liquor from the rectified spirit produced by another distillery (Shamli Distillery ). By another letter, dated 19-6-1986 the petitioner has been asked by the District Excise Officer, Ghazipur not to supply liquor to district Ghazipur. Being aggrieved, the petitioner has filed this writ petition, challenging the said orders/letters dated 30-5-1996 and 19-6-1996. Writ of mandamus, directing the respondents to permit the petitioner to continue to supply the country liquor to the licensees in district Ghazipur till the respondent No. 4 starts actual production of rectified spirit, has also been sought.
(2.) THE learned counsel for the petitioner has made two submissions in support of the writ petition, namely, (i) the respondent No. 4 cannot be permitted to manufacture country liquor, because it is not open to a distillery, to manufacture country liquor from the rectified spirit produced by another distillery, and (ii) the respondent's distillery has been closed pursuant to the order of the Pollution Control Board dated 25. 1. 1993 and, therefore, it cannot manufacture the country liquor. Sri P. P. Srivastava, learned Additional Advocate General and the learned counsel for respondent No. 4 have disputed the above contentions. The Excise Commissioner has power under Section 24 of the U. P. Excise Act (hereinafter referred to as the Act) to grant a licence to any person for the exclusive privilege of manufacturing or supplying country liquor within any local area. Section 31 of the Act has laid down that the licence shall be granted on payment of the prescribed fee and subject to such restrictions and conditions as the. State Government may direct. Rules 415 to 419 of the rules framed under the Act relate to country liquor. According to Rule 415 the supply of country liquor is to be on the contract supply system. Rule 416 defines 'contract supply system' according to which the exclusive privilege is granted for supplying country liquor at fixed price to a firm of distillers. Rule 417, which lays down the procedure for selection of the distillery for grant of exclusive privilege is reproduced below: "417. Contractor's how selected.- The firm is selected in the following manner: Tenders in Farm C. L. 23 are invited by the Excise Commissioner vide notice in Farm C. L. 22 for the rates at which the different categories of spirit will be supplied at all specified bounded warehouses and wholesale depots in the area indicated. These tenders are submitted for the orders of Government. The contract will ordinarily be awarded to the firm tendering at the lowest rates, but full power is reserved to accept such tender as may be deemed best in public interest, and to reject any of those received without reasons being assigned. No payment is required for the exclusive right of supply, the object being to secure to the retail vendors a supply of good spirit at a cheap and fixed rate. Spirit may be supplied from any distillery, whether situated within the State or outside. The detailed conditions of the contract are given in the notice in Farm C. L. 22 calling for tenders and in the form of licence C. L. 1. " In the instant case tenders were invited in the prescribed form and the contacts for supplying country liquor were granted by the Government to various distilleries in accordances with law. Rule 8 defines 'country liquor as follows: "8. 'country liquor' means: (1) Plaint or spice spirit which has been made in India from materials recognised as based for country liquor, namely, mahua, rice gur or molasses and on which duty has not been imposed at the rate fixed for importation of spirit into India; (2) Tari; and (3) all fermented alcoholic beverages made from mahua, rice, millet or other grain according to Indian processes. "
(3.) THE word 'manufacture' has been defined by Section 3 (2) of the Act as under: "3. (2) - "manufacture" includes every process, whether natural or artificial, by which any intoxicant is produced or prepared, and also redisfiliation and every process for the rectification, flavouring, or blending or colouring of liquor. " The production of the country liquor involves several processes, one of which is the production of the rectified spirit from molasses. Rectified spirit is not fit for human consumption and it is a raw material for manufacturing country liquor. Normally a distillery having the licence itself produces the rectified spirit from molasses from which it manufactures the country liquor. But there is neither any statutory provisions nor is there any condition in the licence and the notice inviting tenders prohibiting a distillery from manufacturing the country liquor unless it also produces rectified spirit. No such provision or condition has been placed by the learned counsel for the parties before us. In support of the first contention the learned counsel for the petitioner has however, placed reliance on Condition No. 26 of the licence and term/condition No. 1 of the notice inviting tenders. These conditions do not support such a contention. The English translation of condition No. 26 of the licence is as under: "the allotment for supply of country liquor in favour of a distillery can also be cancelled, if such a distillery does not produce rectified spirit. " This is a condition, which enables the Government to cancel the licence if rectified spirit is not produced by the distillery; but it does not place a mandatory obligation on the Government to cancel the licence if rectified spirit is not produced by the distillery. The Government is, therefore, not bound to cancel the licence even if the rectified spirit is not produced. Whether to cancel or not to cancel the licence of a distillery, which does not produce rectified spirit, has to be decided by the Government on the basis of the relevant considerations including the facts and circumstances of the case. The Government, in the instant case, has not only refused to cancel the licence of respondent No. 4 but has in fact permitted it to get the rectified spirit manufactured from another distillery for the purpose of manufacturing the country liquor in its own distillery. The term/condition No. 1 of the notice inviting tenders also does not support the contention of the learned counsel for the petitioner. This condition merely states that distilleries, which are authorised to manufacture country liquor can submit the tenders. The distillery, which holds a licence is authorised to manufacture country liquor. The respondent No. 4 is holding such a licence. In the absence of statutory provision or the conditions of licence prohibiting the respondent No. 4 from manufacturing the country liquor in its distillery unless it also produces rectified spirit, no exception can be taken to the impugned orders.;