- (1.) The challenge in the present petition filed under Articles 226/227 of the Constitution of India is for quashing of notification dated 26.3.2012 Annexure P-10 issued in exercise of powers conferred by Clause (d) of Section 21 and Section 59 of the Punjab Excise Act, 1914 (hereinafter referred to as "the Act") whereby the Excise Commissioner, Punjab while exercising the powers of the Financial Commissioner amended the Punjab Distillery Rules, 1932 (hereinafter referred to as "the Rules") and by virtue of said amendment, in Rule 93 of the Rules for the words "Food Grade Type" the words "Superior-Grade quality and round in shape" were substituted.
(2.) The case pleaded by the petitioner is that it is a Public Limited Company having its registered office at Chandigarh and engaged in business of manufacturing of Country Liquor(CL)/Punjab Medium Liquor (PML) through its distillery which had been set up at village Louhka, Tehsil Patti, District Tarn Taran. Initially the business of the petitioner comprised of setting up of integrated sugar mill with a capacity to crush 2500 TCS of sugar cane per day at village Butter Sevian, Tehsil Baba Bakala, District Amritsar. With the advancement and aid of modern technology the petitioner also set up a co-generation of electricity production plant with 81 MW of output which was partly used for self consumption and the remaining was being supplied to PSEB and other private consumers. One of the bye products of a sugar mill was molasses which was a key ingredient for a distillery for the manufacture of spirit and for further production of liquor. The petitioner in order to use the bye product i.e. molasses set up a distillery at village Louhka, Tehsil Patti, District Tarn Taran. After setting up of the distillery, the petitioner was granted the Distillery Licence in Form D-2 on 3.2.2006 which was to be renewed annually and the renewal was valid till 2.2.2013. Various restrictions had been imposed while granting the said licence and the petitioner was complying with all the restrictions. There were two types of liquor which were being sold i.e. Indian Made Foreign Liquor (IMFL) and Country Liquor/PML and the petitioner was primarily in the business of manufacturing of the PML though it also produced IMFL. The controversy in the present writ petition is restricted to the second category of the liquor i.e. CL/PML.
(3.) The State of Punjab had fixed the quota of PML equally to all the Distilleries, which were eight in number and the same was to be sold to the retailers at a price which was fixed by the department every year and as such every retailer had to buy a fixed quota at a fixed price from the allotted Distillery and, therefore, the supply of PML was completely regulated. Since the quota of PML was fixed and the same was required to be sold at a fixed price, there was no incentive for the distilleries to improve their product. Thereafter, on the inputs gathered from the consumers, retailers and the field staff, the State of Punjab realised that since quotas and prices were pre-determined, the distilleries in order to minimise their cost of production and to earn maximum profit were not taking adequate steps to improve the quality of liquor which was not a very healthy situation. In order to encourage the distilleries to improve their product, the State of Punjab decided to allow a certain percentage of total PML quota as open quota which the retailers would be free to purchase from any distillery in the State of Punjab of their choice. In the year 2007-08, the State of Punjab restricted the fixed quota to 70% and 30% quota was kept in open category wherein the retailers were free to buy liquor amongst the best quality product offered by the distilleries and as such the distilleries started improving their product and became quality conscious. In the year 2009-10 the open quota was increased to 40% and for the year 2011-12 the open quota was further increased to 50%. The distilleries, thus, started improving the quality of their product inspite of the fixed selling price of PML and every distillery including the petitioner were making sincere efforts to offer the best quality products in the market in terms of the quality of liquor, packaging, bottle including its design, labelling, cork and carton etc.;