State Of Punjab & Anr vs M/S Devans Modern Brewaries Ltd. & Anr on 20 November, 2003

Equivalent citations: AIRONLINE 2003 SC 640

Author: Ar. Lakshmanan

Bench: Chief Justice, R.C. Lahoti, Ar. Lakshmanan

 CASE NO.:
Appeal (Civil) 3017 of 1997

PETITIONER:
State of Punjab & Anr. 

RESPONDENT:
M/s Devans Modern Brewaries Ltd. & Anr. 

DATE OF JUDGMENT: 20/11/2003

BENCH:
CJI., R.C. Lahoti & Dr. AR. Lakshmanan.

JUDGMENT:
JUDGMENT

Dr. AR. LAKSHMANAN, J.

I have had the privilege of perusing the judgment proposed by my 
learned Brother Justice B.N. Agrawal. However, with respect, I express my 
inability to agree with the same and I propose to write a separate judgment in 
the following terms.

As facts and provisions of the relevant law have been set out in the 
judgment of my learned Brother Justice B.N. Agrawal, I do not propose to 
extract them again. 

Civil Appeal No. 3017 of 1997 was filed by the State of Punjab against 
the judgment of the Division Bench of the Punjab & Haryana High Court dated 
17.01.1997 in Writ Petition (Civil) No. 5358 of 1996. The said writ petition 
was filed by Respondent No.1 in this appeal, namely, M/s. Devans Modern 
Brewaries Ltd., Ludhiana praying for issuance of a writ in the nature of 
Certiorari quashing the imposition of import fee on Beer vide Order 1-D (iii) of 
the Punjab Excise Fiscal Orders, 1932, amended from time to time, latest 
being notification dated 27.03.1996 which is impugned in the writ petition and 
for other consequential prayers.

Civil Appeal Nos. 2696 and 2697 of 2003 were filed by Penguin 
Alcohols (P) Ltd. and Another etc. against the State of Kerala and Others 
against the common judgment of the High Court of Kerala dated 06.04.2001 
in Writ Appeal Nos. 3 and 10 of 2001 dismissing the appeal filed by them. 

The original petitions were filed by appellants herein against Exhibit P1 
notification issued by the State of Kerala enhancing the rate of import fee 
from Rs. 2/- per proof litre to Rs.5/- on Indian Made Foreign Liquor 
(hereinafter referred to as "IMFL"). The import fee was initially levied under 
Government Order, G.O.(MS) No. 57/92/TD dated 31.12.1992. The learned 
Single Judge upheld the levy holding that it is a fee and regulatory in nature. 
The appellants preferred writ appeals, which were dismissed by the Division 
Bench by the impugned common order in Writ Appeal Nos. 3 and 10 of 2001. 

In both the appeals, common questions arise for consideration and 
hence they have been heard together and are being disposed of by this 
common judgment.

The points for consideration in both the appeals are:

a) Whether the import fee levied is the price for parting with the 
privilege given to the respondent to import liquor into the State 
and, therefore, the same is within the competence of the State 
to impose import fee;
b) Whether the imposition of import fee does not, in any way, 
restrict trade, commerce and intercourse among the States.

It is well settled by a catena of decisions that the trade in liquor is not a 
fundamental right. It is a privilege of the State. The State parts with this 
privilege for revenue consideration. In Punjab, the Excise Policy of the State 
is formulated every year. It is also made known to the licensees much before 
their licenses for the year comes to an end. It is also a matter of fact that the 
licensees have paid the fee on demand. The fee was first levied in the year 
1992. The licensee, in the Punjab case, had been holding the licence all 
through this period and never challenged or protested against levy of the fee. 
The licensees having paid the fee without any protest all through is not 
entitled to challenge the same, which does not suit them. The licensee 
cannot aprobate and reprobate. In Punjab, the grant of licences are governed 
by the Punjab Excise Act, 1914 (for short "the Act") and various rules and 
orders framed under it. In the Punjab case, the challenge of the appellant is 
limited to the imposition of import fee in addition to the countervailing duty on 
Beer. It is not disputed by the appellant that the State is competent and is 
entitled to impose excise duty or countervailing duty besides there is no bar 
on the State to charge any other fee on account of consideration of the 
privilege provided to the licensee to provide them the right to trade in liquor. 
A perusal of the impugned notification shows that the State Government 
substituted the existing provision with regard to import fee and increased the 
rate of this fee. It is part of the privilege price i.e. consideration amount on 
account of which the licence was granted to the licensee. Further, the 
licensee had an option to opt out of the business field if such levies were 
detrimental to their interest or were to their disadvantage.

The respondent in Civil Appeal No. 3017 of 1997 carries on wholesale 
trade in the State of Punjab. Under the rules, the licensee is required to 
obtain a licence in Form L-1, which is valid for one year. In addition to this 
under the Punjab Excise Fiscal Orders, 1932, the respondent is liable to pay 
duty/fee at the rates mentioned therein. As a result of this, the respondent 
has to pay excise duty/import fee as the case may be. Over and above this, 
there is an import fee which is levied by the State Government in exercise of 
its powers under Section 58 of the Act. According to learned counsel for the 
State of Punjab all these charges and levies are really a price for the privilege 
of carrying on the trade under the L-1 license as far as the privilege of 
importing alcohol into the State of Punjab. The impugned levy is under the 
Punjab Excise act, 1914, which is a pre-Constitution Act. It is this Act which 
provides that no intoxicant shall be imported, exported or transported except 
after the payment of duty to which it may be liable under the Act. The words 
"duty to which it may be liable under this Act" were substituted by the words 
"duty of customs or excise to which it may be liable". This change was also 
brought about by the Government of India on adaptation of Indian Laws Order 
1937. It was, therefore, argued by the State that the power is conferred under 
Section 58(2)(b) to regulate the import, export, transport and possession of 
any intoxicant. Therefore, the different imposts have to be construed in this 
background. There is, therefore, an excise duty so-called which is provided 
for under Rule 5 of the Punjab Excise Fiscal Orders, 1932, not only on locally 
produced beer but also on imported beer. The Statutory Authority for this 
imposition can be found from the provisions including Section 16 read with 
Section 32 of the Act. In addition to the excise duty under Rule 5, there is 
also a provision for grant of licence for sale of intoxicants. To carry on the 
trade in wholesale, a person has to obtain a L-1 licence for which an annual 
pre-determined sum is payable. Similarly, in addition there are licences for 
production and for manufacture each of which licence has its own pre-
determined fee which has to be paid for obtaining such a licence. The 
modalities of the levy of fees or the quantum of the fees has no bearing on its 
legal pedigree which is that of consideration for the permission to carry on an 
activity in the noxious articles. Thus, if a person wants to carry on a 
wholesale trade in liquor in Punjab, he will have to (a) obtain a L-1 licence for 
which he would pay the fees in accordance with the policy carried on for the 
period; (b) On the liquor purchased by him, he will have to pay duty on all 
purchases irrespective of the source of the product. This duty is the duty 
under Rule 5 of the Punjab Excise Fiscal Orders, 1932, in relation to beer 
read with Rule 1 of the said Orders in case of IMFL.

In case, the licensee seeks a permit to bring in imported alcohol, he 
would have to pay as a condition of the permission to import under Section 
16(b) read with Section 19 an import pass fee at such sum fixed by the 
Government. The respondent in this case/writ petitioner has mixed up these 
different imposts and has referred to the duty paid under Rule 5 which is an 
amount equivalent to the excise duty and the fee under Rule 1 (d) of Punjab 
Excise Fiscal Orders, 1932. As already noticed, on imported goods there are 
two independent imposts, namely, duty equal to the local excise duty under 
Rule 5 and an import fee under Rule 1(d) of the Punjab Excise Fiscal Orders, 
1932. 

On 31.01.2002, this Court passed an order which read as under:

"In the course of the argument, it was noticed that the principal 
argument on behalf of the respondents before the High Court, which 
was upheld by the High Court, was that the import fee, which is the 
subject matter of these proceedings, had been imposed by the State 
of Punjab without authority of law. The response on behalf of the 
State of Punjab before the High Court was that the right of the 
respondents to import beer into the State was privilege conferred by 
the State upon the respondents to which Article 301 had no 
application because the respondents had no right to trade in liquor 
de hors that privilege and that the import fee was the price for the 
privilege. In the course of the argument before us, we asked Mr. 
K.K. Venugopal, learned counsel for the State, to tell us what the 
source of power for the imposition of the import fee was. Mr. 
Venugopal referred in reply to Sections 18, 19, 34, 58 and 59 of the 
Punjab Excise Act, 1914. In other words, the contention of the State 
before us is that the import fee is a fee and the respondents are 
required to pay such fee to bring beer into the State." 

In compliance with the aforesaid order, a detailed additional affidavit was filed 
on behalf of the State of Punjab by quoting the relevant provisions of the 
Punjab Excise Act, 1914, namely, Section 3(9) - "Excise Revenue", Section 
3(10) - "Export", Section 3(12) - "Import", Section 16 - "Import, export and 
transport of intoxicant", Section 17 - "Power of State Government to prohibit 
import, export and transport of intoxicant", Section 18 - Passes necessary for 
import, export and transport, Section 19 - Grant of passes for import, export 
and transport, Section 31 - Duty on excisable articles, Section 32 - Manner in 
which duty may be levied, Section 33 - Payment for grant of leases, Section 
34 - Fees for terms, conditions and form of, and duration of licences, permits 
and passes, Section 35 - Grant of lincense for sale, Section 58 - Power of 
State Government to make Rules, Section 59 - Powers of Financial 
Commissioner to make rules. Along with the additional affidavit, a copy of the 
Notification No. 5998 called the Punjab Excise Fiscal Orders and prescribed 
levy of rates of duty etc. was filed and marked as Annexure-A-1. It is seen 
from the additional affidavit that this notification was republished by the State 
of Punjab in the year 1965. The State vide notification dated 24.03.1986 
introduced amendment to the Punjab Excise Fiscal Orders, 1986 and as per 
Clause 5 of the notification, Order 1-D was added after Order 1-C levying an 
import fee of Rs. 3.20 per proof litre on all imports of IMFL and rectified spirit 
into the State of Punjab.

Vide notification dated 31.03.1992, the Government of Punjab made 
further amendment in the Fiscal Order and issued Punjab Excise Fiscal (10th 
amendment) Orders, 1992 and substituted Order 1-D stating that "All imports 
of liquor and spirit shall be subject to the levy of an import fee as prescribed." 
By further amendment vide notification dated 27.03.1996, the Punjab Excise 
Fiscal Orders, 1932 was amended and the Order 1-D item (iii) was 
substituted. In exercise of powers conferred under the Act, the State 
Government framed rules which have been marked as Annexure P-2.

Thus, it is seen from the Punjab Liquor Import, Export Order, 1932, the 
State Government is competent and empowered to regulate the import and 
export of liquor. Under the Punjab Liquor Licence Rules, 1956, there are 21 
types of licences which are prescribed and are given. The respondent in this 
appeal is holding L-1 licence i.e. Wholesale and retail vend of foreign liquor to 
trade only. The said licence is given on fixed licence fee, which is subject to 
variation as per excise policy of the Government based on year to year. The 
State Government has incorporated as one of the terms and conditions on the 
L-1 holders to pay import fees also at the prescribed rate as per the Punjab 
Excise Fiscal Order, 1996. The respondent has been accepting the terms 
and conditions from 1992 onwards and acted on the same, the licence was 
renewed on yearly basis.

Similarly, under the provisions of the Punjab Liquor Permit & Pass 
Rules, 1932, the State Government issued permit in form L-32, in the case of 
import and the licensees are liable to pay permit fee at the prescribed rate. 
As already stated, the respondent has mixed up two different imposts. The 
respondent has referred to the duty paid under Rule 5 i.e. equivalent to 
Excise duty and fees under Order (1) (D) of the Punjab Fiscal Orders, 1932. 
As stated above, on imported goods by L-1 holder, there are two different and 
independent imposts in the shape of Excise duty under Rule 5 and import fee 
under Rule (1) (D) of Punjab Excise Fiscal Orders, 1932. In addition he has 
to pay licence fee under the Punjab Liquor Licence Rules, 1956, which is 
fixed on yearly basis. Thus, it is seen that as per provisions of Section 58 (D) 
as well as Section 59 (D) the State Government, in my opinion, has power to 
regulate the import and price of any description of bottle and the scale of the 
fee and the manner of the fee payable by any licensee. 

It is stated in the additional affidavit that the word "fee" is not used in 
the strict sense to attract the doctrine of quid pro quo. This is the price or 
consideration which the State Government charges for parting with this 
privilege and granting the same to the vendors. Therefore, in my opinion, the 
amount charged is not a fee nor a tax but it is in the nature of price of a 
privilege which the purchaser has to pay in any trading and business in 
noxious article/goods. The collection of such amount in the shape of import 
fee does not form part of the general revenue of the State. As stated above, 
it is one of the terms and conditions of the Excise Policy applicable to all L-1 
holders including the respondents herein. In my view, respondents cannot be 
permitted to challenge the terms and conditions of the policy if they want to 
avail the benefit of the same.

This Court, in a number of judgments, has held that the State 
Government has unfettered powers to regulate the Export/Import sale of 
intoxicants and in exercise of its regulatory powers, the import fee has been 
incorporated as one of the terms of the Excise Policy on yearly basis. We will 
refer to the relevant judgments in the later part of this judgment. 

The learned counsel for the respondent submitted that there is no 
source of power for imposition of import fee over and above the countervailing 
duty and that the appellant-State was not able to show that under which 
Authority or provision of the Punjab Excise Act, 1914, they can impose the 
import fee over and above the countervailing duty. It is further submitted that 
a combined reading of Section 33A of the Punjab Excise Act, 1914, Articles 
301 and 304 of the Constitution and Entry 51 of List II of Seventh Schedule to 
the Constitution makes it clear that the State of Punjab has no authority to 
impose the import fee over and above the countervailing duty. This 
contention, in my opinion, has no force for the reasons stated and the 
discussions made in paragraphs supra.

In my opinion, Articles 302 and 304A of the Constitution of India are 
not attracted to the present case as the imposition of import fee does not, in 
any way, restrict trade commerce and intercourse among the States. In my 
opinion, the permissive privilege to deal in liquor is not a "right" at all. The 
levy charged for parting with that privilege is neither a tax nor a fee. It is 
simply a levy for the act of granting permission or for the exercise of power to 
part with the privilege. In this context, we can usefully refer to Har Shankar 
and Others etc. etc. vs. The Deputy Excise and Taxation Commissioner 
and Others etc. AIR 1975 SC 1121 and Panna Lal and Others vs. State of 
Rajasthan and Others (1975) 2 SCC 633. As noticed earlier, dealing in 
liquor is neither a right nor is the levy a tax or a fee. Articles 301-304 will be 
rendered inapplicable at the threshold to the activity in question. Further, 
there is not even a single judgment which upholds the applicability of Articles 
301-304 to the liquor trade. On the contrary, numerous judgments expressly 
hold these Articles to be inapplicable to trade, commerce and intercourse in 
liquor. We can beneficially refer to the judgments in The State of Bombay 
vs. R.M.D. Chamarbaugwala [1957] SCR 874, Har Shankar's case (supra), 
M/s. Sat Pal and Co. and Others vs. Lt. Governor of Delhi and Others 
(1979) 4 SCC 232 and Khoday's case. The learned counsel for the 
respondent submitted that Articles 301-304 are violated or transgressed. In 
view of discussions in paragraphs above, it is clearly demonstrated as to how 
and why Articles 301-304 are inapplicable to liquor trade in any form.

We shall now deal with the Kerala matter in Civil Appeal Nos. 2696 
and 2697 of 2003.

The learned counsel for the licensee/appellant in this case also 
contended that Part XIII of the Constitution interdicts Parliament and State 
Legislatures from enacting laws containing discriminatory measures/taxation 
in respect of inter-state trade and commerce and that the said articles in Part 
XIII impose a constitutional limitation on the power of the Parliament and the 
Legislatures of the States and that the said Part XIII of the Constitution 
enshrines a principle of paramount importance that the economic unity of the 
country cannot be interfered with by economic protectionism and creation of 
trade barriers, fiscal or otherwise. He would further submit the restriction in 
Part XIII of the Constitution also apply to Taxation Laws and the provisions of 
Part XII of the Constitution are subject to the limitations set out in Part XIII 
and such regulatory measures also do not impede the freedom of trade, 
commerce and intercourse and compensatory taxes for the use of trading 
facilities are not hit by the freedom declared by Article 301. He would also 
urge that Article 303(1) prohibits Parliament and the Legislature of a State 
from enacting any law giving preference to one State over another or from 
making any discrimination between one State and another by virtue of any 
entry relating to trade and commerce in any of the lists in the Seventh 
Schedule and that the obstructions or impediments to the free flow of trade 
would be violative of the freedom declared by Article 301. In this context, he 
referred to the case in The Automobile Transport (Rajasthan) Ltd. vs. The 
State of Rajasthan and Others [1963] 1 SCR 491. It is further submitted 
that the limitation upon the Legislative power stipulated in Article 303(1) and 
Article 304A will apply to trade in liquor. It is further contended that the 
discriminatory levy of import fee is violative of Articles 303(1) and 304A of the 
Constitution. According to the learned counsel for the appellant/licensee, the 
power of the State to levy a tax or a fee should be traceable to the entries in 
the Seventh Schedule to the Constitution. Entry 51 of List II provides for a 
levy of duty of excise on alcoholic liquor for human consumption 
manufactured or produced in the State and countervailing duties at the same 
or lower rates of similar goods manufactured or produced elsewhere in India 
and, therefore, the State Legislature has no power to levy any countervailing 
duty on imported liquor in excess of the excise duty on liquor manufactured 
within the State. The State of Kerala imposes a countervailing duty on 
imported liquor which is equivalent to the excise duty paid by the 
manufacturers within the State. The State imposes an import fee in addition 
to the countervailing duty and the direct and immediate effect of the import 
fee is to favour local manufacturers by making the imported liquor costlier. 
He would further contend that Article 303(1) prohibits the State Legislature 
from taking discriminatory measures and Article 304A also prohibits the State 
from imposing such discriminatory levies. It is also submitted that the State 
Legislature has no competence to levy an import fee in addition to 
countervailing duty.

The argument advanced by learned counsel for the licensee was 
countered by learned senior counsel appearing for the State of Kerala. The 
learned counsel submitted that the import of liquor into the State of Kerala is 
prohibited under Section 6 of the Abkari Act and, therefore, liquor can be 
imported only after obtaining permission from the Government in the form of 
permit issued under Section 24 of the Abkari Act. As a matter of fact, it was 
submitted that the State has not issued any licence to anybody including the 
Kerala State Beverages Corporation to import liquor. The Kerala State 
Beverages Corporation has licence only for wholesale and retail of liquor 
which will not authorise them to import liquor and that the only licence issued 
to import liquor into the State is the permit issued on payment of the import 
fee and, therefore, it is seen that the levy of import fee is authorized by 
Sections 6 and 24 of the Abkari Act, 1977. It is not excise duty or 
countervailing duty referable to Entry 51 of List II. It is a collection falling 
under Entry 8 of List II. It is the price paid to the State for parting with its 
exclusive privilege of dealing in liquor which includes every fact of it including 
its import. In my view, the State has the right to prohibit every form of activity 
in relation to intoxicants including its import. Though it is alleged by the 
appellant that the State has discriminated against, the same has not been 
substantiated or established by any material. The State, in this case, has 
granted such permit to the Beverages Corporation on their paying the fee 
fixed for the purpose as per notification enabling the Corporation to import 
liquor from the petitioners/licensees and others. The import fee so paid is 
passed on to the consumers. Even in the Punjab case, we have already 
noticed, that the right to import liquor is dependant on the issue of the import 
permit on payment of the import fee as consideration for parting with the 
State's exclusive privilege to import the liquor. It is purely a contractual 
dealing between the State and the importer and, therefore, no question of 
violation of Article 301 can arise. The importer had no anterior right to import 
liquor and hence cannot complain of any violation of Article 301 at that stage 
as right to trade in liquor is not a fundamental right. His right to import is 
referable to the import permit which he acquired on payment of the import fee. 
No further impediment has been created in the import of the liquor so that 
Article 301 is not attracted in relation to the payment of the import fee which 
was prior to getting his privilege of importing. The appellant/licensee having 
entered into a contractual relationship with the State obtained the privilege 
and enjoyed the benefit of it. It is not open to the petitioners to turn round 
subsequently and repudiate the obligations subject to which they obtained the 
privilege. Regulation in the interest of public health and order takes the case 
out of Article 301 and regulation for purpose of Article 301 is not confined to 
such regulations alone which will facilitate the trade.

 An affidavit was also filed on behalf of the State of Kerala dated 
16.04.2003 stating that the collection of import fee in the State of Kerala while 
issuing permit to import IMFL is referable to Sections 6 and 24 of the Abkari 
Act, 1977, and that it is the price payable by the grantee to the State for 
parting with the privilege of importing IMFL which is exclusively that of the 
State. Along with the affidavit, Annexure R1 (photocopy of permit issued) and 
Annexure R2 (year-wise statement showing the amount of import fee 
collected by the State) was filed. It is not in dispute that the Kerala State 
Beverages Corporation is the exclusive wholesale distributor of IMFL within 
the State of Kerala. Previously, the retail distribution of IMFL in the State was 
done by 14 shops of the Kerala State Bevereages Corporation and 231 shops 
by private individuals to whom licences were granted by auction conducted 
every year. However, the scheme has been changed and the retail 
distribution of IMFL in the State is now being carried on by a few shops of the 
Kerala State Consumer Federation and the rest of the shops by the Kerala 
State Beverages Corporation. This is apart from the sales in bars, clubs, etc. 
under licences issued in relevant Forms under the Foreign Liquor Rules. The 
Kerala State Beverages Corporation gets its supply of IMFL from distributors 
within the State as also from manufacturers and distributors outside the State. 
The Kerala State Beverages Corporation calls for tenders fixing a floor price 
for the supply with a view to ensure quality as also to prevent unhealthy 
competition and loss of revenue. Based on these tenders, the Kerala State 
Beverages Corporation enters into contracts with the 
manufacturers/distributors. After entering into contracts with the 
manufacturers/distributors, to enable the import of IMFL to the State, the 
Kerala State Beverages Corporation applies to the authorized officer for grant 
of permit for import of specified quantity of IMFL after depositing in advance, 
the countervailing duty and the import fee payable on the quantity of IMFL 
sought to be imported. Details of the payments so made are entered in 
Column No. 6 of the import permit issued. The name of the outside 
manufacturer/distributor from whom the IMFL is being procured is also 
mentioned in the permit for identification of the product. The import fee paid 
by the Kerala State Beverages Corporation is ultimately passed on to the 
consumers by adding to the final selling price of the product. The State has 
to deploy its officers at all the check-posts to monitor import of IMFL. Every 
consignment, on crossing the border has to be escorted till it reaches the 
warehouse of the Kerala State Beverages Corporation to check diversion and 
misuse and the State is incurring heavy expenses for regulating import of 
liquor into the State. Therefore, the import fee was increased from Rs.2/- per 
proof litre to Rs.5/- per proof litre in 1995. Even after the increase in the 
import fee, the import of liquor to the State was steadily increasing till 1999-
2000. The affidavit now filed along with the Annexures gives us a clear 
picture of the levy of import fee while issuing permit to import IMFL. Before 
the High Court, the learned counsel for the appellants therein have raised 
only one contention that the imposition of import fee is not in the nature of 
regulatory fee. It was contended on behalf of the State that the levy is 
permissible and authorized under Sections 6, 7, 17 and 18 of the Act and that 
the import fee is the only fee realized from a firm which supplies liquor to the 
Kerala State Beverages Corporation to be supplied to other licensees in the 
State and that the levy of import fee is also well founded under the Act 
basically referable to the legislative Entries 8 and 66 of List III of the Seventh 
Schedule to the Constitution. The learned Single Judge and also the learned 
Judges of the Division Bench rejected the contention of the licensee and 
upheld the levy on import. 

 At the time of hearing, many judgments were cited by both sides in 
regard of their respective contentions. I feel it is not necessary to deal with or 
refer to all the judgments cited, as in my opinion, the real questions in this 
case as contended by the licensees are that the State has no authority to 
impose the import fee and that it is violative of Articles 301 and 304 of the 
Constitution. The real question, in my opinion, is whether Articles 301 and 
304 at all apply. In the alternative, it was submitted by learned senior counsel 
for the State of Punjab that compensatory or regulatory levies have always 
been held to be valid and permissible under Articles 301 and 304. In this 
context, he referred to the decisions in the cases of Atiabari Tea Co., Ltd. 
Vs. The State of Assam and Others, [1961] 1 SCR 809; The Automobile 
Transport (Rajasthan) Ltd. case (supra), State of Bihar vs. Chambers of 
Commerce (1996) (103) STC 1, Godfrey Ltd. vs. State of Rajasthan (2001) 
(121) STC 54, Jindal Strips Limited and Others vs. State of Haryana 
(2002) 19 PHT 299. If that be so, it is undeniable that regulations deemed 
necessary and apposite are liable to be imposed on liquor trade more than 
any other activity since the former is considered inherent are noxious, 
pernicious and res extra commercium. Regulation is thus the hall-mark of the 
State action in respect of liquor and that regulation can be and indeed 
normally is through the mode of imposition of levies which levy is also 
necessary to regulate by keeping out and excluding persons entering the 
liquor trade. We have already extracted the provisions of 1914 Act. The 
contention of the licensee is that once a L-1 wholesale liquor licence is issued 
to him, the State's permissive privilege in respect of liquor stands 
permanently parted with and thereafter no additional or further levy of any 
kind even in respect of activities other than wholesale selling under L-1 
licence can be raised.

 This argument, in my opinion, is completely fallacious and ex-facie 
unsustainable. This contention ignores the well-established legal statutory 
and operational distinction demarcating and dealing separately with several 
distinct activities in relation to liquor, namely, manufacture, possession, sale, 
transport, import, export consumption on premises of hotel/restaurant etc. 
Each activity is separately defined and separately itemized and separately 
dealt with in statute as also in the rules and involves a diverse range of 
separate licences, passes, permits and applications each of differing 
contained format and ambit. The import fee levied in the instant case is fully 
authorized by the 1914 Act and delegated legislation thereunder and is clearly 
intra vires. I have already listed in paragraphs above all the provisions 
authorizing the levy in question in the instant case which is mentioned in the 
additional affidavit of the State of Punjab. The provisions summarized above 
confer ample regulatory power upon the excise authority to regulate several 
activities related with liquor in any reasonable manner and in particular to 
regulate its import. The regulatory power includes power to levy a monthly 
fee in that regard such as the impugned import fee. Indeed levy for such fee 
to exclude and to keep out certain people from the liquor trade and to keep 
the number of persons participating in this trade within reasonable limits has 
been recognized by this Court in Har Shankar's case (supra) relying upon 
and quoting American decisions. 

The statutory provision in question must be interpreted and read 
broadly and not narrowly. The approach must be to uphold the validity of the 
impugned delegated legislation by a process of fair and broad reading of the 
statutory mandate. Even if the Act does not specifically provide for the levy in 
question by name to provide statutory authority for its imposition by delegated 
legislation and the levy is actually imposed by the delegated legislation made 
under that Statute, the same would be valid and not ultra vires. In the instant 
case, the levy has been imposed by the Punjab Fiscal Orders as amended 
from time to time under specific statutory authority to issue such orders under 
Sections 58 and 59 of the Act, in particular, and other provisions of the Act as 
itemized in paragraphs supra. Since the rule making power has not been 
shown to be bad, the Punjab Fiscal Orders, once made have the effect of the 
Statute itself and become part of the Statute since they have been made 
under valid rule making power. The statutory provisions of the Punjab Act 
and the Rules itemized in paragraphs above amply delineate that regulatory 
power and the impugned import fee is nothing but a facet and manifestation 
of that regulation by the State. Hence, in my view, the levy in question is valid 
as a regulatory levy which has consistently been held on the touchstone of 
Article 304.

The conduct of the respondent/licensee in attempting to wriggle out of 
his contractual obligations is contrary to the clear and unequivocal principle 
laid down in Har Shankar's case (supra). The issuance of liquor licence 
constitutes a contract between the parties i.e. between Excise Authorities on 
the one hand and the individual applicant contractor on the other. The 
respondent having accepted the contracts/licences, having fully exploited the 
advantage flowing from the contract to the exclusion of others and having 
reaped rich commercial benefits from that activity, it is not open to the 
contractor to wriggle out from the contract by challenging, inter alia, any 
particular condition of that contract/licence. The respondent herein seeks to 
do exactly that by challenging the condition requiring him to pay import fee. 
Har Shankar's case (supra) clearly disentitle the liquor contractor from 
wriggling out of contractual obligations solemnly undertaken. Likewise, in 
Panna Lal's case (supra), this Court in the specific context of liquor licence 
had this to say. 

"The licenses in the present case are contracts between the parties. 
The licensees voluntarily accepted the contracts. They fully 
exploited to their advantage the contracts to the exclusion of others. 
The High Court rightly said that it was not open to the appellants to 
resile from the contracts on the ground that the terms of payment 
were onerous. The reasons given by the High Court were that the 
licensees accepted the license by excluding their competitors and it 
would not be open to the licensees to challenge the terms either on 
the ground of inconvenient consequence of terms or of harshness of 
terms."

As a matter of fact, the respondent is the only and the sole challenger of the 
instant levy of import fee. It is stated that no other liquor contractor or beer 
manufacturer or importer has challenged the import fee in Punjab at any point 
of time at any forum. The import fee on IMFL on rectified spirit was levied 
from the Year 1986 and at no time the respondent challenged the levy of 
import fee from 1986 onwards on IMFL and continued to import large 
quantities of beer and paid large sums of fee as per the prescribed rates. The 
writ petition was filed only in April, 1996. The respondent accepted the 
burden of this contract and obviously did so because he enjoyed the benefits 
flowing from this contract. Having done so, in my view, he cannot and should 
not be allowed to wriggle out of his contractual and licence obligation.

In the case of Government of Maharashtra & Ors. vs. M/s. Deokar's 
Distillery (V.N. Khare, CJI and Dr. AR. Lakshmanan,J concurring) reported 
in (2003) 5 SCC 669, this Court, in para 32, observed thus:

"The order of the High Court is bad in law. The High Court, in our 
view, has erred in not appreciating that the impugned demand notice 
was also in the nature of demanding balance of the price of the 
exclusive privilege which would become final only on issue of the 
notification, order under Article 309, the bulk of which has already 
been recovered in advance, which privilege exclusively vests with 
the Government considering the effect of provisions especially 
Section 49 and Section 143 (2)(u) of the Prohibition Act. In our 
opinion, the establishment charges demanded are in the nature of 
price for parting with the privilege to permit manufacture and sale or 
liquor, and the privilege exclusively vests with the Government."

Again in para 40, this Court observed thus:

"As pointed out by Y.V. Chandrachud, C.J., as he then was, what 
the respondents agreed to pay was the price of an exclusive 
privilege which the State parted with in their favour. They cannot, 
therefore, avoid their liability by contending that the payment which 
they were called upon to make is truly in the nature of excise duty 
and no such duty can be imposed on liquor not lifted or purchased 
by them. The respondents, in our view, must fail in their contention 
both on account of the objection to the maintainability of the appeals 
and on merits concerning the nature of the payment which they are 
liable to make."

In the above case, the power of the State Government under Section 
58 A to recover cost of supervision was challenged. Per majority, this Court 
held that the power of the State Government extends to recovering the 
differential amount consequent to upward revision of pay-scales and 
allowances with retrospective effect and that such differential amount can be 
demanded even in exercise of residuary powers of the State Government and 
that the liquor licensees having given undertaking in the application in Form 
PLA prescribed under the Rules to abide by the orders made under the Act 
and the rules could not escape their contractual liability. This Court also 
further held that the establishment charges demanded are in the nature of 
price for parting with the privilege to permit manufacture and sale of liquor 
and the privilege exclusively rests with the Government. 

The same effect is the judgment of this Court in the case of Assistant 
Excise Commissioner & Ors. Vs. Issac Peter & Ors. (1994) 4 SCC 104. In 
the context of a liquor contract, this Court held as under:

"....... We are, therefore, of the opinion that in case of contracts 
freely entered into with the State, like the present ones, there is 
no room for invoking the doctrine of fairness and 
reasonableness against one party to the contract (State), for 
the purpose of altering or adding to the terms and conditions of 
the contract, merely because it happens to be the State. In 
such cases, the mutual rights and liabilities of the parties are 
governed by the terms of the contracts (which may be statutory 
in some contracts are entered into pursuant to public auction, 
floating of tenders or by negotiation. There is no compulsion on 
anyone to enter into these contracts. It is voluntary on both 
sides. There can be no question of the State power being 
involved in such contracts. It bears repetition to say that the 
State does not guarantee profit to the licensees in such 
contracts. There is no warranty against incurring losses. It is a 
business for the licensees. Whether they make profit or incur 
loss is no concern of the State. In law, it is entitled to its money 
under the contract. It is not as if the licensees are going to pay 
more to the State in case they make substantial profits. We 
reiterate that what we have said hereinabove is in the context 
of contracts entered into between the State and its citizens 
pursuant to public auction, floating of tenders or by negotiation. 
It is not necessary to say more than this for the purpose of 
these otherwise than by public auction, floating of tenders or 
negotiation, we need not express any opinion herein."

Kalyani Stores vs. The State of Orissa and Others [1966] 1 SCR 
865 case was heavily relied on by the respondent/licensee. The Constitution 
Bench has not in that cases adverted to the issue of liquor trade being res 
extra commercium and has simply considered whether Articles 301/304 are 
violated or not. The case, in my opinion, would have no relevance to the 
instant case. 

The following judgments can be usefully referred for the proposition 
that the rights are vested in the State which it may part with for a 
consideration.

In the case of Har Shankar and Others etc. etc. vs. The Deputy 
Excise and Taxation Commissioner and Others etc. AIR 1975 SC 1121 
(paras 44, 46, 47, 50, 51, 53, 55, 57 and 58 dealt with the rights of the State 
in this regard).

In the case of Nashirwar and Others vs. State of Madhya Pradesh 
and Others, 1975 (1) SCC 29, this Court held that by virtue of Entry 8 of List 
II, the Government can hold a public auction to grant lease, the amount 
representing the consideration for the grant of such right or privilege. 

In the case of State of Orissa and Others vs. Harinarayan Jaiswal 
and Others (1972) 2 SCC 36, this Court held that the Government is the 
exclusive owner of the privilege to sell the right to sell liquor, reliance on 
Article 19(1)(g) or Article 14 of the Constitution becomes irrelevant.

In the case of State of Andhra Pradesh vs. Prabhakara Reddy AIR 
1987 SC 933 held that all rights in regard to manufacture and sale of 
intoxicants vest in the State and it is open to the State to part with those rights 
for a consideration and that the consideration for parting with the privilege of 
the State is neither excise duty nor licence fee but it is the price of the 
privilege. 

In the case of State of U.P. and Others vs. Sheopat Rai and Others 
1994 Supp (1) SCC 8 held that the term 'licence fee' in the context of the U.P. 
Excise Law connotes the idea of it being the consideration in money received 
by the Government from a private person by grant of a licence (contract) for 
parting in such person's favour, its exclusive privilege or right of carrying on 
certain activities in respect of country liquor or drugs under 'auction system' in 
public auctions. 

 In the case of State of Haryana and Others vs. Lal Chand and 
Others, AIR 1984 SC 1326, this Court has held that the licence fee is a price 
for acquiring such privilege and one who makes a bid for the grant of such 
privilege with a full knowledge of the terms and conditions attaching to the 
auction cannot be permitted to wriggle out of the contractual obligations 
arising out of the acceptance of his bid, by a petition under Article 226. 

 State of Punjab vs. M/s. Dial Chand Gian Chand & Co. AIR 1983 
SC 743 is also a case arising under the Punjab Intoxicants Licence and Sale 
Order, 1956. This Court held that the writ jurisdiction of the High Courts 
under Article 226 of the Constitution is not intended to facilitate avoidance of 
obligations voluntarily incurred.

 In the case of Khoday Distilleries Ltd. and Others vs. State of 
Karnataka and Others, (1995) 1 SCC 574. The Constitution Bench of this 
Court held that a citizen has no fundamental right to trade or business in 
liquor as a beverage and that the activities which are res extra commercium 
cannot be carried on by any citizen and the State can prohibit completely 
trade or business in potable liquor since trade or business in liquor as a 
beverage is res extra commercium and that the State may also create 
monopoly in itself for trade or business in such liquor. It is further held that 
the State can further place restrictions and limitations on such trade or 
business and such restrictions and limitations can be placed by subordinate 
legislation as well. It is also further held that the State is not precluded from 
regulating the trade and business in potable liquor merely because it imposes 
tax or fee on purchase or sale and income is derived from such liquor. 

In the case of Solomon Antony and Others vs. State of Kerala and 
Others, (2001) 3 SCC 694, the contractors are required to pay the 
consideration payable to the State for sale of liquor for importing designated 
quantity of rectified spirit in respect of which the consideration payable is 
equivalent to excise duty. This Court justified the order passed by the High 
Court in holding that the contractors are bound to pay the amount which is a 
measured excise duty payable on the designated quantum of rectified spirit in 
terms of Rule 8 of the Rules and which the contractors had undertaken in the 
agreements executed by them to pay. This Court further held that the power 
of the Government to enhance the rate of excise duty from Rs.5/- per bulk 
litre to Rs.10/- per bulk of arrack could not be assailed. 

 
The Division Bench of the Kerala High Court to which I was a member 
has also taken the same view in Kerala Distilleries and Allied Products 
Limited vs. Assistant Commissioner (Assessment) (I), Commercial Tax, 
Special Circle, Palakkad and Others reported in 2000 (Vol. 117) STC page 

553) in the following terms:

"The manufacture and sale of liquor are the exclusive privilege of the 
State and the State, by the process of licensing, is parting with the 
said privilege and what is charged by the State is only the privilege 
price through the process of licensing and it is not excise duty." 

"The concept of excise duty on production and manufacture as 
understood in the Central Excise Act cannot be equated in the case 
of excise duty under the Abkari Act since the manufacture and the 
sale of liquor are the exclusive privilege of the State and the State, 
by the process of licensing, is parting with the said privilege and 
what is charged by the State is only the privilege price through the 
process of licensing the price and it is not excise duty."

The above rulings are amongst the catena of cases on the point that 
the rights are vested in the State which it may part with for consideration. 

I have already dealt with the concept of contractual relationship 
between the State and the licensee whereunder the licensee having obtained 
a privilege and enjoyed the benefit of it, it is not open to the licensees to turn 
round subsequently and repudiate the obligations attaching with the obtained 
privilege. The following are the cases on the point. 

In the case of State of Haryana and Others vs. Jage Ram and 
Others AIR 1980 SC 2018, this Court held that the bids in respect of country 
liquor vends at an annual auctions and the amounts which bidders agree to 
pay to State Government under auction terms is neither fee nor excise duty 
on undrawn liquor but price of privilege which State parted in their favour.

In the case of State of Haryana and Others vs. Lal Chand and 
Others, (1984) 3 SCC 634, this Court held that after making bid for grant of 
exclusive privilege of liquor vend with full knowledge of terms and conditions 
of auction, the bidder cannot wriggle out of the contractual obligations arising 
out of acceptance of his bid by filing writ petition. 

In the case of State of Punjab vs. M/s Dial Chand Gian Chand and 
Company (1983) 2 SCC 503, this Court held that a licensee who participates 
in the auction voluntarily and with full knowledge is bound by the bargain and 
the writ petition filed under Article 226 by such licensee in an attempt to 
dictate terms of the licence without paying the licence fee must fail. The 
highest bidder after acceptance of his bid cannot challenge the second 
auction on ground of adverse effect on his business.

We shall now consider the cases on the freedom guaranteed by Article 
301 which is not available to liquor because it is a noxious substance injurious 
to public health order and morality. The following cases can be usefully 
referred: 

In the case of M/s Sat Pal and Co. and Others vs. Lt. Governor of 
Delhi and Others (1979) 4 SCC 232, this Court held that the Ordinance does 
not infringe any right under Article 19 (1)(g) or Article 301 there being no 
fundamental right to trade in liquor and that the ordinance was both a fiscal 
measure and one for safeguarding public health and public morals and hence 
it could validly be made retrospective and that the test of reasonable 
restrictions has to be judged in the light of the purpose for which the 
restriction is imposed, that is, as may be required in the public interest and 
restrictions that may validly be imposed under Article 304(b) are those which 
seek to protect public health, safety, morals and property within the territory 
and the present levy under the amended provisions of the Act in its 
application to Delhi could certainly be said to be one enacted both with the 
object of regulating the trade or business in intoxicants and with a view to 
realising the goal fixed in Article 47 of the Constitution. 

In the case of The State of Bombay vs. R.M.D. Chamarbaugwala 
[1957] SCR 874, this Court held as under:
"Gambling activities were in their very nature and essence extra-
commercium although they might appear in the trappings of trade. 
They were considered to be a sinful and pernicious vice by the 
ancient seers and law-givers of India and have been deprecated by 
the laws of England, Scotland, United States of America and 
Australia. The Constitution-makers of India, out to create a welfare 
State, could never have intended to raise betting and gambling to 
the status of trade, business, commerce or intercourse.
The petitioners, therefore, had no fundamental right under 
Art. 19(1)(g) or freedom under Art. 301 of the Constitution in respect 
of their prize competitions that could be violated and the validity of 
the impugned act, in pith and substance an Act relating to gambling, 
did not fall to be tested by Arts. 19(6) and 304 of the Constitution"

In the case of M/s Fatehchand Himmatlal and Others etc. vs. State 
of Maharashtra (1977) 2 SCC 670, this Court held as follows:

"A meaningful, yet minimal analysis of the Debt Act, read in the light 
of the times and circumstances which compelled its enactment, will 
bring out the human setting of the statute. The bulk of the 
beneficiaries are rural indigents and the rest urban workers. These 
are weaker sections for whom constitutional concern is shown 
because institutional credit instrumentalities have ignored them. 
Money lending may be ancillary to commercial activity and 
benignant in its effects, but money-lending may also be ghastly 
when it facilitates no flow of trade, no movement of commerce, no 
promotion of intercourse, no servicing of business, but merely 
stagnates rural economy, strangulates the borrowing community and 
turns malignant in its repercussions. The former may surely be 
trade, but the latter - the law may well say - is not trade. This 
narrow, deleterious pattern of money-lending cannot be classed as 
'trade'. Hence Article 301 does not apply."
 
In the case of B.R. Enterprises etc. vs. State of U.P. and Others etc. 
(1999) 9 SCC 700, this Court held that this case relates to lottery which is 
gambling in nature. This Court held that merely because a lottery transaction 
is run by State itself will not change its character as res extra commercium 
and that merely because lottery tickets are goods, transaction of sale thereof 
cannot constitute trade and while trade contains skill with no chance, 
gambling contains the element of chance with no skill and, therefore, ban by 
any State on the sale of lotteries of other States within its territory does not 
violate Articles 301 and 303. 

We have already noticed that the regulation in the interest of public 
health and order takes the case out of Article 301, and Regulation for the 
purpose of Article 301 is not confined to regulations which will facilitate the 
trade. 

In the case of M/s. Bishamber Dayal Chandra Mohan etc. etc. vs. 
State of U.P. and Others etc. etc., AIR 1982 SC 33, this Court in paras 36 
and 37 observed as under :

"The word `free' in Art. 301 does not mean freedom from laws or 
from regulations. Art. 301 guarantees freedom of trade, commerce 
and intercourse throughout the country from any State barriers. It 
declares that subject to the other provisions of Part XIII, trade, 
commerce and intercourse throughout the territory of India shall be 
free. The whole object was to bring about the economic unity of the 
country under a federal structure, so that the people may feel that 
they are members of one nation is to guarantee to every citizen the 
freedom of movement and residence throughout the country. That 
is achieved by Art. 19(1)(d) and (e). No less important is the 
freedom of movement or passage of commodities from one part of 
the country to another. The progress of the country as a whole also 
requires free flow of commerce and intercourse as between 
different parts, without any barrier. This freedom of trade, 
commerce and intercourse throughout the country without any 
`State barriers' is not confined to inter-State trade as well. In other 
words, subject to the provisions of Part XIII, no restrictions can be 
imposed upon the flow of trade, commerce and intercourse, not only 
between one State and another, but between any two points within 
the territory of India whether any State border has to be cross or not.

It is now well settled that the regulatory measures or 
measures imposing compensatory taxes do not come within the 
purview of the restrictions contemplated by Art. 301. The regulatory 
measures should, however, be such as do not impede the freedom 
of trade, commerce and intercourse. It cannot be said that the 
instructions conveyed by the State Government by the impugned 
teleprinter message imposing the requirement for the making of an 
endorsement by the Deputy Marketing Officer or the Senior 
Marketing Officer or the physical verification of stocks of wheat 
during the course of transit, are a `restriction' on the freedom of 
trade, commerce and intercourse within the country, i.e., across the 
State or from one part of the State to another. These are nothing 
but regulatory measures to ensure that the excess stock of wheat 
held by a wholesale dealer, commission agent or a retailer is not 
transported to a place outside the State or from one district to 
another. Even if these requirements are construed to be a 
`restriction' on the inter-State or intra-State trade the limitation so 
imposed on the enjoyment of the right cannot be considered to be 
arbitrary or of an excessive nature. Nor can it be said that such 
restrictions do not satisfy the test of reasonableness."

 The case of State of Tamil Nadu vs. M/s. Hind Stone etc. etc. 
reported in AIR 1981 SC 711 relates to non-renewal of mining lease for black 
granite. It was submitted by the counsel in this case, that the impugned rule 
offends Articles 301 and 303 of the Constitution. This Court rejected the 
same as without force. This Court held as under:

".......The Mines & Minerals (Regulation and Development) Act is, 
without doubt a regulatory measure. Parliament having enacted it for 
the express purpose of "the regulation of mines and the development 
of minerals". The Act and the rules properly made thereunder are, 
therefore, outside the purview of Article 301. Even otherwise, Article 
302 which enables Parliament, by law, to impose such restrictions on 
the freedom of trade, commerce or intercourse between one State and 
another or within any part of the territory of India as may be required in 
the public interest also furnishes an answer to the claim based on the 
alleged contravention of Article 301.........."

 
The case of State of Tamil Nadu & Others vs. M/s. Sanjeetha 
Trading Co. & Others (1993) 1 SCC 236 relates to prohibition of export of 
timber outside the State to prevent illicit felling. This Court held that where 
goods are declared to be essential commodities/articles and export thereof 
prohibited with a view to effect equitable distribution at a fair price the 
prohibition in the circumstances would not be an unreasonable restriction. 
This Court further held as follows:

"The power to impose restrictions conferred on the Parliament under 
Art. 302 is not qualified by the word `reasonable' while in Art. 304 
(1)(b) which confers such power on the State legislature the 
expression `reasonable' precedes `restrictions' and a further check 
is provided by the proviso thereto. Therefore, before Art. 304 comes 
into play, it has to be held that the prohibition introduced by the 
amendment on movement and transport of any particular item 
amounts to a restriction. Any prohibition on movement of any 
article from one State to another has to be examined with reference 
to the facts and circumstances of that particular case - whether it 
amounts to regulation only, taking into consideration the local 
conditions prevailing, the necessity for such prohibition and what 
public interest is sought to be served by imposition thereof." 

In the case of State of Bihar & Ors. vs. Harihar Prasad Debuka etc. 
AIR 1989 SC 1119, this Court observed thus:

"In the instant case what is being insisted is a permit disclosing 
particulars of the goods to be transported. Art. 304(b) clearly 
permits the State legislature to impose such a reasonable restriction 
on the freedom of trade, commerce and intercourse with or within 
that State as may be required in the public interest. The word `with' 
involves an element having its sit us in another State. It cannot be 
therefore said that the insistence on the disclosure in respect of 
goods entering Bihar from another State if otherwise legitimate 
would not be protected by Art. 304(b)."
 
The High Court of Punjab proceeded to decide the case on a total 
wrong assumption that the import fee levied is in the nature of duty which 
cannot be imposed under the Excise Act, 1984 when, in fact, the import fee 
levied is the price for parting with the privilege given to the licensee to import 
beer into the State and, therefore, the same is within the competence of the 
State to impose import fee. I am of the view that the licensee besides the 
payment of duty etc. is to comply with such conditions as the State 
Government may impose while formulating the excise policy for the 
concerned year. The State, in my view, is competent and entitled to impose 
excise duty or countervailing duty. Besides there is no bar on the State to 
charge any other fees on account of consideration for the privilege provided 
to the licensee to trade in liquor which privilege he did not otherwise have. 
Therefore, the licensee is liable to comply with the other conditions imposed 
by the State Government from time to time. As held in many cases referred 
to supra the levy in dispute under challenge is an import levy. It is neither 
duty nor countervailing duty. It is part of the consideration money i.e. the 
price of the privilege given to the licensees for dealing in liquor. The decision 
of this Court in the case of Kalyani Stores (supra) is not applicable to the 
facts of the present case and that the Punjab Excise Act, 1914 is an existing 
law under Clause 10 of Article 366 of the Constitution of India and its 
continued application is saved by Article 372 of the Constitution of India. It is 
also saved by Article 305 of the Constitution from attack under Articles 301 
and 303 of the Constitution. It is well within the legislative competence of the 
State. 

In the result, Civil Appeal No. 3017 of 1997 filed by the State of Punjab 
is allowed and the judgment of the High Court which is impugned in this Civil 
Appeal stands set aside. Likewise, the appeals filed by the appellants in Civil 
Appeal Nos. 2696 and 2697 are dismissed and the common judgment of the 
High Court in Writ Appeal Nos. 3 and 10 of 2001 is affirmed. However, there 
shall be no order as to costs.