Govt. Has Exclusive Privilege In Liquor Sale & Manufacture; Courts Must Be Conscious While Interfering With Policies: J&K&L HC

The Jammu & Kashmir & Ladakh High Court has emphasized that since the Government has the exclusive privilege in the sale and manufacture of liquor, the Court must be conscious while interfering with the policies since they are complex economic matters over which the Court does not have expertise.

To that end, the Bench of Justice Wasim Sadiq Nargal observed that, "it emerges that while adjudicating upon the validity of an executive decision, owing to the exclusive privilege of the State in the sale/manufacture of liquor, the State must be allowed a greater degree of latitude or play in the joints. The Court, in its power of judicial review must be conscious of the complexity of economic matters of which, of course, it is not an expert. As a consequence thereof, the validity of such decisions cannot and must not be tested on any rigid a priori considerations or on the application of any straitjacket formula. The scope of judicial review, therefore, is not that the Court should strike down a policy decision taken by the State merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. It is only the palpably arbitrary, discriminatory or male fide exercise which can be declared as void."

Petitioners, who were the highest bidders in an auction held by the Excise Department of Jammu and Kashmir, initiated cases because the auction was later cancelled due to poor response and low competition. They argued that their rights as highest bidders were unfairly revoked without due process, especially after they had made significant deposits and were restricted from participating in other auctions.

On hearing the arguments, the High Court reached the following conclusions:

I. In view of the exclusive privilege of the Government in sale/manufacture of liquor, the scope of judicial review in administrative decisions concerning same is extremely limited.

II. No vested right is accrued to a bidder simply by virtue of the fact that he/she has been declared as the highest bidder provisionally and subject to fulfillment of certain conditions in a given auction. 

III. Bearing in mind the nature of the liquor trade, this Court, being a constitutional court, should be slow in interfering with the executive decisions taken by the State as they are essentially a matter of economic policy in which the Government must be afforded a greater latitude and fair play in the joints.

IV. The mere existence of a provision for Minimum Guaranteed Revenue or Minimum Reserve Bid Price in the Excise policy 2024- 25, vide SO 85, does not disentitle the Government from cancelling the auction/re-auctioning on germane considerations having a logical nexus with the policy objectives.

V. The decision to cancel the auction and the subsequent order for reauctioning cannot be termed as arbitrary, discriminatory, or mala fide so as to warrant judicial interference. 

VI. In any event, this Court cannot interfere with an administrative decision, merely on the premise that any other decision would have been fairer, wiser, or more logical especially, when it relates to the Excise policy.

VII. The cause projected by the petitioners does not subserve an overwhelming public interest, which must be borne in mind to decide whether judicial intervention is called for or not.

VIII. The petitioners, being fully aware of the said auction conditions participated in the same without any demur and after having participated in the auction, cannot turn around and challenge or impugn an auction condition unless there is a foundation of manifest arbitrariness or mala fide, which is conspicuously absent in the instant case.

IX. The reasoning provided by the Government for cancelling the auction cannot be termed as unreasonable or arbitrary and, after examining the original record, it appears to be an informed decision based upon germane considerations. 

Cause Title: Kewal Krishan Gupta vs UT of Jammu & Kashmir

Click here to read/download the Judgment