KERALA HIGH COURT

                                          Madhavan K. P.,Kunissery

                                                         Vs

                                       Assistant Excise Commissioner

                                                (K.K.Mathew,J.)

                                                   06.02.1969

                                                 JUDGEMENT

K.K.Mathew,J.

( 1. ) THE petitioners in these writ petitions bid in auctions the right to vend country liquor in the
respective areas mentioned in the licences issued to them.The auctions have been confirmed.The
petitioners committed default in payment of the rental payable by them.The privilege to vend the
liquor of some of them was directed to be reauctioned,and proceedings have been taken against
them and the other defaulters for recovery of arrears of rental under the provisions of the
Revenue Recovery Act.

( 2. ) THE petitioners contend that no amount can be recovered from them by way of rental
under the provisions of the Revenue Recovery Act,that S.18A of the Abkari Act,under which the
privilege to vend the liquor was granted to them,is ultra vires the Constitution,as it infringes their
fundamental right to carry on a trade under Art.19(1 )(g)of the Constitution,that the rental is
neither an excise duty nor a luxury tax,and that if it is considered as a fee,there is no quid pro quo
.They further contend that the rental being neither a tax nor a fee cannot be recovered from them
under the Revenue Recovery Act,that recovery of any amount under the provisions of that Act
would be discriminatory as an unguided discretion has been vested in the authority concerned
either to resort to a suit or to the more drastic provisions of that Act.

( 3. ) THE Cochin Abkari Act,1 of 1077,was enacted by the Maharaja of Cochin.This enactment
was amended in 1964 by the Abkari Laws(Amendment and Validation)Act,1964(Act 1 of
1964)and the amended Act with further modifications was extended to the whole of Kerala by
Act X of 1967,hereinafter called the Act.S.18A,which practically reenacts the provisions of S.16
of the Cochin Act reads: " Grant of exclusive or other privilege of manufacture etc .,on payment
of rules : (1)It shall be lawful for the Government to grant to any person or persons,on such
conditions and for such period as they may deem fit,the exclusive or other privilege - (i)of
manufacturing or supplying by whole sale;or (ii)of selling by retail;or (iii)of manufacturing or
supplying by whole sale and selling by retail, any liquor or intoxicating drugs within any local
area on his or their payment to the Government of an amount as rental in consideration of the
grant of such privilege. The amount of rental may be settled by auction,negotiation or by any
other method as may be determined by the Government,from time to time,and may be collected
to the exclusion of,or in addition to,the duty or tax leviable under S.17 and 18. (2)No grantee of
any privilege under sub -section(1)shall exercise the same until he has received a licence in that
behalf from the Commissioner. (3)In such cases,if the Government shall by notification so
direct,the provisions of S.12 relating to toddy and toddy producing trees shall not apply " ;. Sub -
section(23)of S.3 reads: "rental " ;,means the rental payable under S.18A in consideration of the
grant of an exclusive or other privilege of manufacturing,supplying or selling any liquor or
intoxicating drugs." "Abkari revenue "is defined: "Abkari revenue 'means revenue derived or
derivable from any duty,fee,tax fine or confiscation imposed or ordered under the provisions of
this Act,or of any other law for the time being in force,relating to liquor or intoxicating drugs." It
was argued on behalf of the State that "rental "is the consideration for the privilege of vending
liquor,that the State could grant the privilege as the State has monopoly in liquor trade,that the
assumption behind S.18A of the Act is that the State has exclusive monopoly to carry on the
trade in liquor,and therefore.the reasonableness of restrictions imposed upon the fundamental
right of the citizens to carry on trade in liquor cannot be canvassed in view of the amendment to
Art.19(6)of the Constitution in 1951.In support of the contention that the trade in liquor was the
monopoly of the State under the Cochin,Travancore and Madras Abkari Acts,and therefore,under
the Kerala Statute also,the learned Government pleader referred me to the Cochin State
Manual,Chap.12,Page 333.There,it is stated that the practice in erstwhile Cochin State was to
farm out the privilege of vending toddy and arrack to a few persons.In T.K.Velu Pillai's
Travancore State Manual,Vol.IV at page 48 it is stated: "In the early days the management of the
Abkari Department was vested in the Dewan.The Abkari revenue was collected by a staff
consisting of Vicharipukars,Pillamar and others employed for the purpose.The Amanee system
was introduced in 1010 ME,under it,the monopoly of selling toddy and arrack was farmed out
taluk by taluk to the highest bidder,who agreed to certain stipulations almost identical with those
that obtained in British India.The selling prices were fixed by Government.To each contractor
was assigned a fixed number of shops. He employed his own peons,collected the monthly
instalments of the rent and remitted it into the District or Huzur Treasury.If no farmer came
forward,the Tahsildar controlled the management of the shops." That the practice in the Malabar
area was also the same is clear from the Malabar District Gazetteer,Chap.12,Page 376.Counsel
also relied on the observations in T.D.C.V.T.C.S.Ltd.v.State of Kerala1 and Kunnathur Taluk
Chethu Thozhilali v.State2 to support the contention that the State has the exclusive privilege to
carry on the trade in country liquor and can farm out that privilege to the citizens. ;

Cases Referred.

1(1958 KLT 521)
2(1960 KLJ 689)