COOVERJEE B. BHARUCAH V. THE EXCISE COMMISSIONER & CHIEF COMMISSIONER, AJMER 1957 SCR 873:

DATE: 13/01/1954

COURT: Supreme Court of India

BENCH: Chief Justice Mehar Chand Mahajan, Justice B.K. Mukherjea, Justice Vivian Bose, Justice Ghulam Hasan, and Justice B. Jagannadhadas

FACTS:

The petitioner, Cooverjee B. Bharucha, was the previous licensee holding the privilege to retail country liquor at the Chang Gate shop in Beawar, Ajmer-Merwara. On March 16, 1953, the Collector of Excise, Ajmer, conducted a public auction under the rules framed pursuant to the Ajmer Excise Regulation I of 1915 for granting the license to vend country liquor at that shop for the year 1953-54. At the auction, one Chhoga Lal emerged as the highest bidder with a bid of Rs. 57,000, while the petitioner, who also participated, bid lower and was unsuccessful. The auction conditions required the highest bidder to deposit half the bid amount immediately upon provisional acceptance and the balance within a specified short period. Chhoga Lal deposited only part of the required amount on the auction day and completed the payment two days late, in violation of the rules. The petitioner promptly protested this irregularity via telegram to the Collector, urging that the bid not be confirmed in favour of Chhoga Lal and offering to accept the license at the auctioned price himself. Despite the protest, the authorities confirmed the sale to Chhoga Lal and rejected the petitioner's claim.

Aggrieved by the confirmation of the auction in favour of the rival bidder despite the alleged breach of auction rules, and contending that the decision violated his fundamental rights under Article 19(1)(g) as well as the validity of the excise regulation itself, the petitioner directly approached the Supreme Court by filing a petition under Article 32 of the Constitution seeking enforcement of his fundamental rights and appropriate relief against the Excise Commissioner, Chief Commissioner, and Collector of Ajmer.

ISSUES:

The main issues in the case centered on the constitutional validity of Excise Regulation I of 1915 under Articles 14 and 19(1)(g) of the Constitution, with the petitioner arguing that the regulation created an unconstitutional monopoly in the liquor trade by restricting the number of shops, licensing them through public auction to the highest bidder, and imposing excessive licence fees that amounted to unauthorized taxes rather than regulatory fees. The petitioner also contended that procedural irregularities in the auction process, such as allowing the successful bidder to make delayed payments in violation of rules, discriminated against him and infringed his right to carry on the trade or business of vending country liquor, while challenging the discretionary powers of authorities to regulate or prohibit the trade in intoxicating liquors as unreasonable restrictions not saved by Article 19(6).

JUDGEMENT WITH REASONING:

The Supreme Court dismissed the petition under Article 32, upholding the validity of Excise Regulation I of 1915 and ruling that it did not violate Article 19(1)(g), as the trade in intoxicating liquors is not a fundamental right and can be regulated or even prohibited by the state in the interest of public health and welfare under Article 19(6). The court held that the system of public auction for granting licences does not create a monopoly but is a reasonable method of regulation, and that the licence fees collected thereby are authorized under the regulation for both regulatory and revenue purposes. It further clarified that alleged procedural irregularities in the auction did not amount to infringement of fundamental rights, and such grievances should be pursued through appropriate remedies like mandamus under Article 226 rather than directly under Article 32.

The Court's reasoning began with the premise that the right under Article 19(1)(g) to carry on any occupation, trade, or business is subject to reasonable restrictions imposed in the interests of the general public under Article 19(6), and the reasonableness must be evaluated based on the specific nature of the trade and societal conditions. It emphasized that unlike ordinary trades, the retail sale of intoxicating liquors is inherently fraught with dangers to public health, morality, and welfare, potentially leading to crime, poverty, and social demoralization, as supported by precedents like Crowley v. Christensen from the United States. Consequently, there is no inherent or common-law right to engage in this trade; it exists only as a privilege granted by the state, which may prohibit it entirely or regulate it stringently through measures such as limiting the number of licences, prescribing locations and hours of sale, and excluding certain classes of persons. The Excise Regulation was thus upheld as a valid consolidation of laws governing the production, sale, and possession of liquors, falling within legislative competence and not ultra vires, as its restrictions were deemed reasonable to mitigate the acknowledged evils of the liquor trade without unduly abridging fundamental rights.

Furthermore, the Court distinguished the regulation's licensing system from an unconstitutional monopoly, noting that the public auction process invites open competition among potential licensees, ensuring that the highest bidder secures the privilege while generating revenue for the state, unlike cases such as Rashid Ahmad v. Municipal Board where exclusive privileges were granted without public participation. It clarified that the licence fee, though determined by auction and potentially high, serves dual functions of regulation (by deterring unsuitable applicants) and taxation (under sections like 24 and 62 of the regulation), and is not an unauthorized exaction but a legitimate impost. On the issue of discrimination under Article 14 and procedural lapses, the Court held that these did not constitute violations of fundamental rights, as the petitioner's grievances stemmed from alleged maladministration rather than inherent defects in the law; relief for such executive irregularities lies in statutory appeals or High Court writs under Article 226 for directions like mandamus, not in Supreme Court petitions under Article 32, which are reserved for enforcement of fundamental rights directly. This approach balanced state regulatory powers with constitutional protections, affirming the regulation's alignment with public interest.

ANALYSIS:

Cooverjee B. Bharucha v. The Excise Commissioner & Chief Commissioner, Ajmer is a seminal decision that firmly established that the trade in intoxicating liquors is not an ordinary trade protected by Article 19(1)(g) as a fundamental right, but a privilege subject to stringent regulation or even complete prohibition by the state in the interest of public health, morality, and welfare. The Supreme Court upheld the validity of the Ajmer Excise Regulation I of 1915, which regulated the retail sale of country liquor through a system of limited licences granted by public auction to the highest bidder. The Court held that such a system does not create an unconstitutional monopoly but constitutes a reasonable restriction under Article 19(6), as the dangers inherent in the liquor trade such as public health risks, crime, and social demoralization, justify far-reaching state control. The licence fees determined through open competition were found to be lawful, serving both regulatory and revenue purposes, and the regulation was deemed within legislative competence and not ultra vires the Constitution.

The Court also clarified the scope of Article 32, emphasizing that it is not the appropriate forum for redressing alleged maladministration or procedural irregularities in executive action, such as the acceptance of a delayed deposit by the successful bidder in the auction. Such grievances, including claims of discrimination under Article 14, should be addressed through statutory appeals or writ petitions under Article 226 before the High Court, such as seeking mandamus. By distinguishing between violations of fundamental rights and mere irregularities in administration, the decision reinforced the principle that Article 32 is reserved for direct enforcement of fundamental rights, while also balancing the state’s broad regulatory authority over the liquor trade with constitutional protections against arbitrary executive action. This ruling has remained a key precedent in subsequent cases concerning the regulation of trades with significant public health or moral implications.