Scope of judicial review in admin decisions on sale, manufacture of liquor extremely limited: HC

Srinagar, June 5: The High Court of J&K and Ladakh Wednesday ruled that the scope of judicial review in administrative decisions concerning the sale or manufacture of liquor was extremely limited even as it said no vested right was accrued to a bidder for the fact that he or she had been declared as the highest bidder provisionally.

A bench of Justice Wasim Sadiq Nargal said while dismissing a batch of petitions by H-1 Bidders challenging the cancellation of the auction in February this year regarding liquor vends in various parts of Jammu division for 2024-25. The petitioners were aggrieved by the subsequent cancellation of the auction on the grounds of poor response and less competition.

The petitioners had sought the court’s intervention with the contention that once they were declared as the highest bidder, a right was accrued to them which could not be taken away without adopting due process of law, especially when the moment a bidder was declared as the highest bidder, he or she was required to deposit an amount of Rs 10 lakh and was also barred from participating in other bids.

In his counterargument, Advocate General, D C Raina contended that the liquor trade did not vest any right on the petitioners and it was an absolute privilege of the government to part with such privilege and nobody had an unfettered right of having such a privilege.

“Liquor trade is a privilege, which the government parts and, the scope of interference by courts in fiscal matters is minimal as compared to normal contractual obligations,” he said.

The Advocate General argued that the government had more latitude, insofar as, the economic matters were concerned and the grant of license to the manufacturers, sale of liquor would essentially be a matter of economic policy, where it was settled law that the courts normally do not intervene.

However, the Advocate General said that the court was not precluded from testing if the action was “arbitrary, irrational, or malafide”.

In response to these contentions, the court said it finds force in the Advocate General’s argument that the special character of the liquor trade vests with the J&K administration with the power to grant the exclusive privilege to carry on trade in the manufacture and sale of liquor.

“Given the exclusive privilege of the government in the sale or manufacture of liquor, the scope of judicial review in administrative decisions concerning the same is extremely limited,” the court said while summarising its conclusions and findings.

“No vested right is accrued to a bidder simply because he or she has been declared as the highest bidder provisionally and subject to fulfilment of certain conditions in a given auction,” it observed.

Observing that there was a catena of decisions of the Supreme Court on the issue that the scope of judicial review in the tender or auction process was extremely limited, the court said: “Admittedly, this court cannot adjudge the soundness of a decision and it must concern itself only with how the decision was made.”

Citing the law laid down by the Supreme Court, the court said, “Even the highest bidder has no vested right to have the auction concluded in his favour and owing to the circumstance of a limited scope of judicial review under Article 226, unless a decision is arbitrary or unreasonable, there is no occasion for the court to interfere in the action of calling for a re-auction.”

Bearing in mind the nature of the liquor trade, the court said that it being a constitutional court, should be slow in interfering with the executive decisions taken by the State as these were essentially a matter of economic policy in which the “government must be afforded a greater latitude and fair play in the joints”.

“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 or re-auctioning on germane considerations having a logical nexus with the policy objectives,” the court said. “The decision to cancel the auction and the subsequent order for re-auctioning cannot be termed as arbitrary, discriminatory, or mala fide to warrant judicial interference.”

The court underscored that in any event, it 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.

While the court noted that the cause projected by the petitioners does not sub-serve an overwhelming public interest which must be borne in mind to decide whether judicial intervention is called for or not, it said: “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.”

After examining the original record, the court said the reasoning provided by the government for cancelling the auction cannot be termed as unreasonable or arbitrary.

“Insofar as the reasoning behind cancellation of the auction based on poor response and less competition of the auction, the same does not seem implausible or mala fide, as suggested by the counsels for the petitioners, more so, when it is a fact on record that the some of the vends under auction did receive a single bid,” the court said. “In these circumstances, this court discerns no arbitrariness or irrationality in the decision of the government. Therefore, this court holds that the decision of the respondent government cannot be faulted with.”

It subsequently dismissed the bunch of petitions and accordingly, put the government at liberty to proceed with the re-auction of the various liquor vends.