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Petitioner: Messrs MURREE BREWERY COMPANY LIMITED VS Respondent: DIRECTORGENERAL, EXCISE JUDGMENT
Court Name: Lahore High Court Judge(s): Mian Allah Nawaz Title:Messrs MURREE BREWERY COMPANY LIMITED vs DIRECTORGENERAL, EXCISE
JUDGMENT
Reported As: 1991 MLD 267 Result: Petition accepted Judgment JUDGMENT ' The petitioner M/s. Murree Brewery, Public Limited Company, has prayed for the grant of following reliefs in this Constitution petition:-- (1) Declaration be granted to the effect that the order of the Assistant Excise and Taxation Officer dated 18-4-1986, is illegal, without jurisdiction, without any lawful authority and hence nullity in the eyes of law; (2) That the actions of respondents restraining the Company from manufacturing/production of Malt-79, is illegal, void, ab initio and so ineffective on the right of the petitioner to produce Malt-79. 2. A few controlling facts given in the petition are; that the petitioner Company (herein referred to as the Company) has been engaged in number of business ventures, relating to production/manufacture/selling of alcoholic and non-alcoholic beverages. The Company, a licensee of the Government of Punjab had established a distillery and brewery hall for the purpose of manufacturing bear and other alcoholic products therein. It was in 1979 when the Company applied to respondents for grant of permission to manufacture a non-alcoholic Secondly, it was urged that even if it was presumed that the respondents drink from indigenous material under the name of 'Malt-79'. The Company was granted permission subject to certain conditions incorporated in the order. The permission was renewed from year to year until 29-12-1987 when it was withdrawn. The validity of the aforesaid order was challenged in Constitution petition bearing No,WP/102/88 in the High Court, Lahore. The respondents in their parawise comments took up the stand that the permission with respect to `New Malt-79' was withdrawn. In the aforesaid context the petition was rendered infructuous. The petitioner thereon sent a letter to respondents for the
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renewal of permission to produce Malt-79. No reply was received. Ultimately on 29-12-1987, the Company was communicated that permission for the production of Malt-79 had been withdrawn. 3. It is appropriate to record brief narrative of hearing of this case on account of fact that the learned counsel appearing on behalf of respondents took different stand on legal issues. Mr. Tariq Mahmood and Mr. Mohammad Nawaz Abbasi, appeared on behalf of petitioner and respondents on 4-4-1989, respectively. The case was partly heard, when I came to principal seat. With the order of my Lord the Chief Justice, the case was transferred from Rawalpindi Bench to principal seat of this Court. 4. The case was then heard on 12-2-1990 and 13-2-1990. The arguments were addressed by Mr. Tariq Mahmood and Mr. Maqbool Elahi Malik, the learned Advocate-General, on behalf of the petitioner and respondents, respectively. The case was finally taken up for hearing on 13-6-1990 and 10-71990. The arguments were led by Mrs. Nasira Iqbal and Mr. Irfan Qadir, the learned A.-A.G. On behalf of two sides. 5. Mr. Tariq Mahmood, Advocate appearing on behalf of the petitioner, raised the following points: ' Firstly, that being a public limited Company, petitioner had a right to enter upon any lawful profession, occupation or to transact any lawful trade or business under Article 18 of the Constitution of Islamic Republic of Pakistan, 1973 (hereinafter referred to as the Constitution). It was contended that there was no restriction/prohibition under any law on the manufacture of non- alcoholic beverages. According to the learned counsel, the impugned orders/actions were, therefore, in defiance of Article 18 of the Constitution and were totally void. The strength was sought from Mehtab Jan and another v. Municipal Committee, Rawalpindi PLD 1958 (W.P) Lah. 929; M/s. T.D. Kumar & Bros. Private Ltd. v. Iron and Steel Controller and others AIR 1961 Cal. 258, Govindran Sharma v. The State of U.P. AIR 1961 All. 600; Ghulam Zamin v. Khondkar PLD 1965 Dacca 156; Messrs Shalimar Pictures, Dacca v. The Assessing Officer, Customs Office, Air Freight Dacca and others PLD 1966 Dacca 138. Had a power to regulate the functioning of brewery under the domain of police power of the Government, it had no authority whatsoever to prohibit the production of Malt-79, as it will tantamount to destruction and total annihilation of the business sought to be regulated. This was totally in violation of spirit and the purpose of regulation of lawful commercial activity. Reliance was placed upon Ghulam Zamin v. Khondkar PLD 1965 Dacca 156) Messrs Shalimar Pictures, Dacca v. The Assessing Officer, Customs Office, Air Freight, Dacca and others PLD 1966 Dacca 138 and 285 US (262-311), 278 US (105-115), 270 US (402-416) and 278 US (367-421). ' Thirdly, it was stressed that the action/impugned orders were passed in the absence of the petitioner and without giving him an opportunity to show cause against the order/action. It was contended that the principle of `audi alteram partem' is to be read into every statute, even if it is not expressly embodied therein. On the basis of this contention, it was represented that the impugned action was totally null and void. Help was sought from Moghal Tabacco Co. Ltd. v. Islamic Republic of Pakistan PLD 1959 SC (Pak) 31, Commissioner of Income Tax, East Pakistan v. Fazlur Rahman PLD 1964 SC 410 The University of Dacca through its Vice-Chancellor and another v. Zakir Ahmad PLD 1965 SC 90 and Abdus Saboor Khan v. Karachi University and another PLD 1966 SC 536. ' Fourthly, it was represented that there was no restriction under the Punjab Brewery Rules for the purpose of use of brewery hall for the manufacture of any other beverage. It was emphasised that for the functioning of brewery and distillery, separate rules were issued by the Government of Punjab under the Act. Under Rule No, 9. 42 of the Distillery Rules no other business except manufacturing, and storage of spirit can be carried out, within the precincts of Distillery. No such corresponding restriction was embodied in Brewery Rules. It was, therefore, clear that brewery can be used for the manufacture of Malt-79.
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' Fifthly, it was then contended with full force that the circumstances narrated in petition demonstrated that the order/action was the result of mala fides. It was only when the differences between Mian Muhammad Nawaz Sharif, the then Chief Minister of the Punjab and Mr. V.P.Bhandara, the Chief Executive of the Company arose in political arena, the actions were commenced. It was stated that it was on the directive of the Chief Minister Punjab, that impugned actions were initiated against the Company in order to stifle the voice of dissent of Mr. V.P. Bhandara in the National Assembly. It was contended that on 21-9-1987 arbitrary demand notice for payment of Rs,27,695.62 was served on the Company. Furthermore, the vehicles of Company were prohibited to enter the premises of the Company. On 20-9-1987 the petitioner was required to stop production of Malt-79. When the action was challenged in the Constitutional jurisdiction of this Court, Respondent intentionally took up wrong plea that order related to "New-Malt 79'. The chain of these oppressive actions were sufficient to demonstrate the malicious nature of the impugned action. 6. Mr. Mohammad Nawaz Abbasi, the learned AA.-G. Took up the following stands: (i) That Distillery Rules and Brewery Rules, were issued under the Act in order to guarantee the health of public-at-large. So, according to him Rule 9.42 of Distillery Rules, was to be read into Brewery Rules as well. He contended that Brewery cannot be used for any other purpose except for manufacturing bear. (ii) Regarding bias, it was suggested that allegation related to question of fact which can be determined by recording evidence. This course was not permissible in Constitutional jurisdiction. So this, objection was without any merit. 7. In the second phase of hearing the Advocate-General appearing on behalf of the respondents submitted that Company did not need permission/licence for manufacturing non-alcoholic beverages including 'Malt-79'. He, however, adopted the argument of Mr. Abbasi, the learned AA.-G, that brewery cannot be used for any other purpose except mentioned in the Act and Brewery Rules. 8. Mr. Irfan Qadir, learned A.A.-G. For respondent did not adhere to argument of previous counsel. He took up the following points:- "(i) that the Company could not manufacture Malt-79 within the premises of Brewery without the permission of respondents under section 20 of the Act. It was submitted that under section 20, the Government in exercise of his police power had an authority to regulate the functioning of brewery. So no business can be conducted in brewery without the permission of licensor. On the basis of this argument it was further contended that since the Government had authority to grant permission, it had also the power to withdraw/cancel/revoke such permission under its inherent power. The strength was sought from the provisions of Section 20 of the General Clauses Act. (ii) It was asserted that under sections 36, 37 and 41 of the Act, the respondents had the authority to cancel, revoke or withdraw the permission. In view of the report of the Analyst "that Malt-79 had traces of alcohol", the respondents were justified to pass the impugned order. (iii) It was maintained that the permission in favour of Company was a mere licence simpliciter. It did not create any privilege/vested right in favour of the petitioners. Reliance was placed on Ashfaq Hussain and others v. Karachi Municipal Corporation and others PLD 1957 (W.P.) Kar. 918, ' Muhammad Hashim v. Zulfiqar All Khan, General Manager, West Pakistan, Road Transport Board and others PLD 1963 (W.P.) Lah 418, Abdullah Bhai and others v. Ahmad Din PLD 1964 SC 106, Ismail Brothers v. Keval Ram PLD 1981 SC 545 and Noor Muhammad v. Civil Aviation Authority and another (1987 CLC 393). (iv) Regarding the allegation of bias it was contended that this allegation pertains to a question of fact and normally the High Court was not required to examine the question which required proof by means of evidence. Even otherwise the allegation was factually incorrect and without any foundation.
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9. The arguments were heard at length. The issues for consideration in this Constitution petition are as follows:-- (i)Whether the Company needs permission for the purpose of conducting the business of manufacturing/producing/storing/selling Malt-79 under any provisions of law; (ii) Whether the Brewery hall can be used for the purpose of any other business than mentioned in the Brewery Rules; (iii) Whether the Government of Punjab had the authority to regulate the functioning of brewery being run by the Company licenceholder under the Act; (iv) Whether the impugned order/action is in defiance of principle of natural justice; and (v) Whether the impugned action/order is based upon mala fides. 10. Before I proceed to determine the aforesaid issues it is of some use to note that the Director- General of Excise and Texation Department and the expert from the Company were required to submit their expert opinion on the question whether the machinery in use for the manufacture/production of beer in brewery hall can be used for the purpose of manufacturing Malt-79. The aforesaid persons had submitted their report and have given opinion to the effect that if Malt-79 is manufactured/produced within the framework of the arrangements and conditions embodied in the order of permission; this activity can be carried out without any hazard to public- at-large. Furthermore, the Director General also adopted the position advanced by Mr. Irfan Qadir, A.A.-G. That the Company cannot carry on this commercial activity without the permission of the Government of Punjab, within the premises of brewery. 11. Now the stage is set to undertake the examination of the contentions of both the parties. I will start with the first contention. It is obvious from Article 18 of the Constitution that fundamental rights pertaining to freedom of trade, business, profession are guaranteed subject to the condition that the Government A had the power to prescribe qualifications for the purpose of joining an profession, occupation, or trade and it can also enforce a licensing system. Article 18 is as follows:-- "Article 18: Subject to such qualification, if any, as may be prescribed by law, every citizen shall have the right to enter upon any lawful profession or occupation and to conduct any lawful trade or business: ;' Provided that nothing in this Article shall prevent (a) the regulation of any trade or profession by a licensing system; or (b) the regulation of trade, commerce or industry in the interest of free competition therein; or (c) the carrying on by the Federal Government or a Provincial Government, or by a corporation controlled by any such Government of any trade, business, industry or service, to the exclusion, complete or partial, of other persons. ' It follows that the freedom of trade, profession and occupation are inalienable, valuable and basic rights and only clog on this right is the prescription of qualification under some Statute or a licensing system under some law. None of the learned counsel was able to cite any law containing any prohibition on this trade activity or any licensing system relating to manufacture of non- alcoholic beverages. I am, therefore, quite clear that the Company was not in need of any permission for carrying out the disputed commercial activity. The question now remains as to what are the powers of the respondents to regulate the commercial activity being carried on in brewery. The claim of the respondents in this regard rests upon the provisions of section 21 of the Punjab Excise Act (I of 1914) (hereinafter referred to as the Act). It is a well-settled principle of law that for the purpose of discovering the purpose and intention of law it is necessary to examine the Statute as a whole and in an organic manner. The preamble of the C Statute and various headings of the Chapters are key to understand the intention, and scope of the Act. The Act was enforced on 1st of February, 1914. It starts with a preamble which is as follows:--
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"Whereas it is expedient to consolidate and amend the law in the Punjab relating to the import, export, transport, manufacture, sale and possession of intoxicating liquor and of intoxicating drugs;" The Act has eight Chapters. Chapter I deals with the provisions relating to definition of words embodied in the Act. Chapter II provides the hierarchy dealing with the activities being carried under the Act. At the apex is the Provincial Government while by virtue of notification, superintendence and administration of all matters reside in the Board of Revenue and so on and so forth. Even this Chapter contains the provisions relating to appeal and revision in respect of orders passed under this Act. Chapter III pertains to import, export and transport of intoxicants. For the purpose of this case Chapter IV is important. ' It deals with the manufacture of intoxicants, possession and production of these things. It also deals with establishment of distilleries and breweries under the licence and establishment of licensing of warehouses. It, in detail, deals with the possession, prohibition, and restriction in regard to intoxicants, and narcotics. Similarly this Chapter also deals with the sale of intoxicants, grant of lease of manufacture, and sale of liquor in military cantonments and so on and so forth. Chapter V deals with duties, fees while Chapter VI deals with the conditions relating to conditions and terms of licence. Sections 36, 37 and 41 deal with the power of the Government to cancel, suspend licences, power to cancel any other licence and power to withdraw licences. 12. From the aforesaid survey, it is, therefore, quite clear that this Act deals with the power of the Government to import, export, transport, manufacture of intoxicants and manufacture/production of alcoholic drinks in breweries as well as distilleries. The power of the Government to grant permission or licence is exclusively in regard to the aforsaid intoxicants, narcotics, production of alcoholic products. I am, therefore, quite clear that power to permit or carry on the trade activity of manufacturing non-alcoholic beverage cannot be claimed under this Act. The contention of respondents is, therefore, totally unfounded. It is a settled principle of law that the task of judiciary is to interpret the law and not to make the law. Neither the judiciary can read into the Act nor can provide any omission or gap in the Statute on the principle of cassias omissus. On this principle of interpretation I am of considered opinion that the contention of respondents that this commercial activity in Brewery cannot be carried on without their permission under section 20 of the Act is totally untenable and cannot be accepted. 13. Equally ineffective is the argument that the brewery cannot be used for the purpose of manufacture of Malt-79. To begin with Mr. Irfan Qadir, AA.-G., did not adhere to this argument put forth by Mr. Muhammad Nawaz Abbasi, A.A.-G. And then the learned A.-G. Even otherwise this argument had hardly any merit as the restrictions contained in Brewery Rules cannot be read into the Brewery rules. This contention is, therefore, found to be without any merit. 14. The question remains whether the respondents had the power to regulate the carrying on the disputed commercial activity within the precincts of brewery under the inherent power of the Government aimed at the welfare of public. This is commonly known as police powers of the State. No hard and fast definition of this power can be given. On this concept says Chief Justice Shaw--in Commonwealth v. Alger 7, Cush 53, 84 that:-- "We think it is settled principle, growing out of the nature of well-ordered civil society, that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. All property in this Commonwealth is held subject to those general regulations which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious and to such
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reasonable restraints and regulations established by law as the legislature, under the governing and controlling power vested in them by the Constitution may think necessary and expedient. This is very different from the right of eminent domain -- the right of a Government to take and appropriate private property whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor. The power we allude to is rather the police power; the power vested in the legislature by the Constitution to make, ordain and establish all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the Commonwealth, and of the subjects of the same. It is much easier to perceive and realize the existence and sources of this power than to mark its boundaries, or prescribe limits to its exercise. ' In Chicago etc. R. Co. v. Illinois Exrel, Grimwood 200 U. S. 561, 50, Mr. Justice Harlan, says that-- "We hold that the police power of a State embraces regulations designed to promote the public convenience or the general prosperity, as well as regulations designed, to promote the public health, the public morals, or the public safety." ' Another distinguished Justice of the Supreme Court Mr. Justice Holmes in Nobel State Bank v. Haskell 219 U.S. 104, 55, says:-- "It may be said in a general way that the police power extends to all the great public needs. It may be put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare." ' The police power of the State, states another eminent Judge, namely, Redfield Ch: J. In Thorp v. Rutland & Burlington R.R. Co., 27 Vt. 140, 149 as under: ". . . Extends to the protection of the lives, limbs, health, comfort and quiet of all persons and the protection of all property within the State. According to the maxim, Sic-ultere-tuo-ut-alienum- non-laedas, which being of universal application, it must of course, be within the range of legislative action to define the mode and manner in which every one may so use his own as not to injure others." From the Scheme of the Act it is quite clear that the brewery and distillery are being run under the licence under this Act. These are places where alcoholic products are manufactured and are subject to strict control of respondents, on account of the nature of this particular activity which might affect the health of nation at large. Therefore, the functioning of these palces is within the domain of respondents. If any other activity is to be carried on in these palces that also had to remain under the watchful eye of the respondents. 15. So, I am of the opinion that the power to cancel, suspend, the licence or cancel any other licence under section 37 or the power to withdraw under section 41 of the Act, are not available with respect to disputed activity but this power falls within the domain of police power of the respondents. 16. The next question in this regard is whether the power to regulate can amount to power to prohibit. This question is of significance. Neither the word `regulate' nor the word 'prohibit' are defined in the Act. The word is defined in Black's Law Dictionary. "To fix, establish, or control; to adjust by rule, to direct by rule or restriction, to subject to governing principles or laws, to adopt measures to promote its growth and insure its safety. It is also power to prescribe rules by which commerce is to be governed and embraces prohibitory regulations. Regulate means to govern or direct according to rule or to bring under control of constituted authority, to limit and prohibit, to arrange in proper order and to control that which already exists." ' The word 'regulate' has come into consideration in number of cases before the Courts of foreign jurisdiction. These cases are digested in Book 'Words & Phrass' Vol. 36-A, as under: "In Thielen v. Kostelecky 287, N.W. 513, 516, 69. N.D. 410, 124, ALR 820 the word 'regulate' as used in the provisions of the Liquor Control Act conferring on Governmental bodies of cities the authority to
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'regulate' the retail sale of alcohol and alcoholic beverages, has a broad meaning." ' In U.S. v. Gregg. D.C. Tex 5. F. Snpp. 848, 953. "To regulate 'interstate commerce' means to foster, protect, control and restrain with appropriate regard for welfare of those immediately concerned and of general public. ' In Great Northern Utility Co. v. Public Service Commission (293 P. 294, 301, 88 Mont. 180) "To regulate" in the sense intended is to foster, protect, and control the commerce with appropriate regard to the welfare of those who are immediately concerned as well as the public-atlarge, and to promote its growth and ensure its safety. ' In State ex.Rel. Saperstein v. Bass 152S.W. 2d 236, 238, 177 Tenn. 609 "Regulate" means to adjust by rule or method, to direct, to rule, to govern, to methodize, to arrange. Every element of his definition involves restraint, the exercise of a power over a thing by which its activities are ruled or adjusted, or directed to certain ends. ' In Phelps Inc. v. City of Hastringtons (42, N.W. 2d. 300, 303, 152, Neb. 651) Generally, power to 'regulate', means that manner of conductin business, may be controlled, and in so doing, the regulatory body may ordinarily consider character of those operating .- business '.-business places and hours of operation, type of building and same condition thereof, licences, and any other reason regulation that is not, prohibitory. 17. After the survey of the aforesaid meaning of the words 'Regulate' and `prohibit' I am quite clear in my mind that the respondents can control this activity being carried on in the brewery but they have no power to prohibit this activity. It will simply amount to total ruination of activity sought to be regulated. 18. At this stage, it will be pertinent to note that the brewery rules as well as distillery rules provide elaborate detailed machinery for carrying on the trade activity within the brewery and the distillery…
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