020-SLLR-SLLR-1998-V-3-RAJANAYAGAM-v.-BANDULA-WIJAYARATNE-COMMISSIONER-GENERAL-OF-EXCISE-AND-OT.pdf
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Rajanayagam v. Bandula Wijayaratne,
Commissioner-General of Excise and Others
129
RAJANAYAGAM
v.BANDULA WIJAYARATNE,COMMISSIONER-GENERAL OF EXCISEAND OTHERS
SUPREME COURTFERNANDO, J.,
WADUGODAPITIYA, J.,
BANDARANAYAKE, J.
S.C. APPLICATION NO. 389/98SEPTEMBER 03RD, 1998.
Fundamental Rights – Articles 12 (1) and 14 (1) (g) of the Constitution – Licenceto sell foreign liquor – Excise Ordinance S. 32 (1) – Rules and notifications -Guidelines. Exercise of Statutory discretion – Opportunity of being heard – Equalprotection of the law – Right to livelihood.
Held:
Section 32 (1) imperatively requires Parliamentary approval for all rulesmade under the Excise Ordinance, whether or not they relate to “exciserevenue". It is section 32 (1) alone which empowers the Minister to makerules “for the purpose of carrying out the provisions of (the) Ordinance”,subsection (2) does not confer any new or additional power, but only spellsout some of the subjects on which such rules may be made. That is notin order to expand the scope of subsection (1). but solely to preclude anyargument that the subjects stipulated in subsection (2) fall outside thegeneral words conferring the rule making power.
It is very clear that the preconditions for the issue of a licence are a matterfor rules and not for notifications and that such rules acquire the forceof law (subject to the specified exception in the case of urgency) only whenParliamentary confirmation is gazetted by means of a notification. Had therebeen any doubt, it is axiomatic that is had to be resolved in favour ofParliamentary control of delegated legislation, rather than freedom fromsuch control.
The question of law that arises is not whether the notification was ultravires or void (for lack of Parliamentary confirmation) at the time of publicationin November, 1997, but the more limited question whether it had acquiredthe force of law on 9.3.98 when petitioner made his application for the
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licence or even on 13.6.98 when petitioner says he received the 1strespondent's reply that the application could not be entertained. Thepetitioner's cause of action was the attempt to apply that notification tohim in June,1998 and not its publication.
The petitioner had the right to apply for a licence under and in terms ofthe Ordinance, and if the only form which the 1st respondent would issuefor that purpose was one prescribed by the guidelines, the mere use ofthat form would not give rise to an estoppel or waiver of rights. Muchmore is required to establish an estoppel or a waiver of rights.
The 1 st respondent applied the principles and provisions of the notificationsnot because he thought they were right or that he had any choice in thematter, but only because he thought they were valid and binding on himdespite the lack of Parliamentary confirmation and subsequent notification.There was no independent exercise of his discretion under the Ordinance,but rather a total abdication of his statutory discretion in favour of theguidelines in the notification.
Even the notification he did not apply fairly. He denied the petitioner eventhe limited right to a hearing which clause 10 is purported to guarantee.
The petitioner was denied the equal protection of the law and his rightto livelihood was infringed.
APPLICATION for relief for infringement of fundamental rights guaranteedby Articles 12 (1) and, 14 (1) (g) of the Constitution.
Tilak Marapana, PC with Jayantha Fernando for the petitioner.
Harsha Fernando, SC for the respondents.
Cur. adv. vult.
October 01, 1998FERNANDO, J.
The petitioner complains that his fundamental rights under Articles 12(1) and 14 (1) (g) have been infringed by the 1st respondent, theCommissioner-General of Excise, by the refusal of a "restaurant licence"(i.e. a licence to sell foreign liquor for consumption on the premises,or an "FL 11" licence) in respect of premises No. 1, Tangalle Road,Hambantota.
SCRajanayagam v. Bandula Wijayaratne,
Commissioner-General of Excise and Others (Fernando, J.)131^
In 1979, the Government Agent, Hambantota, issued a noticecalling for tenders for licences to be issued with effect from 1.1.80to operate "liquor restaurants" within the Hambantota Urban Councilarea. That notice stated that the selected tenderers "may renew theirlicences' for the subsequent years on payment of licence fees only",and that "restaurant licences will be subject to general conditions for' the time being in force and applicable to all excise licences".
The petitioner stated that he and his brother were awarded thattender, and carried on the business up to 1994, in respect of thesame premises; that the practice was that upon receipt of acommunication from the authorities informing them of the amount tobe paid for the renewal of the licence for the following year, that sumwas paid and the licence was renewed; and that in 1994 a noticewas received informing them of the amount payable for the period
to 30.4.95, which was paid. Consequent to a newspaperadvertisement on 15.12.94 by the 1st respondent calling forapplications in respect of the rest of 1995, the petitioner and his brotherapplied for licences, but were refused. They did not apply for licencesfor 1996 and 1997. Thus from mid-1995 to 1997 they did not carryon the business.
In the Gazette No. 1001/20 of 13.11.97 there appeared the followingNotification:
THE EXCISE ORDINANCEExcise Notification No. 833
GUIDELINES AND CONDITIONS APPLICABLE TO THE ISSUEOF EXCISE LICENCES
The Minister of Finance and Planning has under section 25 readwith section 32 (2) of the Excise Ordinance directed that theguidelines and conditions given below will be followed in respectof the issue of liquor licences. These guidelines and conditionsshall apply in respect of the following category of licences and withthese guidelines and conditions coming into operation the Excise
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notification No. 827 . . . shall be deemed rescinded, so far asthe same is contrary to or incompatible with these guidelines andconditions. . .
B. C. PERERASecretary
Ministry of Finance and Planning
(a) All guidelines and conditions hitherto in operation … arehereby revoked, and the said licences shall be issued solely on thebasis of, and subject to the guidelines, restrictions and conditions setout below.
(b) The present holders of such licences will not be entitledto automatic renewal thereof; and that [s/'c] all applications will beconsidered solely on the information and material furnished in theapplication for the succeeding year in accordance with theseguidelines and conditions. Applications furnished by such licenseeson or before the 15th day of December of the year preceding theyear of licence may be considered by the Commissioner-General ofExcise in terms of these guidelines and conditions . . .
(a) Applications should be made … to the Commissioner-General … on forms obtained from the Excise Department, onpayment of the relevant application fees.
(b) Late applications will not be entertained . . .
Clause 4 specified "Requirements regarding location and premises”.Clause 4 (dj required that the premises should be 500 metres away(as the crow flies) from schools and places of public religious worship.That was subject to two provisos. "In respect of premises wherelicences have been in continuous operation for 20 years and more… the relaxation of [those] distances …. may be considered bythe Commissioner-General of Excise if he is satisfied that the premisesare suitable for the operation of liquor licences" (clause 4 (d)); and,further, that requirement would not apply "where the sale of liquoris not the main commercial object of the enterprise as determined
SCRajanayagam v. Wijayaratne,
Commissioner-General of Excise and Others (Fernando, J.)133
by the Commissioner-General or any other appropriate authority relevantto the nature of the business of the applicant" (clause 4 (e)).
Clause 10 (a) imposed a duty on the Commissioner-General, ifhe was of the opinion that an applicant should not be issued a licence,to inform him within eight weeks of the receipt of the application of"his reasons for forming such opinion" and to "require the applicantto show cause as to why he should be issued with a licence",whereupon the applicant had a right to show cause within two weeks.
The petitioner stated that he met the 3rd respondent (the Officerin Charge, Excise Office, Hambantota) on 10.12.97, and requestedan application form; he refused, saying that forms are given only tothose who had licences for 1997, but added that an application formcould be issued if a letter was brought from the Member of Parliamentfrom the People's Alliance Party. On 12.12.97 he asked the 4threspondent (the Area Commissioner of Excise, Excise Office, Bentota)for an application form; he too said that an application form couldbe issued only if the Member of Parliament from the People's AllianceParty had authorized it. Neither of those respondents filed affidavitscontradicting those averments. Although the 1st respondent deniedthose allegations, he did not claim any personal knowledge. The 1strespondent added that requests made after the closing date specifiedin notification No. 833 were not entertained.
The identical allegations had been made in SC applicationNo. 20/98 which the petitioner filed on 13.1.98 upon the refusal toissue an application form. That application was settled on 24.2.98,upon the 1st respondent agreeing to issue the application form uponpayment of the requisite fee. It was also agreed that the applicationwould not be rejected on the ground that it had been made out oftime, but would be considered in the normal way, and that, if dis-satisfied with the 1st respondent's order, the petitioner would havethe right to seek redress.
The petitioner submitted his application on 9.3.98. Not havingreceived a response, he sent a reminder dated 15.5.98, by registeredpost. He says he thereafter met the 1st respondent at his office on
and that the 1st respondent informed him that a reply dated'
had already been sent. This, the petitioner says, he received
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only on 13.6.98. In that reply all that the 1st respondent stated wasthat the licence had not been renewed after 30.9.95, and that theapplication could not be entertained because there were places ofworship and schools within a radius of 500 metres; he did not askthe petitioner to show cause. The petitioner filed this application on
seeking leave to proceed under Articles 12 (1) and 14 (1)
, but not Article 12 (2). Leave was granted.
On behalf of the 1st respondent, learned state counsel took apreliminary objection that the application was time-barred. Thatobjection necessarily involved an assertion by the 1st respondent thathis letter dated 8.5.98 had been received by the petitioner before
and therefore the burden of establishing that fact was onhim. He did not say that his letter was sent by registered post, andthere is no direct evidence of either the date of posting or the dateof delivery. On the other hand, even assuming that it had been postedon 8.5.98, it is common knowledge that there were postal delays duringthe relevant period, and the fact that the petitioner sent a reminderby registered post confirms that he had not received that letter onor before 15.5.98. The petitioner asserted that he had received thatletter only on 13.6.98. The 1st respondent merely stated that he was"unaware" of the reminder, without either denying its receipt or explaininghis failure to reply to it. The petitioner was obviously interested invindicating his rights, having already applied to this court simply toget an application form, and it is unlikely that he would have refrainedfrom acting promptly. It is far more probable therefore that the petitioneronly received the 1st respondent's reply on 13.6.98. We thereforeoverruled the preliminary objection.
Mr. Marapana, PC, submitted that "Notification No. 833“ did notapply: although section 32 of the Excise Ordinance, gave the Ministerthe power to make rules, such rules acquire the force of law onlyupon compliance with section 32 (1):
"32 (1) The Minister may make rules for the purpose ofcarrying out the provisions of this Ordinance or other law for thetime being in force relating to excise revenue; and all such rulesshall be laid as soon as conveniently may be before Parliament,and upon being confirmed, with or without modification, by aresolution of Parliament, and upon such confirmation being notified
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Commissioner-General of Excise and Others (Fernando, J.)
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in the Gazette, shall have the force of law from the date of suchnotification, or upon such date as may be therein fixed:
Provided that in any case of urgency the Minister may bynotification declare any such rules to be in force from a date namedtherein, and such rules shall thereupon come into force on suchdate; but if within forty days of the date upon which such rulesare laid before Parliament a resolution be passed by Parliamentpraying that all or any of such rule be modified or annulled, suchrules or rule shall thenceforth be modified or annulled accordingly,but without prejudice to anything done thereunder".
In particular, and without prejudice to the generality of theforegoing provision, the Minister may make rules-
regulating the periods and localities for which licences . . .may be granted;
prescribing the procedure to be followed and the matters tobe ascertained before any licence for such sale is granted in anylocality;
prescribing the restrictions under and the conditions on whichany licence . . . may be granted, including .
Learned state counsel submitted that the notification No. 833 hadbeen incorporated in Gazette No. 1006 of 7.5.98, and brought beforeParliament by a resolution, and had been confirmed on 23.6.98; heconceded, however, that such confirmation had not been notified inthe Gazette, and that no order had been made under the proviso.No such Gazette was produced.
Mr. Marapana replied that he would accept that position, butcontended that in the absence of subsequent Gazette notification ofParliamentary confirmation, the rules failed to acquire the force of law;and that in any event, when the petitioner's application was made,and even when the refusal was communicated to him. Parliamentaryconfirmation had not been obtained. Either way, he argued, the 1strespondent was not entitled to refuse the petitioner's application onthe basis of the notification No. 833. He went further, contending that
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even if that notification was procedurally valid, yet the “requirements0in clause 4 were discriminatory.
State counsel made several submissions in reply. First hecontended that section 32 (1) only applies to rules relating to 'exciserevenue"-, that the notification did not relate to "excise revenue"; andthat therefore Parliamentary confirmation was unnecessary. "Exciserevenue" is defined in section 2 as “revenue derived or derivable fromany duty, fee, tax, fine …" Learned state counsel's contention isplainly untenable because the notification refers to "application fees",and "fees for shifting", and thus obviously relates to excise revenue.But, more important, that contention is based on a misinterpretationof section 32 (1), because the phrase "relating to excise revenue”does not qualify "rules", but only "other law for the time being in force".Thus section 32 (1) imperatively requires Parliamentary approval forall rules made under the Excise Ordinance, whether or not they relateto "excise revenue".
His second submission was that notification No. 833 was madeunder and by virtue of, and fell within, section 32 (2), and not section32 (1); and that therefore section 32 (1) did not apply. That is a fallacy.That argument attempts to treat the two subsections as if they wereentirely distinct and independent provisions, constituting two differentsources of authority to enact delegated legislation. It is section 32
alone which empowers the Minister to make rules "for the purposeof carrying out the provisions of [the] Ordinance"; subsection (2) doesnot confer any new or additional power, but only spells out some ofthe subjects on which such rules may be made. That is not in orderto expand the scope of subsection (1), but solely to preclude anyargument that the subjects stipulated in subsection (2) fall outside thegeneral words cqnferring the rule-making power.
It was his next contention that notification No. 833 was not a setof "rules", but only an "Excise Notification", for which the only require-ment was (in terms of section 60 (1) of the Ordinance) publicationin the Gazette. “Excise Notification" is defined in section 60 (4) tomean a notification made or issued under the Ordinance, or for thepurpose of the Ordinance. The notification No. 833 deals with theconditions for the issue of licences. Nowhere does the Ordinanceauthorise or permit such conditions to be prescribed by means of a
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Rajanayagam v. Wijayaratne,
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notification. Such conditions can only be prescribed by rules (seesections 32 (2) (g), {h) and (I)). Learned state counsel then tried tofall back on section 25 (a), which provides that every licence shallbe "in such form and contain such particulars as the Minister maydirect . . That is a provision which deals only with matters of form,and it is section 25 (c) which refers to restrictions and conditions,which – it is plain from section 32 (2) – the Minister may certainlyprescribe, but only by means of rules.
In making those three contentions, what learned state counsel wastrying to do was to interpret several different provisions of theOrdinance, narrowly and in isolation, in an attempt to persuade usthat salutary provisions for Parliamentary control of delegatedlegislative power were inapplicable. Not only are those interpretationsplainly untenable even in isolation, but when the relevant provisionsare considered, as they must be, in the context of the Ordinance takenas a whole, it is very clear that the preconditions for the issue ofa licence are a matter for rules and not for notifications, and that •such rules acquire the force of law (subject to the specified exceptionin the case of urgency) only when Parliamentary confirmation isgazetted by means of a notification. Had there been any doubt, itis axiomatic that it had to be resolved in favour of Parliamentary controlof delegated legislation, rather than freedom from such control.
Fourth, it was argued that this petition was filed out of time becausethe petitioner sought to challenge the notification No. 833 issued inNovember, 1997, only eight months later, in July, 1998. That ismisconceived. The question of law that arises is not whether thenotification was ultra vires or void (for lack of Parliamentaryconfirmation) at the time of publication in November, 1997, but themore limited question whether it had acquired the force of law on
or even on 13.6.98. The petitioner's cause of action was theattempt to apply that notification to him in June, 1998, and not itspublication.
State counsel's fifth contention was that because the petitioner hadapplied for a licence in terms of the guidelines, and had used a formissued under those guidelines, he was not entitled to challenge theguidelines themselves. That is untenable: the petitioner had the rightto apply for a licence under and in terms of the Ordinance, and if
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the only form which the 1st respondent would issue for that purposewas one prescribed by the guidelines, the mere use of that form wouldnot give rise to an estoppel or a waiver of rights. Much more is requiredto establish an estoppel or a waiver of rights. That contention is alsofactually unsound, because in SC Application No. 20/98 the petitionerexpressly pleaded that the guidelines did not have the force of law,and it was with knowledge of that that the 1st respondent agreedto issue him an application form thereafter; he knew from the outsetthat there was no acquiescence or waiver by the petitioner.
Finally, it was urged that even if the notification No. 833 did nothave the force of law, yet the 1 st respondent had applied its provisionsuniformly to all applicants including the petitioner, and that was alegitimate exercise of discretion. That is an inherently contradictoryplea. The 1st respondent applied the principles and provisions of thenotification not because he thought they were right or that he hadany choice in the matter, but only because he thought they were validand binding on him despite the lack of Parliamentary confirmation andsubsequent notification. There was no independent exercise of hisdiscretion under the Ordinance, but rather a total abdication of hisstatutory discretion in favour of the guidelines in the notification.
And even the notification he did not apply fairly. Thus his letterdated 8.5.98 did not – despite clause 10 – "require the applicant toshow cause as to why he should be issued with a licence", and hethereby denied the petitioner even the limited right to a hearing whichclause 10 purported to guarantee.
The 1 st respondent even tried to justify the refusal of an applicationform, upon a complete distortion of the notification, claiming that thepetitioner's request had been made after the closing date: and thatwas despite the settlement in SC Application No. 20/98. The onlyclosing date stipulated in the notification is 15th December, and thepetitioner's request for a form had been made before that date. Refusalon that ground was therefore capricious and perverse. Further, the1st respondent deposed that he regarded the petitioner's applicationas a new one, and not for renewal; and that therefore he did notconsider that the petitioner's application fell within clause 4 (d)(ie that it was not an application in respect of premises where licenceshad been in continuous operation for twenty years). Clause 1 (b)
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Rajanayagam v. Wijayaratne,
Commissioner-General of Excise and Others (Fernando, J.)
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stipulated a closing date only for applications for renewal, and notfor pew applications. If the 1st respondent had honestly believed thatthe petitioner's application was not for renewal, he could not haverefused that application on the ground that it had been made after
and, a fortiori, he should not have refused the petitioner'srequest for an application form on that ground. Finally, clause 2 (b)deals with late applications, not with late requests for application forms.Admittedly, an application form is issued only upon payment of a feeof Rs. 5,000. If an application subsequently made, using that form,was in law belated, that application would be refused but the fee ofRs. 5,000 already paid would nevertheless remain in the coffers ofthe state. The refusal of a request for an application form, despitethe loss to the revenue, seems inconsistent with the claim that the1st respondent was endeavouring to apply the guidelines fairly; indeed,it points the other way. I must observe that this is by no means theonly instance in which the 1st respondent refused requests for applicationforms: several fundamental rights applications have been made to thiscourt during the past year in respect of such refusals, in which thegrant of leave to proceed was not followed by judgments only becausethe 1st respondent then agreed to issue application forms.
Another unsatisfactory feature of the guidelines must be mentioned.Notification No. 833 was published only on 13.11.97. An applicationfor a licence for 1998 could have been made on 15.12.97. But evenif made with the utmost promptitude, on 13.11.97 itself, clause 10gave the Commissioner-General eight weeks to convey his opinion,ie till 8.1.98. If that was unfavourable, an applicant had two weeksto appeal. But even if he appealed on 8.1.98, the Commissioner-General had another eight weeks for his decision, ie till 5.3.98. Bythat time two months of the year would have elapsed. It is arguablethat reasonable guidelines should have ensured applicants an earlydecision before the commencement of the licensing year so that asuccessful applicant could commence business as soon as possible(providing a service to his customers, employment for his staff, profitfor himself, and revenue for the state); and an unsuccessful applicantcould apply for timely relief. Be that as it may, given the time limitsstipulated, if fairness was the 1st respondent's objective, he wouldhave acted much more expeditiously.
In view of the above conclusions it is unnecessary to considerMr. Marapana's submissions that the guidelines were discriminatory,and that the distances specified were arbitrary and unreasonable.
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The refusal of the petitioner’s application for a licence was illegalbecause the 1st respondent applied the notification No. 833 as if ithad the force of law, and did not exercise his statutory discretion;he denied the petitioner an opportunity of being heard in regard tothat matter, and as to whether the distances from schools and placesof worship were such as to disentitle him in law to a licence; andeven if the notification did apply, he acted capriciously, arbitrarily andunreasonably. The petitioner was thus denied the equal protection ofthe law, and his right to livelihood infringed. I grant the petitioner adeclaration that his fundamental rights under Articles 12 (1) and 14
(g) have been infringed by the 1st respondent.
In considering what relief should be granted, I must take intoaccount the fact that the 1 st respondent has tried to use the guidelinesas an instrument of harassment – by refusing an application form,delaying the communication of his initial response, denying anopportunity to show cause, and relying at every turn on technicalities.He should have been better advised from the outset.
The petitioner claims that he expected a monthly income ofRs. 20,000 from the business. He has been prejudiced by the unduedelay in issuing an application form and in dealing with his applicationaccording to law. To direct the 1st respondent to consider thepetitioner's application afresh would be futile, as the decision-makingprocess lends itself to needless delay, and only another three monthsremain of the year 1998. I therefore award the petitioner a sum ofRs. 200,000 as compensation and Rs. 20,000 as costs, payable bythe state. That must be paid, and proof of payment furnished to theregistrar of this court, before 10.11.98, failing which the registrar isdirected to list this application for an order of court in regard toenforcement.
WADUGODAPITIYA, J. – I agree.
BANDARANAYAKE, J. – I agree.
Relief granted.