Ghaio Mall & Sons v. The State of Delhi & Others

Case Analysis

Ghaio Mall & Sons v. The State of Delhi & Others

June 4, 2025

A) ABSTRACT / HEADNOTE

The case Ghaio Mall & Sons v. The State of Delhi & Others (1959 AIR 65, 1959 SCR Supl. (2) 1424) revolves around the legality of the grant of a foreign liquor license (L-2 license) by the Delhi administration. The Supreme Court meticulously examined whether the Chief Commissioner, the competent authority under the Punjab Excise Act, 1914 as extended to Delhi, had exercised his statutory powers or whether the decision was made by unauthorized officials. The judgment emphasizes the necessity of procedural propriety, especially concerning administrative decisions with significant commercial implications. It also underscores the duty of quasi-judicial bodies to maintain transparency by producing complete records during judicial reviews under Article 226 of the Constitution of India. The Supreme Court reversed the Punjab High Court’s decision, holding that the respondents evaded judicial scrutiny by not producing full records and that the license grant lacked valid statutory sanction. This case sets a crucial precedent regarding administrative law, constitutional law, judicial review, and the separation of powers between administrative and judicial functions.

Keywords: Writ of Certiorari, Administrative Law, Judicial Review, Quasi-Judicial Function, Punjab Excise Act, Article 226, Procedural Propriety, Delhi Liquor License Rules, Part C States Act, Rule of Law.

B) CASE DETAILS

i) Judgement Cause Title
Ghaio Mall & Sons v. The State of Delhi & Others

ii) Case Number
Civil Appeal No. 481 of 1957

iii) Judgement Date
30th September 1958

iv) Court
Supreme Court of India

v) Quorum
S. R. Das, C.J., N.H. Bhagwati, B.P. Sinha, K. Subba Rao, K.N. Wanchoo, JJ.

vi) Author
Das, C.J.

vii) Citation
1959 AIR 65, 1959 SCR Supl. (2) 1424

viii) Legal Provisions Involved

Article 226 of the Constitution of India
Article 166 of the Constitution of India
Punjab Excise Act, 1914 (Punjab Act No. 1 of 1914)
Delhi Liquor License Rules, 1935
Government of Part C States Act, 1951 (Act No. 49 of 1951)

ix) Judgments overruled by the Case (if any)
None.

x) Case is Related to which Law Subjects

Constitutional Law
Administrative Law
Excise Law
Public Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The genesis of this litigation traces back to the excise policy implementation in the Union Territory of Delhi. The appellants, Ghaio Mall & Sons, longstanding licensees in foreign liquor business, faced administrative arbitrariness when their application for an L-2 license renewal was bypassed without due statutory consideration. The Government authorities purportedly sanctioned the license to a rival, Messrs. Gainda Mall Hem Raj, allegedly without the Chief Commissioner’s direct authorization as mandated under Delhi Liquor License Rules, 1935 framed under Section 59 of Punjab Excise Act, 1914. This led the appellants to seek judicial intervention under Article 226 of the Constitution, which triggered the present legal scrutiny before the Supreme Court after an unsatisfactory High Court verdict.

D) FACTS OF THE CASE

The appellants were licensed vendors of foreign liquor since 1922. They operated multiple licenses across Amritsar, Sialkot, and Multan before partition. In 1945, they secured an L-2 license in Chawri Bazar, Delhi. However, due to premises unsuitability and post-partition disruption, the license could not be renewed. In 1951, the appellants applied afresh for licenses under Forms L-1 and L-2 for Karol Bagh and other locations.

On 17 May 1951, the Chief Commissioner sanctioned their L-1 license for Karol Bagh. This license was continuously renewed. In 1954, a vacancy arose for an L-2 license when Messrs. Army and Navy Stores surrendered theirs. The appellants applied on 21 January 1954 for this L-2 license vacancy and offered flexibility regarding the location.

However, administrative delay ensued. They reiterated their willingness to operate in any locality and informed that they had secured premises at Connaught Place, the concerned location. Despite multiple follow-ups and correspondence, the Excise Commissioner discounted their application citing lack of premises—a claim contrary to factual assertions made by the appellants.

On 3 September 1954, a decisive administrative note by the Under Secretary (Finance) recommended rejection of the appellants’ application, primarily alleging absence of suitable premises. The Chief Minister endorsed the file on 14 September 1954, concurring with the Excise Commissioner’s recommendation to issue the license to Messrs. Gainda Mall Hem Raj. However, no documentation reflected Chief Commissioner’s independent decision, as required by Rule 1, Chapter V of the Delhi Liquor License Rules, 1935.

Multiple representations by the appellants for copies of the relevant orders went unanswered. After exhausting initial writ petitions, they filed the present writ petition in the Punjab High Court (Circuit Bench, Delhi), which dismissed it, resulting in this appeal.

E) LEGAL ISSUES RAISED

i) Whether the grant of the L-2 license to Messrs. Gainda Mall Hem Raj was legally valid and in accordance with statutory procedure.

ii) Whether the Chief Commissioner exercised his jurisdiction as required under Rule 1, Chapter V of the Delhi Liquor License Rules, 1935.

iii) Whether non-production of records by the respondents impeded judicial review under Article 226 of the Constitution of India.

iv) Whether administrative convenience justified procedural irregularities.

v) Whether the respondents engaged in deliberate evasion and non-cooperation with judicial scrutiny.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for the Petitioner / Appellant submitted that:

The appellants argued that under Delhi Liquor License Rules, 1935, only the Chief Commissioner had the authority to grant L-2 licenses. They alleged that the respondents bypassed this statutory authority. The Chief Commissioner never applied his mind nor made any independent order. Instead, subordinate officials and the Chief Minister orchestrated the license grant unlawfully.

They emphasized that despite repeated demands, respondents failed to produce a valid order from the Chief Commissioner. This deliberate withholding of records obstructed the purpose of the writ of certiorari. The petitioners contended that the High Court should have inferred adverse presumption against the respondents due to such non-disclosure.

They invoked Dattatreya Moreshwar Pangarkar v. The State of Bombay (1952 SCR 612), distinguishing that unlike Pangarkar where valid delegation and authentication were proven, here the respondents produced no valid authentication.

The appellants argued that the Under Secretary’s letter of 14 December 1954 was merely a communication, not an authenticated administrative order under Article 166 of the Constitution. Thus, the license issued lacked legal sanctity.

They contended that the High Court wrongly dismissed their petition by relying solely on evasive affidavits from lower officials rather than insisting on proper record production.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that:

The respondents defended that the Chief Commissioner sanctioned the license as per procedure, though no separate order was produced. They asserted that the letter from the Under Secretary constituted valid communication of the Chief Commissioner’s sanction.

They claimed that the appellants’ writ petition had become infructuous since the license period had already expired. They also argued that the renewal policy vested no fresh cause of action in the appellants.

The respondents sought refuge under administrative practice where orders are communicated through departmental hierarchy. They argued that under delegation rules framed under Section 38(3) of the Government of Part C States Act, 1951, the Under Secretary was competent to authenticate Government orders.

They also raised technical objections, alleging that no appeal lay against executive decisions on license grants, thereby challenging the maintainability of the writ petition.

H) RELATED LEGAL PROVISIONS

Punjab Excise Act, 1914 (Section 59): Empowers the Government to make rules for licensing.
Delhi Liquor License Rules, 1935 (Rule 1, Chapter V): Empowers only the Chief Commissioner to grant L-2 licenses.
Government of Part C States Act, 1951 (Section 36 and Section 38(3)): Governs administrative powers and delegation thereof.
Article 226 of the Constitution of India: Jurisdiction for writ of certiorari.
Article 166 of the Constitution of India: Rules regarding authentication of orders and instruments.

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court firmly held that:

The respondents failed to prove that the Chief Commissioner made any independent order granting the license. The Under Secretary’s letter did not meet the authentication requirements under Article 166 nor could it substitute the statutory authority of the Chief Commissioner under Delhi Liquor License Rules, 1935.

The entire administrative process bypassed statutory mandates and amounted to an unauthorized exercise of executive discretion. The respondents’ conduct of evasive affidavits and non-production of records significantly impaired judicial review under Article 226.

The Court also emphasized that even though the license tenure lapsed, the question remained live since renewal policies favored the current licensee, depriving the appellants of future opportunities unless judicially corrected.

The license grant was consequently declared void ab initio.

b. OBITER DICTA

i) The Court criticized the deliberate non-cooperation of the respondents. It reiterated that in writ proceedings under Article 226, superior courts must compel inferior authorities to fully produce records to facilitate effective judicial review.

c. GUIDELINES

All quasi-judicial and administrative bodies must produce complete records when facing writs under Article 226.
Authentication under Article 166 must conform to prescribed legal formats.
Administrative convenience cannot override statutory requirements.
Evasive affidavits may trigger adverse judicial inferences.
Delegated authority must trace directly to statutory or rule-based delegation.

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