Madras High Court
Union Of India Rep. By The Chief ... vs /
Author: G.Jayachandran
Bench: G.Jayachandran
A.S.No.364 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 18.06.2025 Pronounced on: 02.07.2025
Coram:
THE HONOURABLE Dr. JUSTICE G.JAYACHANDRAN
Appeal Suit No.364 of 2022
1. Union of India Rep. by the Chief Secretary,
Government of Pondicherry,
Pondicherry. (Union Territory)
2. The Secretary to Government,
Revenue Department,
Government of Puducherry.
3. Deputy Commissioner (Excise),
Mahe. ... Appellants/Defendants
/versus/
M/s.Vinod Foreign Liquors,
Rep by O.P. Sivadasan, S/o Late Sankaran Nair,
Aged 42 years. Managing Partner,
M/s. Vinod Foreign Liquors,
Main Road, Mahe,
Union Territory of Puducherry ... Respondent/Plaintiff
Prayer: Appeal Suit has been filed under Section 96 of Code of Civil Procedure,
pleased to set aside the judgment and decree dated 30.11.2018 in O.S.No.32 of
2015 on the file of Subordinate Judge, Mahe.
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A.S.No.364 of 2022
For Appellants :Mr.P.S.Kothandaraman,
Government Advocate (Pondicherry)
For Respondent :Mr.Manoj Sreevalsan
JUDGMENT
The appeal suit filed by the defendants, being aggrieved by the judgment and decree passed by the Subordinate Court, Mahe, in O.S.No.32 of 2015.
2. The suit was filed by the plaintiff for a sum of Rs.7,00,000/- with 12% interest, claimed as damages from the Government of India and Secretary to Union Territory of Puducherry, for not issuing import permit and thereby caused loss of profit.
3. For the sake of convenience, the parties are described as per their status and ranking shown in the plaint.
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4. The plaintiff is a dealer in liquor in the Mahe region of the Union Territory of Puducherry. Since 1970, the plaintiff is in business and being granted FL-1 License. He was also granted import permit for F.L (Foreign Liquor) to enable him to import from the manufactures of FL.
5. According to the plaintiff, till 1994, he had the import permit and the FL-I license which enabled him to import FL and sell it in wholesale and retail. However, due to a criminal case registered against him for allegedly forging documents related to the import of FL, the import permit was not renewed from 1994. His FL-I license been renewed by collecting the required fees but without import license, he was not able to do business effectively.
6. The plaintiff contends that the Managing Partner of the plaintiff firm was falsely implicated in the criminal case (S.C.No.36 of 1994) and later ended in acquittal. In spite of several applications for issuance of import permits between 02.01.1996 and 18.11.2004, the plaintiff was not granted import permits. While the FL-I license to sell liquor was granted after collecting huge fees, the _____________ Page No.3/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 denial of import permits was in violation of Clause 11 of License in force and tantamount to malafide exercise of power without jurisdiction. The import permits was granted to him only after filing of writ of mandamus before the High Court. However, in view of denial of import permits for the period between 02.01.1996 to 18.11.2004, the plaintiff claims that the business output and turn over of the wholesale business and the profit likely to have been earned is estimated at Rs.25,00,000/-. Therefore, the defendants are liable to pay the damages to compensate for the presumptive loss in business and income.
7. The State contested the suit by filing written statement, wherein it has been stated that the plaintiff has no right to claim any damages from the defendants. While FL-I license is in the name of P.Sankaran Nair and not in the name of Vinoth Foreign Liquors or its representative, O.P.Sivadasan. The suit by O.P.Sivadasan not maintainable. When notice was issued claiming damages, the defendants have suitably replied. The plaintiff, M/s.Vinod Foreign Liquor, Mahe, came under adverse notice of the Excise Commissioner when the import documents presented by them were found to be forged. Consequently, a criminal case was registered in Crime No.29/1995 against O.P.Sivadasan, the _____________ Page No.4/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 representative of the plaintiff firm M/s.Vinod Foreign Liquors, Mahe. Till the criminal case ended in acquittal M/s.Vinod Foreign Liquor or its representatives were not entitled for import permit.
8. The defendants contends that the claim of the plaintiff is an artificial and imaginary one, without any cause of action. Since the FL-I license holder is not the plaintiff, there can be no reason to claim that refusal to issue import permit to the plaintiff had caused damages. Furthermore, the suit is clearly barred by limitation. The cause of action arose in the year 1995, soon after refusal to renew the import permit. Whereas, the present suit for damages, filed on 25.01.2005. Hence, the suit is hopelessly bared by limitation. For recovery of damages based on the tortious liability, the period of limitation is three years and hence, the suit is liable to be dismissed.
9. The Court below, based on the pleadings, framed as many as 19 issues and after considering 115 Exhibits (Ex.A.1 to Ex.A115) filed on behalf of the plaintiff, allowed the suit. Hence, the present appeal has been filed by the State.
_____________ Page No.5/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 Point for determination:-
Whether the State can be held liable for not issuing an import permit for the plaintiff to deal with F.L, despite granting F.L-I license to sell liquors?
10. The plaintiff claims that he is holder of FL-I license to deal with Foreign Liquor, both in wholesale and in retail. He admits that a criminal case was registered in the year 1994 against O.P.Sivadasan for forging 16 import permits and thereafter, the import permit was not renewed. It is also admitted fact that, after filing writ petition before the High Court of Madras, seeking a writ of mandamus, citing his acquittal in the criminal case, the import permit was granted on 13.12.2004. Though the plaintiff has marked 115 documents, Ex.A.4 to Ex.A.107 are all copies of the applications for import permits between 1996 and 2004. O.P.Sivadasan, the Managing Director of Vinod Liquors who is representing the firm in the suit, was acquitted in S.C.No.36 of 1997 on 23.04.2002, as per Ex.A.109 which is the certified copy of the judgment. Claiming damages for not renewing the import permit, the plaintiff has issued _____________ Page No.6/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 notice on 26.04.2004 and 22.11.2004, which are marked as Ex.A.113 and Ex.A.114.
11. The Learned Counsel appearing for the respondent/plaintiff contends that having granted FL-I license, it is mandatory to issue import permit. Clause 11, permits the licensee to import all kinds of Indian Liquors, Foreign liquors and beers from outside the Union Territory of Pondicherry, after obtaining a permit from the Licensing Authority. He also refers Section 7 of Pondicherry Excise Act 1970, wherein, there is a bar to import intoxicant except under a permit granted by the Deputy Commissioner on payment of such countervailing duty and fees, as may be levied.
12. The Learned Counsel appearing for the appellants submits that the Act and Rules been wrongly interpreted by the plaintiff/respondent and same has been erroneously accepted by the trial Court. The grant of import permit is not by default for all FL-I licensee. Furthermore, the plaintiff having caught for forging import documents and facing criminal prosecution, even if the plaintiff had been later acquitted, it does mean that, he is entitled for the import permit or entitled for _____________ Page No.7/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 any damages for not granting permit. The issue of license and permit is the prerogative of the State, governed by the Act and Rules.
13. Section 7 of Pondicherry Excise Act, 1970, deals with 'Import of intoxicant', which reads as below:-
7. (1) No intoxicant shall be imported except under a permit granted by the Deputy Commissioner on payment of such countervailing duty and fees, as may be levied by or under this Act and on such other terms as may be prescribed:
Provided that the Deputy Commissioner may, subject to such restrictions and conditions as may be prescribed to ensure the collection of countervailing duty, permit the import of any intoxicant without the payment of the countervailing duty:
Provided further that no countervailing duty shall be payable on any intoxicant which being liable to the payment of duty under the Indian Tariff Act, 1934 or any other law, for the time being in force relating to the duties of customs on goods imported into India, it has been dealt with according to such law.
_____________ Page No.8/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 (2) A permit granted under sub-section (1), may be cancelled by the Deputy Commissioner for breach of any of the terms subject to which it was granted or for any other reason to be recorded in writing:
Provided that no permit shall be cancelled under this sub-section except after giving a reasonable opportunity to the holder of the permit for making any representation against such cancellation and after considering the representation, if any, received.
14. Section 28 of the Pondicherry Excise Act, 1970 empowers the Government through its authority to cancel or suspend a permit granted under the Act. The said section reads as follows:-
28. (1) Subject to such restrictions as the Government may prescribe, the authority granting any licence or permit under this Act may cancel or suspend it,
(a) if any duty or fee payable by the holder thereof is not duly paid; or
(b) in the event of any breach by the holder thereof, or by any of his servants or by any one acting on his behalf with his express or implied permission, of any of the terms and conditions thereof; or _____________ Page No.9/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022
(c) if the holder thereof or any of his servants or any one acting on his behalf with his express or implied permission, is convicted of any offence under this Act; or
(d) if the holder thereof is convicted of any cognizable and non-bailable offence or of any offence under the Dangerous Drugs Act, 1930 (Central Act 2 of 1930) or under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (Central Act 16 of 1955) or under the Trade and Merchandise Marks Act, 1958 (Central Act 43 of 1958) or under section 481, 482, 483, 484, 485, 486, 487, 488 or 489 of the Indian Penal Code (Central Act 45 of 1860) or of any offence punishable under section 112 or 144 of the Customs Act, 1962 (Central Act 52 of 1962); or
(e) if the conditions of the licence or permit provide for such cancellation or suspension at will.
15. Rules 113 of the Pondicherry Excise Rules, 1970, deals with 'Sale of Indian or Foreign Liquors'. This Rule contemplates the conditions under which when such license can be granted.
113. Licences.- Licences for the sale of Indian liquor or foreign liquor or both shall be of the following _____________ Page No.10/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 descriptions, and shall be granted by the Excise Commissioner or Deputy Commissioner, as the case may be, in accordance with the provisions of sub-section (2) of section 14 of the Act, namely:-
(1) F.L.1 Licence:- The holder of this licence shall be permitted to sell foreign liquor or Indian liquor, or both, in quantities of not less than 9 litres in sealed or capsuled bottles 2 [***] at any one time and in any single transaction to any other licensee under this chapter and also in sealed or capsuled bottles in quantities not exceeding [4.5 litres of all liquors other than beer and 9 litres of beer] at any one time and in any single transaction to an unlicensed person. But he shall not allow the consumption of the liquor at the licensed premises:
16. On combined reading of these provisions, it is clear that import of an intoxicant can be done only with valid permit. If the person is convicted of an offence under the Act mentioned in Section 28(1)(d), the permit already granted can be cancelled or suspended. Nowhere in the Act or the Rules, it is contemplated that any person who is holding F.L-I license will be automatically entitled for import permit. More particularly, when the Act explicitly states that if a person is convicted for any of the offence mentioned in Section 28(1)(d) of the Act, the _____________ Page No.11/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 existing license can be cancelled.
17. In the present case, it is not cancellation of the existing license but the refusal to renew the license, in view of pending criminal case. While the Liquor business is regulated by Statute, any violation of the regulation will automatically lead to withdrawal of a permit or license and refusal to renew the expired permit/license. In this case, the business of the plaintiff is not been fully curtailed. Only his right to import been denied by not issuing the import permit.
For that the plaintiff cannot make a imaginary claim of presumptive loss for not granting him import permit. A preposterous claim with imaginary loss been erroneously entertained by the Court below, in spite of specific bar under Section 67 of the Pondicherry Excise Act, 1970 which reads as below:
“67. No suit or other legal proceedings shall lie against the Government or any Excise Officer or any other person empowered to exercise powers or to perform the functions under this Act for anything in good faith done or intended to be done under this Act.” _____________ Page No.12/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022
18. For the above said reason, this Court finds that the Court below has erroneously allowed the suit which need to be interfered for its perversity.
19. Accordingly, this Appeal Suit is Allowed. The judgment and decree passed in O.S.No.32 of 2015, dated 30.11.2018, on the file of Subordinate Court, Mahe stands dismissed. There shall be no order as to costs.
02.07.2025
Index :Yes.
Speaking order/non speaking order
Neutral citation :Yes/No.
bsm
To,
1.The Learned Subordinate Judge, Mahe.
2.The Section Officer, V.R.Section, High Court, Madras.
_____________ Page No.13/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm ) A.S.No.364 of 2022 Dr.G.JAYACHANDRAN,J.
bsm Delivery judgment made in A.S.No.364 of 2022 02.07.2025 _____________ Page No.14/14 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/07/2025 08:45:48 pm )