Karnataka High Court
Sri Kumaraswamy V vs The State Of Karnataka on 31 August, 2010
Author: Ashok B.Hinchigeri
Bench: Ashok B.Hinchigeri
IN THE HIGH COURT OF KARNATAKA AT BANGALORE.»
DATED THIS THE 31" DAY OF AUGUST 2OIO7 V
BEFORE
THE HON'BLE MR. JUSTICE ASHOK BIIAHI'!'\.|CI;.l"I:(C;;V:vE_;?-EIE
wRIT PETITION NO.25329 ofE'2O1*OE IIEXCISE3. ", "
C/W WRIT PETITION No.256,114_/2010 BI 2573'7>:;_9_"/_:_I_,_I;
AND C/W WRIT PETITION
W.P.NQ.2§32Q[1Q:
BETWEEN:
SRI KUMARASWAMY\:'1__ ' _
S/O VENKATARAJUJ4"i:=_-' "
AGED ABOUT 37_YE'fi\RSj_,.g'. 'N .;
FORMERLY AN EXCISE'_CONTRACTQ'R*
No.43, 15"' STAGE 'D2533 CF;QSS._R~QAD'
OKALIRURAMV ., I
BANGALORE?-__-- 550 _ A PETITIONER
(BY SRI_M'R_ .'i4V\i.*'1.\_I'i<€:',::_"..SENIOR ADVOCATE
I FOR M/S NAIK & NAIK LAW FIRM)
1. THE' S"TATEa_OF* KARNATAKA
REPRESENTED BY ITS SECRETARY
I FINANCE ANDf,E'XCISE DEPARTMENT
_VIDHA'NA"----SO'UDHA
% BANGALORE 560 001
." THE. ESICISE COMMISSIONER FOR THE STATE
__f\_!O£<KALIGARA SANGHA BUILDING
E I<IITUR RANI CHENNAMMA CIRCLE
E --«._BA'NGALORE
I...
3. THE DEPUTY COMMISSIONER FOR EXCISE
TUMKUR DISTRICT
TUMKUR
(BY SRI R DEVDAS, AGA)
THIS WRIT PETITION IS FILED UNDER ARTICLES EZEQANDCVV' I
227 OF THE CONSTITUTION OF INDIA PRA'{Il\J_DG'ETO_ 'DECLARE
THAT, THE COMPUTATION MADE, COMPLITINGTNTHE AL'i_.EGED
EXCISE ARREARS, WITHOUT GIVING BENEFIT OF--?1THE CR;ED"IT_"*
OF FORFEITED SUNS AS ILLEGALAND; CO"!\JSEQUENT_LY'wQUASH"I
THE IMPUGNED COMPUTATION AS"P.ER THE' PROCEEDINGS OF
THE EXCISE COMMISSIONER DATED O9.DO3.D'20O2G'(ANNEXURE D)
AND ETC. A I _
BETWEEN: A
T RAGHAVENDRA
S/O M THIMME_GOWDA1.;____ C.
AGED 35 YEARS_ _ I
No.65, VANI:Dv_VILASA"§i.:OAD I
BASAVANAGUDI. _ ,
BANGALORE - ;a=5_O 004 D A PETITIONER
" (BY SRI'1~MV:R NAIR, SENIOR ADVOCATE
~~E_0R M/SHEGDE ASSOCIATES)
AND{=I
STATE OF KAR*NATA KA
. REPRESENTED BY ITS PRINCIPAL SECRETARY
I 'FINANCE AND EXCISE DEPARTMENT
.VI'D:H.ANA" SOUDHA
"«BA.NGA.LORE 560 001
I EXCISE COMMISSIONER
I STATE OF KARNATAKA
,"VOKKALIGARA SANGHA BUILDING
SECOND FLOOR
KITTUR RANI CHENNAMMA 3CIRCLE
BANGALORE
3. THE DEPUTY COMMISSIONER
MYSORE DISTRICT
MYSORE
4. THE DEPUTY COMMISSIONER
CHAMARAJANAGAR DISTRICT
CHAMARAJANAGA ...RESI?Q'N'E)E:N:TS.: _
(BY SRI R DEVDAS, AGA)
THIS WRIT RETITION IS FILED UNDER..ART'I.CLES--._2'2.6..ANDI
227 OF THE CONSTITUTION OF INDIA PRA_YI'NG TO' -CALL
THE RECORDS AND DECLARE THATTHE 'CO'MRUTATIO,N MADE,
COMPUTING THE ALLEGED EXCISE A_RR_EARS,._WITH-OUT"G'IVING '
BENEFIT OF THE CREDIT OF FORFEITED' SUMS 'AS"ILLE'GAL AND
CONSEQUENTLY QUASH THE,IMPUGN-ED.COMPUTATIf3N AS PER
THE PROCEEDINGS OF THE 'EXCISE . LCQMLLMISSIONER DATED
11.06.2010, 1L1_.o6.,2b1'O,_ L14,.1OS.":01.OS AND 14.06.2010 As PER
ANNESK, K1', K2'AN:D_ K31;LAI-LT~REsEPECTIvELY AND ETC.
wan PETVITIQN""NgV_".26'.§#gS[i"Q:TV:
A. .....
SPR'--'GROU'RHO:LDIN:G'S PVT LTD
A COM PA'N_Y I'NC_O.RPO'RATED UNDER THE
'*-COMPANIES ACT' 1956
No.34/2, "ST" 1'-MAIN, GANDHINAGAR
A -...B!\.I\!G.ALORE'=-,V5'60 009
_ .REPRESENTED'' BY THEIR MANAGING DIRECTOR
TTHI'MME"GOwDA S/O LATE MUTFHEGOWDA
'»r._AG.E;D ABOUT 63 YEARS PETITIONER
I "(SY:SRI M.R.NAIK, SR. ADvOCATE., FOR
SRI D.R.RAVISHANKAR FOR M/S.LEX NEXUS)
AND'
1. THE STATE OF KARNATAKA
REPRESENTED BY THE PRINCIPAL SECRETARY
TO THE GOVERNMENT, DEPARTMENT OF FINANCE
AND EXCISE, VIDHANA SOUDHA
BANGALORE 560 001
2. THE COMMISSIONER OF EXCISE IN KARNATAKA. ~ _
VOKKALIGARA SANGHA BUILDING I
RANICHANNAMMA CIRCLE '
BANGALORE--56O 001.
3. THE DEPUTY COMMISSIONER
RAMANAGARAM DISTRICT-» ,
RAMANAGARAM '-
I R. TA ..A})
THIS wRIT'PETITION IS~..FILED UNDER ARTICLE 226 AND
227 OF THE CONSTITLFTION, OE INDIA PRAYING TO QUASH THE
ORDER DATED 17.1D,2OD5"RRO.DUCED AS PER ANNEXURE--E
PASSED BY TH'*EAT.§A15T RESPONDJENT, CONFIRMING THE ORDER
DATED 27_..1_1.200'1._PASSED BY THE 15"' RESPONDENT VIDE
AN.NExUR.E;C TO THE» EXTENT OF FORFEITURE OF THE EMD MADE. BY» THE PETITIONER IN RESPECT OF RAMANAGARAM, CHAN»NAPA'i'NA'«.I-RND.__KANNAKAPURA TALUK FOR THE EXCISE vEARAIT2'0O14o2T;».._A ~ THESE INRITPETITIONS COMING ON FOR PRLY. HG. IN 'B' A ~ 5G,R.OUTPA THIS DAY, THE COURT MADE THE FOLLOWING: 5
QBDER The petitioners are ali former excise contractors. The Government of Karnataka has come out with a scheme cailed 'Kara Samadhana Scheme-3' which provides for the waiverggof interest on the payment of the principai excise V. petitioners' grievance is that the earnest money:
forfeited to the State are not being :give"n*ariy -:crebitV.vvi:iiile""t computing the petitioner's iiabilityn, Dema_ncii'_ng tha_tpthe'~ be given for the forfeited earnest:"money*i._depositsj,%"these petitions are instituted.
2. Sri Counsel appearing on behalf of whiie computing the loss, the respondentsllhave.VnptAact'ed in the light and spirit of this Ci-'5tiri;'.S o'ir&er,§s:ir..i. .lthe""caisei' of GURUVAMMA v. STATE or KAi%'i\l_.fli'i;A'i{£§;»i:_rep'o.rte§l in 2007 (3) AIR Kar 99, wherein it is tha't,__thev_co'mV_putation of loss cannot be by exciuding the
--.d.lfamo'u..nt which":. has been received by the State by way of {~.'forfeiit_ure "of the amount of the bidder or in any manner. The . Viealrnedlgisenior Counsei further submits that the said order of the fl_""i»ea_;'nf':1ed Single Judge is confirmed by the Division Bench of this HEX.
6 Court by its judgment, dated 21.01.2008 passed in W.A.No.1298/2007.
3. Sri Naik further submits that the order as passed by the learned Singie Judge and as confirmed by the Division,.V0E£en.ch have attained finality. Therefore the respondents recompute the petitioner's iiability by giving forfeited earnest money deposits.
petitioners have suffered enormous»i'iosses.V"2,
4. The learned Advocate General, -Sari Asmjiki Hairanahalli appearing for the respondent?'"'t!fi§£.,.r_l'Ie forfeiture of amounts on 'committed by the petitioners is independentlyfllofy tiie""Ex.c:i'se'4'Commissioners obligation to compute uE.osses"' recover the said amount from the cont_racto_rs have defauited. He "submits that the act of forfeit'in_g"l'.._the' money has nothing to do with the Government rnaking profit or incurring loss on account of the re- of the vending right of arack.
.0 "fhe learned Advocate General further submits that th~ere'"i"s no analysis of Rule 19 and 20 of the Karnataka Excise HS!-1!.
(Lease of the Right of Retaii Vend of Liquors) Ruies, 1969 ('1969 Rules' for short) in the orders passed by the Iearned..Si'r1g_Vi_e Judge and the Division Bench. The said Ruies hereinbeiow:
"19. Adjustment of deposits~:=.._(1)---All it unless forfeited in accordance _with"these rules. shall be adjusted towards the finalrnonthlylh rents by the person to whom;_.licences..a're_issued} H Provided that the Excise" co'mt::i:;¥sis;at=;-'rig may, if he considers it expedient, p_errnit-l".thléVlv of one and a half monthfsl-casih under Rule 13 towards ofof theflast months of the [ease C Provided further not exceeding one month's rent retained by the Deputy Commissioners. ._tlie" v.éxcise Commissioner for a perioldl' not exceeding three months after the expiry "of'the léfaseA~period"'in'order that adjustment towards may be found due to the State tinder these rules may be made and the said' arnoun't of any part thereof as are not adjusted shall be " refunded on the licensee producing a 'no V":V'_A'¢:iue"'g.«certificate issued by the Deputy Commissioner or the concerned.
I939.
(2) It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind'_'>:.""._ the contract. ' l' (3) It is part of the purchase price when the transait=tion"V~' is carried out. . V} _ _ (4) It is forfeited when the transaction reason of the default or failure of thAe.purchaser._l.A * . «. "
(5) Unless there is anything to thleLCe.ntrar'y' in of the contract, on default cornjrnititecly by't'i'i.él.:lauyer, the seller is entitled to 'fo'i'feit
7. He also brin.gstitQ.my:'_ nqtliflce t.hAa~t'.jEhV€' pVjetitioner's request for the refund of down long ago,
8. Sri learn.e__d--Senior Counsel appearing on behalf of the petigtlioners the lis between the former Excise Cogn_tra'ctors a'nd_:)the Government in these petitions is not tot'-forfeiture _vof?y.th4e«...amounts. The grievance in these petitions revoE\i'eS"'l'rQxuf:d""_..the:;"Computation of the loss incurred by the Vfléoxzernment, aiso submits that the prayer (a) in is independentiy of the prayer (b). The it'll.'=:pe'tiitio"ners"grievance over the computation formula adopted by lti:e:'Excise Commissioner is that it is not in keeping with the passed by the learned Single Judge in W.P.No.42013/99 as REM i0 confirmed by the Division Bench in W.A.No.1298/2007. He also submits that the Ruie 19 of the said Rules has been expressiy considered by the learned Single Judge in Smt.Guruvamrira's case (surpa). He further submits that by impiication the said Ruies is also considered, though with.o_ut..::.e>€pre4ssiy~'..:_ V' mentioning it.
9. Sri R.Devdas, the Eearned AdditionalTleomlnrrlelntiv. Advocate submits that the Excise Co'rtimission'e.r's'to-irdeej, dated 9.8.2002 is impugned in i.r3ft.er~--leightVvyears of its passing. He further submits that chailenged by way of revi'sioin;ii, jlwhen 'the"'l§.evision Authority has dismissed the"revi.sion. passed by the Revision Authority in §200€x~l'i'sinct Vc'hali-enged. Additional Government Advocate submits that the column 5 of the application under the Sam'adhan'a'viScheme--III is that "Type of principal amount AA4_AA§4!§]'7fSiR;'TFR/6TH/DDA/LOSS." Therefore, the petitioners' "V7_'--.applica'tiVo'r5:and the respondents' consideration thereon has to vl.V__ilnclu'd'e"the ioss. He submits that the Kara Samadhana Scheme- is a beneficial scheme. It has no compulsive element HFEH.
ii whatsoever. It is open to the petitioners not to avail of the speciai scheme and have the lis pertaining to theirvi»-dues concluded in the reguiar proceedings. He also submi§ts"t*h'a-tr: _ Rule 19 and 20 of the said Rules areynot iearned Singie }udge. He submits that oncefthe.1de'po's'its.___a'reiA forfeited, the amounts cannot be adju_sted"'at"ail. ri"fha:t.:4forfeited amounts cannot be adjusted or __refu_ricled emphatic submission of Sri Devdas.
11. In the coursej'«of submits that the outcome of made known to the majority or tiie case, the Revision Authority order on the revision petition and in thesaid ca'seV_'(W:,P.li§ioi2€iS42/10), the order passed by the Rjevi--sion'-Ltuthoritvy is a'iso'~~el'iallenged. of the Kara Samadhana Scheme--I_II reveals that beneficial scheme intended to give reiief in interest and penal interest, provided the defauiters pay, tllvieliprincipal dues. Ciause 1 of the scheme only speaks of V T the payment of the entire principal amount so due as refiected in books of account of the Excise Department. It does not HRH.
I2 provide for or prescribe any method of computation as such. The liability of the defauiters is as shown in the books of account. Clause 1 of the said scheme is extracted i1ereinbeiow:~ "1. Under the Karasamadhana Schemeniii,V~.a-.._4'_l'~._ defaulter who is in arrears of payment of excise""diJ¢:S'__i' , "
pertaining to period prior to 30-06-2007 ano'~«.__'co.r_nesi' forward to pay the entire principaihlam_o'unt;'so"'d.iie 'asp:
reflected in the books of account of the i;--fxcisfje 'i3epa'rtrnentteA_ V A f shail be eiigibie for waiver of up.to--datea_in'terest pertaining*:.' it to the principal payable under Ring 15 "of__the_V Karnataica Excise Licences (General Conditions} Rtiies, 196?, I
13. It is not in disputebthat the:sAimi_l_a.rA'schemes livere also issued in the'lp'asi'Ati)~iice;'::fT'i1ey~.stood "_t'he'test of time.
14. Column No.;5*ij_r;l._t'he:"application prescribed under the scheme reads als"foilo,w-s:A"v. V""'C')Vutsta3gn amount of arrears ' it " are péttavi--ni'ngt.,to iprinci.pai"i TWo"asteriskslgiven to Column No.5 with the "Type of principal amount ms R/TS'R,/fl"TR/OiiifiJi§DA/LOSS.
Nvo__A'3chalienge whatsoever is raised to ciause 1 of the column 5 of the application thereunder. In the SSH.
absence of any challenge, no directions can be issued on how to compute the amounts.
16. Further it is doubtful whether the order passed by...the learned Single Judge in W.P.No.42013/99 as confirmed":Vbyjujltihei.V. Division Bench in W.A.No.1298/2007 have retroapectivell"horn prospective effect. If the retrospectivity'effect also have the effect of opening the _Pandora's:_box. l"I--fn<2ay the unsettling effect)as the similarly 'p.l:.a"'i:ed dvefaulters made the demands in response to earlierirltwolvischemes,Arnaydemand the reopening of their cases also..f'
17. As far a§l'£i;.é:'clj'ari.l:énge to the original authority (Excise Commiss'io.ner)'s orde'rs.:_upassed in 2002 and the Revision Aothorityfs'-lgorders st'a"te.d_ ____ to have been passed in 2006 is concerned,-..w~hva't. i':3..ljto.._be noticed is that the challenge is raised :7"a,_after eightviyears"'.jan'dV'four years respectively. The delay and _Vil._ach'eVs also milit.ate against the petitioners. A i~.if':l3.'ll"'--..For all the aforesaid reasons the reliefs prayed for V' be acceded to. However, this does not mean that even if fU~t.he'r'e are some errors in the books of accounts, the petitioners fl?BH.
14 are preciuded from chaiienging the same. But the stage for chailenging the same wouid arise when the decisiommaker passes the order on the petitioners' applications filed in response to the Kara Samadhana Scheme~III. Reserving the iEberty'to'the petitioners to chaiienge the wrong entry and/or wron_g'_"totaii.n§,:_.Ef= _ any, these petitions are dismissed. No order as toe-co_s:tsv."~[: . Bvr/MD