Kerala High Court
Vijayabhanu vs State Of Kerala on 22 November, 2005
Equivalent citations: 2006(1)KLT140
Author: K.S. Radhakrishnan
Bench: K.S. Radhakrishnan, K.T. Sankaran
JUDGMENT K.S. Radhakrishnan, J.
1. Rule 6(26) of the Kerala Abkari Shops (Disposal in Auction) Rules 1974 whether could be used as a shield by the State when they are at fault is the question that has come up for consideration in this case.
2. Petitioner was one of the joint bidders of toddy shop Nos. 1 to 90/2000-2001 of Chittur Range. They bid the shops for an annual rental of Rs. 2,33,01,000/- and the sale was confirmed in their favour. Thirty percent of the bid amount was deposited as security. The Asst. Excise Commissioner granted licence to them to vend toddy in 90 shops of Chittur Range for the year 2000-2001 and they started business from 1-4-2000 onwards. On 6-5-2000 the Excise Enforcement and Anti-Narcotic Special Squad of Thrissur and Excise Range party of Chittur had conducted a joint raid at the toddy depot granted in the name of the petitioner and other joint bidders and booked a case for possession of 26170 litres of toddy as against the permissible quantity of 12675 litres of toddy, about 5 Kgs. of a paste like substance used for manufacture of artificial toddy and 55 Kgs. of Sugar in addition to 10 vehicles loaded with toddy. Case was registered as Cr. No. 11/2000 under Section 55(a), 57(a) and 57A(i)(iii) of Abkari Act against petitioner and other joint bidders as well as their 5 employees. Excise Commissioner thereupon directed the Asst. Excise Commissioner, Palakkad to cancel the licences of toddy shop Nos. 1 to 90/2000-2001 of Chittur Range as per Rule 6(30) of Kerala Abkari Shops (Disposal in Auction) Rules, 1975.
3. Petitioner and others aggrieved by the order had filed O.P. 13562/2000 challenging the cancellation order. This court quashed the order and directed the second respondent to pass final orders after hearing the licensees. Excise Commissioner on hearing the parties passed order dated 18-7-2000 setting aside the order dated 9-5-2000 passed by the Asst. Excise Commissioner and permitted the petitioner and others to open the toddy shops for conduct of the business with immediate effect. Because of the illegal order passed by the Asst. Excise Commissioner the toddy shops could not be conducted for 76 days, ie., from 6-5-2000 to 20-7-2000 on account of the cancellation of the licence and they preferred representations before the Commissioner and Government for remission of proportionate kist for 76 days. However, the request was rejected by the Government by order dated 17-5-2001 stating that as per Rule 6(26) of Kerala Abkari Shops (Disposal in Auction) Rules, 1974 no remission or abatement of rental shall be claimed by the licensee on any account whatsoever. Aggrieved by the same petitioner has approached this Court. Learned single Judge found no reason to interfere with the order passed by the Government and rejected the request of the petitioner. Aggrieved by the same this appeal has been preferred.
4. Senior counsel appearing for the appellant submitted that Government was not justified in relying on Rule 6(26) as a defence to defeat the request of the petitioner for remission of the proportionate kist. Counsel also submitted since licence was illegally cancelled for a period of 76 days from 6-5-2000 to 20-7-2000 Rule 6(26) would not apply and the petitioners are entitled to remission of kist. Counsel also submitted no power has been conferred on the rule making authority either under Section 18A or under Section 29 of the Abkari Act to reject the claim of the petitioner since he could not conduct the business not due to his fault but because of the illegal order passed by the Assistant Excise Commissioner.
5. Learned Government Pleader on the other hand contended that whatever be the reasons which led to the cancellation of the licence, in view of Rule 6(26) the licensee cannot seek any remission or abatement of the kist amount. Learned Government Pleader submitted that the revival of shop licences by the 2nd respondent ordered as per order dated 18-7-2000 would not give any right to the petitioner and other licensees to default payment of kist even for a single day and hence there is no question of remission or abatement of the rental.
6. Petitioner and the other licensee could not conduct the shop from 9-5-2000 to 17-7-2000, not due to the fault of licensee but because of the illegal order passed by the Assistant Excise Commissioner. Cancellation order was passed without giving an opportunity of being heard to the petitioner or others. Order was quashed by this Court stating as follows:
In these circumstances, I am of the view that Ext.P2 has to be struck down. I do so. It is, however, made clear that nothing contained herein will stand in the way of the Commissioner proceeding in accordance with law after affording an opportunity to the petitioners to present their case in the matter. It will be for the Commissioner to take into account all the submissions of the petitioners including that appropriate reduction in the kist be allowed for the days when the business could not run in consequence of illegal cancellation of licence. Status quo, as on today, will be maintained until the Commissioner passes fresh orders as directed above.
Commissioner later passed an order dated 18-7-2000 setting aside the order passed by the Asst. Excise Commissioner, the relevant portion of which is extracted below:
Taking all these facts into consideration, I set aside Order No. P5-3930/2000 dated 9-5-2000 of Asst. Excise Commissioner, Palakkad. Permission is granted to the petitioners for opening the toddy shops and conducting the business in Chittur Range with immediate effect. All the vehicles will be released to the owners. The licensees shall take all necessary precautions to see that their depot will function only from 8 a.m. to 7 p.m., no excess stock of toddy will be kept in the depot and no mixing or blending of toddy will take place and that they will strictly observe all the conditions in the licence.
Licensee could not conduct the shop for 70 days from 9-5-2000 to 17-7-2000 not due to their fault but because of the illegal order passed by the Assistant Excise Commissioner, so found by the Commissioner. In a case where the mistake is on the part of the State themselves, Rule 6(26) cannot be used as a shield and vice versa. On the contrary if the licensee is at fault and the shops could not be conducted, Rule 6(26) could be put as a shield against the licensee. Apex court in Isaac Peter's case (1994 (1) KLT 698) in paragraph 16 of the judgment held as follows:
Now, coming to the licencees' right to claim rebate/remission/abatement, Rule 6(26) says that no remission or abatement in the licence fee shall be "claimable" by the licencee "on any account whatsoever". This sub-rule should no doubt be read along with Rule 8(1), which sets out the only situation in which the duty and commission payable will be adjusted. (Of course, where the Government fails to1 perform its statutory obligation e.g., if it fails to supply the monthly quota referred to in Rule 8(1) it may not be open to the Government to invoke Rule 6(26). In such a situation, it is not possible to say that in addition to the situation contemplated by Rule 8(1), there are other situations also wherein such rebate/remission or adjustment is permissible. Not only the conditions are statutory in this case but they are formally drawn in the shape of statutory Rules. In such a situation, it would not be permissible to say that there was some other condition or term agreed upon or implied between the parties which is not found therein. Moreover any implied term should be consistent with the express terms of the Contract and not otherwise.
Section 18A of the Abkari Act deals with grant of exclusive or other privilege of manufacture, etc, on payment of rentals, which does not confer any power on the Government to forfeit the kist deposited by persons. Section 29(2)(r) however, enables the rule making authority to frame rules for the forfeiture of whole or any portion of the kists deposited by persons who purchase the right to sell toddy, arrack, foreign liquors or ganja notwithstanding the provisions to the contrary contained in the Indian Contract Act, 1972 in addition to damages recoverable by Government on account of the breach of conditions of sale laid down by the Government from time to time. It is in exercise of the powers conferred under Section 18A read with Section 29 the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 was framed. Right to forfeit the amount is contained only in Rule 5(10), (15), (19), Rule 6(27), (33) and (34). If any person commit any default it is always open to the rule making authority to invoke the above mentioned rules. Department has no case that petitioner had violated any of the above mentioned rules so as to forfeit kist. Further, they have no case that on account of breach of conditions any amount by way of damages are recoverable from the petitioner. Therefore, the sole ground on which the request for remission of kist amount was rejected is under Rule 6(26). We are of the view, department has got the right to retain the amount under Rule 6(26) only if the petitioner has violated the terms and conditions of the licence and they have no case that the petitioner has violated any of the conditions prescribed in the Act and Rules. They could not conduct the shop because of the illegal order passed by the Assistant Excise Commissioner, which was later cancelled by the Commissioner. Under such circumstance, the principle laid down by the apex court in Issac Peter's case would apply to petitioner also. We may also refer to the Division Bench judgment of this Court in Rajagopalan Nair v. Asst. Commissioner of Excise 1989(1) KLT 800 wherein this Court took the view that proportionate remission can be granted with regard to the payment of rental during the period one is prevented from conducting the business. The above decision was followed by another Division Bench in Jayadevan v. Board of Revenue 1999 (1) KLJ 87.
Under the above mentioned circumstance we are inclined to allow this Writ Appeal. Judgment of the learned single Judge is set aside. Ext.P5 notice would stand quashed to the extent of recovery of the kist for the period from 9-5-2000 to 17-7-2000. Request of the petitioner for remission of kist amount for the period from 9-5-2000 to 17-7-2000 therefore is justified. Exts.P3, P4 and P5 would stand set aside.