Patna High Court
Krishna Deo Poddar vs State Of Bihar And Ors. on 20 December, 1991
Equivalent citations: 1992(2)BLJR1398
JUDGMENT Binod Kumar Roy, J.
1. The petitioner prays to quash an order of the Commissioner, Department of Excise, Government of Bihar (Respondent No. 2) as contained in this letter No. 4/MTP 102/88 (Part II}--370, Patna, dated the 16th May, 1990 addressed to the Collectors and the Deputy Commissioners of all the districts, as contained in Annexure-5, as also for holding that the Superintendent of Excise, Samastipur (Respondent No. 4) was not justified in closing and sealing the factory of the petitioner pursuant to the aforementioned order (Annexure-5) specially when the petitioner had submitted fee and forms for renewal of the factory for the years 1989-90 . within time.
2. The petitioner asserts to this effect. He was granted-licence for running factory in the name and style of Madhu Co. at Dalsinghsarai for preparing Ayurvedic and patent medicines by the Excise Commissioner in 1980 and since then he has been doing distillation work. He had also obtained a licence from the Drug Controller. He prepares Ayurvedic medicines like Madhuco's Ras, Madhuco's Anand Ras, Madhuco's Anand Shakti Ras and Anyfee as patent items, and Mritya Sanjivani Ashwarist and Pudina Hare Ark as Ayurvedic medicines. Originally licences were granted under the Drug and Cosmatics Act. Under the Medicinal and Toilet Preparation (Excise Duties) Act and Rules a licence has also to be granted by the Excise Commissioner. Under Rule 84 of the Rules prepared under the aforementioned Act the petitioner deposited fee and forms in the Government Treasury on 14-3-1990 vide Chalan Nos. 1, 2 and 3, dated 10-3-1990 (as contained in Annexure-1) and submitted the application dated 14-3-1990 (Annexure-2) along with chalans and relevant form (Annexure-1/A) in the office of the Superintendent of Excise (Respondent No. 4) for renewal of licence for the years 1990-91. Under Rules 82 and 83 after deposit within time of the fees and forms the licence is deemed to have been renewed and licensee empowered to run his factory after depositing the requisite duty. However, the respondents stopped the distillation work. Under Rule 87 revocation and suspension of the licensee can be made after giving opportunity to the licensee against whom any proposed action is to be taken. The Government has also issued a circular in this regard, as contained in the letter of the Assistant Commissioner of Excise dated 3rd December, 1986 (as contained in Annexure-3). The Superintendent of Excise on 21-5-1990 in view of the order of the Commissioner (as contained in Annexure-5), locked and sealed the factory of the petitioner though raw materials including the Ayurvedic Jari Buti were put the pit and was in the process for fermentation, without giving any prior notice and affording any opportunity. If the factory is not opened soon in that event the raw materials will be spoiled and the petitioner will be put to a great loss. 5,000 kg. Gur and drugs worth Rs. 1,000 arc lying in the factory of the petitioner and he is having recurring loss of Rs. 2000 per day. That apart, 80 technical and non-technical staff, Vaidya and other workers including some daily wages workers would become idle. After deposit of the fee and forms within the scheduled time it was the duty of the Department to renew the licence of the petitioner but the department took long time to renew the licence.
3. In their counter affidavit, the respondents assert to this effect. The prayer is not maintainable as Annexure-5 is a general order relating to renewal of licences relating to Medicine and Toilet Preparation Act for the year 1990-91 which was not meant to put complete ban on the working of the licensed premises as it is to stop only those Ayurvedi Preparations which are capable of being misued as ordinary alchoholic beverages. The Commissioner has asked the Collectors to send proposals for renewal of licences according to law giving instructions to send draft of show cause notice for such licensees against whom irregularity has been detected in course of inspection. The Commissioner being the authority is competent to issue such instructions which cannot be challenged. There is no mala fide intention of the authority to cause any injury to the petitioner. The direction of the Superintendent of Excise (Annexure-4) is also not challengable as he has jurisdiction to stop manufacture of certain Ayurvedic preparations for the reasons aforesaid till the pendency of renewal matter. Renewal cannot be claimed as a matter of right by the licensees when a number of irregularities have been datected aganist them. Explanations furnished by the petitioner has been disposed of. Cases of Sri Moti Ayurved Bhawan and Uma Chemicals Industries cannot be compared with that of the petitioner on the same footing inasmuch as the petitioner was asked to show cause in regard to the irregularity which has been detected against him and after receiving his explanations it was found that his licence is not fit for renewal. The Collector, Samastipur after enquiry has also intimated vide his letter (as contained in Annexure-32) that his licence is not fit to be renewed. The petitioner has got no Drug licence after 31-12-1983, which is evident from the letter (as contained in Annexure-33) dated 18-4-1990 of the Drug Controller of Bihar, which is an essential condition under Rule 94. He does not possess valid licence since 1987 to 1988. The petitioner has not moved the State Government in appeal. The petitioner has not been adversely affected as some stricted Ayurvedic medicines were not allowed to be manufactured during the pendency of the renewal of the licence. The show cause notice issued to the petitioner shows that he has violated a number of terms and conditions of the licence as well as the Medicine and Toilet Preparation Rules. Grant of licence does not mean that it has to be renewed from year to year as a matter of course and the authorities competent to call for any information relevant to the licences can refuse renewal on valid grounds. The licensees who have not violated any terms and conditions have been allowed renewal whereas those against whom irregularities have been detected or who have been violating the terms and conditions of the Rules have not been favoured with renewal during the pendency of their show cause. The petitioner has no fundamental right to deal with articles containing alchohol which is capable of being misused as ordinary alchoholic beverages. The order of the Excise Commissioner is not violative of Articles 14 and 21 of the Constitution of India. The petitioner has not been stopped from operating from manufacturing other medicinal preparations.
4. Through a supplementary application dated 23-11-1990 filed on 28-11-1990 the petitioner prays to quash the orders dated 9-11-1990, as contained in Annexure-8 and 12-11-1990, as contained in Annexure-9, by which renewal applications of the petitioner for the years 1987-88, 1988-89, 1989-90 and 1990-91 were rejected. It has been asserted therein that the petitioner has already worked as manufacturer of medicines and if renewal of his licence for the aforesaid years is refused in that situation the respondents have to refund the entire excise duty which have been charged/received from him. The aforesaid orders are arbitrary, mala fide and contrary to law. The petitioner having already deposited the fees and forms within time renewal of his licence for the Excise and Drug should be deemed to have been renewed. For the reasons best known to them they have not renewed and passed final orders since 1987. In his show cause (as contained in Annexure-9) the petitioner has categorically denied the allegations levelled against his factory. In regard to the allegation that 150 litres of hot fermented was recovered, he has stated in his show cause that the pass of Madhuco Ras was given and which was under distillation which was seized in the presence of Bond Officer saying that it was Mritsanjivani Sura, as both medicines are prepared out of the same kind of material hence it is difficult to state that the seized article was not Madhuco Ras. Up till now no chemical report has been submitted and that apart from that no sample was taken as required under Rule 33 of the Rules. The Excise Commissioner was not correct in saying that the material of Madhuco Ras is intact rather the material of Mritsanjivani was intact is evident from Sandhan Panji. It is significant to point out that the Bond is under a double lock and key system and accordingly the distillation cannot be done without opening the lock by the Bond Officer.
5. Through a supplementary affidavit, filed on 6-8-1991 it has been further stated by the petitioner that his entire factory has been locked and sealed and hence he is not in a position to manufacture alchocholic medicines even though only distillation of alchoholic medicines should have been stopped.
The submissions:
6. Mr. Parimal Chandra Das, learned Counsel appearing on behalf of the petitioner, submitted that the petitioner was having Excise Licence upto the year 1986-87 and thereafter he deposited fees and forms within the stipulated time every year but his applications for renewal rejected belatedly by order dated 9-11-1990 (Annexures-9 and 10). The petitioner has also obtained Drug Licence upto the years 1982-83 and thereafter deposited fees and forms within time upto 1990-91 but no order was passed. In that situation the Drug Licence will be deemed to have been renewed. Anomaly has arisen because the factory of the petitioner has run upto May, 1990. Irregularities have to be dealt with under the provisions of Rule 123, 124 and 125 but instead of dealing with the said irregularity under those Rules, heavy punishment has been inflicted by refusal of the renewal of licence. The Commissioner has renewed licence of B. M. Company, Hazaribagh which was having some irregularity. The petitioner was preparing medicines under the supervision of the Bond Officer posted in the factory who was having one lock and key. The distillation was done in the presence of the Excise authorities as well. There was no complaint from them that distillation was done without having permission and by breaking the lock and key. It was not possible for anyone to show as to whether Mrit Sanjivani and not Mandhuco Ras was being prepared as alchoholic strength of Madhuco Ras is 65% to 80% whereas the alchoholic percentage of seized unfinished material was mentioned 66% of the alchoholic strength. Since the distillation was being done with the permission of the Superintendent of Excise there was no question of violation of any Rule. The provisions under the Act and Rules are similar to that of Essential Commodities Act. While interpeting the latter Act in AIR 1960 SC 43 (SC) it was held that licences would be deemed to be renewed if fees and forms are deposited within time. Reference was also made to the decision of this Court in C.W.J.C. No. 4739 of 1990-Prem Nath Singh v. The State of Bihar and Ors. decided on 23rd September, 1991 by bringing this case under the heading 'to be mentioned' after the judgment was reserved.
7. Learned Additional Advocate-General No. 1, on the other hand, had submitted that the writ application has become infructuous for the reason that the period for renewal asked for has already expired. Alternatively he submitted that in so far as the question of refusal to renewal licences for the period in question is concerned, merit of the claim need not be gone into as it is all academic. So far as period 1990-91 is concerned, the matter is pre-mature as no order of rejection has been passed as yet. In regard to the merits he conceded that the matter has to be considered afresh on its own merits and not on the basis of earlier refusals. He had further submitted that merely because Drugs Act contemplates that a licence is valid for a particular period i.e. to say six months and for any subsequent period, there is no provision in the Act or the Rules that an application for removal will mean ipso facto renewal.
Findings:
8. This Court in Prem Nath Singh's case (supra) held that before passing an adverse order on the renewal application it was necessary to give an opportunity of hearing. This was emphasised further in view of the fact that an applicant licensee can expect that his licence in ordinary case will be renewed. This Court also took into account the practice said to be prevalent in the department of Excise, in not passing any order on renewal application within time and did not approve the same. Rule 83 of the Rules were considered and it was emphasised that an appropriate order should be passed within one month of the application. This Court also took into account that a licensee cannot be left in a state of uncertainty in knowing as to whether on expiry of the licence period be has to stop his business or to continue or he may continue to carry in the hope that it will be renewed and if a decision is taken after a lapse of considerable time in that event he cannot be said to have violated the provisions of the Act and Rules making him liable with retrospective effect after holding that no person can claim as a matter of right renewal of his licence and that every renewal is a fresh grant. I am in complete agreement with the views aforementioned expressed.
9. For the reasons aforementioned, I allow the amendment prayed for by the petitioner.
10. I, however, agree with the stand taken by the respondents in the counter-affidavit that by Annexure-5 the Commissioner had not directed postponment of grant of licence or manufacturing proceses of such Ayurvedic medicinal preparations pending renewal of the licence which are not capable of being used as alchoholic beverages.
11. The writ application is allowed in part. The impugned orders are quashed and the matter is remitted back for passing a fresh order on the question of renewal applications filed by the petitioner after giving him an opportunity of hearing.
12. Thus, the respondents are directed to open the factory of the petitioner if it is closed.
13. Till final adjudication, the petitioner will carry on manufacturing processes under the supervision of the Excise Officers and after complying with all other requirements prescribed under the Rules and such other directions which may be issued to him from to time.
14. In the peculiar facts and circumstances, there shall be no order as to costs.
I.P. Singh, J.
15. I agree.