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2000 DIGILAW 299 (KER)

Ancy Chacko v. Commissioner of Excise

2000-06-12

A.V.SAVANT, K.S.RADHAKRISHNAN

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Judgment :- A.V. Savant, C.J. Heard both the learned counsel. 2. This is an appeal against the judgment and order dated 22.5.2000 passed by the learned Single Judge in O.P. 12130 of 2000.O.P. was filed by the present appellant Smt. Ancy Chacko challenging the impugned order dated 12th April, 2000, Ext. PI passed by the first respondent Commissioner of Excise, Thiruvananthapuram purporting to be in exercise of his powers under the first proviso to sub-r.(2) of R.6 of the Abkari Shops (Disposal in auction) Rules, 1974 (for short, "the rules") framed under the Kerala Abkari Act,1 of 1077. Under the impugned order dated 12th April, 2000 the first respondent had accorded sanction "to install the FLI shop No. 70/2000-2001 at Karukachal Panchayat" as per the proviso to R.6(2) of the aforesaid Rules on condition that the licensee will not be permitted to locate the shop outside its schedule limit with effect from 2001-2002. It was further ordered that the shop should be located in the schedule limit with effect from 1.4.2001. 3. Admitted facts are that the appellant is a licensee (FL-3) issued under R.13(3) of the Kerala Foreign Liquor Rules framed under the said Abkari Act. She is conducting a hotel-cum-restaurant in Karukachal Panchayat. She was aggrieved by the order Ext. PI passed by the first respondent allowing the third respondent to shift his FL-1 shop, though initially the said shop was located for about 15 years within the Changanacherry Municipal limits. The notified area of location for the said shop No. 70 is admittedly within the Changanacherry Municipal limits. Hence the appellant contended that shifting of the above shop from Changanacherry Municipal limits to Karukachal Panchayat was wholly illegal and arbitrary and was contrary to the scheme of R.6(2) of the Rules. 4.The third respondent was aware that the auction of shop No. 70 was for the Changanacherry Municipal limits. Under R.6(1) of the 1974 Rules, no licensee of any toddy or foreign liquor shop shall be permitted to sell or possess toddy or foreign liquor or cocobrandy outside the local limits specified in his licence. The limits specified in the licence are the Changanacherry Municipal limits. Sub-r.(2) of R.6 contemplates that no toddy or foreign liquor shop notified in the Gazette under R.4, shall be located outside the specified limits. The limits specified in the licence are the Changanacherry Municipal limits. Sub-r.(2) of R.6 contemplates that no toddy or foreign liquor shop notified in the Gazette under R.4, shall be located outside the specified limits. However, with the previous sanction of the Assistant Excise Commissioner it may be removed from one place to another within such limits. The emphasis is, therefore, on locating the shop within the specified limits, in the present case, Changanacherry Municipal limits. It is further provided that no such shop shall be located or removed to a place within an area declared as a project area. Similarly no toddy shop shall be located within 400 metres and no Foreign Liquor 1 shop shall be located within 200metres from an educational Institution, Temple, Church, Mosque, Burial ground, Harijan Colonies or Tribal Colonies. There are two provisos to sub-r.(2) of R.6 and in this case we are concerned with the first proviso, which reads as follows: "Provided that the Excise Commissioner for sufficient reasons to be recorded in writing and subject to such conditions as he may deem necessary to impose, order to remove from any place, any toddy shop or Foreign Liquor 1 shop to a place outside the limits specified in this sub-rule". 5. This case clearly illustrates the Res Ipsa Loquitor maxim. On 13th March, 2000 the third respondent fare his bid at the auction fully aware of the fact that the auction for Shop No. 70 was for the Changanacherry Municipal limits only. The bid was accepted on the same day. It seems that thereafter the third respondent applied to the Circle Inspector of Excise, Changanacherry on 23rd March, 2000 pointing out that it was difficult for him to locate the shop in the Changanacherry Municipal limits and there was no unobjectionable site which was available to him for locating his FL1 shop. Within a day of this application being made, the Circle Inspector of Excise, Changanacherry promptly made a report to the Assistant Excise Commissioner, Kottayam on 24th March, 2000. The report is obviously in favour of the third respondent to the effect that his request for temporarily shifting the FL1 shop No. 70 from the Changanacherry town to Karukachal town may be considered favourably. 6. The report is obviously in favour of the third respondent to the effect that his request for temporarily shifting the FL1 shop No. 70 from the Changanacherry town to Karukachal town may be considered favourably. 6. The Assistant Excise Commissioner seems to be acted with an electric speed in as much as within a day of the receipt of the report he has made a report to the Joint Excise Commissioner, Trivandrum on 25th March, 2000. The report categorically states that the notified limit for the FL1 Shop No. 70 for the Changanacherry Range is the Changanacherry Municipal Town alone. As stated earlier, the third respondent had given his bid in auction for an amount of Rs. 63,11,Ill/and had remitted 60% of the bid amount as security. He was fully aware of the fact that he was bidding for conducting the FL1 shop No. 70 within the Changanacherry Municipal limits only when he accepted the bid for an amount of Rs. 63,11,111/-. However, the report made by the Assistant Excise Commissioner states that the third respondent bidder had stated that there was no unobjectionable site within the notified limit. The Assistant Excise Commissioner then referred to the report made by the Circle Inspector of Excise, Changanacherry which stated that the contention raised by the third respondent about the non-availability of an unobjectionable site in Changanacherry Municipal limit was true. The report concludes with an observation that the bidder was willing to shift the said shop when an unobjectionable site would be available in the Changanacherry Municipal town. It is in these circumstances that the Assistant Excise Commissioner made a report that the case of the third respondent may be considered favourable under R.6(2) of the 1974 Rules and Foreign Liquor Rules 13(1). 7. It appears that on the basis of the above report, the first respondent Commissioner has passed the impugned order on 12th April, 2000. A perusal of the said order shows that beyond stating what the report of the Assistant Excise Commissioner was there is absolutely no application of the mind by the first respondent. The first para of the order refers to the facts and the claim made by the third respondent licensee and the report made by the Assistant Excise Commissioner. A perusal of the said order shows that beyond stating what the report of the Assistant Excise Commissioner was there is absolutely no application of the mind by the first respondent. The first para of the order refers to the facts and the claim made by the third respondent licensee and the report made by the Assistant Excise Commissioner. The second para which is the concluding para is the order subject to the condition that the licensee will not be permitted to locate the shop outside its "schedule limit" with effect from 2001-2002. 8. Counsel for appellant Sri M C John reiterated the contentions and urged that there was no sufficient ground to exercise the power under the first proviso to R.6(2) of the Rules. Counsel has got a further case that Commissioner of Excise has no jurisdiction to issue Ext PI order in exercise of the powers conferred under the first proviso to R.6(2) of the Kerala Abkari Shops (Disposal in auction) Rules. Counsel for the third respondent, Sr. C.C. Thomas, tried to sustain the judgment of the learned single judge. 9. In order to appreciate the rival contentions, it is necessary to examine the scope of R.6(2) and its provisos and Rr. 3 and 4. R.3 authorises the Government to sell the privilege of vending toddy, and foreign liquor for any period in all or any of the independent shops from time to time within the tracts or taluks to be notified in the gazette, by way of public auction either shop by shop or in lot or lots by any Member of Board of Revenue or by the Collector of the District or by the Deputy Commissioner of Excise or by any officer authorised by the Government or the Board of Revenue in that behalf. Chapter III of the Rules deals with the number, location and schedule of shops of which we are concerned with R.4 which is extracted below: "4. The number of independent toddy and foreign liquor I shop in each of the tracts or taluks and also the limits within which such shops are to be located, the period for which the privilege of vending, selling or supplying is to be auctioned and the places and dates of auction shall be notified in the Gazette at least ten days before the commencement of the auctions. (emphasis supplied) Similarly R.13 of the Foreign Liquor rules, which is akin to R.6 also deals with licenses for possession, use or sale of foreign liquor. It provides that the privilege of sale under the said licence will be sold in public auction subject to the condition in the sale notification published by the Government from time to time and also subject to the provisions in the Kerala Abkari Shops (Disposal in auction) Rules, 1974, as amended from time to time. Second proviso to R.13 of the Foreign Liquor Rules and the first proviso to R.6(2) of the Kerala Abkari Shops (Disposal in auction) Rules are pari materia. However in this case Commissioner has admittedly exercised his powers under the first proviso to R.6(2) and we are concerned with the scope of the said proviso. In order to appreciate the scope of the said proviso, it is relevant to examine R.6(1) and (2) as well as the provisos. They are extracted below for easy reference: "6(1) No licensee of any toddy or foreign liquor shop shall be permitted to sell or possess toddy or foreign liquor or cocobrandy outside the local limits specified in his licence. (2) No toddy or foreign liquor shop notified in the Gazette under R.4, shall be located outside the notified limits, but with the previous sanction of the Assistant Excise Commissioner it may be removed from one place to another within such limits. However no such shop shall be located in or removed to place within an area declared as a project area. No toddy shop shall be located within 400 metres and no Foreign Liquor I shop shall be located within 200 metres from an Educational Institution, Temple, Church, Mosque, Burial ground, Harijan Colonies, or Tribal Colonies: Provided that the Excise Commissioner may for sufficient reasons to be recorded in writing and subject to such conditions as he may deem necessary to impose order to remove from any place, any toddy shop or Foreign Liquor I shop to a place outside the limits specified in this sub-rule: Provided further that if any education institution, temple, church, mosque or burial ground comes into existence subsequent to the grant of licence, it shall not disentitle such shops for continuance. Note: (emphasis supplied) R.6(1) prohibits licensee of any toddy or foreign liquor shop to sell or possess toddy or foreign liquor or cocobrandy outside the local limits specified in his licence. In other words, a licensee could sell toddy or foreign liquor, etc., only within the limits specified in his licence. R.6(2) says that no toddy or foreign liquor shop notified in the Gazette under R.4 shall be located outside the notified limits, but with the previous sanction of the Asst. Excise Commissioner it may be removed from one place to another within such limits. However no such shop shall be located in or removed to a place within an area declared as a project area or no toddy shop shall be located within 400 metres and no foreign liquor I shop shall be located within 200 metres from an educational institution, temple, church, mosque, burial ground, harijan colonies and tribal colonies. All the above mentioned provisions, it may be noted, are couched in negative language. When the Legislature has used the negative words, the provision has to be interpreted strictly. When a provision is mandatory, any act done in breach thereof would be invalid. As held by the Supreme Court in M. Pentiah v. V. Veeramallayappa, A.I.R.1961 S.C.1107 negative words are clearly prohibitory and are ordinarily used as a legislative device to make a statute imperative. See also Lachmi Narayan v. Union of India, A.I.R.1976 S.C. 714. 10. First proviso to R.6(2) provides that the Excise Commissioner may for sufficient reasons to be recorded in writing and subject to such conditions as he may deem necessary to impose, order to remove from any place any toddy shop or foreign liquor I shop to a place outside the limits specified in this sub rule. Proviso therefore deals with removal of a toddy shop or foreign liquor I shop, which therefore presupposes existence of a shop. It may be noted before the introduction of distance rule (popularly known as several abkari shops including foreign liquor retail/wholesale shops, Bar, etc., were situated within the prohibited zone, as provided in R.6(2), such as from educational institution, temple, mosque, church, burial ground etc. After the introduction of the introduction of the distance rule Government began to issue successive orders every year permit those categories of shops to be licensed in the prohibited distance. After the introduction of the introduction of the distance rule Government began to issue successive orders every year permit those categories of shops to be licensed in the prohibited distance. At times objections were raised by general public, educational institutions, temple, mosque, church, harijan colonies, tribal colonies, etc. against the continuance of those shops within the prohibited zone and sought for removal of those shops in public interest. In order to meet such contingencies power is given to the Excise Commissioner under the first proviso to R.6(2) to order removal of such shops for sufficient reasons to be recorded in writing. The words "outside the limits specified in this sub-rule" in the first proviso mean the limits specified in the sub-r.(2) that is 400 metres and 200 metres, as the case may be, and not the limits prescribed under R.4. R.4 specifies the limits within which a toddy shop or foreign liquor I shop shall be located as provided in the Gazette notification, prior to the public auction. This reasoning is further strengthened when we look at the second proviso to R.6(2) which says that if any educational institution, temple, church, mosque or burial ground comes into existence subsequent to the grant of licence, it shall not disentitle such shops for continuance. Further the second proviso starts with the expression "provided further". As held by the Supreme Court in Mohan Kumar Singhania v. Union of India, 1992 Supp. (1) S.C.C. 594, where the second proviso begins with the words "provided further" the expression would mean that a strict compliance of the second proviso is an additional requirement to that of the substantive rule and the first proviso. The expression "provided further" spells out that the first proviso cannot be read in isolation or independent of the second proviso, but it must be read in conjunction with the second proviso. On a conjoint reading of both the provisos, we are of the view that the words "outside the limits specified in this sub-rule" mean sub-r.(2) R.6 alone, that is 400 metres and 200 metres, as the case may be, from educational institution, temple, church, mosque, burial ground, etc. and not R.4. 11. The Commissioner of Excise has proceeded as if while exercising power under the first proviso to R.6(2) he could order transfer of a shop from the limits notified in R.4 and also Gazette notification published prior to public auction. and not R.4. 11. The Commissioner of Excise has proceeded as if while exercising power under the first proviso to R.6(2) he could order transfer of a shop from the limits notified in R.4 and also Gazette notification published prior to public auction. Any interference by the Commissioner on the guise of first proviso to R.6(2) by shifting a shop from the scheduled limits notified in the gazette would be in violation of R.4 of the Abkari Shops (Disposal in auction) Rules, and therefore without jurisdiction. Any move of the department to shift the shop from the notified limit prescribed in the Gazette notification after confirmation of auction to a place outside the specified limits will be a fraud on the public. Department as well as licensees whose bid has been confirmed are bound by R.4 as well as Gazette notification published by the Government. 12. we may notice in this connection that Board of Revenue is given certain powers under R.6(3) of the Rules to order transfer of shops from one site to another site or locality on specified grounds. We may refer to the said rule for easy reference: "It shall be competent to the Board of Revenue to order the transfer of shops from one site or locality to another site or locality or to alter the specified limits of any shop even during the currency of the contract or to order any shop to be closed in the interest of public peace or morality or on grounds of expediency and in such an event of transfer, alteration or closure, the contractor shall have no claim for compensation." The above sub rule authorises the Board of Revenue to order transfer of shops from one site or locality to another site or locality or to alter the specified limits of any shop even during the currency of the contract or to order any shop to be closed in the interest of public peace or morality or on grounds of expediency and in such an event of transfer, alteration or closure, the contractor shall have no claim for compensation. This is a power to be exercised by the Board of Revenue in public interest and not at the volition of the contractor. 13. In this behalf we may make a reference to a decision of this Court in W.A. No. 1056 of 1997 decided on 13th November, 1997. This is a power to be exercised by the Board of Revenue in public interest and not at the volition of the contractor. 13. In this behalf we may make a reference to a decision of this Court in W.A. No. 1056 of 1997 decided on 13th November, 1997. That was a case where the bid was made at the auction on 31st March, 1997 for the Abkari year 1997-98. Within a short time, namely, on the 3rd of April, 1997 the bidder made application for shifting the location of the shop outside the notified limits. Within a day of the receipt of that application, that is on 4th April, 1997, the concerned authority recommended the application, as has happened in the case before us. The recommendation was obviously for locating the shop outside the notified limits. In paragraph 12 of the judgment, this Court considered the provisions of R.6(3). The only ground stated in the case was that the contractor could not find out any unobjectionable place within the notified limits. The Division Bench expressed its reservation as to whether the non-availability of an unobjectionable site could be a sufficient ground for exercising the power under R.6(3) of the Rules. In the facts of the case before the Division Bench, it came to the conclusion that the manner in which the recommendation was made raised doubt regarding the bona fides of the claim of the licensee. 14. We may hasten to add the complaint of the licensee that there is no site available to locate a toddy shop or foreign liquor I shop, as the case may be, after the auction is confirmed, is not a relevant consideration at all. It is the look out of the persons who participate in the auction about the availability of sites where shops could be located. If non-availability of a site is taken as a ground for shifting the shop, after auction is confirmed, it would, in our view, go against the very scheme of public auction. We may also notice that there is no provision in the Abkari Shops (Disposal in auction) Rules enabling a licensee to prefer an application for shifting of the shop, after auction is confirmed, from the limits notified under R.4 and also against the limits prescribed in the Gazette notification. 15. We may also notice that there is no provision in the Abkari Shops (Disposal in auction) Rules enabling a licensee to prefer an application for shifting of the shop, after auction is confirmed, from the limits notified under R.4 and also against the limits prescribed in the Gazette notification. 15. We are therefore of the view that Commissioner of Excise has no power or jurisdiction under the first proviso to R.6(2) to transfer an abkari or foreign liquor I shop from the limits notified in the Gazette under R.4 of the Kerala Abkari Shops (Disposal in auction) Rules. 16. Mr. C.C. Thomas, learned counsel for the third respondent tried to contend that the appellant had no locus standi to file the present petition. The appellant is a licensee having FL3 license issued under R.13(3) of the Kerala Foreign Liquor rules. She is conducting a hotel-cum-restaurant in Karukachal Panchayat. The third respondent had given his bid for auction in the Changanacherry Municipal limits and has now obtained an order for shifting the said shop to Karukachal Panchayat and therefore to that extent, her rights are affected. Apart from this, we have already taken the view that the impugned order is without jurisdiction on a plain reading of provisos to R.6(2). 17. In the view that we have taken, we set aside the judgment and order dated 22nd May, 2000 passed by the learned Single Judge in O.P. 12130/2000. Consequently, the impugned order dated 12th April, 2000, Ext. PI in the O.P. passed by the first respondent is hereby quashed and set aside. Appeal is allowed accordingly. 18. At this stage, Mr. C.C. Thomas prays for two weeks time to enable him to dispose of such stock of liquor as is likely to get outdated. He mentioned that stock of beer is likely to get outdated and it may be worth Rs. 3 to 4 lakhs. In the facts and circumstances, we grant the third respondent two weeks' time to enable him to dispose of his beer stock in the shop as it is located today.