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2005 DIGILAW 251 (KER)

The Commissioner of Excise v. K. K. Gopidas

2005-03-31

K.S.RADHAKRISHNAN, S.SIRI JAGAN

body2005
Judgment :- Radhakrishnan, Ag.C.J. Right to sell liquor is not a fundamental right. State has got the exclusive privilege in the trade of liquor. No citizen can claim to have any right or privilege in the trade of noxious or dangerous goods. State while parting with the privilege can lay down whatever conditions which in their wisdom thought fit and persons deal with the vending of intoxicating liquor would be bound by the terms and conditions laid down by the State. Provisions of the Abkari Act and Rules framed thereunder have to be strictly interpreted and in case of any doubt in favour of the State since trade in the noxious or dangerous goods in injurious to health and the society. Liberal interpretation of the various provisions would at times be detrimental to public interest. Article 47 of the Constitution expressly speaks of the endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. Trade and business in intoxicating liquor can therefore be restricted severally, curtailed or even prohibited, at times conditions laid down for parting with the privilege will put the licenses out of business but that it what the State is striving for to achieve the goal under Article 47 of the Constitution. 2. Section 18A of the Abkari Act states that it shall be lawful for the Government to grant to any person or persons, on such conditions and for such period as they may deem fit, the exclusive or other privilege of manufacturing or supplying by wholesale, or of selling by retail or of manufacturing or supplying by wholesale and selling by retail, any liquor or intoxicating drugs within any local area on his or their payment to the Government an amount as rental in consideration of the grant of such privilege. No grantee of any privilege under sub-section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner. Section 24 of the Act states that every licence or permit granted under the Act shall be granted subject to such restrictions and on such conditions. No grantee of any privilege under sub-section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner. Section 24 of the Act states that every licence or permit granted under the Act shall be granted subject to such restrictions and on such conditions. Section 26 of the Act authorizes the Commissioner to cancel or suspend any licence or permit granted under the Act in the event of any breach by the holder of such license or permit or by his servant, or by any one acting with his express or implied permission on his behalf, of any of the terms and conditions of such licence or permit or if the conditions of the licence or permit provide for such cancellation or suspension. 3. State in exercise of the powers conferred under Section 18-A and 29 of the Abkari Act framed the Kerala Abkari Shops Disposal Rules, 2001. Rule 3(1) states that the privilege of vending toddy or foreign liquor for any period in all or any of the independent shops as may be decided by the Government from time to time, within the range or taluk as may be notified in the gazette shall be put to public sale, shop by shop by the District Collector or by the Deputy Commissioner of Exercise or by any other officer authorized by the Government in that behalf to individuals on at such date or dates and at such place or places as may be fixed from time to time, for a fixed annual rental as licence fee as may be decided by Government. Proviso to Rule 3 states that it shall be lawful for the Government to extend by notification in the official gazette the period of privilege sold under sub-rule(1) for any further period, subject to such conditions as the Government may impose. Rule 5 stipulates that the grant of privilege of vending toddy shops shall be subject to the conditions laid down therein. Rule 5(19) empowers the Commissioner of Excise to cancel any licence issued under the Rules at any time on valid grounds. Rule 7(23) states that the licensee shall not sell or otherwise transfer the privilege granted or licence issued to him. No licensee shall lease out or sublet the whole or any portion of the privilege or licence granted to him. 4. Rule 7(23) states that the licensee shall not sell or otherwise transfer the privilege granted or licence issued to him. No licensee shall lease out or sublet the whole or any portion of the privilege or licence granted to him. 4. Petitioner in W.P.C. No. 23196 of 2003 was granted licence to conduct toddy shop No. 13/2002-2003 in Changanacheery excise range. He was granted licence No 71/2002-2003 dated 6.5.2002 by the Assistant Excise Commissioner, Kottayam. Fourth respondent in the writ petition stated that the petitioner had executed an agreement dated 9.4.2002 on a stamp paper by which he had received a total sum of Rs.10,04,000/- by cheque by pleading the licence. Since then fourth respondent was conducting the shop in the new building built up by him at a new location after providing all infrastructural facilities. Petitioner was paid over and above Rs.10 lakhs, Rs.2 lakhs towards margin money for conducting business in the new location. However in the year 2003-2004 petitioner wanted the shop to be conducted by P.C.Rajan who offered more money for the year 2003-2004. Petitioner had however failed to settle the dues to the fourth respondent with whom he had pledged the original licence. Fourth respondent therefore objected the renewal of licence in favour of the petitioner for the year 2003-2004. Rules provide for the production of original licence for renewal. Original licence was with the fourth respondent and he did not part with the same due to non settlement of disputes between the petitioner and the fourth respondent. 5. Abkari policy for the year 2003-2004 had permitted renewal of existing licence for a period of one year on such terms and conditions as laid down in G.O. (P)51/TD dated 21.3.2003. Petitioner had however obtained duplicate licence issued for the year 2002-2003 and got the duplicate renewed for the year 2003-2004 which resulted in filing various writ petitions before this court. Earlier the Assistant Commissioner, Kottayam had refused to renew the licence since the petitioner had not produced the original licence. Ultimately he renewed the licence and issued a duplicate licence which was later renewed. This court in the writ petition filed by the fourth respondent. Earlier the Assistant Commissioner, Kottayam had refused to renew the licence since the petitioner had not produced the original licence. Ultimately he renewed the licence and issued a duplicate licence which was later renewed. This court in the writ petition filed by the fourth respondent. O.P. No.16390 of 2003, however directed the Excise Commissioner to look into the complaints raised by the fourth respondent and pass orders which resulted in Ext.P11 order dated 18.7.2003 Relevant portion of the said order is extracted below for easy reference. “Even going by the facts mutually admitted by appellant/respondents it is very clear that there was some loan taken by the respondent from the appellant and the appellant signed on a stamped paper and handed over to the respondent. There is also no dispute about the fact that the licence and the registers relating to conduct of the shop happen to be in the possession of the appellant. Under these circumstances it is prima facie clear that the respondent did by his acts and omissions put the appellant in a position where he could keep the licence and conduct the shop. It is very hard to believe that the respondents gave blank cheques and blank signed stamp paper to the appellant without intending to put the appellant in a position where he could do what he wanted to with respect to them. The story of respondent that he was hereby dispossessed a shop also does not appeared to be credible. In the light of the above facts, all the available evidence clearly points out that the licensee did take a loan from the appellant pledged his license as a security for the repayment of loan which amount to transferring his right to run the shop in favour of the appellant, an act not permitted under the conditions of license. The renewal of the license in the above circumstances is definitely not correct. Since the licence conditions were violated, instead of renewal, the license deserves to be cancelled. Also since there is prima facie evidence on records to show that the A.E.C. did not act correctly in the matter an enquiry must be done by the Deputy Excise Commissioner to see whether there was any intentional malpractice in the renewal of this license. Since the licence conditions were violated, instead of renewal, the license deserves to be cancelled. Also since there is prima facie evidence on records to show that the A.E.C. did not act correctly in the matter an enquiry must be done by the Deputy Excise Commissioner to see whether there was any intentional malpractice in the renewal of this license. The appeal is allowed and the order of the A.E.C. renewing the license is set aside.” Excise Commissioner was therefore satisfied that the petitioner had violated the terms and conditions of the license and indulged in the practice of pledging the licence for unlawful gain. The above mentioned order was challenged before this court in W.P.(C) No.23196 of 2003 seeking a writ of certiorari to quash the order dated 18.07.2003 issued by the Commissioner and also for a declaration that the petitioner is entitled to continue the business of toddy shop no.13 in Chnaganacherry Excise Range for the year 2003-2004 and also for other consequential relief’s. The fourth respondent had filed W.P.C. No. 16390 of 2003 claiming that he was conducting the shop and that the renewal of licence in favour of the petitioner was in violation of the Abkari Rules which was later withdrawn. However, fourth respondent was permitted to approach the Commissioner which resulted in Ext.P11 order. Petitioner then filed R.P. No.617 of 2003 in O.P. No.16390 of 2003 stating that the fourth respondent has no locus standi to file any application before the Commissioner. 6. Learned single judge also did not interfere with the findings of fact entered by the Excise Commissioner and held that such findings cannot be said to be perverse or on extraneous considerations warranting any such interference. Learned single judge however interfered with the order passed by the Commissioner stating that the renewal could be refused only if there was suspension or cancellation of licence during the previous year, that is, 2002-2003. Learned single judge took the view that since there was no suspension or cancellation of the licence during the year 2002-2003 and not for the year 2003-2004. Holding so, learned single judge quashed the order passed by the Commissioner. 7. We find it difficult to accept the reasoning of the learned judge. Learned single judge was dealing with the question of renewal of licence. Only if a valid licence exists then only the question of renewal arises. Holding so, learned single judge quashed the order passed by the Commissioner. 7. We find it difficult to accept the reasoning of the learned judge. Learned single judge was dealing with the question of renewal of licence. Only if a valid licence exists then only the question of renewal arises. The manner in which licensee had conducted the toddy shop during the previous year, in our view, has considerable relevance for its renewal. Renewal of licence is not automatic. Several factors would influence the mind by the officers while renewing the licence. The manner in which the licensee had conducted the shop during the previous years including the question as to whether there was any attempt by the licensee to sell or transfer the privilege, to lease out or sublet the privilege granted during the previous years has considerable relevance in its renewal. Condition 23 of the licence stipulates that the licensee shall not sell or otherwise transfer the privilege granted or licence issued to him and no licence shall lease out or sublet the whole or any portion of the privilage or licence granted to him. Further notification dated 25.03.2003 was issued by the Government in exercise of the powers conferred under Section 18-A of the Abkari Act read with sub rule (1) of Rule 3 of the Kerala Abkari Shops Disposal Rules, 2002. Condition No.5 of the notification stipulates as follows: 5. No licensee is eligible for the extension of privilege of toddy shops, if: (i) the privilege granted was suspended or cancelled and not revalidated, in the year 2002-2003; (ii) any Abkari offence other than an offence falling under Section 56 of Abkari Act is booked against him; (iii) is disqualified under any of the provisions of the Kerala Abkari Shops Disposal Rules 2002 to hold such licence. Conditions 9 to 11 relevant for our purpose are extracted hereunder. 9. If all the above requirements are complied with and all conditions of eligibility satisfied by the applicant, the Assistant Excise Commissioner may grant the extension of period of privilege for the year 2003-2004 and make necessary endorsement on the original licence produced by the grantee. 10. Conditions 9 to 11 relevant for our purpose are extracted hereunder. 9. If all the above requirements are complied with and all conditions of eligibility satisfied by the applicant, the Assistant Excise Commissioner may grant the extension of period of privilege for the year 2003-2004 and make necessary endorsement on the original licence produced by the grantee. 10. No extension of grant of privilege made by the Assistant Excise Commissioner as per condition (9) above, shall be deemed final as against the Government unless confirmed by the Commissioner of Excise who shall be at liberty to accept or reject any grant of extension of privilege for valid reasons to be recorded in writing. Every confirmation or rejection of grant of extension of privilege with reason of rejection shall be communicated to the grantee in writing as soon as possible. If any grant of extension of privilege is rejected by the Excise Commissioner, the whole amount remitted by the grantee shall be returned the grant cancelled and the licence withdrawn. 11. Notwithstanding anything contained in condition number (10) above, it shall be lawful for the Excise Commissioner to cancel the licence granted and forfeit the whole of the amount paid by the grantee towards the annual rental, if it is found at any stage that any grantee of privilege had suppressed facts in his application as to his eligibility or produced fake documents and obtained the grant of extension of privilege in his name; In our view, learned single judge has not properly appreciated the scope of condition Nos. 5 and 9 to 11. Condition No.9 specifically stipulates that the Assistant Excise Commissioner may grant the extension of the period of privilege for the year 2003-2004 and make necessary endorsement on the original licence. Original licence was never produced by the petitioner. Original licence is in the possession of the fourth respondent. That is a strong circumstances to show that there was attempt on the part of the petitioner to part with the privilege of vending toddy in favour of the fourth respondent for unlawful gain. Further fourth respondent had produced the original licence. Original licence was never produced by the petitioner. Original licence is in the possession of the fourth respondent. That is a strong circumstances to show that there was attempt on the part of the petitioner to part with the privilege of vending toddy in favour of the fourth respondent for unlawful gain. Further fourth respondent had produced the original licence. Possession of original licence with the fourth respondent as well as the original toddy measurement register for the year 2002-2003 is another strong circumstances to hold that there was an attempt on the part of the petitioner to part with the licence in favour of the fourth respondent unauthorisedly and illegally for unlawful gains. Excise Commissioner after perusing the records found that the petitioner had pledged the licence for availing loan from the fourth respondent which would amount to parting his right to run the shop. Excise Commissioner found that the renewal of licence by the Assistant Excise Commissioner was not in order. Excise Commissioner also found that there was prima facie evidence on record to show that the Assistant Excise Commissioner did not act honestly and enquiry must be made by the Deputy Commissioner to see whether there was any intentional malpractice in the renewal of licence. 8. We are of the view, Excise Commissioner has not only the right but an obligation under Section 26(b) to (e) read with Rule 5(15) of the Abkari Shops Disposal Rules and condition No.11 of the notification dated 25.3.2003 to examine the conduct of the licensee and whether the licensee had misused the licence. Learned single judge held that unless and until there is cancellation or suspension of the licence for the year 2002-2003 for any of the violation of the conditions of licence, Excise Commissioner is bound to renew the licence for the year 2003-2004 is an over statement of law. Renewal of the licence itself is discretionary and conditional. Several factors have to be borne in mind before renewing the licence. The mere fact that the petitioner was granted licence for the previous year 2002-2003 is not a ground to hold that the licensee has the right to get the licence renewed. Trading in liquor license to make unlawful gain is a strong circumstance to refuse renewal of licence. Suppression of material facts is also a strong ground to deny renewal of licence. Renewal of licence is always discretionary. Trading in liquor license to make unlawful gain is a strong circumstance to refuse renewal of licence. Suppression of material facts is also a strong ground to deny renewal of licence. Renewal of licence is always discretionary. The court will not interfere unless the authorities have acted malafide or on extraneous reasons. Suppression of material facts and non production of relevant documents are also circumstances which would guide the mind of the authority at the time of renewing the licence. Every action of the public authority or the person acting in public interest or any act that gives rise to public element should be guided by public interest. The Excise Commissioner while dealing with the renewal of an abkari licence has got the freedom to refuse renewal if there is evidence to show that the licence had history of trading with the licence for unlawful gain. 9. We are of the view, learned single judge sitting in writ jurisdiction under Article 226 of the Constitution of India is not justified in interfering with the order passed by the Excise Commissioner. The Excise Commissioner by the impugned order has also directed the Deputy Commissioner to examine as to whether the Assistant Excise Commissioner was justified in renewing the licence on the duplicate licence and pass order on renewal of such duplicate licence. It is for the Excise Authorities to see that such licence would not part with the privilege granted to him, Deputy Commissioner would go on with the investigation and consequential orders would be passed on the report to be submitted by the Excise Commissioner. Writ appeals are therefore allowed and order of the Excise Commissioner is upheld.