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2016 DIGILAW 502 (ORI)

Gemini Distillery v. State of Odisha

2016-07-12

D.P.CHOUDHURY, I.MAHANTY

body2016
JUDGMENT : I.Mahanty, J. The short issue that arises for consideration in the present writ application is as to whether repeal of rule of Section 6-C to the Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989 (hereinafter referred to as the ‘Rules 1989’) vide Notification dated 20th May, 2002, published in Orissa Gazette on 6th July, 2002 could be made and whether any demand for the period prior to the deletion of Rule 6-C of the Rules, 1989 could be validly raised and enforced thereafter. 2. Mr.Asim Amitav Das, learned Senior Advocate for the petitioners contended that the aforesaid issue is no longer res integra in view of the judgment rendered by the Division Bench of this Court in W.P.(C) No.10743 of 2008, by which, this Court has placed reliance on the judgment of Hon’ble Supreme Court in the case of Kolhapur Canesugar Works Ltd. and another v. Union of India and others, (2000) 2 SCC 536 in which, the Hon’ble Supreme Court stated that law is well settled that “repeal of statute or deletion of a provision, unless covered by Section 6(1) of the General Clauses Act or a saving provision, totally obliterates it from the statute book, and the proceedings pending thereunder stands discontinued” and came to conclude as follows: “In this case Rule 6-C has been totally omitted and the petitioners have already accrued a right when their demand was reduced and the reduced demand was paid. From the contents of the provisions of the said rules, it is clear that it did not contain any saving clause for continuance of proceeding under the said rule, which has been deleted/omitted. So the irresistible conclusion would be that the order passed and demand raised vide Annexure-36 after repeal of a Rule could not invoke the old Rule.” 3. The brief facts leading to the present challenge are as follows: A. The State Government framed Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989 under Section 89 of the Bihar & Orissa Excise Act, 1915 and published the same on 14.08.1989. B. The petitioners herein applied for and granted licenses by the Collector, Khurda on 15.12.1995 for (i) bottling of portable foreign liquor (ii) for compounding and blending of foreign liquor and (iii) foreign liquor warehouse in or outside bond or wholesale foreign liquor shop for sale to the traders. B. The petitioners herein applied for and granted licenses by the Collector, Khurda on 15.12.1995 for (i) bottling of portable foreign liquor (ii) for compounding and blending of foreign liquor and (iii) foreign liquor warehouse in or outside bond or wholesale foreign liquor shop for sale to the traders. C. The State Government issued Notification dated 25.11.1997 inserting Rule 6A, 6B and 6C in the Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989 and in terms of Rule 6 C, prescribing Minimum Guaranteed Quantity (MGQ) on Bottling Plants is quoted as hereunder; “6.C. Minimum Guaranteed Quantity of Bottling Plants – (I) All the licensees of (I.M.F.L./Beer) Bottling plants shall guarantee for bottling of 50% of the installed capacity of their bottling plants in a year, as the minimum guaranteed quantity. In case of any shortfall in the minimum guaranteed quantity fixed for the plant by the Excise Commissioner, the licensee of the bottling plant shall be liable to make payment of the duty for the shortfall quantity and the amount will be recovered as arrears due from the licensee.” D. It is also admitted that with the introduction of Rule 6-C of the Rules, 1989 for the period from 1997-98 till 2000-01, the Commissioner of Excise fixed the Minimum Guaranteed Quantity on the petitioner-company and the petitioner-company duly complied with the same and achieved the said guaranteed amount of manufacturer. E. The State Government issued further Notification amending the Bihar and Orissa Excise Act, 1915 and inserting Section 20A therein empowering the State to carry on wholesale trade and distribution of foreign liquor and country spirit. E. The State Government issued further Notification amending the Bihar and Orissa Excise Act, 1915 and inserting Section 20A therein empowering the State to carry on wholesale trade and distribution of foreign liquor and country spirit. Section 20-A of the Bihar and Orissa Excise Act, 1915 reads as hereunder: “’20-A. Notwithstanding anything contained in this Act, the right to carry on wholesale trade and distribution of foreign liquor and country liquor in the State shall, on and from such date as the State Government may, by notification, appoint, solely vest in the State Government and subject to such rules as may be made in this behalf, an agency of the State Government as may be specified in the said notification or a Corporation established, or incorporated under the Companies Act, 1956 and wholly owned and controlled by the State Government for the purpose, shall have the exclusive right and privilege of importing, exporting and carrying on the wholesale trade and distribution of foreign liquor and country liquor in the State on behalf of the State Government for the whole of the State of Orissa, and no other person shall be entitled to any privilege or licence for importing, exporting and supplying the same in wholesale, or distributing the same for the whole or any part of the State.” F. Thereafter the State Government issued a Gazette Notification vide SRO No.50/2001 dated 30th January 2001 under Section 20-A of the Bihar and Orissa Excise Act, 1915 forming the Orissa State Beverage Corporation Ltd. and vesting such Corporation the exclusive authority to carry on wholesale trade and distribution of foreign liquor in the State of Orissa with effect from 01.02.2001. The said notification is quoted as hereunder: “S.R.O.No.50/2001-In exercise of the powers conferred by Section 20-A of the Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act 2 of 1915), the State Government do hereby appoint the 1st day of February 2001, as the date on and from which the right to carry on wholesale trade and distribution of foreign liquor in the State shall solely vest in the State Government and specify that the Orissa State Beverages Corporation Ltd. shall have the exclusive right and privilege of importing, exporting and carrying on the wholesale trade and distribution of foreign liquor in the State on behalf of the State Government for the whole of the State of Orissa, and no other person shall be entitled to any privilege or licence for importing, exporting and supplying the same in wholesale, or distributing the same in any part of the State.” 4. When the applications were invited by Orissa State Beverage Corporation from the manufacturers of foreign liquor for supply of IMFL and thereafter agreements were entered into by all the manufacturers with the said Corporation for supply of IMFL and more importantly, on and from the said date as noted hereinabove, i.e. 31.01.2001 since the wholesale trade of liquor both the foreign and country liquor were vested into only monopoly wholesaler, known as “Orissa State Beverage Corporation (OSBC)” effectively from such date, the petitioners-company could not any longer deal with nor supply liquor to any retailer or wholesaler other than the Orissa State Beverages Corporation Ltd. 5. Many bottling plants of foreign liquor and country liquor made representations to the State Government seeking waiver of MGQ on and from the date of creation of the OSBC (State’s monopoly Corporation) and on such representations, the Joint Secretary to the Govt. of Orissa in the Excise Department addressed the communication to the Excise Commissioner stating therein that since the OSBC became the sole monopoly wholesaler on and from 31.01.2001, therefore, any shortfall in MGQ after the date of establishment of Corporation till the end of the said excise year i.e. 2001-02, should not be a bar for renewal of licenses for the subsequent year i.e. 2002-03. It is most important to note herein that based on the representations made by various bottling manufactures/licensees, the State Government issued notification No.3482 dated 30.05.2002 deleting Rule 6-C from the Rules, 1989 with effect from 30.05.2002 which is quoted herein below: “S.R.O. No.551/2002-Whereas the State Government consider that the following rules shall be brought into force at once. Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 89 of the Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act 2 of 1915), read with the proviso to sub-section, (3) of the said section, the State Government do hereby make the following rules further to amend the Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989, namely:- I. (1) These rules may be called the Orissa Excise (Exclusive Privilege) Foreign Liquor Amendment Rules, 2002. (2) They shall come into force on the date of their publication in the Orissa Gazette. 2. In the Orissa Excise (Exclusive Privilege) Foreign Liquor Rules, 1989, rule 6-C shall be deleted.” 6. Insofar as the present lis is concerned, the same arose from a communication of the Superintendent of Excise, Khurda (Opp. Party No.4) dated 27.12.2002 raising a demand on the petitioners-company directing to pay a sum of Rs.31,06,376.00 as outstanding MGQ dues for the excise year 2001-02 and subsequent thereupon, various representations made by the bottling manufactures to the State Government on 26.04.2003 under Annexure-9 and since no response to the same is received and further since the Superintendent of Excise, Khurda reiterated its demand of shortfall MGQ for the year 2001-02 vide its communication dated 11.02.2005 (Annexure-10), the present writ application has come to be filed seeking to challenge the said demand. 7. Learned Addl. Government Advocate on behalf of the State essentially contended that since Rule 6-C of the Rules, 1989 was only deleted by Notification dated 30th May, 2002, the said Rule and consequent demand was justified even after the OSBC (monopoly wholesaler) was set up by the State Government on 31.01.2001. It is further contended on behalf of the State that the impugned demand notice dated 27th December, 2002 under Annexure-8 was based upon the audit objections and consequently ought to be paid. He fairly submitted that the issue raised in the present writ application is covered by the judgment rendered by the Division Bench of this Court in W.P.(C) No.10743 of 2008 dated 5.11.2012. He fairly submitted that the issue raised in the present writ application is covered by the judgment rendered by the Division Bench of this Court in W.P.(C) No.10743 of 2008 dated 5.11.2012. On a query from the Court as to whether the said judgment of this Court has been challenged, he fairly submitted that no challenge to the said judgment has been made by the State Government. 8. In the light of the submissions as submitted hereinabove, we are of the considered view that once a lis is decided by a competent Division Bench of this Court, the same is binding on a later Bench and we are also in agreement with the conclusion arrived at by the Division Bench. We are also of the considered view that the actual repeal of Rule 6-C of the Rules, 1989 did take place vide Notification dated 30.05.2002 but, much prior thereto i.e. 31.03.2001, the State Government had created a State monopoly of wholesale trade for distribution of foreign liquors i.e. OSBC. Consequently, with the creation of such monopoly at the instances of the State since the licensees (bottlers) no longer had freedom to sell the wholesale trade or retail trade directly, realizing the issues involved, the State went ahead and repealed Rule 6-C of the Rules, 1989 insofar as deleting the imposition of MGQ of bottling companies is concerned, more particularly, since no demand of the alleged shortfall of MGQ had ever been raised prior to 30th May, 2002, the date of which the State of Orissa deleted Rule 6-C from the Rules, 1989 and first time the demand was raised only on 27th December, 2002 effectively much after the date of repeal/deletion. We are, therefore, of the considered view that the writ application ought to be allowed. Accordingly, we so direct and the impugned demand of the alleged shortfall of MGQ dated 27th December, 2002 under Annexure-8 stands quashed.