JUDGMENT : Arup Kumar Goswami, J. (Through Video Conferencing) Heard Mr. Kasa Jagan Mohan Reddy, learned Government Pleader representing the learned Advocate General, for the appellants and Mr. Ch. Samson Babu, learned counsel for the respondent. 2. This appeal is directed against the order dated 04.04.2018 passed by the learned single Judge in W.P.No.5680 of 2018, whereby the learned single Judge allowed the Writ Petition, by setting aside the order dated 14.12.2017 passed by the 1st respondent in the Writ Petition and directing refund of Rs.1.5 Crores which was paid by the respondent/writ petitioner for obtaining Letter of Intent (LOI) for establishing a manufactory for manufacture of Indian Made Foreign Liquor (IMFL) along with its application dated 06.01.2011, with interest @ 9% per annum from that date till the date of payment. The 1st respondent therein was also directed to pay cost of Rs.10,000/- to the respondent/writ petitioner. 3. By the order dated 14.12.2017, the prayer of the respondent/writ petitioner for refund of the application fee of Rs.1.5 Crores was rejected. 4. The respondent/writ petitioner is engaged in the business of IMFL bottling and it had commenced its operation with effect from 17.11.2010 after fulfilling the formalities as required under the A.P. Distillery (Manufacture of Indian Made Foreign Liquor other than Beer & Wine) Rules, 2006 (for brevity “the Rules”). 5. The Government of Andhra Pradesh, in exercise of powers conferred under Rule 4(2) of the Rules, by G.O.Ms.No.728 dated 10.06.2008 invited applications from intending persons in prescribed format for grant of LOI for establishment of new IMFL Manufactory in the State of Andhra Pradesh. Pursuant thereto, the respondent/writ petitioner submitted an application dated 06.01.2011 along with non-adjustable and non-refundable fee of Rs.1 Crore as well as Special fee of Rs.50 lakhs as specified under Rule 5(2)(b), as amended, for LOI for manufacture of IMFL at Pulla village, Bhimadole Mandal, West Godavari District, for a capacity to the tune of 500 lakh proof litres. As the said application was not considered, the respondent/writ petitioner filed W.P.No.25461 of 2012. The same was disposed of by the order dated 17.08.2012 with a direction to the respondents therein to take a decision on the application. 6. As the said application was not considered, the respondent/writ petitioner filed W.P.No.25461 of 2012. The same was disposed of by the order dated 17.08.2012 with a direction to the respondents therein to take a decision on the application. 6. Pursuant to the aforesaid direction of this Court, the Principal Secretary to Government, Revenue (EX.III) Department, passed an order dated 17.12.2012 deciding not to sanction any further IMFL Distillery capacity addition at that point of time, and taking recourse to Rule 5(2)(d) of the Rules, rejected all the applications submitted in pursuance of the notification dated 10.06.2008. 7. Thereafter, an order dated 19.12.2012 was issued, in exercise of powers conferred under Rule 4(3) of the Rules, withdrawing the intention of granting LOI for expansion of production capacities of the existing IMFL (other than Beer and Wine) Manufactories. 8. It is the case of the respondent/writ petitioner that it had submitted representations dated 29.12.2014, 01.10.2016, 09.11.2016, 18.11.2016, 10.03.2017, 25.03.2017, 03.06.2017 and 31.07.2017. However, taking note of the representation dated 25.03.2017, the order dated 14.12.2017 was passed, rejecting the request made by the respondent/writ petitioner, in terms of Rules 5(2)(d) and 5(2)(i) and 5(2)(b)(iii) of the Rules. 9. The learned single Judge, on consideration of Rules 5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules, recorded a finding that once the notification for receiving application for grant of LOI for establishment of new IMFL Manufactories had been withdrawn in terms of a policy decision of the Government, the aforesaid Rules will not apply and, therefore, the State is duty-bound to refund the amount collected as a condition for considering the application for LOI and, accordingly, allowed the Writ Petition with directions, which are already noted hereinbefore. 10. Mr. Kasa Jagan Mohan Reddy, learned Government Pleader representing the learned Advocate General, for the appellants, has relied on Rules 5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules, to contend that the learned single Judge was not correct in holding that the aforesaid provisions do not apply in the facts and circumstances of the case. 10. Mr. Kasa Jagan Mohan Reddy, learned Government Pleader representing the learned Advocate General, for the appellants, has relied on Rules 5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules, to contend that the learned single Judge was not correct in holding that the aforesaid provisions do not apply in the facts and circumstances of the case. The Government, on consideration of existing production of distilleries, existing consumption and also import into the State, came to a conclusion that there was no need to proceed with further production/increase of production by issuing LOI to the existing distillery owners and, therefore, had withdrawn the notification and, when the amount deposited was non-adjustable and non-refundable, there was no question of issuing a Mandamus to the appellant to refund, that too, with interest, he contends. 11. Mr. Ch. Samson Babu, learned counsel for the respondent/writ petitioner, supports the order of the learned single Judge and contends that the application submitted by the respondent/writ petitioner was not considered at all, and the same was rejected solely on the ground of change of policy and as such, the order of the learned single Judge does not require any interference. Mr. Samson Babu submits that the Writ Appeal has become infructuous in view of the fact that in pursuance of the order appealed against, by an order dated 27.01.2021, an amount of Rs.2,88,66,575/-, being the principal amount as well as interest as on 20.01.2021, was directed to be adjusted towards future excise duty and, as such, the appeal may be disposed of as infructuous. 12. Learned Government Pleader, by producing order dated 27.01.2021 through a memo, contends that the Government had issued directions to implement the order of this Court dated 04.04.2018 in W.P.No.5680 of 2018, subject to the outcome of W.A.No.1630 of 2018, to avoid further legal complications in C.C.No.2692 of 2018. 13. We have perused the order dated 27.01.2021 and we are satisfied that amount was directed to be adjusted subject to the outcome of the Writ Appeal and, therefore, we are unable to agree with the submission of the learned counsel for the respondent/writ petitioner that the appeal has been rendered infructuous. In the facts and circumstances of the case, the appeal has to be adjudicated on merits. 14. We have considered the submissions of the learned counsel for the parties and have perused the materials on record. 15. In the facts and circumstances of the case, the appeal has to be adjudicated on merits. 14. We have considered the submissions of the learned counsel for the parties and have perused the materials on record. 15. In the order dated 17.12.2012, it was noted that the existing functional licensed production capacity in the State along with its imports is adequate, on a gross basis, to meet the existing consumption demand of IMFL (other than Beer and Wine) and since the Government had changed its Excise policy regarding disposal of retail IMFL shops with effect from 01.07.2012, it needed some time to observe the trend of consumption demand so as to be able to realistically project the future requirement of production capacities and gap in capacities, if any. In the light of the above, it was recorded as follows: “(i) Not to sanction any further IMFL Distillery capacity addition at present. Accordingly all the applications submitted in pursuance of the Notifications issued vide reference 1st and 2nd read above and pending consideration of the Government (as listed in the Annexure) shall be rejected under Rule 5(2)(d) of the Andhra Pradesh Distillery (Manufacture of IMFL other than Beer and Wine) Rules, 2006. (ii) Notifications shall be issued withdrawing Government’s intention to receive any more applications for grant of LOIs for establishment of new Manufactory or expansion of production capacity of existing Manufactories.” 16. Recording the above, all the applications submitted pursuant to the notification dated 10.06.2008, as also notification dated 01.01.2008, were disposed of. 17. It will be relevant to extract Rules 4 and 5 of the Rules, which read as under: “4. (1) No letter of intent for establishment of any new manufactory or expansion of the production capacity of an existing manufactory shall be issued without previous notification issued by the Government expressing the intention to grant the same from time to time. (2) A notification shall be issued by the Government separately from time to time for grant of Letter of Intent for establishment of a new manufactory or expansion of production capacity of an existing manufactory for different purposes mentioned in Rule 3. (3) Government may, by notification issued from time to time, withdraw their intention of granting Letter of Intent for establishment of new manufactory or expansion of the production capacity of the categories of existing manufactory for any of the purposes separately. 5. (3) Government may, by notification issued from time to time, withdraw their intention of granting Letter of Intent for establishment of new manufactory or expansion of the production capacity of the categories of existing manufactory for any of the purposes separately. 5. (1) No licence for manufactory shall be granted unless the same is notified and sanctioned under sub-rules (1) and (2) of Rule 4 of these rules. (2) Procedure for obtaining sanction of the Government: (a) on the notification issued by the Government under Rule 4(1) and (2), any person intending to construct and work such a manufactory or expand the production capacity of the existing manufactory, may apply in Form-DM(1) along with his scheme to the Government through the Commissioner. (b) (i) No application mentioned in Clause (a) above shall be entertained unless a non-refundable and non-adjustable fee as specified below is paid into Government treasury and the challan in original in support of payment is produced along with the application. Annual Production capacity of the proposed manufactory Non-refundable and non-adjustable Fee Up to 50 lakhs Proof Liters. Rs. 7 crores. Above 50 lakhs Proof Litres and up to 100 lakh Proof Litres. Rs. 10 crores Above 100 lakh Proof Litres. Rs. 12 crores (ii) A special fee as specified below shall also be paid into Government treasury and the challan in original in support of payment is produced along with the application. Annual production capacity of the proposed manufactory Special Fee Up to 50 lakhs Proof Litres. Rs. 3 crores. Above 50 lakhs Proof Litres and up to 100 lakh Proof Litres. Rs. 5 crores. Above 100 lakh Proof Litres. Rs. 6 crores (iii) The special fee remitted under clause (ii) above shall be adjusted towards future licence fee or Excise Duty or both on commencement of production. (c) When the Government are satisfied of the proposed scheme, they may accord the sanction and communicate it in the form of Letter of Intent in Form-DM(S). This Letter of Intent shall be valid for a period of two years from the date of issue. (d) It shall be lawful for the Government to accept or reject without assigning any reason any application made for grant of Letter of Intent in pursuance of the notification under Rule 4(1) and (2) of these rules. This Letter of Intent shall be valid for a period of two years from the date of issue. (d) It shall be lawful for the Government to accept or reject without assigning any reason any application made for grant of Letter of Intent in pursuance of the notification under Rule 4(1) and (2) of these rules. (e) The holder of the Letter of Intent shall obtain a licence in Form DM-2(M) or DM-2(G) or DM-2 within six months from the date of issue of Letter of Intent. (f) If the holder of the Letter of Intent fails to obtain a licence within a period of six months from the date of issue of Letter of Intent, he ceases to have any right on the Letter of Intent. (g) If the holder of the Letter of Intent and Licence fails to commence production within two years from the date of issue of Letter of Intent, he forfeits his right over Letter of Intent and on the licence. (h) The Letter of Intent communicated under clause (c) shall not confer any right or privilege for grant of a licence and is liable to be revoked or withdrawn by the Government at any time without giving any notice to the holder if the Government so desires. (i) No compensation for damage or loss shall be payable when a Letter of Intent is rejected under clause (d) or revoked or withdrawn under Clause (h). 18. As noted earlier, notification dated 10.06.2008 was issued in terms of Rule 4(2) of the Rules for grant of LOI for establishment of a new Manufactory for manufacture of IMFL. Rule 4(3) of the Rules provides that Government, may by notification, issue from time to time, withdraw their intention of granting Letter of Intent for establishment of new manufactory or expansion of the production capacity and it is on the basis thereof that the notification dated 19.12.2012 was issued withdrawing the intention of the Government of granting LOI for establishment of new IMFL manufactories. While rejecting the prayer for refund by the order dated 14.12.2017, reliance was placed on Rules 5(2)(b), 5(2)(b)(i) and 5(2)(b)(iii). Rule 5(2)(b)(i) provides that no application shall be entertained unless the nonrefundable and non-adjustable fee as indicated therein is paid into Government treasury and the challan in original in support of payment is produced along with the application. While rejecting the prayer for refund by the order dated 14.12.2017, reliance was placed on Rules 5(2)(b), 5(2)(b)(i) and 5(2)(b)(iii). Rule 5(2)(b)(i) provides that no application shall be entertained unless the nonrefundable and non-adjustable fee as indicated therein is paid into Government treasury and the challan in original in support of payment is produced along with the application. Rule 5(2)(b)(i) provides that a special fee as specified therein, shall also be paid into Government treasury and a challan in original in support of payment be produced along with the application. Rule 5(2)(b)(iii) provides that the special fee remitted under clause (ii) above, shall be adjusted towards future licence fees or Excise duty or both on commencement of production. Rule 5(2)(d) provides that it shall be lawful for the Government to accept or reject without assigning any reason, any application made for grant of Letter of Intent in pursuance of the notification under Rule 4(1) and (2) of these Rules. Rule 5(2)(i) provides that no compensation for damage or loss shall be payable when a Letter of Intent is rejected under clause (d) or revoked or withdrawn under Clause (h). 19. A perusal of the letter dated 17.12.2012 goes to show that the application of the respondent/writ petitioner was rejected under Rule 5(2)(d) of the Rules on the ground that a decision was taken by the Government not to sanction any further IMFL Distillery capacity addition. Clause 5(2)(b) uses the expression “entertain”. The Hon’ble Supreme Court in Lakshmi Rattan Engineering Works v. Asst. Commissioner, Sales Tax, Kanpur and others, reported in AIR 1968 SC 488 , interpreted the expression “entertain” as meaning “adjudicate upon or proceed to consider on merits”. It is for such consideration it was laid down that applications shall not be entertained unless a non-refundable and non-adjustable fee as detailed therein, is produced along with the application. When an application is accompanied by a non-refundable and non-adjustable fee as well as special fee, such application has to be considered on merits. It is an admitted position that the application of the respondent/writ petitioner was not considered on merits and was rejected only because the Government decided not to sanction any further IMFL Distillery capacity addition. When an application is accompanied by a non-refundable and non-adjustable fee as well as special fee, such application has to be considered on merits. It is an admitted position that the application of the respondent/writ petitioner was not considered on merits and was rejected only because the Government decided not to sanction any further IMFL Distillery capacity addition. While Rule 4(3) of the Rules enables the Government to withdraw intention of granting LOI for establishment of new manufactory or expansion of the production capacity of the categories of existing manufactory for any of the purposes separately, it cannot be countenanced that when such a course of action is taken without considering pending applications, the Government would be entitled to retain the fee deposited along with the application. In the facts of the case, Rule 5(2)(i) will not come into play for the simple reason that the petitioner is not praying for any compensation for damage or loss. 20. In that view of the matter, we hold that the respondent/writ petitioner is entitled to refund of the fee required to be submitted with the application in terms of Rule 2(b)(I)and (II). We have not gone to the question as to whether, in a given case, after consideration of an application, the same could have been rejected without assigning any reason. 21. In view of the above discussion, we are of the opinion that no interference is called for with the order under appeal. Since the amount directed to be paid by the learned single Judge has been directed to be adjusted towards future excise duty and as the respondent/petitioner had accepted the same and had contended that the appeal has become infructuous, no further orders are called for. 22. The Writ Appeal is, accordingly, dismissed. No order as to costs. Pending miscellaneous applications, if any, shall stand closed.