Research › Search › Judgment

Rajasthan High Court · body

2021 DIGILAW 407 (RAJ)

Renu v. State Of Rajasthan

2021-02-17

MANOJ KUMAR GARG

body2021
JUDGMENT 1. The present writ petition has been filed by the petitioner seeking following reliefs: - "(i) by an appropriate writ, order or direction the impugned order cum notice dated 13.05.2020 (Annexure-6) and 18.05.2020 (Annexure-8), may kindly be quashed and set aside. (ii) by an appropriate writ, order or direction the respondents may kindly be directed to re-determine the EPA and composite fee of the shop allotted to the petitioner looking to the change circumstances of the Covid-19 pandemic and cancellation of the conduct the Gogamedi fair, (iii) by an appropriate writ, order or direction the respondents may kindly be directed that if the respondents are not ready to re-determine the EPA and Composite fee for the petitioner's allotment then the amount deposited by the petitioner of the Rs. 13,61,150/- may kindly be refund with interest to the petitioner. (iv) Any other order or direction which this Hon'ble Court may deem fit, just and proper in the facts and circumstances of the case may also be passed in favour of the petitioner, (v) The cost of the writ petition may kindly be awarded to the petitioner." 2. Counsel for the petitioner submits that the State Government issued a Gazette notification on 08.02.2020 with regard to Excise policy for year 2020-21 and in pursuance of said notification, an excise policy was framed by the State. On 04.03.2020, the State Government made certain amendments in the policy notified on 08.02.2020 with regard to issuance of license for liquor shops. The respondent Excise department prepared the list of liquor shops and also determined the application fee, EPA and composite fee amount. 3. In pursuance of the advertisement and policy, the petitioner submitted an application for allotment of liquor shop in Nohar Tehsil, District Hanumangarh. After draw of lottery, the petitioner was allotted shop in Location No. 115 Gogamedi (5 GM). In pursuance of allotment order, the petitioner deposited a sum of Rs. 13,61,150/-. However, after the outbreak of corona virus pandemic, there was complete lockdown in the State, therefore, neither the shop of petitioner could be opened nor the amount of EPA and composite fee could be deposited. It is argued that Gogamedi is the rural area in Nohar Tehsil wherein, every year in the month of July and August a historical fair is organized. However, due to Covid-19 pandemic, the fair was cancelled and therefore, the desired target could not be achieved. It is argued that Gogamedi is the rural area in Nohar Tehsil wherein, every year in the month of July and August a historical fair is organized. However, due to Covid-19 pandemic, the fair was cancelled and therefore, the desired target could not be achieved. On 21.04.2020, the petitioner submitted an application before the respondent no.2 stating therein that she has already deposited 4% guarantee amount but due to lockdown, the remaining amount of EPA and composite fee could not be deposited, therefore, the guarantee amount may be reduced. However, the respondents issued a notice to the petitioner on 13.05.2020 calling upon the petitioner to deposit the amount of Rs. 66,02,630/- within a period of three days. The petitioner submitted yet another application with the request to reduce the guarantee amount or while cancelling the allotment, the amount of Rs. 13,61,150/- may be refunded. 4. It is submitted that vide impugned order dated 18.05.2020, the respondents were called upon the petitioner to deposit the entire due amount else the amount deposited by the petitioner shall be forfeited. The argument of learned counsel for the petitioner is that determination of high EPA for Gogamedi shop is due to historical fair organized in Gogamedi, however, since due to Covid-19 pandemic, the fair was cancelled and liquor shop could not be opened, therefore, the amount of EPA was required to be reduced by the respondent Department. It is further submitted that the respondent department has already reduced the EPA and composite fee of 27 groups in Hanumangarh District so also reduced the composite fees upto 15% in the second lottery, therefore, the action of the respondents in not reducing the EPA and composite fees for petitioner's allotment and insisting upon the petitioner to deposit the entire amount of EPA and composite fees determined by the respondents is arbitrary, illegal and same deserves to be quashed and set aside. In the alternative, the counsel for the petitioner prays that if the respondents are not ready to re-determine the EPA and composite fee for petitioner's allotment, then the amount so deposited by the petitioner in the sum of Rs. 13,61,150/- may be refunded with interest to the petitioner. 5. In the alternative, the counsel for the petitioner prays that if the respondents are not ready to re-determine the EPA and composite fee for petitioner's allotment, then the amount so deposited by the petitioner in the sum of Rs. 13,61,150/- may be refunded with interest to the petitioner. 5. Per contra, learned Advocate General Shri M.S. Singhvi raised a preliminary objection with regard to equal and efficacious remedy available to the petitioner in terms of Section 9-A of the Rajasthan Excise Act, 1950 in the form of appeal before the Excise Commissioner. It is argued that State Government had imposed lockdown in view of Covid-19 pandemic since 22.03.2020, however, majority of shops including the liquor shops were permitted to start and operate w.e.f 04.05.2020. Further, the State Government vide order dated 09.04.2020 had directed the department to remain open and allow deposition of fees under various heads. During the lockdown period, amount with respect to 238 shops were deposited. It is further argued that State Government after considering the situation arisen due to Covid-19, issued order dated 07.04.2020 granted various rebates and concessions. It is further submitted that consumption of liquor has no connection whatsoever with the organisation of Fair. The petitioner cannot be allowed to wriggle out of the contractual obligation based on unfounded plea. It is argued that the impugned orders have been passed absolutely in conformity with the guidelines laying down terms and conditions. The amount deposited by the petitioner could not be refunded and same has already been forfeited, therefore, writ petition may be dismissed. He placed reliance upon the judgment of Har Shankar & Ors Vs. Dy. Excise and Taxation Commr reported in (1975) 1 SCC 1121, Bhaskar Laxman Jadhav & Ors Vs. Karamveer Kakasaheb Wag Education Society & ors reported in 2013 (11) SCC 531 , State of Raj & Ors Vs. M/s C.K.M & company (D.B. Civil Special Appeal (Writ) No.212/2007 decided on 10.05.2017. 6. In rebuttal, counsel for the petitioner argued that since no cancellation of sanction has been issued by the respondents, therefore, no appeal could be filed before the Excise Commissioner under Section 9-A of the Act. M/s C.K.M & company (D.B. Civil Special Appeal (Writ) No.212/2007 decided on 10.05.2017. 6. In rebuttal, counsel for the petitioner argued that since no cancellation of sanction has been issued by the respondents, therefore, no appeal could be filed before the Excise Commissioner under Section 9-A of the Act. In this regard, counsel for the respondents argued that since there was an interim order granted by this Court in favour of petitioner on 19.05.2020, therefore, no order of cancellation of sanction was passed, however no proceedings have been initiated for cancellation for non deposit of requisite amount. 7. Heard learned counsel for the parties and perused the material on record. 8. It is an admitted position that the petitioner had entered into the contract with the respondent department while accepting the terms and conditions stipulated by the respondent department as per guidelines. As per guidelines, if an applicant fails to deposit the requisite amount by due date, then the sanction issued in favour of such application would stand cancelled and amount deposited either as earnest money or as advance EPA shall stand forfeited. The main contention of the petitioner in the writ petition is that the target sale of liquor could not be achieved in the year 2020 due to Covid-19 pandemic and non-organisation of famous Gogamedi fair. In the opinion of this Court, once the petitioner had accepted all the terms and conditions, it was clear that any kind of closure of shops shall not have any bearing or impact upon the recovery of EPA. It is relevant to mention here that all the allottees have been meted out with similar treatment, therefore, the petitioner is not justified in claiming special treatment by way of waiver/reduction of deposit of requisite amount. The law of equity cannot override the specific conditions of the contract and therefore, no relief as sought for can be granted in favour of the petitioner. 9. Hon'ble Apex Court in the case of Har Shankar & Ors Vs. Dy. Excise and Taxation Commr reported in (1975) 1 SCC 1121 has held as under :- "17. Those interested in running the country liquor vends offered their bids voluntarily in the auctions held for granting licences for the sale of country liquor. 9. Hon'ble Apex Court in the case of Har Shankar & Ors Vs. Dy. Excise and Taxation Commr reported in (1975) 1 SCC 1121 has held as under :- "17. Those interested in running the country liquor vends offered their bids voluntarily in the auctions held for granting licences for the sale of country liquor. The terms and conditions of auctions were announced before the auctions were held and the bidders participated in the auctions without a demur and with full knowledge of the commitments which the bids involved. The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Government. The Government's acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them. The successful bidders were then granted licences evidencing the terms of contract between them and the Government, under which they became entitled to sell liquor. The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit. Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of the trading transactions. Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial. Commissioner to grant liquor licencees by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who. had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force." 10. The Division Bench of this Court of this Court in 'Nawal Singh Ratnawat Vs. State of Rajasthan & Ors.' (D.B.Civil Writ Petition No.19947/2013 decided on March 11, 2014) has held in similar terms :- ""2. By such a test no contract could ever have a binding force." 10. The Division Bench of this Court of this Court in 'Nawal Singh Ratnawat Vs. State of Rajasthan & Ors.' (D.B.Civil Writ Petition No.19947/2013 decided on March 11, 2014) has held in similar terms :- ""2. Briefly, the essential material facts necessary for adjudication of the controversy are: That the petitioner was granted a royalty collection contract for 'Bajri1 (sand) excavated from flow area of Banas river and Nallahs within the revenue boundaries of Tehsil and District Sawaimadhopur, for a period of two years. The terms and conditions of the contract, entered into between the State Government and the petitioners on 23rd March, 2011 and 2nd July, 2011, were reduced to writing. A specific condition 3(xvi) was incorporated in the contract (Annexure-1), to the effect that in the event of cancellation/surrender of leases or sanctioning of new leases/revision of 'dead rent1 of existing leases, in the area concerned, shall not have any impact on yearly contract amount. On 30th March, 2012 in D.B. Civil Writ Petition Number 4250 of 2012 (Villagers of Chandgarh, Tehsil Kothadi, District Bhilwara v. State of Rajasthan), an injunction was granted on excavation of Bajri (sand) from the riverbeds of Banas river and the petitioners were directed to stop collection of royalty or permit fee, only for the period with effect from 1st April, 2012 to 18th April, 2012. 3. The petitioners are aggrieved of the demand notice(s) dated 8th March, 2013 and 31st March, 2013, calling upon the petitioners to deposit the due amount for the period of 18 days i.e., with effect from 1st of April, 2012 to 18th April, 2012. The demand is sustained in view of Rule 37(A)(xvi) of the Rules of 1986 as well as in view of Condition 3(xvi) incorporated in the contract entered into between the State Government and the petitioner (Annexure-1). 4. The learned Senior Counsel urged that Rule 63(3) of the Rules of 1986, dealing with grant of short-term permit, provides for a totally different procedure for excavation of Bajri (sand). The State Government in exercise of power of relaxation under Rule 65 of the Rules of 1986, has provided the procedure for grant of mineral concession for Bajri (sand) vide circular dated 10th December, 1986. The State Government in exercise of power of relaxation under Rule 65 of the Rules of 1986, has provided the procedure for grant of mineral concession for Bajri (sand) vide circular dated 10th December, 1986. The circular was further modified by a policy dated 12th September, 1988 and thereafter, by policy circular dated 3rd October, 1988 (Annexure- 18, 19 and 20, respectively). The learned Senior Counsel further submitted that no mining lease or quarry licenses are in existence for the mineral Bajri (sand) in the entire State of Rajasthan. 5. Anybody, desiring to excavate mineral Bajri (sand) may do so and make a payment while passing through Naka or Government Check-post. No application for short-term permit is required. Therefore, the procedure provided for excavation of mineral Bajri (sand) by the State is totally different from one adopted for other minerals and hence, the provisions of Rule 37(A)(xvi) as well as condition stipulated under Clause-3 (xvi) of the agreement have no application. Thus, Rule 37(A)(xvi) is ultra-vires of Article 14, 19(l)(g) of the Constitution of India as well as Section 56 of the Indian Contract Act, 1872. 6. The learned Senior Counsel also emphasized that in the event of closure of excavation or removal of the mineral Bajri (sand) for the relevant period, the petitioners could not have been saddled with the liability for payment of 'royalty1 or 'permit fee', and therefore, the demand raised by the Government amounts to fulfillment of a condition, which was impossible and hence, void. Moreover, when the petitioner entered into contract with the State Government, there was no such closure contemplated by the petitioner. Since the closure was after the contract was entered into, the petitioner cannot be held liable and called upon to fulfill a condition impossible. Hence, the demand raised by the State respondents for the period, when the excavation of the mineral Bajri (sand) was completely stopped, cannot be sustained in the eye of law. 7. We have heard the learned counsel for the petitioners and carefully perused the materials available on record. 8. At this juncture, it will be gainful to consider the text of Rule 3(x), (xvi) and (xxi) of the Rules of 1986, which read thus:- "3. Definitions- (i) ..... 7. We have heard the learned counsel for the petitioners and carefully perused the materials available on record. 8. At this juncture, it will be gainful to consider the text of Rule 3(x), (xvi) and (xxi) of the Rules of 1986, which read thus:- "3. Definitions- (i) ..... (x) "Dead rent" means the minimum guaranteed amount of royalty per year payable as per rules of agreement under a mining lease, (xvi) "Forms" means forms appended to these rules, (xxi) "Royalty Collection Contract" means a contract for the specified mineral or minerals given to collect royalty [with or without fee, as the case may be] on behalf of the Government from the quarry licensee and short term permit holders who excavate minor minerals from the land specified under the contract where under the contractor undertakes to pay fixed amount annually to the Government save as exempted under rule 58." Rule 37(A)(xvi) of the Rules of 1986, read thus:- "Rule 37(A)(xvi)- Cancellation/surrender of lease/quarry licenses or temporary/permanent closure of leases/quarry licenses by Government/ court or due to any other reason in the area concerned shall not have any impact on yearly contract amount." 9. Section 56 of the Indian Contract Act, 1872 read thus:-"56. Agreement to do impossible act - An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful: Where one person has promised to be something which he knew or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promise for any loss which such promisee sustains through the nonperformance of the promise." 10. The learned Senior Counsel submits that the petitioner's right to collect the royalty or permit fee on behalf of the State Government was temporarily withheld during the period in dispute and therefore, the demand raised, is absolutely illegal as the performance of the contract was impossible on account of closure of excavation of mineral Bajri (sand), in view of the order Senior Counsel also assailed the action of the State respondents in rejecting his representation for grant of rebate without any application of mind. 11. Mr.K.K. Sharma, learned Senior Counsel, at the very outset, has restricted his arguments only to the extent of challenge to the vires of Rule 37(A)(xvi) of the Rules of 1986 and therefore, we are confining the scrutiny of the subject matter, in the writ petitions, only to the extent of the challenge to vires of the Rule aforesaid. 12. It is an admitted case of the petitioners that they did enter into an agreement for collection of the royalty in the prescribed form (Annexure-1), which also contained a clause 3(xvi), which reads thus:- "3(xvi). Cancellation/surrender of leases or sanctioning of new leases/revision of dead rent of existing leases in the area concerned shall not have any impact on yearly contract amount." 13. It is also not disputed that the petitioners entered into a contract with the State Government and the contract was reduced to writing, with the terms and conditions stipulated therein, for the purpose of collection of the royalty, which specifically stipulated that there shall be no impact on yearly contract amount in the event of cancellation/ surrender of leases or sanction of new leases including permanent/ temporary closure by Government/Court. 14. Rule 37(A)(xvi) of the Rules of 1986 has not been assailed as ultra-vires, on either of the grounds, viz., (I) lack of legislative competence; or (ii) violation of any of the fundamental rights guaranteed under Part-III of the Constitution of India or for any other constitutional provision. By a catena of judgments, it is settled law that there are only two grounds to strike down the law made by a legislative body, as aforesaid, and there is no third ground. It is also not open to strike down an enactment on the ground of arbitrariness or unreasonableness or even if, in the opinion of the court, the enactment may be unjustified. 15. It is also not open to strike down an enactment on the ground of arbitrariness or unreasonableness or even if, in the opinion of the court, the enactment may be unjustified. 15. From the materials available on record, the grievance of the petitioners, while assailing the vires, legality and validity of Rule 37(A) (xvi) in the face of Section 56 of the Indian Contract Act, 1872, cannot be sustained for the reason that in such a situation alternative, efficacious and speedy remedy under the law is available to the petitioners. 15. The grievance raised pleading the grounds is really one of unreasonableness and for those reasons, in our opinion, the challenge to the legality and validity of Rule 37(A)(xvi) being ultra-vires of Article 14 and 19(l)(g) of the Constitution, cannot be sustained. Further, it is an admitted case of the petitioners that the State respondents modified the procedure by a policy dated 10th December, 1986 and12th September, 1988 and thereafter, by policy circular dated 3rd October, 1988. 16. A mere fact of refusal of the State-respondents to grant rebate to the petitioners for the period in dispute i.e. 1st April, 2013 to 18th April, 2013; when the excavation of Bajri (sand) was completely stopped, cannot, by any stretch of imagination, be a ground to assail the vires of Rule 37(A) (xvi) of the Rules of 1986. 16. From the admitted facts and materials available on record, it is evident that the petitioners entered into agreement(s) with the State Government, reduced to writing on 23rd March, 2011 and 2nd July, 2011, respectively. The agreement(s) stipulated terms and conditions including one under Clause 3(xvi) wherein it has been specifically provided that there shall be no impact on yearly contract amount of dead rent, for the existing leases in the area concerned. Thus, the petitioners were conscious of the terms and conditions of the contract, state of facts as well as the law applicable. Be that as it may, in the event of subsequent developments, the petitioners were at liberty either to rescind the contract or to seek restitution or to affirm the contract reserving their right to seek damages by way of restitution for the loss. The very fact that the petitioners resorted to collection of royalty in terms of the contract/agreement clearly indicates their affirmation. The very fact that the petitioners resorted to collection of royalty in terms of the contract/agreement clearly indicates their affirmation. The petitioners neither rescinded the contract nor reserved their right to seek restitution by way of damages and proceeded further, is also indicative of the full knowledge of the facts to the petitioners. In these attending facts and circumstances, it can safely be concluded that the petitioners in spite of having acquired complete knowledge of the true facts proceeded with the collection of royalty in terms of the agreement(s). Thus, the petitioners took a conscious decision to elect to stand by the agreement(s). 17. For the reasons and discussions herein above, we find it difficulty to accept the proposition of the learned Senior Counsel, on those grounds, to declare Rule 37(A) (xvi) of the Rules of 1986 ultra-vires of Article 14 and 19(l)(g) of the Constitution of India or Section 56 of the Indian Contract Act, 1872. 18. In the result, the challenge fails. Rule 37(A)(xvi) of the Rules of 1986 is absolutely intra-vires legal and valid. 19. Since we have not put to scrutiny the matter on merits but for challenge to the vires of Rule 37(A)(xvi) of the Rules of 1986; it will open for the petitioners to avail of the remedies available under the law. 20. In view of the final adjudication on the writ petitions, the stay application stands closed. 21. No costs." 11. While considering the judgment rendered in the case of Nawal Singh Ratnawat (supra), the Hon'ble Division Bench in the case of M/s C.K.M & Company (supra) held as under :- "19. The terms in the contract, which prohibited any impact upon the royalty, contractual appointment upon the new mining leases being granted or the present mining leases being terminated, is a very broader proposition and has a comprehensive impact upon the mining leases. It is an admitted position in this case that the writ petitioners had entered into an agreement for collection of royalty, which contains the aforesaid language of absolute liability irrespective of the status of the mining operations. The contract between the parties was in writing and the terms and conditions were absolutely stipulated therein, including the collection of royalty, and such stipulation was categorical in nature. 20. The contract between the parties was in writing and the terms and conditions were absolutely stipulated therein, including the collection of royalty, and such stipulation was categorical in nature. 20. In view of the above, it is apparent that the respondents/writ petitioners had entered into the contract with complete consciousness of the specific language therein in the agreement that they shall be paying the collected royalty of a particular area irrespective of the status of the mining operations, and hence, no relief could have been granted to them. Thus, the law of equity, without any basis, cannot override the specific conditions in the contract in the matter of collection of royalty, and therefore, the impugned order deserves to be set aside, so far it relates to the State. 21. In light of the aforesaid discussion, D.B.Civil Special Appeal (Writ) No.212/2007 filed by the State is allowed and the impugned order dated December 08, 2006, so far as it pertains to the same is quashed and set aside. However, D.B.Civil Special Appeals (Writ) No.925/2006, 48/2007 and 49/2007 are dismissed." 12. Fore the foregoing discussion, the writ petition having no merit is hereby dismissed. The stay petition also stands dismissed.