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2025 DIGILAW 735 (AP)

N. R. Wines v. State of Andhra Pradesh

2025-06-19

VENKATESWARLU NIMMAGADDA

body2025
ORDER : VENKATESWARLU NIMMAGADDA, J. This writ petition is filed under Article 226 of the Constitution of India seeking following relief: "to issue an appropriate writ, order or direction particularly one in the nature of writ of Mandamus declaring the order vide Rc.No.30/2025/B1 dated 17.05.2025 passed by Respondent No.4 under Section 31(1)(b) of the Andhra Pradesh Excise Act, 1986 read with Rule 57 of the Andhra Pradesh Excise Rules, 2024 as illegal, arbitrary, unjust and violative of the provisions of the Andhra Pradesh Excise Act, 1986 and the Rules made thereunder violative of the principles of the natural Justice and unconstitutional and consequently set aside the order vide Rc.No.30/2025/BI dated 17.05.2025 of the 4th Respondent and pass such other order or orders...” 2. The case of the petitioner in brief is that the petitioner was granted license for sale of Indian Made Foreign Liquor (IMFL) and Foreign Liquor (FL) for the period commencing from 11.02.2025 to 30.09.2026 in respect of the A4 shop situated at Sy.No.340/14 of Garlapeta Village, Garlapeta Panchayat, Marripudi Mandal. The petitioner has been running the subject shop underthe name and style of M/s. N.R. Wines in accordance with the terms and conditions as stipulated under the provisions of Andhra Pradesh Excise Act, 1986 and the Rules there under. While things stood thus, FIR was registered on 29.04.2025 against the petitioner for the offences alleged to have been committed under Section 36(1 )(b) & (c) r/w Rule 32 of A.P. Excise Rules, 2024 by allegedly selling of IMFL at a price exceeding the Maximum Retail Price (MRP). Subsequently, the respondent No.4 issued show cause notice dated 07.05.2025 but served on 12.05.2025, calling upon the petitioner to show cause as to why action should not be initiated against him for violation of maximum retail price. For which, the petitioner herein submitted his reply on 17.05.2025 denying all the allegations, But, on the very same date, respondent No.4 passed an impugned order dated 17.05.2025 suspending the license granted to the petitioner under Section 31(1)(b) of Andhra Pradesh Excise Act, 1986 r/w Rule 57 of AP Excise Rules 2024. 3. For which, the petitioner herein submitted his reply on 17.05.2025 denying all the allegations, But, on the very same date, respondent No.4 passed an impugned order dated 17.05.2025 suspending the license granted to the petitioner under Section 31(1)(b) of Andhra Pradesh Excise Act, 1986 r/w Rule 57 of AP Excise Rules 2024. 3. The further case of the petitioner is that the Section 47 of the Andhra Pradesh Excise Act, 1986 empowers the competent authority, namely, respondent no.4 to compound the offences falling under Section 31(1)(b) of the said Act by accepting a sum of money towards penal amount as may be prescribed by the Government from time to time provided that an application for such compounding is submitted prior to the issuance of an order of suspension and canceliation of the license. it is submitted that Rule 5(1) of the compounding Ruies confers a right upon the petitioner to submit a written appiication requesting for compounding of the alleged offences within 15 days from the date of receipt of show cause notice. But in the case on hand, the show notice was issued on 07.05.2025 (12.05.2025) and the license was suspended on 17.05.2025. Therefore, the petitioner was precluded from exercising his statutory right to seek for compounding of the alleged offence under Section 47 of the Act as on 17.05.2025, which is much before to the expiry of the 15 days statutory period prescribed under the compounding Rules. As such, without affording adequate time or opportunity to invoke the remedy of compounding as contemplated, the respondent No.4 passed the impugned suspension order dated 17.05.2025 is contrary to the statutory observations as contemplated under law. Aggrieved by the same, the petitioner herein filed the present writ petition. 4. Learned counsel for the petitioner submits that since the offence registered against the petitioner is a compounding offence, the petitioner is ready to comply with the order of compounding to be passed, since the respondents passed an order of compounding as per Section 47 of the Act. 5. In support of his contention, learned counsel for the petitioner also placed reliance on the judgment rendered by the composite high Court in N.Malla Reddy v. State of Andhra Pradesh and others, 2013 (6) ALD 247 wherein, this Court observed as under; 18. 5. In support of his contention, learned counsel for the petitioner also placed reliance on the judgment rendered by the composite high Court in N.Malla Reddy v. State of Andhra Pradesh and others, 2013 (6) ALD 247 wherein, this Court observed as under; 18. A criminal case has been Instituted against the petitioner for the offences, under Section 24(a) and Section 36(b) and (c) of the Act, which are not among the offences compoundable under Section 47 of the Act. Insofar as these offences are concerned, neither has the petitioner claimed nor is he entitled to have such offences compounded. An order of suspension or cancellation of license, for violation of clauses (a) or (b) of Section 31(1), is compoundable, under Section 47(1) of the Act. in cases where a license is either cancelled or suspended, in terms of clauses (c) to (e) of section 31(1). The provisions of Section 47(1) are not attracted, and the licensee is not entitled to claim the benefit of having such offence is compounded. The word “liable", occurring In many statutes, does not convey the sense of an absolute obligation or penalty but merely Importing a possibility of attracting such obligation or penalty In (Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity, AIR 1979 SC 1029 ). Use of words liable to be cancelled or suspended’ under Section 47 of the Act can only mean that an application for compounding has to be made prior to an order of suspension or cancellation being passed under Section 31(1) of the Act, not thereafter. 6. Heard both the learned counsel and perused the material placed on record. 7. As contented by the learned counsel for the petitioner that the offences committed under Section 31(1) (a) & (b) of the Act are compoundable offences as per the Section 47 of the A.P.Excise Act, 1968. This offence in hand is also a compoundable offence. In the light of the above decision, this court observed that the application for compounding offence has to be made prior to the order of suspension or cancellation being passed under Section 31(1)(a) and (b) of the Act, 1968. This offence in hand is also a compoundable offence. In the light of the above decision, this court observed that the application for compounding offence has to be made prior to the order of suspension or cancellation being passed under Section 31(1)(a) and (b) of the Act, 1968. In view of the same, the contention of the learned counsel for the petitioner that the impugned order is passed precluding the petitioner from approaching the authority seeking compounding of offence as envisaged under Section 47 of the Act is valid and merit submission. It is further observed that the impugned order of suspension dated 17.05.2025 is appears contrary to the scheme of the Act. For understanding the same the provisions of Section 31(1) (a) & (b) and Section 47 of the Act extracted hereunder; “31. Power to cancel or suspend licence, etc. - (1) Subject to such restrictions as may be prescribed, the authority granting any licence or permit under this Act [irrespective of the period to which the license or permit relates],- (a) if any duty or fee payable by the holder thereof Is not duly paid; or (b) in the event of any breach by the holder thereof, or by any of his servants or by any one acting on his behalf with his express or implied permission, of any of the terms and conditions thereof; 47. Compounding of offences - (1) The Collector, or any Prohibition and Excise Officer specially empowered in that behalf may accept from any person whose licence or permit is liable to be cancelled or suspended under clause (a) or clause (b) of sub section (1) of section 31 or who is reasonably suspected of having committed an offence falling under clause (b), 1[clause (b), clause (c), or clause (g) of section 34], clause (a), clause (e), clause (f), clause (g) or clause (h) of section 36, clause (b), clause (c) or clause (d) of section 37 or section 41 2[a sum of money not exceeding a sum of money subject to such minima, as may be prescribed and notified by the Government from time to time], in lieu of such cancellation or suspension or by way of compensation for the offence which may have been committed as the case may be; and in all cases in which any property has been seized is liable to confiscation under this Act, may release the same on payment of the value thereof as estimated by such officer: Provided that where the property so seized is a liquor manufactured in contravention of this Act, such liquor shall not be released but shall be disposed of in such manner as may be prescribed. 3[Provided further that in the case of an offence committed by the holder of a bar license for the first time, such offence may be compounded for a sum equal to two times of the license fee along with a warning. In the case of an offence committed for the second time by the Bar licensee, the bar licnese shall be cancelled.] (2) On the payment by the person the sum of money or the value or both, as the case may be 4[in accordance with the provisions of sub-section (1) or section 47-A], such person, if in custody shall be set at liberty, and all the property seized may be released and no proceedings shall be instituted 5[or continued] against such person in any criminal court. The acceptance of compensation shall be deemed to amount to an acquittal and in no case any furtherproceedings be taken against such person or property with reference to same act. The acceptance of compensation shall be deemed to amount to an acquittal and in no case any furtherproceedings be taken against such person or property with reference to same act. 47-A. Special powers of the Commissioner in regard to compounding of offences - (1) Any person who is reasonably suspected of having committed an offence 7[falling under section 38] may apply to the Commissioner for compounding the offence before he is convicted. (2) On receipt of such application, the Commissioner having regard to the circumstances of the case, may in his discretion order for compounding the offence on payment of a sum of money by way of compounding fee or compensation for the offence on such terms and conditions as he deems fit: Provided that the sum of money fixed as compounding fee or compensation by the Commissioner under this section shall not be less than five times but not more than ten times the duty involved and where no duty is involved, not less that rupees fifteen thousand but not more than rupees one lakh; Provided further that in all cases in which any property has been seized as liable to confiscation under this Act, may be ordered by him to be released on payment of the value thereof as estimated by him or by an officer authorized by him in this behalf; Provided also that where the property so seized is a liquor manufactured in contravention of this Act, such liquor shall not be released but shall be disposed of in such manner as may be prescribed. ” 8. The contention of the learned Government Pleader for the respondents that pending enquiry the impugned order of suspension of the license of the petitioner was issued and the enquiry would be completed within a short period. Basing upon the enquiry report, further orders would be passed in accordance with law lacks merits and contrary to the object to be achieved under Section 31 (1) of the Act as mentioned above. 9. On the other hand the order impugned is in violation of principles of natural justice. Admittedly, the notice was issued on 07.05.2025, but served 12.05.2025 and the order of suspension was passed pending enquiry on 17.05.2025 is nothing but ignoring reasonable time, opportunity of hearing and also exercising the power high handedly, arbitrary and in violation of statutory compliance as envisaged under law. Admittedly, the notice was issued on 07.05.2025, but served 12.05.2025 and the order of suspension was passed pending enquiry on 17.05.2025 is nothing but ignoring reasonable time, opportunity of hearing and also exercising the power high handedly, arbitrary and in violation of statutory compliance as envisaged under law. Moreover, it is also opposite to the judgment referred supra. Once the offence found by the respondents is compoundable, the petitioner is entitled for compounding of the offence as per the scheme of Act instead of coercive action taken by the respondents by way of suspension or cancellation of license against the petitioner. 10. In view of the foregoing discussion, this writ petition is disposed of by setting aside the impugned proceedings dated 17.05.2025. Further the respondents are hereby directed to consider the explanation already submitted on 17.05.2025, i.e., the same date of impugned order and pass an order, in accordance with Section 31(1) and Section 47 of the Act, within a period of one week from the date of receipt of copy of this order. After passing of such order, the petitioner shall comply with the same, as directed, within a period of two weeks, thereafter. After such compliance, the respondents shall restore the license of the petitioner within a period of one week, thereafter, in accordance with law. There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall also stand closed.