JUDGMENT
Rajes Kumar, J.
1. By means of the present writ petition under Article 226 of the Constitution of India, the petitioners seek the following reliefs:
(a) “to issue a writ, order or direction in the nature of certiorari quashing the impugned judgment and order dated 23.09.2005, received by the petitioners on 08.10.2005, passed in Excise Revision No. 69 of 2005, Anil Kumar and Anr. v. Excise Commissioner and Ors. (Annexure-1 to this writ petition).
(b) to issue any other writ, order or direction which this Hon’ble Court may deem fit and proper in the circumstances of the case.
(c) to award cost of the petition to the petitioners/
2. The brief facts of the case are. that under the New Excise Rules, namely, Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Country Liquor) Rules, 2002 (hereinafter referred to as “Rule, 2002”), the settlement of the country liquor shops of the District Etawah for the excise year, 2002-2003 took place. Under Rule, 2002. the country liquor shop known as Bhartana No. 2 was settled in favour of petitioner No. 1 and shop known as Bhartana No. 3 was settled in favour of petitioner No. 2 in a lottery drawn on 25th March, 2002. The minimum guaranteed quota for the aforesaid shop of petitioner No. 1 was 42,000 bulk lines, the basic licence fee was Rs. 4,20,000/- and the minimum guaranteed quota for the shop of petitioner No. 2 was 39.000 bulk litres, the basic licence fee was Rs 3,90,000/-, earnest money was Rs 39.000/- and the security amount was Rs 3,19,300 –
3. Under Rule 12 of the Rules. 2002. the person selected as a licensee is required to deposit the entire amount of basic licence fee within three working days and half of the security amount within 10 working days and the balance security amount within 20 days of the information of his selection. If he fails to deposit the aforesaid amount within the prescribed period. his selection stand cancelled and his earnest money and the basic licence lee shall liable to be forfeited in favour of the State Government and the shop is to be re-settled.
4. Admittedly, the petitioners could only deposit the basic licence fee and could not deposit the security and the earnest money as provided under the Rules. Though for the non-deposit of the security and the earnest money, selection stood cancelled in view of the provisions of Rule 12, but the petitioners were permitted to run the shops appears to be as an interim measure. The petitioners continued to pay the amount calculated on the basis of the liquor lifted by them. However, the District Magistrate, vide order dated 21st June, 2002 cancelled the alleged allotment/licences under Rule 14 of the Rules, 2002. The said order was communicated to the petitioners by the District Excise Officer vide order dated 22nd June, 2002. It may be mentioned here that the petitioners could not challenge the said order and the said orders have become final.
5. Thereafter, on 12.09.2003. the petitioners received demand notices dated 09.07.2003 by which the demands were raised for the payment of licence fee allegedly for surrendering their licences under Section 36 of the Act and Rule 19 of the New Rules. On being challenged, the said notices have been quashed by the Excise Commissioner vide orders dated 18.11.2003. The notices were quashed on the ground that they were not in accordance to the Rules
6. The Distinct Excise Officer again issued notices dated 25.11/2003 raising the demand of Rs. 30. 95. 750/- from the petitioner No. 1 and Rs. 28, 78, 930/- from petitioner No. 2 on the ground that even after the notices of re-settlements dated 26.09.2003 22.12.2002 and 19.01.2003. the shop could not be settled, hence the original licensees were liable for the loss of the excise revenue. The petitioners challenged the aforesaid notices dated 25.11.2003 in appeal Nos. 260 and 26l of 2003 before the Excise Commissioner who vide common order dated 14.01.2004 dismissed the aforesaid appeals.
7. Being aggrieved by the aforesaid order, petitioners filed Revision No. 8 of 2004 before the State Government under Section 11(2) of the Act. The State Government vide order dated 22.07.2004 remanded back the matter to the Excise Commissioner to decide the appeals afresh. The Excise Commissioner vide order dated 29.07. 2005 again by a common order dismissed both the appeals The Appellate authority held that since the petitioners had defaulted in paying the licence fee and had not lifted their quota, hence they were liable for payment of licence fee and the loss incurred by the Government for the entire excise year Against the aforesaid order, petitioners filed revision No. 69 of 2005 before the State Government. The State Government vide impugned older dated 23rd September. 2005 dismissed the revision and held that once the petitioners were selected as licensees, they were liable for payment of licence fee for the entire excise year. Being aggrieved by the aforesaid order, present petition has been filed.
8. Heard learned Counsel for the parties.
9. Learned Counsel for the petitioner submitted that Rule 3 of the Country Liquor Rules provided that subject to the provision of the Rules and subject to the payment of basic licence fee and security amount of the retail shop for the sale of country liquor, licence shall be settled or re-settled by the fixed fee system. Rule 12 of the Rule 2002 provided that the person selected as a licensee is required to deposit the entire amount of basic licence fee within three working days and half of the security amount within ten working days and the balance security amount within twenty days of the information of his selection. If he fails to deposit the aforesaid amount within the prescribed period, selection stand cancelled and the earnest money and the basic licence fee shall be forfeited in favour of the State Government and the said shop shall be subject to re-settlement. Thus, on non-furnishing of the security and non-compliance of Rule 12, the allotment of the petitioner stood cancelled and the shop should be subjected to re-settlement. However, the petitioners were permitted to run the shop provisionally only without issuing any permanent licence for the year and, thus, the petitioners was liable for the payment only for the period during which the petitioner could run the shop. He submitted that none of the provisions provide for the recovery of the balance amount from the petitioners and at the best basic licence fee and other amount deposited by the petitioners could be forfeited and the petitioners could have black listed. He submitted that for the inaction on the part of the excise officer, which resulted so-called revenue loss, the petitioners cannot be asked to pay the demand, which is not legally due against the petitioners and for the loss being suffered by the revenue necessary action would be taken against the authorities concerned. He submitted that since no licence was issued, there was no question of cancellation of the licence, but without going into the controversy, the demand for the period subsequent to the date of the cancellation cannot be raised. In support of his contention, he relied upon the decision of this Court in the case of Smt. Indira Devi v. State of U.P. and Ors. reported in 2005 (3) AWC 2879 and the decision of this Court in Civil Misc. Writ Petition No. 1132 of 2004 Rajendra Singh Chauhan v. State of U.P. and Ors. decided on 9th May, 2006
10. Learned Standing Counsel relied upon the impugned orders. Rule 3, 6 and 12 of the Rules 2002 are referred herein below.
3. Settlement of licences for retail sale- (a) Subject to the provision of these rules and subject to the payment of basic licence fee security amount of the retail shop for sale of country liquor licences shall be settled or resettled by the fixed fee system as specified herein.
(c) The licence shall be granted in Form C.L. 5-C for retail sale of country liquor in scaled bottles or such containers as approved by the Excise Commissioner from time to time for consumption both ” On” and “Off” the premises.
6. Grant of licence. The licence shall be granted on payment of basic licence fee and deposit of the security amount in accordance with the provisions of these rules.
12. Payment of basic licence fee and security amount. In case an applicant is selected as licensee, he shall deposit the entire amount of basic licence fee within 3 working days of being informed of his selection. He shall be required to deposit half the security amount within 10 working days of information of his selection and balance of security amount within 20 days of information of his selection. If he fails to deposit the amount of basic licence fee or security amount within prescribed period, his selection shall stand cancelled and his earnest money and the basic licence fee and security amount if deposited by him shall be forfeited in favour of the State Government and the said shop shall be resettled forthwith.
11. From the perusal of aforesaid rules, it is apparently clear that for the non-deposit of the security within the prescribed, the selection stands cancelled and the earnest money, basic licence fee and the security amount deposited by the person would be forfeited in favour of the State Government. It is also clear from the aforesaid rules that till the deposit of the basic licence fee and the security amount Within the prescribed period, the person in whose favour the lottery is drawn is considered to be the selected person for the licence, it is only after the deposit of the requisite money as required under the aforesaid rules, he become the licensee. The consequences, which flow after the grant of the licence, are provided in Rules 13, 14 and 15 of the Rules 2002. Since no licence was ever granted in favour of the petitioner at any point of time, he was not required to lift any minimum guaranteed quantity as provided under the Rules 13, 14 and 15 of the Rules 2002 nor he could be held responsible for the excise duty involved therein. In fact, the District Excise Officer should not have permitted the petitioners to run the shop and should have forfeited the amount deposited and should have resettled the shop forthwith to avoid the revenue loss, but the reason best known to them, they permitted the petitioners to run the shop up to 21st June. 2002. In this view of the matter, the liability created by the respondents against the petitioners are unjustified.
12. Similar matter came up for consideration before this Court in Civil Misc Writ Petition No. 1132 of 2004 Rajendra Singh Chauhan v. State of U.P. and Ors. decided on 9th May. 2006, This Court held as follows:
It cannot be disputed that unless and until the payment of basic licence fees and security money as required under the aforesaid Rules-12 is made, the selected applicant is not treated to be a licensee nor he is entitled to be benefits of licensee flowing there from. Rule 12 itself contemplates the consequences, in case of violation of the conditions stipulated therein and therefore, the Rule is mandatory in nature. The Rule does not confer any discretion upon the licensing authority to relax any of the conditions mentioned therein. The consequences take effect by operation of law, and therefore, in the facts of the present case, till the petitioner had not deposited the security money, as required under Rule 12 of the Rules of 2002, his selection for grant of licence itself stood cancelled in the eyes of law and he could not be treated to be a licensee. Merely because the petitioner was illegally permitted by the Excise Authorities of the District Etah to continue and run his shops, despite non-compliance of the mandatory Rule 12 he cannot be held to become a licensee within the meaning of the Rules of 2002. Since the petitioner cannot be said to have been granted any licence, having regard to the language of Rule 12, the provision of Rules 13, 14 and 15 will not be attracted in his case.
Since no licence was ever granted in favour of the petitioner in the eyes of law, at any point of time he was not required to lift any minimum guaranteed quantity as provided under Rules 13, 14 and 15 nor he could be held responsible for excise duty involved therein.
In view of the statutory rules, the petitioner cannot be fastened with the liability qua the Minimum Guaranteed Quantity or for payment duty relating to the Minimum Guaranteed Quantity, as no licence was ever granted to the petitioner, nor could be granted to the petitioner in the eyes of law. The demand raised therefore, cannot be sustained.
As a matter of fact the District Excise Authority should have cancelled the selection of the petitioner immediately after he had failed to comply with the requirement of Rule 12 of the Rules of 2002 and should have forfeited the month, which had been deposited by the petitioner, which has been done and on the contrary petitioner was permitted to run the shop contrary to statutory Rules. The reasons for such illegal continuance of running of the shop by the petitioner till 8th January, 2003, have not been disclosed.
13. The Court has further considered the aspect of the revenue loss and has issued the direction to the Principle Secretary for necessary action. In this regard, this Court held as follows:
In the opinion of the Court the loss, which has been caused to the State Government is only cause of the deliberate inaction of the Excise Authorities of District Etah in acting in accordance with the requirement of Rule 12 of the Rules of 2002 and thereby, jeopardizing the interest of the public exchequer. The loss caused to the State Government, in these circumstances, cannot be permitted to go uncared for. This Court is of the firm opinion that the loss caused because of negligence on the part of the Excise Authorities, which apparently appears to be in collusion with the petitioner, must necessarily to be redeemed and the persons responsible for such an act must be brought to book. Therefore, this Court directs the principle Secretary, Government of U.P. Excise Department, U.P. Lucknow (respondent No. 1) to take all appropriate action against the concerned excise officers of District, Etah for not performing their statutory duty as required under Rule 12 at the relevant time and thereby causing loss caused to the State Government. The Principle Secretary (respondent No. 1) after conducting an enquiry shall not only direct that the suitable department proceedings to be initiated against the official. He shall also ensure the recovery of the loss caused from the salary or other dues payable to the excise officials. Such exercise must be completed by the Principle Secretary within two months from the date a certified copy of this order is filed before him.
14. In the case of Smt. Indira Devi v. State of U.P. and Ors. (supra), this Court held that no amount could be recovered from the licensee after the cancellation of the licence.
15. For the reasons stated above, revisional order is liable to be set aside. It is held that the petitioner is not liable for the impugned demand, which is fastened on account of non-lifting of the minimum guaranteed quota or for the payment of the excise duty relating to the minimum guaranteed quota as no licence was ever granted to the petitioners, nor could be granted to the petitioners in the eyes of law except the dues which arising for the period during which the petitioners has run the shop. The Principle Secretary is directed to conduct an enquiry as directed in the case of Rajendra Singh Chauhan v. State of U.P. and Ors.. It is necessary to make the similar direction to meet the cause of revenue loss suffered by the State Government. The directions are being issued as follows:
In the opinion of the Court the loss, which has been caused to the State Government is only be caused of the deliberate inaction of the Excise Authorities of District Etawah in not acting in accordance with the requirement of Rule 12 of the Rules of 2002 and thereby, jeopardizing the interest of the public exchequer. The loss caused to the State Government. in these circumstances, cannot be permitted to go uncared for. This Court is of the firm opinion that the loss caused because of negligence on the part of the Excise Authorities, which apparently appears to be in collusion with the petitioner, must necessarily to be redeemed and the persons responsible for such an act must be brought to book. Therefore, this Court directs the principle Secretary, Government of U.P. Excise Department. U.P. Lucknow (respondent No. 1) to take all appropriate action against the concerned excise officers of District, Etawah for not performing their statutory duty as required under Rule 12 at the relevant time and thereby causing loss caused to the State Government. The Principle Secretary (respondent No. 1) after conducting an enquiry shall not only direct that the suitable department proceedings to be initiated against the official. He shall also ensure the recovery of the loss caused from the salary or other dues payable to the excise officials. Such exercise must be completed by the Principle Secretary within two months from the date a certified copy of this order is filed before him.
16. In the result, writ petition is allowed. The revisional order is set aside and the petitioners are held not liable for the impugned demand, which is fastened on account of non-lifting of the minimum guaranteed quota or for the payment of the excise duty relating to the minimum guaranteed quota as no licence was ever granted to the petitioners, nor could be granted to the petitioners in the eyes of law except the dues which arising for the period during which the petitioners has run the shop. The Principle Secretary is directed to take appropriate step as directed above.
17. A Certified copy of this order shall be issued to the learned Standing Counsel for being forwarded to the Principle Secretary for necessary actions within 15 days and a compliance report be submitted to the Registrar General of this Court immediately on the expiry of the time granted above.