IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 13181 of 2010(W)
1. K.V.ARAVINDAN, S/O.KOLLARA VELAYUDHAN,
... Petitioner
Vs
1. THE DEPUTY EXCISE COMMISSIONER,
... Respondent
2. THE EXCISE COMMISSIONER,
3. STATE OF KERALA REPRESENTED
For Petitioner :SRI.T.A.SHAJI
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR
Dated :28/09/2010
O R D E R
T.R. RAMACHANDRAN NAIR, J.
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W.P.(C). No.13181/2010-W
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Dated this the 28th day of September, 2010
J U D G M E N T
The petitioner herein is aggrieved by Ext.P12 proceedings
issued by the Commissioner of Excise wherein the specific
request made by the petitioner to adjust the security amount to
the arrears while computing the liabilities was not accepted.
2. This case has a chequered history. In the light of the
various disputes which had culminated in different Judgments of
this Court in the Writ Petitions filed by the petitioner, Writ Appeal
and the Special Leave Petition and the Civil Appeal before the
Supreme Court, it is only proper to recapitulate the entire history
since the arguments have turned round on the effect and
contents of various orders which have been passed.
3. The petitioner was an individual licensee for the Abkari
Year 1997-98 for vending toddy in Chavakkad Excise Range. He
was granted license for Toddy Shop Nos.53 to 136 of Chavakkad
Range for the years 1997-2000. The auction was confirmed by
the Board of Revenue (Excise), Thiruvananthapuram and the
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privilege to vend toddy was given with effect from 01/04/1997.
The licence was issued for one year from 01/04/1997.
4. Even though the licence was issued only for one year,
a permanent agreement was executed for a period of three years.
The petitioner, thereafter, commenced the business. It appears
that there was default in paying the kist amount during 1997-98
itself which resulted in the Department issuing demand notices,
which prompted the petitioner to approach this Court by filing
O.P.No.5470/1999. Therein, the demand was for an amount of
Rs.1,44,41,281/- and it was mentioned that if the amount is not
remitted within seven days, action will be initiated under Rule 6
(28) of the Abkari Shops (Disposal in Auction) Rules, 1974 (in
short ‘the Rules’). The Assistant Excise Commissioner, Thrissur
passed an order dated 30/05/1998 cancelling the licence by
invoking Sub Rule 28 of Rule 6 of the Rules. The security deposit
of Rs.58,51,000/- furnished by the petitioner was also forfeited
by the Government. The legality of the same was adjudicated in
O.P.No.5470/1999. The Writ Petition was disposed of by
Judgment dated 31/01/2002. The cancellation of licence was
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upheld and with regard to the forfeiture of the security, it was
found that the Commissioner of Excise is the proper authority to
pass the order and, therefore, the Excise Commissioner was
directed to take a fresh decision.
5. Thereafter, the Excise Commissioner passed a fresh
order dated 28/05/2002, a copy of which has been made
available by the Government Pleader along with the memo dated
18/08/2010. It was held that the licence is liable to be cancelled
and security is liable to be forfeited. This was under challenge in
O.P.No.17686/2002 which was dismissed by the learned Single
Judge along with connected Writ Petitions. It was also observed
that the Government may consider the settlement of the matter
by introducing an amnesty scheme. This was taken up before
the Division Bench in W.A.No.641/2005 which was dismissed
along with other connected Writ Appeals. Therein it was held
that the petitioners are also not entitled to challenge the recovery
proceedings since Rule 6(28) of the Rules provides for recovery
of loss. The petitioner carried the matter before the Apex Court
in SLP (Civil) Nos.9394-97/2005 which was dismissed as per
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order dated 06/05/2005 holding the view that no interference is
called for and by recording the submission that he would again be
approaching this Court to raise another ground. Thereafter,
R.P.No.580/2005 was filed against the Judgment in
W.A.No.641/2005. The Review Petition was dismissed as per
order dated 12/09/2007. Again the petitioner approached the
Apex Court by S.L.P. (Civil) No.2705/2008 where the leave was
granted. The Apex Court passed Ext.P4 interim order to the
effect that the petitioners will only be required to pay licence
fee/rental for a period of one year unless it has already been
paid. A batch of Civil Appeals were disposed of by Ext.P6
Judgment. The Civil Appeal filed by the petitioner was allowed as
per Ext.P5, relying on Ext.P6. The impugned order passed by this
Court was set aside and it was directed that the recovery of rent
will be only for one year and not for three years.
6. According to the petitioner, he had paid during the
pendency of these cases the entire amount towards admitted
liability and had paid Rs.1,05,16,939/- in excess and, therefore,
he sought for refund as per Ext.P7 representation. Apart from
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that the petitioner has been conducting a bar attached hotel as
Managing Partner of Vrindara Tourist Home, Edamuttam. The
respondents refused to renew the licence by Ext.P2 order herein
for the reason that one of the partners, namely, the petitioner
herein had to clear arrears in his individual business. The
petitioner disputed this and then he filed an application to renew
the FL.3 licence as per Ext.P8 and, Ext.P9 is the true copy of the
statement of accounts. He later approached this Court by filing
W.P.(C).No.1130/2010 wherein this Court directed the second
respondent to consider Ext.P8 application for renewal of licence
taking into account the Judgment of the Supreme Court as well.
Ext.P10 is the copy of the said Judgment. Finally, Ext.P11 order
has been passed. Ext.P11 Order reveals that an amount of
Rs.1,18,36,472/- is remaining to be realised from the petitioner.
The said order resulted in refusal to renew the bar licence. On
implementation of Ext.P5 Order of the Apex Court, the Excise
Commissioner passed Ext.P12 order. The authority therein
directed to revise the Demand Collection of Balance Statement
[D.C.B Statement] by limiting the balance to the year 1997-98
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only and, directed that the security amount may not be adjusted
to the arrears while computing the liabilities. This is how the
petitioner has approached this Court by filing this Writ Petition.
Ext.P13 is the order passed in respect of the parties covered by
Ext.P6 Judgment of the Apex Court wherein the security amount
has been adjusted towards the liability. The petitioner seeks for
a similar treatment here.
7. The attack is against the refusal to renew the FL.3
licence on the plea that the petitioner is in arrears as well as the
refusal to adjust the security amount to the arrears while
computing the liabilities, which are evidenced by Ext.P12 order.
8. The learned counsel for the petitioner Shri T.A.Shaji
submitted that since the petitioner has been granted all the
benefits granted to the parties in Ext.P6 Judgment going by the
Order in Ext.P5, the security amount is liable to be adjusted
towards arrears and, therefore, it can be seen that he is not a
defaulter and excess amount has been paid which are liable to be
refunded to the petitioner. The said stand is opposed by the
learned Government Pleader appearing for the respondents for
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various reasons and particularly that there is no direction by the
Apex Court in Ext.P5 to adjust the security amount.
9. Along with the memo dated 18/08/2010, the
statements concerning the calculation of the arrears without
adjusting the security deposit and its interest, and after adjusting
the security deposit and its interest have been given. If the
security amount is not adjusted, the balance as on 31/07/2010
will be Rs.1,26,06,026/- and if the amount is adjusted then the
amount remitted by the petitioner in excess will be
Rs.67,32,729/- enabling him to get a refund.
10. The arguments by the learned counsel for petitioner
were mainly confined to Ext.P5 order passed by the Apex Court in
Civil Appeal Nos.7844-46/2009. The said order is reproduced
below for easy reference:-
“The facts have been set out in the impugned
order and hence we are not repeating the same here.
In our opinion, the facts of the case are covered
by a judgment of this Court rendered in Civil Appeal
No.1541 of 2009 dated March 05, 2009, titled V.A
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Ashokan vs. Asstt. Excise Commissioner & Others. In
paragraph 36 of the said judgment, it has been stated
that if the licence is granted for one year, then there
cannot be a recovery of rent for three years.
Following the said judgment, these appeals are
allowed and the impugned order of the High Court is
set aside and it is directed that recovery of rent will be
only for one year and not for three years.”
The learned counsel for the petitioner Shri T.A.Shaji submitted
that significance should be attached to the opening sentence in
the second paragraph that “in our opinion, the facts of the case
are covered by a judgment of this Court rendered in Civil Appeal
No.1541 of 2009 dated March 05, 2009, titled V.A.Ashokan vs.
Asstt.Excise Commissioner & Others“. It is therefore submitted
that all the benefits that have been granted to the parties to the
said Judgment, are liable to be granted to the petitioner herein
also since the facts of this case are similar. The learned counsel
for the petitioner invited my attention to the discussions in Ext.P6
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Judgment by the Apex Court especially, paragraphs (36) and
(41). In paragraph (41), their Lordships have held as follows:-
“41. ………….In the peculiar facts and
circumstances of this case, therefore, we are of the
opinion that it was not a case where even Rule 6(28)
could have also been resorted to. ………”
The learned counsel therefore submitted that while implementing
Ext.P6, by Ext.P13 order, the demand was recomputed by
limiting the demand to the year 1997-98 and also by adjusting
the security deposit and interest on security deposit to the
liability of the defaulters in the respective dates of the forfeiture
of the same to government account. Therefore, it is submitted
that the refusal of the latter benefit as regards the petitioner is
not supportable and is arbitrary and illegal.
11. The learned Government Pleader, Shri Manoj Kumar
raised the following arguments. It is submitted that what was
granted to the petitioner as per Ext.P5 Judgment of the Apex
Court is a declaration that the recovery of the rent will only be for
one year and not for 3 years. The said benefit has been
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specifically granted by the respondents by Ext.P12 order. With
regard to the adjustment of security, it is argued that in the light
of the earlier proceedings, the same have been forfeited as per
competent orders passed by the Assistant Excise Commissioner
and confirmed by the Excise Commissioner. The challenge
against the said order was repelled by this Court and, ultimately,
the SLP (Civil) Nos.9394-97/2005 were also dismissed. It is
therefore, submitted that the said question which has attained a
finality cannot be reopened by the petitioner as the same will be
barred by the principles of res judicata. Shri T..A.Shaji submitted
that the adjustment of security only follows the directions in
Ext.P5 and, therefore, the denial of the benefit on such technical
pleas cannot be justified.
12. When the factual matrix is examined, the following will
be evident:-
In Judgment in O.P.No.5470/1999, this Court had directed
the Excise Commissioner to consider whether the security deposit
is to be forfeited and whether any amount is payable for the year
1998-99 and 1999-2000 towards loss sustained by Government
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due to default by the petitioners. It is accordingly, the Excise
Commissioner passed the order dated 28/05/2002 against the
petitioner holding the view that the licence is liable to be
cancelled and security is liable to be forfeited. The challenge
against the same in O.P.No.17686/2002 resulted in dismissal,
which was challenged in W.A.No.641/2005. The Division Bench
in paragraph (4) of the Judgment in W.A.No.641/2005 and
connected cases held that “petitioners are also not entitled to
challenge the recovery proceedings since Rule 6(28) provides for
recovery of loss. They are bound by the agreements executed by
them and the various provisions of the Rules. We therefore fully
endorse the view of the learned Single Judge and dismiss the
Appeals.” In the S.L.P (Civil) Nos.9394-97/2005 leave was not
granted and it was dismissed recording the submission that the
petitioner could again approach this Court to raise an additional
ground namely that the amount realised from the subsequent
vendees by the licensee for the period should have been adjusted
against the loss claimed by the respondent authorities.
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Accordingly, the petitioner filed R.P.No.580/2005. The Division
Bench passed the following order in the said Review Petition:-
“2. We find no reason to entertain these review
petitions. Learned counsel appearing for the review
petitioners referred to Annexure-A order of the
Supreme Court and submitted that the amount
realised from the subsequent vendees by the licensees
for the period should have been adjusted against the
loss claimed by the respondent authorities. Supreme
Court has noticed that the said contention was never
raised before this Court. We also reiterate that such a
contention was never raised before this Court and
hence cannot be raised through these review petitions.
If the petitioners have got any further grievance they
may approach the Government about which we
express no opinion. So far as these review petitions
are concerned, no grounds have been made out to
review our judgment. Review Petitions lack merit and
they are dismissed.”
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Therefore, what was sought for before the Division Bench in the
Review Petition is the adjustment of the amount realised from the
subsequent vendees by the licensees against the loss claimed by
the respondents. It was repelled on the finding that such a
contention was never raised before this Court and hence cannot
be raised in those Review Petitions and if the petitioners had got
any further grievance they may approach the Government, about
which the Bench expressed no opinion.
13. The learned Government Pleader is therefore right in
submitting that as far as the point concerning the forfeiture of
security is concerned, the matter became final and concluded by
the dismissal of the Writ Petition, Writ Appeal and the Order in
Special Leave Petition (Civil) Nos.9394-97/2005 and the order
passed by the Division Bench in R.P.No.580/2005.
14. But, still the learned counsel for the petitioner Shri
T.A.Shaji submitted that in the light of Ext.P5 Order of the Apex
Court, the matter is open for consideration by the respondents as
to whatever all the benefits granted in Ext.P6 Judgment are liable
to be granted to the petitioners who are parties in Ext.P5 Order
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also. Herein, it is true that in paragraph (2) Their Lordships were
of the opinion that the facts of the case are covered by Judgment
Ext.P6. Specific reference was made to paragraph (36) of the
Judgment in C.A.No.1541 of 2009 wherein it has been stated that
if the licence is granted for one year, then there cannot be
recovery of rent for three years. Accordingly, in the operative
portion of the Order Ext.P5, it was directed that the recovery of
rent will only be only for one year and not for three years. Even
though, Shri T.A.Shaji wanted me to read into the Order the
benefit of adjustment of security forfeited along with the interest,
the said plea cannot be accepted in the light of the fact that no
such benefits have been granted by the Apex Court in Ext.P5.
15. In the judgment of the Apex Court, produced as
Exhibit P6, the relevant facts show that criminal cases were
registered against the appellants therein, as the samples
collected for chemical analysis stated that “Diazepam” had been
detected at varying rates of 1.8 mg to 2.2 mg per litre of toddy
sample, and criminal cases were registered. Thereafter
proceedings were issued cancelling the licences in terms of the
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provisions of Rule 6(30) and Rule 6(28) by the Assistant Excise
Commissioner. So far as the orders directing cancellation of
licence in terms of Rule 6(28) are concerned, they were referred
to the Excise Commissioner for confirmation. At that stage, the
Board purported to have come to the conclusion that in cases
where licenses were cancelled in terms of the provisions of Rule
6(30) of the Rules, Rule 6(28) would also be automatically
attracted and accordingly, the decision of the Assistant
Commissioner was upheld. The criminal cases ended in acquittal.
The points urged in the appeal are referred to elaborately in
paragraph No.19 of the judgment. As far as recourse to Rule 6
(28) is concerned, the point raised was that as there was no
failure to pay kist and in any event having regard to the fact that
the amount of security furnished would cover the entire kist
amount, such proceedings need not have been initiated. In
paragraph No.26 of the judgment, the validity of the proceedings
under Rule 6(30) was considered and it was held that violation of
rules will attract Rule 6(30) leading to cancellation of licence. It
was further held in paragraphs 27 and 30 that the consequences
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of forfeiture under Rule 6(28) of the Rules is not automatic,
consequent upon the cancellation of licence in terms of Rule 6
(30). After elaborately considering the scope of Rule 6(28), the
principles underlying under Section 74 of the Contract have also
been considered. Finally in paragraph 41, after noticing that all
the appellants have been acquitted, it was held as follows:
“In the peculiar facts and circumstances of
this case, therefore, we are of the opinion that
it was not a case where even Rule 6(28) could
have also been resorted to.”
Herein, in this case, as rightly pointed out by the learned
Government Pleader, the facts are different. The petitioner was
not involved in any criminal case, which has led to the
cancellation of the licence. The payment of kist was defaulted
during the currency of the licence. The learned Government
Pleader made available a copy of the notice issued to him which
was produced as Exhibit P3 in O.P.No.5470/99 by the petitioner,
pointing out that in respect of Toddy Shop Nos.53 to 136 for the
period from 9/97 to 1/98 and for the months of 4th and 5th of
1998, the monthly instalments along with interest have been
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defaulted. The defaulted amount in respect of each month has
been mentioned and the total amount shown is Rs.1,36,52,776/-.
Adding interest portion, the total amount of instalments was
Rs.1,36,52,776/- and adding interest to the tune of 7,88,498/-
the amount has been finally arrived at 1,44,41,281/-. It was
informed to him that the amount if not paid within one week
proceedings under Rule 6(28) will be taken against the petitioner.
16. This and other subsequent proceedings were under
challenge in O.P.No.5470/99, wherein this Court ultimately
directed the Commissioner of Excise to examine the matter.
Incidentally, the final order forfeiting the cancellation of licence
and forfeiture of the deposit produced as Exhibit P4 in the said
O.P. was interfered with, only with regard to the portion
forfeiting the deposit, since the Assistant Commissioner was not
the authority to pass an order in that regard. The portion of the
order cancelling the licence was upheld and with regard to the
forfeiture of the licence, the matter was directed to be considered
by the Commissioner. The Writ Petition challenging the order
passed by the Commissioner was dismissed as per judgment in
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O.P.No.17686/2002 dated 14.1.2005. In paragraph No.3 of the
said judgment, a copy of which was made available by the
learned Government Pleader,it was observed as follows:
“The petitioners have no case that licence cannot
be cancelled for non-payment of kist arrears and
none of them have a case that they paid the kist
for the year 1997-98 on the due dates or were
even willing to pay the arrears of kist with delay
even after receipt of notice proposing
cancellation of licence on account of default and
so much so, the licences issued were rightly
cancelled.”
The orders of the Commissioner of Excise, challenged in all the
O.Ps. were upheld. This was affirmed by the Division Bench in
W.A.No.641/2005 and the Special Leave Petition Nos.9394-
97/2005 was also dismissed and the order in full is extracted
below:
ORDER
” The only ground raised by the petitioners
before the High Court was whether the recovery
could be made from the petitioners who had
ceased to be licensees. The same ground has
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petitions. We do not see any reason to
interfere with the decision of the High Court on
this issue. However, it is submitted by the
learned counsel appearing on behalf of the
petitioners that they had an additional ground,
namely, that the amount realised from the
subsequent vendees by the licensee for the
period should have been adjusted against the
loss claimed by the respondent authorities. It
does not appear from the judgment of the High
Court that this argument had been raised before
the High Court. Learned counsel stated that his
client will approach the High Court. The SLPs
are accordingly dismissed.”
17. The learned Government Pleader is therefore justified
in submitting that the issue regarding the validity of the order
forfeiting the security under Rule 6(28) has become final and the
petitioner cannot re-agitate the same at this distance of time.
Evidently, in Exhibit P5 order passed by the Apex Court,
direction is confined to the recovery of rent and it has been
directed that recovery will be only for one year and not for three
years. The said benefit has been granted as per Exhibit P12
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order by limiting the demand for the year 1997-98 only.
18. If the security amount is not adjustable, the
contention of the petitioner that he has no liability to pay the
balance amount, and even excess amount has been remitted
cannot be accepted. In that view of the matter, the refusal to
renew FL.III licence cannot be faulted, as he is still in arrears, in
his individual business.
19. The learned Government Pleader further submitted
that the validity of Rule 6(28) has been upheld by a decision of
the Division Bench of this Court in State of Kerala v. Biju
Thomas (2007(4) KHC 552(DB)). The entire scheme under
the Abkari Act and the relevant Rules have been examined by the
Division Bench. With regard to the adjustment of security
deposit, it was held in paragraph No.24 as follows:
” Under sub-rule (28) of Rule 6 of the Rules, if a
licensee fails to pay the kist, tree tax, duty, etc., for
any month together with interest under sub-rule (25),
the Assistant Commissioner, subject to confirmation
by the Board of Revenue, can cancel the licence, order
re-sale at the risk of the licensee or direct
management of the business of contract by
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same. The loss incurred by the government on
account of such cancellation and re-sale or
departmental management or other disposal of the
privilege will be borne by the defaulting licensee. If
for any reason, in such re-auction, if there is any gain
to the State, the same will not accrue to the licensee.
The said sub-rule also provides for forfeiture of the
whole of deposit made by the licensee at the
commencement of the lease period.”
and finally in paragraph No.36, it was held that:
“………..In our opinion, in view of the discussion we
have made earlier, it may not be possible to hold that
the legislature has not provided any provision in the
Abkari Act to frame a rule providing for forfeiture of
the whole or any portion of the kists deposited by
persons who purchase the right to sell toddy, arrack,
etc.”
Therefore, evidently, if a re-auction is conducted and loss is
assessed, the forfeited deposit shall be deducted from the loss
arising from the resale. It is not the case herein, as for the
failure to pay the kist amount, the licence was cancelled and
security deposit has been forfeited, which is permissible going by
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Rule 6(28). The learned counsel for the petitioner Shri T.A.Shaji
further submitted that prior to 31.3.1998 as no cancellation of
licence was issued, the forfeiture of the security deposit is not
correct. It is true that the initial order was passed only in May,
1998. But that will not show that the forfeiture ordered is
incorrect as all the circumstances which were required to invoke
the Rule were evident and available. Therefore, I am unable to
agree with the pleas raised by the learned counsel for the
petitioner.
In that view of the matter, the challenge against Exhibit P12
fails and the Writ Petition is dismissed. No costs.
T.R.RAMACHANDRAN NAIR, JUDGE.
dsn