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2009(4) Supreme 118
SUPREME COURT OF INDIA
S.B. Sinha and Cyriac Joseph, JJ.
V.K. Ashokan — Appellant
versus
Asstt. Excise Commnr. & Ors. — Respondents
Civil Appeal No. 1541 of 2009
[Arising out of S.L.P. (Civil) No. 25060 of 2005]
with
Civil Appeal No. 1542/2009 to 1547/2009
Decided on : 05-03-2009
(b) The Kerala Abkari Shops (Disposal in Auction) Rules, 1974 – Rules 6(30) and 6(28) – These two rules operate in two different fields – Whereas licence can be cancelled in terms of Rule 6(28) only when the kist has not been regularly paid, Rule 6(30) applies in a wider spectrum – Therefore the consequences emanating from Rule 6(28) cannot ensue even in cases where a licence had been terminated in terms of Rule 6(30) – By amending the Rules deleting the original clause (b) a conscious step was taken not to take recourse of forfeiture of deposit in a case where licence is cancelled in terms of Rule 6(30). (Para 26)
2008 (13) SCALE 1 – Relied upon.
(c) Kerala Abkari Shops (Disposal in Auction) Rules, 1974 – Rules 6(34) – Recourse to forfeiture of amount of deposit as also recovery of the amount of loss purported to have been sustained by the state, could have taken in terms of rule 6(34) if the appellants were convicted – Even then forfeiture would not automatically follow only because the licence was cancelled in terms of Rule 6(30) of the Rules. (Para 27)
(d) Kerala Abkari Act, 1967 – Section 4(b) – Board of Revenue did not have any supervisory jurisdiction under the Act, apart from the functions of the Excise Commissioner as contained in the provisions of Section 4(b) – Even otherwise, the Board vis-à-vis the Excise Commissioner does not have any power to take cognizance of a matter suo motu – Action u/r 6(28) or 6(3) was therefore without jurisdiction. (Para 28)
(e) Natural Justice – Imposing a recovery without complying with the principles of natural justice is not permissible. (Para 28)
(f) Kerala Abkari Act, 1967 – Section 26 r/w Rule 6(28), Kerala Abkari Shops (Disposal in Auction) Rules, 1974 – Nature of power of cancellation of licence on the one hand and confirmation of a sale and/or confirmation of an order passed by the Assistant Commissioner of Excise, on the other, stand on different footings. (Para 30)
(g) Kerala Abkari Act, 1967 – Section 18A r/w Rule 7(2), Kerala Abkari Shops (Disposal in Auction) Rules, 1974 – Appellants have no right to carry on any business in liquor – It is considered to be ‘res extra commercium’. (Para 30)
(2004) 4 SCC 26; (2006) 4 SCC 327; (1986) 4 SCC 566; (1995) 1 SCC 574 – Relied upon.
(h) Natural Justice – When an authority has already made up his mind, the formality of complying with the principles of natural justice may be held to be a nominal and sham one. (Para 32)
(1987) 4 SCC 431; (2007) 2 SCC 181 – Relied upon.
(i) Judicial Review – Where the statutory authority exercises his jurisdiction conferred on him by a statute, he has to apply his own mind – The procedures laid down therefore must be scrupulously followed. (Para 33)
AIR 1952 SC 16; AIR 1979 SC 1628 – Relied upon.
(j) Government Contract – Where the acceptance of the amount of bid was subject to an order of confirmation by a statutory authority acceptance of the offer must be held to be conditional and being subject to the confirmation. (Para 36)
(l) Kerala Abkari Shops (Disposal in Auction) Rules, 1974 – Rule 6(28) – Notwithstanding the contract for three years, advertisement and confirmation of sale made for one year only – Licence also granted for only one year – It cannot be held that the contract was for the entire period of three years – Therefore demand could not have been made towards the loss suffered for a period of three years. (Para 36)
(m) Kerala Abkari Act, 1967 – Section 18A – A valid contract for a period of three years is impermissible in law. (Para 36)
(n) Words and Phrases – Security – It makes the money more assured in its payment or more readily recoverable – It is not confined to a document which gives a charge on specific property, but includes personal securities as well – It is a word of general import signifying an assurance. (Para 38)
AIR 1928 Sind 89 – Relied upon.
(o) Kerala Abkari Shops (Disposal in Auction) Rules, 1974 –Rule 6(28) – Provides for a penal clause – Therefore while invoking the same principles of natural justice were required to be applied. (Para 38)
(p) Indian Contract Act, 1872 – Section 74 – If damages cannot be calculated and the terms of the contract provides only for penalty by way of liquidated damages, a reasonable sum only could be recovered – This sum need not in all situations even be the sum specified in the contract. (Para 39)
AIR 1970 SC 1955; AIR 1970 SC 1986; (1964) 1 SCR 515: AIR 1963 SC 1405 – Relied upon.
[1913] I.L.R. 38 Mad. 178; [1909] I.L.R. 36 Cal. 960; [1906] I.L.R. 19 Mad. 188 – Not good law.
(q) Indian Contract Act, 1872 – Section 74 – Forfeiture of earnest money, if the amount is reasonable, would not fall within Section 74 because it does not amount to penalty. (Para 40)
A.I.R. 1926 P.C. 1; Delhi I.L.R. 33 All. 166; I.L.R. 41 All. 324; I.D. 19 All. 490; (2007) 1 SCC 228; AIR 1970 SC 1955 – Relied upon.
Facts of the case :
1. Interpretation of the provisions of the Kerala Abkari Act and the Rules framed thereunder known as the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 is the question involved in these appeals.
2. On or about 6.3.1997, the Government of Kerala published a notification in its Gazette expressing its intention to part with its privilege of vending toddy through retail shops in the notified Excise Ranges for the year 1997-98 wherefor public auction was proposed to be held on the dates notified therefor.
3. Appellants participated in the said auction and became the successful bidders. On the date of auction, they entered into a temporary agreement in Form-II appended to the Rules, which was for a period of three years. They were, however, granted license to deal in the said commodity only for one year.
4. On or about 6.9.1997 and 7.9.1997, Excise Inspectors, inspected the toddy shops of the appellants and took three bottles of toddy as sample. Pursuant thereto, criminal cases were registered against the appellants. Appellants have however been acquitted of the charges leveled against them in the criminal proceedings.
5. Separate proceedings were also initiated by the Assistant Excise Commissioner for cancellation of licenses. Licenses were cancelled or the matter referred to Commissioner Excise.
6. On or about 19.12.1997, the Assistant Commissioner of Excise issued another order forfeiting the amount of security deposit purporting to act in terms of Rule 6(28) of the Rules.
7. Consequent to the said order, the Circle Inspector of Excise issued a notice dated 8.1.1998 demanding a huge amount as also the interest thereon at the rate of 18% per annum
8. Two of the appellants had filed writ petitions. During the pendency of the said writ petitions, Tahsildar (Revenue Recovery) issued an order in Form 11 attaching the immovable properties of the appellants whereupon applications for amendment of the writ petition were filed, inter alia, questioning the proceedings initiated subsequent to the filing of the writ petition.
9. A learned single judge of the High Court dismissed the said writ applications. Two writ appeals were preferred thereagainst. In the meanwhile, other appellants had also filed writ petitions.
10. High Court rejected the writ petitions.
Finding of the Court :
The Board of Revenue was not correct to hold that the consequences laid down in Rule 6(28) would automatically be attracted. It was not a case where even Rule 6(28) could have also been resorted to.
Result : Appeals allowed.
JUDGMENT
S.B. Sinha, J.—
1. Leave granted.
2. Interpretation of the provisions of the Kerala Abkari Act (for short, “the Act”) and the Rules framed thereunder known as the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 (for short, “the Rules”) is the question involved in these appeals. They arise out of a common judgment and order dated 17.10.2005 passed by a Division Bench of the High Court of Judicature at Kerala at Ernakulam in O.P. No. 5742 of 1998 (H), W.A. No. 1822 of 1998 (C), O.P. No. 5910 of 1998 (C), O. P. No. 5783 of 1999 (L), O.P. No.10276 of 1998 (W), and W.A. No.1790 of 1998(C).
3. The questions involved herein broadly arise in the following factual matrix in the cases. We would, however, notice the fact involved in the individual cases also.
4. Appellants herein carry on business in toddy. For the purpose of grant of privilege in terms of the provisions of the said Act and the Rules framed thereunder, the State frames policy-decision from time to time.
The position of the parties with reference to the name of the licenses and the other relevant dates would appear from the following:
Sl. S.L.P. No. Licencee of Date of Rule Details of Details of No. Shop Nos. cancellation under Writ Criminal & Excise of Licence which Petition Case Range licence is filed before cancelled the High Court by the petitioners
1. 25060 of Licencee of 26.09.1997 Rule 6(30) Writ Accused 2005 Shop Nos. vide order of the Petition No. 1 in (V.K. 55 to 96 of Assistant Abkari O.P. No. S.C. No.83 Ashokan) Thrissur Excise shops 5742 of of 1999 - Excise Commissi- (Disposal 1998 acquitted Range oner in Auction) dismissed by the Rules. by the Sessions judgment Judge by impugned judgment in the S.L.P. dated 16.05.2008.
2. 25467 of Licencee of 27.10.1997 Rule 6(28) Writ Accused 2005 Shop Nos. vide order of of the Petition No. 2 in (V.K. 109 to 222 the Assistant Abkari shops O.P. No. S.C. Ashokan) of Irinjalakuda Excise (Disposal 6609 of No.210 of Excise Range Commissio- in Auction) 1998 - 1999 - Rules. judgment acquitted of Single by Judge on judgment 21.07.1989 dated Writ 16.05.2008 Appeal No. 1822 of 1998 dismissed by the impugned judgment in this S.L.P.
3. 1568 of Licencee of 26.09.1997 Rule 6(30) Writ Accused 2006 Shop Nos. 1 vide order of of the Petition No. 2 in (P.K. to 54 of the Assistant Abkari O.P. No. S.C. Rajan) Cherpu Excise shops 5910 of No.293 of Excise Range Commissioner (Disposal 1998 1999 - in Auction) dismissed acquitted Rules. by the by judgment judgment impugned dated in this 15.11.2005 S.L.P.
4. 1773 of Licencee of 25.05.1998 Rule 6(28) Writ No criminal 2006 Shop Nos. 1 vide order of of the Petition case against (T.P. to 52 and the Assistant Abkari O.P. No. him Saleem) 137 & 138 Excise shops 5783 of of Vadanapally Commissioner (Disposal 1999 Excise Range in Auction) dismissed Rules. by the judgment impugned in the S.L.P.
5. 2166 of Licensee of 26.09.1997 Rule 6(30) Writ Accused 2006 Shop Nos. vide order of of the Petition No. 1 in (K.C. 97 to 171 of the Assistant Abkari O.P. 10276 S.C. No. 84 Rajan) Anthikad Excise shops of 1998 of 1999 - Excise Commissio- (Disposal dismissed acquitted Range ner in Auction) by the by Rules. judgment judgment impugned dated in this SLP. 02.09.2006
6. 1696 of Petitioner is 26.09.1997 Rule 6(30) Writ Petitioner’s 2006 the widow vide order of of the Petition late (Thankam of K.V. the Assistant Abkari O.P. No. husband Rama- Rama- Excise shops 5910 of was krishanan krishnan Commissio- (Disposal 1998 - accused who was a ner in Auction) dismissed No. 3 in co-licencee Rules. by the S.C. No. of shop
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