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1981 Supreme(AP) 270
Andhra Pradesh High Court
Judges : A.RAGHUVIR, K.MADHAVA REDDY
J.Lakshmanna - Appellant
Versus
Government of A P rep.by its Secretary, Revenue (Excise) Dept.Secretariat Buildings, Hyderabad - Respondent
Decided On : 11-02-81
The supply of the MGQ liquor constitutes the fundamental basis of the agreement. That is an essential and implied term of lease and the license. When the Excise Authorities themselves commit a breach of such an essential term of the contract, they cannot enforce the corresponding obligation to pay the rental in full.
Headnote:
EXCISE - LEASE - SUPPLY OF MINIMUM GUARANTEED QUANTITY OF LIQUOR - FAILURE TO SUPPLY - REMISSION OF RENT - RULES 28, 31 AND 38 OF THE ANDHRA PRADESH EXCISE (ARRACK AND TODDY LICENCES GENERAL CONDITIONS) RULES, 1969 - WHETHER ULTRA VIRES - HELD, NO.
Fact of the Case:
The petitioner was granted a lease for the excise year 1979-80 to vend liquor on condition of payment of a monthly rental of Rs. 20,111-13. One of the principal terms of the lease was that the lessee should lift a minimum of 1350 liters of liquor per month through the Government arrack Depot at Tadpatri. For the month of December, 1979, however, inspite of making an indent, no liquor was supplied as there was no liquor in stock at the Government arrack Depot till 22-12-1979. Even on 22-12-1979. only 300 litres were supplied as against the minimum guaranteed quantity of 1350 litres the petitioner deposited the price of 1050 litres of liquor in the State Bank of India, but a further quantity of only 350 litres was supplied on 26-12-1979 leaving a balance of 700 litres and that war- not supplied at all during that month. He was told that there was no stock in the Arrack depot. As a result of the non-supply, he could not carry on his business for the month of December, 1979. This deficit was supplied only in the month of January, 1980.
Finding of the Court:
The court held that the petitioner was entitled to the grant of remission in payment of rental for the failure of the respondents to supply 700 liters of liquor during the relevant period. The Excise Authority shall grant the remission after calculating the amount in accordance with the principles laid down above. The impugned demand against the petitioner is, therefore, quashed and the excise Authorities are directed to grant remission as indicated above and may thereafter demand the rental, if any, still due from the petitioner on that basis.
Issues: 1. Whether Rules 28, 31 and 38 of the Andhra Pradesh Excise (Arrack and Toddy Licences General Conditions) Rules, 1969 are ultra vires? 2. Whether the petitioner is entitled to remission of rent for the failure of the respondents to supply the minimum guaranteed quantity of liquor?
Ratio Decidendi: 1. The court held that Rules 28, 31 and 38 of the Andhra Pradesh Excise (Arrack and Toddy Licences General Conditions) Rules, 1969 are not ultra vires. These rules do not touch upon the question involved in this writ petition and relate to different situations. These rules, though silent on this aspect of the matter, in the court's view, impliedly vest a right in the licensee to claim remission in payment of rental which obligation is based upon an implied term of the contract with the excise Authorities to supply at least the MGQ liquor, the lifting of which is expressly made an obligation of the licensee which obligation is coupled with a further prohibition that he cannot draw the liquor to be sold at the licensed shop from any other source. 2. The court held that the petitioner is entitled to the grant of remission in payment of rental for the failure of the respondents to supply 700 liters of liquor during the relevant period. The Excise Authority shall grant the remission after calculating the amount in accordance with the principles laid down above. The impugned demand against the petitioner is, therefore, quashed and the excise Authorities are directed to grant remission as indicated above and may thereafter demand the rental, if any, still due from the petitioner on that basis.
Final Decision: The writ petition was allowed with costs. Advocate's fee Rs. 150/-.
( 1 ) THIS petition under Article 226 of the Constitution of India is by an Excise Contractor for tne year 1979-80 for a direction against the respon dents herein, the Government of Andhra Pradesh and the Superintendent of Excise, not to suspend or cancel his licence on the ground that the monthly rental for the month of December, 1979 in respect of the arrack shop of Yadiki village has not been paid in full and for a declaration that rules 28, 31 and 38 of the Andhra Pradesh Excise (Arrack and Toddy licences General Conditions) Rules, 1969 thereinafter refered to as "the Rules") offend Articles 14 and 19 of the Constitution of India and are consequently ultra vires and unconstitutional.
( 2 ) THE few facts necessary to appreciate the contentions raised in this writ petition are these:
( 3 ) THE petitioner was granted a lease for the excise year 1979-80 to vend liquor on condition of payment of a monthly rental cf Rs. 20,111-13. One of the principal terms of the lease was that the lessee should lift a minimum of 1350 liters of liquor per month through the Government arrack Depot at Tadpatri. This is referred to popularly as "minimum guaranteed Quantity (MGQ for short ). After he complied with all the requirements of the Act and the Rules, a licence was issued to him subject to certain conditions one such condition being the lifting cf MGQ. It is the case of the petitioner that for the months of October and November, 1979, he was supplied the minimum guaranteed quantity of liquor as per the agreement and the petitioner pdid the monthly rental in full For the month of December, 1979, however, inspite of making an indent, no liquor was supplied as there was no liquor in stock at tha Government arrack Depot till 22-12-1979. Even on 22-12-1979. only 300 litres were supplied as against tha minimurn guaranteed quantity of 1350 litres the petitioner de-posited the psice of 1050 litres oi liquor in the State Bank of India, but a further quantity of only 350 litres was supplied on 26-12-1979 leaving a balance of 700 litres and that war- not supplied at ali during that month. He was told that there was no stock in the Arrack depot. As a result of the non-Fupply, he could not carry on his business for the month of December, 1979. This deficit was suppled only in the month of January, 1980. He made repeated representations to the Excise superintendant, Anantapur but to no avail. He, therefore claims remission of the rents proportionate to the short supply of the minimum guaranteed quantity of liquor during the month of December, 1979. But surprisingly a notice dated 23-12-1979 was irsued by Superintendent of Excise calling upon him to show cause why his iicence should not bs cancelled for non payment of tha rental for the month of December, 1979. The petitioner contends that Rules 28, 31 and 38 of the Rules which vest power in the excise Authoriles to suspend or cancel the licence issued ir. der the act are ultra vires of the Act and vioiative of Articles 14 and 19 (1) (g) of the Constitution in as much as they vest an unguided and unfettered power in the licensing authority to cancel or suspend the licences even in cases where non-payment of rental is due to the failure of the Government to supply the MGQ arrack.
( 4 ) IN the counter-affidavit, it is admitted that the Depot Manager had issued a csrtificate dated 15-12-1979 that liquor was not available in the Depot. It is also admitted that there was short supply of 700 litres during the month of December, 1979 to the petitioner. But it is not asserted that this short supply was made good in the month of January, 1980. What is urged for the Respondents is that there is no provision for guaranting remission of rental on the ground of non-supply of the minimum guaranteed quantity of liquor, and that non supply of MGQ liquor, by itself is no ground for not paying rental within the time stipulated under the Rules and under the terms of the lease. It is further urged that the
