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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
RAMESH SINHA, C.J., BIBHU DATTA GURU, J.
North East Feed And Agro Exports Private Limited & Ors. - Petitioners
Versus
State of Chhattisgarh Through Special Secretary, Commercial Tax (Excise) Department & Ors. - Respondents
WPC Nos. 4226, 4235 of 2024
Decided On : 04-09-2024
(A) Chhattisgarh Excise Act, 1915 - Section 32 - Chhattisgarh Foreign Liquor Rules, 1996 - Amendment of Rule 8 - The petitioner challenged the cancellation of the FL-10(A) license and rate contract due to a policy change by the State Government, asserting that the amendment cannot be applied retrospectively. The court found that the amendment was prospective and upheld the cancellation of the contract. (Paras 6, 8, 16)
(B) Contract Law - Unilateral cancellation - The court ruled that the contract awarded to the petitioner cannot be cancelled unilaterally without following due process, as it is bound by the contractual obligations established under the rules in effect at the time of the contract. (Paras 6, 7, 16)
Facts of the case:
The petitioner company, holding an FL-10(A) license, was awarded a contract for supplying liquor from 01.04.2024 to 31.03.2025. Following a policy change, the State Government cancelled the contract, prompting the petitioner to seek judicial intervention.
Findings of Court:
The court found the cancellation of the contract to be lawful, as the amendment to the rules was prospective and did not affect the existing contracts.
Issues: The main issues were whether the amendment to the rules could be applied retrospectively and the legality of the unilateral cancellation of the contract.
Ratio Decidendi: The court held that the amendment to the rules was prospective and that the petitioner’s contract could be cancelled under the new policy without violating legal principles.
Result: Both petitions dismissed.
JUDGMENT :
Ramesh Sinha, C.J.
1. Since common facts and issue are involved in both these petitions, they are being considered and decided by this common order and WPC No. 4226/2024 is taken as the lead case.
2. The petitioner, in both the above petitions have prayed for the following relief(s) :
[2] That, this Hon'ble Court may kindly be pleased to issue a writ/writs, order/orders, direction/directions and the Hon'ble Court may kindly be pleased to set-aside the NIT dated 11.07.2024 and all consequential actions thereto and the respondent authorities may kindly be directed not to finalize the contract with third, person, company, firm or corporation.
[3] That, this Hon'ble Court may kindly be pleased to issue a writ/writs, order/orders, direction/directions and the respondent authorities may kindly be directed to continue with the rate contract and licence granted to the petitioner company till 31.03.2025.
[4] That, this Hon'ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case.”
3. The facts, in brief, as projected in WPC No. 4226/2024, are that the petitioner is a registered company, under the Companies Act, 1956 and is holding the FL-10(A) License. The petitioner company entered into the rate contract with the respondent No. 4-Chhattisgarh State Marketing Corporation Limited (for short, CSMCL) for supply of Indian made foreign liquor (for short, IMFL) / foreign made foreign liquor (for short, FMFL) / Beer in the State of Chhattisgarh for a period from 01.04.2024 to 31.03.2025. The CSMCL issued notice inviting rate contract offers for registration and supply of foreign liquor in state of Chhattisgarh. The said NIT was issued on 15.02.2024, inviting offers for firms having FL-10(A) and FL-10(B) license issued by the Excise Department. The petitioner company also participated in the said tender process and awarded the contract for supply of IMFL/FMFL/Beer in the State of Chhattisgarh for a period from 01.04.2024 to 31.03.2025. On 12.03.2024 the petitioner was awarded the contract for supply of IMFL/FMFL/Beer in the State of Chhattisgarh for a period from 01.04.2024 to 31.03.2025. The petitioner has paid the license fee of Rs. 20 lacs for the Depot situated at Siltara, District Raipur, Rs. 20 lacs was paid for the depot situated at Sirgitti Bilaspur and Rs. 20 lacs was paid for the depot situated at Arasnara, District Durg, total Rs. 60 Lacs were paid. Subsequently, on 11.07.2024 the State Government has amended Rule 8 of Chhattisgarh Foreign Liquor Rules, 1996 and FL-10(A) and FL-10(B) has been deleted and the decision has been taken that, Chhattisgarh State Beverage Corporation will directly purchased the IMFL and FMFL from the registered Companies. This amendment has been given effect from the date of issuance of the notification i.e. 11.07.2024/prospectively as per Clause No. 2 of the notification dated 11.07.2024.
4. According to Mr. Paranjpe, the licence and the rate contract awarded to the petitioner company from 01.04.2024 to 31.03.2025 has not been cancelled but the policy decision has been taken to purchase the IMFL and FMFL from its manufacturers directly. Vide letter dated 01.07.2024 the petitioner company was informed that, the old policy has been withdrawn and therefore, the contract for supply has been cancelled. The impugned order is illegal, erroneous and contrary to law.
5. The Excise Commissioner has issued a letter dated 04.07.2024 and directed the respondent No. 3 & 4 to apply the new proposed system and certain directions have been issued w
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