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1997 Supreme(Ker) 279
Judges : J.B.KOSHY
Foreign Liquor Dealers Association - Appellant
Versus
State of Kerala - Respondent
Case No : O.P.Nos. 7246.7401 etc.of 1997
Decided On : 09/09/1997
Advocates Appeared :
George Poonthottam, Lucy Christine. Philip T. Varghese, A.N. Rajan Babu, Santhosh Kumar (TR), A. Sudhi Vasudevan, A.K. Avirah, T.G. Rajendran, K. Praveen kumar, K. Jijo Paul. Siby Mathew. M. Ajay, Ravi krishnan, K.P. Satheesan, K.K. Gopinathan Nair. M.R. Jayaprasad, V.N. Achuta Kurup. B.S. Swathi Kumar. M.C. John. Benny Antony Parel, K.R. Sachidanandan, M. Ratna Singh (Sr. advocate). T.I. Daniel. K.M. Varghese, Julian Xavier J.. Mathew John. K.L. Narasimhan & Anil Xavier For Petitioners Advocate General (M.K. Damodaran), Government Pleader (C.N. Raghuraj) & C.J. Balakrishnan For Respondents
The doctrine of legitimate expectation does not give substantive rights to claim against the Government when statutory or contractual terms are clear and unambiguous.
Headnote:
Kerala Liquor Transits Rules - Supply of Liquor - Legitimate Expectation - Abkari Shops (Disposal in auction) Rules - Reduction in Kist Amount
Fact of the Case:
The petitioners, licensees of foreign liquor shops, sought a reduction in the kist amount payable for April and May 1997 due to the Corporation's failure to supply the required quantity of liquor. They argued that their legitimate expectation of supply and profit was not met.
Finding of the Court:
The court dismissed the original petitions, holding that the petitioners had no substantive right to claim against the Government based on legitimate expectation. The court emphasized the binding nature of the contractual conditions and ruled that no remission or abatement of the rental could be claimed by the licensees.
Issues: The main issue was whether the petitioners were entitled to a reduction in the kist amount based on their legitimate expectation of liquor supply and profit.
Ratio Decidendi: The court held that the doctrine of legitimate expectation does not give substantive rights to claim against the Government when statutory or contractual terms are clear and unambiguous. The court emphasized the binding nature of the contractual conditions and ruled that no remission or abatement of the rental could be claimed by the licensees.
Final Decision: The original petitions were dismissed, and the petitioners were directed to pay the kist amount. The court granted one month's time for payment, and if paid within that period, the petitioners would not be treated as defaulters.
J.B. Koshy, J.
Petitioners in all these original petitions are licensees of foreign liquor shops or bars in the hotels and restaurants having FL 1 or FL 2 licences. Petitioners can purchase liquor only from Kerala State Bewarages (Manufacturing and Marketing) Corporation (hereinafter referred to as 'the Corporation'). As per the conditions of licence purchase can be effected only through the Corporation holding FL 9 licence. Corporation is purchasing liquor in bulk from the manufacturers of Indian made foreign liquor (IMFL). During the abkari year 1996-97 Government had enhanced excise duty to the tune of 200% with effect from 1.4.1996. The above duty was reduced to 100% with effect from 1.4.1997. There was a sight increase in price of liquor from June. 1997. It is the contention of the petitioners that the Corporation was not able to supply the requirements. In view of the increased price in 1996-97. licensees did not purchase the usual quota in March 1997. But in view of the reduction in duty there was high demand. Considering the possible demand. petitioners have auctioned the shops with high bid amount. But. the Corporation did not supply the required quantity in April. 1997 and this continued in May also. They have filed representations to the Minister stating that they have auctioned the shops at high rates. But the Corporation is not supplying liquor enough for distribution. In view of the non-supply. they will have to struggle hard for paying kist in time. They also requested that they may be allowed to bring foreign liquor from other sources. In the Kerala Liquor Transits Rules. 1975 there are enough stringent provisions to prevent misuse of permission to transport liquor. Sale of liquor is the privilege of the State. Only because of the licence. petitioners are able to sell liquor. But. as per the licence conditions. petitioners are bound to buy liquor only through the Corporation. The Corporation is not supplying liquor as demanded by the petitioners. Therefore. it is prayed that there should be proportionate reduction in the kist amount payable for April and May. 1997. There are compelling circumstances to reduce the kist amount notwithstanding rules 6(25) and 6(26) of the Abkari Shops (Disposal in auction) Rules. It is also submitted by them that when they bid the shops.-they had in their mind that in 1997-98 there is a reduction of excise duty and consequently reduction in price and there was prohibition of arrack and therefore. they will be able to sell liquor in good quantities and get a good profit. Since it is compulsory for them to purchase liquor from the Corporation. they were also on the belief that Corporation will supply liquor as demanded by them. Since liquor was not supplied as demanded. they were not able to sell liquor as expected and in view of non-availability of liquor. not due to their fault. they are unable to pay full kist and theory of 'legitimate expectation' is applicable. In spite of their legitimate expectation they were not able to get supply and sell liquor. They are doing the business with licences from the Government and in view of the non-supply of liquor by the Corporation as expected. consequent kist reduction should be granted in the quantum of excise duty.
2. Petitioners relied on the decision of the Supreme Court in State of Rajasthan and Ors. v. Nandlal & Ors. (1993 Supp. (1) SCC 681). In that case. retail sale of country liquor in the State of Rajasthan was regulated by Rajasthan Excise Act. 1950. They can sell liquor only as per the provisions of the Act and Rules. During 1967-68. licences were granted under two different systems. One was called the 'Guarantee System' and the other was called 'Exclusive Privilege System'. Under the Guarantee System. licensees were guaranteed to draw from the Government Warehouse and sell during that year country liquor of a specified value which was called the amount guaranteed. Licensee was obliged to deposit 10% of the amount of
