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1999 Supreme(All) 1699
HIGH COURT OF ALLAHABAD
P.K.Jain
SARLA TALWAR
Versus
STATE OF U P
Decided On : 28 October 1999
C. M. W. P Nos. 481 and 9431 of 1993
Arun Kumar Tandon, ARVIND KUMAR, C.P.Dwivedi, V.V.Sharma,
A licensee is not liable to pay the license fee for the period during which they are not permitted to run the license for no fault of their own.
Headnote:
EXCISE - REFUND OF LICENSE FEE - RIGHT TO - LICENSEES NOT PERMITTED TO RUN LICENSE FOR NO FAULT OF THEIR OWN - LICENSE FEE NOT PAYABLE - EXCISE ACT, 1910, S. 24-B.
Fact of the Case:
Petitioners applied for an FL7 license for a hotel and restaurant. The license was granted in the name of the hotel and restaurant, but one of the partners withdrew. Petitioners applied to modify the license to remove the name of the withdrawn partner, but the modification was not made. The license was renewed from time to time, but was not renewed after June 30, 1985. Petitioners were not permitted to run the license until July 24, 1989, when they deposited Rs. 1,62,000 pursuant to an order dated July 14, 1989. Petitioners claimed a refund of Rs. 95,666, representing the license fee for the period from July 1, 1985 to July 17, 1989, during which they were not permitted to run the license.
Finding of the Court:
The court held that the petitioners were not liable to pay the license fee for the period during which they were not permitted to run the license, as the State Government had an exclusive right to manufacture and sell liquor and the license fee was the consideration for the grant of such right or privilege. The court also held that the State Government's attitude in refusing to refund the license fee was arbitrary and lacked fair play and reasonableness.
Issues: Whether the petitioners were liable to pay the license fee for the period during which they were not permitted to run the license.
Ratio Decidendi: The court relied on the following principles in reaching its decision: * The State Government has an exclusive right to manufacture and sell liquor, and the license fee is the consideration for the grant of such right or privilege. * If a licensee is not permitted to run the license for no fault of their own, they are not liable to pay the license fee for that period. * The State Government's attitude in refusing to refund the license fee was arbitrary and lacked fair play and reasonableness.
Final Decision: The court allowed the petitions, quashed the orders of the respondents, and directed the respondents to refund the amount of Rs. 95,666-00 to the petitioners within a period of 6 weeks from the date of a certified copy of the order. The court also awarded costs of Rs. 5,000 to the petitioners.
In both the petitions common question of law and facts are in volved, therefore, both the writ petitions are being decided by a common judgment.
2. Petitioners have filed this writ peti tion with the following prayers:
(i) Issue writs, orders or direction in the nature of certiorari quashing-
(a) order dated 17-8-91 of the Respon dent No. 3 (Annexure XI) rejecting the applica tion of the petitioners for the refund of Rs. 95,666.
(b) order dated 22-7-92 of the Respon dent No. 2 (Annexure XIII) rejecting the appeal of the petitioners against the order dated 17-8-91 of Respondent No. 3.
(c) order dated 28-11-92 of the Respon dent No. 1 (Annexure XIV) rejecting the revision petition of the petitioners against the order dated 28-7-92 of Respondent No. 2.
(ii) issue a writ, order direction in the nature of mandamus directing the respondents to refund Rs. 95,666 to the petitioners.
3. In the year 1982 the petitioners and one Smt. Shanti Devi had applied for FL7 licence for metro Hotel and Restaurant, Izatnagar, Bareilly in accordance with U. P. Excise (Licensing under the Surcharge Fee System) Rules, 1968. The Collector, Bareilly recommended to the Excise Com missioner the grant of the licence by his letter dated 20-1 -83. Excise Commissioner instead of himself sanctioning the licence made recommendations to the Govern ment of Uttar Pradesh by letter dated 6-10-83. The Government granted the licence in favour of metro Hotel and Restaurant by order dated 22-10-83. However, before grant of licence by the State Government, Smt. Shanti Devi had withdrawn herself from the partnership and therefore, an application dated 25-10-83 was moved for grant of licence in the name of the petitioners. That despite application dated 25-10-83 the licence was issued to the Metro Hotel and Restaurant in the name of the petitioner Smt. Shanti Devi, On 28-10-83 the Collector, Bareilly recommended the Commissioner to modify the licence in the name of the petitioners. At the close of the year 1983-84 the petitioners applied for renewal of their licence in the name of the petitioners alone in view of the Rule 332 of the Excise Manual Volume I. The Collector renewed the licence in the names if the petitioners for 3 months only i. e. from 1-4-84 and thereafter from 1-7-84 to 31-8-1984 with endorsement "in anticipation of Govern ment Orders". Thereafter the Collector extended the period upto 30-8-1984. A recommendation was made by the Collec tor, Bareilly to the Excise Commissioner on 30-11-84 for deletion of the name of Smt. Shanti Devi from the licence. An other reference dated 11-12- 84 was also made. The period of licence was extended to 30-6-1985. Since no order of Excise Commissioner was received he refused to renew the licence any further. It is further averred that the Excise Commissioner on receipt of reference from the Collector referred the matter to the State Govern ment for approval by letter dated 24-2-1985. By letter dated 2-9-85 the State Government clarified that it was open to the Collector to find our and mention the names of the proprietors/partners of Metro Hotel and Restaurant correctly in the licence issued to it. Under paragraph 648 of the Excise Manual Volume I, the Collector is empowered to finalise the names with the approval of the Excise Commissioner. Despite above clarifica tion, the Collector Bareilly renewed the licence of the petitioners for the period till 30-6-1985 provisionally even though the petitioners had applied for renewal of the licence for whole of the year after deposit ing the renewal fee of Rs. 6,000. The Col lector sought approval of the Excise Com missioner by his letter dated 19-1-1986. The Excise Commissioner asked for copy of the partnership deed which was sent by the Collector to the Excise Commissioner with his letter dated 6-8-1986. When the Collector did not renew the licence the petitioner moved an application before the Excise Commissioner for renewal of FL 7 licence till year 1987-88. The sa
