Santosh Kumar vs The State of Himachal Pradesh etc.

R.S. Pathak, C.J.—The Petitioner was granted four licences in April, 1968 for carrying on the business of selling liquor atHatli and Sihunta in the District of Chamba during the financial year 1968-69. He carried on the business under the aforesaid licences until December, 1968. On December 12, 1968, a notice was issued by the Assistant Excise and Taxation Officer, Chamba. The notice stated that he had failed to pay the monthly licence fees and sales tax and informed him that the licences could be cancelled under, Section 36 of the Punjab Excise Act. He was warned that the licences would be re-auctioned at his risk in case he did not deposit the clues within a week. He was also informed that any deficiency arising on the re-auction together with outstanding arrears would be recovered from him as arrears of land revenue u/s 60 of the Act, and further that he could be black-listed for the purpose of government contracts. It appears that the Petitioner met the Collector of Chamba about December 18, 1968, and explained the circumstances under which he had been unable to deposit the licence fees. The Petitioner says that thereafter he was allowed to bring in supplies of liquor on December 20, 1968. On December 28, 1968, a further notice was issued to him by the Collector of Chamba stating that he had failed to deposit the licence fees and the tax mentioned in the earlier notice dated December 12, 1968 and that, therefore, his licences were cancelled u/s 36 of the Act. He was further informed that in case the entire dues were not deposited within a week the licences would be put to resale on January 9, 1969 for their remaining period u/s 35 of the Act. It is said that the Petitioner made a representation to the Collector, but was granted no relief. On January 9, 1969, the licences were put to auction. The Petitioner says that the auction proceedings were not bona fide and the licences were granted for wholly inadequate fees. A number of irregularities were alleged. In the result a sum of Rs. 33,866 was made recoverable against the Petitioner on account of the deficiency in respect of the four licences. It is not disputed that the Petitioner has been required to pay this amount and recovery proceedings have been taken.

The Petitioner prays for the quashing of the notice of demand and of the recovery proceedings, and also for mandamus directing the Respondents not to place him on the Excise black-list. He also prays for refund of the security deposited by him and the cost price of the stocks removed by the Respondents after cancellation of the licences.

The first contention of the Petitioner is that he was not served with any notice to show cause against cancellation of the licences. The contention cannot be accepted. The notice dated December 12, 1968, informed him that he had not deposited the dues and that the licences were liable to be cancelled. The notice did not require him in so many words to show cause against cancellation of the licences, but the circumstance that it required him to deposit the dues and warned him of cancellation of the licences if he did not do so clearly set out the case against him. It was open to him either to deposit the dues within the period specified in the notice or to show cause why he was unable to pay the dues. In fact, he did submit a representation and also met the Collector a few days later and seems to have explained to him his position in the matter. It was only after he had explained his position that the notice dated December 28, 1968, was issued cancelling the licences. It is apparent that he availed of the opportunity to show cause against cancellation of the licences when he met the Collector, and the omission of any specific "show cause" notice cannot, in the circumstances, serve cause for complaint. It is also contended that the notice dated December 12, 1968 must be deemed to have been waived because the Petitioner was allowed to take in liquor supplies subsequently on December 20, 1968. It is not possible to construe the issue of those supplies to the Petitioner as a waiver of the notice. He was entitled to bring in the supplies so long as the licences were not cancelled. The first contention of the Petitioner is rejected.

The second contention of the Petitioner is that the re-auction of the licences could have been conducted only by the Collector whereas it was effected by the Revenue Assistant and, therefore, it is said, the re-auction proceedings were invalid. The re-auction was effected under Rule 5.38(22) of the Punjab Liquor Licence Rules, 1932, The rule requires that when a licence has been cancelled "the Collector may resell it by public auction or by private contract" and any deficiency in the licence fee as well as expenses of such resale would be recoverable from the defaulting licensee in the manner laid down u/s 60 of the Punjab Excise Act, 1914. The re-auction could be effected by the Collector and not by anyone else. There is a significant contrast between this provision for resale of a cancelled licence and the provision in Rule 5.38(2) which authorises the Collector or "a gazetted officer selected and empowered in this behalf by the Collector" to conduct auctions held annually. The resale of a cancelled licence is a matter of greater responsibility as it visits the defaulting lieccnsec with a serious liability, that of being liable to pay any deficiency arising on the resale. This view has also been taken by a Division Bench of the Punjab and Haryana High Court in Joginder Singh Amar Prakash Singh and Co. v. State of Punjab G.W.P. No. 2053 of 1969 decided by Hon''ble R.S. Narula and RS. Sarkaria JJ. on January 14, 1970 by reference to the corresponding provisions of the Punjab Liquor Licence Rules, 1956. There is no dispute that the Collector did not conduct the re-auction. It was conducted by the Revenue Assistant. Accordingly, the re-auction procededings must be quashed and consequently the recovery proceedings also to the extent of the deficiency arising on the resale of the licences.

The third contention of the Petitioner is that the reauction was not carried out in accordance with law. As the re-auction proceedings are being quashed, it is not necessary to go into this question.

No case has been made out for quashing the notice of demand or restraining the Respondents from putting the Petitioner on (he Excise black-list or for a direction for refund of the security and payment of the cost price of the slocks removed after cancellation of the licences.

The petition is allowed in so far only that the proceedings for resale of the Petitioner''s licences are quashed and the recovery of the deficiency arising on such resale is also quashed. The remaining reliefs are refused. The parties will bear their costs.