Satpal Singh vs State of Chhattisgarh and Others

M.M. Shrivastava, J.—The aforesaid two (writ petitions are being disposed of by this common order as the issue raised in the two writ petitions are more or less common, based on similar factual backdrop of events relating to grant of liquor licence and recovery from the petitioners in two Writ petitions. Writ petitioner- Satpal Singh in W.P. No. 1206/03 as well as writ petitioner- Guru Bakshish Singh in W.P. No.1207/03 both had applied for grant of liquor licence in response to invitation by the State Agency in the matter of allotment of country liquor and foreign liquor shops in the State.

Writ petitioner- Satpal Singh in W.P. No. 1206/03 emerged successful in the process of allotment and was granted licence in respect of Pithora group of shops, which consisted of one foreign liquor shop and two country liquor shops. Three different licences were issued in favour of petitioner-Satpal Singh, one foreign liquor licence and two country liquors licences.

Similarly, other writ petitioner- Guru Bakshish Singh in W.P. No. 1207/03 emerged successful in the process of allotment and was allotted foreign and country liquor shops of Saraipali group. He was also granted licence in respect of one foreign liquor shop and two country liquor shops of the group.

Both the petitioners, while running their shops under the statutory liquor licence granted to them, under the provisions of the Chhattisgarh Excise Act, 1915 (hereinafter referred to as "the Excise Act") & Chhattisgarh Excise Settlement of Licences for Retail Sale of Country/Foreign liquor Rules, 2002 (hereinafter referred to as "the Rules of 2002''), for various reasons, mainly market conditions relating to demand, found it difficult to lift minimum guarantee quota of liquor and also made default in payment of monthly installment of licence fee as prescribed in the respective licence of foreign and country liquor shops in respect of shops allotted to them.

Writ petitioner -- Satpal Singh in W.P. No 1206/063 made a representation for reduction of minimum guarantee quota and also for changing the licence conditions and requested for giving licence for consumption in premises vide representations Annexure P-2 & P-3). A written notice dated 30th August, 2002 (Annexure P-4) was given by him for surrender of foreign liquor licence and on expiry of one month''s time, he surrendered the licence of foreign liquor shop on 33.10.2002 (Annexure P-5) Thereafter, a representation (Annexure P-6 & P-7) were also given to the effect that he is still ready to willing to run the shops subject to reduction of minimum guarantee quota. According to the petitioner, he surrendered only one liquor shop, but as far as the other two country liquor shops in the group are concerned, he was always ready and willing to continue and even deposited the licence fee for the month of September in so far as two country liquor shops are concerned. A Demand notice dated 28-9-2002 (Annexure P-9) was issued, stating that the petitioner has neither deposited the licence fee for the month of September, nor has lifted the minimum7 guarantee quota of liquor and therefore he is liable for penalty on account of non -lifting of minimum guarantee quota as also the licence fee due and payable for the month of September, failing which, his licence shall be liable to be cancelled. Thereafter, vide order dated 5.10.2002 Annexure P-10) the petitioner''s licence in respect of all the three shops were cancelled, stating that the petitioner failed to pay licence fee for the month of September, 2002 and demand was raised for payment of licence fee for the month of September and penalty of Rs.2,84,800/- on account of, non-lifting minimum guarantee quota for the month of September. Aggrieved by the order ''of cancellation of licence and demand ''raised, the petitioner preferred an appeal before the Excise Commissioner. The appeal of the petitioner was dismissed vide order dated 16.10.2002 (Annexure P -12). Thereafter, the petitioner was, served with a revenue recovery notice issued by Additional Tahsildar (Excise), seeking to recover Rs. 35,66,375 (Annexure R-14).

Writ petitioner Guru Bakshish Singh in W.P. No.1207/03, finding it difficult to pay licence fee and lift minimum guarantee quota as per the terms and conditions, on account of prevailing conditions in the market, gave a written notice dated 1.6.2002 (Annexure P- 3) for surrendering all the three shops, one foreign liquor and two country liquor shops of Saraipali group of shops allotted to him. A notice dated 27.6.2002 (Annexure P-5) was issued, stating that the petitioner has ''failed to lift minimum guarantee quota as prescribed under the licence in respect of one foreign liquor shops and two country liquor shops and is therefore liable for payment of penalty of Rs. 7,56,030/-. The petitioner submitted a representation on 3.7.2002 (Annexure P-6), stating that he is suffering losses and he has already submitted a notice of surrender of shops vide his notice dated 30th June, 2002 and therefore not liable for any other payment. Another notice dated 4.7.2002 (Annexure P-7) was issued, stating that the petitioner was required to deposit an amount of Rs.7,56,030/- as penalty and if the amount is not deposited within 7 days, his licence shall be treated as cancelled. Finally, vide order dated 7.7.2002 (Annexure P-4), the licence of the petitioner in respect of the 3 shops in Saraipali group No. 14 was cancelled on account of his failure to deposit security of Rs.3,93,396/- in respect of liquor shops and the petitioner was further required to deposit an amount of Rs.37,568/-. Vide notice dated 16.3.2003 (Annexure P - 9), demand of Rs.14,47,323/- was raised on the statement that upon resettlement, the State suffered loss of Rs.18,03,151. It was followed by a revenue recovery notice Annexure P -10) issued by the Addl. Tahsildar (Excise) Mahasamund, by which a total amount of Rs. 14,47,325 is stated as being recoverable as arrears of revenue.

Learned senior counsel for the petitioners assailed the legality and validity of revenue recovery notice issued in the two cases to the respective writ petitioners as also orders passed in appeal by Excise Commissioner on 16.10.2002 in the case of Satpal Singh in W.P. No.1206/03, principally, on the submission that as the licencee in the two cases had duly surrendered their licences, no such penalty or recovery could be made against licensee. Learned senior counsel for the petitioners referred to the provisions contained in Section 33 of the Excise Act and submitted that a holder of licence is entitled to surrender his licence. He submits that once the licensee in the two cases gave a written notice for surrender of their licences, the excise authorities could not have issued demand notices either on account of failure to lift the minimum guarantee quota or non- payment of licence fee due for the month, nor could have imposed any penalty on account of non-lifting the minimum guarantee quota.

In so far as case of Satpal Singh in W.P.No. 1206/03 is concerned, it is submitted that the petitioner aggrieved by the order of cancellation of licence of all the three shops, which included one foreign and two country liquor shops, had preferred an appeal specifically challenging the order of cancellation of country liquor shops on the ground that there was no violation of terms and conditions for lifting of minim guarantee quota and payment of licence fee of the two shop of country liquor in the group, yet, while canceling licence of foreign liquor shop of Pithora group, licence of two country liquor shops was illegally cancelled. Learned counsel for the petitioners submitted that in the case of Satpal Singh in W.P. 1206/03, action of respondents in issuing demand notices on various dates and revenue recovery proceedings are illegal and unsustainable, in law. Learned senior counsel for the petitioners relied upon the judgment in the case of Gulabrai & Sons Vs. State of M.P. and Ors. (1972 LJLJ 868) as also the judgment passed by this Court in the case of Shekhar Sahu Vs. State of C.G. & Ors. (W.P. 2321/02). Learned counsel for, the petitioners further submitted that the notice of surrender did not require any payment of fee to be made because the liability to make payment of balance fee would arise only after the decision of the Excise Commissioner upon surrendering the licence and appropriate orders relating to remission of fee is passed. He submits that it is only thereafter that the liability for payment of balance of licence fee for the remainder period would arise and therefore it was not necessary to pay the licence fee for the remainder period at the time of giving written notice of surrender.

On the other hand, learned counsel for the respondents submitted that the petitioners in the two writ petitions were granted licence in a group of shops, consisting of one foreign liquor and two country liquor shops. In the case of Satpal Singh (W.P. No.1206/03), it has been submitted that Satpal Singh was granted one foreign liquor shop and two country liquor shops under three licences in Pithora group of shops. The petitioner defaulted in lifting the minimum guarantee quota as well as payment of installment of licence fee for the month of September, 2002 and thereby violated provisions contained in the Rules of 2002 as also specified terms and conditions of licence. He further submits that the petitioners in the two cases were granted licence u/s 18 of the Excise Act. The provision relating to surrender of licence as provided u/s 33 of the Excise Act is not attracted in those cases and the petitioner had no right to surrender the licence. It is then submitted that even if it is assumed that petitioner was entitled to surrender licence, the petitioners in the two case were required to give proper notice in writing to the Collector and their intention to surrender the licence along with payment of fee payable for the remainder of the period for which it would have been current but for such surrender. It is submitted that in both the cases, neither the notice of surrender shows that the entire licence fee was paid along with the written notice, nor it has been anywhere stated in the writ petition that the licence fee payable for the remainder of the period, as required u/s 33 (1) of the Excise Act was paid along with the notice of surrender. Therefore, there was no valid notice of surrender in both the cases. Learned counsel for the State further submitted that though in the case of petitioner Satpal Singh (W.P. No. 1206/03), the order of cancellation of licence and demand raised against the petitioner was challenged by filing the appeal but in the other case i.e., W.P. No.1207/03, petitioner Guru Bakshish Sigh has not preferred any appeal whatsoever and has straightway filed the petition.

I have heard considered the rival submission made by learned counsel for the parties and perused the records.

The preliminary objection with regard to maintainability of writ petition filed by petitioner-Guru Bakshish Singh is that this writ petition has been filed without availing alternative statutory remedy of appeal before the Commissioner is considered. I find that two writ petitions raised identical issue in so far as issue relating to validity of surrender of licence is concerned Both the writ petitions have remained pending since 2003. Therefore, at this stage, I am not inclined to dismiss Writ Petition No. 1207/03 filed by petitioner Guru Bakshish Singh only on the ground of alternative remedy and I am inclined to exercise discretion to examine his case also on merits.

In order to decide the main issue as to whether there was valid surrender of licence by the petitioners in the two cases and on that count action of respondents in raising demand, imposing penalty was legal or not, it is necessary to examine the statutory scheme of grant and surrender of licence contained in the Excise Act and the Rules of 2002 Section 18 of the Excise Act provides as under

Power to grant lease of right to manufacture, etc.- (1) The State Government may lease to any person, on such conditions and for such period as it may think fit, the right

(a) of manufacturing, or of supplying by wholesale or of both, or

(b) of selling by wholesale or by retail, or

(c) of manufacturing or of supplying by wholesale, or of both, and selling by retail, any liquor or intoxicating drug within any specified area.

(2) The licensing authority may grant to a lessee under sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits sub-letting, may on the application of the lessee, grant a licence to any sub-lessee approved by such authority.

Thus, under the Excise Act, the State is empowered, to grant various rights relating to manufacture, supply of liquor or intoxicating drug within any specified area. Licences of different nature depending upon different activity or combination of activity have been enumerated in clause (a) (b) & (c) of sub Section (1) of Section 18 of the Excise Act. The provision relating to surrender of licence is contained in Section 33 of the Excise Act, which is reproduced as under.

Surrender of licences. (1) Any holder of a licence granted under this Act to sell an intoxicant may surrender his licence on the expiration of one month''s notice in writing given by him to the Collector of his intention to surrender the same, and on payment of the fee payable for the licence for the remainder of the period for which it would have been current but for such surrender:

Provided that if the Excise Commissioner is satisfied that there is sufficient reason for surrendering a licence he may remit to the holder thereof the sum so payable on surrender or any portion thereof (2) Sub-section (1) shall not apply in the case of any licence granted under Sec 18.

A perusal of the aforesaid provision at once shows that any holder of licence may surrender his licence on the expiration of one month''s notice in writing given by him to the Collector of his intention to surrender the same and on payment of the fee payable for the licence for the remainder of the period for which it would have been current but for such surrender Therefore, there are two essential conditions of a valid notice of surrender and they are-

(a) one month''s notice in writing given to the Collector showing intention to surrender the licence

(b) payment of fee payable for the licence for the remainder of the period for which it would have been current but for such surrender.

If the notice of surrender given by the writ petitioner in W.P. 1206/ 03 and W.P. No 1207/03 is looked into, there is no statement made in those notices regarding simultaneous payment of the fee payable for the remainder of the period as required under the provision contained in Section 33 (1) of the Excise Act. In the writ petition also, the petitioners in two cases, have nowhere stated that while giving notice of surrender in writing, the fee payable in respect of the remainder of the period was also paid. At this stage, it is necessary to deal with the two submissions of learned senior counsel for the petitioner. Firstly, it has been advanced that the only reason assigned by respondents State in their return in two case is that the surrender was not valid, because Section 33 of the Excise Act is not attracted in case of surrender granted u/s 18 of the Excise Act and secondly- that in view of the proviso to sub-section (1) of Section 33 of the Act, the stage for payment of fee for the remainder period would come only after a decision taken by the Excise Commissioner with regard to remission of the balance fee either whole or in part, while considering the case of surrender and the circumstance under which it has been surrendered.

True it is that only reason assigned by the State in its return in the two cases is that the notice of surrender is not valid because such provision could not be invoked by the petitioner as they have been granted licence u/s 18 of the Excise Act, however, in case, the petitioner seeks indulgence of the Court by submitting that there was valid surrender of licence in accordance with the provision of law, the petitioners, irrespective of whatever has been stated by the respondents, are required to plead and prove that the petitioners submitted a valid notice of surrender as required u/s 33 of the Excise Act. The petitioners ought to have pleaded in the writ petition, if it were so, that along with the notice, fee for the remainder period was also paid, but no such pleading have been made. Therefore there is no material to show, that petitioner paid the balance fee for the remainder period.

At this stage it is necessary now to deal with the other submission of learned counsel senior counsel for the petitioner that at the time of giving notice of surrender, balance fee for the remainder period is not liable to be paid. Provio to sub-section (1) of Section 33 the Excise Act provides that if the Excise Commissioner is satisfied that there is sufficient reason for surrendering a licence, he may remit to the holder thereof, the sum so payable on surrender or any portion thereof. The provision contained in sub-section (1) of Section 33 clearly obliges the holder of licence not only to give a month''s notice in writing but also to pay the fee payable for the remainder of the period for which the licence would have been current but for such surrender Therefore, a logical reading of the aforesaid provision leads only to one interpretation that the payment of the balance fee payable for the remainder period of the licence but for such surrender has to be simultaneous and along with the notice of surrender. The effect of the provision contained in the proviso is not to defer payment of fee in respect of the remainder of the period of licence, but only to provide for remission of fee in appropriate case by the Excise Commissioners upon his satisfaction that there is sufficient reason for surrendering licence. Use of word "remit", clearly connotes the legislative intention. It means that something is to be remitted or refunded. This would pre-suppose a deposit first. Had it been the intention of the legislature that the liability for payment of fee for the remainder of the period of licence has to be deferred till decision is taken by the Excise Commissioner, the provision would have been couched in altogether different form providing that the balance fee would be payable after the decision of the Excise Commissioner. But that is not reflected from the reading of the provision contained in Section 33 (1) of the Excise Act. The main part of the provision indicates that the notice of surrender in writing is required to be submitted and there has to be payment of fee payable under the licence for the remainder of the period for which it could have been current but for such surrender. Therefore, the petitioners were required to pay the balance of the fee for the remainder of the period either at the time of giving the notice of surrender or in any case on or before expiration of one month''s notice. In the absence of any payment made, a mere notice of surrender would not result in surrender of licence under the law upon expiration of one month''s notice. The legal consequence by operation of law would not flow unless the essential recruitments of surrender of licence are fulfilled in the manner prescribed u/s 33 (1) of the Excise Act Under the scheme, the licence would stands surrendered upon expiration of notice and on payment of fee for the remainder of the licence period and the Commissioner may, upon his satisfaction, decide to remit to the holder the sum so payable on surrender or any portion thereof. Therefore, under all circumstances, one who is willing to surrender licence is required to pay the balance fee in the manner prescribed under sub- section (1) of Section 33 of the Excise Act. The Commissioner of Excise may later on, order remission of fee so payable on surrender either, whole or a portion thereof.

In view of the aforesaid examination and analysis of the statutory scheme of the Act, I am of the firm opinion that in the absence of there being any case of deposit of fee payable in respect ''of remainder of the period of licence either along with the notice in writing or on or before the expiry of period of one month''s notice, there would not be any valid surrender of licence as required u/s 33 of the Excise Act. In the present case, in none of the two writ petitions, it could be established that the fee payable for the remainder period of licence was also deposited in the manner prescribed, under the law. Therefore, I am unable to uphold the contention of learned senior counsel for the petitioner that as there was valid surrender of licence, no action could be taken against the petitioner either towards cancellation of licence or recovery in the name of balance fee payable and penalty or towards loss of revenue in the event of resettlement of shops in the two cases. Learned senior counsel for the petitioners also sought to contend that the requirement of payment of fee payable for the remainder of the period of licence was not necessary at the time of giving notice of surrender, because the provision contained in Rule 22 of the Rules of 2002 do not require payment of fee payable for the remainder of the period. The contention of learned senior counsel has to be rejected. The requirements of valid licence have been expressly stipulated in Section 33 (1) of the Excise Act. The provision contained in Rule 22 of the Rules of 2002 provides that a licensee may surrender his licence after giving atleast one month''s notice in writing to the licensing authority under the provision of Section 33 of the Excise Act, Therefore, the rule also requires giving of notice under the prevision of Section 33 of the Excise Act. In any case, it could not be accepted that requirement under the statute would loose its efficacy in the absence of there being corresponding provision under the rules made under the Act. The submission therefore has no force and deserves to be rejected.

The/submission of learned counsel for the State that the provision relating to surrender of licence contained in Section 33 of the Excise Act are not attracted in the case of grant of licence u/s 18 of the Act, need not be decided, because even assuming that the provisions are applicable, it has been found that there was no valid notice of surrender by the petitioners in two cases on account of non-depositing of fee payable in respect of the remainder period of licence. This would be decided in appropriate case.

As far as writ petitioner Satpal Singh in W.P. No.1206/03 is concerned, there is yet another aspect which requires to be dealt with. The petitioner has submitted that aggrieved by the order of cancellation of licence of all three liquor shops in the group of shops allotted to the petitioner, the petitioner had preferred an appeal, raising a specific ground that on account of violation of terms and conditions in respect of foreign liquor shop, licence of other two county liquor shops in the group could not be cancelled, as there was no allegation of violation of any of the terms and conditions of the licence of the two country liquor shops nor violation of the provision of the Excise Act or the Rules of 2002. I have gone through the memo of appeal and find that it was specific ground raised in the appeal of the petitioner that he had been paying the licence fee in respect of the country liquor shops and therefore on account of violation of terms and conditions of foreign liquor shops, licence of country liquor shops could not be cancelled. The Excise Commissioner in the appeal has rejected this contention, by stating that as the shops were allotted in one group, therefore, for violation of the terms and conditions of any of the shop in the group, licences of all the shops in the group were liable to be cancelled. Such a finding of the Excise Commissioner appears to be clearly illegal and unsustainable in law. In case of licences granted to the petitioner in respect of two country liquor shops of Pithora group, it has nowhere been stipulated that if the petitioner commits breach of terms and conditions of licence granted in respect of foreign liquor shop of that group, the licence of country liquor shops would be liable to be cancelled. Learned counsel for the respondents --State could not point out to this Court any of the provisions either contained in the Excise Act or in the Rules of 2002 framed thereunder that in case of allotment of shops in group, for violation of terms and conditions of licence of one shop in the group, licence of other shops in that group would also be liable to be cancelled. Grant and cancellation of licence are both statutory act. The ground on which statutory licence granted in respect of liquor shop could be cancelled, have been exhaustively provided under the Excise Act and the Rules of 2002 read with terms and conditions of liquor licence for country liquor. Nowhere it has been provided that the licence of the shops in one group shall be liable to be cancelled in the event of breach of terms and conditions of licence or provision of the Act and Rules in respect of any one of the shop in that group. In the absence of there being any such provision either contained in the law or in the terms and conditions of licence granted to petitioner, it was not at all permissible for the respondents to have cancelled the licence of two country liquor shops on the allegation that the petitioner breached the terms and conditions of licence of foreign liquor shop in that group. Therefore, to that extent the action of cancellation of two country liquor shops is illegal and the demand notices issued to the petitioners in so far as they related to two country liquors shops cannot be sustained in law.

In view of the discussions as above and the peculiar facts and circumstances of the present case, reliance placed by the petitioners in the judgment in the case of Gulabrai (supra) and Shekhar Sahu (supra) is misplaced and does not help the case of the petitioners.

In the final analysis Writ Petition No. 1206/03 filed by petitioner Satpal Singh is partly allowed. In W.P. No. 1206/03, the demand raised through various notices in respect of breach relating to foreign liquor licence in Pithora group of shops is upheld, but the demand in respect of two country liquor shops, licences of which were illegally cancelled, is declared illegal. The demand notices Annexure P-13 and Annexure P-14 are set aside. The respondents shall work out liability of the petition for payment of various dues relating to foreign liquor shop and issue fresh notices and may recover liability in respect thereof. Writ Petition No 1207/03 filed by Guru Bakshish Singh is found without any merit and therefore dismissed.