M/S.
Cooperative Co. Ltd. Vs. State of U.P. & Anr [2001] Insc 200 (10 April 2001)
Cji
& N. Santosh Hegde Santosh Hegde, J.
L...I...T.......T.......T.......T.......T.......T.......T..J
The
appellant herein, which is a limited company, was running a distillery with a
bottling plant at Nawabganj, Saharanpur,
since 1910. On 14.7.1980 it made an application to the Commissioner of Excise,
State of U.P., stating that its distillery has
been operating annual licences for wholesale supply of country-liquor to Delhi
Administration for many years continuously. Therefore, it stated that it wanted
to establish a bottling warehouse in district Ghaziabad to meet its requirement of supplying country-liquor to Delhi conveniently and economically. It
pleaded that due to close proximity to Delhi if it is permitted to start a bottling unit somewhere in the district
of Ghaziabad, it will have obvious advantages since bulk of its production of
country-liquor was being sold in Delhi.
It
also stated in the said application that it would help the company to bid
competitively in the auctions and consequently, the State would also stand to
benefit from the excise revenue. In the said letter, it is stated in clear
terms that the State Government would not stand to lose anything by permitting
the compnay to start the bottling warehouse in district Ghaziabad because it would continue to bottle
both at Saharanpur as well as at Ghaziabad, hence, the State excise duty from Saharanpur would not suffer. It was also made
specific in the said application that it was seeking a licence for an
additional bottling warehouse at Ghaziabad.
Pursuant
to the said application, the appellant was informed on 29.7.1980 that it is
permitted to bottle country spirit under bond for exports in a bonded warehouse
to be licensed for suitable premises to be indicated by the appellant at Ghaziabad along with various other
conditions.
The
said intimation also called upon the appellant to make necessary arrangements
after executing counterpart agreement prescribed under the Excise Rules and
that the amended CL-I licence will be issued by the Office of the Excise
Commissioner as also F.L.-3 licence will be issued by the Collector, Ghaziabad.
It is
stated that for a considerable time the appellant was unable to establish the
bottling warehouse as permitted under the letter of the Excise Commissioner,
referred to above. But it is an admitted fact that such a warehouse with the
permission of the authorities was established at Sahibabad, district Ghaziabad, and has been functioning for a
number of years. In the meantime, it is noticed that the appellant faced
certain difficulties in running of its distillery and bottling warehouse at Saharanpur because of the dispute in regard to
the property in which its distillery plant was situated at Saharanpur as also because of the provisions
of the Water (Prevention & Control of Pollution) Act, 1974. Therefore,
sometime in the year 1987 the appellant wrote to the Commissioner of Excise in
view of the above-cited difficulty that it be permitted to shift its distillery
from Saharanpur to some other suitable place.
The
Government as per its letter dated 20.7.1998 informed the appellant that it had
no objection to shifting the said distillery from Saharanpur to some other place, other than Sahibabad,
district Ghaziabad. Subsequently, by another letter of
the Government dated 7.9.1988, the appellant was informed that in supersession
of its aforesaid letter dated 20.7.1988, the Government had decided to approve
the transfer of the distillery of the appellant to a place near the existing
site in Saharanpur and that it had no objection to the working of the
appellants bottling plant at a place owned by the appellant in any other
district provided this did not result in reduction in the number of workers
working in the district of Saharanpur. Consequent to the above order of the
Government dated 7.9.1988, the Assistant Commissioner of Excise informed the
appellant the sanction of the Government for shifting of the site of the
distillery of the appellant. This was done by its letter dated 27.9.1988. In
the said letter it was made clear that the permission to shift the distillery
at Saharanpur was given on a condition that the
shifting shall be done to some place near Saharanpur city with installation of necessary pollution control devices. Based on
this permission, the appellant contends that it shifted its distillery and the
attached bottling plant from Nawabganj, Saharanpur to Yusufpur, Tapari Road, Saharanpur. When this was the position the appellant received a letter dated
9.7.1991 wherein, according to the appellant, for the first time the appellant
was informed that it was granted a licence to run a bottling warehouse at Sahibabad
only till such time as the appellant shifted its distillery and bottling plant
from the existing site at Saharanpur and since that shifting has taken place,
the Government was not willing to continue with the temporary permission given
to it to do the bottling process at Sahibabad, district Ghaziabad. By the said
letter, the appellant was called upon to show cause why the sanction accorded
to it to establish a bottling/filling plant at Sahibabad be not revoked.
To the
aforesaid letter of the Government, the appellant replied on 7.8.1991 stating
that the licence granted to it to run a bottling warehouse at Sahibabad,
district Ghaziabad, was totally unconnected with its distillery and bottling
plant at Saharanpur and was independent of the same. They stated that they
sought permission and the same was granted to establish a bottling plant at Sahibabad
because of its proximity to the State of Delhi and because of the contract it
had with the Government of Delhi to supply huge quantity of country-liquor and
it had no connection whatsoever with the shifting of the distillery and the
bottling plant attached to that distillery at Saharanpur. The Government,
however, did not agree to this stand of the appellant and by a letter of
6.11.1992 directed the appellant to take necessary steps to stop the bottling
plant at Sahibabad and mandated that all further bottling of the arrack
manufactured by the appellant should be done only at the relocated site of its
distillery at Saharanpur within 3 months from the date of the said order.
The
appellant challenged the said cancellation of its licence to run the bottling
plant at Sahibabad, district Ghaziabad, by way of a writ petition before the
High Court of Judiciature at Allahabad in Civil Misc. W.P. No.172/93.
In the
said writ petition, the appellant sought for quashing of the order of the State
of U.P. dated 6.11.1992 along with certain other reliefs.
A
Division Bench of the High Court came to the conclusion that the permission to
start the bottling plant at Sahibabad was not in addition to the bottling plant
run by the appellant at Saharanpur but was as a temporary measure to facilitate
the appellant to shift its distillery and bottling plant from the existing site
at Saharanpur to another site at Nawabganj, Saharanpur, the High Court further
held now that a new distillery and bottling plant have been set up at an
appropriate place at Saharanpur, the appellant cannot be permitted to use the
bottling plant at Sahibabad. On that premise the writ petition came to be
dismissed, giving 3 months time to the appellant to shift its bottling plant
from Sahibabad to the new distillery situated at Yusufpur, Tapari Road.
Before
us, Mr. Shanti Bhushan, learned senior counsel has contended that the
application of the appellant which was made as far back as on 14.7.1980 was
based on certain special facts inasmuch as the appellant had obtained major
contracts for the supply of country-liquor to the State of Delhi and in
executing the said contract, the appellant was finding difficulty in
transporting such huge quantity of arrack bottled from Saharanpur to different
places at Delhi.
Therefore,
with an intention of making supply of country-liquor to Delhi easier and
economical, the appellant approached the Government with permission to
establish only a bottling plant so that it could bring the permissible
raw-liquor from its distillery and other permissible places and convert the
same to potable arrack and bottle them at its bottling plant closer to Delhi
whereby apart from preventing wastage of liquor in transit, the appellant would
also save considerable amount of money in transportation.
This,
according to the appellant, is clear from the contents of its application made
to the Government. Mr. Shanti Bhushan also contended that the permission
granted to the appellant pursuant to its application dated 29.7.1980 also indicates
in clear terms that it is a permission for starting an independent bottling
unit at the place to be notified by the appellant in the district of Ghaziabad.
He says that a perusal of this permission shows that it was meant for bottling
arrack to be supplied at Delhi. He pointed out that the licence
given to establish and run the bottling plant at Sahibabad was an independent licence
and was not in substitution of the bottling plant which was being run at that
point of time at Nawabganj, Saharanpur.
He
contends that the belated stand of the Government that the bottling unit at Sahibabad
was only a temporary arrangement and was meant to be in existence only till the
shifting of the bottling plant at Saharanpur is not supported by any material on record and is contrary to facts. It
is urged that the appellant has spent huge sums of money in establishing a
modern bottling plant at Sahibabad, district Ghaziabad, because of the volume
of its business with the State of Delhi, and it would be futile to contend that
such huge amount for a permanent bottling unit would have been expended by the
appellant if the licence granted to it was not a permanent one. He contends
that this stand of the Government that the licence to run the bottling plant at
Sahibabad is only transitory in nature, is a lame excuse.
On
behalf of the State it is contended by Mr. Subodh Markandeya, learned senior
counsel contended that in fact the permission accorded vide letter dated
29.7.1980 was only temporary and for the limited period during which the
appellant had to shift his distillery and the bottling plant at Saharanpur from
Nawabganj, Saharanpur to some other place and now that it has re-established
its distillery and the bottling plant at another place in Saharanpur, it has no
right to operate the bottling plant at Sahibabad.
Having
heard learned counsel for the parties in extenso and perused the records, the
only question that arises for our consideration is whether the appellant was
given sanction to start an independent and additional bottling warehouse at Sahibabad,
district Ghaziabad by the competent authorities or was it only a temporary
permission to facilitate the appellant to continue with the process of bottling
during shifting of its distillery and the bottling plant from one place to
another at Saharanpur.
We
have already referred to the application made by the appellant for grant of
permission to start a bottling plant in district Ghaziabad on 14.7.1980 so also
the permission accorded by the authorities on 29.7.1980. Basically, the
necessary material to decide the above questions is found in these two
documents. Though we have referred to the said document in some detail earlier,
we think it appropriate to refer to it at the cost of repetition once again
while deciding these question.
As per
the letter dated 14.7.1980, the appellant sought for licence for establishment
of bottling warehouse in Ghaziabad. In the said letter/application,
the appellant stated that the company has been awarded annual licence for
wholesale supply of country-liquor to Delhi Administration for the last 7 years
continuously. It also stated for the current year (referable to the date of the
letter) that the Delhi Administration had granted licences for two brands of
liquor, namely, country-liquor and Rum 50 degree strength.
It
also stated that the State of U.P. earns
substantial revenue in the form of export duty on the supplies of liquor made
by the appellant to the Delhi Administration which according to the appellant
was to the tune of crores of rupees. The letter further stated that in view of
the bitter competition from distillers in other neighbouring States like Punjab, Haryana and Himachal Pradesh, the
appellant was finding it economically difficult to compete with other suppliers
because of the fact that it had to transport bottled liquor from Saharanpur all the way to Delhi. In the process, it is stated that
a large quantity of liquor also gets wasted and the cost of transportation was
also becoming uneconomical. They had pointed out that if it lost the contract
with the Delhi Administration then the State of U.P. also stood to lose crores of rupees in excise revenue.
Therefore, the letter specifically stated that it is in the interest of both
the appellant and the U.P. Government to permit the appellant to establish its
additional bottling warehouse at Ghaziabad. They further stated that they will be investing on the establishment
of the said warehouse with a long term perspective. So it is in these
circumstances that the appellant sought permission from the respondents to
establish a new bottling warehouse at district Ghaziabad. The respondent vide its letter dated 29.7.1980 informed
the appellant that they are allowed to bottle country spirit under a bond for
exports in a bonded warehouse to be licensed at Ghaziabad in suitable premises
provided by the appellant on the conditions mentioned in the said letter. One
of the conditions enumerated therein stated that the appellant was permitted to
reduce the plain country spirit into spiced country spirit in the said bottling
warehouse at Ghaziabad, and that it should provide office facilities for the
excise officials who will be incharge of the bonded warehouse attached to the
bottling premises, and that the appellant should make necessary arrangements to
execute counterpart agreement to receive the necessary CL-I and FL-III licences
from the Commissioner of Excise and the Collector, Ghaziabad, respectively. In
the background of what is urged on behalf of the State, it should be noticed
from this letter that there is absolutely no indication whatsoever to show that
this permission to start the bottling unit at district Ghaziabad was either temporary or was in lieu
of the bottling unit at Saharanpur.
Neither
the application of the appellant dated 14.7.1980 nor the sanction of the
respondents dated 29.7.1980 has made any reference whatsoever to the bottling
plant attached to the distillery of the appellant at Saharanpur. From the reasons given by the
appellant for starting the bottling plant at Ghaziabad and the conditions
attached to the approval of such sanction to start the bottling plant at Ghaziabad,
we cannot even remotely come to the conclusion that this permission was either
temporary or was in lieu of the bottling plant at Saharanpur. However, the
respondents strongly relied upon letter dated 9.7.1991 wherein it had informed
the appellant that the permission to establish a bottling plant was granted
vide its letter dated 7.9.1988 and was meant as a temporary measure till the
construction of a distillery plant at Sahibabad, district Ghaziabad, by the
appellant. It was also mentioned in the said letter that CL-I licence was
issued to the appellant for its unit at Ghaziabad on the condition that the distillery will shift the work from Saharanpur to Sahibabad, district Ghaziabad.
It is
true that the letter of 9.7.1991 does state so but then that letter relies upon
an earlier letter dated 7.9.1988. A perusal of that letter of 7.9.1988 clearly
shows that it had nothing to do with the establishment of the bottling plant at
district Ghaziabad. While appreciating the contents of
that letter, we will have to bear in mind certain additional facts such as
after the permission was granted to the appellant to establish the bottling
plant in district Ghaziabad, the appellant seems to have run
into certain difficulties while running its distillery at Saharanpur. Therefore, they corresponded with
the Government to shift its distillery along with the existing bottling plant
from Saharanpur to some other place.
It is
in that context that the Government wrote letter dated 7.9.1988 which was
nearly 8 years after the sanction granted to start the bottling warehouse at
district Ghaziabad. This letter conveying approval of
the Government to transfer the site of the appellants distillery from Saharanpur
to a place near the existing site in Saharanpur and to install the required
pollution control devices at the new site, made a reference to the existing
bottling plant attached to that distillery and stated that the Deptt. would have
no objection to the work of bottling in the godown by the producer in other
district (i.e. Ghaziabad) provided there shall not be lay off in the number of
the workers working in distt. Saharanpur. In our opinion, this reference to the
bottling plant in the letter of 7.9.1988 or the place Ghaziabad cannot be in
any manner connected with the bottling plant already permitted to be
established at district Ghaziabad in the year 1980 by the Government. Per
contra, it is clear that this is with reference to the bottling plant which was
attached to the distillery at Saharanpur. Therefore, we find that reference to
letter dated 7.9.1988 in the letter of the Government dated 9.7.1991 is wholly
misplaced and the respondents in our opinion cannot make that as the basis for
contending that the licence issued to the appellant for establishing a bottling
plant at Ghaziabad was in lieu of the bottling plant at Saharanpur or was in
fact a temporary one. In this regard we are supported by certain notings found
in the notes and orders of the Excise Commissioner's office, U.P., Allahabad,
in File No. II Techincal D-19 pages 33, 24, 39 & 40 which was exhibited as
Annexure A-17 before the High Court. The notings in clear terms show that what
was intended to be granted to the appellant by the letter of the respondent
dated 29.7.1980 was a permission to start a new bottling plant and grant of a
new bottling licence.
In
this background if we have to consider the impugned order of the respondents
dated 6.11.1992 it is seen that an entirely new stand has been taken on behalf
of the State.
This
letter the original of which is in Hindi and a fresh translation thereof was
provided to us on behalf of the State inter-alia states : "It is also made
clear that during this period you must stop the Bottling plant at Sahibabad and
further bottling must only be done at your relocated site of your distillery at
Saharanpur. After the expiry of these 3 months you will not be allotted any
alcohol from other distilleries for your bottling plant at Sahibabad. Actually,
this was a letter in reply to the complaint of the appellant on insufficient
electric supply to its distillery at the relocated plant. In this letter the
State took the opportunity of informing the appellant of closing its bottling
plant at Sahibabad. By this letter it is clear that the respondents treated the
earlier permission granted to the appellant as a temporary permission to last
till the appellant shifted its distillery and the bottling plant attached to
it. We have already noticed that from the original application and the sanction
granted thereof, it is clear that the permission to start the bottling plant at
district Ghaziabad which was ultimatley established at Sahibabad, district Ghaziabad,
was not temporary or stand-by permission. It was given for a specific purpose
of facilitating the appellant to bottle bulk country-liquor at Sahibabad so
that the appellant could compete with the other bidders for supply of country
liquor to the State of Delhi.
That
permission cannot be treated as a permission having been granted as a stand-by
permission till the appellant shifted its distillery and the bottling unit at Saharanpur.
We are
satisfied that the High Court has erred in coming to the conclusion that the licence
granted to the appellant to establish and run a bottling unit at Sahibabad,
district Ghaziabad is a temporary one.
We
however make it clear that if the appellant has not complied with any of the
provisions of the said Excise Act and Rules or has contravened any of the
provisions of the Act or any of the terms of the licence, it is open to the
State to take such action as is legally permissible but this licence to run a
bottling warehouse at Sahibabad, district Ghaziabad, shall not be cancelled on
the ground that the same was granted as a temporary measure.
In the
result, the appeal succeeds and is allowed. The order dated 16.11.1992 is
hereby set aside. No costs.
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