Secretary,
Department of Excise & Commercial Taxes & Ors Vs. M/S. Sun Bright
Marketing Pvt. Ltd. & Anr [2004] Insc 94 (12 February 2004)
Cji,
S.B. Sinha & S.H. Kapadia S.B. Sinha, J:
The
judgment of the Chhattisgarh High Court dated 4.4.2001 passed in Writ Petition
No. 6021 of 2000 granting exemption from payment of licence fee is in question
before us in this appeal.
The
respondent herein was awarded a contract for running Indian Made Foreign Liquor
shops in the district of Raipur for the period commencing 1.4.2000 to
31.3.2001.
Although
the contract was to commence from 1.4.2000, he had been handed over the licence
on 3.4.2000.
The
respondent claimed deduction by way of remission and/ or compensation from the
amount of licence fee payable by him for three periods for different reasons
which are:
(i)
For closure of shop due to holding of municipal election at several places wherefor
the liquor shops situated within a radius of 25 kilometers from the Municipal
Corporation of Durg and Bhilai were directed to be closed.
(ii)
For closure of shop for five days consisting of - three days due to agitation
on account of constitution of Chhattisgarh State, one day owing to strike with
regard to constitution of High Court Bench at Raipur and one day on account of
strike on Kargil issue.
(iii)
For non-grant of the licence from 1st April, 2000 to 3rd
April, 2000.
The
High Court in its judgment held that the respondent was entitled for
compensation and/ or exemption from payment of licence fee for three days when the
liquor shops remained closed due to political agitation and demonstration. He
was also found to be entitled for compensation and/ or exemption from payment
of licence fee for a period of three days for the period when the shops were
directed to be closed for municipal election. The High Court further held that
the respondent was also entitled to exemption from payment of licence fee for
three days, i.e., for the period from 1st April, 2000 to 3rd April, 2000 on
account of delay in handing over the licence.
Mr. Prakash
Shrivastava, learned counsel appearing on behalf of the State would urge that
the respondent herein was not entitled to any compensation and/ or remission in
licence fee for closure of his shops owing to holding of election of municipal
corporation at Raipur in view of the provisions contained in Sub-Section (1) of
Section 24 of the Madhya Pradesh Excise Act, 1915 (for short "the
Act") as in terms thereof the District Collector is empowered to direct
closure of such shops for maintenance of public peace.
The
learned counsel would argue that closure of shops due to political agitation
and demonstration cannot give rise to any claim for compensation in view of
condition No. 18 of the Sale Memo as also General Condition No. 8. So far as
the judgment of the High Court directing payment of compensation for the period
1st April, 2000 to 3rd April, 2000 is concerned, Mr. Shrivastava would argue that the same is
impermissible under the provisions of the Act.
Mr.
P.N. Mishra, learned counsel appearing on behalf of the respondent, on the
other hand, would urge that from a perusal of the note appended to Clause (V)
of the conditions laid down in Schedule-4 of the Sale Memo, it would be evident
that there was no embargo for claiming payment of compensation as in terms
thereof only those shops, which fall within the area of the local bodies, where
election was to be held, were required to be compulsorily closed.
Mr. Mishra
would further submit that having regard to the proviso appended to Sub-Section
(2) of Section 24 of the Act, a statutory duty was cast upon the licensee to
close down his shop in the event of any riot or unlawful assembly takes place
and in that view of the matter, the licensee was entitled therefor to claim
exemption and/ or remission from payment of licence fee.
The
learned counsel would submit that Rule VIII (3) of the General Licence
Conditions whereupon the learned counsel for the appellant has relied upon will
have no application in the instant case. He would urge that Rule VIII of the
General Licence Conditions will have no application in a case where closure is
forced upon the shop by reason of a political agitation which would be apparent
from the fact that a similar embargo contained in Condition No. 42 of the Sale
Memo had been deleted. Mr. Mishra would, therefore, submit that the finding of
the High Court cannot, thus, be faulted as while granting relief to the
respondents herein all the relevant provisions of the Act, the General Licence
Conditions and the conditions laid down in Sale Memo had been taken into
consideration.
Mr. Mishra
would further contend that as the respondent was not legally entitled to run
the shop for the period 1st April, 2000 to 3rd April, 2000, as no licence was
granted to him, it must be held that the licence remained suspended for the
said period and in that view of the matter the High Court must be held to have
correctly arrived at the conclusion that the respondent was entitled to grant
of remission in payment of licence fee for the said period.
STATUTORY
PROVISIONS:
Section
24 of the Act reads as under:
"24.
Closing of shops for the sake of public peace
(1)
The District Magistrate, by notice in writing to the licensee, may require,
that any shops in which any intoxicant is sold shall be closed at such times or
for such period as he may think necessary for the preservation of the public
peace.
(2).
If a riot or unlawful assembly is apprehended or occurs in the vicinity of any
shop, a Magistrate of any class, who is present, may require such shop to be
kept closed for such period as he may think necessary:
Provided
that, when any such riot or unlawful assembly occurs, a licensee shall, in the
absence of the Magistrate, close his shop without any order.
(3).
When any Magistrate issues an order under sub-section (2), he shall forthwith
inform the Collector of his action and his reasons thereof." Rules II and
VIII of the General Licence Conditions read as under:
"II.
Payment of fees
(1) the
licence fees for all intoxicant shall be payable at the treasury or, in
outlying tahsils, at the sub-treasury, on or before the first working day of
each month.
(2)
The licence fees for intoxicating drugs and country liquor shall be paid in
twelve equal monthly instalments. If a licence fee be not exactly divisible by
12, the remainder left over after division by 12 shall be paid with the first instalment.
(3) No
remission or abatement shall be claimable except in accordance with the
provisions of Section 32 of the Act, or of rule VIII below. An advance deposited
as security shall be credit to fees due in the closing months of the
year." "
VIII.
Shops to be kept open and adequately stocked.
(1)
Shops shall be kept open every day throughout the year unless their temporary
or permanent closure has been authorised by the Collector. Such supply of
liquor or intoxicating drugs as the Collector may consider sufficient to meet
the local requirement shall be maintained.
Subject
to the provisions of section 38 of the Act, and to the exceptions specified in
rule XIV, sales be made to all comers on payment at the current rate of sale.
Shops for the sale of tari may be closed during the rains, i.e. from 1st June
to the 14th October.
(2)
Shops shall remain closed for the whole day on such days as the Collector may
announce at the time of auctions:
Provided
that the Collector, or District Excise Officer, or in their absence a Deputy
Collector, duly authorised by the Collector, may require foreign liquor
licensees holding licenses in Forms F.L. 1 and F.L. 2 to open the shops on such
days for sale of foreign liquor to bona fide foreign visitors.
(3)
Shops shall also remain closed in any area or areas for such period as the
State Government may in public interest deem necessary so to do.
An
intimation to the effect shall be given to the licensee through the Collector
of the district well in advance as far as possible:
Provided
that, when a shop is closed under this rule, the Collector may, with the
previous sanction of the Excise Commissioner, award compensation to the licensee
for loss of profits." The relevant clauses of Schedule-4 appended to Sale
Memo are as under:
"(IV)
In addition to this, the Collector shall have power in administrative and
public interest to issue orders for closure of any one or more shops of any
place or all the shops of Tehsil or Distt. for additional 3 days and the shops
shall remain closed accordingly.
(V)
During Lok Sabha and Assembly General Elections/ by elections, the shops shall
remain closed for 48 hours before the time fixed for closure of election/
voting i.e. on the date of election and one day before the date of election and
so far the question of declaring the days as dry days after the election and
counting days is concerned, the concerned Collector shall be empowered to take
decision in view of local circumstances as to whether there is a need from
administrative point of view or not to declare dry days after the election and
counting days.
Similarly,
shops shall also remain closed during i.e. for general/ by elections of local bodies.
Note: The local bodies includes Municipal
Corporation, Municipal Committee, Nagar Panchayat and Distt. Panchayat. During
their elections, shops of only those areas will remain closed where elections
are being held.
(VI)
In addition to above festivals/ occasions, every Collector shall decide and fix
the boundaries of the industrial area situated within their district separately
for each area and the shops shall remain closed for two days, i.e., days for
disbursement of salary and expenses of workers/ labourers, which shops are
situated within the boundary so fixed by them. The Collector shall fix/ decide
these days in such a manner that these days are same for all the mills and
industrial establishments of one Town.
(VII)
For the dry days as mentioned in the above para (I) to (VI), the concerned
contractors shall not be allowed any rebate/ concession whatsoever in the
auction money for those days and nor they will be entitled to any compensation
whatsoever.
(VIII)
If in addition to the abovesaid fixed dry days, shops are remained closed on
the written order of Collector, then in case of closure of such shops, the
Contractor shall be entitled to proportionate rebate/ concession in auction
money as prescribed for the concerned shop." The Act is a self-contained
code.
The
licensees indisputably are bound by the provisions of the said Act, the general
conditions framed thereunder as also the terms and conditions of the sale memo.
It is also not in dispute that remission in licence fee would be permissible
provided the claim of the licensee is covered by one or the other provisions
contained therein.
The
scheme of the Act, the General Licence Conditions and the conditions contained
in the Sale Memo postulate that, in the event, the licensee is required to
close a shop in terms of an order passed by the statutory authority or
otherwise, he would be entitled to claim remission in licence fee unless the
same is expressly barred.
Section
24 of the Act is in two parts. Sub-section (1) of Section 24 empowers the
District Magistrate to direct closure of any shop in which any intoxicant is
sold for such time or for such period as he may think necessary for
preservation of the public peace. Sub-section (2) of Section 24, however, deals
with a specific situation in terms whereof in the event of apprehension or
occurrence of a riot or unlawful assembly in the vicinity of a shop, a
Magistrate of any class may require such shops to keep closed for such period
as he may think necessary. In the event, however, no magistrate is available,
the proviso appended thereto mandates that the licensee shall close the said
shop without any order.
A bare
perusal of the provisions contained in Sub- section (2) of Section 24 read with
the proviso appended thereto makes the legal position absolutely clear that
closure of a shop in the event of occurrence of a riot or unlawful assembly is
mandatory whether at the instance of a Magistrate or at the instance of a
licensee himself; the only difference being that the Magistrate can pass an order
where a riot or unlawful assembly is apprehended, the licensee is enjoined with
a duty to close his shop whence a riot or unlawful assembly occurs.
It is
not disputed that the shops of the respondent remained closed for three days
owing to agitations as regard creation of State of Chhattisgarh etc.
In
terms of Clause (3) of Rule II of the General Licence Conditions, a remission
or abatement in the licence fee cannot be claimed save and except in the cases
which would come within the purview of Section 32 of the Act or Rule VIII of
the General Licence Conditions. It is also not in dispute that Section 32 of
the Act has no application in the instant case.
Rule
VIII aforementioned mandates the licensee to keep his shop open everyday
throughout the year. Such a statutory obligation on the part of the licensee,
however, is subject to temporary or permanent closure which is authorised by
the Collector. Clause (2) of Rule VIII states that the shops would remain
closed for the whole day on such days as the Collector may announce at the time
of auctions.
Clause
(3) of Rule VIII, however, authorises the State Government to direct closure of
any shop in public interest, intimation wherefor is required to be given to the
licensee through the Collector of the district well in advance as for as
possible. The proviso appended to Rule VIII, however, empowers the Collector to
award compensation to the licensee for loss of profits.
The
provisions of the sale memo, so far as they are not inconsistent with the
provisions of the Act or the Rules also provide for closure of the shop on one
ground or the other.
Condition
No. 18 contains the liquor prohibition policy which as has been noted by the
High Court reads as under:
"(18)
Liquor Prohibition Policy and closure of shops due to natural calamities:- As a
result of Liquor Prohibition Policy of any neighbouring State or of the State,
any shop/ shops are closed, then no compensation on this account shall be
payable by the State to the contractor. Similarly, due to Liquor Prohibition in
neighbouring State or for any other reason, if the decision to reauction any
shop of the States is taken or in case State consider it necessary to open any
shop during the year 2000-2001, then the Excise Commissioner shall have power
to do so and no objection whatsoever from the contractor shall be entertained
and accepted and no compensation whatsoever or any rebate/ concession
whatsoever shall be payable objector. If during the period of contract,
contractor suffers from any loss or damage whatsoever as a result of natural
calamity, celestial problem or political demonstrations, public demonstration,
movements, law and order problems, the contractor shall not be entitled to any
compensation whatsoever. All the licenses shall be subject to the Madhya
Pradesh Excise Act, 1915 and Rules framed thereunder and rules as amended from
time to time and orders/ instructions passed and issued by the State
Government, Excise Commissioner, Collector from time to time." The said
provision does not put an embargo on remission in payment of licence fees in
the event the closure of shop due to any reason authorised by law. The said
provision furthermore cannot restrict the operation of the provisions of the
Act. As would appear from what has been stated hereinbefore, the provision
contained in Clause 42 of the Sale Memo in this behalf had been stood deleted.
Schedule-4
appended to the Sale Memo provides for the proposed dry days for 2000-2001.
Clause
(IV) of the Sale Memo empowers the Collector to direct closure of anyone or
more shops for three days in addition to the days which have been noticed in
Clause (I) of the Schedule-4 in administrative and public interest.
Clause
(V) provides for closure of shops for 48 hours during the time fixed for
holding of election. The provisions contained in Clause (V) also applies in
case of general/by elections of local bodies. The note appended to the same,
however, provides that during holding of election inter alia of local
authorities, shops of only those areas would remain closed where election is
held. It is, however, not in dispute that the Collector of Raipur district had
issued an order purported to be in terms of Sub-Section (1) of Section 24 for
keeping the shops closed for 48 hours which would fall within a radius of 25
kilometers from the boundary of Municipal Council, Bhilai-III of Charoda Nagar.
Such an order, therefore, was outside the purview of Clause (V).
Clause
(VI) of the said Memo provide for closure of the shop in addition to the days
specified in Clauses (I) to (V) for two days within or nearabout the industrial
area.
In
terms of Clause (VII) of the Sale Memo aforementioned, the licensees are not
entitled to any rebate/ concession for the days of closure of such shops in
terms of Clauses (I) to (VI) aforementioned. Clause (VII), therefore, does not
prohibit remission in licence fee and/ or grant of compensation if the closure
is directed for any reason other than those mentioned in Clauses (I) to (VI) of
the said Sale Memo.
It is
also not in dispute that the power of the Collector to direct closure of any
shop may emanate from a direction by a Competent Authority in terms of the
provisions of the other statutes.
Sub
Para 3 of Chapter 13 of the Handbook to the Returning Officers issued by the
State Election Commission provides:
"3.
Ban on sale of liquor:-
(a)
During public election in every Municipal Corporation area and within the
radius of 25 Kilometers of its limit all the liquor shops will be closed from
48 hours before closing of the voting and during this period the sale and
purchase of liquor will be totally prohibited." The power, in terms of
Sub-Section (1) of Section 24 of the Act, was, therefore, exercised by the
Collector, Raipur having regard to the aforementioned provision and not in
terms of Clause (V) of the Sale Memo.
Condition
No. 42 of the Sale Memo which stood deleted read thus:
"(42)
Loss arising from celestrial/ natural calamities and for other reasons: - No
contractor shall be entitled to get compensation whatsoever from the State for
the loss suffered as a result of loss in contract business, damages to crop or
political movements, transfer of markets or natural calamities." Keeping
in view the aforementioned provisions, the correctness of the impugned judgment
would have to be considered.
Section
24 of the Act does not militate against the claim of remission in the licence
fee, in the event a closure is effected thereunder.
It is
a well-settled principle of law that a subordinate legislation either by way of
rules framed in terms of the provisions of the Act or the General Conditions
issued by the Excise Commission in exercise of its statutory power or the
conditions of Sale Memo framed would be subject to the provisions of the Act.
For proper interpretation of the statutory provisions, the Act and the Rules
are required to be harmoniously read. Political agitation resulting in unlawful
assembly would clearly attract the proviso appended to Sub-Section (2) of
Section 24. As noticed hereinbefore, in case of a riot or unlawful assembly, a
licensee is statutorily enjoined to close his shop. The proviso appended to
Sub-Section (2) of Section 24 is mandatory in nature.
Rule
VIII of the General Licence Conditions also enjoins upon the licensee to keep
the shop open everyday throughout the year unless their temporary or permanent
closure has been authorised by the Collector. Rule VIII aforementioned also in
our considered opinion contemplates a situation where Sub-Section (2) of
Section 24 would be attracted. The proviso appended to Sub-Section (2) of
Section 24 will have to be read as a part of the main enactment and not an
exception thereto. Sub-sections (1) and (2) of Section 24 as also the proviso
appended thereto refer to the closure of shop for the reasons stated therein.
Whereas
in terms of Sub-Section (1) of Section 24 the Collector may pass an order, in a
case falling within the purview of Sub-Section (2) thereof, even a Magistrate
can pass such an order. Thus, Rule VIII of the General Conditions also refers
to a temporary or permanent closure, as has been authroised by the Collector
and, thus, the same having regard to the principles of purposive construction
would include an order passed by a Magistrate in terms of Sub-Section (2) of
Section 24. In that view of the matter, if a Magistrate is not available when a
riot or unlawful assembly occurs, the licensee having a statutory duty to close
the shop; the same shall stand at par in view of the fact that in both the
situations maintenance of public peace is mandatory.
Clause
(3) of Rule VIII stands on a different footing.
Proviso
appended to Clause (3) of Rule VIII refers to closure under the said rule,
viz., Rule VIII. The said proviso does not cover clause (3) of Rule VIII alone
but also brings within its fold a case falling under Clause (1) aforementioned.
Therefore,
in a situation of this nature, the licensee is entitled to claim remission in licence
fee and/ or damages.
Furthermore,
it has rightly been opined by the High Court that having regard to the fact
that Condition No. 42 of the Sale Memo stood deleted, a mischief covered
thereby was sought to be removed. To that extent Clause 18 of the purported
excise policy has not been given effect to, presumably because the same may be
held to be violative of Section 24 of the Act.
To us
it appears that such a decision was taken consciously. In a case of occurrence
of natural calamity, riot or unlawful assembly, the licensee cannot discharge
his obligation to keep his shop open. A riot or an unlawful assembly may take
place for any reason including political agitation.
If an
unlawful assembly takes place in course of a political movement, having regard
to Section 24 of the Act, it might not even be possible to sustain the validity
of Condition No. 42. Unlawful assembly owing to political movement was within
the purview of Condition No. 42 of the Sale Memo having regard to Clause 18 of
the excise policy.
By
deleting the said condition, a mischief is sought to be Shapoorji Data
Processing Ltd., JT 2003 (8) SC 109, Ashok 355).
So far
as the closure of the shop in terms of the direction of the Collector dated
21.6.2000 is concerned, the same is not in dispute. The validity of the order
of the Collector is not in question. Schedule-4 specifies the dry days and also
specifies the date on which the shops are required to remain closed. The note
appended to Clause (V) specifically directs closure of shops of only those
areas falling within the area where elections are being held. The area refers
to the cases in respect whereof the election is being held and not which is
outside the said area.
In
terms of Schedule-4, a remission in licence fee is impermissible if the closure
occurs for a reason mentioned in any of the clauses referred to therein. The
shops which are situated outside the area where election is being held would
not, therefore, come within the purview of Clause (V) and, thus, would attract
Clause (VIII) aforementioned, in terms whereof, the Contractor becomes entitled
to grant proportionate rebate/ concession in auction money as prescribed for
the concerned shop.
The
above view also find supports from the fact that Clause (VII) excludes those
contractors who had to keep their shops closed owing to the declaration of dry
day as provided for in Clauses (I) to (VI). If a shop falling outside the area
has to be kept closed in terms of an order passed under Sub-Section (1) of
Section 24 of the Act, Clause (VIII) of the Sale Memo shall be attracted.
Jagjeet
Singh [JT 2003 (8) SC 40: (2003) 8 SCC 270] a 3- Judge Bench of this Court [in
which one of us (the Chief Justice of India) is a party] on interpreting
Section 59 of the U.P. Excise Act which is in pari materia with Section 24 of
the said Act held:
"Section
59 empowers the district magistrate to close any liquor shop at such time or
for such period which he may consider necessary for preservation of peace. In
cases where some riot or unlawful assembly is apprehended in vicinity of such a
shop a magistrate or any police officer above the rank of constable, who is
present may order for closure of the shop. The proviso to Section 59 casts a
duty on the licensee to close the shop without any order by any authority,
where a riot or unlawful assembly occurs at the place where the shop is
situated. Apart from providing for closure of the shop to maintain peace,
Section 59 does not provide for anything either way for awarding compensation
or remission on account of such a closure." In that case it was inferred
that if awarding of compensation is not specifically barred, the same may be
granted.
While
interpreting Rule 34(ii) of the U.P. Excise Licenses (Tender-cum-Auction)
Rules, 1991, it was further observed:
"The
position which finally emerges out is that an application for remission /
damages for closure of shops in entirety auctioned in a group as is the case in
the appeals in hand would be maintainable. But it is for the authorities
concerned to consider the merit of the claim for remission/ damages and pass
any appropriate order looking to the facts and circumstances of the case in accordance
with law. It would be the position as it relates to cases prior to the
amendment of Rule 34 in 1998." However, so far as the claim of the
respondent for the period 1st April, 2000
to 3rd April, 2000 for non-grant of licence is
concerned, in our opinion, the same does not come within the purview of the
Act, the General Conditions or the conditions of Sale Memo. The respondent for
the aforementioned purpose must avail other remedies, if any, in relation
thereto. We, therefore, are of the opinion that the judgment of the High Court
to that extent cannot be sustained.
Ordinarily,
we would have referred the matter back to the appropriate authority for passing
an appropriate order in accordance with law but herein we find that the
respondents had filed representations which had been rejected. The period of licence
is also long over.
Furthermore,
the licence had been granted by the State of Madhya Pradesh. The writ petition filed by the respondent, however, on
creation of the High Court at Chhattisgarh, was heard by it.
We,
therefore, do not intend to interfere with that part of the judgment of the
High Court wherein, having regard to the interpretation of the provisions of
the Act, general conditions and the conditions of Sale memo, a part of its
claim has been allowed.
For
the reasons aforementioned, the appeal is allowed in part and to the extent
mentioned hereinbefore. However, in the facts and circumstances of this case,
there shall be no order as to costs.
Back