Full Judgment Text
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CASE NO.:
Appeal (civil) 6425 of 2002
PETITIONER:
Secretary, Department of Excise & Commercial Taxes & ors.
RESPONDENT:
M/s. Sun Bright Marketing Pvt. Ltd.Chhattisgarh & Anr.
DATE OF JUDGMENT: 12/02/2004
BENCH:
CJI, S.B. Sinha & S.H. Kapadia
JUDGMENT:
JUDGMENT
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
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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:
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"24. Closing of shops for the sake of
public peace \026 (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 \026 (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. \026 (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
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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
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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
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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
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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
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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
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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
remedied thereby. (See Ameer Trading Corporation Ltd. Vs.
Shapoorji Data Processing Ltd., JT 2003 (8) SC 109, Ashok
Leyland Ltd. Vs. State of Tamil Nadu & Anr., 2004 (1) SCALE
224 and Reema Aggarwal Vs. Anupam & Ors., 2004 (1) Supreme
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
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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.
We may notice that recently in State of U.P. Vs.
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
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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.