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Thursday, August 27, 2015

Due to a dispute with its landlord it had to vacate its premises; and on locating to another, it applied for the renewal of the licence on 26.2.2002. This was obviously for the immediately succeeding year 1.4.2001 to 31.3.2002. The Excise Commissioner rejected the application for renewal on 4.9.2002 on the ground that the licence had become defunct; a decision which was upheld by the State Government. = In order to eradicate any possibility of misunderstanding our present Judgment, we hasten to clarify that had the Appellant’s application for renewal of the FL-3 licence found approval instead of rejection on 4.9.2002, the Appellant would have been liable to pay the entire fee for the year 2001-2002. This is so for the simple reason that there was no third party interference or intervention which led to the non-utilization of that licence for the previous portion of that year; it may be reiterated that the Appellant had to locate fresh premises. However, after 4.9.2002, the Appellant cannot be held responsible in any way for the non-utilization of the licence up to the date it was eventually renewed i.e. 25.3.2003.we are of the opinion that the Appellant is only liable to pay the proportionate licence fee for the period in which it could avail of the licence, that is 25.3.2003 to 31.3.2003. It would be fair to cogitate upon whether the Appellant should have declined the licence for virtually a week in that year, and since it failed to exercise that option, whether it should be burdened with the fee for the full year. It seems to us that any person placed in the position of the Appellant would not be in a position to decline to accept the renewal of the licence even though it was for less than a fortnight, since that would have led to the licence being rendered defunct; which may have then led to consequence of disentitlement for grant or renewal of the FL3 licence in the future. The Appeal is accordingly allowed. The Respondents are directed to recalculate the proportionate amount of licence fee due and payable by the Appellant for the period from 25.3.2003 to 31.3.2003. The amount of refund shall carry interest at the rate of six per cent per annum from the date of its payment due till the date of its refund. This exercise should be completed within two months from today. Failure to make this payment within this period will render the Respondents liable to pay the interest at the rate of twelve per cent per annum, instead of six per cent, as directed above, and in addition thereto, the Respondents shall be liable to pay to the Appellant the costs quantified at [pic]15,000/- (Rupees fifteen thousand only), which amount shall be deposited with the Supreme Court Advocates Welfare Fund.

                                                REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL NO. 2246 OF 2006
Chitra                                                   .. Appellant
                                   Versus
State of Kerala & Ors.                             .. Respondents
                                    WITH
                        CIVIL APPEAL NO. 4900 OF 2006
Cochin Wines & Drugs                               .. Appellant
                                   Versus
The Assistant Excise Commissioner & Ors.                 .. Respondents
                               J U D G M E N T
VIKRAMAJIT SEN, J.

CIVIL APPEAL NO.2246 OF 2006

1     This Appeal calls into question a brief Judgment passed  on  21.7.2005
by the Division Bench of the High Court of Kerala in W.A. No.  910  of  2000
reversing the detailed Judgment of the learned Single Judge.   The  question
that has  been  raised  pertains  to  the  Appellant’s  entitlement  to  pay
proportionate annual rental for the year 1999-2000, instead of  full  annual
fee of [pic]13 lakhs which was applicable for that year  in  respect  of  an
FL3 licence granted to her.

2.    The Division Bench took note of Rule 14 of the  Foreign  Liquor  Rules
which reads thus:
“If any of the licences referred to in Rule 13 is granted in the  course  of
a financial year, the full annual fee shall be paid and  the  licence  shall
expire at the end of the financial year”.

On the reading of the said Rule, the Division Bench opined that it  was  not
permissible for any licensee to claim  only  proportionate  payment  on  the
predication that it had been disabled from utilizing  the  licence  for  the
full period because of third party intervention. Accepting the  Appeal,  the
Appellant was  permitted  to  pay  the  balance  of  the  entire  fee  after
adjusting the sum already paid, within  three  weeks,  in  which  event  the
Respondent would not be permitted to claim  interest  on  belated  payments.
It is the admitted case that in  order  to  avail  of  this  indulgence  and
advantage the balance amount has been duly paid.  However, the  legality  of
the demand to pay the fee for the entire year, despite the truncated  period
of user by the Appellant for no fault ascribable to her  is  what  has  been
brought into question before us.

3     We have commented on the brevity of  the  impugned  Judgment  for  the
reason that the learned Single Judge of the Kerala High Court  in  O.P.  No.
18145 of 1994 had,  in  its  detailed  Judgment,  considered  various  legal
aspects  including  the  topicality  of  the  maxim  ‘Actus  curiae  neminem
gravabit’, that  an  act  of  Court  prejudices  no  one,  as  well  as  the
pronouncement of this  Court  in  R.Vijaykumar  v.  Commissioner  of  Excise
1993(4) SCALE 386, which indubitably held the  field  and  was  facially  in
favour of the Appellant.  It seems to us that the attention of the  Division
Bench  was  not  drawn  to  this  binding  precedent,  since  otherwise  its
conclusion would in all likelihood have been diametrically different.

4      The  facts  are  neither  disputed  nor  are  they  convoluted.   The
Appellant had submitted an application on 16.3.1990 for the grant of an  FL3
licence in respect of her Hotel  Chanakya  at  Trivandrum,  which  had  been
granted.  However, it transpired that a third party filed a  suit  in  which
the Munsif Court, Trivandrum granted an interim injunction  restraining  the
Excise Commissioner from issuing the said licence to the Appellant for  user
at her said Hotel. This suit, along with another suit  similar  to  it,  was
eventually dismissed on 29.9.1993.   In  an  ensuing  Appeal,  the  District
Judge granted an ad interim  injunction  on  15.4.1994,  which  came  to  be
vacated  on  3.6.1994.    On  23.11.1994,  the   Respondent   rejected   the
Appellant’s application for the FL3 licence  due  to  an  amendment  to  the
Foreign Liquor Rules which had resulted in private parties being  ineligible
for FL3 licences.  Consequently, the  Appellant  filed  O.P.  no.  18145  of
1994, which was allowed by the Single Judge. Acting in accordance  with  the
Single Judge’s directions the Excise Commissioner granted  the  licence  and
raised a demand of  only  the  proportionate  licence  fee  which  was  duly
deposited; but the matter was brought  before  the  Division  Bench  in  the
subject Appeal.  As  already  mentioned,  it  seems  most  likely  that  the
attention of the Division Bench which passed the impugned Judgment  was  not
brought to bear on the already existing binding  decisions  in  R.Vijaykumar
as well as Jayadevan v. Board of Revenue (Excise) 1999 (1)  KLJ  87  wherein
the Division Bench of the High Court of Kerala has held  that  the  licensee
is required to pay only the  proportionate  licence  fee  if  the  delay  in
granting the licence, or utilizing it, as the case may be, are  for  reasons
not attributable to the said licensee.

5     We are in agreement with the learned senior counsel for the  Appellant
that the legal principle to the effect that  no  person  can  be  prejudiced
because of an act of a Court is apposite and relevant in the  present  case.
We say this keeping in perspective the position that although the  Appellant
had applied for the FL3 licence which would ordinarily  run  the  course  of
one financial year,  due  to  interim  orders  passed  by  the  Courts,  the
Appellant could only utilize it for a fraction of that  period.   We  hasten
to clarify that the Appellant’s application was not made in the duration  of
that year and was thus initially not for a fraction of the  financial  year.
This  Court  has  already  held  in  R.Vijaykumar,  in   the   circumstances
prevailing in that case, that the Department could not  interfere  with  the
utilization of the FL3 licence, provided that  the  licensee  complied  with
all other conditions as well as “payment of annual rental  proportionately”.
  It is therefore clear that  Rule  14  would  not  impede  or  inhibit  the
charging of annual proportionate fee so long as no failure is placed on  the
licensee or it is blameworthy itself.  We must be quick to clarify  that  in
the event that  a  party  applies  for  a  period  which  is  obviously  not
effective for the entire financial year, such as applying for a licence mid-
way that financial year, the full fee for that  year  may  be  claimable  or
chargeable and, therefore, would have to be paid.   In other words, had  the
Appellant applied for the licence even with the knowledge  that  because  of
external factors such as a pre-existing injunction  order  etc.,  she  would
not have been able to exploit it for the entire year, she may not have  been
liable to pay the licence fee for the entire year.  This is not the  factual
matrix which obtains in the case at hand; the licence could only be  granted
for the period from 21.12.1999 to 31.3.2000, i.e. till  the  close  of  that
financial year, owing to unforeseeable  circumstances  beyond  the  ken  and
control of the parties before us.  We have already made  a  mention  of  the
Division Bench Judgment delivered in Jayadevan which in  turn  was  referred
to in another Division Bench  Judgment  in  Rajagopalan  Nair  v.  Assistant
Commissioner of  Excise  1989  (1)  KLT  800,  wherein  the  Division  Bench
directed that the licensee was entitled to remission  of  payment  of  kisht
because of being disabled to conduct its business on account of the  interim
orders passed by the Court.  We affirm the conclusions arrived at  in  these
decisions.  We hold that a party is entitled to  seek  a  remission  in  the
payment of licence fee if it is precluded from transacting business  on  the
strength of that licence because of factors and  reasons  extraneous  to  it
and/or if it is granted the licence on the direction of a Court for  only  a
portion of the financial year.

6     The Appeal is  accordingly  allowed.    The  Respondent  State  shall,
within six  weeks  from  today,  refund  to the  Appellant    the    balance
 amount   of  [pic] 9,41,257/- together with interest thereon  at  the  rate
of six per cent per annum with effect from 11.8.2005.      Failure to do  so
shall render the Respondent State liable to refund  the  aforementioned  sum
of [pic]9,41,257/- together with interest at the rate  of  twelve  per  cent
per annum calculated from 11.8.2005  till  the  date  of  payment  and  also
additionally  liable  for  payment  of  costs  quantified  at  [pic]15,000/-
(Rupees fifteen thousand only).

CIVIL APPEAL NO.4900 OF 2006

7      The  facts  that  arise  in  this  Appeal  are  somewhat  complex  in
comparison to Chitra’s foregoing Appeal.  The Appellant had been granted  an
FL3 licence for its Hotel Hackoba at Ernakulam  for  the  period  ending  on
31.3.2001.     Due to a dispute with its  landlord  it  had  to  vacate  its
premises; and on locating to another, it applied  for  the  renewal  of  the
licence on 26.2.2002.   This was obviously for  the  immediately  succeeding
year  1.4.2001  to  31.3.2002.   The  Excise   Commissioner   rejected   the
application for renewal on 4.9.2002 on  the  ground  that  the  licence  had
become defunct; a decision which was upheld by  the  State  Government.   In
these circumstances, the Appellant successfully approached  the  High  Court
of Kerala which issued a direction to the  State  Government  to  issue  the
licence within two weeks.  The  Single  Judge  simultaneously  directed  the
Appellant to pay the licence fee for the years 2001-2002  and  2002-2003  by
his Judgment dated 27.1.2003.  The Appellant preferred  an  Appeal,  and  on
the first day of its hearing, the Division Bench passed an ad interim  Order
directing the Appellant to pay [pic]15 lakhs.   Shortly  after  making  this
payment, on 25.3.2003, the licence was renewed.  The Division Bench  of  the
High Court of Kerala noted Rule 14 of the Foreign Liquor Rules  as  well  as
the fact that it had not been challenged.  The Division Bench  accepted  the
argument of the Appellant that for the reason that it could not utilize  the
licence for the year 2001-2002 as its application  had  been  disallowed  it
was not liable to pay any fee; viz. during this period it was  prevented  by
extraneous elements and factors from utilizing the licence.    However,  the
Division Bench held that since the licence was renewed in March  2003,  even
though the Appellant could conduct its business for less  than  a  fortnight
in that licence year, nevertheless the Appellant was liable to pay the  full
fee  for  the  year  2002-2003.   It  is  these  circumstances  which   have
constrained the Appellant to file the present Appeal before us.

8     In order to eradicate any possibility of misunderstanding our  present
Judgment, we hasten to clarify that  had  the  Appellant’s  application  for
renewal  of  the  FL-3  licence  found  approval  instead  of  rejection  on
4.9.2002, the Appellant would have been liable to pay  the  entire  fee  for
the year 2001-2002.  This is so for the simple  reason  that  there  was  no
third party interference or intervention which led  to  the  non-utilization
of that licence for the previous portion of that year; it may be  reiterated
that the Appellant had to locate fresh premises.  However,  after  4.9.2002,
the Appellant cannot be held responsible in any way for the  non-utilization
of the licence up to the date it was eventually renewed i.e. 25.3.2003.

9     On the predication of the  legal  analysis  and  discussion  in  Civil
Appeal No. 2246 of 2006 (supra), we are of the opinion  that  the  Appellant
is only liable to pay the proportionate licence fee for the period in  which
it could avail of the licence, that is 25.3.2003 to  31.3.2003.    It  would
be fair to cogitate upon whether the  Appellant  should  have  declined  the
licence for virtually a week in that year, and since it failed  to  exercise
that option, whether it should be burdened with the fee for the  full  year.
It seems to us that any person placed  in  the  position  of  the  Appellant
would not be in a position to decline to accept the renewal of  the  licence
even though it was for less than a fortnight, since that would have  led  to
the licence being rendered defunct; which may have then led  to  consequence
of disentitlement for grant or renewal of the FL3 licence in the future.

10    The Appeal is accordingly allowed.   The Respondents are  directed  to
recalculate the proportionate amount of licence fee due and payable  by  the
Appellant for the period from  25.3.2003  to  31.3.2003.     The  amount  of
refund shall carry interest at the rate of six per cent per annum  from  the
date of its payment due till the  date  of  its  refund.      This  exercise
should be completed within two months from  today.   Failure  to  make  this
payment within this period will render the Respondents  liable  to  pay  the
interest at the rate of twelve per cent per annum, instead of six per  cent,
as directed above, and in addition thereto, the Respondents shall be  liable
to pay to the  Appellant  the  costs  quantified  at  [pic]15,000/-  (Rupees
fifteen thousand only),  which amount shall be deposited  with  the  Supreme
Court Advocates Welfare Fund.



…………………………………J.
[VIKRAMAJIT SEN]


…………………………………J.
[SHIVA KIRTI SINGH]

New Delhi,
August 21 ,  2015.

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