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.
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.
