(SUPREME COURT OF INDIA)
Secretary, Department of Excise & Commercial Taxes and Others
Vs
Sun Bright Marketing Private Limited Chhattisgarh and Another
HON'BLE JUSTICE V. N. KHARE (CJI), HON'BLE JUSTICE S. B. SINHA AND
12/02/2004
Civil Appeal No. 6425 of 2002
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.
2. 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.
3. 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.
4. 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.
5. 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 owning 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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 Sales Memo had been taken into
consideration.
11. Mr. Mishra would further contend that as the respondent was not legally
entitled to run thr 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:
12. 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, by 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 resent, any 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 (20, he shall
forthwith inform the Collector of his action and his reasons thereof."
*
13. 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 outlaying 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 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 or 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."
*
14. 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 of
more shops of any place or all the shops of Tehsil or Distt. for additional 3
days ad the shops shall remain closed accordingly.
(V) During Lok Sabha and Assembly General Elections/by elections, the shop
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 after 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 pare (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." *
15. The Act is a self-contained code.
16. The licensees indisputable 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 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.
17. 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.
18. 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.
19. 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.
#
20. It is not disputed that the shops of the respondent remained closed for
three days owning to agitations as regard creation of State of Chhattisgarh
etc.
21. 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. #
22. 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 wherefore 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.
23. 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.
24. 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, than 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 re-auction 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 Commission 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. *
25. 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. #
26. Schedule-4 appended to the Sale Memo provides for the proposed dry days for
2000-2001.
27. 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 or Raipur district had
issued an order purported to be in terms of Sub-Section (1) or 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).
28. 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 near about the
industrial area.
29. 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.
30. 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.
31. 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." *
32. 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.
33. 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." *
34. Keeping in view the aforementioned provisions, the correctness of the
impugned judgment would have to be considered.
35. 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.
36. 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. #
37. 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. Rules 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 authorised 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 in mandatory. #
38. 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.
39. Therefore, in a situation of this nature, the licensee is entitled to claim
remission in licence fee and/or damages.
40. 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.
41. 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.
42. 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 3003 (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 ).
43. 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 shop 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 thereof the election is being
held and not which is outside the said area. #
44. 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.
45. 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.
46. We may notice that recently in State of U.P. Vs. Jagjeet Singh :
] a 3 Judge Bench of this Court [in which one of us (the Chief Justice
of India) is a partly] 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 my 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." *
47. In that case it was inferred that if awarding of compensation is not
specifically barred, the same may be granted.
48. 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 entirely 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." *
49. 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.
#
50. Ordinarily, we could 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.
51. 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.
52. 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.