WOW/< IN THE HIGH COURT OF JUDICATURE CHHATTISGARH AT BILASPUR W.P. No.3g3/ 2003 8 ha ay x Sushil Cndrakar S/o Shri Naran Lal Chandrakar, aged about 37 years, R/o A f J ‘ i 9 Petitioner 4 .- ' @ WRIT PETITION UNDER ARTICLE 216/227 OF THE CONSTITUTION OF INDIA ( g? Dist : Mahasamund—(C.G.) Versus ' ##9» W91 State of Chhattisgarh through the .W Secretary Excise Department, DKS AQQO gwg '1 . Bhawan, Raipur, Dist : Raipur-(C.G.) '1 .L a 2. The Excise Commissioner Chhattisgath, Raipur, Dist : Raipur—(C.G.) The Collector (Excise), Mahasamund, Dist : Mahasamund-(C.G.) 4. The District Excise Officer, Mahasamund, Dist : Mehasamund-(CGJ HIGH COURT OF CHHATTISGARH : BILASPUR Single Bench: Hon’ble Shri Manindra Mohan Shrivastava, J. Writ Petition No.3889 of 2003 (Writ Petition under Article 226/227 of the Constitution of India) Present: - Shri Anand Dadariya, counsel for the petitioner. Shri V. V. S. Murthy, Deputy Advocate General for the State/respondents. ORAL ORDER (Passed on 06-04-201 1) By this petition, the petitioner has called in question the legality and validity of order dated 03-11-2003 (AnnexureP-13) passed by the Excise Commissioner as also the demand notice dated 16-03-2003(Annexure P—8) issued by the District Excise Officer, Mahasamund. The petitioner has also prayed for refund of the amount of Rs.12,71,382/—, being the balance amount from the security amount deposited by the petitioner to the respondent. 2. Case of the petitioner is that the petitioner had offered to take group of liquor shops styled as Group No.1 of Mahasamund. According to the petitioner, he was told by the Excise Officer that the daily sale of the group of shops is between Rs.2 Lakh to Rs.2.5 Lakh and acting upon this assurance given by the Excise Authority, the petitioner agreed to take the shops of group No.1 for a consideration of Rs.6,12,00,000/—. Consequently, the petitioner was granted license in respect of three shops by three different licenses placed on record vide Annexure P-1, P-2 & P-3, in which, one of‘them related to country liquor and remaining in respect of foreign liquor. However, after taking the shop, the Petitioner Sushil Chandrakar Versus Respondents State of Chhattisgarh and others petitioner could not get the sale, as was assured by the Excise Authority, therefore, on 18-04—2002(AnnexureP-5), the petitioner submitted a letter seeking their cooperation stating that if he does not receive cooperation, he will not be in a position to run the shops. Later on, the petitioner came to know that in the previous year, when the government was running the shops, daily collection of the shop was very low and was approximately Rs.50,000/- to Rs.60,000/— per day. According to the petitioner, he was cheated by the Excise Authority. For all these reasons and as sale of liquor from the shops given on license to the petitioner being very low, the petitioner neither lifted the minimum guaranteed .quantity of liquor as stipulated in the three licenses nor could deposit the excise duty. This led to cancellation of his licenses vide order dated 03-05-2002. Thereafter, the shop was run by the Excise Department for some time, and it was again re-auctioned and given on license to one Shri Yuvraj Chandrakar for a consideration of Rs.2,55,00,000/—. Thereafter, the Excise Officer issued a letter dated 24-02-2003 (Annexure P-6) to the petitioner requiring him to pay the amount of penalty of Rs.12,78,618/-. The petitioner replied to the same vide his letter dated 03-03-2003(AnnexureP-7) stating that the amount of Rs.12,78,618l— be deducted from the security amount of Rs.25,50,000/— and the balance amount of Rs.12,71,382/— be refunded back to him. However, instead of refunding, the Excise Officer issued a demand notice dated 16—03-2003 (Annexure P-8), wherein the respondent demanded an amount of Rs.2,96,39,931/—. Aggrieved by the said demand, the petitioner made a representation to the Collector on 28-03- 2003 (Annexure P—10). As the Collector did not take any steps nor redressed the petitioner’s grievance, the petitioner then preferred a representation before the Excise Commissioner, State of Chhattisgarh for quashing the demand raised by the Excise Department. However, vide impugned order dated 03-11-2003 nohce and rejection of petitioners representation learned counsef for the petitioner has made followmg submissions:— (A) That the cancellation of libense of the petitioner vide order dated O3~ 05—2002 is iltegal, in violation of principies of naturai justice and also in vioiation of the provisions contained in Section 31(1)(A) of the Chhattisgarh Excise Act 1915 (in short “the Act of 1915”) and Rule 23(2) of the Chhattlsgarh Exmse Settlement of Licences for Retail Sale of Country/Foreign Liquor Rules, 2002 (ln short “the Rules of 2002") as also in violation of Condition No.3 of License (Annexure P-1), Condition 8 (W) of License of AnnexurerP—2 and Condition No.3 of License (Annexure P-3)V It is submitted that the aforesaid provisions require the Excise Authority to issue show cause notice to the petitioner against cancellation of licenses, but no show cause notice was given to the petitioner. lt is further submitted that the document Annexure D-t, which has been placed on record by the respondents I x cannot be said to be show cause notice against proposed action of cancellation of license, but it was merely a show cause notice for repleriishing shortfall in the security amount. lt is further submitted that the law requires that if the petitioner fails to deposit the amount of shortfall within seven days from the date of the notice, then only, action ‘7 t could be taken, but, in the present case, order of cancellation of license has been passed on 03rd of May, 2002 itself Learned counsel l further submitted that the cancellation of license Vide order dated 03- 05 2002 completely Violated the prOViSions contained in Sectron 4 31(1)(A) of the Act of 1915, as before making an order of cancellation of license, the authority did not record any reason in writing for the proposed action nor furnished to the petitioner information in that regard much less reasonable opportunity of being heard. (B) That the recovery of the amount of Rs.2,96,39,931/— as the deficit amount in view of the re-auction of the shop, in respect of which, petitioner’s license was cancelled, is arbitrary and illegal because the petitioner was cheated by the respondent-Excise Authority to obtain license of three shops on a very high amount of license fee without proper disclosure with regard to actual figures of sale of liquor from o those shops in the past. This is clear from the fact that in the re-auction of those shops, the Excise Authority could fetch much low amount of Rs.2‘55,00,000/-. This itself shows that the fixation of license fee, in respect of three shops, in the case of the petitioner, at the time of grant of license, was fictitious amount and was exorbitant. Therefore, the petitioner could not be saddled with a huge liability by depositing the same as license fee. 4. On the other hand, learned State counsel submitted that the petitioner had accepted to run those three shops in one group knowingly fully well the market conditions. lt is submitted that the order of the Excise Commissioner passed on 03-11-2003 clearly records that the Collector invited tenders and in response to the short tender notice, wherein the petitioner submitted his offer for Rs.6,10,00,000/—. Thereafter, negotiation had taken place between the petitioner and the Collector and finally the petitioner agreed for payment of license.for , Rs.6,12,00,000/—, whereupon license was granted to the petitioner. He further submitted that the petitioner has not disputed that he failed to lift the minimum quantity of liquor as provided in‘the terms and conditions of license, and 4 therefore, the petitiohér became liable for payment of penalty, which was ordered to be adjusted from the security amount deposited by the petitioner. 5. Learned counsel for the respondent further submitted that the challenge to the legality and validity of cancellation of license vide order dated 03-05-2002 during thecourse of arguments is liable to be rejected, because, the petitioner has not challenged the legality and validity of the order of cancellation of license in this writ petition. ,He submits that in the absence of there being any challenge or any pleading inthat regard, such a challenge to the legality and validity of order of cancellation of license deserves to be rejected, He further submits that even othenNise, as during the course of hearing in this case, vvhen statement was made before the Court on 25—10-2010 that the petitioner was not afforded any opportunity of hearing before issuing order dated 16-03-2003 and 03-11— 2003, the respondents have placed on record an affidavit and along with that affidavit, a show cause notice dated 27-04-2002 has also been annexed. He submits that this was a show cause notice as required under Section 31(1)(A) of the Act of 1915 read with Rule 23 (2) of the Rules of 2002 and Condition No,3 incorporated in License (Annexure P-1), Condition No.8 (11) incorporated in License (Annexure P-2) and Condition No.3 incorporated in License Annexure P- 3. He submits that this notice, on the face of it, shows that the petitioner was given a show cause notice in terms of the provisions contained in the Act of 1915 and the Rules‘of 2002 made thereunder, and as the petitioner has failed to replenish the shortfall of the security amount within a period of one week, as stated in the notice, the license of the petitioner was cancelled vide order dated 03-05-2002. He further submits that the authority to recover the deficit amount upon re—auction, is derived from the statutory provisions contained in Section 31(4)(b) of the Act of 1915. He lastly submits that each and every grievance 'raised by the petitioner in his representation was duly considered by the Excise 4 Commissioner, who recorded finding that-the recovery was strictly in accordance with iaw and the representation of the petitioner was rejected. 6. The first submission of the petitioner to assail correctness and validity of order dated 03-05-2002‘ by which, license of the petitioner was cancelled, has to be rejected at threshold for the reason that in the entire petition, the petitioner has not challenged the legality and validity of action of cancellation of license nor has sought any relief on that count. i have gone through the entire writ petition. There is no whisper in the pleadings of the petitioner to even remotely suggest that the petitioner sought to challenge the correctness and validity of the action of cancellation of license. 'It is neither reflected from the facts of the case nor from the grounds urged in the writ petition. Even in the relief sought for by the petitioner does not include any relief for quashing the action and order of cancellation of license. ln the absence of there being any pleading, grounds or reliefs in that regard, it is clear that the petitioner’s main grievance in the writ petition was to seek refund of the balance amount and recovery of Rs.2,96,39,931/— and the petitioner never intended to challenge the correctness and validity of the order of cancellation of license. The petitioner did not even place on record the order of cancellation of license, which was placed on record by the respondents/State as Annexure D—2. Even though, the petitioner did not raise any grievance against the cancellation part, but chose to challenge only recovery underdemand notice dated 16-03—2003. The respondents in their return have stated that the license of the petitioner was cancelled after affording proper ‘ opportunity of hearing. Though, it was open for the petitioner to amend his pleadings and to file his rejoinder to controvert such an averment, the petitioner has chosen not to do that. Therefore, the conduct of the petitioner is clear that he does not intend to challenge the correctness and validity of the order of cancellation of license. The oral submission made by learned counsel for the ¢ ' petitioner before this Court, in the absence of proper pleadings, grounds and the relief sought for in this regard, has to be ignored. This apart, the respondents have, in fact‘ placed on record the show cause notice dated 27—04-2002 as Annexure D—1. Therefore, it cannot be said that no notice was given to the petitioner The notice contains statements regarding petitioner’s failure, and by which, it was informed to thepetitioner that the penalty on account of short lifting of minimum guaranteed quantity will be adjusted against the amount of security, and that, if the petitioner does not replenish the shortfall of the security amount within a period of seven days, license of the petitioner will stand cancelled. The said notice, therefore, prima facie fulfills the requirements of law. However as legality and validity of cancellation of license has not been assailed in the petition, i need not dwell into this aspect any further. 7. ln so far as demand notice for recovery of amount of Rs.2,96,39,931/- is ~ concerned, the petitioner could not dispute that he had taken the shops in Group No.1 at Mahasamund on total amount of Rs.6,12,00,000/—. The petitioner has also not disputed that after cancellation of license of those shops, that shops were re—auctioned for a total amount of Rs.2,55,00,000/—. After adjusting the security amount of Rs.25,50,000/—, remaining amount of Rs.2,96,39,931/—, which was demanded against the petitioner under the demand notice dated 16-03-2003 (Annexure P-8). The provisions contained in Section 31(4)(b) of the Act of 1915 provided that Where a license is cancelled under clause (a) (b) (c) or (e) of sub section (1), the Collector may take the grant under management or resell it at the risk and loss of the ex—licensee. Therefore, there is a statutory sanction behind such a demand of the deficit amount. The cancellation of the license clearly falls under Section 31(1)(b).of the Act of 1915, as it was related to the breach of the terms and conditions. ln 'the license, it was stated that, if the petitioner fails to replenish the shortfall of the security amount, the license shall stand cancelled. 4 The provisions contained in Rule 15 ofthe Rules of 2002 also clearly provide that license of the shops may be cancelled. 8. Learned counsel for the petitioner has relied upon the decision of this Court in the case of Shekhar Sahu Vs. State of C.G. & Others, 2008(1) C.G.L.J. 528, Ramesh Kumar Sahu vs. State of Chhattisgarh and other, order dated 28-10-2010 passed in Writ Petition No.3094 of 2006 and decision of the Supreme Court in the case of Commissioner of Sales Tax and Others vs. Subhash & Co., (2003) 3 Supreme Court Cases 454. 9. ln the case of Shekhar Sahu (supra), the Court was considering the aspect of notice in the context of a notice of surrender of license given by the petitioner in that case. The backgroundpin which, the essentials of a valid notice were considered, are not applicable to the present case. Decision in the case of Commissioner of Sales Tax and Others (supra) also relates to requirements of a valid notice. The decision in the case of Ramesh Kumar Sahu (supra) dealt with the aspect of requirements of a valid show cause notice. As l have held that the petitioner has not challenged legality and validity or correctness of order of cancellation of license dated 03—05-2002, the reliance placed by the petitioner is misconceived. 10. ln view of the aforesaid consideration, i do not find any merit in the petition, and is accordingly dismissed. No orders as to cost. Sd/- #4”.— Manind‘ra Mohan Shrivastavaj l Judge Tumane