IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 25.08.2010 CORAM : THE HONOURABLE Mrs.JUSTICE R.BANUMATHI and THE HONOURABLE Mr.JUSTICE G.M.AKBAR ALI Writ Appeal No.1677 of 2002 1.The State of Tamil Nadu, rep. by its Commissioner and Secretary, Prohibition and Excise Department, Chepauk, Chennai-5. 2.The Collector of North Arcot District, Vellore, North Arcot District. 3.The Special Tahsildar, Vaniyambadi, Vellore, North Arcot District. ... Appellants. Vs. R.Selvaraj .. Respondent Prayer: Writ Appeal filed under Clause 15 of Letters Patent against the Order of the learned single Judge of this Court dated 31.3.1998 in W.P.No.5885 of 1989. For Appellants : Mr.M.Dhandapani, Spl. Government Pleader For Respondent : Mr.N.Kannan JUDGMENT R.BANUMATHI,J This Writ Appeal arises out of the order in W.P.No.5885/1989 whereby the learned single Judge quashed the recovery proceedings under Revenue Recovery Act for the collection of notional loss of Rs.47,669.50 in respect of Arrack Shop No.24/81-82. 2. Brief facts are that Respondent was the licensee of the Arrack Shop No.24/81-82 of Vadapudupattu; Arrack Shop No.33/81-82 of https://hcservices.ecourts.gov.in/hcservices/ Periyancuppam and Arrack Shop No.34/81-82 of Solur village in Vaniyambadi Taluk. The privilege of sale of arrack in retail through Arrack Shop No.24/81-82 in Vadapudupattu for the excise year 1981-82 was sold on 28.5.1991 and the Respondent was the successful bidder for a monthly rental of Rs.10,500/-. The sale was confirmed in the District Collector's Proceedings Rc.F2.83116/81 dated 05.6.1981 and licence was issued by the Excise Officer, Vaniyambadi on 15.07.1981. Inspite of repeated demands for the payment of monthly arrears of kist from December 1981, Respondent had failed to remit the monthly kist and hence the Shop was brought to resale. Anticipating the resale of the Shop, Respondent filed O.S.No.37 of 1982 on the file of District Munsif Court, Vellore and in I.A.No.96/1982, Respondent obtained order of injunction and after trial, the suit O.S.No.37 of 1982 was dismissed on 29.7.1983 Again the shop was brought to resale on 30.4.1982. The auction fetched a monthly rental of Rs.1010/- on the highest offer made by one N.Krishnamurthy. Licence was issued to the resale purchaser Krishnamurthy on 13.5.1982 and the same was valid up to 15.7.1982. After the resale of the shop and based upon the proposals for notional loss, 2nd Appellant fixed the notional loss as Rs.47,366/- deducting the Earnest Money Deposit of Rs.1000/-. Based upon the Proceedings Rc.T5.83116/81 dated 23.10.1982 of the 2nd Appellant/District Collector, a notice in Rc.A.S.No.24/81-82 dated 04.12.1982 was served to the Respondent and the same was duly served upon him on 08.1.1983. 3. Soon after the disposal of the suit in O.S.No.37/1982 on 29.7.1983, demand notice was issued to the Respondent on 20.10.1983 for recovery of Rs.47,366/- under Revenue Recovery Act. In the meanwhile, a sum of Rs.696.50 was collected on 30.3.1985 prior to the issuance of first Demand notice. The impugned Demand notice dated 11.3.1989 was issued to the Respondent for payment of Rs.47,669.50. Challenging Form I Demand notice served on him on 11.3.1989, Respondent filed W.P.No.5885/1989. In the Writ Petition, Respondent averred that he was the second auction bidder of Arrack Shop No.33 for which a sum of Rs.3005/- has been collected from him. It was further averred that because of filing of suit O.S.No.2601/1981 by the first auction bidder, he could not run the said Arrack Shop No.33 and the notional loss in respect of the said shop has not been adjusted towards Arrack Shop No.24/81-82. Main contention of the Respondent is that there is no basis for the amount of Rs.47,669.50 calculated and the notional loss calculated by the Appellants is arbitrary. 4. Appellants resisted the Writ Petition contending that after giving sufficient opportunity for payment of notional loss of Rs.47,669.50 and taking into account the payment of Rs.696.50, notional loss was calculated and Respondent cannot challenge the same by filing Writ Petition and prayed for dismissal of Writ Petition. https://hcservices.ecourts.gov.in/hcservices/ 5. The learned single Judge held that no opportunity was given to the Respondent before fixing the notional loss at Rs.47669.50. Learned single Judge observed that no break up figure was given to inform the Respondent as to how the amount was calculated and under which head he has to pay the amount. Learned single Judge further held that when the lumpsum amount is demanded, break up figure should be given and holding that the impugned demand is not a valid demand, learned single Judge allowed the Writ Petition quashing Form I Demand notice dated 11.3.1989 which is challenged in this Writ Appeal. 6. Learned Special Government pleader contended that Form I Demand notice dated 11.3.1989 is only consequential to the Proceedings of the District Collector dated 23.10.1982 whereby the District Collector has calculated the notional loss. It was further contended that without challenging the main order/Proceedings of the District Collector dated 23.10.1982, the Respondent cannot validly challenge the consequential proceedings. Learned Special Government Pleader further contended that the learned single Judge failed to note that sufficient opportunity was given to the Respondent and even though, Respondent received notices dated 04.12.1982 and 08.1.1983 in response to which he also remitted a sum of Rs.696.50 and the same was not taken note of by the learned single Judge. 7. Learned counsel for Respondent submitted that before assessing the notional loss, opportunity ought to have been given to the Respondent and without so affording opportunity, notional loss calculated at Rs.47,669.50 is unsustainable. It was further contended that absolutely, there is no basis to show as to how the amount of Rs.47,669.50 was arrived at as notional loss and in the absence of any such basis, the learned single Judge rightly quashed Form I Demand notice. 8. There is no dispute that Respondent was the highest bidder in respect of sale of privilege of arrack in retail through Arrack Shop No.24/81-82 of Vadapudupattu, Vaniyambadi Taluk for the lease period 1981-82 for a monthly kist amount of Rs.10,500/-. Respondent has not paid the monthly kist amount from December 1981. Reauction was conducted at the risk of original renter and resale was confirmed in the name of the highest bidder N.Krishnamurthy for Rs.1010/-. As per the terms and conditions of the auction, the original renter is personally responsible for the loss amount. 9. Even at the out set, it is to be pointed out that challenge in the Writ Petition was Form I Demand notice dated 11.13.1989. Demand of Rs.47,669.50 in respect of Arrack Shop No.24/81-82, Vadapudupattu is consequential to the Proceedings of the District Collector dated 23.10.1982. Earlier, notional loss proposal was submitted to the District Collector and by the Proceedings dated 23.10.1982, the District Collector had fixed the notional loss at https://hcservices.ecourts.gov.in/hcservices/ Rs.47,366/-. After calculating the kist amount which the original renter/Respondent was liable to pay and the amount fetched for the shop in the resale and the total loss sustained by the Government. Proceedings of the District Collector fixing the notional loss of Rs.47,366/- is basis for Form I Demand notice. It is pertinent to note that Respondent has not challenged the Proceedings of the District Collector dated 23.10.1982 fixing the notional loss at Rs.47,366/-. Without challenging the main Proceedings of the District Collector, the Respondent has only challenged the consequential order – Form I Demand notice. 10. For quashing Form I Demand notice, the learned single Judge observed that break up figure was not given in Form I Demand notice and Appellants are not shown the details as to how the figure was arrived at. In our considered view, the learned single Judge did not keep in view the Proceedings of the District Collector dated 23.10.1982 fixing the notional loss at Rs.47,366/- and the calculation shown thereon. We are unable to subscribe to the views of the learned single Judge that break up figure was not given in Form I Demand notice and that the demand is without any basis. 11. The impugned demand was quashed by the learned single Judge mainly on the ground that no opportunity was given to the Respondent before fixing the notional loss and opportunity ought to have been given to the Respondent to explain under what ground he is liable to pay the amount. Whenever grievance is made as to violation of principles of natural justice, Court has to decide whether observance of that rule was necessary. Rules of natural justice are flexible and its application depends upon the setting and background of each case. As per the terms of tender-cum-auction, the renter has to pay the monthly kist and in case of failure to remit the monthly kist, there would be resale of Arrack shop at the risk of the renter. Admittedly, the Respondent has not remitted the monthly kist from December 1981 and inspite of repeated demands, he has not paid the arrears of kist from December 1981 and hence the shop was brought for resale. As per the terms and conditions of the auction, the net loss was calculated by taking into account the kist amount for the shop for which it was originally auctioned and the amount fetched for the shop in the resale. Respondent having participated in the auction is bound by the terms and conditions of the auction. 12. Learned Special Government Pleader submitted that sufficient opportunity was afforded to the Respondent by issuing notices dated 04.12.1982 and 08.01.1983 respectively. Again Demand notice was issued on 20.10.1983 which was duly received by the Respondent. On receipt of the said notice, Respondent remitted a sum of Rs.696.50 on 30.03.1985. Again District Collector's order dated 06.4.1985 was also served on him on 08.5.1985 and summon was issued on him on 11.3.1986 and for the said summon, Respondent presented a petition on 14.3.1986 requesting time till 17.3.1986, but did not raise any https://hcservices.ecourts.gov.in/hcservices/ objection. That apart earlier, Form I Demand notice dated 29.10.1987 was also issued to the Respondent and Respondent has not chosen to challenge the same. We find no merit in the contention of the Respondent that opportunity was not afforded to him. This is all the more so, when the Respondent has not chosen to challenge the Proceedings of the District Collector dated 23.10.1982. The learned single Judge did not keep in view the Proceedings of the District Collector dated 23.10.1982 and the fact that Respondent has not chosen to challenge the same, the order of learned single Judge cannot be sustained. 13. In the result, the order of learned single Judge is set aside and this Writ Appeal is allowed. Consequently, connected M.P. is closed. No costs. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar bbr To 1.The Commissioner and Secretary, State of Tamil Nadu, Prohibition and Excise Department, Chepauk, Chennai-5. 2.The Collector of North Arcot District, Vellore, North Arcot District. 3.The Special Tahsildar, Vaniyambadi, Vellore, North Arcot District. Judgment in W.A. No. 1677 of 2002 MSM {CO} TP/8.9.2010. https://hcservices.ecourts.gov.in/hcservices/