IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE TWENTY SECOND DAY OF JULY TWO THOUSAND AND NINE PRESENT THE HON'BLE MRS JUSTICE T.MEENA KUMARI AND THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL No.1830 OF 2008 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated 06.08.2008 in W.P.No.12343 of 2006 on the file of the High Court.) Between: M/s. Raja Goud Wines, H.No. 11-2-536, 8 Incline Colony, Allur, Karimnagar District, rep. by its Licencee Mr. B. Srinivasa Goud. ..... APPELLANT AND 1 The Commissioner of Prohibition & Excise, Government of Andhra Pradesh at Nampally, Hyderabad. 2 The Prohibition & Excise Superintendent, Godavarikhani, Karimnagar District. .....RESPONDENTS Counsel for the Appellant : MR.AMARNATH GOUD THODUPUNURI Counsel for the Respondents: GP FOR PROHIBITION & EXCISE The Court made the following : THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.1830 OF 2008 JUDGMENT (Per Hon’ble Sri Justice Sanjay Kumar) Aggrieved by the order dated 06.08.2008 passed by the learned single Judge dismissing Writ Petition No.12343 of 2006, the petitioner is in appeal. The appellant seeks refund of the licence fee collected by the Excise Department for the unlicenced period of the excise year 2005-06. It is not in dispute that the petitioner, having participated in the auction held by the Excise Department for the lease of a retail wine shop in Ward No.28 of Ramagundam Municipality, Karimnagar District, was declared as the highest bidder for a sum of Rs.15,55,557/-. It is his case that in spite of complying with all the necessary formalities, the Excise Department could not issue the requisite licence in view of the fact that most of the land in Ward No.28 of Ramagundam Municipality belonged to M/s.Singareni Collieries, which had objected to the establishment of brandy/bars/wine shops in the Company’s land. Ultimately, the Deputy Commissioner of Prohibition and Excise, Karimnagar Division, addressed letter dated 08.07.2005 to the Joint Commissioner of Prohibition and Excise, Hyderabad, seeking permission to locate the appellant’s shop in Ward No.30 instead of Ward No.28 of Ramagundam Municipality, as notified earlier. Thereupon, the licence was finally issued on 28.12.2005 which was valid upto 30.06.2006. Pursuant to the issuance of the licence, the business was commenced under the name and style of M/s.Raja Goud Wines at the licensed premises in Ward No.30, i.e., at 8, Incline Colony, Allur, Karimnagar District. The appellant claims the refund of the licence/lease amounts for the unlicensed period from 01.07.2005, when the excise year commenced, upto 27.12.2005 (5 months 27 days). The Excise Department contested the claim of the appellant. In the counter-affidavit filed in the writ petition, the Excise Authorities contended that the appellant himself made a representation on 27.06.2005 seeking permission to shift the business from Ward No.28 to Ward No.30 and that as per Rule-27 of the A.P. Excise (Lease of Right of Selling by Shop and Conditions of Licence) Rules, 2005 (for short, ‘the Shop Rules of 2005’) the successful tenderer is responsible for the selection of suitable premises for establishing the shop. Therefore, the licence could not be granted to the appellant in view of his failure to select suitable premises within time. Consequently, the Excise Department denied the entitlement of the appellant for refund of the proportionate bid amount from the commencement of the excise year upto the date of issuance of the licence. The learned single Judge, guided by the Full Bench Judgment of this Court in SRI NARASIMHA WINES AND OTHERS V/s. PROHIBITION AND EXCISE SUPERINTENDENT, MEDAK DISTRICT AT SANGAREDDY AND OTHERS[1], was of the opinion that a Writ of Mandamus could not be issued to the statutory authorities directing them to act contrary to law. Stating that the appellant had failed to demonstrate any statutory entitlement with regard to payment of proportionate licence fee or an obligation on the part of the State to collect such proportionate licence fee, the learned Judge held that no public law element was involved in this case and accordingly dismissed the writ petition. Hence, this appeal. Heard Sri T.Amarnath Goud, learned counsel appearing for the appellant and the learned Government Pleader for Prohibition and Excise for the respondents. Admittedly, the Excise Department had notified the auction for lease of a retail wine shop to be established in Ward No.28 of Ramagundam Municipality, Karimnagar District. The material placed on record demonstrates that M/s.Singareni Collieries Company Limited had intimated to the Excise Department as long back as in February, 2005 (vide its letter dated 24.02.2005) that it did not want any new licences to be issued for opening brandy/bar shops in the Company’s land without its permission. This request was reiterated in the subsequent letters of the Company dated 02.06.2005 and 26.06.2005. In spite of the same, the Excise Department appears to have notified the subject auction in respect of a retail shop in Ward No.28 of Ramagundam Municipality, where most of the land was owned by M/s.Singareni Collieries Company Limited. Having done so, the question arises whether it is open to the Excise Department to now blame the appellant for the delay in the selection of suitable premises for establishment of the said shop. The Shop Rules of 2005 provide under Rule-3 thereof for auction of the grant of lease to sell liquor by shop for a period of one year or part thereof. It is in pursuance of such an auction that the appellant emerged as the successful bidder. Rule-17 of the Shop Rules of 2005 requires the successful auction purchaser to obtain a licence in Form A-4 in respect of the premises where the shop will be located. In the present case, the shop could not be located in Ward No.28 of Ramagundam Municipality as notified by the Excise Department, due to the reason that M/s.Singareni Collieries Company Limited objected to the same and ultimately, the shop was permitted to be established in Ward No.30. Rule-2(l) of the Shop Rules of 2005 defines ‘lease amount’ to mean the amount payable in respect of a shop as part of the sum in consideration of the grant of lease payable under Section 23 read with Section 17 of the A.P. Excise Act, 1968. Section-23 of the Act speaks of payment of a sum in consideration of the grant of lease or licence or both for the exclusive privilege in respect of liquor or any other intoxicant under Section-17 of the Act. Section-17 of the Act deals with the grant of exclusive privilege, amongst other things, of selling liquor by wholesale or by retail. The explanation appended to the said Section states that the lease shall not take effect until the licence is issued under the Act. Rule-26 of the Shop Rules of 2005 authorizes the issuance of a licence in Form A-4 once the lease is granted by the Auctioning Authority. Rule-23 of the said Rules states to the effect that the lease granted to the auction purchaser shall not take effect until he obtains a licence. No separate fee was payable by the appellant for the issuance of the licence in the present case. The auction bid amount constitutes the sum in consideration of which the grant of lease and license for exclusive privilege for sale by retail was conferred upon the appellant as per Section-23 of the Act. Under the Shop Rules of 2005 it is only if the Form A-4 licence holder applies for grant of a permit room licence that he is required to pay additional licence fee. In the present case, the appellant seeks refund of the amount collected by the Excise Department for the unlicenced period of the excise year 2005-06. He placed reliance upon the judgment of a learned single Judge dated 25.04.2006 in W.P.No.27417 of 2005. The petitioner in that case assailed the action of the Excise Department in seeking to collect the licence fee for the unlicenced period of the excise year. The said case arose under the A.P. Excise (Grant of Licence of Selling by Bar and Conditions of Licence) Rules, 2005 (for brevity, ‘the Bar Rules of 2005’). The learned Judge found that as per the said Rules, licence fee includes proportionate licence fee i.e. licence fee calculated proportionately as per the licence period and held that an annual licence for a period of 12 months is applicable only when the licence is issued on or before the commencement of the excise year. Upon a reading of the statute as a whole, the learned Judge came to the conclusion that the licensee cannot be made responsible for the belated grant of licence after the commencement of the excise year and accordingly, the Excise Department could not insist on payment of licence fee for the unlicenced period of the excise year. It is stated that the order of the learned single Judge aforestated was confirmed in Writ Appeal No.686 of 2006. The Excise Department, however, contended that the said judgment has no application to the facts of the present case as it pertained to the Bar Rules of 2005 and did not arise under the Shop Rules of 2005. It is however to be noticed that in the Shop Rules of 2005 also the lease period is defined under Rule-2(m) to mean the actual lease period in the lease year or part thereof. Therefore, even in the Shop Rules of 2005 it is envisaged that the lease period could be for a period less than the full excise year. It is no doubt true that under Rule-27 of the Shop Rules of 2005, a duty is cast upon the successful tenderer to select suitable premises for establishment of the shop. But in the present case, the fault lies not with the appellant, but with the Excise Department for having notified the shop in Ward No.28 of Ramagundam Municipality, knowing fully well that M/s.Singareni Collieries Company Limited had objected to the same and that there was no possibility of the successful tenderer finding suitable premises in the said Ward. In such circumstances, the Excise Department cannot fall back on Rule-27 to deny the entitlement of the appellant to claim refund of the amounts paid by him for the unlicenced period, citing his so-called incapacity to select suitable premises. Relevant to note, this Court had held in W.A.Nos.341 and 1179 of 1991 vide judgment dated 02.12.1991 and in W.A.No.1025 of 1991 dated 23.12.1991 that the Excise Department could not collect the lease amounts for the period during which no licence had been granted. Following the aforestated judgments, this Bench had occasion to hold in W.A.No.378 of 2002 that the Excise Department could not collect rentals for the unlicenced period of the excise year. We held that such action on the part of the Excise Department was arbitrary and unconscionable. The Full Bench judgments of this Court in SRI NARSIMHA WINES’s case (1 supra) and M/s. S.L.V. WINES, CUDDAPAH DISTRICT V/s. THE STATE OF A.P.[2] were considered by us in the aforesaid judgment in W.A.No.378 of 2002. We found that in SRI NARSIMHA WINES’s case (1 supra), the licensees had taken part in the auction of the licences knowing fully well that they would be required to pay the entire licence fee, and therefore, they could not complain of the same at a later date and in M/s. S.L.V. WINES’s case (2 supra) the licence had been subjected to cancellation/suspension and in such a situation the licensee could not seek remission of the licence fee for such period. Such is not the case before us in the present appeal. The facts borne out on record clearly show that the appellant was not at fault for the non- issuance of the licence upto 28.12.2005 and it is the Excise Department itself, which is squarely responsible for the delay in the establishment of the wine shop. In such a situation, it would be utterly unconscionable and arbitrary to thrust the burden of paying the lease/licence amount for the period prior to the issuance of the licence upon the appellant. The judgment of the learned single Judge in W.P.No.27417 of 2005, which was affirmed in appeal, squarely applies to the facts of the present case, notwithstanding the fact that the said case arose under the Bar Rules of 2005. The learned single Judge in the present case relied upon the Full Bench judgment in SRI NARSIMHA WINES’s case (1 supra), overlooking the factual aspects. Further, the facts as demonstrated, clearly indicate arbitrariness on the part of the Excise Department thereby bringing in the public law element required for invoking the jurisdiction of this Court under Article 226 of the Constitution. We are, thus, of the considered opinion that the appellant cannot be mulcted with the liablility to pay the lease/licence amount for the period during which he had no licence in the excise year 2005-06, which lapse is squarely attributable to the Excise Department itself. The appellant is therefore entitled to the refund of the lease/licence amount for the said period of 5 months 27 days from 01.07.2005 to 27.12.2005. The writ appeal is accordingly allowed. There shall be a direction to the Excise Department to refund the amount due for the said period to the appellant within a period of two months from the date of receipt of a copy of this order. In the facts and circumstances of the case, we make no order as to costs. ------------------------------ T.MEENA KUMARI, J --------------------------- SANJAY KUMAR, J 22nd JULY, 2009 PGS THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.1830 OF 2008 (Per Hon’ble Sri Justice Sanjay Kumar) 22nd JULY, 2009 [1] 2001(6) ALT 240 [2] W.P.NO.15904 OF 1994, DT.17.03.2005