IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY THURSDAY, THE SIXTEENTH DAY OF JULY, TWO THOUSAND NINE ONLY WRIT PETITION No.22485 of 2006 Between: M/s.Pedamma Chemicals Pvt., Ltd., Reptd., by G.Madhava Rao, S/o.G.Venkateshwar Rao, Managing Director, 41 yrs, Jadcherla, Mahabubnagar District. … Petitioner And: Commissioner of Prohibition and Excise, Government of A.P., Excise Complex, Nampally, Hyderabad and another. … Respondents Counsel for the Petitioner: Sri P.Balamukundarao. Counsel for the Respondents: AGP for Prohibition and Excise. This Court made the following: ORDER:- This Writ Petition is filed seeking invalidation of orders dated 3-1-2005 and 29-9-2006 passed by respondents 2 and 1 respectively. The petitioner is a distillery manufacturing Rectified Spirit (for short ‘R.S’). The Excise officials intercepted lorry bearing No.TN 51C-4392 on the road leading from Polepally village to Macharam village of Jadcherla Mandal and found 8435 litres of RS in 241 bulk cans. The driver of the lorry was stated to have confessed that he was transporting the RS from the petitioner to Tamilnadu on the instructions of Sri G.Madhava Rao, Managing Director of the petitioner. The stock was seized. This was followed by inspection of factory and seizure of RS lying therein. Confiscation proceedings were initiated under the provisions of the A.P. Excise Act, 1968 (for short “the Act”). A show- cause notice was issued, to which the petitioner filed explanation dated 6-1-2004 and further explanation dated 17-1-2004. In the show-cause notice it was alleged that as against the total physical quantity of 14,700 bulk litres (for short ‘BLs’) of RS available in the factory, the quantity of 8000 BLs was recorded in the book balance and, therefore, there was excess of 6,700 BLs of RS. A criminal case was also registered against the petitioner. By order dated 10-3-2004, respondent No.2 confiscated the seized stock. On the appeal filed by the petitioner before respondent No.1, the said order was set aside and the matter was sent back to respondent No.2 for fresh consideration with a direction to conduct an enquiry and afford an opportunity to the petitioner to examine the witnesses. After remand, respondent No.2 passed order dated 3-1- 2005 confiscating the seized stock. The petitioner filed an appeal against the said order before respondent No.1, which was dismissed by the latter, vide: his order dated 29-9-2006. These two orders are the subject matter of challenge in this Writ Petition. At the hearing, Sri P.Balamukunda Rao, learned counsel for the petitioner, urged that respondents 1 and 2 completely failed to consider the petitioner’s explanations for the alleged variations. He further submitted that there was absolutely no basis for the respondents to conclude that the contraband found in the seized lorry was connected to the petitioner. He also submitted that the Court of Judicial Magistrate of I Class, Jadcherla, acquitted the petitioner of the criminal charge by its judgment dated 23-1-2008 in C.C.No.103 of 2006; therefore, the respondents shall reconsider the entire case. Opposing the aforesaid contentions of the learned counsel for the petitioner, the learned Assistant Government Pleader for Prohibition and Excise submitted that the panchanama, under which the stocks were seized, contained the explanation of the petitioner and that the said explanation supports the findings of the respondents in their respective orders; and that, therefore, there is no illegality in the orders passed by the respondents. She further submitted that under Section 46-D of the Act, the conviction or acquittal of the accused has no bearing on the confiscation proceedings. I have carefully considered the submissions of the learned counsel for the respective parties. The allegations against the petitioner can be divided into two parts, viz., that it was found clandestinely transporting 8435 litres of RS in 241 plastic cans; and there was variation of 6700 BLs of RS between the ground balance and the stock register at the petitioner’s factory premises. In the two explanations filed by it, the petitioner denied both the said allegations. As regards the first allegation, it is not necessary for this Court to delve into the same because the issue relating to confiscation of the stock found in the lorry is distinct from the proceedings which are under challenge in the present case and the present Writ Petition is confined to the latter proceedings involved in confiscation of 14700 BLs of RS found in the factory premises. In its explanation, dated 6-1-2004, the petitioner stated that there was no actual issue of 4000 litres, but entries were made in the stock register in anticipation of such issue. From the orders passed by respondents 1 and 2, I find that both of them did not discuss the explanation of the petitioner with regard to the alleged variation between the stock register and the ground balance. Respondent No.2 in his order made a cryptic observation that the plea raised by the respondent (writ petitioner) in the explanation submitted to the show- cause notice is not tenable. He did not either refer to the nature of the explanation or explain how the explanation of the petitioner is not tenable. Similarly, respondent No.1 also did not delve into the petitioner’s explanation regarding the discrepancy in the stocks. The order of confiscation passed on the finding of violation of the statutory provisions by the petitioner leads to serious adverse civil consequences, which include confiscation of the seized stock and also cancellation of its license. Such orders are required to be passed carefully after thorough examination of the explanation of the person, who is likely to suffer such adverse consequences. Therefore, in my considered view, it is necessary for respondent No.2 to re-examine the petitioner’s stand regarding the variation. According to the learned counsel for the petitioner, in anticipation of release of 4000 BLs of RS by the Distillery Officer from the bonded room, an entry was made deducting the said quantity from the stock register. The learned counsel further submitted that in the stock register the Distillery Officer has not signed against the said entry. The learned counsel explained that if the said quantity of 4000 litres were not deleted from the stock register, there would be a variation of about 2700 litres only. The learned counsel invited my attention to the cross- examination of the Investigating Officer & Inspector of Prohibition and Excise, Jadcherla, wherein he categorically stated that the quantity in the bonded warehouse was measured with the help of a gauge rod and he cannot say whether the gauge rod was in inches or centimeters. He further stated that he has not noted the gauge rod reading and the quantity as per the chart and that he has assessed the quantity of RS in M.S. Tank No.1 at 12,200 BLs., but it was not the exact quantity. The learned counsel for the petitioner submitted that from this evidence it is clear that the respondents have not arrived at the exact quantity of RS physically available in the tank and that, therefore, they ought to have taken into consideration this crucial aspect and exonerated the petitioner. Since the respondents have not taken into consideration the above factors, apart from the judgment of the criminal Court, which acquitted the petitioner, I deem it appropriate to set aside the impugned orders and direct respondent No.2 to reconsider the entire case in the light of the observations made hereinabove and pass a fresh order after giving the petitioner an opportunity of personal hearing. The Writ Petition is accordingly allowed to the extent indicated above. ------------------------------------ C.V.NAGARJUNA REDDY,J Date:16-7-2009 MNR