IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.10761 of 2009 1. BALMIKI PRASAD, Son of Ganesh Mahto, village – Pachohia, P.O. Roh, District Nawadah 2. Vikki Kumar @ Bikki Kumar, Son of Pramod Prasad, Resident of Alamganj, Loharwa Ghat, Patna – 800 007 ……….. Petitioners Versus 1. THE STATE OF BIHAR through the Principal Secretary, Department of Excise, Prohibition and Registration, Government of Bihar, Patna 2. The Member, Board of Revenue, Bihar, Patna 3. The Excise commissioner cum Secretary, Department of Registration, Excise and Prohibition, Government of Bihar, Patna 4. The Joint Commissioner Excise, Department of Registration, Excise and Prohibition, Government of Bihar, Patna 5. The Collector cum District Magistrate, Nawadah 6. The Superintendent of Excise, Nawadah ----------- For the petitioners : M/s Y.V.Giri, Sr. Advocate, Sanjeev Kumar and Raju Giri, Advocates For the Respondents : Mr. Ram Balak Mahto, Advocate General P R E S E N T THE HON’BLE MR. JUSTICE SHIVA KIRTI SINGH THE HON’BLE MR. JUSTICE DR. RAVI RANJAN O R D E R Dr. Ravi Ranjan, J: The petitioners have preferred this application for quashing and setting aside the order dated 12.2.2009 passed by the Member, Board of Revenue in Revision 2 Case No. 18 of 2008, whereby his revision application has been dismissed and quantum of remission of license fee and refund of security amount for the period commencing from 31.1.2007 to 31.3.2007, as calculated by the authorities has been upheld. The petitioners have further made a prayer inviting us to hold that the authorities are obliged to return the entire security amount of Rs. 7,54,742, that had been deposited by the petitioners. Further, that the petitioners should be adequately compensated for the loss incurred due to withdrawal of license before its date of expiry under Section 43 of the Excise Act, 1915 (hereinafter referred to as „the Act‟ for the sake of brevity) as they had to pay wages of employees and rental of 22 shops for the entire period of license. Counter affidavit has been filed on behalf of the respondent no. 3, the Excise Commissioner – cum – Secretary, Department of Registration, Excise and Prohibition, Government of Bihar, Patna. Before adverting to consider the controversy, it would be pertinent to narrate certain facts as under that are not in dispute. 3 Earlier, settlement of the concerned vend was with one Shri Sanjay Sinha. However, by order dated 22.1.2007, as contained in Annexure 1, his license was cancelled under Section 42 of the Act. Thereafter, advertisement was made for fresh settlement of the retail vend for the district of Nawada for the period commencing from 31.1.2007 to 31.3.2007 (the remaining period of the earlier license granted in favour of aforesaid Shri Sanjay Sinha). The petitioners were successful bidder in the fresh settlement and were granted retail vend of I.M.F.L (Indian Made Foreign Liquor) and Beer for the 22 outlets within the district of Nawada at the bid amount of Rs. 10,60,000/- per month. On 31.1.2007 the petitioners deposited Rs. 10,34,500/- by way of advance fee and Rs. 7,54,712/- as security deposit. Again the petitioners deposited Rs. 10,51,306/- by way of advance license fee on 2.2.2007. The petitioners started operating as per the settlement. However, the aforesaid Sanjay Sinha preferred writ petition against the order of cancellation of license, which was permitted to be withdrawn by order dated 1.2.2007 passed in C.W.J.C. No. 1118/2007 with a 4 direction to the Excise Commissioner to hear and finally dispose of the petitioner‟s appeal within 15 days from the date of receipt / production of a copy of the order. The Excise Commissioner vide its order dated 20.2.2007, as contained in Annexure 5, set aside the order dated 22.1.2007 as contained in Annexure 1 passed by the Collector, Nawada, whereby the license of aforesaid Sanjay Sinha was cancelled. The said order was communicated to the Joint Commissioner of Excise who, in compliance of the aforesaid order, restored the license of Sri Sanjay Sinha and the license of petitioners was ordered to be withdrawn. However, refund of the proportionate amount of license fee for unexpired period of license was also ordered. According to the calculation of the authorities since the petitioners carried on the trade under license till 18.2.2007, the total period comes to 1 month 19 days and, thus, a sum of Rs. 3,76,128/- towards license fee and a sum of Rs. 5,95,807/- as security money was found refundable. The petitioners have earlier moved before this Court by filing a writ petition bearing C.W.J.C. No. 3901 of 2007, which was dismissed with the 5 observation that the petitioner‟s interest has adequately been safe-guarded by the Excise authority by directing for proportionate refund of the amount of license fee deposited by him for the un-expired period of license. However, the decision of the authorities was challenged by the petitioners by filing aforesaid Board Revision Case No. 18 of 2008 and order passed wherein is under challenge in this writ petition. Heard Mr. Y.V.Giri, learned Senior Counsel for the petitioners and Mr. Ram Balak Mahto, learned Advocate General for the State. The grievance of the petitioners is three fold. Firstly, it has been contended that as per the calculation of the petitioners the total amount which should have been refunded to the petitioners comes to the tune of Rs. 26,30,468/- or even in accordance with the respondent‟s calculation the same would come to Rs. 20,54,144/- plus compensation. Secondly, that there was no occasion for the State authority to deduct Rs. 1,58,905/- from the security deposit of the petitioners as the petitioners‟ license has not been cancelled rather the same has been withdrawn prematurely by the 6 Department in purported exercise of powers conferred under Sub Section 1 of Section 43 of the Act. Mr. Giri further contended that the premature withdrawal of the license has incurred heavy loss upon the petitioners and, thus, they are liable to be compensated by the State for the said loss incurred specially due to payment of wages to the employees working in the 22 shops together with the rentals for the said 22 shops for the period during which the said 22 shops were kept in sealed position consequent upon the revival of the license of the erstwhile licensee Sanjay Sinha and the withdrawal of the license of the petitioners. For the said purpose Mr. Giri, learned Senior Counsel appearing on behalf of the petitioners drew attention of this Court towards certain calculations as contained in this application. On the other hand learned Advocate General, drew attention of this Court towards Annexure A of the counter affidavit which is a detailed calculation done by the Collector, Nawada, with regard to remission fee of the petitioners to show that the trade period of the petitioners under the license was from 31.1.2007 to 7 19.3.2007 and, thus, total period comes to 1 month 19 days. The petitioners have deposited a sum of Rs. 20,85,806/- as license fee whereas the proportionate amount for the aforesaid 1 month 19 days comes to Rs. 17,09,678/-. Thus, it has been contended that, after deducting the same, Rs. 3,76,128/- was correctly found by the authorities to be refundable for unexpired period of license. So far the deduction of Rs, 1,58,905/- from the total amount of security deposited by the petitioners to the tune of Rs, 7,54,712/- is concerned, learned Advocate General submitted that petitioners had not lifted the minimum quota of Foreign Liquor and Beer, thus, the department was justified in deducting an amount of Rs. 1,58,904.98/- from security deposits as per the detailed calculation contained in Schedule „Kha‟ of Annexure A to the counter affidavit. Learned Advocate General drew attention towards Clauses 19 and 25 of the sale notification for the year 2006-2007 which indicates that the minimum fixed quota for a month has compulsorily to be lifted by the license holder and upon violation of any terms and conditions contained in the aforesaid notification, the 8 authorities are competent to take action as per the provisions contained in Section 42 of the Act or other relevant provisions. It has also been contended that since the license fee for the unexpired period has already been refunded along with security deposit after deducting the amount as per the detail calculation under Schedule „Kha‟ of the Annexure A, the petitioners are not entitled for any other compensation and, thus, the writ petition is fit to be dismissed. Upon hearing the rival submissions, this Court is of the opinion that since the petitioners have worked and traded for 1 month 19 days, the calculation for remission of the proportionate license fee for the unexpired period as per Annexure A cannot be faulted with. The authorities have correctly deducted Rs. 17,09,678/- and have found Rs. 3,76,128/- as refundable to the petitioners. Therefore, the contention raised on behalf of the petitioners in this regard is not well founded, hence is rejected. So far deduction from the security deposit of the petitioners is concerned, though learned Advocate General is correct in pointing out that there is a 9 condition in the notification under Clause 19 that the licensee would have to lift minimum fixed quota of Foreign Liquor as well as Beer per month failing which the authorities in terms of Clause 25 can take action as per the provisions contained in Section 42 of the Act, however, in the present case no action appears to have been taken in terms of Section 42 of the Act or any other relevant provisions by initiating such proceeding, issuing notice to the petitioners and then passing an appropriate order after hearing them. In the absence of any appropriate proceeding the decision of the authorities in making deduction from the security deposit of the petitioners cannot be held to be justified. Thus, the petitioners are entitled to get refund of their entire security deposit of Rs. 7,54,712/-. So far the question of compensation is concerned, it has been contended on behalf of the petitioners that they have incurred heavy loss due to the withdrawal of the license as they had to pay wages of employees of the 22 shops and also the rental for the aforesaid shops coupled with the other expenses. Learned counsel has pointed out that the 10 erstwhile licensee Mr. Sanjay Sinha was granted license merely on license fee amount of Rs, 3,77,356/-, whereas the petitioners have been granted license for two months on payment of Rs, 10,50,000/- and even then the same has been withdrawn prematurely incurring loss to the petitioners. It has been pointed out that the Member, Board of Revenue, has erroneously held that there is no provision in the Excise Manual to grant compensation for payment of wages of employees or rental of the excise shop for the unexpired period of license. This Court finds substance in the contention raised on behalf of the petitioners. The authorities are empowered under Sub Section 1 of Section 43 of the Act to withdraw the license granted under this Act for any cause other than those specified in Section 42 of the Act and on doing so it shall remit a sum equal the amount of the fees payable in respect thereof for fifteen days and withdraw the license. Sub Section 4 of section 43 of the Act provides that whenever license is withdrawn under Sub Section 1, any fee paid in advance, or deposit made, by the licensee in respect thereof shall be refunded to him after deducting the 11 amount (if any) due to the State Government. Whereas Sub Section 5 provides the methodology for calculating such amount which is due to the State Government. However, it would be pertinent to consider Sub Section 2 as well as Sub Section 3 of Section 43 of the Act, which are quoted as under: “43 (1) x x x x x (2) If any licence be withdrawn under clause (b) of sub-section (1) the said authority shall, in addition to remitting such sum as aforesaid, pay to the licensee such further sum (if any), by way of compensation, as the Excise Commissioner may direct. (3) If any licence be withdrawn under clause (a) of sub-section (1) the Excise Commissioner may, in special circumstances, direct the payment of such compensation as he may consider fit in addition to the remission of the fee as aforesaid. (4) x x x x (5) x x x x” It is apparent from Sub Section 2 that if any license is withdrawn under clause (b) of Sub Section 1 of Section 43, the authorities shall, in addition to remitting such sum as aforesaid, pay to the licensee 12 such further sum (if any), by way of compensation, as the Excise Commissioner may direct. Again according to the Sub Section (3) if any license is withdrawn under clause (a) of Sub Section (1) the Excise Commissioner may, in special circumstances, direct the payment of such compensation as he may consider fit in addition to the remission of the fee as aforesaid. Thus, in view of this Court there is sufficient provision under the Act to address the question of compensation if the license has been withdrawn in purported exercise of the power of Section 43 of the Act as contained in Sub Sections 2 and 3. The point in this regard raised on behalf of the petitioners has incorrectly been negated by the revisional court on the ground of lack of relevant provision. In above view of the matter the impugned order so far as it is concerned with regard to deduction made in security deposit of the petitioners and non consideration by the authorities of the case of petitioners for compensation, is hereby set aside. The authority concerned is directed to refund the entire 13 security deposit of Rs. 7,54,742/- admittedly deposited by the petitioners. However, it would be open for the authorities to initiate any proceeding against the petitioners and take action in accordance with law, if the petitioners are found to have violated the terms of the lease in any manner including non-lifting of the fixed per month quota of Foreign Liquor as well as Beer. The Excise Commissioner would also hear the petitioners on the point of compensation in terms of Section 43(2) or 43(3), whichever is applicable, and take a decision in accordance with law within three months. Accordingly, this writ petition succeeds in part and is allowed to the extent as indicated above. However, there will no order as to costs. The Patna High Court The 22 December, 2010 Sanjay Pd. / N.A.F.R. ( Dr. Ravi Ranjan, J.) Shiva Kirti Singh, J.: I agree (Shiva Kirti Singh, J.)