IN THE HIGH COURT OF JUDICATURE AT PATNA CIVIL WRIT JURISDICTION CASE No.7501 of 2009 ============================================== Rajesh Kumar Singh son of Shri Hridya Nand Singh, resident of Village-Tarhani, P.S. Sonhan, District-Kaimur .... .... Petitioner Versus 1. The State of Bihar through the Secretary, Registration, Excise and Prohibition Department, Bihar, Patna 2. The Member Board of Revenue, Bihar, Patna 3. The Excise Commissioner, Bihar, Patna 4. The Collector, Rohtas at Sasaram 5. The Assistant Commissioner of Excise, Kaimur cum Rohtas .... .... Respondents ============================================== with CIVIL WRIT JURISDICTION CASE No.7944 of 2009 ============================================== Rajesh Kumar Singh son of Shri Hridya Nand Singh, resident of Village Tarhani, P.S. Sonhan, District- Kaimur .... .... Petitioner Versus 1. The State Of Bihar through the Secretary, Registration, Excise and Prohibition Department, Bihar, Patna 2. The Member Board of Revenue, Bihar, Patna 3. The Excise Commissioner, Bihar, Patna 4. The Collector, Kaimur at Bhabhua 5. The Assistant Commissioner of Excise, Kaimur cum Rohtas .... .... Respondents ============================================== Appearance: (In CWJC No.7501 of 2009) For the Petitioner : Mr. G.P.Bimal, Advocate : Mr. Satyabir Bharti, Advocate For the Respondents : Mr. Vikash Kumar, Assisting counsel to A.G. (In CWJC No.7944 of 2009) For the Petitioner : Mr. G.P.Bimal, Advocate Mr. Satyabir Bharti, Advocate For the Respondents : Mr. Vikash Kumar, Assisting counsel to A.G. ============================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE JYOTI SARAN ORAL JUDGMENT 05th May 2011 (Per: HONOURABLE THE CHIEF JUSTICE) Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 2 These two petitions filed under Article 226 of the Constitution raise identical issues. These petitions are, therefore, decided by this common judgment. Pursuant to the sale notification issued by the District Magistrate, Rohtas the petitioner had applied for licence for liquor shops in Rohtas District. Under the licence granted by the Assistant Commissioner of Excise, Rohtas four liquor shops were settled in favour of the petitioner for the period from Ist July 2004 to 31st March 2005. For the said settlement the petitioner had deposited security money in the sum of Rs. 1,45,828/-. After the expiry of period of licence the petitioner demanded refund of the security deposit. Such refund was refused on 7th July 2006 by the Assistant Commissioner of Excise on specious ground that the petitioner’s performance as a licensee was not satisfactory. The said order was confirmed on 4th December 2007 by the Excise Commissioner in Excise Appeal Case No. 7 of 2007. The Commissioner of Excise observed that the petitioner had failed to lift the Minimum Guaranteed Quota. On account of the said shortfall the State Exchequer had suffered loss of Excise Duty of Rs. 5,97,251/-. The Excise Commissioner relied upon the Circular Letter No. 928 dated 11th April 2005 to reject the claim of the petitioner. The said order has been confirmed by the Board of Revenue by impugned order dated 28th May 2008 made in Rohtas Case No. 13 of 2008. It would not be out of place to mention here that even the Board of Revenue did not consider the Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 3 shortfall a serious matter. It observed; “The licenced premises were conducted to the total satisfaction of the authorities. There was a minor shortfall (sic for) which composition fee under Section 68 of the Bihar Excise Act was imposed against the aforesaid liquor shops……….” Feeling aggrieved the petitioner has filed above C.W.J.C. No. 7501 of 2009. For the said year 2004-05 the petitioner had also applied for settlement of liquor shops in Kaimur District. Pursuant to his application the Assistant Commissioner of Excise settled five liquor shops in favour of the petitioner. For the said five liquor shops the petitioner had deposited security money in the sum of Rs. 6,58,800/-. After expiry of the period of licence the petitioner applied for refund of the security money. The same was rejected on 7th July 2006 by the Assistant Commissioner of Excise. The said order was confirmed on 4th December, 2007 by the Excise Commissioner in Excise Appeal Case No. 8 of 2007. The Excise Commissioner observed that the petitioner had failed to lift the Minimum Guaranteed Quota. On account of his failure the State Exchequer had suffered loss of Excise Duty in the sum of Rs. 4,15,768/-. The Excise Commissioner relied upon the Circular Letter No. 928 dated 11th April 2005 to reject the claim of the petitioner. The said order was confirmed by the Board of Revenue on 27th May 2008 in Kaimur Case No. 14 of 2008. It would not be out of place to Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 4 mention here that even the Board of Revenue did not consider the shortfall a serious matter. It observed; “The licenced premises were conducted to the total satisfaction of the authorities. There was a minor shortfall (sic for) which composition fee under Section 68 of the Bihar Excise Act was imposed against the aforesaid liquor shops……….” Feeling aggrieved the petitioner has filed the above C.W.J.C. No. 7944 of 2009 under Article 226 of the Constitution. For the aforesaid shortfall in lifting the Minimum Guaranteed Quota a composition proceeding was initiated against the petitioner under Section 68 of the Bihar Excise Act, 1915. Under the order of composition the petitioner was directed to pay a composition fee of Rs. 14,000/- for five liquor shops in Kaimur District and a composition fee of Rs. 9,500/- for the three shops in Rohtas District. The aforesaid Circular No. 928 (Annexure-5 to the petition) is issued by the Joint Commissioner of Excise addressed to the District Collectors to the effect that in case of satisfactory performance by the licensee the security deposit be refunded without delay. The security deposit is to be refunded only in case of satisfactory performance. In case of unsatisfactory performance appropriate decision be taken. Learned Advocate Mr. Bimal has appeared for the writ petitioner. He has submitted that none of the terms and Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 5 conditions of the licence provided for forfeiture of security deposit on account of failure of the licensee to lift the Minimum Guaranteed Quota. He has submitted that the Board of Revenue and the authorities below have fallen in error in holding that the State Exchequer had suffered a loss in the form of Excise Duty. He has submitted that the petitioner cannot be made liable to pay Excise Duty on the liquor which he did not lift and did not sell. In support thereof he has relied upon a judgment of Hon’ble Supreme Court in the matter of State of Madhya Pradesh Vs. Firm Gappulal & Ors. [(1976)1 SCC 791]. In that matter the Hon’ble Supreme Court has held that the levy of Excise Duty on undrawn liquor was improper. Learned Advocate Mr. Vikash Kumar has appeared for the respondent authorities. He has supported the impugned orders made by the Board of Revenue. He has submitted that under the conditions of licence the licensee was required to lift the Minimum Guaranteed Quota. On petitioner's failure to lift the Minimum Guaranteed Quota the State Exchequer did suffer loss of Excise Duty as held by the authorities below. Further in view of the said shortfall the performance of the petitioner cannot be said to be satisfactory which necessarily entailed forfeiture of security deposit as provided under Circular No. 928. We have perused the terms and conditions of the licence. Condition no. 18 of the licence did require the licensee to lift the Minimum Guaranteed Quota. However, Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 6 none of the terms and conditions of the licence provided for consequences in case of breach of condition no. 18. Clause 24 of the terms and conditions of the licence did provide for proceeding under Section 42 of the Bihar Excise Act, 1915 (hereinafter referred to as “the Act”) in case of breach of any of the conditions of licence. Sub-Section (1)(c) of Section 42 of the Act empowers the licensing authority to cancel or suspend the licence, inter alia, "in the event of any breach by the holder thereof, or by any of his servants, or by anyone acting on his behalf with his express or implied permission, of any of the terms and conditions thereof". Sub-Section (4) thereof provides for consequences of cancellation of licence as; "The holder of a licence, permit or pass shall not be entitled to any compensation for its cancellation or suspension under this Section, or to the refund of any fee paid or deposit made in respect thereof". Thus the only action available to the State Government for breach of condition of lifting Minimum Guaranteed Quota was a proceeding for cancellation or suspension of licence under Section 42 (1)(c) of the Act and consequently forfeiture of the security deposit under Section 42(4) of the Act. Admittedly, the respondents did not select to proceed against the petitioner under Section 42 of the Act; instead they chose to resort to Section 68 of the Act. Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 7 Section 68 1(a) relevant for the purpose of the present petitions reads as under: 68. "Power to compound offences and to release property liable to confiscation-(1) The Collector or any Excise Officer specially empowered by the State Government in this behalf, not below the rank of Deputy Collector or Superintendent of Excise- (a) may subject to any restrictions imposed by any rules made under clause (k) of Section 89, accept from any person whose license, permit or pass is liable to be cancelled or suspended under clause (a), clause (b), or clause (c) of Section 42, or who is reasonably suspected of having committed an offence punishable under any section of this Act other than Section 61, payment of a sum of money, not exceeding ten thousand rupees, in lieu of such cancellation or suspension or by way of composition for such offence, as the case may be". The respondents invoked power of composition under Section 68 (1) (a) of the Act obviously in lieu of the proceeding under Section 42 of the Act. In other words, instead of taking proceeding for cancellation of licence under Section 42 of the Act, the respondents chose to avail of the provisions of composition under Section 68 of the Act. The respondents, having compounded the breach of condition of licence, could not have resorted to cancellation or suspension of licence under Section 42 of the Act or consequently to forfeiture of security deposit. In our view, under the impugned orders the Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 8 respondents have forfeited the amount of security deposit which they, having resorted to composition under Section 68 of the Act, could not have legally done. Further the grant of licence is in the realm of contract or agreement. The terms and conditions of the contract or agreement cannot be altered unilaterally by one of the parties. In the present case, under Circular No. 928 the Joint Commissioner of Excise has tried to impose a condition which did not make part of the licence, that is not permissible. Moreover, as recorded hereinabove, in Rohtas District out of the four liquor shops settled in favour of the petitioner, the petitioner failed to lift the Minimum Guaranteed Quota in three of the shops. For the fourth shop though he failed to lift the Minimum Guaranteed Quota, considering the marginal shortfall of 865 LPL, no action was taken under Section 68 of the Act. Thereby the respondents forego their power to proceed against the petitioner for the shortfall in respect of Khurmabad country liquor shop. The respondents were, therefore, required to refund the security deposit of Rs. 45,320/- made for Khurmabad country liquor shop without demur. Nevertheless, neither the authorities below nor the Board of Revenue thought it fit to refund the said amount of security deposit of Rs. 45,320/- to the petitioner. In our opinion, the action of the authorities below and the Board of Revenue in refusing to refund the amount of security deposit to the petitioner is wholly illegal and unjustified. Patna High Court CWJC No.7944 of 2009 (4) dt.05-05-2011 9 For the aforesaid reasons, both these petitions are allowed. The District Collector, Rohtas, respondent no. 4 in C.W.J.C. No. 7501 of 2009 is directed to refund the security deposit of Rs. 1,45,828/- to the petitioner after adjusting the composition fee of Rs. 9,500/-. Such refund shall be made by 30th June 2011. The District Collector, Kaimur, respondent no. 4 in C.W.J.C. No. 7944 of 2009 is directed to remit the security deposit of Rs. 6,58,800/- to the petitioner after adjustment of composition fee of Rs. 14,000/ and the licence fee of Rs. 1,83,500/-. The said refund shall be made by 30th June 2011. It is further directed that in case the District Collector, Rohtas or the District Collector, Kaimur fails to refund the amount of security deposit to the petitioner as directed hereinabove, the petitioner will be entitled to interest over the amount of refund at the rate of 12 per cent per annum commencing from 1st July 2011 till the date of payment. The respondents will bear the cost of the petitioner. The cost to the petitioner in each petition is quantified at Rs. 5,000/-. The amount of cost in each petition will be paid to the petitioner by 30th June 2011. S.Sb/- (R.M. Doshit, CJ.) (Jyoti Saran, J.)