IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY FIRST DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No.4208 of 1998 Between: 1 Vempuluru Narsaiah, S/o Bujjaiah, R/o Narasapuram Village, Indukurpet Mandal, Nellore Dist. 2 Nimmala Eswaraiah, S/o Pitchaiah, R/o Koruturu Village, Indukurpet Mandal, Nellore Dist. ..... PETITIONER(S) AND 1 The Commissioner of Prohibition & Excise, Nampally, Hyd. 2 The Asst.Commissioner, Prohibition & Excise, Nellore. 3 The Dist.Collector, Nellore. 4 The Excise Superintendent, Nellore. 5 The Excise Circle Inspector, Neelagiri Sangham, Moolapet, Nellore. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a writ or order or direction, more particularly one in the nature of mandamus declaring the proceedings of the 5th respondent in reference Rc.No.49/90/P&E/Nellore dt.03.02.98 as contrary to judgment in WP No.9430/94, order in C.D.No.155/91, violative of the principles of natural justice, arbitrart and illegal and direct the 1st respondent to consider and disposed oﬀ the issues refered by order dt.23.03.91 in C.D.155/91 Counsel for the Petitioner:MR.M.RAVINDRANATH REDDY Counsel for the Respondent No.: . The Court made the following : THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No.4208 of 1998 ORDER: Petitioners question the notice, dated 03-02-1998, issued by the Prohibition and Excise Inspector, Nellore, in Rc.No.49/90/P&E/Nellore, directing them to pay a sum of Rs.2,81,774/- due to the Government, failing which, the said amount will be recovered under the Revenue Recovery Act, as per the directions of this Court in W.P.No.9430 of 1994, dated 27-11- 1997. It is stated that when respondents took coercive steps for recovery of the excise arrears, without following the due procedure prescribed in law, without determining the amounts payable under the provisions of A.P.Excise Act and without giving any opportunity, the petitioners filed W.P.No.9430 of 1994 before this court and this court disposed of the said writ petition directing the respondents not to detain or take the petitioners or their family members into custody for recovery of the alleged excise arrears for the year 1990-91. However, it is observed that the respondents are at liberty, to recover the alleged arrears, if any, in accordance with law. It is the case of the petitioners that they are the highest bidders and auction purchasers in respect of 13 toddy shops in Nellore Town for the excise year 1990-91, pursuant to the auction held on 28-09-1990 and immediately, after auction, they have deposited EMD at the rate of 2% of the annual lease agreement and one month rental for the shops at the rate of Rs.2,05,000/- per month and also furnished bank guarantee equivalent to one month rental, and also complied with other formalities for issuance of licences. But, the District Collector, Nellore, issued notice, dated 09-10-1990, directing the petitioners to furnish bank guarantee for two months rental, as advance, contrary to the rules but, however, the petitioners furnished bank guarantee for two months rental amounting to Rs.4,10,000/- and ultimately the licences were issued on 15-10-1990. Thus, it is the case of the petitioners that they could not carry business from 01- 10-1990 to 15-10-1990 for no fault of them and, therefore, they are not liable to pay rent prior to grant of licences, but the respondents collected rents even for the said period i.e., from 01- 10-1990 to 15-10-1990. It is further stated that the petitioners submitted applications for grant of B licences for 15 sale points in the month of October, 1990 and 10 sale points in the month of November 1990, but the respondent authorities have not granted B licences, though they are entitled for grant of additional sale points as per Excise Policy and the Act. I am of the opinion that the controversy relating to illicit sale of liquor and non-grant of B licences are not relevant, as the petitioners are liable to pay admitted rentals for the whole year. It is not in dispute that the licences of the petitioners have been cancelled on 08-08-1991, for adulteration of toddy with diazepam under Section 31 (1) (b) of A.P.Excise Act, 1968. It is not in dispute that immediately after cancellation of the licences, the said shops were notiﬁed in Extraordinary Gazette No.48, dated 09-08-1991, for re-auction of the said shops and the said shops were re-auctioned on 17-08-1991 for the remaining period of the excise year 1990-91, and the resultant loss that was accrued to the Government is Rs.3,02,714/-. Learned counsel appearing for the petitioners submits that there was no ﬁnal determination of the accrued amount of Rs.3,02,714/- by following the due process prescribed in law and any such determination of the said amount by the respondents themselves will not meet the legal requirement, unless a show cause notice has been issued giving reasonable opportunity and ﬁnal order has been passed determining the resultant loss/excise arrears. It is not the case of cancellation of licences for non- payment of revenue. If the licences were cancelled for non- payment of revenue, then the cancellation of licences itself indicates demand to pay excise arrears. But, in the instant case, the licences were cancelled for adulteration of toddy. Therefore, I am of the opinion that there could have been a determination of the resultant loss that was accrued to the Government, by reason of re-auction, on account of cancellation of licences for adulteration of toddy. Admittedly, in the instant case, no show cause notice has been issued, giving reasonable opportunity and no ﬁnal order has been passed determining the resultant loss/excise arrears. Further, the impugned notice has been issued by the Prohibition and Excise Inspector, but not by the licencing authority and it is for the licencing authority to determine the resultant loss/excise arrears, but not by the Prohibition and Excise Inspector. Therefore, the impugned notice is liable to be set aside. Accordingly, the writ petition is allowed setting aside the impugned notice issued by the Prohibition and Excise Inspector, Nellore, dated 03-02-1998, leaving it open for the Prohibition and Excise Superintendent, Nellore, to determine the resultant loss/excise arrears by following the due procedure prescribed in law i.e., by issuing show cause notice, giving reasonable opportunity and by passing ﬁnal order, so as to enable the respondents to proceed further in accordance with the Revenue Recovery Act, if the said ﬁnally determined amount has not been paid. However, the petitioners are directed to furnish their residential addresses to the Prohibition and Excise Superintendent, Nellore, within two weeks from the date of receipt of a copy of this order. There shall be no order as to costs. ___________ 21-07-2008 Prv ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{TSSB}