IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE FIRST DAY OF JULY TWO THOUSAND AND NINE PRESENT THE HON'BLE MRS JUSTICE T.MEENA KUMARI and THE HON'BLE MR JUSTICE SANJAY KUMAR WRIT APPEAL NO : 378 of 2002 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated ______ in WP NO : 23595 OF 1997 on the file of the High Court.) Between: 1 The Prohibition & Excise Superintendent, Hyderabad District at Narayanaguda, Hyderabad. 2 The Assistant Commissioner of Prohibition & Excise Hyderabad District at Narayanaguda, Hyderabad ..... APPELLANTS AND Toddy Tappers Cooperative Society Rep. by Chief Promoter, D.Balraj Goud .....RESPONDENT Counsel for the Appellants : GP FOR PROHIBITION & EXCISE Counsel for the Respondent : The Court made the following : THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.378 OF 2002 JUDGMENT (Per Hon’ble Sri Justice Sanjay Kumar) The entitlement of the Excise Department to collect rentals for the period of the excise year anterior to the grant of licence and for the period during which the toddy shop was closed upon its own order, is in question. The learned Judge by order dated 11.07.2001 allowed W.P.No.23595 of 1997 holding that there was no such entitlement. Hence, this appeal. The Toddy Tappers Co-operative Society, Addagutta, the respondent herein, was granted a licence on 25.11.1996 to establish and operate the toddy shop at a particular location in Addagutta. It is not in dispute that the respondent society did not transact any business from 01.10.1996, being the commencement of the excise year, upto 24.11.1996. The facts on record also establish that the Excise Department, vide Proceedings in Cr.No.B1/3401/96/P&E dated 11.01.1997, itself directed the respondent society to close down the toddy shop. The shop remained closed from 11.01.1997 till 18.01.1997 when it was reopened pursuant to the orders granted by this Court in an other writ petition. It is therefore manifest that the respondent society’s toddy shop remained closed without transacting any business from 11.01.1997 to 17.01.1997. The issue that arises is whether the Excise Department is entitled to collect toddy shop rentals for the above-mentioned two periods during which the respondent society’s toddy shop admittedly did not transact any business. The request of the respondent society in this regard vide its representation dated 27.06.1997 was rejected by the Assistant Commissioner of Prohibition and Excise, Hyderabad, by the order in Cr.No.B1/3401/96/P&E dated 02.09.1997. The same was questioned by the respondent society in the writ petition and the learned Judge, following the earlier judgment dated 02.12.1991 of a Division Bench of this Court in W.A.Nos.341 and 1179 of 1991, held that rentals could not be collected for the period during which no licence was granted. The learned Judge also recorded the fact that the same principle was reiterated by a Division Bench of this Court in its order dated 23.12.1991 in W.A.No.1025 of 1991. Extending this principle to the second period during which the shop remained closed upon the orders of the Department itself, the learned Judge held that the demand made by the Department for rentals during the said period could not be sustained and accordingly allowed the writ petition. Heard the learned Government Pleader for Prohibition and Excise and Sri T.Amarnath Goud, learned counsel appearing for the respondent society. The learned Government Pleader strenuously contended that the delay in issuance of the licence was attributable to the respondent society itself as it failed to identify a suitable premises for establishing its toddy shop and therefore the respondent society was bound to pay rentals from the commencement of the excise year, i.e. 01.10.1996. With regard to the second period, the learned Government Pleader argued that the shop of the respondent society was directed to be closed as it was functioning on Government land and therefore the Department was justified in seeking rentals for the period of closure also. He placed reliance upon a Full Bench Judgments of this Court in SRI NARSIMHA WINES V/s. PROHIBITION AND EXCISE SUPERINTENDENT, MEDAK DISTRICT AT SANGAREDDY[1] and M/s. S.L.V.WINES, CUDDAPAH DISTRICT V/s. THE STATE OF A.P.[2] in support of his contentions. Refuting the same, Sri T.Amarnath Goud, learned counsel, argued that the judgments relied upon by the learned Government Pleader have no application to the facts of the present case and that the issue in the writ petition was squarely covered by the judgments of the Division Benches which had been relied upon and followed by the learned Judge. On facts, the learned counsel contended that it was unfair and arbitrary on the part of the Excise Department to seek payment of toddy shop rentals for the periods during which the shop was not in operation. He accordingly prayed for dismissal of the writ appeal. Section 28 of the Andhra Pradesh Excise Act, 1968 provides for grant of a licence in the prescribed proforma. The provision itself makes it clear that the licence is granted with reference to the premises wherefrom the licensee is entitled to carry on business. The same is borne out by the form of the licence also. Therefore, the licensee would not be entitled to commence business before the issuance of the licence which makes specific reference to the licenced premises. The payment of rentals by the respondent society is relatable to Rules 16 and 18 of the A.P.Excise (Lease of Right to sell Liquor in Retail) Rules, 1969 while payment of the license fee is under Rule 18 of the A.P. Excise (Arrack and Toddy Licenses General Conditions) Rules, 1969. The Division Bench judgments of this Court in W.A.Nos.341 and 1179 of 1991, 1095 of 1991 and 1025 of 1991 demonstrate that this Court took the view therein that no rentals could be claimed by the Excise Department for the period during which there was no licence. In such a situation, when the licensee is barred by law from commencing and transacting business from the licenced premises before the issuance of the licence, it would be arbitrary and unconscionable to require such a licensee to pay rentals for the period prior to the issuance of the licence. It is no doubt true that in the present case the Excise Department vide its proceedings in Cr.No.B1/4054/95/P&E dated 30.08.1996 put the respondent society on notice that it was required to select alternative suitable premises for locating its toddy shop at Addagutta. However, a reading of the said communication would show that the respondent society was not informed that it would be required to pay rentals from the commencement of the excise year i.e. 01.10.1996 without reference to the actual establishment and licensing of the toddy shop at the new premises. In the absence of intimation of such intention by the Excise Department, it is not open to it to demand rentals from 01.10.1996 upto 24.11.1996 during which period the respondent society had no licence to run the toddy shop. Similarly, it is an admitted fact that the respondent society’s toddy shop was closed on 11.01.1997 pursuant to the order of the Excise Department itself and was reopened only on 18.01.1997 pursuant to the interim orders passed by this Court upon the motion of the respondent society. Having directed the closure of toddy shop, the stand of the Excise Department that the respondent society should pay rentals during the period of such closure cannot be countenanced. In this regard, reference may also be made to Rule-33 of the A.P. Excise (Indian and Foreign Liquor Retail Sale Conditions of Licences) Rules, 1993 (for brevity, ‘the 1993 Rules’). Though the said Rules have no application to the respondent society, Rule-33 thereof is of guidance in so far as this issue is concerned. Under Rule-33, where a shop is ordered to be closed otherwise than by cancellation or suspension of the license, no demand of rental shall be made for the period of such closure. In the present case also there was neither cancellation nor suspension of the respondent society’s licence when it’s toddy shop was directed to be closed by order dated 11.01,1997. Therefore, the Excise Department is not legally entitled to seek payment of rentals for the period of such closure, extending the principle adumbrated in Rule- 33 of the 1993 Rules. In so far as the judgments relied upon by the learned Government Pleader are concerned, we find that the same have no application to the issue on hand. In SRI NARSIMHA WINES’s case (1 supra), the issue was with regard to payment of the entire licence fee notwithstanding the fact that the licences were granted with delay. The Full Bench took the view that 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. The said judgment did not deal with payment of rentals. Further, the facts of the present case extracted supra, clearly indicate that the respondent society was not informed by the Excise Department that it would be required to pay the rentals from 01.10.1996 irrespective of the delay in the establishment and licensing of the respondent society’s toddy shop for the excise year 1996-97. In M/s. S.L.V.WINES’s case (2 supra), the issue before the Full Bench was with regard to remission of licence fee for the period during which the licensee’s shop was illegally closed. The issue of payment of rentals was not before the Full Bench. The Full Bench, having referred to the statute and precedential law on the aspect of remission of licence fee, came to the conclusion that refund of licence fee could not be claimed for the period during which the licence was cancelled or suspended. In the present case, even if the principle was to be extended to payment of rentals, the licence of the respondent society was neither subjected to cancellation nor suspension. The issue raised in the present case is therefore squarely covered by earlier Division Bench judgments of this Court referred to supra. The writ appeal is therefore devoid of merit and is accordingly dismissed. In the circumstances of the case, no order as to costs. ------------------------------ T.MEENA KUMARI, J --------------------------- SANJAY KUMAR, J 1ST JULY, 2009 PGS THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.378 OF 2002 (Per Hon’ble Sri Justice Sanjay Kumar) 1st JULY, 2009 [1] 2001(6) ALT 240 (F.B.) [2] W.P.NO.15904 OF 1994, dated 17.03.2005