* THE HON’BLE Ms. JUSTICE G. ROHINI + WRIT PETITION No.28072 OF 2009 %Date: 30.03.2010 # Toddy Tappers Co-operative Society, Kosgi, rep. by Its President Sri Mallaiah Goud .. Petitioner Vs. $ 1. The State of Andhra Pradesh, rep. by its Principal Secretary, Excise Department, at Secretariat Buildingds, Hyderabad., And another. … Respondents ! Counsel for the petitioner: Sri K. Ramakrishna Reddy, Senior Counsel For Sri V. Ramchander Goud ^ Counsel for the respondents: Govt. Pleader for Proh. & Excise <GIST: >HEAD NOTE: ?CASES REFERRED: - NIL - THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.28072 OF 2009 Dated: 30.03.2010 Between: Toddy Tappers Co-operative Society, Kosgi, rep. by Its President Sri Mallaiah Goud .. Petitioner And 1. The State of Andhra Pradesh, rep. by its Principal Secretary, Excise Department, at Secretariat Buildingds, Hyderabad., And another. … Respondents THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.28072 OF 2009 ORDER: Toddy Tappers Co-operative Society, Kosgi Village and Mandal filed this writ petition seeking a declaration that the order dated 27.01.2009 passed by the 2nd respondent – Prohibition & Excise Superintendent, Mahaboobnagar - rejecting the request of the petitioner society for grant of licence for the period 2008 - 2013 on the ground that the petitioner society had suffered disqualification under Rule 5 (2) (a) & (c) of A.P. Excise (Grant of Licence To Sell Toddy, Conditions Of Licence And Tapping Of Excise Trees) Rules, 2007 (for short, ‘Rules, 2007’) as arbitrary and illegal. The facts, in brief, are as under: The petitioner society was granted five licenses for sale of toddy (four licenses for shops and one license for toddy depot) for the period from 1.4.2003 to 31.3.2007. The said licenses were cancelled on 26.05.2006 on the ground that the toddy samples drawn from shop No.2 and the toddy depot were found to be adulterated with Chloral Hydrate. Aggrieved by the same, the petitioner society filed W.P.No.24920 of 2006 seeking a declaration that the action of the respondents in cancelling the licenses of Shop Nos.1, 3 & 4 which were not inspected and in respect of which there was no allegation of adulteration of toddy was arbitrary and illegal. The said writ petition was dismissed by order dated 8.12.2006 and the same was confirmed by a Division Bench by judgment dated 3.1.2007 in W.A.No.1380 of 2006. The petitioner society carried the matter to the Supreme Court and during pendency of the said appeal the period of licenses had expired. In the circumstances, the appeal - Civil Appeal No.3035 of 2007 was disposed of by the Supreme Court by order dated 24.06.2008 as infructuous. However having regard to the submission made on behalf of the appellant that the society was acquitted in criminal proceedings, it was observed by the Supreme Court as under: “We therefore dispose of this appeal as having become infructuous with an observation that any future application by the appellant society for excise licence may not be rejected merely on the ground that the licence for Shop Nos.1, 3 and 4 had been cancelled by order dated 26.5.2006.” Thereafter, the petitioner society made a representation for grant of licenses for Shop Nos.1, 3 & 4 of Kosgi for the period 2008 – 2013. Alleging that the respondents failed to consider its request, the petitioner society filed W.P.No.27402 of 2008. This Court by interim order dated 17.12.2008 directed the 2nd respondent herein to consider the petitioner’s application and pass appropriate orders as per law within a period of three weeks. Thereafter, the impugned order dated 27.1.2009 came to be passed by the 2nd respondent rejecting the petitioner’s request for grant of fresh license for the period from 2008 to 2013 and aggrieved by the same the present writ petition is filed. I have heard Sri K. Ramakrishna Reddy, the learned Senior Counsel appearing for the petitioner as well as the learned Government Pleader for Prohibition & Excise appearing for the respondents and perused the material available on record including the counter-affidavit filed by the 2nd respondent. The learned Senior Counsel while drawing the attention of this Court to the observations made by the Supreme Court in the order dated 24.06.2008 in Civil Appeal No.3035 of 2007, submitted that in view of the observations made by the Supreme Court there cannot be any objection for considering the request of the petitioner society for grant of license for Shop Nos.1, 3 & 4 and therefore the impugned order of rejection was arbitrary, illegal apart from being contrary to the order of the Supreme Court. It is also contended that the ground upon which the impugned order was passed i.e., the petitioner had suffered disqualification under Rule 5 (2) of the Rules, 2007 was untenable since the petitioner society was never granted a license under the Rules 2007 nor suffered any disqualification under Rule 5 (2) of the said Rules. The learned Senior Counsel also contended that the disqualification, if any, suffered under the repealed law cannot be taken as a ground for rejecting the grant of license under the Rules, 2007. On the other hand, the learned Government Pleader for Prohibition & Excise vehemently contended that since the cancellation of the petitioner’s licenses was upheld by this Court as well as the Supreme Court, the petitioner’s request for grant of fresh licenses was rightly rejected by the 2nd respondent. It is not in dispute that the petitioner society was earlier granted licenses under the A.P. Excise (Arrack and Toddy Licenses General Conditions) Rules, 1969. The said Rules stood repealed and ceased to operate w.e.f. 1.10.2007 on which date the new Rules, 2007 have come into force. Thus the petitioner’s application for grant of licenses for the period from 2008 to 2013 requires consideration under the new Rules, 2007. Rule 5 (2) of the Rules, 2007 which provides for disqualifications runs as under: “5 (2) Disqualifications:- No Licence shall be granted to Tappers Co-operative Society which, or tapper under “Tree for Tappers Scheme” who,-- (a) has been convicted of any offences specified in clause (d) of sub-section (1) of Section 31 of the Act in respect of which he has been penalised or convicted within the preceding five years; (b ) has been convicted or whose licence has been cancelled for breach of any of the conditions of licence granted under Section 31 of the Act within the preceding three years; ( c ) has been held guilty either in a departmental proceeding or in a court of an offence under Section 37 of the Act for adulteration of toddy by mixing any article injurious to public health or otherwise within the preceding five years; (d) is a defaulter of excise revenue; (e) is adjudged as an insolvent by a competent court; or ( f ) suffering from leprosy or any other contagious disease.” A perusal of the above Rule shows that cancellation of license under Section 31 of the A.P. Excise Act, 1968 for breach of any of the conditions of license within the preceding three years is a disqualification under Rule 5 (2) (b). That apart, Rule 5 (2) (c) prohibits grant of license to a society which was held guilty in a departmental proceeding for adulteration of toddy by mixing any article injurious to public health or otherwise within the preceding five years. At the outset, it is to be noticed that there is nothing in the Rules, 2007 which either expressly or by necessary implication provides that the disqualifications prescribed under Rule 5 (2) should have been suffered by the society under the new Rules, 2007. On the other hand, the fact that Rule 5 (2) referred to Section 31 of the A.P. Excise Act, 1968 which empowered the authority granting the licence to cancel it makes it clear that the disqualification provided under Rule 5 (2) is only with reference to the cancellation of license under Section 31 of the A.P. Excise Act, 1968. It is relevant to note that Section 31 of A.P. Excise Act, 1968 is the enabling provision under which the licensing authority is empowered to cancel the license and no other provision under the Rules deals with such power for breach of conditions of licence. The Rules 2007 have been made under G.O.Ms.No.1228, Revenue (Ex.II) Department, dated 9.9.2007, in exercise of powers conferred by the rule making power under Section 72 of the A.P. Excise Act regulating the grant of license to sell toddy and conditions of licence. Hence, the contention that the cancellation of the petitioner’s license granted under the repealed Rules does not amount to disqualification under Rule 5 (2) of the new Rules is without any substance and the 2nd respondent rightly concluded that the petitioner is disqualified on account of the cancellation of its license under the repealed Rules. Coming to the next contention raised by the petitioner on the basis of the observation made by the Supreme Court, it is true that it was observed by the Supreme Court that the petitioner’s future application may not be rejected merely on the ground that its license for Shop Nos.1, 3 & 4 had been cancelled. However it is to be noticed that even if the cancellation of license for the said three shops is ignored, the fact remains that the petitioner’s licenses for the Shop No.2 and the toddy depot were cancelled on 26.5.2006 and the said order became final. Therefore, the impugned order of rejection cannot be held to be contrary to the observations made by the Supreme Court. The learned Senior Counsel further contended that as the disqualification provided under Rule 5 (2) (b) is only on the ground of cancellation of license within the preceding three years, the impugned order is illegal. It is sought to be contended by the learned Senior Counsel that by the date of the impugned order the period of three years had expired long back and therefore the 2nd respondent ought not to have rejected the petitioner’s request for grant of fresh licenses. The material available on record shows that the petitioner’s license was cancelled on 26.5.2006. Hence, the period of three years expired on 26.5.2009. Thus, as on the date of the impugned order, dated 27.01.2009, the disqualification suffered by the petitioner society was subsisting. Therefore, the submission on behalf of the petitioner is factually incorrect and the impugned order cannot be found fault with on that ground. However, the learned Senior Counsel vehemently contended t h a t even assuming that the petitioner society suffered a disqualification, the 2nd respondent ought to have granted the license in terms of Rule 39 of the Rules, 2007 which provides that the act of indulging in adulteration for the first time shall result in disqualification of only the members of the managing committee and that the same shall not operate as a bar to continue the society with eligible tappers / members. Rule 39 to the extent it is necessary runs as under : 39. Cancellation of Licence:- In case of cancellation of licence for default of payment of any dues, the order of cancellation of licence of the shop(s) may be revoked by the Collector after satisfying himself that the defaulter has paid the entire dues together with interest payable thereon as per rules: Provided that if the licensee of toddy shop of Toddy Co-operative Societies is found indulging in adulteration, for the first time, the members of managing committee will be disqualified and removed from the primary membership and the society may be continued with eligible tapper/members by imposing fine as prescribed by the Commissioner of Prohibition & Excise: … … … … … … …” As could be seen, the first proviso to Rule 39 provides that if the licensee of the society is found indulging in adulteration for the first time the members of the managing committee will be disqualified and removed from the primary membership and the society may be continued with eligible tappers/members by imposing fine as prescribed by the Commissioner of Prohibition & Excise. It is apparent that it is a discretionary power conferred on the authority competent to cancel the license to allow the society to continue with eligible members in certain circumstances. It is open to the licensing authority to exercise the said discretion while exercising the powers under Section 31 of the A.P. Excise Act, 1968 and instead of cancelling the license itself the society may be allowed to continue with eligible members by imposing the fine. However, in my considered opinion, the said power under Rule 39 is not available to the licensing authority while considering the request for grant of fresh license. Hence it is not open to the petitioner society to seek the benefit of Rule 39 of the Rules, 2007. For the aforesaid reasons, the Writ Petition is devoid of any merit and the same is hereby dismissed. No costs. _____________ G. ROHINI, J. Dt. 30.03.2010 gbs Note:- LR Copy to be marked. (B/O) gbs