Case: Co-Operative Company, Uttar Pradesh Vs. State Of U.P.

The appellant herein, which is a limited company, was running a distillery with a bottling plant at Nawabganj, Saharanpur, since 1910. On 14.7.1980 it made an application to the Commissioner of Excise, State of U.P., stating that its distillery has been operating annual licences for wholesale supply ofto Delhi Administration for many years continuously. Therefore, it stated that it wanted to establish a bottling warehouse in district Ghaziabad to meet its requirement of supplyingto Delhi conveniently and economically. It pleaded that due to close proximity to Delhi if it is permitted to start a bottling unit somewhere in the district of Ghaziabad, it will have obvious advantages since bulk of its production ofwas being sold in Delhi. It also stated in the said application that it would help the company to bid competitively in the auctions and consequently, the State would also stand to benefit from the excise revenue. in the sadi letter, it is stated in clear terms that the State Government would not stand to lose anything by permitting the company to start the bottling warehouse in district Ghaziabad because it would continue to bottle both at Saharanpur as well as at Ghaziabad, hence, the State excise duty from Saharanpur would not suffer. It was also made specific in the said application that it was seeking a licence for an additional bottling warehouse at Ghaziabad.2. Pursuant to the said application, the appellant was informed on 29.7.1980 that it is permitted to bottle country spirit under bond for exports in a bonded warehouse to be licensed for suitable premises to be indicated by the appellant at Ghaziabad along with various other conditions. The said intimation also called upon the appellant to make necessary arrangements after executing counterpart agreement prescribed under the Excise Rules and that the amendedlicence will be issued by the Office of the Excise Commissioner as alsolicence will be issued by the Collector, Ghaziabad.3. It is stated that for a considerable time the appellant was unable to establish the bottling warehouse as permitted under the letter of the Excise Commissioner, referred to above. But it is an admitted fact that such a warehouse with the permission of the authorities was established at Sahibabad, district Ghaziabad, and has been functioning for a member of years. In the meantime, it is noticed that the appellant faced certain difficulties in running of its distillery and bottling warehouse at Saharanpur because of the dispute in regard to the property in which its distillery plant was situated at Shaharanpur as also because of the provisions of the Water (Prevention & Control of Pollution) Act, 1974. Therefore, sometime in the year 1987 the appellant wrote to the Commissioner of Excise in view of thedifficulty that it is permitted to shift its distillery from Sharanpur to some other suitable place. The Government as per its letter dated 20.7.1998 informed the appellant that it had no objection to shifting the said distillery from Sharanpur to some other place, other than Sahibabad, district Ghaziabad. Subsequently, by another letter of the Government dated 7.9.1988, the appellant was informed that in supressession of its aforesaid letter dated 20.7.1988, the Government had decided to approve the transfer of the distillery of the appellant to a place near the existing site in Saharanpur and that it had no objection to the working of the appellants bottling plant at a place owned by the appellant in any other district provided this did not result in reduction in the number of workers working in the district of Saharanpur. Consequent to the above order of the Government dated 7.9.1988, the Assistant Commissioner of Excise informed the appellant the sanction of the Government for shifting of the site of the distillery of the appellant. This was done by its letter dated 27.9.1988. In the said letter it was made clear that the permission to shift the distillery at Saharanpur was given on a condition that the shifting shall be done to some place near Saharanpur city with installation of necessary pollution control devices. Based on this permission, the appellant contends that it shifted its distillery and the attached bottling plant from Nawabganj, Sharanpur to Yusufpur, Tapari Road, Saharanpur.4. When this was the position the appellant received a letter dated 9.7.1991 wherein, according to the appellant, for the first time the appellant was informed that it was granted a licence to run a bottling warehouse at Sahibabad only till such time as the appellant shifted its distillery and bottling plant from the existing site at Saharanpur and since that shifting has taken place, the Government was not willing to continue with the temporary permission give to it to do the bottling process at Sahibabad, district Ghaziabad. By the said letter, the appellant was called upon to show cause why the sanction accorded to it to establish a bottling/filling plant at Sahibabad be not revoked.5. To the aforesaid letter of the Government, the appellant replied on 7.8.1991 stating that the licence granted to it to run a bottling warehouse at Sahibabad, district Ghaziabad, was totally unconnected with its distillery and bottling plant at Saharanpur and was independent of the same. They stated that they sought permission and the same was granted to establish a bottling plant at Sahibabad because of its proximity to the State of Delhi and because of the contract it had with the Government of Delhi to supply huge quantity ofand it had no connection whatsoever with the shifting of the distillery and the being plant attached to that distillery at Saharanpur. The Government, however, did not agree to this stand of the appellant and by a letter of 6.11.1992 directed the appellant to take necessary steps to stop the bottling plant at Sahibabad and mandated that all further bottling of the arrack manufactured by the appellant should be done only at the relocated site of its distillery at Shaaranpur within 3 months from the date of the said order.6. The appellant challenged the said cancellation of its licence to run the bottling plaint at Sahibabad, district Ghaziabad, by way of a writ petition before the High Court of Judicature at Allahabad in Civil Misc. W.P. No. 172/93. In the said writ petition, the appellant sought for quashing of the order of the State of U.P. dated 6.11.1992 along with certain other reliefs.7. A Division Bench of the High Court came to the conclusion that the permission to start the bottling plant at Sahibabad was not in addition to the bottling plaint run by the appellant at Saharanpur but was as a temporary measure to facilitate the appellant to shift its distillery and bottling plant from the existing site at Saharanpur to another site at Nawabganj, Saharanpur, the High Court further held now that a new distillery and bottling plant have been set up at an appropriate place at Saharanpur, the appellant cannot be permitted to use the bottling plant at Sahibabad. On that premise the writ petition came to be dismissed, giving 3 months time to the appellant to shift its bottling plant from Sahibabad to the new distillery situated at Yusufpur, Tapari Road.

Court's reasoning:
13. In this background if we have to consider the impugned order of the respondents dated 6.11.1992 it is seen that an entirely new stand has been taken on behalf of the State. This letter the original of which is in Hindi and a fresh translation thereof was provided to us on behalf the Statestates : "It is also made clear that during this period you must stop the Bottling plant at Sahibabad and further bottling must only be done at your relocated site of your distillery at Saharanpur. After the expiry of these 3 months you will not be alloted any alcohol from other distillers for your bottling plant at Sahibabad." Actually, this was a letter in reply to the complaint of the appellant on insufficient electric supply to its distillery at the relocated plant. In this letter the State took the opportunity of informing the appellant of closing its bottling plant at Sahibabad. By this letter it is clear that the respondents treated the earlier permission granted to the appellant as a temporary permission to last till the appellant shifted its distillery and the bottling plant attached to it. We have already noticed that from the original application and the sanction granted thereof, it is clear that the permission to start the bottling plant in district Ghaziabad which was ultimately established at Sahibabad, district Ghaziabad, was not temporary orpermission. It was given for a specific purpose of facilitating the appellant to bottle bulkat Sahibabad so that the appellant could compete with the other bidders for supply of country liquor to the State of Delhi. That permission cannot be treated as a permission having been granted as apermission till the appellant shifted its distillery and the bottling unit at Saharanpur. We are satisfied that the High Court has erred in coming to the conclusion that the licence granted to the appellant to establish and run a bottling unit at Sahibabad, district Ghaziabad is a temporary one.14. We however make it clear that if the appellant has not complied with any of the provisions of the said Excise Act and Rules or has contravened any of the provisions of the Act or any of the terms of the licence, it is open to the State to take such action as is legally permissible but this licence to run a bottling warehouse at Sahibabad, district Ghaziabad, shall not be cancelled on the ground that the same was granted as a temporary measure.