Writ Petition No.5253 of 2006

28th August, 2007

Petitioner Counsel: S/Shri. P. C. MADKHOLKAR , DEEPAK GUPTA
Respondent Counsel: Smt. B. H. DANGRE

Cases Cited:
Shri. Raghunathrao Ganpatrao Vs. Union of India, AIR 1993 S.C. 1267 [Para 5]

JUDGMENT

JUDGMENT :- By the present writ petition, the petitioner assailed order dated 1-4-2004 passed by the Collector, Buldana, confirmed by Commissioner of State Excise on 21-10-2005 and also confirmed by respondent No.1 - Hon'ble Minister on 5-7-2006.

FACTS :

2. The petitioner holds FL-II licence as sole proprietor of M/s. J. G. Mihani Wine Shop. There is one more licence, namely, CL-II licence, issued in the name of wife of petitioner with partnership firm, namely, M/s. Vishal Liquors. Vishal Liquors, in a raid that was conducted by the State Excise Department, was found to have evaded the duty payable i.e. Rs.46,11,394.80 i.e. on a licence in the name of wife of petitioner, namely, Smt. Pushpadevi. A criminal case was registered against her as well as the petitioner because the petitioner was on "Nokarnama" actually conducting the shop M/s. Vishal Liquors in the name of his wife. Since her licence was initially suspended and thereafter cancelled for the said evasion of duty, she filed proceedings and one is pending in this Court in W.P. No.4962/2006. The Collector, Buldana made an order on 1-4-2004 in respect of the licence of the petitioner i.e. FL-II licence, suspending the same on a ground that the petitioner and Smt. Pushpadevi being husband and wife were the members of the same family unit and M/s. Vishal Liquors owned by Smt. Pushpadevi did not pay the huge excise duty due to the Government and so also the petitioner failed to pay the said duty despite demand from him. Feeling aggrieved by this order, the petitioner preferred appeal before the Commissioner of State Excise which came to be dismissed on 21-10-2005. Thereafter, a revision that was filed by the petitioner before the Hon'ble Minister (State Excise) was also dismissed by the concerned Hon'ble Minister. Hence, this writ petition.

3. Advocate S/Shri. Deepak Gupta and P. C. Madkholkar appearing for petitioner made the following submissions :

(1) Licence given to the petitioner i.e. FL-II licence has absolutely no concern with the licence, namely, CL-II licence, given to Smt. Pushpadevi wife of the petitioner and licence given to his wife was independent.

(2) CL-II licence in the name of Smt. Pushpadevi wife of the petitioner is admittedly not a scheduled licence within the meaning of Clause 2(d) of the Bombay Prohibition (Restrictions on grant of licences) Order 1980 issued in exercise of powers conferred by Clauses - (a) and (n) of Sub-Section (1) of Section 139 of the Bombay Prohibition Act, 1949 though FL-II licence in the name of petitioner does fall in the category of scheduled licence. Therefore, in case of default of payment on FL-II licence, CL-II licence may be cancelled but not vice versa.

(3) Section 114 of the Bombay Prohibition Act does not entitle the authorities under the Act to make recovery from the person like the petitioner who was not liable to pay the duty defaulted on the licence in the name of his wife Smt. Pushpadevi. The petitioner was neither a surety on the said licence.

(4) Admittedly, FL-II and CL-II licences were issued to proprietary concerns having no relationship or any obligation between the two licence holders, amongst themselves or qua the Government and, therefore, the theory of clubbing the two licences for the purposes of recovering the duty is not in accordance with law. Both counsel for petitioner, therefore, prayed for allowing the writ petition.

4. Per contra Advocate Mrs. Bharti Dangre for respondents-State opposing writ petition made the following submissions;

(1) Inviting my attention to paragraph No.3 of affidavit-in-reply of respondent No.4, she submitted that four types of licences have been issued in the name of petitioner, his wife and his two sons. The petitioner was admittedly managing the affairs of the shop in the name of his wife i.e. under CL-II licence and it is he who was actually arrested and was instrumental in evading huge excise duty due to the Government. It is the petitioner who has been the brain behind evasion of such huge excise duty and legally as well as morally the petitioner is responsible for making payment of Government dues.

(2) Admittedly, Smt. Pushpadevi is a member of family of the petitioner and being a member of the said family unit there is a legal as well as moral responsibility to make payment of the Government dues.

(3) Section 114 of the Bombay Prohibition Act enables the respondents to recover the defaulted excise duty and as such there is no want of power in the authorities.

(4) The petitioner as a holder of FL-II licence will definitely fall in the "person" occurring in Section 114 of the Bombay Prohibition Act. She, therefore, prayed for dismissal of the writ petition.

CONSIDERATION :

5. At the outset it is required to be made clear that this case will have to be decided on the basis of the law applicable thereto and not on morality. In the case of Shri. Raghunathrao Ganpatrao Vs. Union of India, reported in AIR 1993 Supreme Court 1267, the Hon'ble Supreme Court observed thus;

"103. The above passages remind us of the distinction between law and morality and the line of demarcation which separate morals from legislation. The sum and substance of it is that a moral obligation cannot be converted into a legal obligation.

104. In the light of the above principle, the Attorney General is right in saying that Courts are seldom concerned with the morality which is the concern of the law makers."

6. Now Section 114 of the Bombay Prohibition Act reads thus;

"114. Recovery of Duties, etc.

(1) All duties, taxes, fines (except fines imposed by a Court) and fees leviable under any of the provisions of this Act or in respect of any licence, permit, pass or authorisation granted under it, and the cost of the supervising staff appointed under section 58-A "(if not paid within the due date or the prescribed period, shall be recovered from any person liable to pay the same or from his surety, if any, with simple interest at the rate of 2 per cent, per month, from the date it has become due, as if they were arrest of land revenue)."

2) When any person, in compliance with any rules, regulation or order made under this Act, gives a bond (other than a bond under Section 91 or 93) for the performance of an act, or for his abstention, from any Act, such performance or abstention shall be deemed to be a public duty within the meaning of section 74 of the Indian Contract Act, 1872 (XI of 1872), and upon breach of the conditions of such bond by him, the whole sum named therein as the amount to be paid in case of such breach may be recovered from him or fro his surety (if any) as if it were an arrear of land revenue)."

7. It shows that the fees can be recovered if not paid from the person liable to pay the same or from his surety. Now in the instant case the huge duty of around Rs.46,11,394.80 has been evaded by Smt. Pushpadevi wife of the petitioner while operating CL-II licence in her name. It is true that it was the petitioner who was acting as servant under the said licence with "Nokarnama" in his name who was actually responsible for evasion of the said duty and was therefore correctly prosecuted in a criminal case. The submission made by A.G.P Smt. Dangre for respondents-State can easily be accepted that it is the petitioner who is the brain behind evasion of such a huge duty due to the Government. The conclusion, therefore, can safely be drawn that it is the petitioner who is morally responsible for payment of the dues due to the Government even under the licence CL-II in the name of his wife, who defaulted payment of duty. However, Section 114 of the Bombay Prohibition Act cannot be read to mean that the petitioner is the person who was liable to make payment of the duty. It is nobody's case that he was the surety and, therefore, in my view the petitioner does not answer the test of the person or surety under Section 114 of the Bombay Prohibition Act. Hence, the contention raised by A.G.P. Smt. Dangre that there is a power to recover the dues from the petitioner under Section 114 of the Act is rejected.

8. Now coming to the core issue, namely, the provisions of the Bombay Prohibition (Restrictions on grant of licences) Order 1980, following definitions are required to be understood correctly;

"Clause - 2. (a) "family unit" means a person and his spouse (or more than one spouse) and his children solely dependent on him for their maintenance ;

(d) "scheduled licence" means any of the licences specified in the schedule hereto.

Clause - 3. A licensing authority shall not grant more than one scheduled licence to any one individual or to any one family unit, firm, private company or any other body of individuals, whether incorporated or not.

SCHEDULE

(See Clause 2(d))

I. Licence under the Bombay Mhowra Flowers Rules, 1950 - Licence in Form M.F. II (Licence for the sale of Mhowra Flowers).

II. Licences under the Bombay Foreign Liquor Rules, 1953 - (1) Licence in Form F.L. - I (Ordinary Trade and Import Licence for the removal from a Customs Frontier and for the import and vend of foreign liquors (potable) including Indian made liquors (potable) excised at special rates ("not to be drunk on the premises")).

(2) Licence in Form F.L. II (Vendor's Licence for sale of Foreign Liquor).

III. Licences under the Bombay Denatured Spirit Rules, 1959 - (1) Licence in Form D. S. VI (Licence for the wholesale sale of ordinary denatured spirit).

(2) Licence in Form D. S. VII (Licence for the retail sale of ordinary denatured spirit).

IV. Licences under the Maharashtra Denatured Spirituous Preparations Rules, 1963. (1) Licence in Form D.S.P. I (Licence for the manufacture of denatured spirituous preparations or for the manufacture and sale of such preparations).

(2) Licence in form D.S.P. 2 (Licence for the wholesale sale of denatured spirituous preparation (s).

(3) Licence in Form D.S.P. 3 (Licence for the retail sale of denatured spirituous preparations).

V. Licence under the Maharashtra Country Liquor Rules, 1973 - Licence in Form C.L. III (Licence for the retail sale of country liquor)."

9. Now perusal of the above provisions in the said order shows that more than one licence cannot be granted from the scheduled category to any one individual or one family unit etc. Admittedly, in the instant case FL-II licence in the name of the petitioner is a scheduled licence. However, CL-II licence held by Smt. Pushpadevi wife of the petitioner does not anywhere fall in the category of scheduled licence. In the wake of this position, in my opinion in the absence of any provision either under the Act or under the sub-ordinate legislation for recovery of the said huge excise duty defaulted on any other non-scheduled licence cannot be recovered on and from a holder of a scheduled licence only on the ground that the wife of the petitioner Smt. Pushpadevi is the member of the family unit of the petitioner. Since it is not necessary to decide whether vice versa is true, I refrain from making any comment on the said argument made by Counsel for petitioner. To me, the plain reading of the aforesaid provisions shows that the petitioner cannot be in law made responsible for payment of the evaded duty on the CL-II licence held by his wife Smt. Pushpadevi. It is apparently clear in the instant case that there is neither any partnership nor joint licence but the admitted fact is that these licences are issued in the individual names of petitioner and his wife who are running independent proprietary concerns.

10. During the course of argument, Advocate Shri. Madkholkar for petitioner pointed out to me that the property belonging to the family of the petitioner has been attached by the department for recovering the said excise duty but in the recent past the excise department had suddenly become slow in selling the said property for recovering the duty. I refrain from making any comment on this submission, but I can only say that if the submission is correct, then the department in the interest of public revenue should immediately take steps to sell the property attached by them and recover all the dues payable to the Government. I have absolutely no doubt in my mind that the petitioner has moral responsibility to pay the said huge duty due to the Government and he must feel obliged to the Government which has granted total four separate licences to petitioner, his wife and his two sons. Thus, except expecting that the petitioner should fulfil his moral obligation, this Court is unable to say anything further.

11. In the result, the writ petition is allowed. Rule is made absolute in terms of prayer Clause - (A) The respondents are directed to sell the property attached by them and make all efforts to recover the entire dues due to the Government from the petitioner and his family members in accordance with law and subject to the orders that might have been in force issued by the various Court or the authorities under the Act.

12. The petitioner to pay costs of Rs.25,000/- to the respondents.

13. Rule accordingly.

Petition allowed.