1/16 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF OCTOBER, 2017 BEFORE THE HON’BLE Dr.JUSTICE VINEET KOTHARI WRIT PETITION No.45101 OF 2017 (EXCISE) BETWEEN:
M.J.SIWANI S/O J K SIWANI AGED ABOUT 51 YEARS CL-9 LICENSEE, M/S CHANG HOTELS PRIVATE LIMITED, NO.22, CHURCH STREET, BANGALORE-560 001 ... PETITIONER (BY MR: G K BHAT, ADV) AND:
1. THE EXCISE COMMISSIONER IN KARNATAKA 2ND FLOOR, TTMC ‘A’ BLOCK BMTC BUILDING, SHANTINAGAR BENGALURU-560 027 2. THE DEPUTY COMMISSIONER BENGALURU URBAN DISTRICT BEHIND KANDAYA BHAVAN BENGALURU-560 009 3. THE DEPUTY COMMISSIONER OF EXCISE BENGALURU URBAN DISTRICT (EAST) PURNIMA COMPLEX, OFF J.C.ROAD BENGALURU-560 027 ... RESPONDENTS (BY MR: A. M. SURESH REDDY, AGA) *** THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ENDORSEMENT DATED 11.9.2017 ISSUED BY THE R-2 VIDE ANNEX-K; DIRECT THE R-2 RENEW THE LICENSE IN FORM CL-9 IN FAVOUR OF THE PETITIONER FOR THE EXCISE YEAR 2017-18 AND ETC., THIS WP COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Mr.G K Bhat, Adv. for Petitioner.
Mr.A M Suresh Reddy, Adv. for Respondents.
1. The petitioner - M J Siwani, son of J K Siwani, representing ‘M/s Chang Hotels Private Limited’, No.22 Church Street, Bengaluru, has filed this petition against the impugned endorsement Annexure-K dated 11.09.2017 of the Deputy Commissioner, Bengaluru Urban District, Bengaluru which has called upon the petitioner to deposit the sum of Rs.24,48,620/- in terms of Rules 14(2) of the Karnataka Excise (Sale of Indian and Foreign Liquor) Rules, 1968, for the period July 2006 to July 2014 for short lifting of liquor during the said period by the petitioner licencee at the rate of Rs.100/- per bulk liter.
2. It is the contention of the petitioner that the said endorsement had been issued by the respondent – Deputy Commissioner without giving any show cause notice to the petitioner and by the said order on the ground of non-payment of the damages under Rule 14(2) aforesaid, the renewal application of the petitioner for the year 2017-18 has been rejected by the said authority. Hence, the present petition.
3. Mr.G K Bhat, learned Counsel appearing for the petitioner has drawn the attention of this Court towards the interim order passed by the Karnataka Appellate Tribunal, Bengaluru in Appeal No.405 of 2015 filed by the petitioner - M J Siwani Vs The Excise Commissioner, against the order dated 17.03.2015, for the demand of damages under Rule 14(2) of the aforesaid Rule for the period upto July 2006 to June 2010 amounting to Rs.11,60,900/- and the balance demand is for the next period July 2010 to June 2011 and the total of entire demand is Rs.24,48,620/-. He submitted that in the aforesaid Appeal No.405 of 2015, the learned District Judge, Member has passed the interim order in favour of the petitioner on 08.09.2017 and therefore, for enforcing the entire demand of Rs.24,48,620/-, the respondent – Deputy Commissioner could not have rejected the renewal application of the petitioner for the year 2017-18.
4. He also submitted before the Court that this Court while interpreting the provisions of the aforesaid Rule 14(2) in the case of High Point Hotel Private Limited Vs The Excise Commissioner in Karnataka in WP No.27575/2017 decided on 18.08.2017, had given an opportunity of hearing to the affected excise licensees while upholding the validity of Rule 14(2) of the Excise Rules of 1968, but without giving any opportunity to the petitioner, the respondent – Deputy Commissioner has passed the impugned order rejecting the renewal application of the petitioner insisting upon the recovery of entire demand of Rs.24,48,620/-.
5. On the other hand, Mr. A.M. Suresh Reddy, learned Counsel appearing for the Excise Department has vehemently opposed these submissions and has urged before the Court that the petitioner had given an Undertaking to the respondent-Department to pay the entire demand of damages under Rule 14(2) of the Rules amounting to Rs.24,48,620/- at the time of renewal of excise licence for the preceding years 2016-17, therefore, the petitioner is bound to pay the said entire amount before the application for renewal for the next years 2017-18 could be favorably considered by the respondent-Deputy Commissioner.
6. He has further submitted that this Court has already upheld the said Rule of 14(2) in the aforesaid judgment referred above and the petitioner-licencee has never raised any dispute about the wrong computation of the damages/penalty for short lifting under Rule 14(2).
7. He has further drawn the attention of this Court towards the interim order passed by the Karnataka Appellate Tribunal on 08.09.2017 after 2 years contrary to the judgment of this Court without referring to the same in the appeal which was pending for the last two years which was filed in the year 2015 and was registered as Appeal No.405 of 2015. He therefore, urged before the Court that there is no force in the present petition and the same deserves to be dismissed.
8. I have heard the learned Counsel at length and perused the records.
9. The controversy with regard to Rule 14 (2) of the Excise Rules of 1968, interpretation and validity thereof has already been decided by this Court in the aforesaid decision in the case of M/s.High Point Hotels Private Limited and others Vs. The Excise Commissioner in Karnataka and others in Writ Petition Nos.27575/2017 and connected matters decided on 18/08/2017, the relevant extract of the said judgment is quoted below for ready reference.
“27. This Court is further of the view that the said fiscal liability in the name of Penalty under Rule 14 (2) of the Excise Rules of 1968 is actually the price or the liquidated damages to be paid by the Excise Licencees or vendors of liquor for the breach of contract on their part for short-lifting of the prescribed quantity of liquor from the State Beverage Corporation. That is why there is no need to go into the question of mens rea or opportunity of hearing or raising an objection in that regard was considered appropriate in the aforesaid case in Lakshmi Bar and Restaurant case (supra), decided by this Court on 27/06/2017 and the requirement of giving such opportunity wherein Rule 14(2) was restricted in the case where the licence itself was sought to be cancelled for the said reason of short-lifting of the liquor.
28. This Court also does not find any merit in the contention No.III that measure of Penalty under Rule 14 (2) cannot be assailed on different price range for different types of liquor. It is for the Legislature to adopt such measure and no illegality or arbitrariness is seen in such a measure adopted in Rule 14(2) in the present case.
29. This Court has also noticed that in none of the cases, the petitioners have even raised any such objections or reasons for such short lifting of liquor. Had it been so raised, the authority concerned of the Excise Department could have been expected to pass appropriate orders in this regard. Having not done that, the petitioners cannot be permitted to raise the said plea of alleged breach of principles of natural justice to get the demand notices quashed on the said ground.
30. Having said as above, this Court is of the view that while upholding the levy, about its mathematical computation and assessment, the petitioners can be given even now an opportunity of hearing. Therefore, the Respondent authorities are directed to pass speaking adjudication orders, in cases where Objections are now filed about the quantum of penalty and damages under Rule 14 (2) of the Excise Rules of 1968, within a period of one month from today. However, no objection as to the very levy shall be entertained by them. The petitioners are permitted to file such Objections within one month from today and thereafter a period of two months is allowed to the respective authorities to pass such orders thereon. No extension of time would be permitted to any of the parties in this regard.
31. Petitions are accordingly disposed of with aforesaid observations. No order as to costs.”
10. In view of this, as far as lower Authorities including Karnataka Appellate Tribunal are concerned, the said judgment holds the field and is binding upon them. It appears that the said judgment has not been brought to the notice of the learned Karnataka Appellate Tribunal when the said Appeal was argued for interim relief on 08/09/2017. There is no reference to the said judgment in the interim order, though Mr. G.K. Bhat, Advocate had appeared in both the cases, before this Court and before the Tribunal for the petitioners.
11. The relevant portion of the interim order passed by the learned Karnataka Appellate Tribunal on 08/09/2017 is also quoted below for ready reference.
“Heard L/C Sri. G.K.B. on admission and IA No I filed for staying the execution and operation of impugned order passed by Respondent No.1.
L/c Sri. G.K.B. filed a memo along with documents. Perused the material available on record.
This appeal is u/s 61(3) of KE Act against order passed by respondent No.1 u/s 61(2) of the said Act in appeal nor ECS 24/APP/2012 dated 17-3-2015.
Under the impugned order the 1st respondent held that the appellant has not full- filled the relevant provisions of Karnataka Excise (Appeal) Rules 1967 by producing copy of the order in appeal etc.
The L/c for the appellant produce the documents to show that at No.22, Church street, Bengaluru earlier Blue Heaven Hotel was existing having CL-9 license and later on the name of the same was changed as M/s. Chang Hotels Pvt. Ltd., and even the same is shown as Petitioner No.36 in W.P.No.23652- 687/2011. On careful perusal of the material available on record, at this stage it appears that the present appellant was given relevant show cause notice by the 3rd respondent and it appears that the 1st Respondent dismissed the appeal which is now under challenge on the ground that there was no any order against the present appellant i.e., M/s. Chang Hotels Pvt. Ltd., After considering all these aspects in my opinion at this stage the appellant has made out a prime facie case and hence the appeal is admitted and the impugned order is hereby stayed till further orders.
Hence, issue notice appeal to the respondents and call for the records.
Call on 27-10-2017.”
The aforesaid interim order passed by the learned Karnataka Appellate Tribunal by the learned District Judge Member also leaves much to be desired. Without discussing the relevant facts about the penalty/damages imposed under Rule 14 (2) of the Rules of 1968, merely on account of change of name of the licencees from the earlier name of M/s. Blue Heven Hotels to M/s. Chang Hotels Private Limited, the learned District Judge Member has found that a prima facie case has been made out to stay the impugned order till further orders. Neither the other relevant factors of irreparable injury or balance of convenience have been discussed in the said interim order nor even the facts of the case about the levy of penalty/damages under Rule 14(2) have been discussed. The said order also does not refer to the judgment of this Court in the case of M/s. High Point Hotels Private Limited decided on 18/08/2017, much prior to the date on which the said interim order was passed on 08/09/2017, particularly when the same learned Advocate appears at both, the Tribunal was duty bound to bring it to the notice of the Tribunal below.
12. Be that as it may, in the circumstances of the case, the Tribunal should now dispose of the pending Appeal itself within a period of one month from today. The parties will appear before the said Tribunal in the first instance on 30-10-2017.
13. Without going to the other aspects of the matter about the renewal of the licence for the year 2017-18, in the impugned endorsement, Annexure K dated 11/09/2017, the learned Deputy Commissioner, Bangalore Urban District, Bangalore has merely referred to the Undertaking given by the petitioner itself at the time of renewal of the Excise licence for the preceding year 2016-17 which was duly notarized, to remit the total amount of Rs.24,48,620/-. In view of the said Undertaking, which, in effect, amounts to an admission on the part of the petitioner - Company to pay the said penalty/damages under Rule 14 (2) of the Rules of 1968, nothing actually remains in the matter to be determined by the Authority concerned and the petitioner was bound to pay the said amount to the Respondent - Excise Department. The Respondent Deputy Commissioner, Bangalore Urban District, Bangalore, cannot therefore be faulted in refusing to consider the renewal of licence for the next year 2017- 18 on account of the failure on the part of the petitioner Company to pay the said amount, despite its Undertaking given in writing before the Respondent – Excise Department.
14. There is no reason put forth in the present petition which would render such an Undertaking on the part of the petitioner Company to be non-est in any manner. It is the duty of the Respondent to collect the requisite fees, charges or revenue or even penalty and damages Under Rule 14(2) under the Excise Act in accordance with the provisions of the Act and Rules. This Court has already upheld the imposition of penalty/damages as per the rates and quantity of short lifting of liquor prescribed under Rule 14(2) itself in the aforesaid judgment in the case of M/s. High Point Hotels Private Limited, discussing the entire legal position as argued on behalf of such liquor licencees and the Respondent Department. So long as the said judgment holds the field, not only the Authorities of the Respondent Department but the liquor licencees are also equally bound throughout the State to comply with the provisions of Rule 14 (2) of the Rules of 1968 and the said judgment of this Court for the period during which the said Rule 14(2) of the Rules existed on the Statute Book.
15. Therefore, this Court finds nothing wrong or illegal in the impugned Endorsement, Annexure K dated 11/09/2017 passed by the Respondent Deputy Commissioner, Bangalore Urban District, Bangalore, refusing to renew the Excise Licence, CL-9 of the petitioner for the year 2017-18 on account of non- payment of the aforesaid amount of Rs.24,48,620/- determined to be due from it for the period in question.
16. The petition thus found to be devoid of merit and is liable to be dismissed. Accordingly, it is dismissed. No order as to costs.
Sd/- JUDGE Bgn/BMV*