JUDGMENT Arun Tandon, J.
1. Heard Sri Neeraj Sharma, Advocate on behalf of petitioner and learned Standing Counsel on behalf of respondents.
2. For the Excise Year 2002-03, a now policy was enforced and for the said purpose, U.P. Excise (Settlement of licences for Retail Sale of Country Liquor) Rules, 2002 were notified vide notification dated 14th March, 2002. In accordance with this policy, an advertisement was published for settlement of the shop for retail sale of country liquor in District Etah. The petitioner submitted an application for grant of licence in respect of the shops situated at Nagla-Bari, Tehsil Sadarand Badaola, District Etah. The petitioner was selected for grant of licence in respect of aforesaid shops and be was accordingly intimated by respondent No. 4, namely, District Excise Officer, Etah.
3. In the relevant Excise year, because of the interim order passed by the Hon'ble High Court, in a bunch of writ petition, the settlement of the shop for retail sale of country liquor could not take place on 2nd April, 2002. It was only on 20th April, 2002 that the petitioner was called upon to complete the formality for the grant of licence. However, till such grant only temporary permission was granted to the petitioner to run the aforesaid shop subject to the disposal of the writ proceedings.
4. On behalf of the petitioner it is stated that in these circumstances he did not deposit the security money as contemplated by Rule-12 of the Rules of 2002, which is a basic formality for grant of license under the rules.
5. However, it is admitted that the petitioner ran the shop on temporary basis even after 20th April, 2002 and deposited the basic licence fees for the period, he ran the shop, as required under the Rules of 2002. It has further been stated that at no point of time, the licence for the entire years was ever issued to the petitioner as contemplated by rule nor such licence could be issued in absence of deposit of the security money as required under Rule-12 of the Rules of 2002.
6. It is not in dispute that the petitioner ran the shop on temporary basis without any licence being issued in his favour after completion of necessary formalities. However, on 8th January, 2003 the respondent No. 4 issued an order cancelling the alleged license granted in favour of the petitioner on the ground that necessary security money as contemplated by Rule-12 of the Rules of 2002 had not been deposited.
7. The petitioner did not challenge the aforesaid order and the same has become final between the parties.
8. After expiry of the excise year 2002-03, on 6th May, 2003, the respondents issued an order demanding a sum of Rs. 5,43,914.20 (Rs. Five lac, forty three thousand, nine hundred fourteen and twenty paise only) and, in respect thereto, recovery proceedings have also been initiated. The petitioner challenged the aforesaid demand, by means of an excise appeal under Section 11 of the Excise Act, which was numbered as Appeal No. 204 of 2003, he also prayed for grant of an interim order, before the Excise Commissioner, U.P., Allahabad.
9. By means of the order dated 1st November, 2003, the Additional Excise Commissioner, UP. (Licensing rejected the interim stay application of the petitioner and fixed a date for filing objections in the matter as well as for hearing of the appeal. Against the said order of the Additional Excise Commissioner, the petitioner filed a revision before the State Government, which was numbered as Revision No. -15 (Revision)/2004 under Section 11(2) of the U.P. Excise Act.
10. The State Government, by means or the order dated 2nd April, 2004, has partly allowed the revision filed petitioner and has held that the petitioner will not be liable for payment of any amount only for the period subsequent to 8th January, 2003. However, since he has not fulfilled the obligation under the Rules of 2002, he shall be blacklisted. It is against this order of the State Government that the present writ petition has been filed.
11. It is contended on behalf of the petitioner that under Rule-12 of the Rules of 2002, the legal consequences, which follow, because of non-deposit of the security money by the petitioner within the time specified, has been provided for under Rule 21(2) of the Rules of 2002. It is contended that the selection for grant of license stands cancelled by operation of law, and the respondents are under legal obligation to settle the shop afresh. It is further contended that the language of Rule-12 as well as language of Rule-14 of the Rules of 2002 are in themselves sufficient to establish that no licence can be said to have been granted unless and until the security money has been deposited and, therefore, the monthly installment of the licence fees, as required under Rules-13,14 and 15 of the Rules of 2002 will not be applicable, inasmuch as the petitioner has not become the licensee, nor can it be said that ho has committed any default in payment of licence fee. Lastly it is contended that the arrangement under which the petitioner has permitted to run the shop, is not contemplated under the aforesaid Rules, inasmuch as the said settlement cannot be said to be a regular settlement, as contemplated for grant of licence under Rule-6 or an interim settlement of the shop as contemplated by Rule-20. Therefore, the Rules of 2002 themselves have no application.
12. Learned Standing Counsel, on the ether hand submits, that the order passed by the State Government is just, fair and equitable and therefore, calls for no interference under Article 226 of the Constitution of India.
13. In order to appreciate the controversy raised on behalf of the parties, following facts may be recorded:
Under the advertisement the public at large was well-informed that the basic licence fees for the shop in question was Rs. 1,50,000/- (Rupees One lac, fifty thousand only), while the annual licence fees i.e. security money was Rs. 12, 30,000/- ( Rupees Twelve lac thirty thousand only).
14. Rule-12 of the Rules of 2002 provides for the money to be deposited before any licence can be granted to the selected candidates for the excise shops. Rule-12 reads as follows:
12. Payment of basic licence fee and security amount- In case an applicant is selected as licensee, he shall deposit the entire amount of basic licence fee within 3 working days of being informed of his selection. He shall be required to deposit half the security amount within 10 working days of information of his selection and balance of security amount within 20 days of information of his selection. If he fails to deposit the amount of basic licence fee or security amount within prescribed period, his selection shall stand cancelled and his earnest money and the basic licence fee and security amount if deposited by him shall be forfeited in favour of the State Government and the said shoo shall be resettled forthwith.
15. From the aforesaid Rule, it is apparently clear that non-deposit of the security money, as required under the aforesaid Rule, would render the selection of the applicant for grant of licence, as having been cancelled and his earnest money, basic licence fees and security money, if any deposited, has to be forfeited. It is also worthwhile to notice that at the stage of the deposit of security money, as required under the Rule-12, the candidate has been terned as the selected person for the licence, it is only after the deposit of requisite money as required under the aforesaid Rule, he become the licensee. The consequences, which flows after grant of licence are provided for under Rules-13, 14 and 15 of the Rules of 2002.
16. It admitted on record that the petitioner in this case, deposited only Rs. 61,500/- (Rupees sixty one and five hundred only) towards the security money, when he was required to deposit a sum of Rs. 1,23,000/- ( Rupees one lac twenty three thousand only) i.e. 1/10 of the total licence fees excluding the basic licence fees. Such default in deposit of the security money, would intale the consequences, which flow from Rule-12 of the Rules of 2002.
17. It cannot be disputed that unless and until the payment of basic licence fees and security money as required under aforesaid Rules-12 is made, the selected applicant is not treated to be a licensee nor he is entitled to the benefits of licensee flowing there from. Rule-12 itself contemplates the consequences, in case of violation of the conditions stipulated therein and therefore, the Rule is mandatory in nature. The Rule does not confer any discretion upon the licensing authority to relax any of the conditions mentioned therein. The consequences take effect by operation of law, and therefore, in the facts of the present case, till the petitioner had not deposited the security money, as required under Rule-12 of the Rules of 2002, his selection for grant of licence itself stood cancelled in the eyes of law and he could not be treated to be a licensee. Merely because the petitioner was illegally permitted by the Excise Authorities of the District Etah to continue and run his shops, despite non-compliance of the mandatory Rule-12 he cannot be held to become a licensee within the meaning of the Rules of 2002. Since the petitioner cannot be said to have been granted any licence, having regard to the language of Rule-12, the provisions of Rules-13, 14 and 15 will not be attracted in his case.
18. The aforesaid conclusion is further supported from the letter of the District Excise Officer himself dated 8th January, 2003, wherein he has stated that the petitioner not fulfilled the conditions as mentioned under Rule-12 of the Rules of 2002.
19. Since no licence was ever granted in favour of the petitioner in the eyes of law, at any point of time he was not required to lift any minimum guaranteed quantity as provided under Rules-13, 14 and 15 nor he could be held responsible for excise duty involved therein.
20. In view of the statutory rules, the petitioner cannot be fastened with the liability qua the Minimum Guaranteed Quantity or for payment duty relating to the Minimum Guaranteed Quantity, as no licence was ever granted to the petitioner, nor could be granted to the petitioner in the eyes of law. The demand raised therefore, cannot be sustained
21. As a matter of fact the District Excise Authority should have cancelled the selection of the petitioner immediately after he had failed to comply with the requirement of Rule-12 of the Rules of 2002 and should have forfeited the money, which had been deposited by the petitioner, which has not been done and on the contrary petitioner was permitted to run the shop contrary to statutory Rules. The reasons for such illegal continuance of running of the shop by the petitioner till 8th January, 2003, have not been disclosed.
22. This leads to the issues as to whether the petitioner should have been blacklisted because of non-performance of his part in terms of Rule-12 of the Rules of 2002 or not.
23. In the opinion of the Court since the petitioner had applied for grant of licence and deliberately failed to carryout the obligations as required under Rule-12 of the Rules as also in view of his being a party to the illegal running of an excise shop contrary to Rules of 2002, he has rendered himself unsuitable for being considered in future for grant of any such licence. Therefore, he has rightly been directed to be blacklisted. The order to that extent passed by the Excise Commissioner does not required any interference under Article 226 of the Constitution of India.
24. At this stage of the proceedings, this Court has also taken care of the loss, which has been caused to the public exchequer because of negligence on the par to the Excise Authorities of District Etah, to faithfully carryout the mandates of Rule-12 of the aforesaid Rules for which absolutely no explanation has been furnished.
25. In the opinion of the Court the loss, which has been caused to the State Government is only cause of the deliberate inaction of the Excise authorities of District Etah in acting in accordance with the requirement of Rule-12 of the Rules of 2002 and thereby, jeopardizing the interest of the public exchequer. The loss caused to the State Government, in these circumstances, cannot be permitted to go uncared for. This Court is of the firm opinion that the loss caused because of negligence on the part of the Excise authorities, which apparently appears to be in collusion with the petitioner, must necessarily, to be redeemed and persons responsible for such an act must be brought to book. Therefore, this Court directs the Principle Secretary, Government of U.P. Excise Department, U.P. Lucknow (respondent No. 1) to take all appropriate action against the concerned excise officers of District, Etah for not performing their statutory duty as required under Rule-12 at the relevant time and thereby causing loss caused to the State Government. The Principle Secretary (respondent no.1) after conducting an enquiry shall not only direct that the suitable department proceedings to be initiated against the official. He shall also ensure the recovery of the loss caused from the salary or other dues payable to the exercise officials. Such exercise must be completed by the Principle Secretary within two months from the date a certified copy of this order is filed before him.
26. A certified copy of this order shall be issued to the learned Standing Counsel for being forwarded to the Principle Secretary for necessary actions and a compliance report be submitted to the Registrar General of this Court immediately on expiry of the time granted above.
27. The present writ petition is disposed of finally subject to the observations made.