THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF NOVEMBER 2019 BEFORE THE HON’BLE MRS. JUSTICE S SUJATHA W.P.NO.28647/2018 (EXCISE) Between:
Sri G.H.Mariyoji Rao S/o late Hanumanth Rao CL-9 Licensee, Aged about 61 years M/s Santhosh Bar and Restaurant No.400, 313, 333, Maratagalli Harihara Division, Harihara Davangere District-577001. … Petitioner (By Sri. G.K. Bhat, Advocate) And:
1. The Excise Commissioner in Karnataka 2nd Floor, TTMC, ‘A’ Block BMTC Building Shantinagar Bengaluru-560027.
2. The Deputy Commissioner Davangere District Davangere-577001.
3. The Deputy Commissioner of Excise Davangere District Davangere-577001. ... Respondents (By Smt. Niloufer Akbar, AGA for respondents) This writ petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the impugned order as per annexure-H dated 29.06.2018 passed by the Karnataka Appellate Tribunal, Bengaluru in Appeal No.611/2017 and consequently that of the respondent No.1 dated 02.03.2017 as per annexure-G in Appeal No. ECS 108 APP 2016 and consequently that of the 2nd respondent dated 25.06.2016 as per annexure-F which was the subject matter of the appeal before the Karnataka Appellate Tribunal Bengaluru and etc., This writ petition coming on for Preliminary hearing in ‘B’ group this day, the court made the following:
ORDER The petitioner has challenged the order dated 29.06.2018 passed by the Karnataka Appellate Tribunal at Bengaluru in Appeal No.611/2017 whereby the order of the first respondent dated 02.03.2017 as well the order of the Deputy Commissioner dated 25.06.2016 are confirmed.
2. Petitioner was the holder of license in Form CL-9 engaged in the business of Bar and Restaurant. It is submitted that the Sub-Inspector of Excise, Harihar Range registered a criminal case against the petitioner under FIR No.9/2015-16 on 13.08.2015. Subsequently, the Deputy Commissioner-Excise issued show-cause notice and pursuant to which, the Deputy Commissioner (Revenue) – respondent No.2 cancelled the CL-9 license of the petitioner vide order dated 25.06.2016. Being aggrieved, the petitioner preferred statutory appeal before the Excise Commissioner- respondent No.1, the same came to be dismissed.
3. On further appeal before the Karnataka Appellate Tribunal, the order passed by respondent No.1 dated 02.03.2017 has been confirmed dismissing the appeal. Being aggrieved, the petitioner is before this Court.
4. Learned counsel Sri. G.K.Bhat appearing for the petitioner vehemently submits that the orders impugned suffers from the vice of arbitrariness and is against the provisions of the Karnataka Excise Act, 1965 (the ‘Act’ for short) and the Karnataka Excise (Sale of Indian and Foreign Liquours) Rules, 1967 (the ‘Rules’ for short).
5. It is submitted that the license of the petitioner was cancelled on the basis of three criminal cases registered and FIR filed. The Investigating Officer did not take up further investigation nor any final report has been submitted to the jurisdictional Magistrate in the said cases so as to subject the petitioner for trial. Any penal action resulting in serious consequences has to be followed with enquiry. In the absence of any enquiry conducted by the Deputy Commissioner (Revenue)-respondent No.2, merely canceling the CL-9 license of the petitioner on the recommendation made by respondent No.3 is solely illegal and hit by the principles of natural justice. Inviting the attention of the Court to Sections 29, 36 and 45 of the Act, it was submitted that the maximum punishment would have been imprisonment for three months moreover, the offences were compoundable under Section 45 of the Act, by making the maximum compounding fee of Rs.50,000/-. The harsh decision taken by respondent No.2 approved by respondent No.1 and Karnataka Appellate Tribunal without the supportive evidence is ex-facie illegal. It is argued that the petitioner had explained the discrepancies pointed out by the Inspector of Excise as well as the Deputy Commissioner of Excise in as much as misconduct on the violations of the conditions of the license in his reply, the same not being appreciated in a right perspective, the same has culminated in the orders impugned. The livelihood of the petitioner being affected, it was obligatory on the part of the authorities concerned to verify the genuineness of the allegations made against the petitioner in as much as violations of the conditions of the license. The respondent-authorities having not proceeded with the investigation as required under Section 55 of the Act, no cancellation order under Section 29(1)(b) of the Act would have been passed.
6. Learned Additional Government Advocate appearing for respondents justifying the orders impugned submitted that it is well settled law that carrying on business is not a fundamental right but only a privilege. Certain conditions are stipulated while granting the license in CL-9, the same are explicitly specified in the said license. Condition No.4 of license specifies that the licensee is bound to maintain correct daily accounts of the transactions and submit the report every month to the Excise Officer concerned within first week of the following month. Condition No.5 of the license indicates that the license may be suspended or cancelled in accordance with the provisions of Section 29 of the Act and the licensee or his employee shall be liable for prosecution for breach of any of the conditions of the license, under the provisions of the Act or the Rules and orders there under. It is submitted that the authorities can proceed with two modes of action for violation of the conditions of the license, (1) initiating criminal proceedings (2) proceeding with Section 29 of the Act. Section 29(1)(b) of the Act empowers the Deputy Commissioner (Revenue) to cancel or suspend the license in the event of any breach by the holder thereof or by any of his service or by any one acting on his behalf which is express or implied conditions of any of the terms and conditions thereof. Respondent No.2 invoking Section 29(1)(b) of the Act has cancelled the license after providing reasonable opportunity of hearing to the petitioner by issuing show-cause notice and considering the reply submitted. It is further submitted that no attempts were made by the petitioner to come forward to compound the offences under Section 45 of the Act. Hence, the concurrent findings of the authorities below deserves to be confirmed.
7. I have carefully considered rival submissions of the learned counsel for the parties and perused the material on record.
8. The following offences committed by the petitioner in as much as the violations of the license conditions are detected by the department.
1. Bill book and Inspection book not produced.
2. Not produced Noukar (Servant) Nama.
3. Blueprint of licence not produced 4. Internal alterations to the building were made without approval of the Department.
5. Books of Account not maintained after 07.04.16.
6. Food/Refreshment facility was not provided to the customers along with the liquor.
7. Non-lifting of liquor stock from KSBCL Depot, after March-2016 and non-storing of the liquor required for 7 days.
9. Three cases were registered i.e., crime No.9/2015-16 on 13.08.2015, crime No.20/2015-16 on 29.09.2015 and crime No.76/2015-16 on 14.06.2016 for the aforesaid violations. Pursuant to which, the Deputy Commissioner of Excise has issued two show- cause notices calling upon the petitioner to show cause as to why the case of the petitioner could not be recommended to the Deputy Commissioner (Revenue)- respondent No.2 for suspension/cancellation of the license. For the reasons best known to the petitioner, no reply was submitted to the said notices.
10. However, on the show-cause notice issued by respondent No.2 dated 17.02.2015, reply dated 20.06.2016 was submitted, whereby the allegations made regarding the violations of the conditions of the license has been duly admitted. Nonetheless, a request was made to drop the proceedings initiated against him, taking a sympathetic view considering the petitioner’s pitiable condition. Even in the said reply, no efforts were made by the petitioner to seek for compounding of the offences under Section 45 of the Act.
11. The arguments advanced by the learned counsel for the petitioner that to pass an order under Section 29(1)(b) of the Act, the criminal investigation is mandatory and the FIR submitted by the competent authority has not being persuaded as such no order of cancellation of license could be passed is wholly a misconception.
12. Section 29(1)(b) of the Act reads thus:
29. Power to cancel or suspend licence etc.—(1) Subject to such restrictions as the State Government may prescribe, the authority granting any licence or permit under this Act [shall cancel it],— (b) in the event of any breach by the holder thereof, or by any of his servants or by any one acting on his behalf with his express or implied permission, of any of the terms and conditions thereof; or 13. Chapter-VII of the Act deals with the criminal proceedings. Proceedings initiated under Section 29 of the Act operates in a different field, whereas the proceedings initiated under Chapter-VII would culminate in criminal proceedings. It is for the authorities to choose the mode to take action for violations of conditions of the license. It is true that three FIRs were filed for the offences committed by the petitioner. But the said action would not be an embargo for the authorities to proceed under Section 29(1)(b) of the Act. In other words, initiation of criminal proceedings is not a bar for initiating proceeding under Section 29 of the Act.
14. Learned counsel for the petitioner has strenuously argued that if the petitioner had opted for compounding under Section 45 of the Act, on the acceptance of the same, it would have been deemed acquittal and in no case, any further proceedings would have been taken against the petitioner. The petitioner is required to exercise the option available to him within a reasonable time. Having suffered orders from the authorities as well as the Karnataka Appellate Tribunal, now cannot take a plea that the penal action initiated by the authorities is disproportionate to the offence committed or not in consonance with the action that would have been taken under Chapter-VII or Section 45 of the Act.
15. As regards the arguments, no enquiry is held by respondent No.2, it is apparent that the petitioner himself has admitted all the offences alleged in the reply submitted to the show-cause notice by respondent No.2. Under such circumstances, there was no occasion for the quasi judicial authority to proceed with any enquiry. As such, the said arguments are negated.
16. It was argued that the Deputy Commissioner of Excise has issued a show-cause notice, whereas the order of cancellation was passed by respondent No.2. Even this argument cannot be countenanced for the reason that the show-cause notice was issued by the Deputy Commissioner, Excise calling upon the petitioner to show-cause why recommendation could not be made to respondent No.2 for canceling or suspending the license. Indeed, a show-cause notice was issued by the Deputy Commissioner (Revenue) before passing of the order impugned and the same is already discussed in the preceding paragraphs. The veracity of the proceedings initiated under Section 29(1)(b) of the Act are analyzed by the authorities in extenso and has been confirmed by the Tribunal.
17. The concurrent finding of the authorities and the Tribunal does not call for any interference by this Court.
Accordingly, the writ petition stands dismissed.
Sd/- JUDGE ssb