Court No. - 7
Case :- WRIT TAX No. - 919 of 2018 Petitioner :- Veena Chauhan Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Abhishek Sharma,Abhishek Sharma,Neeraj Sharma Counsel for Respondent :- C.S.C.,S.C.
Hon'ble Saumitra Dayal Singh,J.
1. Heard learned counsel for the parties.
2. Challenge has been laid to the order passed by the State Government dated 27.04.2018, rejecting the revision application of the petitioner arising from the order dated 11.10.2017 passed by the Appellate Authority rejecting the appeal filed by the petitioner against issuance of the recovery certificate/citation dated 23.02.2017. The recovery certificate/citation dated 23.02.2017 had been issued with respect to certain recoveries claimed from the petitioner towards excise dues for a country liquor shop set up by the petitioner at Jaithra Pachim, Tehsil-Sadar, District-Etah.
3. Briefly, the facts giving rise to the present petition are that upon petitioner's submitting the application for settlement of country liquor shop at Jaithra Pachim, Tehsil-Sadar, District- Etah, an allotment appears to have arisen on 02.04.2002 in her favour. While petitioner claims to have been given physical possession of the shop on 20.04.2002, it is her case, she deposited basic license fee Rs. 3,60,000/- within 3 days from the allotment but did not deposit the entire security amount Rs. 2,95,000/- within the next 20 days as contemplated under Rules 12 of the Uttar Pradesh Excise (Settlement of Licenses for Retail Sale of Country Liquor) Rules, 2002 (hereinafter referred to as the 'Rules'). She claims to have deposited Rs. 1,00,000/- only on 27.07.2002.
4. Later, it has been claimed, since the business was not profitable to the petitioner, she did not run the same and therefore did not deposit the balance security money. As a consequence of such stand being taken by her, it has been further submitted the temporary license that existed to allow her to run that vend came to an end, by operation of law in view of the provisions of Rule 12 of the Rules. For ready reference the provisions of Rule 12 of the Rules, are quoted below:
"12. Payment of basic license fee and security amount -- In case an applicant is selected as licensee, he shall deposit the entire amount of basic license 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 license fee or security amount within prescribed period, his selection shall stand cancelled and his earnest money and the basic license fee and security amount if deposited by him shall be forfeited in favour of the State Government and the said shop shall be resettled forthwith."
5. Learned counsel for the petitioner thus submits that the consequence of non-payment of security money was automatic and mandatory. Resultantly, the temporary license being worked by the petitioner came to an end and in absence of any license having been issued to her, she could not be visited with the consequences that would arise only if and after such license had been issued.
6. Referring to the provisions of Rule 12 of the Rules, it has been submitted, there is no option with the authorities except to accept the license of the allottee in the event of non-compliance of conditions regarding payment of license fee (security money etc.). Therefore, it has been submitted no license having been issued to the petitioner, there never existed any privity of contract between the parties as may give rise to a claim for recoveries being made from the petitioner. At most, the State would be entitled to forfeit the amounts already deposited by the petitioner.
7. In this regard, reliance has been placed on a decision of learned Single Judge of this Court passed in Civil Misc. Writ Petition No. 1226 of 2007 (Rajeev Kumar Vs. State of U.P. & Others) decided on 05.09.2013 as has also been followed by another learned Single Judge in Writ Tax No. 32 of 2017 (Omveer Singh Vs. State of U.P. & 3 Others) decided on 23.10.2018.
8. Learned Standing Counsel on the other hand submits, once it is admitted to the petitioner that she had made an application for allotment and further she had been allotted the shop which was also run by her for sometime against deposit of basic license fee and also part security money, privity of contract had arisen between the parties and the petitioner would remain bound by the terms of the license that had to be issued.
9. Reliance has been placed on a decision of the Supreme Court in the case of Har Shankar and Others Vs. The Deputy Excise and Taxation Commissioner and Others reported in 1975 (1) SCC 737.
10. Having heard learned counsel for the parties and having perused the record, in the first place, reliance may not be placed on the decision of the Supreme Court inasmuch as that decision had arisen in absence of the Rules. While it does appear to lay down the law that upon acceptance of the bid, there came into existence a concluded and binding agreement, however, in that case, it was never an issue as to how that contract may be impacted and consequences that may follow upon non-payment of certain amounts by the bidder before issuance of the licence.
11. In this regard, Rule 12 of the Rules specifically provides, in the event of failure to deposit either the basic license fee or the security amount within the prescribed period, the selection of the allottee shall stand cancelled and his earnest money and basic license fee and the security amount if deposited shall be forfeited in favour of the State and the shop in question shall be resettled forthwith.
12. In view of such statutory intervention made by the Rules, the rights of the parties cannot be held to be governed solely by event of acceptance of the bid. In view of the clear provision of the Rules that such contract would stand repudiated inasmuch as the Rule provides that the selection itself shall stand cancelled it is difficult to sustain the objection raised by learned Standing Counsel.
13. Further, provisions in the Rule provide for forfeiture clause as also proceedings to resettle the shop without visiting the original allottee with any further consequences makes it plain that the consequences of the allotment had to be confined to the extent provided by the Rules. The general principle governing such contracts as laid down by the Supreme Court, therefore, stands interdicted by the new statutory Rule.
14. Then, specific to the Rule in question, the earlier decisions of the learned Single Judge relied upon by the learned counsel for the petitioner do appear to support the case of the petitioner inasmuch as in the case of Rajeev Kumar Vs. State of U.P. & Others, it was held as below:
"In the opinion of the Court since the selection of a candidate stands cancelled under Rule 10(c) read with Rule 12 for non-deposit of the licence fee and the security money, the question of grant of licence and surrender thereof does not arise. Surrender/cancellation of licence is a stage subsequent to the deposit of money as per Rule 12. It is worthwhile to notice that Rules 10(c) and 12 talk of cancellation of selection, while Rule 21 talks of cancellation of licence. Therefore, the Rules, 2002 themselves make a distinction between cancellation of selection for non- deposit of the requisite basic licence fee , security and the cancellation/surrender of licence of a person who has been granted licence after deposit of the said amount."
15. Similar findings had been reached by another learned Single Judge in the case of Omveer Singh Vs. State of U.P. & 3 Others.
16. Consequently, the present writ petition is allowed. The impugned order dated 27.04.2018 passed by the respondent no.1, impugned appellate order dated 11.10.2017 & impugned recovery certificate/citation dated 23.02.2017 are quashed. No order as to costs.
17. The amount deposited in terms of the interim order (excluding the forfeited amount), may be refunded to the petitioner within a period of three months from today.
Order Date :- 28.11.2018 Abhilash