G. Rajendra Babu v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** ## **THURSDAY, THE 29TH DAY OF AUGUST 2013/7TH BHADRA, 1935** ## **WP(C).No. 19372 of 2013 (V)** **---------------------------------------** ## **PETITIONER:** - **-------------------** **G.RAJENDRA BABU, AGED 64 YEARS, S/O.LATE A.GOVINDAN, PROPRIETOR, BABUJI RESTAURANT, FL-3, NO.07/2013-14, MYTHANAM, VARKKALA, THIRUVANANTHAPURAM DISTRICT.** **BY SMT.SUMATHY DANDAPANI, SENIOR ADVOCATE, ADV. SRI.K.R.RANJITH.** ## **RESPONDENTS:** **------------------------** **1. STATE OF KERALA, REPRESENTED BY COMMISSIONER OF EXCISE, EXCISE COMMISSIONERATE, NANDAVANAM, THIRUVANANTHAPURAM - 695 033.** **2. THE DEPUTY COMMISSIONER, OFFICE OF THE DEPUTY COMMISSIONER, THIRUVANANTHAPURAM DIVISION, THIRUVANANTHAPURAM, PIN CODE - 695 015.** **3. CIRCLE INSPECTOR OF EXCISE, ATTINGAL EXCISE CIRCLE, THIRUVANANTHAPURAM DISTRICT, PIN CODE - 695 101.** **4. KERALA STATE BEVERAGES (M&M) CORPORATION LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SASTHA KRIPA OFFICE COMPLEX, SASTHAMANGALAM, THIRUVANANTHAPURAM - 695 010.** **R1 TO R3 BY SPL. GOVERNMENT PLEADER SRI. SUJITH MATHEW JOSE, R4 BY ADV. SRI.C.S.AJITH PRAKASH,S.C.** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16-08-2013, THE COURT ON 29-08-2013, DELIVERED THE FOLLOWING:** **Prv.** **W.P.(C).NO.19372/2013-V:** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXT.P-1: TRUE COPY OF THE ORDER XC7-20756/13 DATED 31.7.2013 OF THE 1ST RESPONDENT SERVED ON THE PETITIONER ON 1.8.2013.** **EXT.P-2: TRUE COPY OF THE SHOW CAUSE NOTICE DATED 18.7.2013 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.** - **EXT.P-3: TRUE COPY OF THE REPLY DATED 20.7.2013 SENT BY THE PETITIONER TO THE 3RD RESPONDENT.** **EXT.P-4: TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER BEFORE THE CIRCLE INSPECTOR OF EXCISE, ATTINGAL, DATED 20.7.2013.** **EXT.P-5: TRUE COPY OF THE OCCURENCE REPORT DATED 25.7.2013 IN OR NO.42/2013 EXCISE INSPECTOR, EXCISE RANGE OFFICE, VARAKALA.** **EXT.P-6: TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE KERALA BAR HOTELS ASSOCIATION ON 1.8.2013 TO THE EXCISE MINISTER.** - **EXT.P-7: TRUE COPY OF APPLICATION SUBMITTED BY THE PETITIONER UNDER THE RIGHT TO INFORMATION ACT, DTD. 09/08/2013.** - **EXT.P-8: TRUE COPY OF APPLICATION SUBMITTED BY THE PETITIONER UNDER THE RIGHT TO INFORMATION ACT, DTD. 09/08/2013.** - **EXT.P-9: TRUE COPY OF THE REPLY TO EXTS. P7 AND P8, DTD. 12/08/2013.** - **EXT.P-10: TRUE COPY OF THE ENA CERTIFICATE, DTD. 13/05/2013.** - **EXT.P-11: TRUE COPY OF THE CETIFICATE ISSUED FROM CHEMICAL EXAMINER'S LABORATORY DEPARTMENT.** - **EXT.P-11(A): TRUE COPY OF ANALYSIS REPORT DTD. 07/05/2013 ISSUED BY CHEMICAL EXAMINER.** ## **RESPONDENTS' ANNEXURES:** **ANNEXURE R3.A: TRUE COPY OF THE LABEL STATEMENT ISSUED FROM WAREHOUSE, KOTTARAKKARA, IN RESPECT OF THE LIQUOR AVAILED BY THE PETITIONER ON 28/06/2013.** - **ANNEXURE R3.B: TRUE COPY OF THE DAILY STOCK POSITION STATEMENT DTD. 18/07/2013.** - **ANNEXURE R4.A: TRUE COPY OF THE THREE LABEL STATEMENT PREPARED AND ISSUED TO THE PETITIONER ON 28/06/2013.** **ANNEXURE R4.B: TRUE COPY OF THE INVOICE PREPARED BY THE K.S.B.C. ON 29/06/2013.** **//TRUE COPY//** **P.A. TO JUDGE.** **Prv.** ## **P.R. RAMACHANDRA MENON, J. :::::::::::::::::::::::::::::::::::::::::::::::: W.P.(C). No. 19372 of 2013 ...................................................... Dated this the 29[th] day of August, 2013** ## **JUDGMENT** Ext.P1 order passed by the Excise Commissioner, Kerala, suspending the FL-3 license with immediate effect and seeking for explanation from the petitioner with regard to the proposed step to cancel the same, in respect of the alleged offence under the Abkari Act, is under challenge in this writ petition. 2. The petitioner is running a restaurant under the name and style as “Babuji Restaurant” which was started by the deceased father of the petitioner in the year 1971. On satisfying the relevant requirements, FL - 3 license was issued in the month of March, 1985 and for the past three decades, the business was being conducted without any complaint from any corner. On 17.07.2013, the 3[rd] respondent and party conducted an inspection at the petitioner's premises and on verification of the liquor store room, nine bottles of 'CONTESSA XXX RUM' (BR.No.74, B.No.114 MFD May, 2013) of one litre each were seen kept there, without affixing 'Hologram Stickers'. The 3[rd] respondent freezed the items and kept the same in Room No. 8 of the petitioner's Bar hotel and the room was kept sealed. The W.P.C. No. 19372 of 2013 -2- matter was reported to the 2[nd] respondent, who directed to take legal action against the Licensee, if the seized articles were found to be 'illicit liquor', after conducting proper enquiry at FL 9 warehouse, Kottarakkara. 3. In the course of further proceedings, it was found that the seized bottles were not included in the permit and label statement dated 29.06.2013 (the date of alleged purchase). On meeting the Manager and Godown-in-charge of the FL 9 Warehouse at Kottarakkara, a statement was given; as per which it was informed that, there was no variation in the stock of 'CONTESSA XXX RUM' and 'Security Labels' and that liquor without Hologram Stickers were not supplied from the said depot. Accordingly, a case was registered on 25.07.2013 against the Licensee and the Manager; but no one was arrested, as they were not present while detecting the case. After registering O.R. No.42/2013 under Section 58 of the Abkari Act, the 'Thondy' articles were handed over to the Excise Range Office, Varkkala. This made the Commissioner to suspend the FL-3 license as per Ext.P1 order dated 31.07.2013 and the petitioner was required to show cause, why the license should not be cancelled under the Abkari Act. 4. On issuance of Ext.P2 notice by the 3[rd] respondent W.P.C. No. 19372 of 2013 -3(signed on 18.07.2013) seeking for explanation as to the circumstance under which the seized bottles came to be stored in the premises, the petitioner submitted Ext.P4 explanation dated 20.07.2013 pointing out that he had purchased only 'CONTESSA WHITE RUM' from the 4[th] respondent Warehouse and that the mistake might be due to the lapse on the part of the loading/unloading employees of the 4[th] respondent. The petitioner also filed Ext.P3 representation dated 20.07.2013 before the 4[th] respondent referring to the purchase of 15 cases of one litre 'CONTESSA WHITE RUM' as per invoice No.873 dated 29.06.2013 and pointing out that the 'CONTESSA XXX RUM' might have been despatched by some mistake; in turn seeking for permission to sell the 'CONTESSA XXX RUM'. It is seen that, Ext.P5 report was filed by the 3[rd] respondent before the concerned Judicial First Class Magistrate's Court in respect of OR.No.42/2013 of the Varkkala Range as to the offence under Section 58 of the Kerala Abkari Act. Since Ext.P6 representation preferred by the petitioner on 01.08.2013 before the Minister for Excise, with copy to the 3[rd] respondent, did not turn to be fruitful, the petitioner has approached this Court by way of this writ petition. 5. During the pendency of the proceedings, the petitioner W.P.C. No. 19372 of 2013 -4- has filed different I.As producing additional documents and also seeking for some directions. A statement has been filed on behalf of the 3[rd] respondent asserting that the seized articles were never supplied from the godown of the 4[th] respondent and that the seized nine bottles of 'CONTESSA XXX RUM' (1 litre capacity) were not included in the 'permit' and 'label statement' dated 29.06.2013 issued from the FL 9 Warehouse, Kottarakkara. The said bottles were also not included in the 'Stock Register' maintained in the Bar hotel. It is stated that, the detailed inspection conducted, did not show any variation in the stock of 'CONTESSA XXX RUM' and 'Security Labels' and no liquor without Hologram Stickers were ever delivered from the 4[th] respondent Warehouse, as borne by Annexure R3(a). A copy of the daily stock position dated 18.07.2013 has also been produced as Ext.R3(b). It is stated that, by virtue of the data collected, it has to be inferred that the petitioner procured 'CONTESSA XXX RUM' by illicit means. 6. A statement has been filed on behalf of the 4[th] respondent as well, pointing out that the plea of mistaken despatch by the 4[th] respondent is without any truth or bonafides. The procedure, as to how the labels are handed over to the labelling workers has been explained, adding that, as per records W.P.C. No. 19372 of 2013 -5- maintained by the 4[th] respondent, 'CONTESSA XXX RUM' was not supplied to the petitioner. A copy of the 'Label Statement' issued to the petitioner on 29.06.2013 is produced as Annexure R4(a) and a copy of the invoice prepared by the 4[th] respondent on 29.06.2013, is produced as Ext.R4(b). It has been pointed out by the 4[th] respondent that, neither was there any excess No: of Security Labels, nor was there any instance of supply of liquor without affixing the Security Label/Hologram. It is further stated that, the items supplied on 29.06.2013 very much tally with the records. 7. A memo dated 13.08.2013 has been filed by the learned Government Pleader to accept a copy of the letter No. KSBC/KTR/2013-14/333 dated 9.8.2013 issued by the 4[th] respondent, who certifies that, the 'CONTESSA XXX RUM' having B.No.114, B.R.No. 74 procured from Paulson Distilleries, Chalakkudy on 15.05.2013 was stocked as per GRS No.333 and that the entire items in the said Batch No.114, B.R.No.74 available in stock was sold/disposed of by 27.05.2013 and that, no such item with the said Batch number had ever been brought to the godown thereafter. 8. Smt. Sumathi Dandapani, learned Senior Counsel appearing for the petitioner submits that, Ext.P1 order W.P.C. No. 19372 of 2013 -6- suspending the FL 3 license of the petitioner is per se wrong and illegal in all respects. It is stated that, the mistake committed by the loading/unloading workers of the 4[th] respondent (who are stated as mostly 'daily rated' employees) cannot be shifted to the shoulders of the petitioner and adds that, the business being conducted by the petitioner for the past several decades is without any complaint. It is pointed out that, the license ought not to have been suspended with reference to the 'excess stock' of 'nine bottles' of 'CONTESSA XXX RUM'. The learned counsel further submits that, no offence under Section 58 of the Abkari Act will lie against the petitioner and that, if at all there is any offence in respect of the alleged excess quantity, it could only be under Section 56 (b) of the said Act, more so, in view of the law declared by this Court as per the judgment reported in **Jith and Others** v. **State of Kerala (2013 (3) KHC 138)** . It is contended that, the suspension of FL 3 license is not automatic/mandatory in all the cases, as made clear by this Court as per the judgment reported in **Banerji Memorial Club, Thrissur v. Deputy Commissioner of Excise, Thrissur and Others (2009 (3) KHC 623** ). The defective nature of the course and proceedings is sought to be highlighted with reference to the judgment rendered by this Court in **Balan v. State of** W.P.C. No. 19372 of 2013 -7- **Kerala (2006 KHC 1377)** as well. The learned counsel further submits that, to attract the offence under Section 58 of the Abkari Act, the liquor has to be 'illicit liquor', which is not the position in the instant case. 9. Heard the learned Special Government Pleader appearing for respondents 1 to 3, as well as the learned Standing Counsel for the 4[th] respondent. 10. As mentioned hereinbefore, there is no dispute with reference to the inspection held on 17.07.2013 and the incriminating circumstance leading to the seizure of nine bottles of 'CONTESSA XXX RUM' on 25.07.2013. The case moulded by the petitioner is with the plea that, the petitioner had placed indent for supply of the requisite quantity of 'CONTESSA WHITE RUM' and instead of supplying the full quantity as above, the loading/unloading workers of the 4[th] respondent, by mistake, despatched 'CONTESSA XXX RUM' to the above extent. Eventhough, the seized nine bottles did not contain the 'Hologram', it could have been the mistake committed by the labelling workers, for which the petitioner cannot be found fault with, more so, when the relevant Batch number (B.No. 114, B.R.No.74) was clearly shown on the labels and it was for the concerned authorities to have ascertained the factual particulars W.P.C. No. 19372 of 2013 -8- with reference to the data from the source of supply and such other relevant aspects, before proceeding with further steps against the petitioner. 11. The factual particulars as to the stock position and the procedure involving different stages from the submission of application, to the stage of despatch of the indented items and unloading them in the presence of Excise Officials and the Licensee have been explained in Paragraphs 6 and 7 of the statement of the 3[rd] respondent; which are extracted below: “6) They informed that there is no variation in the stock of CONTESSA XXX RUM (1 litre capacity) and security labels and they have not delivered any liquor without hologram stickers from there. The liquor purchased from the KSBC should contain the hologram stickers with serial numbers pasted on the bottles caps. True copy of the label statement issued from Warehouse, Kottarakkara, in respect of the liquor availed by the petitioner on 28.06.2013, is produced as Annexure R3(a). It can be seen that the petitioner had lifted 15 cases of CONTESSA WHITE RUM. It is also submitted that pursuant to the enquiry conducted the daily stock position statement from FL-9, Kottarakkara available on 18.07.2013 was taken. True copy of the daily stock position statement dated 18.07.2013 is produced as Annexure R3(b). As on date the stock position of CONTESSA WHITE RUM W.P.C. No. 19372 of 2013 -9- is 253 cases and two bottles and that of CONTESSA XXX RUM is 458 cases and 5 bottles. Physical verification conducted with reference to the above stock statement showed that the stock statement particulars were correct. Therefore, it is evident that none of the cases or bottles of CONTESSA XXX RUM has been passed on to the petitioner by mistake. Therefore, it has to be inferred that the petitioner had obtained CONTESSA XXX RUM by illicit means. 7) It is submitted that in order to purchase IMFL from FL9 warehouse, the licensed shop puts up an application to the Manager and the Manager prepares an indent of liquor as per the availability of items. On the basis of the indent, the cost of liquor, Sales Tax, VAT etc are remitted to the Head of Account of KSBC. After the remittance, they produce the receipt before the Manager, KSBC. Therefore, the KSBC authorities issue hologram security stickers as per the indent allotted to the shop. Meanwhile, the concerned shop puts up an application before the Circle Inspector of Excise of that Warehouse, for permit on the basis of the indent they received. The godown in charge of the Warehouse entrust the labeling employees to stick the security labels on the bottle caps issued to the shop under his supervision. Then there will not arise any variation in the liquor cases allotted to one shop. On completing all the formalities at the godown, the said liquor is loaded to the vehicle under the supervision of Godown-in charge, Helper W.P.C. No. 19372 of 2013 -10- and Security Guards of the Warehouse and also in the observation and satisfaction of the employees of the licensee. When the vehicle reaches at the licensed premises, the licensee informs the concerned Excise Circle Office and Excise Range Office before unloading the liquor cases. One Excise personnel will supervise while unloading the liquor in the presence of the employee of the licensee who will notice any variation occurred in the purchased loads. So there is no chance to excess and shortage of liquor cases purchased by the licensee.” 12. It has been asserted by the 3[rd] respondent that, the enquiry made in this regard revealed that the petitioner had not lifted any 'CONTESSA XXX RUM' from the 4[th] respondent for the ' ' past one year , and this aspect is virtually conceded from the part of the petitioner as well. It is pointed out that, the petitioner has violated the licensing condition; namely condition No.1A and No.10 and that the Excise Commissioner is the competent authority to cancel or suspend the license. The case registered by the competent authority necessitating suspension of FL 3 license vide Ext.P1 and the requirement to proceed against the petitioner in respect of the grave offence under Section 58 have been highlighted. 13. Similarly, the procedure as to the issuance of the W.P.C. No. 19372 of 2013 -11- 'Hologram Labels' and lifting of the items from the godown has been explained in paragraphs 3 and 4 of the statement filed by the 4[th] respondent; which are reproduced below: “3) It is submitted that the method by which the labels are handed over to labeling workers is as follows. The security labels supplied to the FL-9 warehouse from the head office are kept in the safe custody of the Manager, Warehouse. On the basis of the order placed by the licensee with the electronic data processing section, an indent will be prepared and chelan will be issued to the licensee for remitting the cash. Upon remitting the charge the section will generate dummy label statement. The dummy label statement thus prepared will be handed over to the labeling section. The statement will contain the names of different brands and the number of cases ordered with particulars about the volume. The Manager will hand over a bundle of roll of security labels (hologram stickers) to labeling-in-charge, who is a permanent staff of KSBC. The labeling-in-charge will supply the security labels based on the dummy label statement to the labeling workers with due acknowledgment of the same. The actual label affixing work in this particular FL-9 godown is being carried out by labeling workers on deputation. The work will be supervised by the labeling charge and the labeling assistant. At the time of taking delivery the original invoice and label statement will be prepared by the computer section and a copy of the same will be issued to the licensee, Excise Officials concerned and a copy will be maintained in the W.P.C. No. 19372 of 2013 -12- warehouse. 4) It is the case of the petitioner that, he lifted some items of liquor on 29.06.2013 from the FL-9 godown and the questioned bottles are one of the item wrongly supplied from the Warehouse. As per the records maintained in the KSBC, there is no supply of Contessa XXX Rum to the petitioner. A true copy of the three label statement prepared and issued to the petitioner on 28.06.2013 is produced herewith and marked as Annexure R4(a). A true copy of the invoice prepared by the KSBC on 29.6.2013 is produced herewith and marked as Annexure R4(b). Going by Annexure R4(a) and R4(b) it is evident that there is no supply of Contessa XXX Rum to the petitioner as alleged.” It is stated that, as per the 'Label Statement' prepared and maintained by the 4[th] respondent, there is no excess number of ' 'Security Labels' and it is asserted that, no liquor was ever issued to the petitioner without affixing 'Security Label'. The quantity and items supplied on 29.06.2013 to the petitioner have been clearly mentioned in the 'Label Statement' and Invoice produced and they are stated as tallying with each other. 14. The communication bearing No.KSBC/KTR/201314/333 dated 9.8.2013 issued by the 4[th] respondent shows that, B.No.114, B.R.No.74 of 'CONTESSA XXX RUM' (1000 ml, 100 cases) was procured and brought to the godown of the 4[th] W.P.C. No. 19372 of 2013 -13respondent from 'Paulson Distilleries, Chalakkudy' and it was stocked on 15.05.2013 as per GRS No.333. It is also stated that the entire stock of 'CONTESSA XXX RUM' pertaining to the said Batch No. 144, B.R.No.74 were sold out on 27.5.2013 and after that date, no liquor pertaining to the said Batch was ever brought or unloaded in the godown. If this be the correct position, it has to be reasonably presumed that, there was absolutely no chance for the labelling workers or loading/unloading workers of the 4[th] respondent to have despatched nine bottles of 'CONTESSA XXX RUM' of 1000 ml each pertaining to B.No.114, B.R.No.74, pursuant to the indent placed on 28.06.2013; which however is a matter to be verified and established with reference to the relevant records. 15. The Correctness of the version put forth by the petitioner has to be considered, analysed and appreciated in the above background. This is more so, in view of the detailed/systematic procedure as to the submission of the application, placing the indent, issuance of hologram labels, affixture of the same on the bottles by the labelling workers in presence and supervision of the labelling assistant (employee of the 4[th] respondent) and the remote chances for such a mistake to have occurred. However, this Court does not intend to express W.P.C. No. 19372 of 2013 -14- any opinion in this regard, as the matter has to be considered and adjudicated by the competent authority at the first instance. 16. It is true, that suspension of FL 3 license is not automatic and suspension need not be there in all cases involving violation of Section 26(b) of the Abkari Act, as made clear by this Court in **Banerji Memorial Club, Thrissur v. Deputy Commissioner of Excise, Thrissur and Others (2009 (3) KHC 623).** This of course depends on the facts and circumstances of each case and the gravity of the offence involved. In the case cited supra, suspension was with reference to the 'disputed ownership of property', pending adjudication, which was held as not a good ground to suspend the license. Whereas, in the instant case, it is with reference to the seizure of nine bottles of 'CONTESSA XXX RUM' without any 'Hologram Stickers'. There is a disputed question of fact, with regard to the concerned 'Batch number' supplied and according to the respondents, no bottle of 'CONTESSA XXX RUM' was available on 28.06.2013 to have effected any supply to the petitioner, even by mistake, as the entire stock obtained from the concerned distillery on 15.05.2013 was sold out by 27.5.2013. The case registered against the petitioner invoking 'Section 58' of the Abkari Act is stated as under challenge by way of other W.P.C. No. 19372 of 2013 -15- appropriate proceedings and as such, this Court does not find it proper to consider the correctness or sustainability of this aspect. It also remains a fact that, the license of the petitioner has been suspended from 31.7.2013 as per Ext.P1 and that the petitioner is made to incur huge loss. This Court finds that the matter requires to be finalized by the Commissioner of Excise after considering the explanation offered from the part of the petitioner. 17. In the said circumstance, the petitioner is permitted to file a detailed explanation, if any, in response to Ext.P1 forthwith, if not filed already, on receipt of which the matter shall be considered and appropriate orders shall be passed by the Commissioner of Excise, in accordance with law, after hearing the petitioner, at the earliest, at any rate, within 'two weeks' thereafter. Writ petition is disposed of. ## **P.R. RAMACHANDRA MENON, JUDGE.** kp/-