Hotel Neelambari Suites v State of Kerala and others (WA Nos.1690 & 1325 of 2022)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944 WA NO. 1690 OF 2022** **AGAINST THE JUDGMENT IN WP(C) 24892/2022 DATED 03.08.2022 OF** **HIGH COURT OF KERALA** ## **APPELLANTS/RESPONDENTS IN W.P.(C):** 1 STATE OF KERALA REPRESENTED BY THE SECRETARY TAXES (A) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001 2 THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS,NANDAVANAM,THIRUVANANTHAPURAM, PIN - 695033 3 THE DEPUTY COMMISSIONER OF EXCISE, EXCISE DIVISION OFFICE, KACHERIPADY, ERNAKULAM, PIN - 682018 4 THE CIRCLE INSPECTOR OF EXCISE THANGALAM JUNCTION, KOTHAMANGALAM, ERNAKULAM DISTRICT, PIN - 686691 BY SRI.SREEJITH V.S., GOVERNMENT PLEADER ## **RESPONDENT/PETITIONER IN W.P.(C):** M/S HOTEL NEELAMBARI SUITES VILLANCHIRA, NERIAMANGALAM, KOTHAMANGALAM, ERNAKULAM DISTRICT REPRESENTED BY ITS MANAGING PARTNER P.G. SUBRAMANIAN, AGED 61 YEARS, S/O P.E. GANGADHARAN (LATE), PIN - 686691 BY ADV M.G.KARTHIKEYAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.12.2022, ALONG WITH WA.1325/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.Nos.1690 & 1325 of 2022 2 **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA,** **1944** **WA NO. 1325 OF 2022** **AGAINST THE JUDGMENT IN WP(C) 24892/2022 DATED 03.08.2022** ## **OF HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** M/S.HOTEL NEELAMBARI SUITES VILLANCHIRA, NERIAMANGALAM, KOTHAMANGALAM, ERNAKULAM DISTRICT REPRESENTED BY ITS MANAGING PARTNER, P.G.SUBRAMANIAN, AGED 61 YEARS, S/O.P.E.GANGADHARAN (LATE). BY ADVS.M.G.KARTHIKEYAN NIREESH MATHEW ## **RESPONDENTS/RESPONDENTS:** 1 STATE OF KERALA, REP. BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695 001. 2 THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS, NANDAVANAM, THIRUVANANTHAPURAM-695 033. 3 THE DEPUTY COMMISSIONER OF EXCISE, EXCISE DIVISION OFFICE, KACHERIPADY, ERNAKULAM, PIN682018. 4 THE CIRCLE INSPECTOR OF EXCISE, THANGALAM JUNCTION, KOTHAMANGALAM, ERNAKULAM DISTRICT, PIN-686691. BY SRI. SREEJITH V.S., GP THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.12.2022, ALONG WITH WA.1690/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.Nos.1690 & 1325 of 2022 3 **K.VINOD CHANDRAN & C.JAYACHANDRAN, JJ. ========================= W.A.Nos.1690 & 1325 of 2022 =========================** Dated this the 12[th] day of December, 2022 ## **JUDGMENT** ## **K.VINOD CHANDRAN, J.** The appeals are filed by the State and a three star hotel, who was the petitioner before the writ court. The writ petitioner challenged Exts.P7 and P10 orders in the writ petition and also claimed renewal of its license for the year 2022-23. The learned Single Judge granted only the last prayer of renewal, despite the proviso that, if a bar hotel remains defunct for more than 10 months during the period of validity of license or after expiry of the license period, it shall not be renewed. The State is concerned with the renewal, which was in violation of the proviso. The writ petitionerhotel is aggrieved by the non consideration of the challenge against Exts.P7 and P10 orders. 2. The learned Counsel appearing for the writ petitioner, Sri. M.G. Karthikeyan, places reliance on Ext.P12 judgment in _Chitra v._ W.A.Nos.1690 & 1325 of 2022 4 _State of Kerala 2015 (3) KLT 956 (SC)_ by which the Hon’ble Supreme Court declared the right to seek for remission, if there was any manner of interdiction to conduct the bar, during the validity period of license, for extraneous reasons not attributable to the licensee. The learned Counsel would vehemently contend that the license could not be renewed due to the pandemic situation and there was an embargo in renewing the license. When such embargo was lifted, the applicant had filed an application for renewal of license in December 2020; when the proviso; dis-entitling defunct bar hotels from seeking renewal, was amended, enhancing the period incurring such dis-entitlement, from six months to ten months; in January 2021. The writ petitioner applied for a license and paid entire license fee, allegedly under protest. The bar was operated on the strength of the license granted for two months in the financial year 2020-2021. 3. In the subsequent financial year 2021-22, no application was filed, since there was uncertainty due to the pandemic situation having not subsided fully. But many others applied and obtained licenses and commenced operation of bars in their hotels. Yet again, there was an embargo for two months in 2021-2022 and when the W.A.Nos.1690 & 1325 of 2022 5 same was lifted, the writ petitioner made a fresh application and remission was sought, for the previous year's license fee. This Court was approached and pursuant to directions issued by this Court, a consideration was made and the prayer for remission was rejected as per Ext.P7. Again, the writ petitioner applied for renewal for the current year, 2022-23, which was refused to be considered, banking on the proviso. The writ petitioner approached this Court and there was an interim direction issued pursuant to which a consideration was made and the prayer rejected by Ext.P10. An amendment was sought in the writ petition pending, which was not allowed by the learned Single Judge. The writ petition also stood dismissed, against which a writ appeal was filed. The writ appeal was disposed of, by Ext.P11 judgment, permitting the writ petitioner to withdraw the writ petition and file a fresh writ petition making a comprehensive challenge to the orders. The instant writ petition was one which was filed challenging Exts.P7 and P10 orders, also seeking fresh license for the current year. 4. The learned Government Pleader Sri.Sreejith V.S. would argue that there is no question of a remission being granted, since for the year 2020-21, the licensee with open eyes sought for renewal W.A.Nos.1690 & 1325 of 2022 6 only in January. The payment of the entire licence fee, as per the statutory mandate, was on the volition of the licensee, with open eyes. Ext.P7, hence, cannot be interfered with. As far as Ext.P10 is concerned, the proviso kicks in, for reason of the applicant having not renewed the license for the year 2021-22, by not applying for a renewal. The learned Single Judge failed to see the proviso and took note of extraneous factors in allowing the writ petition; quite contrary to the facts arising in _**Chitra**_ (supra). It is also argued that the writ petitioner could any time apply for a fresh license which would be considered within a month. 5. We have to note the essential facts, to dispose of the above writ appeals. A three star hotel admittedly obtained FL-3 license under the Foreign Liquor Rules, for the year 2019-20, which stood issued in August, 2019, and was valid till 31.3.2020. On 24.3.2020, there was a national lock down declared which was lifted in the month of May. The writ petitioner did not apply for license during the year 2020-21, at its commencement, since the pandemic situation had not subsided. Even after the lock down was lifted, the embargo in conducting bar hotels continued in the State, which embargo stood lifted only on 21.12.2020. Then, the proviso which ## W.A.Nos.1690 & 1325 of 2022 7 dis-entitled renewal of license of bar hotels remaining defunct for more than six months, stood against the writ petitioner's bar license being renewed. But, by G.O.(P).No.2/21/TD published in the Gazette as S.R.O.22/21 with effect from 08.01.2021, the proviso was amended increasing the six month period to 10 months. The writ petitioner applied for renewal and obtained license fee for the financial year 2020-21, paying the full fees; but applicable only for the last two months in that year, since the license was issued only on 31.01.2021. This, as argued by the State, was on the writ petitioner's own volition. 6. The writ petitioner thus applied for and got a license in the year 2020-21, which was issued only on 31.01.2021. The writ petitioner carried on the bar hotel for two months, i.e., in February and March 2021 after paying the full fees voluntarily; the protest claimed, was not substantiated before us. The license stood expired on 31.03.2021 and since the pandemic situation continued, the writ petitioner did not make further application for renewal of license for the period 2021-22. As anticipated, again, there was an embargo in conducting bar hotels on 24.04.2021, which continued up to 14.06.2021. The said embargo having been lifted, the W.A.Nos.1690 & 1325 of 2022 8 Government also came out with Ext.P16(a), which granted remission for the license fee paid for the period between 24.04.2021 to 14.06.2021. The writ petitioner then applied for license on 02.07.2021, asking for renewal of the earlier license and also for the remission of license fee for the period 2020-21, in which the hotel paid the entire license fee to carry on the bar, only for two months. The request essentially was to adjust the 10 month's license fee paid for 2020-21 for the renewal of the license in the year 2021-22. This was declined by Ext.P7. 7. We are of the opinion that, in Ext.P7, the prayer for remission was rightly declined. For the year 2020-21, admittedly, there was an embargo till December, from the commencement of the financial year and the writ petitioner could not have been faulted for not making the application for renewal of license during the lock down period, for the subsequent financial year, when the embargo continued. However, when the embargo was lifted and the restrictive period in the proviso to Rule 13 stood increased, the writ petitioner, with open eyes applied for license in the month of January, though there was little time left in the financial year. The writ petitioner very much aware of Rule 14 of the Foreign Liquor W.A.Nos.1690 & 1325 of 2022 9 Rules, which required Rule 13 licensees to pay the full annual fee, even if the license is granted in the course of the financial year, paid it with open eyes; which license would expire at the end of the financial year. We do not think that the facts in _Chithra_ (supra) arise herein or the dictum applies. 8. _Chitra_ [supra] considered two appeals, which had distinctive facts, but both were granted the benefit of refund, for the period in which the license could not be operated. In the first case, though the Bar hotel had applied and obtained a license for the year 1990-1991, for reason only of an injunction issued by a Munsiff's Court, the Excise Commissioner was restrained from issuing the said license. The license was eventually granted only for the period 21.12.1999 to 31.03.2000, after the injunction stood vacated. It was held that the licensee was entitled to seek remission of license fee, to the extent it was ' _precluded from transacting business on the strength of that license' (sic)_ for reasons extraneous to itself. Likewise in the other appeal, the license expired on 31.03.2001 and a renewal could not be applied for the next year, ie:2001-2002, for reason of a dispute with the landlord, forcing the hotel to vacate the premises. Even then, an application was filed on 26.02.2002 for renewal in that W.A.Nos.1690 & 1325 of 2022 10 succeeding year of 2001-2002 itself. The Excise Commissioner rejected the application for renewal on 04.09.2002, citing the proviso, which dis-entitle any licensee, whose bar had been defunct for six months (as it stood then) during the currency of a license or after the last license expired; from claiming a renewal. In a writ appeal filed the Division bench held that, for the year 2001-2002, there were extraneous reasons for the bar hotel becoming defunct and the licensee cannot be faulted for the same. However, despite the appellant having the benefit of conducting the Bar, in the hotel for less than a fortnight in the year 2002-2003, the appellant had to pay the full licence fee by reason of Rule 14. The Hon'ble Supreme Court found that in that case, the application filed for the year 2001-2002 was rejected on 04.09.2002, citing the proviso under R.13. If that had not been occasioned and the application stood allowed, before the close of the year, then the licensee would have had the liability to pay the full annual fee as per R.14. When the application stood declined in the year and renewal was only by virtue of an interim order by the High Court, coupled with the fact of discontinuation having occurred for reason of vacation of the premises, there existed extraneous reasons not attributable to the W.A.Nos.1690 & 1325 of 2022 11 licensee. The licensee was found entitled to remission of fees for the period they were disabled from operating the license. 9. The Hon’ble Supreme Court on such distinctive facts held that: _“We hold that a party is entitled to seek a remission in the payment of licence fee if it is precluded from transacting business on the strength of that licence because of factors and reasons extraneous to it and or if it is granted, the licence on the direction of a Court for only a portion of the financial year.”_ ## _[underlining by us for emphasis]_ The Hon’ble Supreme Court, in the concluding portion of the judgment, noticed that a licensee could not have refused to accept the renewal in the course of the year, even if the renewal is for a minimal period, in which circumstance the rigor of the proviso to Rule 13 applies squarely and the liability under Rule 14 is attracted. What is pertinently vivid is that, the dictum in _Chitra_ (supra) applies only when the the licensee, despite possessing a license, could not carry on the bar in the hotel due to a third party intervention or for extraneous reasons not attributable to the licensee. No such facts arise in the present case. W.A.Nos.1690 & 1325 of 2022 12 10. In the present case, the writ petitioner had a license for the year 2019-20, after expiry of which, the licensee did not make an application for renewal in the subsequent year, 2020-21 because of the pandemic situation which resulted in a lock down commencing from the end of the previous year. There was a further embargo even after the expiry of the lock down. The licensee applied for renewal, after the embargo, in the fag end of the year, 2021, paid the entire licence fee for the whole year and conducted the bar for two months; a purely voluntarily decision. The application for renewal, as we saw, was made only when the embargo was lifted in December, 2020 and with open eyes, the entire amounts were paid, which also is a statutory mandate. The writ petitioner cannot seek for a remission of the license fee for the period prior to his application in the financial year 2020-2021, for which period he had not applied for renewal of license at the inception. 11. The Hon'ble Supreme Court had in _Chitra_ (supra) dealt with a case where the operation of the bar was interdicted during the validity period of a license, for third party intervention or extraneous reasons not attributable to the licensee. As far as the second case considered in _Chitra_ (supra) the authority declined the W.A.Nos.1690 & 1325 of 2022 13 renewal citing the proviso to Rule 13 and the renewal was only by virtue of the orders of this Court, which enabled the licensee to operate the bar only for a short period in that financial year. Neither of these grounds arise in the instant case, since the writ petitioner voluntarily did not apply for renewal at the commencement of the year 2020-21, while others did. The writ petitioner also did not apply for a license in the year, 2021-22, at its commencement. Since he had not applied for a license, he did not have a valid license during the period of the embargo in 2021-22. The two month remission between 24.4.2021 to 14.6.2021 does not visit the writ petitioner with any benefit. The further application made in July 2021, again with full knowledge of Rule 14 and the limited period available then, was rejected since the applicant sought proportionate reduction of the license fee paid for between April 2020 to December 2020, in the financial year 2021-22. The facts are thus distinguishable from the second case considered in _Chitra_ (supra) which renewal was by virtue of an interim order issued by this Court. Ext.P7, in our view, is perfectly in order. 12. Now we come to the challenge against Ext.P10 which applies for the present financial year 2022-2023. The validity W.A.Nos.1690 & 1325 of 2022 14 period of the writ petitioner's license expired on 31.03.2021. As we saw the writ petitioner did not apply for a fresh license at the commencement of the financial year ie, 01.04.2021 for reason of the uncertainty due to the pandemic situation; quite justified. The writ petitioner's apprehensions also turned out to be correct since in April 2021 itself there was again an embargo for the conduct of bars in hotels, which continued upto 14.06.2021. Immediately after the embargo was lifted, the writ petitioner made an application for renewal but, with a prayer sought for proportionate adjustment of the license fee between 1.4.2020 to 21.12.2020; which application stood dismissed by Ext.P7, which we already found to be in order. The rejection of the application made for the year 2022-22 by Ext.P10 was for the reason that the writ petitioner's license remained defunct for 10 months. 13. We already noticed the circumstances in which the writ petitioner did not apply for a license in the year 2021-2022; due to the pandemic situation. The embargo which came on 24.04.2021 was lifted on 14.06.2021. An application for renewal made in July, 2021, however, with a plea for remission, stood declined. By the time Ext.P7 order was passed ie, on 02.12.2021, again, there was W.A.Nos.1690 & 1325 of 2022 15 little time left in the financial year 2021-2022. It was only because of the pandemic situation and the applicant's prayer for remission having been rejected that the circumstance arose, which led to Ext.P10 order, refusing renewal for reason of the license having been defunct for more than ten months. 14. Admittedly, the uncertainty due to the pandemic situation continued in the period and the writ petitioner cannot be faulted for not having applied for a license, which even if issued in the fag end of the year, the writ petitioner would be mulcted with the full liability of license fee for the year. From his experience in the previous year, he could also not claim any further remission or proportionate adjustment for the period in which he had not applied for or obtained a license under FL3. In 2021-2022, the writ petitioner did not have a license for reason of the impending situation created by the pandemic which derailed the entire world. 15. An extraordinary/peculiar situation arising from a pandemic cannot be left to be governed by the rule providing for non renewal – on account of license being defunct – for, the rule contemplates the license being defunct on the volition of the licensee and not for reasons beyond the ken and control of the W.A.Nos.1690 & 1325 of 2022 16 licensee; which is the contextual situation created by the pandemic, an extraordinary situation with no parallel. It was in these circumstances that the learned Single Judge directed consideration of the renewal. We are told by the learned Government Pleader on instructions that, if a fresh application is made, the same would be allowed within a month, but that can apply only to the next year or if permitted for this year, a month would be lost. Again, we are at the fag end of the financial year and the loss caused would be substantial, especially noticing the fact that the applicant would be obliged to pay the full license fee for the financial year. We specifically inquired from the learned Counsel for the writ petitioner, as to whether they are willing to pay the full license fee for the balance period in the financial year 2022-2023. Sri.M.G.Karthikeyan, learned counsel for the petitioner in the Writ Petition informs us that the petitioner does not have any objection to pay the entire balance fees and undertakes on behalf of the licensee that, no remission would be sought for, for the period already expired in the financial year. In such circumstances, application for renewal shall be considered within a week, favorably, _dehors_ the proviso to Rule 13 and the renewal issued W.A.Nos.1690 & 1325 of 2022 17 within three days from the date of payment of license fee. We find no reason to interfere with the judgment in W.A.No.1690 of 2022 filed by the State and dismiss the same. As far as W.A.No.1325 of 2022, we find no reason to interfere with Exts.P7 but set aside Ext.P10 to the extent it declines the renewal for the year 20222023. We dispose of the same with the directions herein above which shall be scrupulously complied with by the Excise Commissioner, failing which he shall be personally liable for the consequences. Ordered accordingly, leaving the parties to suffer their respective costs. ## **Sd/-** **K.VINOD CHANDRAN JUDGE** **Sd/-** **C.JAYACHANDRAN JUDGE** uu/sbna W.A.Nos.1690 & 1325 of 2022 18 ## **APPENDIX OF WA 1690/2022** PETITIONER ANNEXURES Annexure A1 TRUE COPY OF THE SRO NO. 32/2021 DATED, 07.01.2021 Annexure A2 TRUE COPY OF THE JUDGMENT IN WP(C) NO. 6275/2022 DATED, 06.07.2022 Annexure A3 TRUE COPY OF THE JUDGMENT IN WP(C) NO. 20567/2022 AND CONNECTED CASES DATED, 31.08.2022