K.V. Aravindan v. Deputy Excise Commissioner, Thrissur; Excise Commissioner, Commissionerate of Excise, Thiruvananthapuram; State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 11TH DAY OF JANUARY 2012/21ST POUSHA 1933 ## **W.A.No.1767 of 2010** AGAINST THE JUDGMENT IN WP(C).NO.13181/2010, DATED 28--09--2010. ------ ## APPELLANT/PETITIONER:- ------------------------------------- K.V.ARAVINDAN, S/O. KOLLARA VELAYUDHAN, EDATHURUTHY, P.O.EDATHURUTHY, MANAGING PARTNER, VRINDARA TOURIST HOME, EDAMUTTAM. BY ADV.SRI.T.A.SHAJI. ## RESPONDENTS/RESPONDENTS:- ------------------------------------------------- 1. THE DEPUTY EXCISE COMMISSIONER, THRISSUR. 2. THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXCISE THIRUVANANTHAPURAM. 3. STATE OF KERALA, REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, THIRUVANANTHAPURAM. R1 TO R3 BY SENIOR GOVERNMENT PLEADER SRI.GEORGE MECHERIL. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 28-11-2011, THE COURT ON 11-01-2012 DELIVERED THE FOLLOWING:- C.N.Ramachandran Nair & K.Vinod Chandran, JJ. ---------------------------------------- ## W.A.No.1767 of 2010 ----------------------------------------Dated this, the 11[th] day of January, 2012 ## JUDGMENT ## K.Vinod Chandran,J.: Under the guise of seeking directions to renew FL-3 licence for the current abkari year, the appellant/petitioner seeks to rake up issues long settled by the judgment of this Court, confirmed by the Supreme Court by dismissal of Special Leave Petitions and Civil Appeals. 2. The appellant, being the Managing Partner of a partnership firm, invoked the writ jurisdiction of this Court seeking renewal of FL-3 licence to the partnership firm, which was rejected on the ground of pending arrears of one of the partners, viz., the appellant. Interestingly, the rejection of FL-3 licence was projected in the writ petition as being based on Exhibits P2 and P3 communications dated 31.03.2005 and 30.03.2005. In fact the arrears being the loss to Government for 1998-99 and 1999-2000 was imposed by order No.XM2-25836/01 dated 28.5.2002 and the forfeiture of security made by order No.XA2-8448/02/C dated 28.05.2002. The 1[st] order is inoperative by virtue of Exhibit P5 judgment and the second order, i.e., forfeiture of security is confirmed by the Supreme Court in Exhibit P5. It is this order No.XA2-8448/02/C dated W.A.No.1767 of 2010 - 2 - 28.5.2002 that was given a new lease of life in 2010 by Exhibit P12 order issued in pursuance of Exhibit P10 judgment. The challenge made in the present writ petition is against Exhibits P11 and P12 orders, which is a mere reiteration of the earlier order of 2002 challenged unsuccessfully by the appellant before this Court and the Supreme Court. 3. The brief facts leading to the present litigation is that the appellant/petitioner was an individual licensee for vending toddy in the abkari year 1997-98 in the Chavakkad Excise Range. The appellant had purchased from the Government the right to sell toddy in the said range for three years, i.e., 1997-98 to 1999-2000, and had executed temporary agreements under Rule 5(10) of the Abkari Shops Disposal Rules, 1974 (hereinafter referred to as “the Rules”), and later executed permanent agreements in Form No.11 prescribed under Rule 5(15) of the Rules. The appellant having purchased the right in auction for three financial years, deposited 30% of the Kist for three years in advance, as mandated in the agreement. The balance for each year was to be paid in monthly instalments in the respective years. Again as per the terms of the agreement licence was issued under Section 18A(2) of the Abkari Act only for the first year and the appellant having committed default in payment of the agreed Kist amount during the first financial year, the W.A.No.1767 of 2010 - 3 - licence was cancelled under Rule 6(28) of the Rules. On such cancellation, as a consequence, the appellant was also called upon to pay the loss to the Government in terms of the said Rule. The appellant challenged the cancellation and the demand on account of the loss to the Government in O.P.No.5470/1999, wherein this Court confirmed the cancellation of licence, but held that the forfeiture of security amount and the demand of Kist should be only with the approval of the Commissioner of Excise as is provided under Rule 6(28). The Commissioner of Excise, thereafter, heard the appellant in terms of the judgment and issued proceedings dated 28.05.2002 (referred to earlier), which were challenged by the appellant in O.P.No.17686 of 2002. The appellant in the said proceedings sought to challenge the cancellation of the licence as also the forfeiture of the security amount and demand of Kist for three years, being loss suffered by the Government. The said proceedings dated 28.5.2002 were produced in O.P.No.17686 of 2002 as Exhibits P5 and P6. 4. O.P.No.17686 of 2002 was dismissed by a common judgment dated 14.1.2005, however with certain observations regarding the advisability of an amnesty scheme for easy recovery of amounts due from the various licensees. A learned Single Judge of this Court found in the said Original Petition that the cancellation of licence having not been W.A.No.1767 of 2010 - 4 - interfered with in the earlier Original Petition, i.e., O.P.No.5470 of 1999, it would not be open to the licensees to challenge the cancellation of licence as the same was already decided in the earlier Original Petition. 5. What remained for consideration was the demand and recovery of the Kist arrears as loss for the years 1998-99 and 1999-2000 and the forfeiture of the security amount. The learned Single Judge having elaborately considered the issue, upheld the impugned orders. The appellant then filed W.A.No.645 of 2005 which, along with the connected Writ Appeals, was dismissed by a Division Bench of this Court. The Special Leave Petition filed against the judgment dated 7.4.2005 in the Writ Appeal was also dismissed by the Hon'ble Supreme Court. The forfeiture of the security amount as also the demand of Kist for the remaining two years stood concluded by the order of the Supreme Court dated 6.5.2005 in Petitions for Special Leave to Appeal (Civil) Nos.9394-97/2005. While dismissing the Special Leave Petitions, the Hon'ble Supreme Court noticed the additional ground raised by the licensees that they are entitled to adjust the amounts realised from the subsequent vendees and merely recorded the submission of the counsel for the licensees that his client would approach the High Court to agitate the said additional ground. Subsequently, R.P.No.580 of 2005 filed by the appellant before this Court was also dismissed by a Division W.A.No.1767 of 2010 - 5 - Bench. It was against the dismissal of the said Review Petition on 12.9.2007 that the appellant again approached the Supreme Court by way of S.L.P.(C) Nos.21055-57/2007, which were later numbered as Civil Appeals and culminated in Exhibit P5 order. 6. It is submitted by the learned counsel for the appellant that Exhibit P5 order was passed following Exhibit P6 judgment of the Hon'ble Supreme Court in another batch of Civil Appeals and that the reliefs granted by the Supreme Court in Exhibit P6 have to be necessarily deemed to have been granted to the appellant too. The learned counsel would refer to the operative portion of Exhibit P6 and contend that the appellant's case also was not one in which Rule 6(28) could have been resorted to and hence there could be no forfeiture of security amount and there could be no demand for the arrears for 1998-99 and 1999-2000. The appellant, by virtue of the said contentions, would seek setting aside of Exhibits P11 and P12 orders and refund of the amounts allegedly paid in excess by the licensee/appellant. 7. The fallacy of the said contention would be revealed on a plain reading of Exhibit P5 order of the Supreme Court. While following the earlier judgment, in Exhibit P5, the Supreme Court specifically referred to paragraph 36 of the earlier judgment and noticed the finding W.A.No.1767 of 2010 - 6 - that the licence having been granted only for one year, there cannot be any recovery of rent for three years. After noticing the same, it was specifically directed that the recovery of rent will be only for one year and not for three years. It is to be noticed that the above order has been passed in a Civil Appeal and except to the extent to which relief granted, the judgment of the High Court merged in the order of the Supreme Court and the findings rendered therein operate as findings of the Supreme Court and would attract Article 141 of the Constitution of India, as held by the Supreme Court in _**Kunhayammed v. State of Kerala**_ [(2000) 6 SCC 359]: _“41. Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief._ W.A.No.1767 of 2010 - 7 - _Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court._ **==> picture [225 x 9] intentionally omitted <==** **==> picture [183 x 14] intentionally omitted <==** **==> picture [225 x 8] intentionally omitted <==** _(vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation”._ Exhibit P5 is passed in a Civil Appeal after granting leave to appeal and attracts the doctrine of merger and the law stated or declared by the High Court is deemed to be that stated and declared by the Supreme Court attracting applicability of Article 141. In such circumstances, the appellant cannot re-agitate the issue with respect to forfeiture of security amount, since the same is decided against the appellant and stands concluded by Exhibit P5. 8. The learned counsel for the appellant, however, would strenuously urge before us that he is entitled to all the reliefs granted in Exhibit P6 judgment and takes us through the entire judgment to demonstrate that the fact situation is one and the same. We are afraid that we cannot agree. Exhibit P6 judgment is passed in the case of W.A.No.1767 of 2010 - 8 - licensees whose licences were cancelled in terms of the provisions of Rule 6(30) and against whom Rule 6(28) was subsequently invoked with consequences of forfeiture and demand of arrears for the years 1998-99 and 1999-2000. Though items 4 and 7 in the tabulation with regard to the position of the parties and the relevant dates would show invocation of Rule 6(28), it cannot be disputed that the Supreme Court was considering the issue of cancellation of licence on the detection of “diazepam” in the toddy seized from the business premises of the appellants in the said case. On the detection of “diazepam”, constituting an offence in terms of the provisions of the Act, proceedings were taken under Rule 6(30) terminating the licences issued to the respective appellants. The issue considered by the Supreme Court was whether on termination under Rule 6(30); the provisions of Rule 6(28) could automatically be invoked. The Supreme Court noticed that Rule 6(30) applies in a wider spectrum contemplating cancellation of licence on infraction of the rules or conditions of licence, while Rule 6(28) operates only when there is arrears of Kist. In paragraph 28 of Ext.P6 it was also noticed that “whereas in the cases where Rule 6(28) was taken recourse to records were sent to the Commissioner of Excise for confirmation of the order, no such step was taken by the said authority in cases where Rule 6(30) was invoked” ( _sic_ ). The forfeiture of security amount in the W.A.No.1767 of 2010 - 9 - cases in which licences were cancelled under Rule 6(30) was made on an understanding that the consequences of forfeiture under rule 6(28) is automatic even in cases invoking Rule 6(30). The Supreme Court also emphasized the fact that the Assistant Commissioner of Excise had invoked Rule 6(28) on the opinion expressed by the Commissioner of Excise, the latter of whom is the higher authority conferred with the power of confirmation under Rule 6(28). It was in such circumstances that the Supreme Court held in Exhibit P6: _“In the peculiar facts and circumstances of this case, therefore, we are of the opinion that it was not a case where even Rule 6(28) could have also been resorted to (sic)”._ The appellant's case cannot, by any stretch of imagination, be said to be similar in so far as the cancellation of licence against the appellant was made under rule 6(28) and confirmed by the Commissioner of Excise as contemplated under Rule 6(28). It is also to be noticed that in Exhibit P5 specific mention has been made to paragraph 36 of Exhibit P6 judgment, which dealt with the issue of the demand made towards the loss suffered for a period of three years. In Exhibit P5 what was granted to the appellant was only the limited relief regarding the recovery of rent for the balance two years, as loss; the same having been held to be impermissible in law in paragraph 36 of Exhibit P6. W.A.No.1767 of 2010 - 10 - ## 9. The contention of the appellant regarding the forfeiture of the security falters in so far as the same having been decided earlier by this Court and settled finally by the Supreme Court. The cause of action resorted to by the appellant, for filing a writ petition based on Exhibits P11 and P12, in our opinion is imaginary and illusory and down right frivolous. There is absolutely no merit in the writ petition or the Writ Appeal and the challenge made against Exhibits P11 and P12 is only to be rejected and as a consequence, the claim for renewal of FL-3 licence is also to be rejected. We do not find any infirmity in the judgment of the learned Single Judge and we dismiss the Writ Appeal with no order as to costs. Sd/- vku/- C.N.Ramachandran Nair, Judge Sd/K.Vinod Chandran, Judge. - true copy -