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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2246 OF 2006

Chitra .. Appellant

Versus

State of Kerala & Ors. .. Respondents

WITH

CIVIL APPEAL NO. 4900 OF 2006  

Cochin Wines & Drugs .. Appellant

Versus

The Assistant Excise Commissioner & Ors. .. Respondents

J U D G M E N T

VIKRAMAJIT SEN, J.

CIVIL APPEAL NO.2246 OF 2006

1 This Appeal calls into question a brief Judgment passed on 21.7.2005 by

the  Division  Bench of  the  High Court  of  Kerala  in  W.A.  No.  910 of  2000

reversing the detailed Judgment of the learned Single Judge.  The question that

has  been  raised  pertains  to  the  Appellant’s entitlement  to  pay  proportionate

annual rental for the year 1999-2000, instead of full annual fee of  13 lakhs

which was applicable for that year in respect of an FL3 licence granted to her.  

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2. The Division Bench took note of Rule 14 of the Foreign Liquor Rules

which reads thus:

“If  any of  the licences referred  to  in  Rule 13 is  granted in  the

course of a financial year, the full annual fee shall be paid and the

licence shall expire at the end of the financial year”.   

On the reading of  the said Rule,  the Division Bench opined that it  was not

permissible  for  any  licensee  to  claim  only  proportionate  payment  on  the

predication that it had been disabled from utilizing the licence for the full period

because of third party intervention. Accepting the Appeal,  the Appellant was

permitted to pay the balance of the entire fee after adjusting the sum already

paid,  within  three  weeks,  in  which  event  the  Respondent  would  not  be

permitted to claim interest on belated payments.  It is the admitted case that in

order to avail of this indulgence and advantage the balance amount has been

duly paid.  However, the legality of the demand to pay the fee for the entire

year,  despite  the  truncated  period  of  user  by  the  Appellant  for  no  fault

ascribable to her is what has been brought into question before us.

3 We have commented on the brevity of the impugned Judgment for the

reason that the learned Single Judge of the Kerala High Court in O.P. No. 18145

of  1994  had,  in  its  detailed  Judgment,  considered  various  legal  aspects

including the topicality of the maxim ‘Actus curiae neminem gravabit’, that an

act of Court prejudices no one, as well as the pronouncement of this Court in

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R.Vijaykumar v.  Commissioner  of  Excise  1993(4)  SCALE  386,  which

indubitably held the field and was facially in favour of the Appellant.  It seems

to us that the attention of the Division Bench was not drawn to this binding

precedent,  since  otherwise  its  conclusion  would  in  all  likelihood have  been

diametrically different.  

4 The facts are neither disputed nor are they convoluted.  The Appellant

had submitted an application on 16.3.1990 for the grant of an FL3 licence in

respect  of  her  Hotel  Chanakya  at  Trivandrum,  which  had  been  granted.

However, it transpired that a third party filed a suit in which the Munsif Court,

Trivandrum granted an interim injunction restraining the Excise Commissioner

from issuing the said licence to the Appellant for user at her said Hotel. This

suit,  along  with  another  suit  similar  to  it,  was  eventually  dismissed  on

29.9.1993.   In an ensuing Appeal,  the District Judge granted an  ad interim

injunction  on  15.4.1994,  which  came  to  be  vacated  on  3.6.1994.    On

23.11.1994,  the Respondent  rejected the  Appellant’s application for  the  FL3

licence due to an amendment to the Foreign Liquor Rules which had resulted in

private parties being ineligible for FL3 licences.  Consequently, the Appellant

filed O.P. no. 18145 of 1994, which was allowed by the Single Judge. Acting in

accordance with the Single Judge’s directions the Excise Commissioner granted

the licence and raised a demand of only the proportionate licence fee which was

duly deposited; but the matter was brought before the Division Bench in the

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subject Appeal.  As already mentioned, it seems most likely that the attention of

the Division Bench which passed the impugned Judgment was not brought to

bear  on the already existing  binding decisions  in  R.Vijaykumar as  well  as

Jayadevan v. Board of Revenue (Excise) 1999 (1) KLJ 87 wherein the Division

Bench of the High Court of Kerala has held that the licensee is required to pay

only  the  proportionate  licence  fee  if  the  delay  in  granting  the  licence,  or

utilizing  it,  as  the  case  may be,  are  for  reasons  not  attributable  to  the said

licensee.   

5 We are in agreement with the learned senior counsel for the Appellant

that the legal principle to the effect that no person can be prejudiced because of

an act  of  a Court  is  apposite and relevant in the present  case.   We say this

keeping in perspective the position that although the Appellant had applied for

the FL3 licence which would ordinarily run the course of one financial year,

due to interim orders passed by the Courts, the Appellant could only utilize it

for  a  fraction  of  that  period.   We  hasten  to  clarify  that  the  Appellant’s

application was not made in the duration of that year and was thus initially not

for  a  fraction  of  the  financial  year.   This  Court  has  already  held  in

R.Vijaykumar,  in  the  circumstances  prevailing  in  that  case,  that  the

Department could not interfere with the utilization of the FL3 licence, provided

that  the licensee complied with all  other  conditions as  well  as  “payment  of

annual rental proportionately”.   It is therefore clear that Rule 14 would not

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impede or inhibit the charging of annual proportionate fee so long as no failure

is placed on the licensee or it is blameworthy itself.  We must be quick to clarify

that  in  the  event  that  a  party  applies  for  a  period  which  is  obviously  not

effective for the entire financial year, such as applying for a licence mid-way

that financial year, the full fee for that year may be claimable or chargeable and,

therefore, would have to be paid.   In other words, had the Appellant applied for

the licence even with the knowledge that because of external factors such as a

pre-existing injunction order etc., she would not have been able to exploit it for

the entire year, she may not have been liable to pay the licence fee for the entire

year.  This  is  not  the factual  matrix  which obtains in  the case at  hand;  the

licence could only be granted for the period from 21.12.1999 to 31.3.2000, i.e.

till  the  close  of  that  financial  year,  owing  to  unforeseeable  circumstances

beyond the ken and control of the parties before us.  We have already made a

mention of the Division Bench Judgment delivered in Jayadevan which in turn

was referred to in another Division Bench Judgment in Rajagopalan Nair v.

Assistant  Commissioner  of  Excise 1989 (1)  KLT 800,  wherein the Division

Bench directed that the licensee was entitled to remission of payment of kisht

because of  being disabled to conduct its  business on account of  the interim

orders  passed  by  the  Court.   We affirm the  conclusions  arrived at  in  these

decisions.  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

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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.

6 The Appeal is accordingly allowed.   The Respondent State shall, within

six  weeks  from  today,  refund  to the  Appellant   the   balance   amount   of   

9,41,257/- together with interest thereon at the rate of six per cent per annum

with effect from 11.8.2005.      Failure to do so shall render the Respondent

State  liable  to  refund  the  aforementioned  sum of  9,41,257/-  together  with

interest at the rate of twelve per cent per annum calculated from 11.8.2005 till

the date of payment and also additionally liable for payment of costs quantified

at 15,000/- (Rupees fifteen thousand only).  

CIVIL APPEAL NO.4900 OF 2006

7 The facts that arise in this Appeal are somewhat complex in comparison

to Chitra’s foregoing Appeal.  The Appellant had been granted an FL3 licence

for its Hotel Hackoba at Ernakulam for the period ending on 31.3.2001.     Due

to a dispute with its landlord it had to vacate its premises; and on locating to

another, it  applied  for  the renewal  of  the  licence  on 26.2.2002.    This  was

obviously  for  the immediately succeeding year  1.4.2001 to 31.3.2002.   The

Excise Commissioner rejected the application for renewal on 4.9.2002 on the

ground that the licence had become defunct; a decision which was upheld by

the  State  Government.   In  these  circumstances,  the  Appellant  successfully

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approached  the  High Court  of  Kerala  which issued a  direction  to  the  State

Government  to  issue  the  licence  within  two  weeks.   The  Single  Judge

simultaneously  directed  the  Appellant  to  pay  the  licence  fee  for  the  years

2001-2002 and 2002-2003 by his Judgment dated 27.1.2003.  The Appellant

preferred an Appeal,  and on the first  day of its  hearing, the Division Bench

passed an ad interim Order directing the Appellant to pay 15 lakhs.   Shortly

after  making  this  payment,  on  25.3.2003,  the  licence  was  renewed.   The

Division  Bench of  the  High Court  of  Kerala  noted  Rule  14 of  the  Foreign

Liquor Rules as well as the fact that it had not been challenged.  The Division

Bench accepted the argument of the Appellant that for the reason that it could

not  utilize  the  licence  for  the  year  2001-2002  as  its  application  had  been

disallowed  it  was  not  liable  to  pay  any  fee;  viz.  during  this  period  it  was

prevented  by  extraneous  elements  and  factors  from  utilizing  the  licence.

However, the Division Bench held that since the licence was renewed in March

2003,  even though the  Appellant  could  conduct  its  business  for  less  than a

fortnight in that licence year, nevertheless the Appellant was liable to pay the

full  fee  for  the  year  2002-2003.   It  is  these  circumstances  which  have

constrained the Appellant to file the present Appeal before us.

8 In  order  to  eradicate  any  possibility  of  misunderstanding  our  present

Judgment, we hasten to clarify that had the Appellant’s application for renewal

of  the  FL-3  licence  found  approval  instead  of  rejection  on  4.9.2002,  the

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Appellant would have been liable to pay the entire fee for the year 2001-2002.

This is so for the simple reason that there was no third party interference or

intervention which led to the non-utilization of  that licence for  the previous

portion of that year; it may be reiterated that the Appellant had to locate fresh

premises.  However, after 4.9.2002, the Appellant cannot be held responsible in

any way for the non-utilization of the licence up to the date it was eventually

renewed i.e. 25.3.2003.   

9 On the predication of the legal analysis and discussion in Civil Appeal

No. 2246 of 2006 (supra), we are of the opinion that the Appellant is only liable

to pay the proportionate licence fee for the period in which it could avail of the

licence,  that  is  25.3.2003 to  31.3.2003.    It  would  be fair  to  cogitate  upon

whether the Appellant should have declined the licence for virtually a week in

that  year,  and  since  it  failed  to  exercise  that  option,  whether  it  should  be

burdened with the fee for the full year.  It seems to us that any person placed in

the position of the Appellant would not be in a position to decline to accept the

renewal of the licence even though it was for less than a fortnight, since that

would have led to the licence being rendered defunct; which may have then led

to consequence of disentitlement for grant or renewal of the FL3 licence in the

future.

10 The Appeal is accordingly allowed.   The Respondents are directed to

recalculate  the  proportionate  amount  of  licence  fee due  and payable  by the

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Appellant for the period from 25.3.2003 to 31.3.2003.    The amount of refund

shall carry interest at the rate of six per cent per annum from the date of its

payment due till the date of its refund.     This exercise should be completed

within two months from today.  Failure to make this payment within this period

will render the Respondents liable to pay the interest at the rate of twelve per

cent  per  annum,  instead of  six  per  cent,  as  directed  above,  and in  addition

thereto,  the  Respondents  shall  be  liable  to  pay  to  the  Appellant  the  costs

quantified at 15,000/- (Rupees fifteen thousand only),  which amount shall be

deposited with the Supreme Court Advocates Welfare Fund.   

…………………………………J. [VIKRAMAJIT SEN]

…………………………………J. [SHIVA KIRTI SINGH]

New Delhi, August 21 ,  2015.