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Judgment
S.B. Sinha, C.J.—The petitioners in these writ petitions, inter alia, question the vires of Rule 53(4) of A.P. Indian Liquor and Foreign Liquor Rules, 1970 and also fora declaration that the proceedings dated 16-8-1999, 14-8-1999 and 14-8-1999 respectively issued by the Excise Superintendent, West Godavari district, Eluru suspending their licences issued for retail sale of Indian Liquor and Foreign Liqour and Beer as illegal, arbitrary and contrary to the provisions of A.P. Excise Act, 1968 and A.P. Prohibition Act, 1993 and the rules framed thereunder.
Though WP No.18385 of 1999 and WP Nos. 19464 and 20175 were heard separately since all the writ petitions challenge the vires of Rule 53(4) of the aforementioned Rules, they were being disposed of by this common judgment.
Bereft of all unnecessary details, the fact of the matter is as follows:
The petitioner in WP No.18385 of 1999 was initially issued a licence for the year 1998-99 for retail sale of Indian Liquor, Foreign Liquor and Beer and he was running the said business in the name and style of M/s. Sri Rama Wines, Kavvagunta, West Godavari district. The said licensee was renewed for the year 1999-2000. The enforcement wing of Vijayawada conducted a raid at house bearing D.No.2/113 in Kavvagunta village on 31-5-1999 at about 10 p.m. and seized 11 Nip bottles of non-duty paid Kerala Malt Whisky and a nowkamama No.103/98-99 dated 2-5-1998 was also seized from the scene of offence. The said nowkarnama belongs to one Godugu Banerjee Ramakrishnarao who had been appointed by the petitioner for the year 1998-99 as his servant. A case is Crime No.47/99-2000 u/s 34(a) of the A.P. Excise Act was registered against the said Ramakrishna Rao. Thereafter, it is alleged that as per the directions of Asst. Commissioner of Prohibition and Excise, Enforcement Wing, Vijayawada dated 12-6-1999, the petitioner was also implicated in the crime and his name was shown as A2 in the aforementioned criminal case. The said Ramakrishna Rao was appointed as nowkarnama for the year 1998-99 only and for the year 1999-2000 one M. Venkateswara Rao was appointed as nowkamama. Thereafter, the 2nd respondent issued proceedings dated 16-8-1999 suspending the licence of the petitioner pending enquiry under Rule 30 of A.P. Excise (Indian and Foreign Liquor Retail Sale Conditions of Licences) Rules, 1993 (for short ''the Rules'') alleging that Ramakrishna Rao who voluntarily surrendered before the Court of the Special Judicial Magistrate of I Class (Excise) Eluru had confessed that he was selling non-duty paid liquor at the time the raid was conducted and that he also alleged to have confessed that the petitioner was indulging in the sale of non-duty paid liquor which is prohibited under Rule 16(1) of the Rules. According to the petitioner, Ramakrishna Rao, was not the nowkarnama for the year 1999-2000 and, therefore, he cannot be made liable for the acts of omissions and commissions on the part of the said Ramakrishna Rao. Even otherwise also, the petitioner cannot be vicariously liable for the acts of the nowkarnama as the petitioner had not expressly or impliedly authorised the nowkarnama to do such illegal acts.
The Common facts in WP Nos.19464 of 1999 and 20175 of 1999 are that the petitioners were carrying on business of IL & FL at Chintalapudi in the name and style of M/s. Sri Kanaka Durga Wines and M/s. Jyothi Wines respectively. On 5-8-1999 a raid was conducted at house bearing No.2-10 in Balavarigudem belonging to one Sri M. Sobhan Babu, 6 kms away from the shops of the petitioners and that 81 cases of non-duty paid liquor was seized. Four persons alleged to be working in the shops of the petitioners were arrested and on their disclosure the licences of the petitioners suspended on the ground that they were indulging in the sale of non-duty paid liquors and acted in a prejudicial manner to the interest of Government revenue and they are responsible for the acts of nowkarnama holder. A case in Cr.No.125/99-2000 u/s 34(a) of A.P. Excise Act and 8(b) of A.P. Prohibition Act was registered on the file of Prohibition and Excise Station, Chintalapudi against the petitioners and others.
It was contended that Rule 53(4) fixes vicarious liability on the licensee for the acts committed by the nowkarnama holder and such exceptional provisional cannot be made by way of delegated legislation without the express sanction of the Legislature and specifically laying down the guidelines and criteria therefor. It was further submitted that the words "with his express or implied permission" used in Section 31 makes it clear that the Legislature did not intend to make the master liable for the acts of the servant without a guilty mind and that unless there was specific authorization or permission of the licensee to do such acts, the master cannot be made liable for such acts done by the servant during the course of the employment. If a true construction of the provisions of the Act is given, it was contended, that the master is liable for the acts of his servant done in contravention of the Act only when such acts are done within the scope or in the course of the employment.
The impugned order of suspension of licence dated 16-8-1999 in \\VP No. 18385 of 1999 reads as under :
On 31-5-1999 at about 10.00 p.m. the Enforcement Officers, Vijayawada detected 11 Nip bottles of NDP Liquor along with four loose bottles in a private shed bearing D.No.2-113 at Kavvagunta village of Pedavegi Mandal of West Godavari district. The following are the accused persons and also seized the Nowkarnama of Sri G. Banerji Rama Krishna Rao for 1998-99 who worked in IL-24 shop of M/s. Sri Rama Wines, Kavvagunta, accused No.1.
Godugu Banerjee Rama Krishna Rao, S/o Nagabhushanam, aged 30 years, Kapu, Garllamadugu, Pedavegi Mandal.
Medkonda Srinivasa Rao, S/o Nagabhushanam R/o Garlamadugu, Licensee of M/s. Sri Rama Wines, Kavvagunta.
A case has been registered in Cr.No.47/ 99-2000 of Proh. & Excise Station, Eluru against the above (2) accused u/s 8(b)(ii) and (iii) of A.P. Prohibition Act, 1995 read with Sections 34(a), 36(b) and (c) of the A.P. Excise Act, 1968.
The accused No.(l) has been voluntarily surrendered before the Hon''ble Court of the Special Judicial Magistrate of I Class (Excise) W.G. Eluru on 16-6-1999. The accused No.(2) is the licensee of M/s. Sri Rama Wines, Kawagunta L.No.655/ 98-99 dated 2-4-1998 and renewed for 1999-2000.
The sale of non-duty paid liquors is prohibited under rule 16(1) of A.P. Excise (Indian and Foreign Liquor Retail Sale Condilions of Licences) Rules, 1993.
Under licence Condition No.9, the licensee shall not act in any manner prejudicial to the interest of the Revenue of the Government.
The licence is liable for suspension without prior notice pending enquiry into an offence under Rule 30 of A.P. Excise (Indian and Foreign Liquor Retail Sale Conditions of Licences) Rules, 1993.
The seizure proceedings prima facie established that the licensee of M/s. Sri Rama Wines, L.No.65 5/98-99 (renewed for 1999-2000) who is accused No.2 in this case is indulging in the sale of the non-duty paid liquors which constitutes an offence u/s 8(c) of A.P. Prohibition Act, 1995. Therefore, I, the undersigned being the licensing authority hereby suspend the licence bearing No.655/98-99 dated 2-4-1998 (renewed for 1999-2000) held by Sri Medikonda Srinivasa Rao, S/o Nagabhushanam, R/o Garlamadugu in the name and style of M/s. Sri Rama Wines, Kavvagunta pending enquiry.
Rule 53(4) reads as follows:
Every action of the servant shall be deemed to be an act of the licensee. Any notice, intimation, or order given to a person nominated by a licensee shall be deemed to have been given to the licensee.
Section 8 of the A.P. Prohibition Act, 1995 deals with the punishment for buying, selling, consumption etc., of liquors. Section 8(b) of the Prohibition Act provides that whoever possesses, collects, buys, sells, transports, produces or manufactures any liquor other than arrack except in accordance with the provisions of the A.P. Excise Act, 1968 or the terms of any rule, notification, order, licence or permit issued thereunder shall be punished as provided under Clauses (i) and (ii) thereof. The petitioner in WP No.18385 of 1999 has been charge-sheeted for the offence punishable u/s 8(b) of A.P. Prohibition Act, 1995 read with Sections 34(a), 36(b) and (c) of the A.P. Excise Act, 1968 whereas the petitioners in the other writ petitions were charge-sheeted for the offences punishable u/s 8(b) ofA.P. Prohibition Act, 1995 read with Section 34(a) of the A.P. Excise Act, 1968, Sale of non-duty paid liquors is prohibited under Rule 16(1) of the Rules.
The learned Counsel appearing on behalf of the petitioner would submit that having regard to Rule 30 of the Rules, the licensing authority could suspend the licence pending enquiry. Rule 30 reads thus:
Suspension of Licence :--The licence can be suspended without prior notice pending enquiry into an offence committed by the licensee and if the licensing authority is convinced that the lease has been obtained by licensee by furnishing any false information etc. Where licence is suspended on account of default in the payment of any dues payable by the licensee the Collector may at his discretion take the shop under his management during the period of suspension. Any revenue loss that may accrue when, in consequence of such default, the shop has been taken under the management of the Collector shall be recoverable from the defaulting licensee but the defaulting licensee shall not be entitled to any profit that may result during the management. The suspension of the licence may be revoked at any time, if the defaulting licensee pays the dues.
Section 31 to the extent relevant for the purpose reads as under :
Power to cancel or suspend licence etc :--(1) Subject to such restrictions as may be prescribed, the authority granting any licence or permit under this Act may cancel or suspend it irrespective of the period to which the licence or permit relates:
(a) if any duty or fee payable by the holder thereof is not duly paid; or
(b) in the event of any breach by the holder thereof, or by any of his servants or by any one acting on his behalf with his express or implied permission, of any of the terms and conditions thereof; or
(c) if the holder thereof or any of his servants or any one acting on his behalf with his express or implied permission, is convicted of any offence under this Act, or
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It was submitted by the learned Counsel appearing for the petitioners that the petitioner cannot be said to have violated Rule 16(1) of the Rules in view of the fact that the bottles of non-duty paid liquor were not seized from the licensed shop of the petitioner and he was arrayed as one of the accused only on the basis of the proceedings dated 12-6-1999 of the Assistant Commissioner of Prohibition and Excise. The learned Counsel would contend that having regard to the provisions of Section 8(c) of the A.P. Prohibition Act, 1995, a licensee must be held to be guilty of commission of an offence before his licence can be suspended. The learned Counsel in support of the said contention strongly relied on the decisions of this Court in Satyanna Goud and Others Vs. The Excise Superintendent and Others, and Sree Devi Wines v. Dy. Commissioner of Excise, Kakinada 1995 (1) ALD 164, for buttressing the proposition that prior to issuance of impugned order, a notice ought to have been given.
In Tappers Co-operative Society, Maddur v. Superintendent of Excise, Mahaboobnagar 1984 (2) APLJ 1 (FB), a Full Bench of this Court while considering the question as regards the vires of Rule 53(4) of A.P. Indian Liquor and Foreign Liquor Rules, 1970 held that power of suspension of licence having regard to the immediacy is incidental or ancillary one. It was, however, observed:
However, we must make it clear that his incidental or ancillary powers cannot be exercised in a routine way or as a matter of course. The licensing authority is bound to exercise the discretion reasonably, bona fide and without negligence considering the circumstances of the case when such interim suspension is necessary. If it is possible to give an opportunity to the petitioner and the circumstances do not warrant such a drastic step, the licensing authority is bound to afford an opportunity and the power of suspension pending enquiry should not be exercised as an invariable rule or mode of making an enquiry. Further the suspension pending the enquiry should not be allowed to continue for an unduly long period. The authorities are bound to complete the enquiry as early as possible and any undue delay when it constitutes abuse of power makes the order liable to be set aside. Whether the suspension of licence must be preceded by notice or opportunity must depend upon various factors such as degree of urgency involved, the duration of suspension, the nature of the breach, public danger to be avoided, and other similar circumstances which warrant an immediate action where it is not feasible or possible or even advisable to give an opportunity to the holders of the licences before passing interim orders of suspension.
A Division Bench of this Court by order dated 13-6-2001 in WP Nos.22276 of 2000 and 15510 of 2000 (Sri Venkateswara Wines v. The Superintendent, Prohibition and Excise Department and others) observed:
Heard the learned Counsel for the parties. In view of the fact that the power to suspend a licence pending enquiry has already been upheld by a Full Bench of this Court reported in Tappers Co-op. Society, Maddur, v. Superintendent of Excise, this writ petition being premature could not be, therefore, allowed. However, in the facts and circumstances of the case, the authority concerned is directed to complete the enquiry within a period of one month from the date of receipt of a copy ofythis order. The writ petitions are accordingly disposed of.
It is now a well-settled principle of law that this Court while exercising its power of judicial review cannot enter into the merit of the matter. It is trite that while exercising its jurisdiction under Article 226 of the Constitution of India, this Court is concerned with the decision making process and not the merit of the decision. The submission of the learned Counsel appearing on behalf of the petitioner to the effect that in fact no case for violation of Rule 16(1) of the Rules has been made out cannot be accepted having regard to the fact that the matter is pending consideration before the appropriate authority.
The counter-affidavit filed before us by the respondents in WP No.18385 of 1999 which has been affirmed by Sri V. Satyanarayana, Prohibition and Excise Inspector, Eluru shows that an opinion was formed that the petitioner had been indulging in illicit sale of non-duty paid liquor for some years and that accused No. I is alleged to have confessed that he had been working under the petitioner for the said purpose on a monthly salary of Rs.800/-. In the counter it is further alleged that the petitioner is a professional seasonal liquor offender and number of crimes were registered against him and in some cases charge-sheets were filed whereas some cases are pending investigation. It has further been averred that the petitioner took a shed within 20 meters from the licensed shop to sell non-duty paid liquor and while he was so doing, on 31-5-1999, on seeing the excise party A1 escaped from the scene of offence, but later the petitioner got Al surrendered before the Court through an advocate and got him released on bail.
Even in terms of Rule 19(1) of A.P. Excise (IL and FL Retail Sale Conditions of Licences) Rules, 1993, a licensee may be held responsible for any Indian Liquor or Foreign Liquor unauthorisedly kept outside or nearby the licensed premises unless a report thereof has been made by him to an Excise Officer having jurisdiction over the place.
The learned Counsel for the petitioner drew our attention to a letter dated 12-6-1999 addressed by the Assistant Commissioner of Prohibition and Excise, Enforcement Wing, Vijayawada to the Director of Prohibition and Excise which reads thus:
During the search one Nowkarnama No.103/98-99 dated 2-5-1999 issued in favour of Godugu Benarjee Rama Krishna, S/o Nagabhushanam, aged 30 years, caste Kapu, relating to Sri Rama Wines, Kavvagunta (L.No.655/98-99 dated 2-4-99 issued in favour of Medikonda Srinivasa Rao S/o Nagabhushanam, Garlamadugu) was recovered from the scene of offence.
Thus, the accused Godugu Benarjee is the nowkarnama holder in Sri Rama Wines, Kavvagunta. The scene of offence is very nearer to Sri Rama Wines (L.No.65 5/98-99).
The Enforcement party handed over the property and case record to Eluru Proh. and Excise Station. The SHO, Eluru registered a case in Cr.No.47/99-2000, u/s 34(a) of A.P. Excise Act against the nowkarnama holder only, but he has not included the licensee as A2. Copy of FIR in Cr.No.47/99-2000 of Eluru Excise Station is enclosed. I have also addressed the Prohibition and Excise Superintendent, West Godavari District, Eluru to take action to include the licensee Sri Medikonda Srinivasa Rao as A2 in this case.
The submission of the learned Counsel for the petitioner in WP No.18385 of 1999 to the effect that only on the basis of the aforementioned material, the order of suspension of licence has been passed and thus the same should be set aside cannot be accepted. This Court in exercise of its jurisdiction under Article 226 of the Constitution of India cannot deal with the sufficiency of the material. The correctness or otherwise of the allegation against the petitioners must be the subject-matter of an enquiry and the same has to be decided by the concerned authorities.
The decision of this Court in Sriaevi Wines (supra) relied upon by the learned Counsel for the petitioner is not applicable in the facts and circumstances of this case. In that case, the learned Judge had proceeded on the basis that the Excise Superintendent had already concluded that the petitioner therein had violated the conditions of licence and thus the same was a final order of suspension, which requires affording of an opportunity of being heard u/s 31 of the Act. In Satyanna Gaud''s case, the same learned Judge entered into the merits of the matter and observed:
I am of the view that the record and facts clearly disclose that the impugned orders of suspension of the petitioners'' licences have no basis, which can be justified on reason. The record does not disclose that the petitioners'' counters at Kishtareddipet and Rangaur were raided or checked or that the toddy being sold by them was found to be adulterated. There is no material whatsoever except the alleged oral statement of the said Chinnaiah recorded by the said panchas that the toddy at the unauthorised depot in Mohan Gaud''s land was being supplied to or received by the petitioners at their counters.
The said decision was, therefore, decided on its own peculiar facts and circumstances and no legal principle has been laid down therein.
Another contention of the petitioners is that Rule 53(4) fixes vicarious liability on the licensee for the acts committed by the servants and such exceptional provision cannot be made by way of delegated legislation. We find no merit in the said contention. Rules have been framed in exercise of the power conferred on me Government u/s 72 of A:P. Excise Act. Sub-section (1) of Section 72 provides that the Government may by notification make rules for carrying out all or any of the purposes of the Act. Section 43 of the Act deals with the criminal liability of licensees for acts of servants and it reads thus:
Criminal liability of licensee for actions of servants :--Where any offence u/s 34, Section 35, Section 37 or Section 38 is committed by any person in the employ and acting on behalf of the holder of a licence or permit granted or issued under this Act, such holder shall also be punishable as if he had committed himself the said offence, unless he establishes that all due diligence was exercised by him to prevent the commission of such offence.
Section 34 deals with penalties for illegal import etc. Section 34 to the extent relevant reads as under:
Whoever, in contravention of this Act, or of any rule, notification or order made, issued or passed thereunder or of any licence or permit granted or issued under this Act;
(a) imports, exports, transports, manufactures, collects or possesses or sells any intoxicant; or
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shall on conviction be punished :
(1) in the case of an offence falling under clause (a)-
(i) Where the intoxicant involved in the offence is less than such quantity as may be notified in this behalf with imprisonment for a term which shall not be less than six months but which may extend upto three years and with fine which shall not be less than rupees five thousand but which may extent upto rupees twenty thousand.
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Section 36 which deals with penalty for misconduct of licensees insofar as it is relevant reads thus:
(1) whoever being the holder of a licence or permit granted or issued under the Actor being in the employee of such holder acting on his behalf :
(a) fails to produce such licence or permit on demand by any Prohibition and Excise Officer or any other officer duly empowered to make such demand; or
(b) wilfully does or omits to do anything in breach of any of the conditions of his licence or permit not otherwise provided in this Act; or
(c) wilfully contravenes any rule made under this Act; or
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(i) in the case of an offence falling under clause (a) clause (b) or clause (c) with clause (c) with imprisonment for a term which shall not be less than six months but which shall not exceed two years and with fine which may extend to one thousand rupees.
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The vires of sub-rule (4) of Rule 53 of the rules is to be considered in the above context.
By reason of sub-rule (4) of Rule 53 of the Rules, no vicarious liability as such is created. Such a provision exists in Section 43 of the Act read with Sections 34, 36 and 37 of the Act and thus sub-rule (4) of Rule 53 has to be read in the context of Section 43 of the Act. So read, sub-rule (4) of Rule 53 cannot be held to be ultra vires the provisions of the Act. Admittedly, all the petitioners were charge-sheeted for the offence u/s 34(a). The various provisions of the Act clearly provide that where offences are committed by any person in the employ and acting on behalf of the holder of a licence or permit granted or issued under the Act, such holder of licence shall also be punishable as if he had committed himself the said offences unless he establishes that all due diligence was exercised by him to prevent the commission of such offence. Therefore, the burden was on the holder of licence or permit to prove that he had taken all due diligence to prevent the commission of such offence. Correctness or otherwise of the allegation shall be gone into only during the course of enquiry to be made in accordance with the provisions of the Act and the rules made thereunder.
The contention of Mr. Adinarayanarao, learned Counsel appearing for the petitioners to the effect that the words "with his express or implied permission" used in Section 31 shows that the Legislature did not intend to make the master liable for the acts of the servant without a guilty mind and that unless there was specific authorization or permission of the licensee to do such acts, the master cannot be made liable for such acts done by the servant during the course of the employment has also no merit. The provisions of the A.P. Excise Act have to be read in entirety and not in isolation. On a reading of Section 43 read with Section 36 which deals with penalty for misconduct of licensees etc., it is clear that the holder of a licence or permit shall be liable for the commissions and omissions of any person who was in his employment and who is acting on his behalf including for the contravention of the provisions of the Act and the rules, made thereunder or for contravention of conditions of the licence or permit granted or issued under the Act as if he had committed such acts and omissions unless he (licensee) establishes that all due diligence was exercised by him to prevent the same. The aforementioned provisions of the act would clearly show that the master is liable for all the acts of his servant done in contravention of the Act and the rules in the course of the employment or even for the commissions and omissions done by the servant without his express or implied permission unless the master establishes that all due diligence was exercised by him to prevent the commission of such offence. We are of the view that a true construction of the above provisions clearly shows that the licence holder was vicariously made liable for the acts of omissions and commissions on the part of any person who is in the employment of the licence holder and who is acting on his behalf.
It has not been established before us as to how Rule 53(4) of the Rules is ultra vires the provisions of the A.P. Excise Act, 1968 and the A.P. Prohibition Act, 1995.
Even otherwise also, the mediators reports disclose that the servants of the petitioners are alleged to have confessed that they stored the contraband as per the instructions of the licensees and selling both duty paid and non-duty paid liquor on behalfof the petitioners upon their instructions. As already noticed hereinbefore, the truth or otherwise of such factual allegations cannot be gone into by us in exercise of the extraordinary writ jurisdiction and the same has to be dealt with in the enquiry as per law,
Having regard to the facts and circumstances of the cases, we are of the view that these are not fit cases where this Court can interfere with the orders of suspension of the licensees.
For the reasons aforesaid, the writ petitions fails and are accordingly dismissed. There shall be no order as to costs.