Som Distilleries and Breweries Ltd. vs Govt. of A.P. and Others

The petitioner has a contract for the year 1997-98 with respondent No. 3 with regard to supply of Indian Made Foreign Liquor (IMFL). It appears that respondent No.2 issued a letter on 4th July, 1997 to respondent No.3. By this letter he forwarded a list of dealers of liquor to respondent No.3 who according to him had smuggled Non duty paid liquor into the State of Andhra Pradesh. He also requested the respondent No.3 to keep the dealers figuring in the list in a black list. One of the persons in the list was "M/s. Som Distilleries Ltd., M.R". The Petitioner submits that M/s. Som Distilleries Ltd., is a different company than the petitioner-company which is M/s. Som Distillers and Breweries Limited and it is this company which had entered into agreement with respondent No.3. But, once the letter dated 4-7-97 was issued by respondent No. 2 and sent to respondent No.3, the respondent No.3 stopped purchasing liquor from the petitioner. Therefore, he filed a Writ petition in this Court being W.P.No.25576 of 1997. This Writ Petition was disposed of by this Court on 13-10-1997. The order passed by this Court is reproduced hereunder:

"Heard Komireddi Ramuloo, learned counsel for the petitioner and learned Government Pleader for Prohibition and Excise.

The petitioner has questioned the action of the third respondent Corporation in not processing the petitioner''s purchase orders and permits and not purchasing the liquor (IMFL & Beer) from the petitioner on the ground that M/s. Some Distilleries Limited, Madhya Pradesh listed at Serial No. 14of the letter Cr.No.2164/97/DPE/C6 dated 04-071997 of the Commissioner of Prohibition and Excise relates to another entity and not the petitioner.

In short, it is the contention of the learned counsel for the petitioner that there is no case either registered or pending against the petitioner- M/s Som Distilleries & Breweries Limited and it is only misinterpretation of the letter dated 4-7-97 of the Commissioner, black listing certain distilleries, the petitioner is being treated in '' ''black list'''' for no fault of his.

It is seen that the petitioner has brought the above facts to the knowledge of the second respondent -- Commissioner of Prohibition and Excise through his representation dated 30-07-1997 and no action has been taken thereon. Hence, the present writ petition is filed. In the light of the above, this Writ petition can and is being disposed of at this stage with a direction to the second respondent - Commissioner of Prohibition and Excise to dispose of the representation filed by the petitioner on 30-07-1997 in accordance with law within a period of two weeks from the date of receipt of a copy of this order.

With the direction as above, the Writ petition is disposed of"

It is submitted that, by virtue of the order supra the respondent No.2 i.e., Mr.A.K Goel, Commissioner of Prohibition and Excise was duly bound to decide the representation made by the petitioner within the time stipulated by the order, that was two weeks. But, the petitioner submitted that till the date the Writ petition was filed, second respondent had not passed any order on the representation. The petitioner thereafter, after waiting for the time granted by the High Court gave a legal notice to the respondent on 14-12-1997 requesting them to implement the order of the High Court within seven days. These notices were acknowledged by the respondents but the order of the Court was not implemented. It has been further stated that, since according to the petitioner the respondent No.2 Sri A.K. Goel, Commissioner of Prohibition & Excise had wilfully disobeyed the orders of the Court, he filed a Contempt Case vide SR No. 87269/97. That petition appears to be pending in the court. The contempt petition was filed on 27th December, 1997 and this writ petition was filed on 30th December, 1997. The learned Counsel for the petitioner stated that, on the same day when contempt was filed, the respondent No.2 passed another order on 27th December, 1997 which was purportedly an order passed in pursuance of the directions of this Court referred above. Therefore, he challenged the order dated 4-7-97 and 27-17-97 by this writ petition.

Notice was issued to the respondents and during the pendency of these proceedings two other orders came to be passed by respondent No.2 one is dated 5th January, 1998 and another is dated 19th January, 1998. The petitioners were allowed to bring on record these orders and respondents were given a chance to file counter. Therefore, the legality or otherwise of orders dated 4-7-97, 27-12-97, 5-1-97 and 19-1-97 is to be examined in these proceedings.

By order dated 4-7-97 respondent No-2 asked respondent No.3 to black list certain liquor dealers, one of the names as pointed out earlier was M/s Som Distilleries Ltd-, and the case of the petitioner was that he was not M/s. Som Distilleries Ltd., but he was M/s. Som Distilleries & Breweries Limited and for this reason he filed a writ petition in this Court which was disposed of by this Court on 13-10-97. So, the respondent No.2 was duty bound in terms of the orders of this Court which has assumed finality, to dispose of the repiesentation of the petitioner within two weeks which he did not do. However, non-implementation of the judgment within the stipulated period is a subject-matter of contempt proceedings and this Court does not want to go into that question for the present. But the High Court order led to passing of an order that is dated 27-12-97 which makes an interesting reading. In the title of the case, it was shown as "M/s Som Distilleries (P) Ltd., Madhya Pradesh" as the appellant whereas the case of the petitioner all along is that he was not representing M/s. Som Distilleries (P) Ltd., but was representing M/s. Som Distilleries & Breweries Limited. The order starts with the assertion by respondent No.2 that the case came up for hearing before him on 18-10-97 and one Sri Nirmal Chandra Jain, senior Advocate appeared for appellants and then he went on passing the order. He gave certain reasons and ultimately on page-3 he made the following observation.

"Aggrieved by the above order M/s. Som Distillery (P) Ltd., filed a W.P.No. 25576 of 1997 in the Hon''ble High Court. The Hon'' ble High Court while disposing of the W.P. on 13-10-97 have directed the Commissioner of Prohibition and Excise to dispose of the representation of the petitioner filed on 30-7-97 in accordance with the Law and within (2) weeks from the date of receipt of the judgment. M/s. Som Distilleries & Breweries Ltd., filed a representation on 20-10-97 only. The representation stated to have been filed on 30-7-97 has not been received in this Office. The case was posted for hearing on 18-10-97. The party and his advocate appeared on 18-10-97 and they mainly argued on the following lines:"

When one peruses the extract of the order, one finds that the respondent No.2 referred to Writ Petition No. 25576/97 as a Writ petition filed by M/s. Som Distilleries Pvt. Ltd., whereas this writ petition was not filed by M/s. Som Distilleries Pvt. Ltd., but has been filed by M/s. Som Distilleries and Breweries Ltd. He knew that he had to decide the matter within two weeks from the date of receipt of the judgment but in the quoted para he refers to M/s. Som Distilleries & Breweries Ltd., and states that they filed representation only on 20-10-97 and further states that there was no representation received by him which according to the petitioner had been filed on 30th July, 1997. He further states that he heard the matter on 18-10-97. No representation had been received by the respondent, according to him which had been made by the petitioner on 30-07-97 when he passed the order. The second representation which was made by the Writ petitioner was made according to the respondent No.2 on 20-10-97 but he had heard the matter on 18-10-97 and heard the Counsel for petitioner also.

I have failed to understand, when the representation dated 30-7-97 had not been received by him and the only representation made by the petitioner was made on 20-10-97, what was the matter he heard on 18th October, 1997 two days earlier than the actual representation was made. This has neither been explained in the counter nor explained by the learned counsel for respondents. The only guess one can make is that, perhaps M/s. Som Distilleries Pvt. Ltd., being a different concern had made a representation which was heard and decided by the respondent by virtue of the order under reference and infact respondent No.2 had only tried to create a camouflage of referring to the order of this court to escape his own liability by stating that he was passing this order in execution of the orders of the High Court. In fact the petitioner did not decide the representation of the petitioner by virtue of the order dated 27-12-97 because on the day he had the matter no representation even according to him made by the petitioner was before him. While disposing of the matter he writes:

"I am of the firm opinion that the order issued in Cr.No. 2164/97/DPE/C6, dated 4-7-97 by the Director of Prohibition & Excise, Hyderabad are in accordance with the Rules and spirit of the Act."

But, this order of 4-7-97 referred above was in fact passed by him.

The learned Counsel for the petitioner has staled that when 4-7-97 order was passed, this order affected many persons including M/s. Surya Distilleries, Mangalore and M/s. Cawasji Investment Pvt. Ltd., Bangalore. Both the concerns filed writ petitions in this Court, one of the writ petition being W.P. No. 21192/97 which was decided on 4-9-97 and the other being W.P.No. 15301/97 which was decided on 29th July, 1997. In W.P. No. 21192/97 the Court passed the following order

"Heard Sri. P. Sitarama Raju, learned Counsel for the petitioner and learned Government Pleader for Prohibition and Excise. The matter is one squarely covered by a judgment of this Court in W.P. No. 15301/97 dated 20-7-97.

In the case of M/s Cawaschi Investment (P) Limited (cited supra) this Court held that the proceedings impugned therein are void and were directed to be set aside on the ground that by the orders impugned therein the Commissioner had withdrawn the approvals granted in respect of "Chairman Fine Whisky Lables" was passed without affording an opportunity of hearing the petitioner therein. This court, further held that mere absence of a rule with regard to show cause notice to be issued before the approval is withdrawn is noi a decisive factor. What is decisive is the affect of the exercise of power.

In the instant case the impugned proceedings 4-7-97 the Commissioner has directed withdrawal of the lable "Old Tavern Whisky" on the ground of violation of the provisions of A.P. Excise Ac; and Rules. The said order has been passed without being preceded by a show cause notice or having afforded an opportunity of being heard to the petitioner. The impugned order thus, suffers from vice of \\iolation of principles of natural justice.

In the light of the Judgment in the case of M/s Cawasji Investments Private Limited (cited supra) the impugned orders in the instant case are accordingly required to be set aside on the said ground and be hereby set aside.

This order, however, shall not preclude the respondent-Commissioner from taking any appropriate action against the petitioner for any violation as may be open to the respondent in the law."

The Counsel for petitioner states that, since basic order dated 4-7-97 has been set aside by this Court with respect to two other concerns on the ground that it is violative of rule? of natural justice therefore this Court should also extend the same treatment to the present petitioner as regards the order dated 4-7-97 is concerned if at all this order concerns the petitioner concern. He further states that order dated 27-12-97 is a nullity and no arguments are needed to be made for getting the order dated 27-12-97 quashed as regards the petitioner because reasons have been given by respondent No.2 himself for holding that the order is nullity with regard to the petitioner.

During the pendency of these proceedings, respondents No.2 passed another two orders one being dated 5-1-98. The 5-1 -98 order addressed to 3rd respondent also gives an interesting reading:

"I invite your attention to the reference 1 st cited wherein a list of Distilleries of various states were kept in black list were sent to you. Out of these (16) Distilleries M/s. Som Distilleries Ltd., Madhya Pradesh was one among them The appeal filed by M/s Som Distilleries Ltd., before the Commissioner of Prohibition and Excise was disposed upholding the orders issued in the referenced 2nd cited keeping them in ''Black list''.

I have to further state the M/s Som Distilleries and Breweries Ltd., District Raison M.P. State is also involved in the following crime cases.

(1) Cr.No. 540/90-91 dt. 6-7-97 of Yalamanchili S.H.O. Visakhapatnam District involving 4330 (N); 20(P) of ''Heman Fine Whisky'' and 60(Q) of Rocky Whisky.

(2) Cr.No. 380/96-97 dt. 12-7-97 of SHO Prattipadu EG. district involving 4,8000 (N) of Heman Fine whisky.

(b) 5328(N) of Heman Fine whisky

(c) 3504(N) of Piano Fine Whisky

(d) 969 (N) of Heman Gin and one Tanker bearing No. Cl 1 6272.

As M/s Som Distilleries and Breweries Ltd., Raison M.P. was found in indulging in smuggling of IML into the Andhra Pradesh State causing loss of Revenue to the Government, M/s. Som Distilleries and Breweries Ltd., District Raisan M.P. may also be kept in ''Black List''."

From bare perusal of the order, it appears that now on 5th of January, 1998 the respondent No.2 became conscious of the fact that M/s. Som Distilleries Ltd., and M/s. Som Distilleries & Breweries Ltd., were two different concerns. He states in the order that M/s. Som Distilleries Pvt. Ltd., had filed an appeal which he has dismissed upholding the order dated 4-7-97. After saying that, the respondent No.2 says that M/s. Som Distilleries and Breweries Ltd., is also involved in certain crimes and after giving the particulars of the alleged crimes he asks the respondent No.3 that M/s Som Distilleries & Breweries Ltd., Raison, M.P. was found indulging in smuggling of IML into the Slate of Andhra Pradesh causing loss of revenue to the Government, therefore this concern should be kept in the ''black list''.

So, on his own saying respondent No.2 for the first time passed an order against the petitioner on 5th of January, 1998. Till 5th of January, 1998 there was no order passed against the petitioner. Even the High Court had directed respondent No.2 to consider the matter and pass appropriate orders but he misdirected himself and did not carry the order of the High Court, but during the pendency of these proceedings i.e., on 5-1 -98 he passed an order placing the petitioner firm on the black list. So, the order passed on 4th July, 1997 and 27-12-97 had not at all been passed against the petitioner therefore they were non existent as far as the petitioner was concerned. This can be said even solely on the strength of the order passed by respondent No.2 on 5th of January, 1998. If Som Distilleries & Breweries Ltd., had been black listed on 4th July, 1997 and that order had been upheld by order dated 27th December, 1997 what was the necessity for the respondent No.2 on 5th of January, 1998 to say that M/s. Som Distilleries and Breweries Ltd., are also involved in the crime cases and they should also be kept in the blacklist

Therefore, no further discussion is needed by this Court with regard to the orders passed on the 4th July, 1997 and 27th December, 1997 as they were not passed against the petitioner. Two facts however emerge :

(a) That no order had been passed against petitioner till 5th January, 1998 yet he was stopped from carrying on his business with affect from 4th of July, 1997

(b) That representation- of petitioner was not considered in spite of orders of Court even upto 5th of January, 1998.

On 19th of January, 1998 another order was passed which according to respondent No.2 disposed of the representation of the petitioner. So, according to the respondent No.2 he has decided the representation which he was asked to do by the High Court now on 19th January, 1998. Another important fact emerges from this order. The High Court''s order was not implemented till 19-1-1998.

Now the question revolves around the legality or otherwise of the order passed on 5-1-1998. This order has been challenged by the learned counsel for the petitioner on various grounds and I have heard the learned counsel for the parties at length. Firstly, Mr. Singhvi contended that the order has been passed at the back of the petitioner without giving him a chance of putting forth his point of view. Secondly, Mr. Singhvi has argued that it is a case of sheer malice, the petitioners were insisting from the day they filed the first representation that their concern was different than the concern which has been black listed on 4-7-1997, But respondent No.2 did not heed to (heir request and did no implement the orders of this Court in deciding the representation of the petitioner. On the other hand he passed an order on 19th January, 1998 creating a confusion so that he could say that he decided the representation made by the petitioner. Somebody else was before him and somebody else''s case was argued before him when he decided the rights pertaining to the petitioner. Therefore, malice writ large in the actions of second respondent can easily be perceived if all the four orders passed by him in this matter are considered. Thirdly, Mr. Singhvi hai contended that no orders whatsoever were passed in fact against the petitioner or communicated to the petitioner but whatever has been done by respondent No.2 is by way of communication between respondent No.2 and 3 resulting in deprivation of business to the petitioner which he was legally entitled to do. He submits that, till date from July, 1997 almost half of the financial year has been lost and his client has suffered losses of crores of rupees without passing any order by respondent No.2.

The learned Counsel for respondent has submitted that it is not in each case that rules of natural justice are attracted and there could be cases where no right of hearing could be demanded before an order could be passed. He further submits that even a post order hearing would be sufficient in certain cases. He has also argued that this action of the respondent No.2 be presumed to be an implied suspension of licence which is a power available to the respondent No.2 in terms of section 31 of the A.P. Excise Act, 1968. he further states that, may be there were some genuine mistakes but no mala fides can be attributed to respondent No.2. He further stated that the petitioner is involved in smuggling of the liquor and therefore he cannot complain that he is being deprived of doing the business. It has also been argued by the learned Counsel for the respondents that since the petitioner or anybody else has no right to do business in liquor therefore he cannot complain even if a privilege which had been granted to him was withdrawn.

Coming to the first argument of Mr. Singhvi that no order was passed against the petitioner but because of the communication between respondent No.3 and respondent No.3 the petitioner was deprived of his business which is against rules of natural justice, as has been seen, at no point of time any order was communicated to the petitioner and in any way the first two orders were not with respect to petitioner and only the third and fourth orders have been passed against the petitioner which have not been communicated to him. Therefore, on this count the communication dated 5th January, 1998 cannot sustain. There is another reason also for which the order dated 5-1-98 cannot sustain, that is, before passing this order no show cause notice was ever given to the petitioner. Even if it is conceded, as has been suggested by learned counsel for respondents that this is a case of implied suspension of licence, even then this order cannot sustain. He relied on section 31 of the A.P. Excise Act, but the proviso to the section clearly lays down:

"Provided that no licence or permit shall be cancelled or suspended unless the holder thereof is given an opportunity of making his representation against the action proposed."

Therefore, even if the contention of the learned counsel for respondents is accepted that this was a case of implied suspension of licence, even then the order cannot sustain on the ground that no chance of showing cause against the order was ever given to the petitioner.

Both the Counsels have relied upon various judgments of the Supreme Court, but I do not think it is necessary in the light of the circumstances to refer all those judgments because of the fact that the order dated 5th of January, 1998 has been passed by way of a communication to respondent No.3 and result being deprivation of business to petitioner and also that this was passed without giving a hearing to the petitioner.

The order is also sought to be defended on the ground that only a privilege had been extended to the petitioner which has now been withdrawn and therefore he cannot be heard to complain about such deprivation. In this connection I have found that the licence granted to the petitioner to deal with business of liquor has not at all been disturbed only petitioner''s right to deal with a third party has been stopped by respondent No.2. If a privilege is granted by the State to the petitioner it is true that he can be deprived of such privilege, as has been laid down by Supreme Court in Khoday Distilleries Ltd. and Others Vs. State of Karnataka and Others, and in State of Andhra Pradesh and others, etc. Vs. McDowell and Co. and others, etc., nobody has fundamental right to carry on business in liquor but at the same lime the Supreme Court has held that Article 14 has appropriate application. In the present case, the petitioner has not at all been deprived of the privilege which was granted to him but only the respondent No.2 has tried to deprive him of the business which he was doing with respondent No.3 under a contract which is operative. Therefore, this argument also does not help the respondents. It was also argued on behalf of the respondents that there can be a post order hearing and the order dated 19-1-1998 was sought to be shown as an order which according to the respondents has been passed after considering the representation of the petitioner. The circumstances in which the order has been passed have been narrated in detail in this judgment The representation of the petitioner was decided according to the respondents twice and the order dated 19-1 -98 is the second time. When one goes through the order, one finds that the respondent No.2 has taken three instances into consideration while passing the order. One is with regard to Cr.No. 540/96-97 dated 6-7-97, second is Cr.No. 380/96-97 dated 12-7-97 and the third is Cr.No. 431/96-97, dated 8-8-97.For the first time the respondent No. 2 had passed an order black listing certain concerns on 4-7-1997 and for seven months the respondent No.2 claimed that present petitioner was one of them, but all the instances with regard to commission of the offences as narrated in the order dated 19th January, 1998 relate to the period subsequent to 4th July, 1997, therefore it becomes doubtful whether there were actual occurrences or not Mr. Singhvi submits that, his clients were never informed about the pendency of these complaints and he submitted that no case within the meaning of Criminal Procedure Code is pending against the petitioner. Further, I am of the view that this material was not put to the petitioner before the order was passed against him because no mention of these cases is made in the order dated 5-1-1998. It is true that respondent No.2 has stated that he passed this order on the basis of representation made by the petitioner on 30th July, 1997. The representation made by the petitioner dated 30-7-97 was against the order of 4-7-97 which in fact was not an order against the petitioner, therefore only he had claimed in his representation that the order has not been passed against him. In between, the order dated 5th January, 1998 came into existence which was passed against the petitioner. Against that order there was no representation and that order was never communicated to the petitioner and it was only disclosed to this court that an order has been passed on 5th January 1998, therefore there was no post order hearing also.

Lastly, the learned counsel for the respondents has submitted that, since the petitioner is involved in smuggling activities he cannot be allowed to run business. This cannot be accepted because unless the petitioner is given atleast a chance to defend himself he cannot be deprived of doing his business.

For these reasons, I allow this Writ petition and quash the order dated 5th January, 1998 and 19th January, 1998. No orders are need to be passed with respect to the orders dated 4-7-97 and 27-12-97 because now it is admitted position that those orders were not passed with respect to the petitioner. However, in case there is any evidence to suggest that the petitioner has indulged in unlawful activities of smuggling, the respondents have ample powers under the Act to proceed against and they shall be at liberty to proceed in accordance with law against the petitioner. Costs assessed at Rs.1000/-.