ISSAC Vs. ASSISTANT EXCISE COMMISSIONER

JUDGEMENT

(1.) IN this writ petition, the question of law that arises for consideration relates to the interpretation to be given to sub-rules (1)and (3) of R. 8 of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, (the Rules ).

(2.) THE petitioner was the successful bidder of arrack shop Nos. 4, 7 to 12, 15, 19, 20 to 24 and 26 to 28 in Sultan's Battery Range in Wynad District for the financial year 1981-82 in the auction held on 27-3-1981 pursuant to the sale notification in accordance with S. 18a of the abkari Act 1 of 1077 (the Act) and R. 3 (1) of the Rules, the bid amount being rs. 50,43,000/-; he was also the successful bidder in respect of 15 arrack shops in Kalpetta Range in Wynad District in the auction held on 27-3-1981, the bid amount being Rs. 51,11,000/ -. THE first respondent, the Assistant Excise commissioner, Kozhikode, who was the auctioning officer, had announced 1350 litres of arrack to be the monthly quota allowed for the above shops put up to auction in Sultan's Battery Range and 2353 litres to be the monthly quota for the shops in Kalpetta Range. For the month of April 1981 for the arrack shops in the Sultan's Battery Range this monthly quota was supplied (800 litres on 3-4-1981, 300 litres on 9-4-1981 and 250 litres on 17-4-1981 vide: Ext. P16 at page 85 of the Paper Book ). Though as per order No. D3-2994/81 dated 20-4-1981, a true copy of which is Ext. P4 (page 83 of the Paper Book), on the recommendation of the Excise Inspector, Sultan's battery, the first respondent Assistant Excise Commissioner accorded sanction for the issue of 25,000 litres of arrack on commission basis for the shops in sultan's Battery Range for the month of April 1981 in excess of the announced monthly quota, out of this, the petitioner was able to draw only 1000 litres; and that was on 27-4-1981; he had remitted the commission and duty for 2000 litres on 27-4-1981: but he was not able to draw that, as arrack was not available for supply. This was the position in contrast with that of April 1980 during which month the petitioner had received for sale in the above shops 19,000 litres of arrack in excess of the announced monthly quota. Pointing out these facts the petitioner had sent a representation dated 29-4-1981 to the 1st respondent Assistant Excise Commissioner praying for the remission of kist for the month of April 1981; and the copy of that representation is Ext. P-16 Ext. P-15 is the copy of order No. D3-2994/81 dated 11-5-1981 passed by the 1st respondent Assistant Excise Commissioner whereunder, referring to the application dated 11-5-1981 made by the petitioner, and Ext P-14 order passed by him earlier on 20-4-1981, sanction was accorded for the issue of 20001itres of arrack for which duty and commission (which came to Rs. 7000/-) were remitted by the petitioner as per TR. No. 1005 dated 27-4-1981. subject to availability of stock of arrack. THE total quantity of arrack supplied to the petitioner for bis 18 shops in Sultan's Battery Range is shown in Ext. P-24 which reveals that as against a total additional quota of 4,10. 000 litres applied for, the additional quota granted was only f or 77 240 litres, whereas the corresponding figures for 1979-80 for 9 shops in Sultan's Battery Range was 1,52,700 litres applied for and 1,52,700 litres granted. In 1980-81 for the same 9 shops in Sultan's Battery Range the additional quota granted was 1,51,400 litres for the period April 1980 to January 1981 (no supply having been made in the months of February and March 1981 for want of stock ). By the middle of May 1981, the petitioner approached this Court with this Writ petition seeking the following reliefs: (1) to declare that R. 5 (2) of the Rules is ultra vires; (2) to issue a writ of mandamus directing the 1st respondent Assistant Excise Commissioner to supply the petitioner with additional quantity of arrack as requested for by him, on payment of commission to be fixed by the Board of Revenue and quota quantity of arrack as announced at the time of auction on payment of its price; (3) to issue a direction to the 3rd respondent State of kerala not to enforce monthly payments due, calculated on the basis of the bid amount, except those amounts payable on the basis of arrack supplied viz. , on the basis of statement to be filed in that behalf; (4) to issue an order preventing the Government from conducting any reauction and from terminating the supply of not only the arrack quota fixed but also the additional quantity of arrack in accordance with the rules and the contract executed with the Government; (5) to issue a direction to the 3rd respondent not to appropriate the advance paid by the petitioner towards any amount of kist alleged to be due from the petitioner concerning Abkari Auction for Sultan's battery Range conducted on 27-3-1981; (6) to issue a writ of mandamus restraining the respondents from collecting the petitioner kist other than in proportion to the arrack actually supplied to the petitioner as against the total quantity of arrack requisitioned or demanded by the petitioner from the Government; and (7) to issue appropriate order as is deemed fit and proper in the circumstances of the case. THE writ petition has subsequently been amended incorporating a prayer for quashing the revenue recovery proceedings initiated against the petitioner for recovery of the abkari dues for the year 1981-82.

(3.) IT is abundantly clear from the material available on record that during the last two months in 1980-81 (about which period we are not directly concerned in these writ petitions) and practically during the whole of 1981-82 there was acute scarcity of arrack in the State of Kerala. Ext. P-8 is an extract from the Mathrubhoomi dated 9-7-1981 in which the Excise minister is stated to have told the Kerala Legislative Assembly that Kerala produced only 14 percent of the total requirement of arrack for consumption in the State; and that 86 percent had to be brought from outside. Therein it is also seen stated that though the Government of Tamilnadu had agreed to supply ten thousand tons of molasses with which ten lakhs litres of spirit could have been produced, not even one litre was supplied by that Government; and that was the main reason for the scarcity of arrack in the State. The same report contained the further information that in that year (1981-82) the auction of arrack shops fetched only 43 crores against 45. 27 crores in 1979-80. and Rs. 51. 17 crores in 1980-81. Ext. P-7 is an extract from the Malayala Manorama dated 15-7-1981 under the caption "arrack to be produced from tapioca". IT was reported inter alia that the Excise Minister told the assembly that it was decided to produce arrack from tapioca to meet the acute scarcity of arrack in the State According to the report the Minister had told the Assembly that it would be in the Chittoor Co-operative Sugar Mills that the production of arrack from tapioca would be begun; that the process would be later extended to the Mills at Thiruvalla and Pandalam; and that, if necessary, new distilleries would be established for the purpose. Ext. P7 is stated to be extract from the report in the Deepika dated 30-5-1981 of the disclosure stated to have been made by the Excise Minister Sri M. K. Krishnan at a Press conference at Trivandrum that out of 1845 arrack shops in the State 765 shops remained without being auctioned for want of bidders mainly on account of the scarcity of arrack in the State, for, whereas as against 60 lakhs litres during the previous year, not a drop of rectified spirit was received in Kerala from outside; and what was allotted by the Centre was not also received. He is stated to have added that to remove this scarcity, steps were being taken to produce arrack in the distilleries in Kerala; arrangements were being made in the chittoor Mills for that purpose; however, for that Mill to go into production, it might take one year. Ext. P6 is an extract from the Mathrubhoomi dated 24-4-1981. Under the caption "arrack distillation would be entrusted with private distilleries also" it was reported that distillation of arrack by private distilleries to remove scarcity of arrack was an important decision taken at the meeting of the Council of Ministers on Wednesday. IT also added that because of the scarcity of arrack in the State as a result of the "spirit Scandal", as many as 35 per cent of the arrack shops remained without being auctioned. The report went on to say that even the successful bidders did not open the shops as arrack was not available. According to the report 1,75,000 litres of arrack was the monthly requirement of the State whereas the production capacity of the State came to 45,000 litres only a month. If the ten lakhs litres spirit and 5000 tons of molasses allotted by the central Government were made available, it might have been possible to meet the requirements. IT was only if it could be assured that arrack would be available, the auction in respect of the remaining shops could take place. The private distillerates would produce arrack from jaggery or from spirit that might be obtained. Ext. P5 is an extract from Malayala Manorama dated 18-4-1981. Therein it was stated that to tide over the scarcity of arrack, the government had decided to entrust the production of arrack to private distilleries through Mannam Sugar Mills, Travancore Sugar Mills and Chittoor sugar Mills which were public sector concerns. IT was stated therein that because of the scarcity, and there being no prospect of the situation improving immediately, nearly half the number of arrack shops could not be auctioned; though auctions were conducted several times, there were no bidders; remission of kist was demanded by those who had bid in auction, but to whom arrack could not be supplied; and the Government was anticipating a loss of half the revenue which it was expecting from that source. This was the position that was stated to have been explained by Sri M. K. Krishnan, the Excise Minister, at the meeting of Liaison Committee of the ruling party in the light of the decision taken by the Cabinet the previous day. Ext. P11 is the copy of G. O. Rt. 122/81/td dated 25-2-1981. The material portion of that order made as follows: "the present supply position of arrack in the State is very precarious. To tide over the situation the existing arrangements for the supply of arrack within the State has to be reviewed for making available adequate quantity of arrack from alternative sources. Government have therefore considered the question in all its aspects and are pleased to issue the following orders: (i) Alternative arrangements will be made with the public sector unit within the State to distill spirit out of jaggery. (ii) Fifty lakhs litres of jaggery spirit arrack will be produced by the above distilleries. (iii) The issue price of arrack to contractors will be fixed at Rs. 6/- per litre. (iv) The existing rate of commission of Rs. 2/- charged on arrack supply in excess of the prescribed quota will be completely waived in respect of jaggery spirit arrack. " Ext. PI is an extract from the report dated 18-3-1981 in the Desabhimani dated 19-3-1981 under the caption "spirit would be supplied to arrack shops": therein it has been stated inter alia that the excise Minister Sri M. K. Krishnan at a Press Conference had stated that steps were being taken to ensure the supply of spirit required by the arrack shops in the State; other methods also would be adopted besides producing arrack through the three Sugar Mills in the State with the molasses allotted by the Centre; the intention is to produce arrack from jaggery; the cost of production of arrack from molasses per litre would be Rs. 1. 10, whereas it would be Rs. 12/-if produced from jaggery; even then, in order to remove the scarcity of arrack it was decided to adopt that method; it was possible to produce spirit from tapioca: the cost of production of arrack from tapioca would be Rs. 5/- only per litre; for production of spirit from tapioca separate distilleries were necessary; for producing arrack from jaggery the distilleries in existence in kerala would be sufficient. Ext. P10 is a statement showing the quantity of arrack supplied to the petitioner for the shops in Sultan's Battery Range during 1979-80 and 1980-81; and Ext. P24 is the statement showing the bid amount, the monthly quota applied for, the additional quota applied for, additional quota granted, and the total quantity granted in respect of the kalpetta Range for the years 1975-76,1976-77,1977-78 and 1978-79; and separately for Kalpetta and Sultan Battery Ranges after the former Kalpetta range was bifurcated into two for the years 1979-80,1980-81,1981-82 and 1982-83. Ext. P-25 is an extract from the profit and loss account for the year ended 31st March 1982 in respect of the petitioner's arrack shops at Kalpetta and Sultan's Battery Ranges. IT showed a net loss of Rs. 78,29,876. 15.