NARANG INDUSTRIES LTD Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of india, the petitioner challenges an order dated 17th January, 1984, passed by the Excise Commissioner, U. P, levying a sura of Rs. 19.278 under Rule 466 of the U. P. Excise Manual.

(2.) The petitioner is a distiller and manufacturer of country liquor holding a licence in Form P.O. 2 and for the year 1977-78 it was granted a contract under the provisions of Rule 417 of the U. P. Excise Manual for supply of country liquor to the Government bonded warehouse at Varanasi and Gyanpur. The impugned order has been passed on the allegations that the petitioner M/s. Narang Distillery who was granted a licence in Form C.L. 1 failed to supply country liquor from 5th July. 1977 and had thus violated the conditions of the licence which required the dealer to maintain certain minimum stock and, therefore, in terms of Rule 466 of the U. P. Excise Manual it was liable to pay a penalty of Rs. 17.50 per alcohol litre (A.L.J. The petitioner's contention is that the conditions 9 and 10 of the licence issued to it in Form C.L. 1 were as under: "6. That condition Nos. 9 and 10 of the licence in Form C.L. 1 stand as under : "9. Licensed vendors shall be entitled to have spirit issued to them will all reasonable expedition in such quantities subject to reasonable limit and at any of the prescribed strength, as they require on proof of payment into a Government treasury of the Excise duty at the rate from time to time prescribed and of the supply price at the rate agreed to in this contract and in the case of country spirit shops under the direct management on the production of a permit granted by the District Excise Officer or an Excise inspector authorized in this behalf." '10. Failure to supply spirit as specified in condition No. 9, supra, within what the Collector considers a reasonable time shall entail a penalty, at the discretion of the Excise Commissioner, not exceeding Rs. 17.50 per alcohol litre spirit demanded but not supplied, in such cases the spirit may be purchased by the Collector from elsewhere at his discretion and at the risk of the contractor. The penalty, the cost of spirit purchased and any loss to Government, that may result may be deducted from the amount, if any, due to the contractor or from his deposit or from the price received under condition No. 2 above, provided that if failure to supply is proved due to (1) damage to or in the factory of the contractor from causes beyond the contractor's control or (2) strikes, pestilence, riot, violence of the mob or other resistible force or (3) to failure on the part of railway authorities to supply sufficient wagons for transport of raw materials to and finished products from the contractors factory and if immediate notice of the said cause or occurrence has been given to the Excise Commissioner and the Collector, the penalty of Rs. 17.50 per alcohol litre of spirit in this condition will not be exacted from the contractor."

(3.) According to it during the period April, 1977, 12,280 bulk litres (B.L.J of plain and 7258 B.L, of spiced spirit were supplied by the petitioner to warehouse at Gyanpur as against 8240 B.L, of plain and 484 B.L. of spiced country liquor during the year, 1976-77, it has given certain other figures also to show that there was a sudden heavy demand that resulted in the shortage, it is not necessary to deal with those details, in short, its contention is that because of a sudden abnormal heavy demand in the period preceding 2nd May, 1977, there was a breakdown in the supply and the minimum prescribed stock could not be maintained. On 26th April, 1983, the Excise Commissioner issued a show cause notice to the petitioner as to why a penalty of Rs. 24.480 be not imposed, it is contended that the Government actually did not suffer any loss and that as provided in the Rule, the Collector did not requisition the supply from any other area. By the impugned order a penalty of Rs. 19.278 has been levied, it is contended that an action of the Commissioner is invalid and that the Government had no power to make any Rule of that type, it is also contended that the order does not show that the petitioner failed to "supply the country liquor within a time judged by the Collector to be reasonable nor does it show that the supply was obtained from elsewhere. Further, the Commissioner has not found that the Government actually suffered any loss.