Fort Saint George, Chennai-9.2. The District Collector Coimbatore.3. The Excise Officer Coimbatore v. P.V.Suresh2. The Tahsildar (R.R.) Trichur Kerala State

J U D G M E N TK.K.SASIDHARAN, J.The legality of the revenue recovery proceedings initiated bythe Collector of Coimbatore and transferred to the Collector,Trichur in the State of Kerala to recover the excise arrears from thefirst respondent is the subject matter involved in the present writappeal.FACTUAL MATRIX :-2.The first respondent (hereinafter referred to as "thelicensee") was the successful bidder in the auction conducted by theExcise Department, Coimbatore on 26.5.1981 for the grant of privilegeto conduct Arrack Shop No.69 for the Excise year 1981-82. The bidwas confirmed in the name of the licensee on a monthly rent ofRs.15,555/-. The very same licensee took the privilege for theconduct of Toddy Shop No.1 at Kinathukadavu and Toddy Shop No.4 atSivakkalampalayam in Pollachi Taluk for the Excise Year 1981-82. Theshop bearing T.S.No.1was taken on a monthly rent of Rs.14,250/- andthe other Shop bearing T.S.No.4 was taken on a monthly rent ofRs.7,200/-. It was the case of the licensee that without any rhymeor reason and on account of the influence exerted by some of thepolitical leaders of the ruling party, who were inimically disposedof against him and opposed to his conducting the shop, thefunctioning of the Toddy shop was stopped by the authorities and are-auction was conducted. With respect to the Arrack shop it was thegrievance of the licensee that the appellants (hereinafter referredto as "the licensing authority") failed to supply the requiredquantity of arrack and they also failed to comply with the terms andconditions of the auction and as such he was forced to discontinuethe business in arrack. Subsequently, the licensee received a noticefrom the second respondent calling upon him to pay a sum ofRs.2,12,807.90 stated to be the excise arrears for the year 1981-82.The said notice was challenged before the High Court of Kerala inO.P.No.560 of 1991 and the O.P was disposed by granting liberty tofile appropriate proceedings before the proper forum. Accordingly thelicensee filed a writ petition before this Court in W.P.No.7238 of1997. In addition to the challenge with regard to theunsustainability of the claim made by the Licensing Authority, thelicensee also challenged the fixation of notional loss. According tohim there was no adjudication with respect to the liability by theLicensing Authority and he was taken by surprise on receipt of therecovery notice from the second respondent. Accordingly he prayedfor quashing the recovery notice dated 3.12.1990 issued by the https://hcservices.ecourts.gov.in/hcservices/ Village Officer, Trichur and a consequential direction to thelicensing authority to refund a sum of Rs.1,14,015/- deposited byhim.3.The contention of the licensee was refuted by the Governmentas well as the Licensing Authority and in the counter affidavit filedby the Special Secretary to the Government (Prohibition and Excise)they have detailed the events commencing from the confirmation of bidin favour of the licensee and the re-auction conducted by them onaccount of his failure to conduct the arrack as well as toddy shops.With respect to the Arrack Shop bearing No.69 at VettaikaranpudurVillage, it was the contention of the appellants that the licenseeconducted the shop till 4.9.1981 and failed to remit the monthly kistfor the month of September, 1981 as per the agreement and on accountof his failure to pay the monthly kist, the Licensing Authority wasconstrained to re-auction the shops at the risk and cost of thelicensee as provided by Tamil Nadu Toddy and Arrack Shops(Disposal inAuction) Rules, 1981 and the shops were brought to re-sale aftergiving due notice to the licensee. In the re-auction conducted on25.9.1981 one Thiru R.V.Subramaniam was the highest bidder on amonthly kist of Rs.7,550/. As the amount fetched in the re-sale wasvery low when compared to the kist amount originally fixed, auctionwas conducted once again on 12.10.1981 by giving due publicity. Inthe re-auction conducted on 12.10.1981 one Arumugam was the highestbidder on a monthly kist of Rs.12,613/-. However the LicensingAuthority was not in a position to confirm the bid in favour of thesaid Arumugam on account of the suit filed by the licensee inO.S.No.1027 of 1981 and the order passed by the Civil Court grantinginterim injunction against confirmation. There were also WritPetitions challenging the confirmation in W.P.Nos.10121 of 1981 and10121 of 1981. By the time the suit in O.S.No.1027 of 1981 as well asthe writ petitions were disposed of, the period for which the licencehas been granted in the re-auction to sell the arrack expired and assuch the matter has become infructuous. However liberty was grantedby this Court to the State to enforce its claim against thedefaulters in appropriate proceedings.4. With respect to Toddy Shop No.1, it was the contention of theappellants that the licensee was in arrears from September, 1981 andhe voluntarily closed the toddy shop and as such the LlicensingAuthority was forced to conduct re-auction. Accordingly, re-auctionwas conducted on 25.9.1981 and 12.10.1981. In the re-auction held on12.10.1981 Thiru R.V.Subramaniam, made an offer for payment of kistat Rs.10,111/- per month. The said offer was accepted and bid wasconfirmed by the District Collector and licence was granted on13.11.1981. In the said transaction, the Government suffered apecuniary loss of Rs.32,100.90 on account of the default committed by https://hcservices.ecourts.gov.in/hcservices/ the licensee. Similarly with respect to Toddy Shop No.4, the licenseedefaulted in payment of kist and closed the shop, which made theGovernment to conduct re-auction and ultimately the bid submitted byone Sri Jyothis Babu in the re-auction held on 6.10.1981 was foundtobe the highest offer for a sum of Rs.2,111/- and the bid wasconfirmed and licence was granted to the successful bidder on16.11.1981. In the said transaction also the Government sufferedloss on account of the default committed by the licensee and thenotional loss was assessed at Rs.40,712/-. 5.Accordingly the Licensing Authority quantified the notionalloss in respect of these three licenses at Rs.2,12,807.90 as on12.10.1981 and as the licensee was residing at Trichur and havingproperty only within the jurisdiction of the District Collector,Trichur, revenue recovery proceedings were initiated and made overto the Collector of Trichur District for realisation of the amount.The appellants justified their action, as according to them it wasonly on account of the default committed by the licensee which madethe Government to conduct re-auction and only lesser amount wasreceived by the Government in such re-auction which prompted them toassess the notional loss and as per the terms and conditions of theauction, the said notional loss was liable to be recovered from theEx-licensee and as such they were fully justified in invoking theprovisions of the Revenue Recovery Act for the purpose of suchrecovery.DISPOSAL OF WRIT PETITION :-6.The learned Single Judge was of the opinion that the recoverynotice issued by the Tahsildar, Trichur was bereft of details and itwas not clear as to whether the licensee was in arrears to theGovernment of Kerala or to any other revenue authorities. Thereforewhile taking note of the fact that the dispute was in relation to thepayment of kist amount which has arisen in the State of Tamil Naduand as no factual details were given in the Revenue Recovery Notice,the learned Single Judge quashed the revenue recovery proceedings anddirected the appellants to refund the amount of Rs.15,000/- paid bythe licensee as per the interim direction of this Court. Aggrieved bythe said order, the State has filed the appeal.SUBMISSIONS :-7. The learned Special Government Pleader appearing on behalf ofthe appellants submitted that the impugned recovery notice issued bythe revenue authorities of Kerala was only in the statutory formatprescribed both under the Tamil Nadu Revenue Recovery Act as well as https://hcservices.ecourts.gov.in/hcservices/ Kerala Revenue Recovery Act and as such the learned Single Judge wasnot justified in quashing the proceedings. It was the furthercontention of the learned Government Pleader that even before issuingthe second notice in the statutory format, the licensee has filedthe writ petition and as such the authorities were prevented fromfurnishing details and therefore the grievance of the licensee has nobasis.8. The learned counsel appearing on behalf of the licensee whilesupporting the order of the learned Single Judge contended thatproceedings were not initiated by the Excise Authorities of TamilNadu demanding arrears from the licensee and as such the recoverynotice issued by the revenue department of Kerala has no legalsanction and as such the learned Single Judge was right in quashingthe recovery notice. The learned counsel also relied on the judgmentof a Division Bench of this Court in V.D.Swami & Co. Ltd., v. ChiefEngineer, Public Health Engineering Department, Government of Kerala(99 Law Weekly 917 = 1986 Writ Law Reporter 380) in support of hiscontention that determination or adjudication with regard to theliability was necessary before invoking the provisions of the RevenueRecovery Act and failure to make such adjudication would result innullifying the revenue recovery proceedings.POINT FOR CONSIDERATION :-9.There are two questions involved in the present matter, thefirst being, the maintainability of the writ petition challenging therevenue recovery proceedings without challenging the substantialproceedings and the second question relates to the power of theCollector of a District to execute the order of recovery issued bythe Collector of another State.10. It is found from the materials available on record that thelicensee took part in the auction to exploit the privilege ofconducting an Arrack shop bearing No.69 in Vettaikaranpudur Villageand two Toddy shops bearing Nos.1 and 4 situated at Kinathukadavu andSivakkalampalayam in Pollachi Taluk for the Excise year 1981-82. Evenaccording to the licensee, he failed to conduct the Arrack/Toddyshops during the licence period on account of the hostile attitude ofthe appellants in the matter of conduct of toddy shops and non supplyof required quantity of arrack. Therefore the confirmation of bidand parting with the privilege to do business in intoxicants infavour of the licensee is admitted. The licence was granted inaccordance with the provisions of the Tamil Nadu Toddy and ArrackShops (Disposal in Auction) Rules, 1981. Therefore the contract was astatutory one and the terms and conditions of the auction were theterms and conditions of the agreement and the Licensing Authority as https://hcservices.ecourts.gov.in/hcservices/ well as the licensee were bound by those conditions. Subsequently onaccount of the failure of the licensee to pay the monthly kist, theappellants were compelled to conduct re-auction with notice to thelicensee. 11. With respect to the Arrack Shop there were litigations andamong them there was a civil suit and the plaintiff was none otherthan the licensee and his prayer was against the grant of privilegein favour of the re-auction purchaser and an interim injunction wasalso granted by the Civil Court in his favour. Therefore on accountof the said litigation, the appellants were not in a position toconfirm the bid in favour of the re-auction purchaser. By the timelitigations have come to an end, Excise Year 1981-82 was alreadyover and there was no arrack sale during the said year. However thetwo Toddy Shops were offered for re-auction by the appellants. In there-auction bid was only for a lesser amount, which resulted incomputing the notional loss by the Licensing Authority. Therefore inexercise of the power conferred on them under Rule 21 (i) and (ii) ofthe Tamil Nadu and Arrack Shops (Disposal in Auction) Rules, 1981the appellants have conducted re-auction and fixed the notional lossin respect of all the three licences held by the licensee. The totalnotional loss was arrived at Rs.2,12,807.90 and the proceedingcomputing the notional loss was sent to the licensee with a directionto clear the liability.12. It is also found from the documents produced by theappellants that a communication was addressed to the licensee on19.12.1990 by the Excise Officer, Pollachi calling upon him to remitthe entire arrears failing which it was indicated that action wouldbe taken to collect the dues under Recovery Recovery Act. In factthe order of the District Collector, Coimbatore as well as thestatement annexed to the said order, available in the typed set ofpapers clearly shows the assessment of notional loss by the ExciseAuthorities. The factum of such fixation was also intimated to thelicensee as per proceedings dated 4.8.1986. It was only on accountof the failure of the licensee to pay the amount within the timegranted by the appellants that the Collector of Coimbatore issued arecovery certificate invoking Section 3(1) of the Revenue RecoveryAct, 1890 requesting the Collector of Trichur District in the Stateof Kerala to recover the amount from the licensee treating it asarrears of land revenue. Similarly, on the strength of the recoverycertificate issued by the Collector, Coimbatore to the Collector,Trichur, the Tahsildar, Trichur had issued the impugned recoverynotice in form No.I. 13. The recovery notice and more particularly column (iii)shows the nature of arrears and the authority from whom the recovery https://hcservices.ecourts.gov.in/hcservices/ certificate was received. The said notice in form No.I was only apreliminary notice calling upon the defaulter to pay the amount andthe question of attachment and sale of the property of the licenseearises only in the event of his failure to pay the amount. It isalso found from records that even before issuing the subsequentproceedings by the revenue authorities at Trichur, the licensee hasfiled a writ petition before the High Court of Kerala and laterbefore this Court. Therefore we are of the view that there is noambiguity in the notice issued by the revenue authorities of Trichurin form No.I calling upon the licensee to pay the amount.RES EXTRA COMMERCIUM14. The business involved in the present matter is a trade inintoxicants. It is trite that there is no fundamental right to do thebusiness in liquor. The State has the absolute right and authority toprohibit the trade in intoxicants. It is only when the State decidesto part with the privilege with regard to intoxicants that thecitizen gets the right to do the said business. While announcing theExcise policy from time to time the State prescribes the mode ofparting with the privilege. The excise revenue is considered to bethe main source of income for the Government. Therefore the Stateformulates its excise policy with the sole aim of getting maximumamount by way of excise duty.15. The amount payable by a successful bidder is neither a feein its ordinary meaning nor a tax. It is nothing but a price for theprivilege parted with by the State in favour of the licensee. Sincewhat was parted with by the State was only its privilege to do thebusiness in intoxicants, the question of quid-pro-quo or tax elementis completely absent in such transactions. The amount payable by thelicensee is a fixed sum and only for the sake of convenience thelicensee would be permitted to pay the licence fee in instalments.16. Every year the State conducts the auction to part with theprivilege to do business in intoxicants subject to the excise policyand it was only in pursuance of the auction notification issued bythe Excise Authorities that the prospective licensee takes part inthe auction. The terms and conditions of the auction for partingwith the privilege is contained in the auction notification itself.The notification will be issued as per the provisions of the ExciseAct and the rules framed thereunder and therefore the contract isstatutory in nature and the terms and conditions of the auctionnotification itself would be the essential term of the contractentered into between the Government and the licensee. There was nocompulsion to take part in the auction and therefore once the auctionis concluded in favour of a particular licensee he is bound to https://hcservices.ecourts.gov.in/hcservices/ adhere to the terms and conditions of the contract. It is immaterialas to whether the licensee earns huge profit or suffered losses. Ineither case, the liability is only to pay the price fixed for partingwith the privilege.17. Since the liability is only to pay the price for theprivilege, the licensees are bound to pay the privilege amountirrespective of their actual earnings. Like any other business,profits and loss are part of this trade also. In the event of makinghuge profits from the excise business, the licensees are not going toshare the said profit with the Government and in the similar way whenthere is a loss, they cannot avoid the liability by pleading adverseconditions which resulted in substantial loss. Therefore in the eventof closure of the business or failure to pay the monthly kist, itgives authority to the excise Department to conduct re-auction. Insuch re-auction, if the amount fetched was only lesser amount,compared to the monthly kist for which the bid was confirmed infavour of the original licensee, it would enable the State to recoverthe notional loss from the original licensee. Such conditionspermitting re-auction and fixing notional loss and recovery of theamount from the defaulting licensee etc., are found in the statutorycontract itself. There is no question of the defaulter challengingsuch re-auction or assessment of notional loss on the ground of lackof fairness or violation of the principles of natural justice. Whilefixing the notional loss, the State was only doing a mathematicalcalculation as the amount due from the original licensee has alreadybeen determined. Very often, when the State enforces the contractualobligations by directing the licensee to pay the amount as per theterms and conditions of the auction, writ petitions are filed tostall such move. It is not permissible for the excise licensees toinvoke the equitable jurisdiction to avoid the contractualobligations voluntarily incurred by them. Writ petition is notmaintainable in such excise contracts for the purpose of varying theterms of the contract entered into by the licensees with the State onthe basis of an open auction. The terms of these contracts commonlyknown as "Executory Contracts" are governed by the statute. Both therights and obligations of the licensees as well as the State areprovided in the contract itself. The Licensee as well as the State isequally bound by the terms of the agreement. This Court cannotrewrite the terms of contract for the parties and jurisdiction of theCourt under Article 226 of the Constitution of India is not intendedfor such purposes. The transaction is purely in the realm ofcontract and writ petition is not maintainable to avoid suchcontractual obligations voluntarily undertaken by the parties.18. Similarly writ petitions challenging the action taken by theGovernment for recovery of the excise arrears is also not https://hcservices.ecourts.gov.in/hcservices/ maintainable unless the order fixing the liability is challenged. Theassessment of notional loss is made after conducting re-auction, andby taking into account the amount fetched in such re-auction. Thereis no question of conducting a full fledged enquiry in suchmatters, as the licensees are aware of the arrears on account oftheir default. It is open to the licencees to challenge theproceeding fixing liability or quantum on valid grounds in the mannerknown to law. Unless the order fixing liability is challenged, suchorders would be binding on the licensee. Therefore if the Statedecides to execute the order by resorting to the provisions of theRevenue Recovery Act, it would not be possible for the licensee tochallenge the recovery order, there being no challenge to the orderfixing primary liability. Therefore writ petition against recoveryproceedings without challenging the substantial proceedings, fixingliability is not maintainable.19.The Honourable Supreme Court in STATE OF PUNJAB v. DIAL CHANDGIAN CHAND & CO., (1983 (2) SCC 503) held that the jurisdiction underArticle 226 of the Constitution of India was not intended tofacilitate avoidance of obligations voluntarily incurred and observedthus:-"9. The High Court also did notappreciate that writ petition was filed bya licensee who participated in the auctionwith eyes wide open and on untenable pleawanted to wriggle out of the bargain. Inthis connection, one can advantageouslyrefer to decision of the Constitution Benchof this Court in Har Shankar v. Dy. Exciseand Taxation Commissioner1 wherein it hasbeen held that the writ jurisdiction of theHigh Courts under Article 226 of theConstitution is not intended to facilitateavoidance of obligations voluntarilyincurred. It was also held that byattempting to exploit the licences withoutthe burden of licence fees subject to whichthe licence was granted, the licensee areseeking to work the licences on such termsas they find convenient."20.The Honourable Supreme Court in Panna Lal v. State ofRajasthan,( AIR 1975 SC 2008 = (1975) 2 SCC 633) considered thequestion whether the license fee stipulated to be paid by the liquorcontractors was a price or consideration or rental which theGovernment charges from the licensees for parting with its privilegeand made the legal position thus:- https://hcservices.ecourts.gov.in/hcservices/ "20. The license fee stipulated to bepaid by the appellants is the price orconsideration or rental which theGovernment charges from the licensees forparting with its privilege in stipulatedlump sum payment and is a normal incidentof a trading or business transaction. ThisCourt in the recent decision in Nashirwarv. State of M.P. and the unreporteddecision dated January 21, 1975 in CivilAppeal No. 365 of 1969 Har Shanker v.Deputy Excise and Taxation Commissionerheld that the State has exclusive right tomanufacture and sell liquor and to sell thesaid right in order to raise revenue. Thenature of the trade is such that the Stateconfers the right to vend liquor by farmingout either by auction or by private treaty.Rental is the consideration for theprivilege granted by the Government formanufacturing or vending liquor. Rental isneither a tax nor an excise duty. Rental isthe consideration for the agreement forgrant of privilege by the Government.21. The licenses in the present caseare contracts between the parties. Thelicensees voluntarily accepted thecontracts. “They fully exploited to theiradvantage the contracts to the exclusion ofothers. The High Court rightly said that itwas not open to the appellants to resilefrom the contracts on the ground that theterms of payment were onerous. The reasonsgiven by the High Court were that thelicensees accepted the license by excludingtheir competitors and it would not be opento the licensees to challenge the termseither on the ground of inconvenientconsequence of terms or of harshness ofterms.22. The legal position is alsocorrectly stated in Madhavan v. AssistantExcise Commissioner, Palghat where it is https://hcservices.ecourts.gov.in/hcservices/ said that the rental charged by the Statefor licenses is the consideration for theprivilege of vending liquor. The licenseesin the present appeals voluntarilycontracted to pay the guaranteed sum of thestipulated lump sum for the exclusiveprivilege to vend liquor."21.In State of Haryana v. Jage Ram, [AIR 1980 SC 2018 = (1980)3 SCC 599] the issue before the Supreme Court was as to whetherexcise licencees, who have exploited the licence for a portion of theperiod in their lease could avoid payment of licence fee by filing awrit petition and after considering the earlier decisions of theSupreme Court it was held thus:- "15. In view of these decisions, thepreliminary objection raised by the learnedSolicitor General to the maintainability ofthe writ petitions filed by the respondentshas to be upheld. We hold accordingly thatthe High Court was in error in entertainingthe writ petitions for the purpose ofexamining whether the respondents couldavoid their contractual liability bychallenging the Rules under which the bidsoffered by them were accepted and underwhich they became entitled to conduct theirbusiness. It cannot ever be that a licenseecan work out the licence if he finds itprofitable to do so; and he can challengethe conditions under which he agreed totake the licence, if he finds itcommercially inexpedient to conduct hisbusiness.19. .........The amount which therespondents agreed to pay to the StateGovernment under the terms of the auctionis neither a fee properly so called whichwould require the existence of a quid proquo, nor indeed is the amount in the natureof excise duty, which by reason of theconstitutional constraints has to beprimarily a duty on the production ormanufacture of goods produced or https://hcservices.ecourts.gov.in/hcservices/ manufactured within the country. Therespondents cannot therefore complain thatthey are being asked to pay “excise duty”or “still-head duty” on quota of liquor nottaken, lifted or purchased by them. Therespondents agreed to pay a certain sumunder the terms of the auction and theRules only prescribe a convenient modewhereby their liability was spread over theentire year by splitting it up intofortnightly instalments. The Rules might aswell have provided for payment of a lumpsum and the very issuance of the licencecould have been made to depend on thepayment of such sum. If it could not beargued in that event that the lump sumpayment represented excise duty, it cannotbe so argued in the present event merelybecause the quota for which the respondentsgave their bid is required to be multipliedby a certain figure per proof litre andfurther because the respondents were giventhe facility of paying the amount byinstalments while lifting the quota fromtime to time. What the respondents agreedto pay was the price of a privilege whichthe State parted with in their favour. Theycannot therefore avoid their liability bycontending that the payment which they werecalled upon to make is truly in the natureof excise duty and that no such duty can beimposed on liquor not lifted or purchasedby them." 22.In State of Haryana v. Lal Chand, [AIR 1984 SC 1326) =(1984) 3 SCC 634) the Honouarable Supreme Court by placing relianceon the earlier decision in Har Shanker v. Deputy Excise and TaxationCommissioner (AIR 1975 SC 1121) held that excise contracts arenothing but statutory contracts and it is not possible for thelicensees to avoid such contractual obligations. The relevant portionof the said judgment reads thus:-8. In Har Shanker v. Deputy Excise andTaxation Commissioner (AIR 1975 SC 1121) thisCourt held that the writ jurisdiction of the HighCourts under Article 226 was not intended tofacilitate avoidance of obligations voluntarilyincurred. It was observed that one of the https://hcservices.ecourts.gov.in/hcservices/ important purposes of selling the exclusive rightto vend liquor in wholesale or retail is to raiserevenue. The licence fee was a price foracquiring such privilege. One who makes a bid forthe grant of such privilege with a full knowledgeof the terms and conditions attaching to theauction cannot be permitted to wriggle out of thecontractual obligations arising out of theacceptance of his bid. Chandrachud, J. (as hethen was) interpreting the provisions of thePunjab Excise Act, 1914 and of the Punjab LiquorLicence Rules, 1956 said: “The announcement of conditionsgoverning the auctions were in thenature of an invitation to an offerto those who were interested in thesale of country liquor. The bidsgiven in the auctions were offersmade by the prospective vendors tothe Government. The Government’sacceptance of those bids was theacceptance of willing offers made toit. On such acceptance, the contractbetween the bidders and theGovernment became concluded and abinding agreement came into existencebetween them. . . . ..............................................The powers of the FinancialCommissioner to grant liquor licencesby auction and to collect licencefees through the medium of auctionscannot by writ petitions bequestioned by those who, had theirventure succeeded, would have reliedupon those very powers to found alegal claim. Reciprocal rights andobligations arising out of contractdo not depend for theirenforceability upon whether acontracting party finds it prudent toabide by the terms of the contract.By such a test no contract could everhave a binding force.” https://hcservices.ecourts.gov.in/hcservices/ To the same effect are the decisions of thisCourt in State of Haryana v. Jage Ram and theState of Punjab v. Dial Chand Gian Chand & Co.laying down that persons who offer their bidsat an auction to vend country liquor with fullknowledge of the terms and conditionsattaching thereto, cannot be permitted towriggle out of the contractual obligationsarising out of the acceptance of their bids bya petition under Article 226 of theConstitution."23.In STATE OF PUNJAB & ANOTHER v. M/S DEVNS MODERN BREWARIESLTD. & ANR (JT 2003(10) SC 485), the legal position regarding excisecontract was reiterated thus:-"319. The conduct of the respondent/licenseein attempting to wriggle out of his contractualobligations is contrary to the clear andunequivocal principle laid down in HarShgankar's case (supra). The issuance of liquorlicence constitutes a contract between theparties i.e. between excise authorities on theone hand and the individual applicantcontractor on the other. The respondent havingaccepted the contracts/licenses, having fullyexploited the advantage flowing from thecontract to the exclusion of others and havingreaped rich commercial benefits from thatactivity, it is not open to the contractor towriggle out from the contract by challenging,inter alia, any particular condition of thatcontract/lidcence. The respondent herein seeksto do exactly that by challenging the conditionrequiring him to pay import fee. Har Shankar'scase (supra) clearly disentitle the liquorcontractor from wriggling out of contractualobligations solemnly undertaken. Likewise, inPanna Lal's case (supra), this Court in thespecific context of liquor licence had this tosay."The licenses in the present case arecontracts between the parties. The https://hcservices.ecourts.gov.in/hcservices/ licensees voluntarily accepted thecontracts. “They fully exploited totheir advantage the contracts to theexclusion of others. The High Courtrightly said that it was not open to theappellants to resile from the contractson the ground that the terms of paymentwere onerous. The reasons given by theHigh Court were that the licenseesaccepted the license by excluding theircompetitors and it would not be open tothe licensees to challenge the termseither on the ground of inconvenientconsequence of terms or of harshness ofterms."333. In the case of Khoday DistilleriesLtd. And Others v. State of Karnataka andOthers, the constitution bench of this Courtheld that a citizen has no fundamental rightto trade or business in liquor as a beverageand that the activities which are res extracommercium and that the State may alsocreate monopoly in itself for trade orbusiness in such liquor. It is further heldthat the State can further place restrictionsand limitations on such trade or business andsuch restrictions and limitations can beplaced by subordinate legislation as well. Itis also further held that the State State isno precluded from regulating the trade andbusiness in potable liquor merely because itimposes tax or fee on purchase or sale andincome is derived from such liquor."24.The law relating to trade in intoxicants, the concept offairness and reasonableness in the sphere of excise contract as wellas the question of promissory estoppel and legitimate expectationwere considered by the Honourable Supreme Court of India in Asstt.Excise Commr. v. Issac Peter, (1994) 4 SCC 104) and it was observedthus:-"14. The contract between the parties isgoverned by statutory provisions, i.e.,provisions of the Act, the rules, theconditions of licence and the counterpart https://hcservices.ecourts.gov.in/hcservices/ agreement. They constitute the terms andconditions of the contract. They are bindingboth upon the Government and the licensee.Neither of them can depart from them. It isnot open to any officer of the Government toeither modify, amend or alter the said termsand conditions, not even to the Minister forExcise. 22. These cases cannot be equated tocases of persons buying airline tickets, wherecertain conditions are printed in small print.These are cases of formal contracts arrived atpursuant to a public auction or submission oftenders, and in some cases, by negotiation.23. Maybe these are cases where thelicensees took a calculated risk. Maybe theywere not wise in offering their bids. But inlaw there is no basis upon which they can berelieved of the obligations undertaken by themunder the contract. It is well known that insuch contracts — which may be called executorycontracts — there is always an element ofrisk. Many an unexpected development may occurwhich may either cause loss to the contractoror result in large profit. Take the very caseof arrack contractors. In one year, there maybe abundance of supplies accompanied by goodcrops induced by favourable weatherconditions; the contractor will makesubstantial profits during the year. Inanother year, the conditions may beunfavourable and supplies scarce. He may incurloss. Such contracts do not imply a warranty —or a guarantee — of profit to the contractor.It is a business for him — profit and lossbeing normal incidents of a business. There isno room for invoking the doctrine of unjustenrichment in such a situation. The saiddoctrine has never been invoked in suchbusiness transactions. The remedy provided byArticle 226, or for that matter, suits, cannotbe resorted to wriggle out of the contractualobligations entered into by the licensees. https://hcservices.ecourts.gov.in/hcservices/

24. Learned counsel for the respondentssought to invoke the rule of promissoryestoppel and estoppel by conduct. The attemptis a weak one for the said rules cannot beinvoked to alter or amend specific terms ofcontract nor can they avail against statutoryprovisions. Here, all the terms and conditionsof contract, being contained in the statutoryrules, prevail.26. ...........We are, therefore, of theopinion that in case of contracts freelyentered into with the State, like the presentones, there is no room for invoking thedoctrine of fairness and reasonablenessagainst one party to the contract (State), forthe purpose of altering or adding to the termsand conditions of the contract, merely becauseit happens to be the State. In such cases, themutual rights and liabilities of the partiesare governed by the terms of the contracts(which may be statutory in some cases) and thelaws relating to contracts. It must beremembered that these contracts are enteredinto pursuant to public auction, floating oftenders or by negotiation. There is nocompulsion on anyone to enter into thesecontracts. It is voluntary on both sides.There can be no question of the State powerbeing involved in such contracts. It bearsrepetition to say that the State does notguarantee profit to the licensees in suchcontracts. There is no warranty againstincurring losses. It is a business for thelicensees. Whether they make profit or incurloss is no concern of the State. In law, it isentitled to its money under the contract. Itis not as if the licensees are going to paymore to the State in case they makesubstantial profits. We reiterate that what wehave said hereinabove is in the context ofcontracts entered into between the State andits citizens pursuant to public auction,floating of tenders or by negotiation."`25.In a recent decision in STATE OF MADHYA PRADESH v. LALITJAGGI (2008(12) SCALE 770) the legal position that rental is the https://hcservices.ecourts.gov.in/hcservices/ consideration for the privilege granted by the Government formanufacturing and vending liquor was reiterated by the Supreme Court.INTER STATE EXECUTION OF REVENUE RECOVERY CERTIFICATE :-26.The recovery action for realisation of the excise arrearsoften involves cumbersome procedure. The Licensing Authority isentitled to proceed against the mortgaged property of the licensee ortheir sureties as well as to initiate proceedings under RevenueRecovery Act. In other cases, the remedy is to initiate proceedingsunder the Revenue Recovery Act, 1890, for inter-state execution.27.The Revenue Recovery Act, 1890 is a self contained Code. Asper Section 3 of Central Act I of 1890 (hereinafter referred to as"the Revenue Recovery Act") where an arrears of land revenue, or asum recoverable as arrears of land revenue is payable to a Collectorby a defaulter being or having property in a District other than thatin which the arrears accrued, it would enable the Collector to sendthe Collector of the other District, a certificate containing detailsof the defaulter, the amount payable by him and authorising the saidCollector or his delegate to recover the amount as if it were anarrear of land revenue which had accrued in his own District. Theterm "District" and "another District" as found in Section 3 of theAct refers to the District anywhere in India and not confined to aparticular State. Section 5 of the Revenue Recovery Act clarifiesthe position. This provision confirms the authority of a Collectorto recover the revenue arrears on the basis of the recoverycertificate issued by the Collector of another State treating thearrears as if the sum was payable to himself in the said District.Therefore the Collector of a District in a particular State isempowered to recover the arrears due to another State and the onlyrequirement is the initiation of revenue recovery proceedings by theCollector of the home District, where the default is committed.28.The purpose of enacting the Revenue Recovery Act, 1890 isonly for the purpose of enabling the Government of a particular Stateto realise the arrears from the defaulter, having immovable propertyin another State. By resorting to the provisions of this Act, theCollector of a District would be able to recover the arrears from thedefaulter not withstanding the fact that the default was committed inanother State. A reading of the provisions of the Revenue RecoveryAct clearly shows that "the Collector of a District" in the said Actmeans the Collector of a District anywhere in India and it is notconfined to the Collector of the State in whose jurisdiction theamount was found due. In view of the Revenue Recovery Certificateissued by the Collector of a District where the amount is in arrears, https://hcservices.ecourts.gov.in/hcservices/ the Collector of the District where the property of the defaulter issituated would be in a position to enforce the revenue recoverycertificate. The Collector of the District where the arrears wassought to be recovered is not concerned about the validity of theclaim. It is trite that the Executing Court is not entitled to gobehind the decree and similarly the Collector who takes action forrecovery of the amount on the basis of the recovery certificateissued by the Collector of another District is not expected to decidethe validity of the recovery notice. His duty is only to recover theamount and pay the same to the Collector from whom he has receivedthe recovery certificate. However the person against whomproceedings were taken and made to pay the amount is not without anyremedy. Section 4 of the Revenue Recovery Act prescribes the remedyavailable to a person denying such liability. The only optionavailable to such a person is to file a suit in a Civil Court havingjurisdiction in the local area in which the office of the Collectorwhich made the revenue recovery is situate. The law applicable tothe disposal of such suits is also indicated in the Act itself.Therefore it is evident that the certificate issued by the Collectorto his counter part in another State is prima facie proof ofexistence of liability and civil suit is not maintainable, where therevenue recovery certificate is sent for execution. 29.In the present case, the appellants have quantified thenotional loss and proceeding was also issued to the licensee callingupon him to pay the revenue arrears. The said proceeding was dulyreceived by the licensee, but however he failed to challenge theproceeding in the manner known to law. It was only when the revenuerecovery proceeding was initiated for the purpose of recovering thearrears assessed as per the substantial proceedings, that thelicensee has come up with the writ petition. Even in the writpetition, the challenge was only to the recovery notice and not theprimary order fixing liability. Therefore the writ petitionpreferred by the licensee challenging the revenue recoveryproceedings without challenging the legality of the order fixingliability, is clearly not maintainable. 30.The revenue recovery certificate was issued by the Collectorof Coimbatore in exercise of the jurisdiction conferred under Section3 of the Revenue Recovery Act, 1890. As per the provisions of theCentral Revenue Recovery Act, the Collector of Coimbatore Districtwas within his powers to issue the recovery certificate to theCollector of Trichur though the said Collector is functioning in adifferent State. The District, as found mentioned in the RevenueRecovery Act, 1980 has to be construed to be a District anywhere inIndia and as such the revenue recovery certificate issued by the https://hcservices.ecourts.gov.in/hcservices/ Collector of Coimbatore authorising the Collector of Trichur torecover the arrears from the licensee was valid and enforceable.31.For the reasons aforesaid, the Writ Appeal deserves to beallowed and is accordingly allowed. Consequently, the connected MP isclosed. No costs.Sd/Asst.Registrar/true copy/Sub Asst.Registrar Tr/To1. Commissioner & Secretary to Government Prohibition and Excise Department Fort Saint George Chennai-9.2. The District Collector Coimbatore.3. The Excise Officer Coimbatore.+1cc to Govt. Pleader Sr 5815+1cc to Mr.David Tyagaraj,Advocate Sr 5739KK(CO)km/17.2.W.A.NO.559 OF 2007