The State of Tamil Nadu,rep. by its Commissionerand Secretary, Prohibitionand Excise Department,Chepauk, Chennai-5 v. R.Selvaraj

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 25.08.2010CORAM :THE HONOURABLE Mrs.JUSTICE R.BANUMATHIandTHE HONOURABLE Mr.JUSTICE G.M.AKBAR ALIWrit Appeal No.1677 of 20021.The State of Tamil Nadu,rep. by its Commissionerand Secretary, Prohibitionand Excise Department,Chepauk, Chennai-5.2.The Collector of North ArcotDistrict, Vellore,North Arcot District.3.The Special Tahsildar,Vaniyambadi, Vellore,North Arcot District.... Appellants.Vs.R.Selvaraj.. RespondentPrayer: Writ Appeal filed under Clause 15 of Letters Patentagainst the Order of the learned single Judge of this Court dated31.3.1998 in W.P.No.5885 of 1989. For Appellants : Mr.M.Dhandapani, Spl. Government PleaderFor Respondent : Mr.N.KannanJUDGMENTR.BANUMATHI,JThis Writ Appeal arises out of the order in W.P.No.5885/1989whereby the learned single Judge quashed the recovery proceedingsunder Revenue Recovery Act for the collection of notional loss ofRs.47,669.50 in respect of Arrack Shop No.24/81-82.2. Brief facts are that Respondent was the licensee of theArrack Shop No.24/81-82 of Vadapudupattu; Arrack Shop No.33/81-82 of https://hcservices.ecourts.gov.in/hcservices/ Periyancuppam and Arrack Shop No.34/81-82 of Solur village inVaniyambadi Taluk. The privilege of sale of arrack in retail throughArrack Shop No.24/81-82 in Vadapudupattu for the excise year 1981-82was sold on 28.5.1991 and the Respondent was the successful bidderfor a monthly rental of Rs.10,500/-. The sale was confirmed in theDistrict Collector's Proceedings Rc.F2.83116/81 dated 05.6.1981 andlicence was issued by the Excise Officer, Vaniyambadi on 15.07.1981.Inspite of repeated demands for the payment of monthly arrears ofkist from December 1981, Respondent had failed to remit the monthlykist and hence the Shop was brought to resale. Anticipating theresale of the Shop, Respondent filed O.S.No.37 of 1982 on the file ofDistrict Munsif Court, Vellore and in I.A.No.96/1982, Respondentobtained order of injunction and after trial, the suit O.S.No.37 of1982 was dismissed on 29.7.1983 Again the shop was brought to resaleon 30.4.1982. The auction fetched a monthly rental of Rs.1010/- onthe highest offer made by one N.Krishnamurthy. Licence was issued tothe resale purchaser Krishnamurthy on 13.5.1982 and the same wasvalid up to 15.7.1982. After the resale of the shop and based uponthe proposals for notional loss, 2nd Appellant fixed the notional lossas Rs.47,366/- deducting the Earnest Money Deposit of Rs.1000/-.Based upon the Proceedings Rc.T5.83116/81 dated 23.10.1982 of the 2ndAppellant/District Collector, a notice in Rc.A.S.No.24/81-82 dated04.12.1982 was served to the Respondent and the same was duly servedupon him on 08.1.1983.3. Soon after the disposal of the suit in O.S.No.37/1982 on29.7.1983, demand notice was issued to the Respondent on 20.10.1983for recovery of Rs.47,366/- under Revenue Recovery Act. In themeanwhile, a sum of Rs.696.50 was collected on 30.3.1985 prior to theissuance of first Demand notice. The impugned Demand notice dated11.3.1989 was issued to the Respondent for payment of Rs.47,669.50.Challenging Form I Demand notice served on him on 11.3.1989,Respondent filed W.P.No.5885/1989. In the Writ Petition, Respondentaverred that he was the second auction bidder of Arrack Shop No.33for which a sum of Rs.3005/- has been collected from him. It wasfurther averred that because of filing of suit O.S.No.2601/1981 bythe first auction bidder, he could not run the said Arrack Shop No.33and the notional loss in respect of the said shop has not beenadjusted towards Arrack Shop No.24/81-82. Main contention of theRespondent is that there is no basis for the amount of Rs.47,669.50calculated and the notional loss calculated by the Appellants isarbitrary.4. Appellants resisted the Writ Petition contending that aftergiving sufficient opportunity for payment of notional loss ofRs.47,669.50 and taking into account the payment of Rs.696.50,notional loss was calculated and Respondent cannot challenge the sameby filing Writ Petition and prayed for dismissal of Writ Petition. https://hcservices.ecourts.gov.in/hcservices/

5. The learned single Judge held that no opportunity was givento the Respondent before fixing the notional loss at Rs.47669.50.Learned single Judge observed that no break up figure was given toinform the Respondent as to how the amount was calculated and underwhich head he has to pay the amount. Learned single Judge furtherheld that when the lumpsum amount is demanded, break up figure shouldbe given and holding that the impugned demand is not a valid demand,learned single Judge allowed the Writ Petition quashing Form I Demandnotice dated 11.3.1989 which is challenged in this Writ Appeal.6. Learned Special Government pleader contended that Form IDemand notice dated 11.3.1989 is only consequential to theProceedings of the District Collector dated 23.10.1982 whereby theDistrict Collector has calculated the notional loss. It was furthercontended that without challenging the main order/Proceedings of theDistrict Collector dated 23.10.1982, the Respondent cannot validlychallenge the consequential proceedings. Learned Special GovernmentPleader further contended that the learned single Judge failed tonote that sufficient opportunity was given to the Respondent and eventhough, Respondent received notices dated 04.12.1982 and 08.1.1983 inresponse to which he also remitted a sum of Rs.696.50 and the samewas not taken note of by the learned single Judge.7. Learned counsel for Respondent submitted that beforeassessing the notional loss, opportunity ought to have been given tothe Respondent and without so affording opportunity, notional losscalculated at Rs.47,669.50 is unsustainable. It was furthercontended that absolutely, there is no basis to show as to how theamount of Rs.47,669.50 was arrived at as notional loss and in theabsence of any such basis, the learned single Judge rightly quashedForm I Demand notice.8. There is no dispute that Respondent was the highest bidder inrespect of sale of privilege of arrack in retail through Arrack ShopNo.24/81-82 of Vadapudupattu, Vaniyambadi Taluk for the lease period1981-82 for a monthly kist amount of Rs.10,500/-. Respondent has notpaid the monthly kist amount from December 1981. Reauction wasconducted at the risk of original renter and resale was confirmed inthe name of the highest bidder N.Krishnamurthy for Rs.1010/-. As perthe terms and conditions of the auction, the original renter ispersonally responsible for the loss amount.9. Even at the out set, it is to be pointed out that challengein the Writ Petition was Form I Demand notice dated 11.13.1989.Demand of Rs.47,669.50 in respect of Arrack Shop No.24/81-82,Vadapudupattu is consequential to the Proceedings of the DistrictCollector dated 23.10.1982. Earlier, notional loss proposal wassubmitted to the District Collector and by the Proceedings dated23.10.1982, the District Collector had fixed the notional loss at https://hcservices.ecourts.gov.in/hcservices/ Rs.47,366/-. After calculating the kist amount which the originalrenter/Respondent was liable to pay and the amount fetched for theshop in the resale and the total loss sustained by the Government.Proceedings of the District Collector fixing the notional loss ofRs.47,366/- is basis for Form I Demand notice. It is pertinent tonote that Respondent has not challenged the Proceedings of theDistrict Collector dated 23.10.1982 fixing the notional loss atRs.47,366/-. Without challenging the main Proceedings of theDistrict Collector, the Respondent has only challenged theconsequential order – Form I Demand notice.10. For quashing Form I Demand notice, the learned single Judgeobserved that break up figure was not given in Form I Demand noticeand Appellants are not shown the details as to how the figure wasarrived at. In our considered view, the learned single Judge did notkeep in view the Proceedings of the District Collector dated23.10.1982 fixing the notional loss at Rs.47,366/- and thecalculation shown thereon. We are unable to subscribe to the viewsof the learned single Judge that break up figure was not given inForm I Demand notice and that the demand is without any basis.11. The impugned demand was quashed by the learned single Judgemainly on the ground that no opportunity was given to the Respondentbefore fixing the notional loss and opportunity ought to have beengiven to the Respondent to explain under what ground he is liable topay the amount. Whenever grievance is made as to violation ofprinciples of natural justice, Court has to decide whether observanceof that rule was necessary. Rules of natural justice are flexibleand its application depends upon the setting and background of eachcase. As per the terms of tender-cum-auction, the renter has to paythe monthly kist and in case of failure to remit the monthly kist,there would be resale of Arrack shop at the risk of the renter.Admittedly, the Respondent has not remitted the monthly kist fromDecember 1981 and inspite of repeated demands, he has not paid thearrears of kist from December 1981 and hence the shop was brought forresale. As per the terms and conditions of the auction, the net losswas calculated by taking into account the kist amount for the shopfor which it was originally auctioned and the amount fetched for theshop in the resale. Respondent having participated in the auctionis bound by the terms and conditions of the auction.12. Learned Special Government Pleader submitted that sufficientopportunity was afforded to the Respondent by issuing notices dated04.12.1982 and 08.01.1983 respectively. Again Demand notice wasissued on 20.10.1983 which was duly received by the Respondent. Onreceipt of the said notice, Respondent remitted a sum of Rs.696.50 on30.03.1985. Again District Collector's order dated 06.4.1985 wasalso served on him on 08.5.1985 and summon was issued on him on11.3.1986 and for the said summon, Respondent presented a petition on14.3.1986 requesting time till 17.3.1986, but did not raise any https://hcservices.ecourts.gov.in/hcservices/ objection. That apart earlier, Form I Demand notice dated 29.10.1987was also issued to the Respondent and Respondent has not chosen tochallenge the same. We find no merit in the contention of theRespondent that opportunity was not afforded to him. This is all themore so, when the Respondent has not chosen to challenge theProceedings of the District Collector dated 23.10.1982. The learnedsingle Judge did not keep in view the Proceedings of the DistrictCollector dated 23.10.1982 and the fact that Respondent has notchosen to challenge the same, the order of learned single Judgecannot be sustained.13. In the result, the order of learned single Judge is setaside and this Writ Appeal is allowed. Consequently, connected M.P.is closed. No costs.Sd/-Asst. Registrar//true copy//Sub Asst.RegistrarbbrTo1.The Commissioner and Secretary, State of Tamil Nadu, Prohibition and Excise Department,Chepauk, Chennai-5.2.The Collector of North Arcot District, Vellore,North Arcot District.3.The Special Tahsildar,Vaniyambadi, Vellore,North Arcot District. Judgment in W.A. No. 1677 of 2002MSM {CO}TP/8.9.2010.