THE HONOURABLE MR v. The Commissioner of Prohibition and Excise

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 8.6.2007CORAM:THE HONOURABLE MR.JUSTICE P.D.DINAKARANandTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJAWrit Appeal Nos.793 and 794 of 2003P.Kandaswami.. Appellant in W.A.No.793 of 2003Sundarammal.. Appellant in W.A.No.794 of 2003vs.1. The Commissioner of Prohibition and Excise, Chepauk Chennai – 600 005.2. The Collector of Chennai Chennai – 600 001.3. The Deputy Commissioner of Excise Chennai – 600 001... Respondents in both W.As.PRAYER: Writ Appeal under Clause 15 of Letters Patent against theorder dated 12.12.2002 made in Writ Petition Nos.3727 and 3729 of2000 respectively. W.P.Nos.3727 and 3729/ 2000:- Petitions presented to this Courtunder Article 226 of the Constitution to issue writs of certioraricalling for the records relating to the order passed by the IStrespondent in L1/39599/99 dated 2.2.2000 (confirming the order ofthe respondent made in L6/54653/99 dated 15.11.1999 and quash theorders of the Ist respondent in L1/39599/99 dated 2.2.2000 andconsequently the order of the 2nd respondent made in 16/54653/99dated 9.12.99 and the order of the 3rd respondent made inL6/54653/ 99 dated 151.11.1999.2. calling for the records relating to the order passed by the IStrespondent in L1/39599/99 dated 2.2.2000 confirming the order ofthe 2nd respondent made in L6/54653/99 dated 9.12.1999 whichconfirm the order of the 3rd respondent made in L6/54653/99 dated15.11.1999 relating to the shop No.37 at No.30 Manali Salai, https://hcservices.ecourts.gov.in/hcservices/ Korukkupet, Chennai and quash the orders of the Ist respondent inL1/39599/99 dated 2.2.2000 and consequently the orders of the 2ndrespondent made in L6/54653/99 dated 9.12.99 and the order of the3rd respondent made in L6/54653/99 dated 15.11.1999 respectively.For Appellants .. Mr.AR.L.Sundaresan Senior Counsel for M/s.A.L.GandhimathiFor Respondents .. Mr.G.Sankaran Special Government Pleader J U D G M E N T(Delivered by P.D.DINAKARAN, J.)The correctness of the cancellation of the licenses issued tothe appellants under the provisions of the Tamil Nadu Liquor(Retail Vending) Rules, 1989 (for brevity, "the Rules"), on theground that the liquor bottles, which were not supplied by theTASMAC, were smuggled into the shop and sold through the licensedoutlets, by orders of the Original Authority/third respondentherein even dated 15.11.1999, the confirmation of the same by theAppellate Authority/second respondent herein by orders even dated8.12.1999, the Revisional Authority/first respondent herein byorders even dated 2.2.2000, and by the learned Single Judge of thisCourt, by common order dated 16.3.2000 in W.P.Nos.3727 and 3729 of2000 respectively, is the lis in the above appeals.2.1. In brief, the appellants were granted licenses forselling liquor that would be supplied by the TASMAC under theprovisions of the Rules. As per Rule 27 of the Rules, everylicensee shall obtain his requirement of liquor for retail vendingon an indent placed by him from the TASMAC and the licensee shallnot bring to or store in the shop or sell stock of liquor from anyother source. Rule 27 of the Rules reads as under:"Rule 27. Stock of Liquor.- Every licensee shall obtain hisrequirement of liquor, for retail vending on an indentplaced by him, from the Tamil Nadu State MarketingCorporation and the licensee shall not bring to or store inthe shop or sell stock of liquor from any other source. Theliquor supplied by the Tamil Nadu State MarketingCorporation shall be sold in sealed bottles in the samecondition as is received.Provided that if any stock in the shop is found to beunfit for human consumption such stocks shall not be sold."(emphasis supplied) https://hcservices.ecourts.gov.in/hcservices/

2.2. Condition 6 of the license granted to the appellantsherein contemplates that the licensee shall not deal in any stockof liquor other than supplied by TASMAC. 2.3. Condition 23 of the license granted to the appellantsfurther provides that infraction of any of the conditions of thelicense or the rules or orders relating to the IMFL either by thelicensee or by person in his employment shall entail the forfeitureof the security deposit and/or cancellation or suspension of thelicense. 2.4. The third respondent issued show cause notices even dated4.10.1999 to the appellants to the effect that during the surpriseinspection of the licensed premises on 29.9.1999, it was found thatthe appellants were smuggling liquor bottles, not supplied by theTASMAC, and are selling them through the licensed outlets byviolating the terms and conditions 7 and 23 of the license, andthat the appellants have also violated Rule 27 of the Rules. Theappellants were, thus, directed to show cause within 15 days as towhy the security deposit of Rs.25,000/- remitted by each of themshould not be forfeited and the license granted to the appellantsshould not be cancelled for the alleged irregularities. Anopportunity of being heard was given to the appellants on18.10.1999 at 3.00 pm by the Deputy Commissioner.2.5. The appellants baldly denied the alleged irregularitiesattributed against them during the enquiry. Therefore, the thirdrespondent, after going through the relevant records, found thatthe conditions No.6 and 23 of the license and Rule 27 of the Ruleswere violated and therefore, by independent proceedings even dated15.11.1999 cancelled the licenses of the appellants.2.6. Against the cancellation of licenses by the thirdrespondent by proceedings even dated 15.11.1999, the appellantpreferred appeals before the second respondent, who by independentorders even dated 8.12.1999 confirmed the cancellation of licenses.2.7. The appellants, against the said orders of the secondrespondent even dated 8.12.1999, preferred revisions before thefirst respondent. Before the first respondent, it was reiteratedthat the appellants were not furnished with the proof ofdocumentary evidence relied on by the authorities below to arriveat the conclusion that the appellants smuggled liquor, not suppliedby the TASMAC and sold the same through the retail shops. Thefirst respondent, therefore, perused the relevant records thatweighed the original and appellate authorities, viz., third andsecond respondent respectively, and satisfied that there was aninspection of the respective premises of the licensees on 29.9.1999and smuggled liquor bottles, not supplied by TASMAC, were seized https://hcservices.ecourts.gov.in/hcservices/ from the respective premises of the licensees. It was also foundfrom the seizure mahazars, which forms part and parcel of therecords relating to the respective FIRs, that the liquor bottleshad no proper Government excise labels. Accordingly, the firstrespondent confirmed the cancellation of the licenses, byindependent orders even dated 2.2.2000, which were challenged inW.P.Nos.3727 and 3729 of 2000 respectively.2.8.1. Before the learned Single Judge, it was vehementlycontended that the documentary evidence relied on by therespondents to show that the Prohibition and Excise Wing Police andthe Taluk Excise Officer, Fort Tondiarpet have seized smuggled orspurious liquor bottles, which were not supplied by TASMAC, weresold by the appellants, were not furnished to the appellants andtherefore, the finding of the respondents authorities that theappellants smuggled liquor bottles not supplied by TASMAC and wereselling the same in the licensed premises is not sustainable as theentire proceedings cancelling the license suffers for noncompliance of the substantive rules, which forms part and parcel ofnatural justice, namely non-furnishing of the copies of documentsrelied on by the respondents, who cancelled the license.2.8.3. Meeting the above contention, the respondents,submitted that when such a serious contention was projected beforethe first respondent, the first respondent examined the entirematter afresh referring to the original records and also thematerial documents that form part and parcel of the entire recordsand only thereafter, confirmed the orders of cancellation of thelicenses issued to the appellants. 2.8.4. Since the first respondent also confirmed thecancellation of the license and the appellants reiterated theirsubmission that the entire cancellation proceedings vitiate for noncompliance of the principles of natural justice, particularly, whenthe first respondent has not chosen to furnish the documents reliedupon by them to the appellants, the learned Single Judge, tosatisfy himself whether the authorities below have exercised thedecision making power conferred on them correctly, particularlywhen it was suggested that there was no search or seizure at all on29.9.1999, called for the entire original files relating to theimpugned proceedings and satisfied himself that the files wouldshow the registration of the Crime, numbers and the recovery ofspurious liquor bottles from the appellants shops on 29.9.1999 andthat the appellants were also engaged in transaction ofmanufacturing illicit liquor bottles, printing labels and pastingthem on the bottles filled up with spurious liquor. Thus, thelearned Single Judge, by common order dated 12.12.2002 dismissedthe writ petitions. Hence, these appeals. https://hcservices.ecourts.gov.in/hcservices/

3. Concededly, the appellants, except by way of formal balddenial, have not specifically denied the search or seizure on29.9.1999 and the alleged irregularities. It is true thatsubstantive rules of evidence based on principles of naturaljustice cannot even be ignored in the quasi judicial proceedings.There cannot be any quarrel as to the above proposition of law. 4. In the instant case, when show cause notices were issued tothe appellants, specifically mentioning the violation of conditions7 and 23 of the license and Rule 27 of the Rules, the appellantsfailed to submit their explanation specifically as to the allegedviolation of the conditions of the license and the Rules. A balddenial would not justify the contention of the appellants thatthere was no search or seizure on 29.9.1999 by the authorities atall. At this stage, it is relevant to note that appellants did notdemand copy of the FIRs or Mahazar reports when they submittedtheir explanation to the show cause notices. 5. On the other hand, when the appellants were given anopportunity of being heard by the third respondent, the entirerecords were available before him, but the appellants failed toavail the opportunity to peruse the same and raise their objectionsto the same. The appellants neither availed such opportunity beforethe Appellate Authority or the Revisional Authority.6. When the revisional authority/first respondent, thus,examined the entire original records and came to the conclusionthat the search and seizure on 29.9.1999 on the respective premisesof the appellants is true and the same conforms with the entries inthe FIRs and the Mahazar reports to arrive at the finding that theappellants were smuggling spurious liquor bottles, which were notsupplied by TASMAC, and were selling the same in the licensedpremises contrary to Conditions 7 and 23 of the license and Rule 27of the Rules, the non availing of such opportunity of perusing therelevant materials relied on by the respondents by the appellantscanot be now complained of.7. It is a settled law that while exercising the power ofjudicial review the Court has jurisdiction to call for the recordsand satisfy itself whether the Tribunal has arrived at a findingbased on no evidence or where the finding is inconsistent with theevidence or contradictory to it, has acted on material partlyrelevant and partly irrelevant or where the Tribunal draws upon itsown imagination, imports facts and circumstances not apparent fromrecord, or based its conclusion on mere conjectures or surmises, orwhere no person judicially acting and properly instructed as to therelevant law would have come to the determination reached and thatin all such cases the findings arrived at are vitiated, vide CIT v.SHEKHAWATI RAJPUTANA TRADING CO. (P) LTD., [1999] 236 ITR 950. https://hcservices.ecourts.gov.in/hcservices/

8. In the instant case, the learned Single Judge rightlyexercised such power of judicial review while confirming the ordersof the respondents cancelling the license of the appellants andthus found that there was a search and seizure as claimed by therespondents on 29.9.1999 and that FIRs and the Mahazar reportsdisclosed that the appellants were smuggling spurious liquorbottles, which were not supplied by TASMAC, and were selling thesame in the licensed premises. 9. Under such facts and circumstances, it may not be proper tohold that the impugned orders vitiate for violation of thesubstantive rules which form part of the principles of naturaljustice and as such, we do not see any violation of the principlesof natural justice and the contention of the appellants in thisregard is nothing but hyper-technical and therefore, we are unableto appreciate the same.Hence, finding no reasons to interfere with the order of thelearned Single Judge, we dismiss these appeals. No costs.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.sasiTo:1. The Commissioner of Prohibition and Excise, Chepauk Chennai – 600 005.2. The Collector of Chennai Chennai – 600 001.3. The Deputy Commissioner of Excise Chennai – 600 001.1 cc to Mrs.A.L. Gandhimathi, Advocate, Sr. 33091Writ Appeal Nos.793 and 794 of 2003SMV (CO)kk 18/6