1991 (8) TMI 329 - SC - Central Excise

Whether fixation of the price of the plants and machinery at Ujjain and the attached ware- houses and stock in trade and payment thereof to the appellant is a condition precedent to take possession and delivery thereof to the respondent on August 28 1981? Held that - Prior valuation of plant and machinery in the distillery stock in trade therein or the value of the machinery in the ware- houses and stock of the liquor stored therein and payment thereof before taking possession and handing them over to the incoming licensee is not a mandatory nor a condition precedent. Therefore taking over possession from the appellant on August 28 1981 and handing over the plant and machinery etc. to the respondent is not illegal. In this case admittedly the conditions of licence are not questioned but expressly given up in the High Court. Even before us the validity of the valuation has not been questioned. It cannot cut the branch on which the appellant sits to assail the constitutional validity of the conditions of the licence. Accordingly we have no hesitation to hold that the appellant is not entitled to the restitu- tion of the plant and machinery of the distillery at Ujjain and the attached warehouses.

Issues Involved:
1. Legality of dispossession of the appellant from the distillery and warehouses.
2. Entitlement to restitution of plant and machinery.
3. Valuation and payment for the plant and machinery before dispossession.
4. Compliance with conditions of the licence and tender.
5. Applicability of the Godhra Electricity case ratio.
6. Determination of the final value and payment to the appellant.

Detailed Analysis:

1. Legality of Dispossession:
The appellant, a partnership firm, contended that it had been in exclusive possession of the distillery, plant, and machinery at Ujjain and the attached warehouses, and that its dispossession was unlawful. The High Court found that the appellant had no exclusive possession, which always remained with the Excise Department. The appellant's non-cooperation led to the possession being taken and delivered to the incoming licensee, the respondent, as per rules. The Supreme Court upheld this view, noting that the appellant's licence had expired, and the possession was taken as per the procedure.

2. Entitlement to Restitution:
The appellant sought restitution of the plant and machinery of the distillery and the attached warehouses. The Supreme Court held that the appellant was not entitled to restitution, as the possession was taken lawfully after the expiry of the licence and due to the appellant's non-cooperation. The Court emphasized that the continuity of the supply and sale of intoxicants and the prevention of loss of public revenue were paramount.

3. Valuation and Payment Before Dispossession:
The appellant argued that the valuation of the plant and machinery and payment thereof should have been a condition precedent to taking possession and handing over to the respondent. The Supreme Court interpreted Clause 50 of the licence, which required the valuation of materials before the expiry of the old contract and commencement of the new one. However, the Court held that strict construction of this clause would lead to complications and loss of public revenue. The Court concluded that prior valuation and payment were not mandatory conditions precedent for taking possession.

4. Compliance with Conditions of the Licence and Tender:
The appellant contended that the grant of licence to the respondent was in violation of the tender conditions. The Supreme Court declined to go into this question, noting that the licence granted to the respondent had become final and expired by efflux of time. The Court also noted that the appellant had given up the reliefs of valuation of the plant and machinery and stock in trade in the High Court.

5. Applicability of the Godhra Electricity Case Ratio:
The appellant relied on the Godhra Electricity case, which held that valuation and payment before dispossession were mandatory. The Supreme Court distinguished this case, noting that the conditions of the licence in the present case were not questioned and were expressly given up in the High Court. The Court held that the ratio of the Godhra Electricity case was inapplicable to the present case.

6. Determination of Final Value and Payment:
The Supreme Court noted that the appellant had not cooperated in estimating the value, and the Committee of designated officers had to assess the value. The Court held that the appellant could make a representation to the Government for re-evaluation. The Registry was directed to make payment of Rs. 53,016.45 and interest accrued thereon to the appellant, and the balance amount and interest to the respondent. The respondent's liability would be subject to the decision by the Secretary as indicated in the judgment.

Conclusion:
The appeal was allowed to the extent of directing the determination of the final value and payment to the appellant. The appellant was not entitled to restitution of the plant and machinery, and there was no order as to costs.

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