2015 (3) TMI 1176 - HC - VAT and Sales Tax

Seeking permission to continue to conduct the toddy shops - Suspension and cancellation of licenses - auction sale of privilege for vending toddy in different toddy shops - Revokation of provisional allotment granted in favour of the petitioners - Entitled to get preferential right in terms of Rule 5(1)(a) of Kerala Abkari Shops Disposal Rules, 2002 - Held that - as per Ext.P2 this Court granted only an interim order staying all further proceedings including suspension/cancellation of the licences of toddy shops concerned and the specific direction sought for as above was not granted. Per contra, the 4th respondent submitted that even in the absence of a specific direction to give preferential claim for the allotment/renewal/extension of toddy shops the order of stay in respect of suspension and cancellation of licences of toddy shops would have the impact of protection of his preferential right otherwise available under Rule 5(1)(a) of the Rules in favour of the 4th respondent. In otherwords, the stay of the suspension and cancellation of licences when once stayed it would enable the 4th respondent to continue to run the shop, based on the licence issued in his favour and in such circumstances, on the strength of such licence the 4th respondent therein is entitled to claim for preference by virtue of the provisions under Rule 5(1)(a) of the Rules. According to the 4th respondent therein a separate direction though sought for, such a direction was uncalled for as even in the absence of such a direction preference by virtue of the Rule 5(1)(a) of the Rules ought to be available owing to the stay of all further proceedings pursuant to the registration including suspension and cancellation of the licence of the shops concerned was carried out. Therefore, it will only be appropriate to refer to Rule 5(1)(a) of the Rules. When this Court issued a direction to the Excise Commissioner to consider the availability of preferential right under Rule 5(1)(a) of the Rules claimed by the 4th respondent with notice to the petitioner, the first respondent should have taken a decision after addressing the said issues in accordance with law. The learned counsel for the petitioner submitted that as a matter of fact yet another contention which was taken up by the petitioner that the 4th respondent in the said writ petition had actually failed to apply and obtain the preferential certificate and did not participate in the auction was also not considered by the Excise Commissioner. Evidently, the said contention was pointedly posed for consideration, going by the argument note submitted at the hearing conferred to the petitioner by virtue of the directions in the common judgment. However, it was also not considered. Suspension of licence - auction was conducted - Impugned order came to be passed subsequent to the direction in the common judgment in various writ petitions whereby this Court directed the first respondent to consider the claim of the petitioner for preferential right under rule 5(1)(a) of the Rules and then to pass orders invoking the power under Rule 5(15) of the Rules - Petitioner submitted that though the 4th respondent participated in the auction, at that point of time the challenge against the prosecution proceedings launched against him was not there. In such circumstances, the disqualification by virtue of the registration had to be adversely affected the 4th respondent and subsequent discharge as per would be inconsequential. Held that - a fresh decision shall be taken by the first respondent after bestowing consideration and to enable the first respondent to consider those points the parties are permitted to take up their respective contentions on the points mentioned hereinbefore, appropriately, within two weeks from the date of receipt of a copy of this judgment. To enable such consideration Ext.P7 impugned order is set aside. There will be a direction to the first respondent to consider all such contentions if taken up appropriately by both the parties, on merits and to take appropriate decisions, in accordance with law, and also in terms of the common judgment dated 2.4.2014 after affording an opportunity of being heard to both the parties. It shall be done expeditiously, and at any rate, within six weeks from the date of receipt of the respective petitions carrying such contentions from the petitioner and the 4th respondent. Suspension of licence - This Court directed the first respondent to consider the claim of the 4th respondent for preferential right under Rule 5(1)(a) of the Rules and subject to the said decision to pass an order invoking the power under Rule 5(15) of the Rules - Petitioner contended that since this Court granted stay only in respect of further investigation and the arrest of the 4th respondent it could not efface the consequence of the registration of the crime against the petitioner in the light of the provisions under Rule 5(1)(a) of the Rules - Also submitted that one of the employees of the shops concerned run by the 4th respondent approached this Court challenging Ext.R4(d) which is Ext.P2 in this writ petition, and the said writ petition is still pending. In the said circumstances, he is entitled to the preferential right which is otherwise available under Rule 5(1)(a) of the Rules. Held that - in the light of the common judgment of this Court in various writ petitions, the first respondent was bound to consider that question before proceedings to pass order invoking the power under Rule 5(15) of the Rules. However, the impugned order would reveal that the aforesaid points were not actually considered in accordance with law. To enable such a consideration in the light of the provisions as also the decisions on the point the impugned Ext.P5 order is set aside. Consequently, this writ petition is disposed of with liberty to the petitioner and the 4th respondent to take up the aforesaid questions and points appropriately before the first respondents within two weeks from the date of receipt of a copy of this judgment and with a direction to the first respondent to consider those questions and points taking note of the observations in this judgment as also the common judgment dated 2.4.2014 and any other authorities if cited by the concerned parties and in accordance with law. - Petition disposed of

Summary

Issues Involved:
1. Preferential right under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002.
2. Validity of the registration of abkari cases against the previous licensees.
3. Impact of interim orders staying the suspension and cancellation of licenses.
4. Provisional allotment and subsequent cancellation of toddy shops.
5. Consideration of preferential certificates and participation in auctions.

Detailed Analysis:

1. Preferential Right under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002:
The primary issue revolves around the preferential right granted to previous licensees under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002. This rule stipulates that preference should be given to licensees who have conducted toddy shops consecutively for the preceding three years, provided no abkari case is registered against them other than under section 56 of the Abkari Act. The petitioners in the writ petitions became successful bidders in the auction after the previous licensees were denied preference due to the registration of abkari cases against them. The court directed the Excise Commissioner to consider the entitlement of the previous licensees for preference under Rule 5(1)(a) before confirming the provisional allotments.

2. Validity of the Registration of Abkari Cases:
The court emphasized the need to consider whether the abkari cases were validly registered against the previous licensees. In W.P.(C) No.13758/2014, the court noted that the Excise Commissioner did not address whether the abkari case was validly registered against the 4th respondent. The court directed the Excise Commissioner to take a fresh decision on the availability of the preferential right after considering all legal contentions, including the validity of the abkari case registration.

3. Impact of Interim Orders Staying the Suspension and Cancellation of Licenses:
Interim orders staying the suspension and cancellation of licenses played a crucial role in the judgment. In W.P.(C) No.13758/2014, the court observed that the stay of suspension and cancellation of licenses should protect the preferential right of the 4th respondent. The court directed the Excise Commissioner to consider the impact of the stay orders while deciding on the preferential right. Similarly, in W.P.(C) No.14191/2014, the court noted that the first respondent did not consider the impact of the stay order on the registration of the crime against the 4th respondent.

4. Provisional Allotment and Subsequent Cancellation of Toddy Shops:
The provisional allotments granted to the petitioners were cancelled by the Excise Commissioner based on the common judgment dated 2.4.2014. The court directed the Excise Commissioner to reconsider the provisional allotments after addressing the preferential rights of the previous licensees. In W.P.(C) No.13868/2014, the court set aside the impugned order and directed the first respondent to take a fresh decision after considering the rival contentions and the impact of the discharge of the 4th respondent from the criminal proceedings.

5. Consideration of Preferential Certificates and Participation in Auctions:
The court highlighted the need to address whether the 4th respondents had applied for and obtained preferential certificates and participated in the auctions. In W.P.(C) No.13758/2014, the court noted that the Excise Commissioner did not consider the contention that the 4th respondent had failed to obtain a preferential certificate and did not participate in the auction. The court directed the Excise Commissioner to consider this contention while taking a fresh decision.

Conclusion:
The court set aside the impugned orders in all three writ petitions and directed the Excise Commissioner to take fresh decisions on the availability of preferential rights under Rule 5(1)(a) after considering all relevant legal contentions and the impact of interim orders. The court emphasized the need for a thorough examination of whether the abkari cases were validly registered and the participation of the previous licensees in the auctions. The court also directed that the status quo be maintained in respect of the toddy shops involved until fresh decisions are taken.