2016 (4) TMI 974 - HC - Central Excise

Auction for the privilege - denial of preference - Held that - With respect to the contention that the first respondent has granted the benefit of preference to the fourth respondent though such a relief has been declined by this Court in Ext.P9 order, we notice that such a contention was raised before this Court earlier W.P.. The said contention was considered by this Court and rejected, in Ext.P5 judgment. This Court has found that, the consequence of Ext.P9 interim order was to set at naught all the proceedings initiated against the fourth respondent pursuant to registration of the crime against him, including cancellation of his license. Therefore, a further declaration to the effect that his right of preference was available to him was unnecessary. Having suffered the said judgment, it is not open to the appellant to agitate the said contention again. Another contention put forward by the learned Counsel is that, the fourth respondent had requested for the grant of privilege to him and upon rejection therof, had participated in the auction from the general category. Since he had participated in the auction and was unsuccessful, it was not open to him to claim the privilege after the auction was conducted. We notice that, the fourth respondent had challenged the denial of preference to him before this Court in earlier W.P. In the said writ petition an interim order had been granted by this Court staying confirmation of the auction that was conducted on 5.3.2014. It is clear from the conduct of the fourth respondent that he had challenged the proceedings of the auction without any delay and had obtained interim orders against confirmation thereof. The said writ petition was disposed of by Ext.P5 judgment, with the appellant also on the party array, directing the first respondent to consider and take a decision in the matter after hearing all the parties. Having suffered Ext.P5 judgment pursuant to which the first respondent had considered the rival contentions of the appellant as well as the fourth respondent and decided the issues, it is not open to the appellant to contend that the fourth respondent should be held disentitled to the preference claimed by him for the reason that he had participated in the auction. The said contention is therefore rejected.

Summary

Issues Involved:
1. Cancellation of provisional allotment of toddy shops.
2. Preferential right under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002.
3. Registration of Crime No:72/2013 under Section 55(a) & (i) of the Abkari Act.
4. Validity of Ext.P7 and Ext.P10 orders.
5. Interim order in Crl.M.C.4299/13 and its implications.
6. Contentions regarding non-participation in the auction.

Issue-wise Detailed Analysis:

1. Cancellation of provisional allotment of toddy shops:
The appellant participated in an auction for toddy shops and emerged as the highest bidder, resulting in a provisional allotment. However, this allotment was later canceled by the first respondent. The appellant challenged this cancellation in a writ petition, which was dismissed by the learned Single Judge.

2. Preferential right under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002:
The fourth respondent, the previous licensee, claimed a preferential right to the toddy shops under Rule 5(1)(a) despite the registration of Crime No:72/2013 against him. The appellant argued that the registration of the crime disqualified the fourth respondent from claiming this preference. However, the fourth respondent contended that the seized toddy was genuine but unfit for consumption and that the registration of the crime was unsustainable.

3. Registration of Crime No:72/2013 under Section 55(a) & (i) of the Abkari Act:
A substantial quantity of toddy unfit for human consumption was seized from the fourth respondent's possession, leading to the registration of Crime No:72/2013. The fourth respondent challenged this registration in Crl.M.C.4299/13, and an interim order was issued staying all further proceedings, including suspension/cancellation of licenses.

4. Validity of Ext.P7 and Ext.P10 orders:
The first respondent initially issued Ext.P7, canceling the appellant's provisional allotment and granting preference to the fourth respondent. This order was challenged by the appellant and set aside by the court, directing a fresh consideration. The first respondent then issued Ext.P10, again granting preference to the fourth respondent. The appellant argued that Ext.P10 was a verbatim reproduction of Ext.P7 and lacked consideration of his contentions. However, the court found that Ext.P10 substantially addressed the issues and was not a mere reproduction of Ext.P7.

5. Interim order in Crl.M.C.4299/13 and its implications:
The interim order in Crl.M.C.4299/13 stayed all further proceedings related to the crime against the fourth respondent, including the cancellation of his license. This order effectively allowed the fourth respondent to continue operating the toddy shops until the end of his license period. The court held that this interim order justified the grant of preference to the fourth respondent under Rule 5(1)(a).

6. Contentions regarding non-participation in the auction:
The appellant argued that the fourth respondent did not request the grant of privilege or participate in the auction, disqualifying him from claiming preference post-auction. However, the court noted that the fourth respondent had promptly challenged the auction proceedings and obtained interim orders against confirmation. The court found this conduct sufficient to justify the fourth respondent's claim for preference.

Conclusion:
The court dismissed the appeal, upholding the learned Single Judge's judgment and the first respondent's decision to grant preference to the fourth respondent under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002. The court found no grounds to interfere with the impugned judgment and orders.