2021 (9) TMI 1011 - SC - Indian Laws

Cancellation of Country Liquor license - recovery of certain amount towards the balance - applicability of the amended Rule 13 to pre-existing contracts - the main contention before this court is that amounts collected as departmental management fee were not adjustable - HELD THAT - The obvious basis of the principle against retrospectivity is the principle of 'fairness , which must be the basis of every legal rule. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. The findings and conclusions previously recorded would have been dispositive of the issues arising in this appeal. However, this court is mindful of the fact that the respondent had succeeded before the High Court and was thus entitled to claim adjustment of the departmental management fees, for the period after its contract was terminated. The respondent was also entitled to claim relief under the Amnesty Scheme, which was denied to it despite having succeeded before the High Court - Since the respondent had approached this Court complaining that the State had sought to auction his properties, a status quo order was made, binding the parties not to take fresh steps. In view of the findings recorded, the State has to ensure that the property of the respondent is released from attachment and due possession is handed back to the latter within the same period of two months. The following directions are given (a) Upon payment of 50% of the amount, i.e. 50% of ₹40,51,288/- within two months from today, the respondent s liabilities towards the arrears of dues for the liquor vend in issue which was cancelled by the appellant State s order dated 30-09-1993 shall stand discharged; (b) The state is hereby directed to release the respondent s property attached and sought to be sold, towards satisfaction of the above liability, upon receiving the said balance 50% of the amount within two months or latest within four weeks of receipt of the amount; (c) The respondent shall not be liable to pay any interest for the upheld payment or for any other reason whatsoever, on the principal amount, i.e. ₹ 40,51,288/-. The State shall refrain from initiating any proceedings for its recovery towards arrears for the said period the contract was to be in operation, i.e. 1993-94. The appeal is dismissed.

Issues Involved:
1. Legality of the cancellation of the liquor license.
2. Liability of the licensee for dues post-cancellation.
3. Applicability of amended Rule 13 to pre-existing contracts.
4. Adjustment of departmental management fees against dues.
5. Entitlement of the licensee to relief under the Amnesty Scheme.

Detailed Analysis:

1. Legality of the Cancellation of the Liquor License:
The State of Kerala cancelled the license of the licensee due to default in payment and failure to replenish the security amount. The licensee challenged the cancellation, seeking a declaration that the cancellation was illegal and void. The High Court Division Bench upheld the cancellation but limited the licensee's liability to the actual loss suffered by the government.

2. Liability of the Licensee for Dues Post-Cancellation:
The licensee argued that its liability should be limited to the period before the cancellation (April 1993 to 19th August 1993). The Division Bench directed the government to issue fresh demands covering only the actual loss. The Supreme Court upheld this view, noting that the state collected departmental management fees and excise duty during the period it managed the shops, which should be adjusted against the licensee’s liability.

3. Applicability of Amended Rule 13 to Pre-Existing Contracts:
The core issue was whether the amended Rule 13, effective from 23-12-1993, applied retrospectively to contracts entered into before its enactment. The Supreme Court affirmed that the amended Rule 13 did not apply retrospectively. Contracts and licenses entered into before the amendment were governed by the old Rule 13, which allowed credit for departmental management fees against the dues of the original contractor.

4. Adjustment of Departmental Management Fees Against Dues:
The state argued that the departmental management fees collected should not be adjusted against the licensee's dues. However, the Supreme Court, relying on the High Court’s previous ruling in Lucka v State of Kerala, held that the amounts collected as departmental management fees during the period the state managed the shops had to be adjusted against the licensee’s dues. The old Rule 13, which allowed such adjustments, was applicable.

5. Entitlement of the Licensee to Relief Under the Amnesty Scheme:
The licensee sought relief under the Amnesty Scheme of 2008 and 2011. The state initially rejected the licensee's application under the 2008 scheme, contending that the departmental management fees could not be adjusted against arrears. The Supreme Court permitted the licensee to deposit 50% of the admitted amount under the 2011 scheme. The court directed that upon payment of 50% of the amount (?40,51,288), the licensee's liabilities would be discharged, and the attached property should be released.

Conclusion:
The Supreme Court upheld the High Court’s judgment, affirming that the amended Rule 13 did not apply retrospectively to contracts entered into before its enactment. The amounts collected as departmental management fees had to be adjusted against the licensee’s dues. The licensee was entitled to relief under the Amnesty Scheme, and upon payment of 50% of the admitted amount, the liabilities would be discharged, and the attached property released. The appeal was dismissed, with each party bearing its own costs.

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