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TMI Blog2003 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... reof the wholesale distribution of liquor and brewery was to be dealt with exclusively by it. 2. According to the appellants in terms of licences granted in their favour under the Karnataka Excise Act, 1965, in Form No. 2 they were free to sell their product either to the Distributors possessing CL II licences or directly to wholesalers possessing CL I licences who in turn would sell to the retailers, namely, CL 2 licences. 3. On 13.9.1989 the Excise Rules framed under the Karnataka Excise Act were amended, in terms whereof the State was to appoint an Agency as its sole Distributor as a result whereof manufacturers of liquor etc. were required to sell their products to it only, enabling the latter to sell the same to the wholesalers who in turn could sell the same to the retailers. 4. It is not in dispute that the said amended rules were to come into force with effect from 1.7.1990 i.e. from the next excise years. 5. The said writ petitions were dismissed by the High Court by reason of a judgment and order dated 13.11.1989, inter alia, holding: "(v) Licences granted under the amended Rules, create a privilege under the Act; that privilege in no way gets the protection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject of the amendment. The affidavit states: "The impugned Rules have been made with the sole object of preventing leakage of excise revenue and, therefore, they are reasonable restriction within the meaning of Article 19(6)." It is submitted before us that such evasion could have been checked by other means which would have been more beneficial to or less hard on the appellants. How such evasion is to be checked. however, is a matter of policy. So long as the policy as formulated in the amended Rules is not manifestly arbitrary or wholly unreasonable, it cannot be considered as violative of Article 14. There is, in the present case, no self-evident disproportionality between the object to the achieved and the Rules which have been framed. It was lastly submitted that MSIL ought not have been nominated for distributor licence because it is not competent to discharge its obligations and does not have the necessary infrastructure. This plea was raised before the Karnataka High Court at a time when MSIL had not started functioning. It is now a fully functional authority. MSIL has stated that it has a large number of depots in various districts of the State and is already h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiring payment of ₹ 533.30 lacs interest at this rate also does not call for interference on any basis." 14. On 31.3.1999 MSIL filed a review application for modifying this Court's order dated 9.4.1990, inter alia, on the ground that this Court while permitting the appellants to withdraw the appeals could not have directed that no compensation would be payable to it. 15. A3-Judge Bench of this Court upon considering the rival contentions raised in the said review proceedings in terms of its order dated 28.4.2000 directed deletion of the sentence "there will be no compensation payable to the third respondent" contained in this Court's order dated 9.4.1990 and with a view to arrive at a rate at which such compensation should be determined in fairness to the appellants directed the matter to be heard. 16. Mr. A.K. Ganguly and Mr. K.K. Venugopal, learned Senior Counsel appearing on behalf of the appellants addressed us at great length. It was submitted that having regard to the fact that the amended Rule was to come into force with effect from 1.7.1990 and the appeals have been withdrawn on 9.4.1990, the question to MSIL's suffering any loss or conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court passed an interim order dated 20.11.1989 validity or otherwise and in fact even the existence of the said letter dated 13.11.1989 was not brought to its notice. 18. In support of the aforementioned contention, reliance was placed on Bimal Chandra Banerjee etc. v. State of Madhya Pradesh etc. [1971]81ITR105(SC) and State of Kerala v. Madras Rubber Factory Ltd. AIR1998SC723 . 19. Mr. S.R. Bhat, learned counsel would submit that wine has been exempted from the purview of the said Rule. He drew our attention to the fact that Rule 6A was inserted in the Rules in terms whereof a person holding a retail licence under the Rules was permitted to sell wine. The learned counsel would contend that his client has produced accounts from time to time before MSIL and had all along been giving notice so as to take supplies of its product but it had failed to do so. It was contended that in the year 1997 it had entered into two lease agreements with Purpose Distilleries and Balaji Enterprises and in terms thereof the amount of duty was to be paid by the lessee. 20. Mr. Jaideep Gupta, learned counsel appearing on behalf of the Purpose Distilleries would submit that his client only has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel appearing on behalf of the State of Karnataka who on instructions, submitted that the State of Karnataka have refused to amend the Rules as asked for by the Licensees in their representations. 23. The questions which are required to be determined in these appeals relate to adjustment of equity. Ordinarily in a disposed of appeal this Court would not have entertained contentious questions which have been raised in these appeals we did so as there is no doubt whatsoever that the appellants herein have not only taken advantage of the interim order passed in Khoday's case but also denied and disputed the claim of MSIL relying on the basis of this Court's order dated 7.4.1990. It has not been disputed that in terms of the Rules as amended by the State of Karnataka on and from 1.7.1990, all supplies were required to be made by owners of the distilleries and breweries only through MSIL who was appointed as the sole distributor therefore. 24. In the special leave petitions, the appellants herein had prayed for stay of the operation of the Notification No. HD 25 PES 89 dated 13.9.1989 and the Notification No. HD 26 PES 89 of the same date. In terms of Notification No. HD 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the doctrine of 'unjust enrichment' retain the undue advantages derived by it. They must be asked to pay back the amount received either directly or indirectly on account of MSIL. The doctrine of restitution must, thus, be applied in these appeals. 31. We are, therefore, of the opinion that with a view to do complete justice between the parties and having regard to the order passed by this Court in Khoday Distilleries's case, the following directions should be issued: (1) The appellants would have no liability to pay any commission to MSIL prior to the appointed date, namely, 1.7.1990 and after 13.2.1997; (2) The appellants shall produce or cause to be produced all books of accounts for the period 1.7.1990 to 13.2.1997 within eight weeks from date before the authorised agent of MSIL so as to enable it to determine the amount due and payable to MSIL; (3) Determination of such amount shall be confined only to those transactions wherein appellants had charged commission on account of MSIL or indirectly realized the same although not shown in the bills issued therefore. (4) In the event of an unlikely dispute as regards the quantum of the amount of commission t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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