CHITRAversusSTATE OF KERALA & ORS.

                         [2015] 9 S.C.R. ?52


A                              CHITRA
                                   v.
                    STATE OF KERALA & ORS.
                   (Civil Appeal No.2246 of 2006)
B                        AUGUST21, 2015
        [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
        Foreign Liquor Rules:

C       rr. 13, 14 - Entitlement to pay proportionate annual rental
  instead of full annual rent applicable for the year in respect
  of FL3 licence granted to appellant-licencee - Due to third
  party suit, injunction granted restraining excise
  commissioner from issuing the said licence to the appellant
D for use at her hotel- Claim of appellant that she was disabled
  from utilising the licence ,tor the full period because of third
  party intervention - Legality of demand to pay the fee for the
  entire year despite the truncated period of use by the appellant
  for no fault attributed to appellant- Held: A party is entitled to
E seek a remission in the payment of licence fee if it is
  precluded from transacting business on the strength of that
  licence because offactors and reasons extraneous to it and!
  or if it is granted the licence on the direction of a Court for
F only a portion of the financial year - Respondent State to
  refund the excess amount paid by the appellant.

       rr.13, 14 - Renewal of licence -Appellant-licencee was
  holder of FL3 licence for the period ending on 31.3.2001 -
  Due to a dispute with its landlord it had to vacate the premises
G and on relocating it to another place, it applied for renewal of
  licence on 26.2.2002 - Litigation - High Court directed
  appellant to pay licence amount and after such payment,
  licence renewed on 25.3.2003 - In these circumstances,
H                                752
          CHITRAv. STATE OF KERALA& ORS.                      753


appellant could conduct its business only for less than a A
fortnight in that licence year- Liability to pay licence fee for
the year 2002-03....: Held: Appellant is only liable to pay the
proportionate licence fee for the period in which it could avail
of the licence, that is 25.3.2003 to 31.3.2003- Respondent
State to refund the excess amount paid by the appellant.         B

    Allowing the appeals, the Court

    HELD: 1. CIVIL APPEAL N0.2246 OF 2006

     No person can be prejudiced because of an act of a         C
Court. Although the Appellant had applied for the FL3
licence which would ordinarily run the course of one
financial year, due to interim orders passed by the
Courts, the Appellant could only utilize it for a fraction of
                                                                0
that period. The Appellant's application was not made in
the duration of that year and was thus initially not for a
fraction of the financial year. Rule 14 does not impede
or inhibit the charging of annual proportionate fee so
long as no failure is placed on the licensee or it is           E.
blameworthy itself. In the event that a party applies for a
period which is obviously not effective for the entire
financial year, such as applying for a licence mid-way
that financial year, the full fee for that year may be
claimable or chargeable and, therefore, would have to           F
be paid. In other words, had the Appellant applied for
the licence even with the knowledge that because of
external factors such as a pre-existing injunction order
etc., she would not have been able to exploit it for the
entire year, she may not have been liable to pay the            G
licence fee for the entire year. This is not the factual
matrix which obtains in the case at hand; the licence
could only be granted for part of the period owing to
unforeseeable circumstances beyond the ken and
control of the parties. A party is entitled to seek a           H
754        SUPREME COURT REPORTS               [2015] 9 S.C.R.


A  remission in the.payment of licence fee if it is precluded
   from transacting business on the strength of that licence
   because of factors and reasons extraneous to it and/or
   if it is granted the licence on the direction of a Court for
   only a portion of the financial year. [Para 5] [757-H; 758-
 B B-H]
         2. CIVIL APPEAL N0.4900 OF 2006

      The Appellant is only liable to pay the proportionate
  licence fee for the period in which it could avail of the
C licence, that is 25.3.2003 to 31.3.2003. It would be fair to
  cogitate upon whether the Appellant should have
  declined the licence for virtually a week in that year, and
  since it failed to exercise that option, whether it should
  be burdened with the fee for the full year. Any person
0
  placed i.n the position of the Appellant would not be in a
  position to decline to accept the renewal of the licence
  even though it was for less than a fortnight, since that
  would have led to the licence being rendered defunct;
E which may have then led to consequence of
  disentitlement for grant or renewal of the FL3 licence in
  the future. The Respondents are directed to recalculate
  the proportionate amount of licence fee due and payable
  by the Appellant for the period from 25.3.2003 to
F 31.3.2003. [Paras 9, 1O] [760-G-H; 761-A-C]

         Rajagopa/an Nair v. Assistant Commissioner of Excise
      1989 (1) KLT 800- relied on.

          R. Vijaykumar v. Commissioner of Excise 1993(4)
 G SCALE 386 - referred to.

                       Case Law Reference

         1989 (1) KLT 800      relied on.           Para 5
 H
         1993(4) SCALE 386     referred to.         Para 3
          CHITRA v. STATE OF KERALA & ORS.                       755


   CIVIL APPELLATE JURISDICTION: Civil Appeal No.                    A
2246 of2006

    From the Judgment and Order dated 21.07.2005 of the
High Court of Kerala at Ernakulam in W.A. No. 910/2000(A).
                                                                     B
                               WITH
    C.A. No. 4900 of 2006.

      HuzefaAhmadi, RoyAbraham, Seema Jain, HiminderLal
for the Appellant.                                                   C

    Bina Madhavan forthe Respondents.

    The Judgment of the Court was delivered by

    VIKRAMAJIT SEN, J.                                               D

    CIVIL APPEAL N0.2246 OF 2006

     1 This Appeal calls into question a brief Judgment passed
on 21.7.2005 by the Division Bench of the High Court of Kerala E
in W.A. No. 910 of 2000 reversing the detailed Judgment of
the learned Single Judge. The question that has been raised
pertains to the Appellant's entitlement to pay proportionate
annual rental for the year 1999-2000, instead of full annual fee
of ~13 lakhs which was applicable for that year in respect of F
an FL3 licence granted to her.

    2. The Division Bench took note of Rule 14 of the Foreign
Liquor Rules which reads thus:

     "If any of the licences referred to in Rule 13 is granted in    G
     the course of a financial year, the full annual fee shall be
     paid and the licence shall expire at the end of the financial
     year''.

    On the reading of the said Rule, the Division Bench opined       H
756        SUPREME COURT REPORTS                   [2015] 9 S.C.R.


A that it was not permissible for any licensee to claim only
  proportionate payment on the predication that it had been
  disabled from utilizing the licence for the full period because
  of third party intervention. Accepting the Appeal, the Appellant
  was permitted fo pay the balance of the entire fee after adjusting
B the sum already paid, within three weeks, in which event the
  Respondent would not be permitted to claim interest on belated
  payments. It is the admitted case that in order to avail of this
  indulgence and advantage the balance amount has been duly
  paid. However, the legality of the demand to pay the fee for
C the entire year, despite the truncated period of user by the
  Appellant for no fault ascribable to her is what has been brought
  into question before us.

        3. We have commented on the brevity of the impugned
 D Judgment for the reason that the learned Single Judge of the
   Kerala High Court in 0.P. No. 18145of1994 had, in its detailed
   Judgment, considered various legal aspects including the
   topicality of the maxim 'Actus curiae neminem gravabit', that
   an act of Court prejudices no one,· as well as the
 E pronouncement of this Court in R.Vijaykumar v.
   Commissioner of Excise 1993(4) SCALE 386, which
   indubitably held the field and was facially in favour of the
   Appellant. It seems to us that the attention of the Division Bench
 F was not drawn to this binding precedent, since otherwise its
   conclusion would in all likelihood have been diametrically
   different.

       4. The facts are neither disputed nor are they convoluted.
G The Appellant had submitted an application on 16.3.1990 for
  the grant of an FL3 licence in respect of her Hotel Chanakya
  at Trivandrum, which had been granted. However, it transpired
  that a third party filed a suit in which the Munsif Court,
  Trivandrum granted an interim injunction restraining the Excise
H Commissioner from issuing the said licence to the Appellant
  for user at her said Hotel. This suit, along with another suit
          CHITRA v. STATE OF KERALA & ORS.                    757
                [VIKRAMAJIT SEN, J.]

similar to it, was eventually dismissed on 29.9.1993. In an A
ensuing Appeal, the District Judge granted an ad interim
injunction on 15.4.1994, which came to be vacated on
3.6.1994. On 23.11.1994, the Respondent rejected the
Appellant's application for the FL3 licence due to an
amendment to the Foreign Liquor Rules which had resulted in B
private parties being ineligible for FL3 licences. Consequently,
the Appellant filed O.P. no. 18145of1994, which was allqwed
by the Single Judge. Acting in accordance with the Single
Judge's directions the Excise Commissioner granted the
licence and raised a demand of only the proportionate licence C
fee which was duly deposited; but the matter was brought before
the Division Bench in the subject Appeal. As already
mentioned, it seems most likely that the attention of the Division
Bench which passed the impugned Judgment was not brought D
to bear on the already existing binding decisions in
R.Vijaykumar as well as Jayadevan v. Board of Revenue
(Excise) 1999 (1) KLJ 87 wherein the Division Bench of the
High Court of Kerala has held that the licensee is required to
pay only the proportionate licence fee if the delay in granting E
the licence, or utilizing it, as the case may be, are for reasons
not attributable to the said licensee.

     5. We are in agreement with the learned senior counsel
for the Appellant that the legal principle to the effect that no F
person can be prejudiced because of an act of a Court is
apposite and relevant in the present case. We say this keeping
in perspective the position that although the Appellant had
applied for the FL3 licence which would ordinarily run the
course of one financial year, due to interim orders passed by G
the Courts, the Appellant could only utilize it for a fraction of
that period. We hasten to clarify thatthe Appellant's application
was not made in the duration of that year and was thus initially
not for a fraction of the financial year. This Court has already
held in R.Vijaykumar, in the circumstances prevailing in that H
758         SUPREME COURT REPORTS                      [2015] 9 S.C.R.


A     case, that the Department could not interfere with the utilization
      of the FL3 licence, provided that the licensee complied with
      all other conditions as well as "payment of annual rental
      proportionately". It is therefore clear that Rule 14 would not
      impede or inhibit the charging of annual proportionate fee so
 B    long as no failure is placed on the licensee or it is blameworthy
      itself. We must be quick to clarify that in the event that a party
      app_lies for a period which is obviously not effective for the
      entire financial year, such as applying for a licence mid-way
      that financial year, the full fee for that year may be claimable or
C     chargeable and, therefore, would have to be paid. In other
      words, had the Appellant applied for the licence even with the
      knowledge that because of external factors such as a pre-
      existing injunction order etc., she would not have been able to
 D    exploit it for the entire year, she may not have been liable to
      pay the licence fee for the entire year. This is not the factual
      matrix whiGh obtains in the case at hand; the licence could
      only be granted forthe period from 21.12.1999 to 31.3.2000,
      i.e. till the close of that financial year, owing to unforeseeable
 E    circumstances beyond the ken and control of the parties before
      us. We have already made a mention of the Division Bench
      Judgment delivered in Jayadevan which in turn was referred
      to in another Division Bench Judgment in Rajagopalan Nair v.
      Assistant Commissioner of Excise 1989 (1) KLT 800, wherein
 F    the Division Bench directed that the licensee was entitled to
      remission of payment of kisht because of being disabled to
      conduct its business on account of the interim orders passed
      by the Court. We affirm the conclusions arrived at in these
      decisions. We hold that a party is entitled to seek a remission
G     in the payment of licence fee if it is precluded from transacting
      business on the strength of that licence because of factors
      and reasons extraneous to it and/or if it is granted the licence
      on the direction of a Court for only a portion of the financial
      year.
 H
               CHIT RA v. STATE OF KERALA & ORS.                   759
                      [VIKRAMAJIT SEN, J.]

          6. The Appeal is accordingly allowed. The Respondent A
     State shall, within six weeks from today, refund to the
     Appellant -the balance amount of 9,41,257/-togetherwith.
     interest thereon at the rate of six per cent per annum with effect
     from 11.8.2005. Failure to do so shall renderthe Respondent
     State liable to refund the aforementioned sum of 9,41,257 /- B
     together with interest at the rate of twelve per cent per annum
     calculated from 11.8.2005 till the date of payment and also
     additionally liable for payment of costs quantified at 15,000/-
     (Rupees fifteen thousand only).
                                                                     c
         CIVIL APPEAL N0.4900 OF 2006

          7. The facts that arise in this Appeal are somewhat
     complex in comparison to Chitra's foregoing Appeal. The
     Appellant had been granted an FL3 licence for its Hotel o
     Hackoba at Ernakulam for the period ending on 31.3.2001.
     Due to a dispute with its landlord it had to vacate its premises;
     and on locating to another, it applied for the renewal of the
     licence on 26.2.2002. This was obviously for the immediately
     succeeding year 1.4.2001 to 31.3.2002. The Excise E
     Commissioner rejected the application for renewal on
     4.9.2002 on the ground that the licence had become defunct;
     a decision which was upheld by the State Government. In these
     circumstances, the Appellant successfully approached the High
     Court of Kerala which issued a direction to the State F
     Government to issue the licence within two weeks. The Single
     Judge simultaneously directed the Appellant to pay the licence
     fee for the years 2001-2002 and 2002-2003 by his Judgment
     dated 27.1.2003. The Appellant preferred an Appeal, and on
     the first day of its hearing, the Division Bench passed an ad G
..   interim Order directing the Appellant to pay 15 lakhs. Shortly
     after making this payment, on 25.3.2003, the licence was
     renewed. The Division Bench of the High Court 9f Kera la noted
     Rule 14 of the Foreign Liquor Rules as well as the fact that it H
760       SUPREME COURT REPORTS                     [2015] 9 S.C.R.


A had not been challenged. The Division Bench accepted the
  argument of the Appellant that for the reason that it could not
  utilize the licence for the year 2001-2002 as its application
  had been disallowed it was not liable to pay any fee; viz: during
  this period it was prevented by extraneous elements and factors
B from utilizing the licence. However, the Division Bench held
  that since the licence was renewed in March 2003, even though
  the Appellant could conduct its business for less than a fortnight
  in that licence year, nevertheless the Appellant was liable to
  pay the full fee for the year 2002-2003. It is these
C circumstances Which have constrained the Appellant to file the
  presentAppeal before us.

       8. In order to eradicate any possibility of misunderstanding
  our present Judgment, we hasten to clarify that had the
D Appellant's application for renewal of the FL-3 licence found
  approval instead of rejection on 4.9.2002, the Appellant would
  have been liable to pay the entire fee forthe year 2001-2002.
  This is so for the simple reason that there was no third party
  interference or intervention which led to the non-utilization of
E that licence for the previous portion of that year; it may be
  reiterated that the Appellant had to locate fresh premises.
  However, after 4.9.2002, the Appellant cannot be held
  responsible in any way for the non-utilization of the licence up
F to the date it was eventually renewed i.e. 25.3.2003.

        9. On the predication of the legal analysis and discussion
   in Civil Appeal No. 2246 of 2006 (supra), we are of the opinion
   that the Appellant is only liable to pay the proportionate licence
   fee for the period in which it could avail of the licence, that is
G 25.3.2003 to 31.3.2003. It would be fair to cogitate upon
   whether the Appellant should have declined the licence for            •
   virtually a week in that year, and since it failed to exercise that
 . option, wheth~r it should be burdened with the fee for the full
H year. It seems to us that any person placed in the position of
   the Appellant would not be in a position to decline to accept
            CHITRA v. STATE OF KERALA& ORS.                          761
                  [VIKRAMAJIT SEN, J.]

the renewal of the licence even though it was for less than a A
fortnight, since that would have led to the licence being
rendered defunct; which may have then led to consequence of
disentitlement for grant or renewal of the FL3 licence in the
future.
                                                                      B
      10. The Appeal is accordingly allowed. The Respondents
are directed to recalculate the proportionate amount of licence
fee due and payable by the Appellant for the period from
25.3.2003 to 31.3.2003. The amount of refund shall carry
interest at the rate of six per cent per annum from the date of C
its payment due till the date of its refund. This exercise should
be completed within two months from today. Failure to make
this payment within this period will render the Respondents
liable to pay the interest at the rate of twelve per cent per annum,
instead of six per cent, as directed above, and in addition D
thereto, the Respondents shall be liable to pay to the Appellant
the costs quantified at 15,000/-(Rupees fifteen thousand only),
which amount shall be deposited with the· Supreme Court
Advocates Welfare Fund.
                                                                     E
Devika Gujral                                     Appeals allowed.