Holding

An application for remission or damages for total closure of shops auctioned in a group is maintainable and the authorities must consider such applications on their merits.

Summary

The State of Uttar Pradesh ordered the closure of liquor shops licensed to Jagjeet Singh and others under Section 59 of the U.P. Excise Act during curfew periods caused by communal disturbances. The licensees sought remission of licence fees for the closure period, but the State refused. The High Court directed the State to pay remission with interest. On appeal, the Supreme Court examined whether Rule 34 (as amended in 1992 and 1998) bars any claim for remission in cases of total closure of shops auctioned as a group, and considered the provisions of the Excise Manual paragraphs 179 and 190. The Court held that Rule 34 does not prohibit a claim for remission when all shops in a group are closed, and such applications are maintainable, leaving it to the authorities to decide on merit. Consequently, the Court set aside the High Court’s orders for remission with interest, directed the authorities to consider the applications within three months, partially allowed the State’s appeals and dismissed the appeal concerning one of the cases.

Issues considered

Whether licensees are entitled to remission of licence fees for periods of total closure of liquor shops ordered under Section 59 of the U.P. Excise Act.
Whether Rule 34 (as amended in 1992 and 1998) bars any claim for remission or damages in cases of total closure of shops auctioned as a group.
Whether the provisions of the Excise Manual (paras 179 and 190) permit remission in such circumstances.

Legislation cited

U.P. Excise Act, 1910s. 10, s. 24, s. 31, s. 41, s. 59

Subjects

remission of licence feeliquor shop closureSection 59Rule 34Excise Manualcurfewauction-cum-auction rulescompensationU.P. Excise Act

Judgment

STATE OF U.P. AND ORS. A
v.
JAGJEET SINGH AND ORS.

OCTOBER 16, 2003

[V.N. KH!-RE, CJ., BRIJESH KUMAR AND B
ARUN KUMAR, JJ.]

U.P. Excise Act, 1910-Sections 24, 31and59-U.P. Excise Licenses
(Tender-cum-Auction) Rules, 1991-Rule 34 amended in 1992 and 1998-
Remission of licence fees in case of closure of shops during the period of C
curfew-Entitlement of-Held entitled to if al I the auctioned group of
shops were closed and not otherwise-UP. Excise Manual; Paras 179 and
190.

The liquor shops of respondent-licensees were ordered to be
closed under section 59 of the U.P. Excise Act, 1910 by the State during D
the period of curfew imposed in the areas concerned due to communal
disturbances. The respondents claimed remission of licence fees from
the State for the period during which the liquor shops were closed. On
refusal by the State, the respondents filed Writ Petitions before High
Court. The High Court quashed the order refusing remission and E
directed the State to reconsider the applications of the respondents for
remission and to pay the amount to the respondents with interest.

Disposing of the appeals, the Court

HELD : 1.1. Rule 34 as amended by the U.P. Excise Licences
F
(Tender-cum-Auction) (Amendment) Rules, 1992 does not contain any
blanket bar against any claim of damages or remission on account of
closure. The heading of the Rule mentions about no claim for delay in
supply or closure or not opening of shop but its contents in clauses (i)
and (ii) do not provide plainly that no remission or damages would be G
payable for closure or non-opening of a shop. The manner in which
clause (ii) is worded appears that it governs the shops auctioned in a
group. It restricts the scope of claim of remission or damages in case
a shop or some shops auctioned in a group remain closed for any
reason. A group of shops is one whole and in case such group of shops H
837
838 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A is only affected partially, no remission or refund of bid money can be
claimed. Out of the group of the shops, if only some shops are closed
or one shop is closed, there would be no claim for any remission. The
language used for negating the claim in n~spect of pa~tial cf osure in
relation to time or group of shops leads to the conclusion that case of
B total closure would not be covered by Rule 34. On the contrary, no
inference can be drawn that in case of total closure of a group of shops
or for whole time in a day, it would entitle a licensee for remission or
damages. All that can be said is that it is not impermissible. It may or
may not be allowed, is to be decided on its own merits. But it would
C not be possible to say that no such application for remission/damages
would be maintainable as in the case of curtailment of time of a shop
or closure of one or some of the shops in a group of shops. (849-A-G)

1.2 The position which emerges on reading paragraphs 179 and
190 of U. P. Excise Manual is that in some special cases, a remission
D is permissible, if(he Excise Commissioner finds some merit in the claim
and forwards it for orders to the State Government. The rules do not
provide any such positive provision but only provides for cases in
which remission cannot be claimed, namely where it relates to
curtailment of hours of shops or partial closure of shops auctioned in
E a group. Section 59 of the U.P. Excise Act, 1910 does not provide for
any such claim for the closure but the licence issued under section 24
of the Act contains a condition referable to section 31 of the Act again
confers no right to claim for closure of shop on the days as specified
in Condition no. 27 of the licence plus three more days . For the rest
of the days or period, it leaves open the matter without any provision
F therefor. This being the position under the provisions of the Act, the
Rules and the Excise Manual, there is scope for the argument that Rule
34 does not exclude the possibility of any claim for' remissio;'or
damages on account of closure of a shop totally, which situation is not
dealt with under Rule 34 as amended in 1992. [850-B-F)
G
1.3 Rule 34, as amended in 1998, clarifies that remission would not
be claimed where an auctioned shop or some or all shops auctioned in a
group remain closed. In absence of the provision, which now exists after -~
amendment in 1998, it could not be said that no compensation could be
H claimed for the period prior to 1998 amendment. (850-G-H, 851-A]
STATE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 839
1.4. An application for remission/damages for closure of shops in A
entirety auctioned in a group as is the case in the appeals in hand would
be maintainable. It is for the authorities concerned to consider the
merit of the claim for remission/damages and pass any appropriate
order looking to the facts and circumstances of the case in accordance
with law. [851-H, ·ss2-A-B] B
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4673 of
1997.

From the Judgment and Order dated 1.11.1996 of the High Court of
Judicature at Allahabad in Civil Misc. W.P. No. 137 of 1994. C
WITH

Civil Appeal Nos. 5024 & 5828 of 1999.

Anoop G. Chaudhary, Rakesh Dwived!, M.L. Varma, Ashok K. D
Srivastava, R.C. Verma, Mukesh Verma, Manish Shanker, Ms. Shalini
Kumar, Abhishek Chaudhary, Ms. V. Mohana, Mukesh Prasad, Arvind
Kumar Shukla, Shahid Anwar, Ms. Archana Singh, Prashant Kumar,
Yatish Mohan, E.C. Vidya Sagar for the appearing parties.
E
The Judgment of the Court was delivered by

BRIJESH KUMAR, J. :The common question involved in all the
above noted three appeals is as to whether the contractors running the
liquor shops under licence, issued by the State, in Uttar Pradesh are entitled F
to remission of licence fee for the period during which the liquor shops
were ordered to be closed under Section 59 of the U.P.Excise Act, 1910
(for short 'the Act'). The licensees in all the three cases, being the highest
bidders for the group of shops in question, their bids were accepted and
thus they were running the shops in the concerned areas. In the month of
December, 1992, the structure in Ayodhya was demolished. As a sequel G
thereof disturbances and tension prevailed at several places in the State and
the shops involved in the first two appeals noted above, were ordered to
be closed during the period curfew was imposed in the areas concerned.
In so far it relates to the group of shops involved in the third appeal, they
were ordered to be closed during the period of imposition of curfew due H
840 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A to communal disturbances ..between November, 1991 - January, 1992, in
Aligarh. /;'

In the above noted Civil Appeal No.4673 of 1997, the High Court
by means of the impugned judgment, quashed the order, rejecting the
B request of the respondent to allow remission and to pay compensation arid .
remanded the matter to the authorities to reconsider their applications under
paragraphs 179 and 190 of the Excise Manual and it was also directed that
the amount as may be found liable for remi~sion shall be paid to the
licensees with interest @ 18% p.a. In the other appeal no.5024 of 1997,
C the High Court, while quashing the order refusing to give remission,
directed the State and its authorities to adjust the licence fee for the given
period with interest@ 12% p.a. In the third appeal, namely, civil appeal
no.5828 of 1999, the court found that' the contractor was allowed
remission partially, which is in the discretion of the Government and as
D to in what proportion the remission is liable to be allowed would not be
a matter to be decided in writ proceedings and for that purpose licensee
may seek his remedy elsewhere.

The relevant facts for the purposes of this case, which admit of no
..:. ~·.
dispute, are that in the State of Uttar Pradesh grant -0f exclusive privilege
E to manufacture or sale of liquor, at the relevant time was being given under
a licence by auction system. The highest bidder would be issued licence
to run the liquor shops. The auction would be held of one shop or group
of shops in a particular area. The licensees in the above noted appeals had
made bid for group of shops which were accepted by the authorities and
F the licences were issued to them for sale of liquor on the basis
whereof they have been running the shops but the difficulty arose when
curfew was imposed during certain periods due to disturbances and
communal tensions.

G Before entering into the merits of the matter, it may be appropriate
to peruse some of the relevant provisions of the U .P .Excise Act, 1910 and
the U.P.Excise Manual.

Section 24 of the U.P.Excise Act provides for grant of exclusive
H privilege of manufacture and sale of liquor and it reads as under:
STATE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 841

"24. Grant of exclusive privilege of manufacture, etc.- A
Subject to the provisions of Section 31, the Excise Commissioner
may grant to any person a license for the exclusive privilege :

(l) of manufacturing or of supplying by wholesale, or of both; B
or

(2) of selling by wholesale or by retail, or

(3) of manufacturing or of supplying by wholesale, or of both,
and of selling by retail. C
any country liquor or intoxicating drug wit~in any local
area."

Section 31 provides for issue of license subject to certain conditions and
restrictions. The provision reads as under : b
"3 l. Form and conditions of licences, etc.- Every licence, permit
or pass granted under this Act shall be granted -

(a) on payment of such fees (if any),
E
(b) subject to such restrictions and on such conditions,

(~) shall be in such form and contain such particulars, as the
(Excise Commissioner) may direct either generally or in any
particular instance in this behalf, and F
(d) shall be granted for such period as the [State Government]
may in like manner, 'direct."

One of conditions of the licence which provides for normal close days for
liquor shops is Condition No.27 of the licence which provides as under : G

"The shop will remain closed on l st day of every month,
Independence day, (15th August), Republic day, (26th January)
and Mahatma Gandhi birthday (2nd October). If lst day of any
month is public holiday then next day will be the day, when Shop H
842 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A will remain closed. In addition to this, any three days during the ·
·excise year, will be declared by the Licensing authority on which
the shops will remain closed. No compensation will be given to
the licensee for closure of the shop on aforesaid days."

B According to the above condition, no compensation was liable to be paid
for closure of shops as provided in the said condition. Section 59 provides
for closure -of the shops in certain exigencies and for the sake of public
peace. The same reads as under :

"59. Power to close shops for the sake of public peace.- The
C District Magistrate by notice in writing to the licensee may require
that any shop in which any [Intoxicant] is sold shall be closed at
such time or for such period as he may think necessary for the
preservation of the public peace.

If a riot or unlawful assembly is apprehended or occurs in
D
the vicinity of any such shop a Magistrate of any class or any
police officer above the rank of constable who is present ipay
require such shop to be kept closed for such period as he may
/
think necessary:

E Provided that where any such riot or unlawful assembly
occurs the licence shall, in the absence of such Magistrate or ..
police officer, close his shop without any order."

It may be noted that the above provision does not provide either .~ay, for
F awarding remission of compensation for the period of closure of shops in
the circumstances given in Section 59 quoted above.

Section 41 empowers the Excise Commissioner to make rules subject to
previous sanction of the State Government. Such rules known as U.P.Excise
Licences (Tender-cum-Auction) Rules, 1991 were framed in exercise of
G power under Section 41 of the Act. Rule 34 provides for no claim for
delay in supply of intoxicant. It reads as under:

"34. No claim for delay in supply.- The licensee shall have no
claim for damages or for remission of bid~money in the case of
H delayed supply of the intoxicant."

•,
STATE v. JAGJEET SINGH [BRIJESH KUMAR, J.} 843

Rule 34 was, however, amended on March I 0, 1992 by the U.P.Excise A
Licences (Tender-cum-Auction) (Amendment) Rules, 1992 and after
.. amendment it reads as under :

"No claim for delay in supply or for closure or not opening of shop
or curtailment in hours of sale:
B
(i) The licensee shall have no claim for damages or for
remission of bid-money in the case of delayed supply of the
intoxicant.

(ii) The licensee shall have no claim for remission or refund of C
bid-money, in case a shop or some shops, auctioned in a
group remain closed or could not be opened for any reason.
Similarly the licensee shall have no claim for remission of
refund of bid-money in case of curtailment, at any time in
the hours of sale."
D
The provision relating to administration of the Excise Department
is provided for under Chapter II of the Act. Section I 0 provides as
under:

"10. Administration of Excise Department in districts.- (1) The E
administration of the Excise Department in any district shall,
unless the [State Government] otherwise directs, be under the
charge of the Collector of that district.

(2) Power of State Government - The (State Government] may
by notification applicable to the whole of [Uttar Pradesh] or to any F
district or local area comprised therein -

(a) To appoint Excise Commissioner: [appoint an officer hereinafter
referred to as the Excise Commissioner, who shall, subject to the
orders of the [State Government] have the control of the G
administration of the Excise Department].

Xxx xxx xxx"

The Excise Commissioner having the control of the administration of the
Excise Department in the State issues certain directions from time to time H
844 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A which are nonnally compiled and known collectively as Excise Manual.
Paragraphs l 79 and l 90 of the Excise Manual would be relevant for the
purposes of a remission of payment of compensation. They read as under:

"179. Remission in special cases.- Proposals for i:emissions other
than of irrecoverable balances must. be reported. to the Excise
B Commissioner who, ifhe supports them, will forward them for the
orders of the State Government.
'
190. Miscellaneous directions.- The following miscellaneous
directions regarding the classification and payment of charges are
c noted for observance :

( l) Payment on account of compensation for closing shop under
Section 59 of the Act or for closing country spirit shops
settled under the auction system during the passage of troops
D includes (a) the refund of an amount originally credited to
Excise and (b) l 0 per cent calculated on the amount oC-
licence fees for the period during which the shop was closed,
on account of loss of profits.

(2) The latter charge only should be debited to Contract
E Contingencies. The fonner will be treated as a refund and
adjusted against the separate grant for refund and drawbacks.

(3) Compensation may be paid by the Collector ~n his own
authority." \
F
The learned counsel for the licensees has drawn our attention to Rule
34 as amended vide notification dated March, 1998 to indicate tftat prior
to the said amendment, there was no such provision by which remission
may not be allowable even though all the shops of the group are closed
G in entirety. The rule 34, as amended in 1998, is quoted below:

"No claim for delay in s~upply or for closure or for closure or not
opening of shop or curtailment in hours of sale:

(i) The licensee shall have no claim for damages or for
H remission of bid-money in the case of delayed supply of the
STATE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 845

intoxicant. A
(ii) The licensee shall have no claim for remission or refund
of bid money, in case of an auction shop or some or all
shops, auctioned in a group remain closed or could not be
opened for any reason. Similarly the licensee shall have no B
claim for remission of refund of bid-money in case of
curtailment, at any time in the hours of sale."

We may, however, presently consider the case according to the rules as
existing in 1991-92. The effect of amendment of 1998 may be seen later.

The claim of the licensees for remission of the license fee rests upon
c
the plea that under Section 59 of the Act there is no provision either way
to allow or prohibit such remission on account of closure ordered under
the aforesaid provisions. The other plank on which the licensees base their
case is Clause (ii) of Rule 34 as amended in 1992 where it particularly
provided that a licensee shall have no claim for remission in case a shop D
or some shops, auctioned in a group remain closed or could not be opened
for any reason. It further provided that no remission would be admissible
in case of curtailment in hours of sale. The interpretation of the above
noted sub-rule (ii), according to the licensee is that a remission would not
be permissible if a shop or some of the shops out of the total number of E
shops of the group remain closed. The reason being that if some of the
shops out of the whole pool, remain open the licensee would not be totally
deprived of the earnings and may also stand compensated for closure of
other shops of the group of shops. It would thus be permissible only in
case of all shops of the group being clos~d in the entirety. Reliance has F
been placed on certain decisions of the Allahabad High Court on the point
to which we shall make a reference a little later. Yet another basis for claim
of remission is paragraph 179 of the Excise Manual which provides for
remission in special cases in respect of which a report is submitted to the
Excise Commissioner who, in case agrees with the proposal, would G
forward it to the government for orders, whereas paragraph 190 provides
for payment on account of compensation for shops being closed under
Section 59 of the Act during the passage of troops.

The question for grant of remission in respect of closure of shops
during the month of December, 1992 came to be considered before the H

.. ·
846 SUPREME COURT REPORTS (2003) SUPP. 4 S.C.R.
A Allahabad High Court in a batch of writ petitions decided on March 30,
1993 which has been referred to in the impugned judgment as Harpal
Singh's case (Harpal Singh & Ors. Etc. v. State of UP. & Ors.) or decision
as rendered in the case ofRatnagar Mishra, both of whom were petitioners
in separate writ petitions before the High Court in the ·same bunch of
B petitions. The matter was decided by a common judgment. The Court
accepted the contention of the petitioners in those writ petitions that Rule
34 (ii) as amended in 1992 would apply in cases of auction of shops in
a group. It has been held that clause (ii) of Rule 34 refers to partial closure
of shops auctioned in a group, in respect whereof no claim for remission
C would be permissible but it does not provide otherwise. That is to say
clause (ii) of Rule 34 would be no bar for grant of remission or
compensation under paragraphs l 79 and 190 where closure of the shop~
auctioned in a group is total and in entirety. Where no shop out of the
group of shops remains open, in that event, clause (ii) of Rule 34 would
not be applicable. To support the above interpretation the Division Bench
D observed that Rule 34 clause (ii) refers to only partial closure either in terms
of number of shops or in terms of hours of sale. The High Court has also
distinguished the decision of another Bench of the High Court in the case
of Hanuman Prasad Jaiswal v. State of UP. (Civil Misc. Writ Petition
No.2902 of 1981, decided on January 25, 1981) (1983 U.P.T.C.-362). It
E was held in that case that closure of a shop for the rest of the period of
the license amounted to cancellation of the license under Section 35(3) of
the Excise Act and it was not a case of temporary closure as envisaged
under Section 59 of,the Act. Yet another decision which has been referred
to is rendered by another Division Bench of the High Court in Civil Misc.
F Writ Petition No.375 of 1981,-0m Prakash Sharma & Anr. v. The Excise
Commissioner, UP.Allahabad & Anr., decided on 4th July, 1991. The
Bench presided over by Hon'ble Mr. Justice B.P.Jeevan Reddy (Chief
Justice - as he then was) held that remission/compensation was liable to
be paid since the government had itself failed to supply the bhang for sale
of which license was granted to the petitioner in that case on annual license
G fee @ Rs.10,~00 per month. The petitioner had deposited two months'
license fee in advance but the authorities failed to make supply of bhang
to the petitioner. The Court observed : "In the present case we are of the
opinion that the Government having itself failed to supply bhang for more
than one month to the petitioner and for this reason, his license remained
H practically suspended for thP- said period, there is no justification for the
STA TE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 847

Government to recover licence fee for the aforesaid period." A reference A
of the Division Bench decision in the case of Hanuman Prasad Jaiswal
(supra) was also made. It was observed that the petitioner could not sell
bhang by procuring it otherwise from any other source except as made
available from the bonded warehouses. It was observed that the petitioners
cannot be asked to pay the licence fee for the period because the B
Government itself created a situation where petitioners were not able to run
their shops. We have noticed that in the case ofHanuman Prasad Jaiswal
also the closure of the ~hop for the rest of the licenced period was at the
instance of the Government which was held to be virtual cancellation of
the licence. The above noted two decisions do not help the petitioner. The C
closure of the shops under Section 59 of the Act would not be a situation
created by itself. D_uring the relevant period tension had prevailed at many
places and the communal riots had also erupted necessitating imposition
of curfew resulting in closure of shops.

Yet another decision of the High Court as referred to on the point is D
dated 12th July, 1993 rendered in Civil Misc. Writ Petition No.1200 of
1993, Om Prakash v. State of U.P. & Ors. The Bench was presided over
by one of us (Mr.Justice V.N.Khare, as he then was). Remission was
claimed for closure of the shop due to imposition of curfew from December
8 to 14th December, 1992. An application moved by the petitioner in that E
case was rejected by the Collector, Azamgarh. Relying upon the decision
in the case of Harpal Singh and Ratnagar Mishra (supra) it was contended
before the Bench that an application for remission would be maintainable
and the view taken otherwise was incorrect. The Bench noted that the order
passed by the Collector, Excise was an appealable order before the
Commissioner. But an apprehension was expressed by the petitioner in F
filing the appeal before the Commissioner that the Commissioner himself
had issued a direction that application for remission was not maintainable,
therefore, it would be an illusory remedy. The Bench observed that the
apprehension was not well founded since in the case of Ratnagar Mishra
it was held that application for remission would lie where a group of shops, G
has been closed in entirety. Therefore, the Court declined to interfere with
the order and provided that the petitioner could file a~ appeal before the
Excise Commissioner who shall entertain the same and decide it on merits,
in accordance with the law. The writ petition was thus dismissed on the
I
ground of alternative remedy. H
•
848 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A In the background set out above, the effect of Rule 34 clause (ii) as
amended in 1992, is to be seen as to whether the embargo to Jay a claim
of remission is confined to cases where it has been an auction of group
of shops or it extends to closure of shops for whatever reason auctioned
singly or in group and closed partially or entirely.
B
We may examine the provisions under the Jaw as quoted above in
relation to closure of shops and remission/compensation in lieu thereof.
Section 59 empowers the District Magistrate to close any liquor shop at
such time or for such period which he may consider necessary for
preservation of peace. In cases where some riot or unlawful assembly is
C apprehended in vicinity of such a shop a Magistrate or any police officer
above the rank of constable, who is present may order for closure of the
shop. The proviso to Section 59 casts a duty on the licensee to close the
shop without any order by any authority, where a riot or unlawful assembly
occurs at the place where the shop is situated. Apart from providing for
D closure of the shop to maintain peace, Section 59 does not provide for
anything either way for awarding compensation or remission on account
of such a closure. We then find that licence is issued under Section 24
of the Act subject to the provisions of Section 3 l-. Section 3 l under "clause
(b)" provides that the licence would be subject to such restrictions and on
E such conditions as the Excise Commissioner may direct generally or in
particular. Condition No.27 of the licence, quoted above, prescribes the
days on which the shop would remain closed, i.e. first of every month,
the Independence Day, the Republic Day, on birthday of Mahatma Gandhi
and apart from such days on any three days during the excise year which
would be declared by the licencing authority to be the close days. Then
F in negative form it provides that no compensation will be given for closure .
of shop on the aforesaid days. The rest, it leaves to inference. There is
no provision in·same terms for no compensation for closure on such days
other than indicated in Condition No.27 of the licence. We may then
consider Rule 34 of the U.P.Excise (Tender-cum-Auction) Rules, 1991 (as
G amended in 1992) which also deals with the subject of remission and
compensation. Clause (i) deals with cases of delayed supply of the
intoxicant in which case no remission/damages of bid money is allowable.
Clause (ii) however, as indicated earlier, says that there would be no claim
in case of a shop or some shops auctioned in a group is closed for any
H reason nor in case of curtailment at any time in the hours of sale. It is
STA TE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 849

to be noted that Rule 34 does not contain any bi~nket bar against any claim A
of damages or remission on account of closure. The heading of Rule 34
no doubt mentions about no claim for delay in supply or closure or not
opening of shop but its contents in clauses (i) and (ii) do not provide plainly
that no remission or damages would be payable for closure or non-opening
of a shop. The manner in which clause (ii) is worded, it appears that it B
governs the shops auctioned in a groi.;p. It restricts the s_cope of claim
of remission or damages in case a shop or some shops auctioned in a group,
remain closed for any reason. A group of shops is one whole and in case
such group of shops is only effected parti.ally no remission or refund of
bid money can be claimed. The Division Bench in the case ofHarpal Singh C
has observed that clause (ii) of Rule 34 (as amended in 1992) deals with
partial closure as would be evident from the later part of the sub-rule which
provides that there would be no claim for curtailment of any time in the
hours of sale i.e. there would be no remission in case of curtailment of
time of a shop but the position in respect of total closure of a shop in place
of mere curtailment of time has been left unprovided for. We may say there D
is no provision either way and the prohibition is only in respect of partial
closure in a day. Similarly, the first part of the sub-rule (ii) talks about
the auction of shops in group. Out of the group of the shops if some shops
are closed or a shop is closed there would be no claim for any remission.
It leaves a situation where all shops of a group are closed. Therefore, the E
language used for negating the claim in respect of partial closure in relation
to time or a group of shops leads to the conclusion that cases of total closure
would not be covered by Rule 34. We may hasten to say that no such
inference can be drawn that in case of total closure of a group of shops
or for whole time in a day, would necessarily entitle a licensee for F
remission or damages. All that can be said is that it is not impermissible.
It may or may not be allowed, is liable to be decided on its own merits.
But it would not be possible to say that no such application for remission/
damages would be maintainable as in the case of curtailment of time of
a shop or closure of one or some of the shops in a group of shops. The
interpretation as made by the Bench in the case of Harpal Singh cannot G
be faulted with.

Rule 34 is obviously referable to Section 41 of the Act which
empowers the Excise Commissioner to make rules with previous sanction
of the State Government regulating the manufacture, supply, storage or sale H
850 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A of any intoxicant.
Then we come to the positive provisions relating to remissions and
in that connection para 179 of the Excise Manual may be referred to, which
provides for remission in special cases it may be reported to the Excise
B Commissioner who in tum, if considers appropriate, will forward for orders
to the State Government. Similarly, para I 90 of the Excise Manual
provides for compensation on account of closing of a shop during the
passage of troops. Such directions as contained in paras 179 and 190 issued
by the Excise Commissioner are referable to Section 10 of the Act quoted
above, wherein he is entrusted with control and administration of Excise
C Department. The position thus which emerges is that in some special cases
a remission is permissible, if the Excise Commissioner finds some merit
in the claim, he shall then forward it for orders to the State Government.
Rules of course do not provide any such positive provision but only
provides for cases in which remission cannot be claimed, namely, where
D it relates to curtailment of hours of the shop or partial closure of shops
auctioned in a group. Section 59 ·itself does not provide for any such claim
for the closure but the licence issued under Section 24 contains a condition
referable to Section 31 of the Act again confers no right to claim for closure
of shop on the days as specified jn Condition No.27 plus three more days.
E For the rest of the days or period it leaves open the matter without any
provision therefor. This being the position under the provisions of the Act,
the rules and the Excise Manual, there is scope for the argument that Rule
34 does not exclude the possibility of any claim for remission or damages
on account of closure of a shop totally which situation is not dealt with
F under Rule 34 as amended in 1992. However, it is introduced by
amendment of Rule 34 in 1998, as quoted earlier.

The above noted amended provision of 1998 squarely provides for
closure of a shop auctioned or some or all shops auctioned in a group. It
may be noted that the language of clause (ii) of Rule 34 which used to be
G "in case a shop or some shops auctioned in a group" has been changed to
"in case of an auction shop or some or all shops auctioned in a group".
That is to say auction of shops has been put in two categories where it is
an auction of one shop and the other shops auctioned in a group. It is
further clarified in the amended sub-rule that remission would not be
H claimed where an auctioned shop or some or all auctioned shops in a group
STA TE v. JAGJEET SINGH [BRIJESH KUMAR, J.] 85 l

remain closed. It is submitted that in absence of the provision as now exists A
after amendment in 1998 it could not be said that no compensation could
~. ..J
be claimed for the period prior to 1998 amendment. By amendment of Rule
34 in 1998 certainly the position has somewhat changed,· but in relation
to the period with which we are concerned in this case, the Amended Rule .
34 (ii) (1998) would not be attracted. Learned counsel for the licensees B
submit, that subsequent amendment clarifies the position that earlier the
position was different from what is sought to be brought about by means
of the amended provision.

We may recapitulate the position as it regards the cases decided by
the High Court of Allahabad pertaining to the above provisions which have C
been referred to in the earlier part of this judgment. All those decisions
relate to period prior to 1998 i.e. before the amendment of Rule 34(ii). In
the case of Hanuman Prasad Jaiswal remission/damages was allowed since
on facts it was found that it was a case which amounted to cancellation
of licence for the rest of the period. Hence, such a. closure was beyond D
the purview of Section 59. The case of Om Prakash Shanna was also on
a different footing but the remission/damages was not refused; rather
allowed since it was found that the government itself was at fault in not
making supply of bhang from the bonded warehouse and did not make it
available for sale to the licensee for a period of two months. In principle E
it was accepted that remission/ damages could be claimed if due to fault
of the government the shop could not be opened for the purpose of sale
for which the licence was granted. In the case of Harpal Singh and
Ratnagar Mishra, it has been held that such an application for remission
would be maintainable where it is a case of total closure in entirety and F
distinction was drawn between a partial and a total closure. In the case
of Om Prakash, it was observed that in view of decision in the case of
Ratnagar Mishra an application would lie for remission. In yet another case
Om Prakash Gupta v. State of Uttar Pradesh, Civil Misc. Writ Petition
No.408 of 1996, dated 4th December, 1996, decided by a learned Single
Judge of the Allahabad High Court, it pertained to the year 1988 before G
coming into force of 1992 Rules. It was held that an application for
remission would be maintainable and the same was allowed for closure of
shops for 5 days.

The position which finc:!lly emerges out is that an application for H
852 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A remission/damages for closure of shops in entirety auctioned in a group
as is the case in the appeals in hand would be maintainable. But it is for
the authorities concerned to consider the merit of the claim for remission/
damages and pass any appropriate order looking to the facts and
circumstances of the case in accordance with law. It would be the position
B as it relates to cases prior to the amendment of Rule 34 in .1998.

In the result, we partly allow the appeals (C.A.No.4673 of 1997 and
C.A.No.5024 of 1999) filed by the State and set aside the directions as
given by the High Court for remission and damages to the respondents with
interest etc. The other part of the order, however, is maintained and it is
C directed that the applications of the respondents for remission/damages
may be considered and appropriate orders may be passed by the authorities
in accordance with the law, expeditiously say within a period of three
months from the date of communication of this judgment.

D So far Civil Appeal No.5828of1999 is concerned, it is dismissed and
the order passed by the High Court is maintained. There will, however,
be no order as to costs.

B.S. Appeals disposed of.