LexSTATE OF ORISSA AND ORS. versus NARAIN PRASAD AND ORS.
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STATE OF ORISSA AND ORS.
v.
NARAIN PRASAD AND ORS.
SEPTEMBER 3, 1996
[B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.]
Excise Law:
Orissa Excise (Exclusive Privilege) Rules, 1970: Rules 6A and 6.
Liquor licence-Under contract-Considerations for grant of-Licensee
required to lift 'minimum guaranteed quantity' ( MGQ) every month-As well
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as to remit excise duty twice every month-While licensee obliged to remit
excise duty in case tlie full M.G.Q. was not lifted, Collector could.pennit
deficit to be lifted in subsequent n01th-Licensee as per tenns of contract
unde1took to remit excise duty plior to lifting of liquor-However, licensee D
failed to lift M.G.Q. as well as to remit excise du{JWl1en demand for
payment of excise duty was made, licensee filed wlit petition challenging the
Rules obliging payment of excise duty even p1ior to lifting and sale of
liquo1~Held : Rules valid-Payment of excise duty was independent obliga-
tion unrelated to lifting of M.G.Q.-Licensee obliged to remit excise duty E
whether or not he lifted full M.G.Q.-Licensee was bound by tem1s of
contract-Bihar and Olissa Excise Act, 1915, Ss. 27, 28 and 29.
Constitution of India, 1950 : Anicle 226.
Extraordinary jwisdiction-Invoking of-Person who entered into con-
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tract could not later be allowed to challenge validity of tenns of that contract
by invoking extraordinary julisdiction of High Coult.
Words and Phrases :
''Plivilege''-Meaning of-In the context of grant of liquor licence.
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The respondents were the highest bidders in respect of the various
liquor shops in the State. Their bids were accepted. They executed agree·
ments in the prescribed form and were issued licences. Each of them had
undertaken under the agreement/contract to lift a particular specified
quantity of liquor every month during the relevant excise year as well as H
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SUPREME COURT REPORTS [1996] SUPP. 5 S.C.R.
A to remit the excise duty as specified in the Orissa Excise (Exclusive
Privilige) Rules, 1970. They did the business under the said licences for
the entire excise year. They failed to lift the agreed Minimum Guaranteed
Quantity (M.G.Q.) They also failed to remit the excise duty as provided by
Rule 6-A of the Rules. And when notices were served calling upon them to
B remit the appropriate amount, they approached the High Court by way of
writ petitions questioning the demand notices. The High Court allowed the
writ petitions. Being aggrieved, the appellants preferred the present ap·
peal.
The main contention of the respondents-licensees was that the
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demand for payment of excise duty on unlifted quantity of liquor amounted
to levy of duty and that such levy was not warranted by the Bihar and
Orissa Excise Act, 1915. They contended that Rule 6-A(3) of the Rules was
ultra vires the rule-making power or the Government and was outside the
purview of the Act. They contended that if there was a sale of liquor, duty
could be collected on the liquor sold but that seeking to collect the duty
D even in the absence of sale amounted to levy of duty contrary to the
provisions of the Act. While the respondents-licensees looked at the im-
pugned demand as an instance of levy of excise duty, the State looked at
it as a case of enforcing the undertakings contained in the agreement/con-
tract executed by the licensees.
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Allowing the appeal, this Court
HELD : 1. A person who enters into certain contractual obligations
with his eyes open and works the entire contract, cannot be allowed to turn
round, and question the validity of those obligations or the validity of the
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Rules which constitute the terms of the contract. The extra-ordinary
jurisdiction of the High Court under Article 226, which is of a discretion-
ary nature and is exercised only to advance the interests of justice, cannot
certainly be employed in aid of such persons. Neithl-<" justice nor equity is
in their favour. [ 480-C-D]
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2.1. A reading of Rule 6-A of the Orissa Excise (Exclusive Privilege)
Rules, 1970 makes it clear that the licensee shall have to undertake to lift the
Minimum Guaranteed Quantity (M.G.Q.) ofliquor every month. Clause (3)
of Rule 6-A of the Rules, read with clauses (1) and (2) means that the
obligation to lift the M.G.Q. of liquor and the obligation to remit the excise
H duty payable for the month are two distinct obligations. While the obligation
STATEv. NARAIN PRASAD
467
to lift the M.G.Q. is to be discharged before Excerpt shown. Read the full judgment & AI analysis in Lexace.