STATE OF RAJASTHAN AND ORS. versus NANDLAL AND ORS. ETC. ETC.

Citation: [1992] SUPP. 1 S.C.R. 785 · Decided: 22-09-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Dismissed

Judgment (excerpt)

STATE OF RAJASTHAN AND ORS. 
v. 
NANDLAL AND ORS. ETC. ETC. 
SEPTEMBER 22, 1992 
(S. RANGANATHAN, V. RAMASWAMI AND B.P. JEEVAN 
REDDY, JJ.] 
Rajasthan Excise Act, 1950/Rajasthan Excise Rules, 1956: Sections 3 
A 
B. 
and 40/Chapters Vll(A) and VII (BJ-Country liquor-Sale of-Guarantee 
system and Exclusive Privilege System-Short-lifting of liquor by licence- C 
Notice of demand for recovery of deficit amount on undrawn liquor and 
proceedings for recovery-Validity of-Failure of State to supply liquor as and 
when demanded-Burden of proof-Whether lies with the licencee--'Whether 
liability of licencee remains unaffected despite total failure of State to supply 
liquor. 
D 
The retail sale of countcy liquor in the appellant-State was regulated 
by the provisions of the Rajasthan Excise Act, 1950 and the Rajasthan 
Excise Rules, 1956. 
During the year 1967-68 licences were granted under two dilferrent E 
systems, viz., 'Guarantee System' provided in Chapter Vll(A) and 'Ex-
clusive Privilege Systme' governed by Chapter Vll(B) of the Rules. Under 
the Guarantee System, the lincen.cee was guaranteed to draw from the 
Government Warehouse and sell, d.uring that years, countcy liquor of a 
specified value, called the amount guaranteed. The licencee was obliged to F 
deposit 10% of the amount of guarantee by way of security at the time of 
grant of licencee and was under an obligation to draw from the warehouse 
every month liquor equivalent in value to 1/12th of the amount guaranteed 
and in case be failed to do so the amount of deficit could be recovered from 
out of the security deposit and also from bis movable and immovable 
properties. Under the Exclusive Privilege System, the licencee was granted G 
exclusive privilege of selling country liquor by retail within a particular 
local area on condition of payment of lumpsum, instead of or in addition 
to excise duty, as may be determined by the Excise Commissioner. Under 
this system too, the licencee was required to deposit 10% of the said 
amount by way of security at the time of grant of licence. The total amount H 
785 
786 
SUPREME COURT REPORTS [1992) SUPP. 1 S.C.R. 
A had to be deposited In 12 monthly Instalments and the. llcencee was entitled 
to draw liquor from the Government Warehouse against the said deposits. 
Any amount not paid could be recovered as land revenue. 
A large number of writ petitions were filed in the High Court by the 
llcencees questioning the demand or the deficit guaranteed/stipulated 
B amount, contending that the short-lifting of liquor was on account of 
failure of the State to supply the appropriate quantities as and when 
demanded by them, that the licencees produced material in support of 
their allegation that the State was unable to supply the quantities 
demanded by them, which established that the production of country 
C liquor during that year in the State was below the requisite figure, with the 
result that adequate supplies could not be made to some of the warehouses, 
OD account Of which shops Of some of the llcencees had to be closed and 
therefore, the notices of demand for the recovery of the entire amount and 
deficit resulting from the shortfall from the licencees and the proceedings 
D for their recovery of the demands could not be upheld and . must be 
quashed. 
While denying this allegation of the llcencees of short supply, the 
appellant-State, squarely blamed the licencees for the short-lifting and 
asserted. that they were always ready and willing to supply the quantities 
E demanded, but the licencees themselves failed to lift the same. 
All these petitions were dealt with and disposed of by different 
Judges on different dates. 
In one batch of 61 writ petitions, a Single Judge held that the 
F llcencees had singularly failed to produce any material to establish their 
allegation that the department had failed to supply as and when 
demanded. Following the aforesaid decisfon, another Single Judge dis· 
missed another batch or 9 writ petitions. 
In another batch of 17 writ petitions, a Single Judge held that the 
G llcencees had succeeded in establishing that for four months during the 
period in question there was shortage Of liquor at the walUOUSe and OD 
account of which liquor was not made available to the llcencees as per their 
demands for the purposes of s11le in their shops and quashed the notice of 
demand for the recovery or the entire amount of deficit resulting from the 
H shortfall from the licencee an

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