V.K. ASHOKAN versus ASSTT. EXCISE COMMNR. & ORS.

Citation: [2009] 4 S.C.R. 331 · Decided: 05-03-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

(2009] 4 S.C.R. 331 
~~ 
V.K. ASHOKAN 
A 
V. 
ASSTT. EXCISE COMMNR. & ORS. 
Civil Appeal No. 1541 of 2009 
MARCH 5, 2009 
B 
[S.S. SINHA AND CYRIAC JOSEPH, JJ.] 
<j 
Kera/a Abkari Shops (Disposal in Auction) Rules, 1974: 
JI( 
r. 6(30)- Mixing of 'diazepam' in toddy- Held: Constitutes 
an offence - Licence liable to cancellation under r. 6(30) - c 
Kera/a Abkari Act - ss.57(a), 56. 
rr.6(28), 6(30) - Cancellation of licence under Rule 6(30) 
- Forfeiture of deposit in terms of Rule 6(28) would not 
automatically follow. 
,--t 
Kera/a Revenue Recovery Act: s. 7 - Demand for loss D 
incurred by Government in holding re-auction on cancellation 
of licence - Loss purportedly sustained by the State as if the 
privilege of sale in toddy was transferred for three years - Held: 
Licence was granted for one year only - Advertisement was E 
made for one year and confirmation of sale was also accorded 
for a year only - Grant of licence for carrying out business as 
~ • 
envisaged under Section 18A of the Kera/a Abkari Act is 
imperative in character whereby a valid contract for a period 
of three years was clearly impermissible in law - Therefore, 
F 
demand could not be made towards the loss suffered for three 
years - Kera/a Abkari Act - s. 18A. 
Interpretation of statutes: Heydon's rule - Applicability 
of 
.,-1 
Administrative law: Principles of natural justice - Violation G 
of -
Held: Since no notice issued to licencee before 
cancellation of licence, principles of natural justice not 
complied with. 
331 
H 
332 
SUPREME COURT REPORTS 
[2009] 4 S.C.R 
A 
Jurisdiction. Statutory authorities - Where two statutory 
..-• 
authorities could exercise the same power, if a matter was 
heard by one authority, the other could not exercise the power 
Doctrines/Principles: 'res extra commercium' - Carrying 
on business in liquor - Held: It is considered to be 'res extra 
8 
commercium '. 
Words and phrases: Security - Meaning of. 
Appellants were carrying on business of toddy. In 
March, 1997, the State Government published a 
C notification expressing its intention to part with its 
privilege of vending toddy through retail shops in the 
notified excise ranges for the year 1997-98 wherefor public 
auction was proposed to be held. Although the 
Notification for holding auction for one Financial year was 
D published, the District Collector held auction for three 
years purportedly on the basis of past practice. Appellants 
were successful bidders. They entered into a temporary 
agreement for a period of three years. They were however 
granted licence to deal in the said commodity only for one 
E year. The Board of Revenue confirmed the said auction. 
Appellants furnished security to the extent of one-third of 
the amount payable for the first year. 
In September, 1997, Excise Inspectors inspected the 
toddy shops of the appellants and took three bottles of 
F toddy as sample. On chemical examination of samples, 
'Diazepam' 1.8 mg. to 2.2 mg. per litre of toddy sample 
was detected. Pursuant thereto, criminal case was 
registered against appellants. However, appellants were 
acquitted. 
G 
Separate proceedings were also initiated by Assistant 
Commissioner for ..;ancellation of licences under Rule 
6(28) and Rule 6(30). Licences were cancelled under Rule 
6(30). So far as the orders directing cancellation of 
H licences in terms of the provisions of Rule 6(28) were 
, 
V.K. ASHOKAN V. ASSTT. EXCISE COMMNR. & ORS. 
333 
,...'-i 
concerned, they were referred to the Excise Commis-A 
sioner for confirmation. 
, 
In the meantime, auctions were held. As no bidder 
turned out, the Assistant Commissioner of Excise entered 
into negotiations with some of the parties and granted 
licences to them. 
B 
The matters were referred to the Commissioner of 
Excise for confirmation of sale. At that stage, the Board 
held that in cases where licences were cancelled in terms 
of Rule 6(30), Rule 6(28) would also be automatically c 
attracted and on that basis, the decision of Assistant 
Commissioner was upheld. 
On 19.12.1997, the Assistant Commissioner of Excise 
issued another order forfeiting the security deposit. 
Consequent to the said order, the Circle Inspector of D 
Excise issued a notice dated 8.1.1998 demanding a huge 
amount as also the interest thereon at the rate of 18% per 
annum stating that the State Government had suffered 
losses in holding re-auctions and wherefor licences were 
granted. Revenue Recovery proceedings were initiated E

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