Andhra Pradesh High Court - Amravati
The State Of A.P. vs M/S Sentini Beverages Private ... on 24 February, 2021
Bench: Arup Kumar Goswami, C.Praveen Kumar
* IN THE HIGH COURT OF ANDHRA PRADESH : AMARAVATI
HON'BLE MR. JUSTICE ARUP KUMAR GOSWAMI, CHIEF JUSTICE
&
HON'BLE MR. JUSTICE C. PRAVEEN KUMAR
+ WRIT APPEAL No.1630 of 2018
% 24.02.2021
# The State of A.P., rep. by the Special Chief Secretary,
Revenue (Ex.II) Department, Secretariat Amaravathi,
Andhra Pradesh, and another. ....Appellants
v.
$ M/s Sentini Beverages Private Ltd., Gandepally Village,
Kanchikacherla Mandel Krishna District having Regd. Office
at Plot No 1229, Road No 60, Jubilee Hills, Hyderabad,
Rep. by its President, Corporate Affairs
Mr.Sarat Joseph Gummadi. ....Respondent
! Counsel for the Appellant : Mr.Kasa Jagan Mohan Reddy, G.P.,
representing the Advocate General
^Counsel for Respondent : Mr.Ch. Samson Babu
<Gist :
>Head Note:
? Cases referred:
1
AIR 1968 SC 488
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2 W.A.No.1630 of 2018
IN THE HIGH COURT OF ANDHRA PRADESH : AMARAVATI
****
WRIT APPEAL No.1630 of 2018
Between:
The State of A.P., rep. by the Special Chief Secretary,
Revenue (Ex.II) Department, Secretariat Amaravathi,
Andhra Pradesh, and another. ....Appellants
v.
M/s Sentini Beverages Private Ltd., Gandepally Village,
Kanchikacherla Mandel Krishna District having Regd. Office
at Plot No 1229, Road No 60, Jubilee Hills, Hyderabad,
Rep. by its President, Corporate Affairs
Mr.Sarat Joseph Gummadi. ....Respondent
JUDGMENT PRONOUNCED ON 24.02.2021
HON'BLE MR. JUSTICE ARUP KUMAR GOSWAMI, CHIEF JUSTICE
&
HON'BLE MR. JUSTICE C. PRAVEEN KUMAR
1. Whether Reporters of Local newspapers Yes
may be allowed to see the Judgment?
2. Whether the copy of judgment may be marked to Yes
Law Reporters/Journals
3. Whether Their Lordship/Ladyship wish to see the Yes
fair copy of the Judgment?
ARUP KUMAR GOSWAMI,CJ C. PRAVEEN KUMAR,J
HCJ & CPKJ
3 W.A.No.1630 of 2018
IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HON'BLE Mr. JUSTICE ARUP KUMAR GOSWAMI, CHIEF JUSTICE
&
HON'BLE Mr. JUSTICE C. PRAVEEN KUMAR
WRIT APPEAL No.1630 of 2018
(Through Video Conferencing)
The State of A.P., rep. by the Special Chief Secretary,
Revenue (Ex.II) Department, Secretariat Amaravathi,
Andhra Pradesh, and another ... Appellants
Versus
M/s Sentini Beverages Private Ltd., Gandepally Village,
Kanchikacherla Mandel Krishna District having Regd. Office
at Plot No 1229, Road No 60, Jubilee Hills, Hyderabad,
Rep. by its President, Corporate Affairs
Mr.Sarat Joseph Gummadi ... Respondent
Counsel for the appellants : Mr.KasaJagan Mohan Reddy, G.P.,
representing the Advocate General
Counsel for the respondent : Mr.Ch. Samson Babu
Date of hearing : 01.02.2021
Date of judgment : 24.02.2021
JUDGMENT
(Arup Kumar Goswami, CJ)
Heard Mr.Kasa Jagan Mohan Reddy, learned Government Pleader
representing the learned Advocate General, for the appellants and
Mr. Ch. Samson Babu, learned counsel for the respondent.
2. This appeal is directed against the order dated 04.04.2018 passed
by the learned single Judge in W.P.No.5680 of 2018, whereby the
learned single Judge allowed the Writ Petition, by setting aside the
order dated 14.12.2017 passed by the 1st respondent in the Writ Petition
and directing refund of Rs.1.5 Crores which was paid by the
respondent/writ petitioner for obtaining Letter of Intent (LOI) for
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establishing a manufactory for manufacture of Indian Made Foreign
Liquor (IMFL) along with its application dated 06.01.2011, with interest
@ 9% per annum from that date till the date of payment. The 1st
respondent therein was also directed to pay cost of Rs.10,000/- to the
respondent/writ petitioner.
3. By the order dated 14.12.2017, the prayer of the respondent/writ
petitioner for refund of the application fee of Rs.1.5 Crores was
rejected.
4. The respondent/writ petitioner is engaged in the business of IMFL
bottling and it had commenced its operation with effect from
17.11.2010 after fulfilling the formalities as required under the A.P.
Distillery (Manufacture of Indian Made Foreign Liquor other than Beer &
Wine) Rules, 2006 (for brevity "the Rules").
5. The Government of Andhra Pradesh, in exercise of powers
conferred under Rule 4(2) of the Rules, by G.O.Ms.No.728 dated
10.06.2008 invited applications from intending persons in prescribed
format for grant of LOI for establishment of new IMFL Manufactory in
the State of Andhra Pradesh. Pursuant thereto, the respondent/writ
petitioner submitted an application dated 06.01.2011 along with non-
adjustable and non-refundable fee of Rs.1 Crore as well as Special fee
of Rs.50 lakhs as specified under Rule 5(2)(b), as amended, for LOI for
manufacture of IMFL at Pulla village, Bhimadole Mandal, West Godavari
District, for a capacity to the tune of 500 lakh proof litres.As the said
application was not considered, the respondent/writ petitioner filed
W.P.No.25461 of 2012. The same was disposed of by the order dated
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17.08.2012 with a direction to the respondents therein to take a
decision on the application.
6. Pursuant to the aforesaid direction of this Court, the Principal
Secretary to Government, Revenue (EX.III) Department, passed an order
dated 17.12.2012 deciding not to sanction any further IMFL Distillery
capacity addition at that point of time, andtaking recourse to Rule
5(2)(d) of the Rules, rejected all the applications submitted in
pursuance of the notification dated 10.06.2008.
7. Thereafter, anorder dated 19.12.2012 was issued, in exercise of
powers conferred under Rule 4(3) of the Rules, withdrawing the
intention of granting LOI for expansion of production capacities of the
existing IMFL (other than Beer and Wine) Manufactories.
8. It is the case of the respondent/writ petitioner that it had
submitted representations dated 29.12.2014, 01.10.2016, 09.11.2016,
18.11.2016, 10.03.2017, 25.03.2017, 03.06.2017 and 31.07.2017.
However, taking note of the representation dated 25.03.2017, the order
dated 14.12.2017 was passed, rejecting the request made by the
respondent/writ petitioner, in terms of Rules 5(2)(d) and 5(2)(i) and
5(2)(b)(iii) of the Rules.
9. The learned single Judge, on consideration of Rules 5(2)(d),
5(2)(i) and 5(2)(b)(iii) of the Rules, recorded a finding that once the
notification for receiving application for grant of LOI for establishment
of new IMFL Manufactories had been withdrawn in terms of a policy
decision of the Government, the aforesaid Rules will not apply and,
therefore, the State is duty-bound to refund the amount collected as a
condition for considering the application for LOI and, accordingly,
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allowed the Writ Petition with directions, which are already noted
hereinbefore.
10. Mr.Kasa Jagan Mohan Reddy, learned Government Pleader
representing the learned Advocate General, for the appellants, has
relied onRules 5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules, to contend
that the learned single Judge was not correct in holding that the
aforesaid provisions do not apply in the facts and circumstances of the
case. The Government, on consideration of existing production of
distilleries, existing consumption and also import into the State, came
to a conclusion that there was no need to proceed with further
production/increase of production by issuing LOI to the existing
distillery owners and, therefore, had withdrawn the notification and,
when the amount deposited was non-adjustable and non-refundable,
there was no question of issuing a Mandamus to the appellant to refund,
that too, with interest, he contends.
11. Mr. Ch. Samson Babu, learned counsel for the respondent/writ
petitioner, supports the order of the learned single Judge and contends
that the application submitted by the respondent/writ petitioner was
not considered at all, and the same was rejected solely on the ground
of change of policy and as such, the order of the learned single Judge
does not require any interference. Mr. Samson Babu submits that the
Writ Appeal has become infructuous in view of the fact that in
pursuance of the order appealed against, by an order dated 27.01.2021,
an amount of Rs.2,88,66,575/-, being the principal amount as well as
interest as on 20.01.2021, was directed to be adjusted towards future
excise duty and, as such, the appeal may be disposed of as infructuous.
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12. Learned Government Pleader, by producing order dated
27.01.2021 through a memo, contends that the Government had issued
directions to implement the order of this Court dated 04.04.2018 in
W.P.No.5680 of 2018, subject to the outcome of W.A.No.1630 of 2018,
to avoid further legal complications in C.C.No.2692 of 2018.
13. We have perused the order dated 27.01.2021 and we are satisfied
that amount was directed to be adjusted subject to the outcome of the
Writ Appeal and, therefore, we are unable to agree with the submission
of the learned counsel for the respondent/writ petitioner that the
appeal has been rendered infructuous. In the facts and circumstances
of the case, the appeal has to be adjudicated on merits.
14. We have considered the submissions of the learned counsel for
the parties and have perused the materials on record.
15. In the order dated 17.12.2012, it was noted that the existing
functional licensed production capacity in the State along with its
imports is adequate, on a gross basis, to meet the existing consumption
demand of IMFL (other than Beer and Wine) and since the Government
had changed its Excise policy regarding disposal of retail IMFL shops
with effect from 01.07.2012, it needed some time to observe the trend
of consumption demand so as to be able to realistically project the
future requirement of production capacities and gap in capacities, if
any. In the light of the above, it was recorded as follows:
"i) Not to sanction any further IMFL Distillery capacity
addition at present. Accordingly all the applications
submitted in pursuance of the Notifications issued vide
reference 1st and 2nd read above and pending consideration
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of the Government (as listed in the Annexure) shall be
rejected under Rule 5(2)(d) of the Andhra Pradesh
Distillery (Manufacture of IMFL other than Beer and Wine)
Rules, 2006.
ii) Notifications shall be issued withdrawing Government's
intention to receive any more applications for grant of LOIs
for establishment of new Manufactory or expansion of
production capacity of existing Manufactories."
16. Recording the above, all the applications submitted pursuant to
the notification dated 10.06.2008, as also notification dated
01.01.2008, were disposed of.
17. It will be relevant to extract Rules 4 and 5 of the Rules, which
read as under:
"4. (1) No letter of intent for establishment of any new
manufactory or expansion of the production capacity of an
existing manufactory shall be issued without previous
notification issued by the Government expressing the intention
to grant the same from time to time.
(2) A notification shall be issued by the Government separately
from time to time for grant of Letter of Intent for establishment
of a new manufactory or expansion of production capacity of an
existing manufactory for different purposes mentioned in Rule 3.
(3) Government may, by notification issued from time to time,
withdraw their intention of granting Letter of Intent for
establishment of new manufactory or expansion of the
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production capacity of the categories of existing manufactory for
any of the purposes separately.
5. (1) No licence for manufactory shall be granted unless the
same is notified and sanctioned under sub-rules (1) and (2) of
Rule 4 of these rules.
(2) Procedure for obtaining sanction of the Government:
(a) on the notification issued by the Government under Rule 4(1)
and (2), any person intending to construct and work such a
manufactory or expand the production capacity of the existing
manufactory, may apply in Form-DM(1) along with his scheme
to the Government through the Commissioner.
(b) (i) No application mentioned in Clause (a) above shall be
entertained unless a non-refundable and non-adjustable fee as
specified below is paid into Government treasury and the
challan in original in support of payment is produced along with
the application.
Annual Production capacity Non-refundable and non-adjustable
of the proposed Fee
manufactory
Up to 50 lakhs Rs. 7 crores.
Proof Liters.
Above 50 lakhs Rs. 10 crores
Proof Litres and up
to 100 lakh Proof
Litres.
Above 100 lakh Rs. 12 crores
Proof Litres.
(ii) A special fee as specified below shall also be paid into
Government treasury and the challan in original in support of
payment is produced along with the application.
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Annual production capacity Special Fee
of the proposed
manufactory
Up to 50 lakhs Proof Rs. 3 crores.
Litres.
Above 50 lakhs Proof Rs. 5 crores.
Litres and up to 100
lakh Proof Litres.
Above 100 lakh Proof Rs. 6 crores
Litres.
(iii) The special fee remitted under clause (ii) above shall be
adjusted towards future licence fee or Excise Duty or both on
commencement of production.
(c) When the Government are satisfied of the proposed scheme,
they may accord the sanction and communicate it in the form
of Letter of Intent in Form-DM(S). This Letter of Intent shall be
valid for a period of two years from the date of issue.
(d) It shall be lawful for the Government to accept or reject
without assigning any reason any application made for grant of
Letter of Intent in pursuance of the notification under Rule 4(1)
and (2) of these rules.
(e) The holder of the Letter of Intent shall obtain a licence in
Form DM-2(M) or DM-2(G) or DM-2 within six months from the
date of issue of Letter of Intent.
(f) If the holder of the Letter of Intent fails to obtain a licence
within a period of six months from the date of issue of Letter
of Intent, he ceases to have any right on the Letter of Intent.
(g) If the holder of the Letter of Intent and Licence fails to
commence production within two years from the date of issue
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of Letter of Intent, he forfeits his right over Letter of Intent
and on the licence.
(h) The Letter of Intent communicated under clause (c) shall not
confer any right or privilege for grant of a licence and is liable
to be revoked or withdrawn by the Government at any time
without giving any notice to the holder if the Government so
desires.
(i) No compensation for damage or loss shall be payable when a
Letter of Intent is rejected under clause (d) or revoked or
withdrawn under Clause (h).
18. As noted earlier, notification dated 10.06.2008 was issued in
terms of Rule 4(2) of the Rules for grant of LOI for establishment of a
new Manufactory for manufacture of IMFL. Rule 4(3) of the Rules
provides that Government, may by notification, issue from time to
time, withdraw their intention of granting Letter of Intent for
establishment of new manufactory or expansion of the production
capacity and it is on the basis thereof that the notification dated
19.12.2012 was issued withdrawing the intention of the Government of
granting LOI for establishment of new IMFL manufactories. While
rejecting the prayer for refund by the order dated 14.12.2017, reliance
was placed on Rules 5(2)(b), 5(2)(b)(i) and 5(2)(b)(iii). Rule 5(2)(b)(i)
provides that no application shall be entertained unless the non-
refundable and non-adjustable fee as indicated therein is paid into
Government treasury and the challan in original in support of payment
is produced along with the application. Rule 5(2)(b)(i) provides that a
special fee as specified therein, shall also be paid into Government
treasury and a challan in original in support of payment be produced
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along with the application. Rule 5(2)(b)(iii) provides that the special
fee remitted under clause (ii) above, shall be adjusted towards future
licence fees or Excise duty or both on commencement of production.
Rule 5(2)(d) provides that it shall be lawful for the Government to
accept or reject without assigning any reason, any application made for
grant of Letter of Intent in pursuance of the notification under Rule 4(1)
and (2) of these Rules. Rule 5(2)(i) provides that no compensation for
damage or loss shall be payable when a Letter of Intent is rejected
under clause (d) or revoked or withdrawn under Clause (h).
19. A perusal of the letter dated 17.12.2012 goes to show that the
application of the respondent/writ petitioner was rejected under Rule
5(2)(d) of the Rules on the ground that a decision was taken by the
Government not to sanction any further IMFL Distillery capacity
addition. Clause 5(2)(b) uses the expression "entertain". The Hon'ble
Supreme Court in Lakshmi Rattan Engineering Works v. Asst.
Commissioner, Sales Tax, Kanpur and others,reported in AIR 1968 SC
488, interpreted the expression "entertain" as meaning "adjudicate
upon or proceed to consider on merits". It is for such consideration it
was laid down that applications shall not be entertained unless a non-
refundable and non-adjustable fee as detailed therein, is produced
along with the application. When an application is accompanied by a
non-refundable and non-adjustable fee as well as special fee, such
application has to be considered on merits. It is an admitted position
that the application of the respondent/writ petitioner was not
considered on merits and was rejected only because the Government
decided not to sanction any further IMFL Distillery capacity
addition.While Rule 4(3) of the Rules enables the Government to
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withdraw intention of granting LOI for establishment of new
manufactory or expansion of the production capacity of the categories
of existing manufactory for any of the purposes separately, it cannot be
countenanced that when such a course of action is taken without
considering pending applications, the Government would be entitled to
retain the fee deposited along with the application. In the facts of the
case, Rule 5(2)(i) will not come into play for the simple reason that the
petitioner is not praying for any compensation for damage or loss.
20. In that view of the matter, we hold that the respondent/writ
petitioner is entitled to refund of the fee required to be submitted with
the application in terms of Rule 2(b)(I)and (II). We have not gone to the
question as to whether, in a given case, after consideration of an
application, the same could have been rejected without assigning any
reason.
21. In view of the above discussion, we are of the opinion that no
interference is called for with the order under appeal. Since the amount
directed to be paid by the learned single Judge has been directed to be
adjusted towards future excise dutyand as the respondent/petitioner
had accepted the same and had contended that the appeal has become
infructuous, no further orders are called for.
22. The Writ Appeal is, accordingly, dismissed. No order as to costs.
Pending miscellaneous applications, if any, shall stand closed.
ARUP KUMAR GOSWAMI, CJ C. PRAVEEN KUMAR, J
MRR/GM
