The State Of A.P. vs M/S Pearl Distilleries Private ...
2021 Latest Caselaw 1142 AP

       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.1638 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 two others                          ... Appellants

                                  Versus
M/s.Pearl Distilleries Private Limited,
Old Singarayakonda, Prakasam District,
Rep. by its Chief Executive Officer
Mr.S.V.Nagaraja Reddy and 2 others.                      ... Respondent


Counsel for the appellants     : Mr.KasaJagan Mohan Reddy, G.P.,
                               representing the Advocate General

Counsel for the respondent     : Mr.SivarajuSrinivas

Date of hearing                : 01.02.2021

Date of judgment               :


                             JUDGMENT

(Arup Kumar Goswami, CJ)

Heard Mr.KasaJagan Mohan Reddy, learned Government Pleader

representing the learned Advocate General, for the appellants and

Mr.SivarajuSrinivas, learned counsel for the respondent.

2. This appeal is directed against the order dated 14.06.2018 passed

by the learned single Judge in W.P.No.4201 of 2018.

3. On the submission of the learned writ petitioner that the issue is

squarely covered by the order dated 04.04.2018 in W.P.No.5680 of

2018, which was not disputed by the learned Government Pleader, the

learned single Judge passed the order under challenge.

HCJ & CPKJ

4. It is appropriate to quote the order in its entirety:

"When the matter is taken up, it is submitted by the

learned counsel for the petitioner that the issue in the

present writ petition is squarely covered by the order,

dated 04.04.2018, in W.P.No.5680 of 2018 of this Court

and the same is not disputed by the learned Government

Pleader. A copy of the said order is placed on record.

Following the said order and for the reasons recorded

therein, this writ petition is also allowed; the impugned

proceedings dt:14.12.2017 of the 1st respondent is set

aside; the sum of Rs.4.5 crores, which had been paid by

the petitioner for obtaining LOI for establishment of new

IMFL manufactory along with its application

dt:23.04.2018, retained by the 1st respondent, is directed

to be refunded to the petitioner with [email protected]% per

annum from the said date till the date of repayment.

Office to enclose a copy of the order, dated

04.04.2018, in W.P.No.5680 of 2018 to this order.

Miscellaneous Petitions pending consideration, if any,

in this Writ petition shall stand closed. There shall be no

order as to costs.

5. At the outset, it would be relevant to note that against the order

dated 04.04.2018 in W.P.No.5680 of 2018, the State of Andhra Pradesh

represented by the Special Chief Secretary, Revenue (Ex.II)

Department, Secretariat Amaravathi, Andhra Pradesh preferred an HCJ & CPKJ

appeal registered as W.A.No.1630 of 2018 and by an order dated

24.02.2021 passed by this Court, the Writ Appeal was dismissed.

6. The respondent/petitioner is a company incorporated for the

purpose of manufacturing of Indian Made Foreign Liquor (IMFL)and

started its operation and production on 14.08.1997.

7. The Government of Andhra Pradesh, in exercise of powers

conferred under Rule 4(2) of the A.P. Distillery (Manufacture of Indian

Made Foreign Liquor other than Beer & Wine) Rules, 2006 (for brevity

"the Rules"), issued a G.O.Ms.No.1 dated 01.01.2008 for grant of Letter

of Intent (LOI) for expansion of the existing IMFL manufactories and

invited applications from the existing manufactories. Pursuant thereto,

the respondent/writ petitioner submitted application dated 23.04.2010

along with non-adjustable and non-refundable fees of Rs.3 Crores as

well as special fee of Rs.1.50 Crores as specified by Rule 5(2)(b) of the

Rules.

8. In the order of the learned single Judge, apparently the date of

application of the petitioner is wrongly recorded as '23.04.2018' as the

respondent/petitioner had submitted his application only on

'23.04.2010'. It is also wrongly recorded in the order that the

petitioner had applied for obtaining LOI for establishment of new IMFL

manufactory, though the petitioner had applied for expansion of the

existing capacity of the respondent/petitioner's manufactory.

9. It is stated that 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 and, accordingly, taking recourse to Rule 5(2)(d) of the Rules, HCJ & CPKJ

rejected all the applications including the application of the

respondent/writ petitioner submitted in pursuance of the notification

dated 01.01.2008. It is stated that the order dated 17.12.2012 was not

within the knowledge of the respondent/writ petitioner and the

respondent/writ petitioner came to know about the same only in the

early part of 2017, while it was pursuing with the respondents for

refund of the amounts paid to them. It is also stated that the second

respondent was also apparently not aware of the order dated

17.12.2012 as he had submitted a report dated 17.09.2014 to the first

respondent for taking necessary action on the representation, as there

was no intent to grant LOI in view of the G.O.Ms.No.690 dated

19.12.2012, which 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.

10. It is the case of the petitioner that it had submitted a

representation dated 16.03.2017, after coming to know about the order

dated 17.12.2012, to the first and second respondents of the writ

petition and by the order dated 14.12.2017, as noted supra, the request

made by the respondent/writ petitioner was rejected, in terms of Rule

5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules.

11. Mr.K.Jagan Mohan Reddy, learned Government Pleader for the

appellant submits that the instant case is not covered by the decision

rendered in W.P.No.5680 of 2018 and that apart, while W.P.No.5680 of

2018 was filed in connection with establishment of new manufactory for

manufacturing of IMFL, the present is a case of expansion of the HCJ & CPKJ

existing capacity of the manufactory. He also submits that the learned

single Judge, while deciding W.P.No.5680 of 2018, was not correct in

holding that Rules 5(2)(d), 5(2)(i) and 5(2)(b)(iii) of the Rules 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.

12. Mr.SivarajuSrinivas, learned counsel for the respondent/writ

petitioner, submits that the fundamental issue raised in W.P.No.4201 of

2018 and the present one is fully covered by the decision of this Court

in W.P.No.5680 of 2018 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 and

as such, the Government is liable to refund the amount deposited along

with the application submitted by the respondent/writ petitioner.

13. We have considered the submissions of the learned counsel for

the parties and perused the materials on record.

14. 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 HCJ & CPKJ

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

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."

15. Recording the above, all the applications submitted pursuant to

the notification dated 01.01.2008, as also notification dated

10.06.2008, were disposed of.

16. After considering Rules 4 and 5 of the Rules, this Court while

disposing of W.A.No.1603 of 2018 vide order dated 24.02.2021,

observed as follows:

"Rule 4(3) of the Rules provides that Government, may by

notification, issue from time to time, withdraw their HCJ & CPKJ

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 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).

HCJ & CPKJ

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 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 HCJ & CPKJ

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."

17. We are of the opinion that, issue raised in the Writ Petition

No.4201 of 2018 is fully covered by the judgment rendered in

W.P.No.5680 of 2018 which was affirmed in W.A.No.1630 of 2018.As

such, we find no merit in this appeal and accordingly, the same is

dismissed. No order as to costs. Pending miscellaneous applications, if

any, shall stand closed.

ARUP KUMAR GOSWAMI, CJ                      C. PRAVEEN KUMAR, J

MRR/GM