Kerala High Court

Sdf Industries Limited vs The State Of Kerala on 20 June, 2024

Author: N.Nagaresh

Bench: N.Nagaresh

         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                            PRESENT
              THE HONOURABLE MR.JUSTICE N.NAGARESH
 THURSDAY, THE 20TH DAY OF JUNE 2024 / 30TH JYAISHTA, 1946
                    WP(C) NO. 20562 OF 2024
PETITIONER:

         SDF INDUSTRIES LIMITED
         SDFHOUSE,N.H BYEPASSROAD, CHANDRANAGAR, PALAKKAD
         REPRESENTED BY SRI. SUNNY MATHEW,
         S/O.LATE P.M, MATHEW, AGED 55 YEARS
         SENIOR LIAISON ASSISTANT,
         SDF INDUSTRIES LIMITED, PIN - 678007

         BY ADV M.KRISHNAKUMAR


RESPONDENTS:

    1    THE STATE OF KERALA
         REPRESENTED BY THE SECRETARY TO THE GOVERNMENT,
         TAXES DEPARTMENT, GOVT. SECRETARIAT,
         THIRUVANANTHAPURAM-, PIN - 695001
    2    THE COMMISSIONER OF EXCISE
         GOVERNMENT OF KERALA COMMISSIONERATE OF EXCISE
         BAKERY JUNCTION ROAD, NANDAVANAM PALAYAM VIKAS
         BHAVAN P.O THIRUVANANTHAPURAM, PIN - 695033
    3    THE CIRCLE OF INSPECTOR OF EXCISE
         SDF INDUSTRIES LTD. PAMPADY THIRUVILWAMALA
         THRISSUR DISTRICT, PIN - 680588

         SRI.SREEJITH V.S., GOVERNMENT PLEADER

     THIS WRIT PETITION       (CIVIL) HAVING COME UP    FOR
ADMISSION ON 20.06.2024,      THE COURT ON THE SAME     DAY
DELIVERED THE FOLLOWING:
 WP(C) No.20562 of 2024
                              2




                         JUDGMENT

Dated this the 20th day of June, 2024

The petitioner is a Public Limited Company. The

petitioner has been granted all the required licences under the

Abkari Act to manufacture, warehouse, blending and bottling

of IMFL and has been holding licences for the past more than

28 years. The annual licence was valid upto 31.03.2024.

2. The petitioner was declared as a Sick Unit under

the provisions of the Sick Industrial Companies (Special

Provisions) Act, 1985. The petitioner strove hard over the

years to achieve a balance between the income and

expenditure. However, the Covid-19 pandemic forced the

Company to be closed down for many months, which has

accumulated its losses setting the Company back with a

heavy financial burden. The petitioner-Company has already

submitted the application for renewal of licence and tendered

the required fee under the statute.

3. However, the application for renewal stands

rejected on the ground that there are arrears / dues relating to

the establishment cost, which is the salary payable to the staff

of the Excise Department. The salaries paid by the State

Government are to be reimbursed by the petitioner. Along with

the rejection of the application for renewal, the respondents

have demanded payment of arrears of Cost of Establishment,

which according to them is ₹19,50,762/-.

4. Renewal of licence is subject to payment of the

actual licence fee. Cost of Establishment is a liability on the

Industry / Company, which is to be paid. However, arrears /

dues in the payment of the Cost of Establishment is not a

precondition for the renewal of licence. It is without realising

the difference between licence fee dues and dues in

establishment cost that the respondents are refusing to renew

the licence. Neither Section 26 of the Abkari Act nor Rule 14

(relating to Cost of Establishment) of the Kerala Distillery and

Warehouse Rules, 1968 makes it a precondition for renewal

of licence.

5. The petitioner had approached this Court earlier

filing W.P.(C) No.8945 of 2022, wherein this Court had

allowed an instalment facility of ₹5 lakhs to be paid every

month as per Ext.P7 interim order. The petitioner had paid up

the entire dues. Likewise for the year 2023-2024 also, the

petitioner was compelled to approach this Court again filing

W.P.(C) No.11187 of 2023, wherein an interim order was

passed by this Court as per Ext.P8, again granting

instalments.

6. All these instalments were promptly paid by the

petitioner to continue to operate on the strength of the licence.

However, for the year 2024-2025, the respondents, as stated

earlier, are demanding an amount of ₹19,50,762/-. When the

petitioner pointed out that as per Ext.P6, there is an excess

payment of ₹7,26,904/-, the respondents are not keen to take

that into account.

7. In order to run the Company / Factory from

01.04.2024, the petitioner requires a licence from the

respondents issued under the provisions of the Abkari Act

which is renewed from year to year. Refusal to renew the

licence on the ground of arrears in payment of establishment

cost has already led to the closure of the Factory. The

rejection of the application for renewal in spite of having paid

the licence fee is per se illegal. Hence, the petitioner is before

this Court.

8. Government Pleader entered appearance on behalf

of the respondents and resisted the writ petition. The

Government Pleader submitted that payment of Cost of

Establishment is a statutory requirement and it is a condition

of licence also. As the petitioner has violated the conditions of

the licence, the petitioner is not entitled to renewal of licence.

The tendering of licence fee alone will not make the petitioner

entitled to renewal of licence. The writ petition is therefore

without any merit and it is liable to be dismissed, contended

the Government Pleader.

9. I have heard the learned counsel for the petitioner

and the learned Government Pleader representing the

respondents.

10. During the course of arguments, counsel for the

petitioner submitted that apart from paying the licence fee, the

petitioner is ready to pay the arrears of Cost of Establishment

in instalments, if a breathing time is granted. The counsel for

the petitioner submitted that there is an excess demand of

Cost of Establishment to the tune of ₹7,26,904/- as is evident

from Ext.P6.

11. The Government Pleader submitted that Ext.P6 is

not a reliable document and according to the respondents, the

arrears of Cost of Establishment would come to ₹19,50,762/-

plus applicable interest / penal interest.

12. As the petitioner has expressed his willingness to

pay the arrears of Cost of Establishment along with interest

subject to the objections based on Ext.P6, I am of the view

that the writ petition can be disposed of with appropriate

directions.

13. The writ petition is accordingly disposed of with the

following directions:

(i) The petitioner shall pay the licence fee

within a period of one week, if it is not

already paid.

(ii) The Cost of Establishment amounting

to ₹19,50,762/- along with applicable interest

/ penal interest shall be paid in seven

consecutive and equal monthly instalments.

(iii) The first of such instalment shall be

paid within a period of ten days from today.

The subsequent instalments shall be paid on

the 15th day of subsequent months.

(iv) The petitioner will be at liberty to take

up his objections based on Ext.P6 in the

meanwhile, without affecting the payment

schedule as directed above.

(v) On the petitioner paying the licence fee

and the first instalment of Cost of

Establishment, then the respondents shall

renew the licence, if the application satisfies

all other parameters.

Sd/-

N.NAGARESH JUDGE spk

PETITIONER EXHIBITS

Exhibit P1 TRUE COPY OF THE COMMUNICATION DATED 27-03-2024 RECEIVED ONLINE REJECTING THE APPLICATION FOR FORM 1 LICENSE Exhibit P2 TRUE COPY OF THE COMMUNICATION DATED 27-3-2024 RECEIVED ONLINE REJECTING THE APPLICATION FOR FORM II LICENSE Exhibit P3 TRUE COPY OF THE COMMUNICATION DATED 27-03-2024 RECEIVED ONLINE REJECTING THE APPLICATION FOR FORM III LICENSE Exhibit P4 TRUE COPY OF THE COMMUNICATION DATED 27-03-2024 RECEIVED ONLINE REJECTING THE APPLICATION FOR FORM IV LICENSE Exhibit P5 TRUE COPY OF THE COMMUNICATION DATED 27-03-2024 RECEIVED ONLINE REJECTING THE APPLICATION FOR FORM IV A LICENSE Exhibit P6 TRUE COPY OF THE DETAILS OF EXCESS AMOUNT PAID BY THE PETITIONER AND COUNTERSIGNED BY THE 3RD RESPONDENT FOR THE PERIOD FROM SEPTEMBER 2019 UP TO SEPTEMBER 2023 Exhibit P7 TRUE COPY OF THE INTERIM ORDER DATED 17-03-2022 PASSED IN WPC NO.8945/ 2022 OF THIS HON'BLE COURT.

Exhibit P8 TRUE COPY OF THE INTERIM ORDER DATED 30-03-2023 IN WPC 11187/2023 OF THIS HON'BLE COURT.