Default in statutory deposit by selected liquor applicant amounts to cancellation of selection, not surrender of an ungranted licence.

Where a selected applicant failed to deposit the prescribed licence fee, earnest money and security within time, the governing Rules, 2002 treated the default as cancellation of the selection and resettlement of the shop, with forfeiture only of amounts actually deposited. The court distinguished this from surrender of a licence under Section 36 of the U.P. Excise Act because no regular licence had yet come into existence. The order treating the default as surrender was unsustainable, the demand on that basis was set aside, and the matter was remitted for fresh consideration under the Rules after hearing the applicant.

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Issues: Whether the non-deposit of the basic licence fee, earnest money and security money by a selected applicant for retail sale of country liquor amounted to surrender of a licence under Section 36 of the U.P. Excise Act, or whether the consequence was cancellation of selection under the U.P. Excise (Settlement of Licenses for Retail Sale of Country Liquor) Rules, 2002.

Analysis: The selected applicant did not deposit the amounts required within the stipulated period. Under Rule 10(c) and Rule 12 of the Rules, 2002, the legal consequence of such default is cancellation of the allotment or selection and resettlement of the shop, with forfeiture of amounts if deposited. The scheme of the Rules draws a clear distinction between cancellation of selection before grant of licence and cancellation or surrender of a licence after it has been granted. Since no regular licence had come into existence, the matter could not be treated as surrender under Section 36 of the U.P. Excise Act. The earlier decision relied on by the State was held distinguishable on facts because it did not deal with the same issue regarding default in statutory deposit by a selected candidate.

Conclusion: The impugned order treating the default as surrender of licence was unsustainable, and the petitioner succeeded on this issue.

Final Conclusion: The demand based on surrender of licence was set aside, the revision was restored for fresh consideration, and the State Government was directed to decide the matter again in accordance with the Rules after hearing the petitioner.

Ratio Decidendi: Where a selected applicant fails to deposit the prescribed licence fee and security within the stipulated time, the legal consequence is cancellation of selection under the governing rules and not surrender of a licence that has never been granted.

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