2015 (8) TMI 946 - SC - Indian Laws

Licensees must pay full annual fees, with balance adjusted later. Court emphasizes fairness in fee payment.

The Supreme Court clarified that licensees must pay the full annual fee for licenses granted during a financial year, allowing for balance payment after ... Entitlement to pay proportionate annual rental for the year 1999-2000, instead of full annual fee of 13 lakhs which was applicable for that year in respect of an FL3 licence granted - Held that:- the legal principle to the effect that no person can be prejudiced because of an act of a Court is apposite and relevant in the present case. We say this keeping in perspective the position that although the Appellant had applied for the FL3 licence which would ordinarily run the course of one financial year, due to interim orders passed by the Courts, the Appellant could only utilize it for a fraction of that period. We hasten to clarify that the Appellant’s application was not made in the duration of that year and was thus initially not for a fraction of the financial year. This Court has already held in R.Vijaykumar, in the circumstances prevailing in that case, that the Department could not interfere with the utilization of the FL3 licence, provided that the licensee complied with all other conditions as well as “payment of annual rental proportionately”. It is therefore clear that Rule 14 would not impede or inhibit the charging of annual proportionate fee so long as no failure is placed on the licensee or it is blameworthy itself. Licensee was entitled to remission of payment of kisht because of being disabled to conduct its business on account of the interim orders passed by the Court. We affirm the conclusions arrived at in these decisions. We hold that a party is entitled to seek a remission in the payment of licence fee if it is precluded from transacting business on the strength of that licence because of factors and reasons extraneous to it and/or if it is granted the licence on the direction of a Court for only a portion of the financial year. In order to eradicate any possibility of misunderstanding our present Judgment, we hasten to clarify that had the Appellant’s application for renewal of the FL-3 licence found approval instead of rejection on 4.9.2002, the Appellant would have been liable to pay the entire fee for the year 2001-2002. This is so for the simple reason that there was no third party interference or intervention which led to the non-utilization of that licence for the previous portion of that year; it may be reiterated that the Appellant had to locate fresh premises. However, after 4.9.2002, the Appellant cannot be held responsible in any way for the non-utilization of the licence up to the date it was eventually renewed i.e. 25.3.2003 - It would be fair to cogitate upon whether the Appellant should have declined the licence for virtually a week in that year, and since it failed to exercise that option, whether it should be burdened with the fee for the full year. It seems to us that any person placed in the position of the Appellant would not be in a position to decline to accept the renewal of the licence even though it was for less than a fortnight, since that would have led to the licence being rendered defunct; which may have then led to consequence of disentitlement for grant or renewal of the FL3 licence in the future. - Decided in favour of appellant. Issues:1. Interpretation of Rule 14 of the Foreign Liquor Rules regarding payment of annual fee for FL3 license.2. Entitlement to pay proportionate annual rental for truncated period of license utilization.3. Application of legal principles regarding act of Court prejudicing no one.4. Dispute over payment of full annual fee for license renewal due to intervening factors.5. Liability for payment of license fee based on utilization period and external factors.6. Refund of balance amount and interest in case of overpayment.Issue 1: Interpretation of Rule 14 of the Foreign Liquor RulesIn the first case, the Supreme Court examined the interpretation of Rule 14 of the Foreign Liquor Rules, which mandates full annual fee payment for licenses granted during a financial year. The Division Bench's decision allowed the Appellant to pay the balance of the fee after adjusting the sum already paid, emphasizing that licensees cannot claim only proportionate payment due to third-party interventions. However, the Court noted that the Division Bench did not consider binding precedents like R.Vijaykumar, which favored the Appellant's case. The Court clarified that licensees may seek remission in fee payment if external factors prevent full license utilization.Issue 2: Entitlement to pay proportionate annual rentalThe Court analyzed the Appellant's entitlement to pay proportionate annual rental for a truncated period of license utilization. It emphasized the legal principle that no person should be prejudiced due to an act of the Court. The Court differentiated cases where an applicant knowingly applies for a license mid-year versus situations where external factors limit license utilization. The judgment affirmed that licensees are entitled to remission in fee payment if they are unable to conduct business due to factors beyond their control.Issue 3: Application of legal principlesThe judgment discussed the application of legal principles, including the maxim 'Actus curiae neminem gravabit' (an act of Court prejudices no one). It highlighted that license fee payment should be based on the licensee's ability to utilize the license and external factors affecting business operations. The Court cited previous decisions supporting remission in fee payment when license utilization is hindered by reasons not attributable to the licensee.Issue 4: Dispute over payment of full annual feeIn the second case, the Court addressed a dispute over the payment of the full annual fee for license renewal due to intervening factors. The Appellant's license renewal was initially rejected, leading to a legal battle resulting in the High Court's direction to issue the license. The Court differentiated between scenarios where the Appellant was liable for the full fee based on non-utilization due to relocating premises versus instances where external factors prevented license utilization.Issue 5: Liability for payment based on utilization periodThe Court determined the Appellant's liability for payment based on the license utilization period and external factors affecting business operations. It clarified that the Appellant should only pay the proportionate fee for the period in which the license was utilized, considering the circumstances that led to non-utilization. The judgment emphasized fairness in assessing fee liability based on the licensee's ability to avail the license within a specific period.Issue 6: Refund of balance amount and interestRegarding the refund of the balance amount and interest in case of overpayment, the Court directed the Respondent State to recalculate the proportionate fee due and payable by the Appellant. The Court mandated the refund with interest and specified consequences for failure to make the payment within the stipulated period. Additionally, the Court outlined the costs to be borne by the Respondents in case of delayed refund, ensuring fair compensation to the Appellant.