2019 (10) TMI 673 - SC - Indian Laws

Supreme Court Upholds License Refunds & Compensation; Emphasizes Due Process

The Supreme Court affirmed the High Court's judgments in cases where the Respondents were unlawfully deprived of their licenses and premises, granting ... Sealing of premises - Whether the Respondent is entitled to refund of the licence fee and the differential amount for the period during which the unit was sealed? - HELD THAT:- The Respondent is entitled for refund of licence fee and the differential amount. The High Court failed to notice that there is no prior adjudication in favour of the Respondent and the Respondent was given an opportunity to show cause as to why the premises should not be sealed. After considering the explanation submitted by the Respondent, the penalty was imposed on the Respondent and due to the failure of the payment of the amount of penalty, the premises were sealed. Appeal disposed off. Issues Involved:1. Refund of license fee and differential amount due to unlawful sealing/closure of premises.2. Legality of sealing orders and suspension of licenses.3. Entitlement to compensation for the period of closure and for raw materials that could not be liquidated.Issue-wise Detailed Analysis:1. Refund of License Fee and Differential Amount Due to Unlawful Sealing/Closure of Premises:In Civil Appeal No. 7951 of 2019, the High Court had directed the Appellant-State to refund the license fee and differential amount recovered from the Respondent for the period during which their premises were unlawfully sealed. The Respondent's premises were sealed on 13.12.2015 for non-supply of the prescribed quantity of country liquor, and the High Court set aside this sealing order on 25.01.2016. The Respondent sought a refund for the period between 13.12.2015 and 04.02.2016, when the premises were sealed and the license was suspended. The Supreme Court affirmed the High Court's judgment, stating that the Respondent is entitled to a refund of the license fee and differential amount for the period of unlawful sealing and suspension due to lack of a show-cause notice before the suspension order was passed.In Civil Appeal No. 7952 of 2019, the Respondent sought a refund for a period of 95 days during which the premises were sealed or the license was suspended. The High Court allowed the refund, but the Supreme Court set aside this judgment, stating that the closures were due to violations of tender conditions and the conditions of the license. There was no prior adjudication in favor of the Respondent, and sufficient notices were given before the orders of suspension and sealing.In Civil Appeal No. 7957 of 2019, the Respondent's license was suspended and later canceled, which was declared illegal by the High Court. The Respondent sought a refund for the period of closure between 02.02.2016 and 31.03.2016. The Supreme Court affirmed the High Court's judgment, granting the Respondent the relief sought.In Civil Appeal No. 7958 of 2019, the Respondent's premises were sealed due to non-payment of a penalty imposed for manufacturing substandard liquor. The Respondent sought a refund for the period between 02.02.2016 and 31.03.2016. The Supreme Court set aside the High Court's judgment, stating that there was no prior adjudication in favor of the Respondent, and the sealing was justified due to the Respondent's failure to pay the penalty.2. Legality of Sealing Orders and Suspension of Licenses:In Civil Appeal No. 7951 of 2019, the sealing order dated 13.12.2015 was set aside by the High Court, and the Supreme Court affirmed this decision, stating that the Respondent was not given a show-cause notice before the suspension order was passed, making it unlawful.In Civil Appeal No. 7952 of 2019, the Supreme Court found that the sealing orders and suspension of the license were due to violations of tender conditions and the conditions of the license. The Respondent was given sufficient notice and opportunity to respond, making the actions of the Appellant-State lawful.In Civil Appeal No. 7957 of 2019, the High Court declared the suspension and cancellation of the Respondent's license illegal, and the Supreme Court affirmed this decision, granting the Respondent relief for the period of unlawful closure.In Civil Appeal No. 7958 of 2019, the Supreme Court found that the sealing of the Respondent's premises was justified due to the Respondent's failure to pay the penalty for manufacturing substandard liquor. The actions of the Appellant-State were lawful, and the Respondent was not entitled to a refund.3. Entitlement to Compensation for the Period of Closure and for Raw Materials that Could Not Be Liquidated:In Civil Appeal No. 7951 of 2019, the High Court directed the Appellant-State to consider the claims of the Respondent regarding compensation for the value of raw materials that could not be liquidated due to the unlawful closure of the premises. The Supreme Court affirmed this direction.In Civil Appeal No. 7952 of 2019, the Supreme Court set aside the High Court's judgment, finding that the Respondent was not entitled to compensation as the closures were due to violations of tender conditions and the conditions of the license.In Civil Appeal No. 7957 of 2019, the Supreme Court affirmed the High Court's judgment, granting the Respondent relief for the period of unlawful closure, including compensation for raw materials that could not be liquidated.In Civil Appeal No. 7958 of 2019, the Supreme Court set aside the High Court's judgment, finding that the Respondent was not entitled to compensation as the sealing of the premises was justified due to the Respondent's failure to pay the penalty.Conclusion:The Supreme Court provided a nuanced analysis of each case, affirming the High Court's judgments in cases where the Respondents were unlawfully deprived of their licenses and premises, and setting aside judgments where the closures were justified due to violations of tender conditions and the conditions of the license. The entitlement to refunds and compensation was determined based on the legality of the actions taken by the Appellant-State and the adherence to due process.