TaxTMI 
TaxTMI 
2022 (1) TMI 312
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....nts have also questioned the order dated 06.11.2019 in C.M. Application No. 90936 of 2019, whereby the High Court directed the appellant No. 2 (Excise Commissioner, Uttar Pradesh) to expeditiously take a final decision on the application for refund of the amount that was deposited by the writ petitioner pursuant to the interim order passed in the said writ petition. 3. Before dilating on the issues raised in this case, we may draw a brief outline of the matter to indicate the contours of forthcoming discussion. 3.1. The genesis of the present litigation had been in a fire incident that took place in a godown of the distillery of the respondent company on 10.04.2003. As many as 35,642 cases of Indian Made Foreign Liquor (IMFL) of different brands got destroyed in this fire. After receiving the initial reports that the fire possibly took place due to short circuit of electricity, the department proposed to recover the amount of excise duty lost, due to such destruction of liquor, from the respondent company. The respondent maintained that there was no negligence on its part and, therefore, no case for recovery of the alleged loss of excise duty was made out under Rule 7(11) of ....
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....that of negligence on the part of the respondent. The appellants rely upon Rule 7(11)(a) of the Rules of 1969 and Rules 708 and 709 of the Excise Manual to contend that the respondent company is absolutely liable to pay the excise duty payable on the stock of IMFL destroyed in fire. An ancillary aspect relating to the effect of insurance coverage, only of the value of liquor, and receiving of insurance claim by the respondent company have also been raised. Per contra, it submitted that the claim of excise duty in the present case cannot be enforced, for being not authorised by law; and that the respondent is not liable to pay excise duty on the IMFL destroyed in fire, particularly when there was no negligence on its part. 4. The foregoing outline would indicate that the focal point in this case is, as to whether the appellants are entitled to levy, and correspondingly, the respondent is liable to pay, the excise duty on the liquor destroyed in fire? As regards this focal point, three principal questions would require determination, as noticed infra. Relevant factual aspects and background: The fire incident and demand of excise duty on the liquor destroyed 5. Having regard....
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....3.09.2002, that the work pointed out in the report had been completed. 7.2. Apart from the above, it appears that certain modification/upgradation work was undertaken at the production plant in the distillery and in that regard, the Excise Inspector, Production Section, Rosa Distillery, Shahjahanpur, in his letter dated 26.12.2002, advised the respondent that electrical and gas wielding jobs be performed carefully with full safety, while ensuring standard methods of fire safety and the required firefighting devices. The said Excise Inspector cautioned the respondent that "You will be responsible for any loss of revenue/other loss if that occurs due to your carelessness." 7.3. On 01.03.2003, the office of Fire Brigade Officer, Shahjahanpur issued a No Objection Certificate of Fire Fighting Department for the period between 06.02.2003 to 30.09.2003 after carrying out inspection of the premises in question. In this inspection, the Fire Brigade Officer took note of the fact that different types of fire extinguishers and other firefighting instruments were at the right place and were in working condition, which were refilled by the Chief Engineer of the respondent company. However....
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....o damage to a substantial quantity of liquor; and also indicated that upon enquiring about the possible reasons of this fire, he was informed that the same took place, probably, due to short circuit in the electricity supply. According to the appellants, even the Station House Officer concerned opined in his investigation report dated 11.04.2003 that the reason for fire was short circuit of electricity. 10. On 13.04.2003, the Fire Brigade Officer of Uttar Pradesh Fire Service also drew up the report about the incident and the efforts made for controlling the fire. He, however, indicated that the reason of fire was unknown. The relevant part of this report, counter signed by the Deputy Superintendent of Police, as placed on record by the respondent, reads as under: - "ON receiving information about Fire, Fire Service Unit rushed to the Place of Incident. On arriving, it was seen that the front part of Godown of Indian Made Foreign Liquor was burning in fire badly, which is situated in Rosa Kothi, M/s Mcdowell Company Ltd. Thana- R.___ , District- Shahjahanpur, and fire was in a horrible, which was being doused by the Staff of M/s Mcdowell & Company Ltd. with the help of ....
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....ated 30.04.2003, Deputy Excise Commissioner, Bareilly Incharge, Bareilly, investigation dated 10.04.03, Fire Brigade Officer, Investigation report dated 13.04.03 and Station House Officer's Final Report dated 11.04.03, also with copies annexed. In the report of Station House Officer reason of incident is possibly due to short circuit in Electricity. I had also seen the burned cable in debris, but in my opinion Nothing can be confirmed. It can be such an incident, in which reason is Unknown. On the Distiller level, in the month of December, Instrument according to Fire safety standard, were installed and safety orders were ordered in respect of Letter No. 39/ dated 26.12.02 by the distillery Fire Brigade Officer, Shahjahanpur; Letter No. Memo/F.S./ date 1.03.03, and received the certificate regarding the Instrument in good condition. The Distillery also produced certificate by U.P. Electricity Department, regarding Electricity cabel Establishment. In accordance, with letter sent by me dated 14.04.03 and 21.04.03 in view of the aforementioned points before the Fire Incident, during the Fire Incident and after that, the calculation of the damaged stock and possible r....
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....yed in the above fire incident is in Order. Please take necessary steps at the earliest and inform the same to the Government within 15 days." 12.3. Proceeding on the letter so received from the Principal Secretary, the Excise Commissioner, on 23.02.2004, asked the District Magistrate to quantify the excise duty leviable under Rule 7(11) of the Rules of 1969. Having noticed such steps on the part of the authorities, the respondent company remonstrated in its letter dated 08.06.2004 addressed to the Excise Commissioner and requested that the competent authority must first determine as to whether excise duty could at all be levied on IMFL destroyed due to fire before the point of issue of liquor for sale was reached. It was also submitted that the directions may be given only to proceed in terms of Rule 709 of the Excise Manual and not Rule 7(11) of the Rules of 1969. The Excise Commissioner, in his letter dated 12.05.2005, sought a point-wise reply from the respondent company and this letter was replied on 16.05.2005, wherein the respondent company maintained that fire incident was due to the reasons beyond human control and there was no negligence on the part of the company. ....
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..... A Show cause Notice no. 463/CAA/Rosa Distillery/Shahjahanpur dated 24.09.2003 was given to the M/s. McDowell and Company ltd. in relation to the burning of the alcohol kept in the sealed godown. It has been stated by the M/s Mcdowell and Company Ltd. in its explanation dated 01.10.2003 to the abovementioned Show Cause Notice that the fire incident is an act of god and they have no control over this. On 10.04.2003, during the spot inspection conducted by Deputy Excise Commissioner Bareilly, Manager Personnel Shri Anurag Dhawan who was present has stated that possibly fire took place due to short circuit in the electricity supply. The Station officer Shri Ram Chandra Mishan, District Shahjahanpur has stated in his investigation report dated 11.04.2003 that the reason for fire is the short circuit of electricity. The inspection of the M/s McDowell and Company Ltd. was conducted by Joint Excise Commissioner (Task Force) and Deputy Excise Commissioner (Law). It has been found in the inspection that the godown is very old and its repair has also not been done. It is also necessary to mention that M/s Mcdowell and Company Ltd. in the distillery from the time of British period and the di....
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....s. The Licensee cannot deny the conditions of the license. It has been clearly stated by the Constitution Bench of the Hon'ble Supreme Court in judgment Har Shankar and Anr. Vs. Deputy Excise and Taxation Commissioner and Anr. (1997) 1 SCC 737 that the licensee has taken the license after carefully reading the questioned rules of 1969 and now he cannot wriggle out from the conditions of the license. The licensee has received the license after reading the Uttar Pradesh Bottling of Foreign Liquor Rules 1969 with open eyes, therefore he cannot wriggle out to follow the Rules. It has been mentioned in Khode Distilleries Ltd. and Ors. vs. State of Karnataka and Ors. (1975) SCC 576 at point (h) "The State can adopt any mode of selling the licences for trade or business with a view to maximize its revenue so long as the method adopted is not discriminatory". It is clear from the Rule 7(11)(a) of UP Bottling of Foreign Liquor Rules, 1969 are made to secure the revenue. The State has special privilege on manufacturing of liquor, custody, transport, import - export. The State in public interest to increase the revenue strictly monitor the business of alcohol so that neither....
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....006 staying the recovery proceedings subject to the respondent company depositing an amount of Rs. 3 crores with the Excise Commissioner. The respondent company attempted to challenge this interim order dated 25.07.2006 by way of SLP(C) No. 12902 of 2006 but, this Court declined to interfere with the interim order and the special leave petition was dismissed on 14.08.2006. Thereafter, the respondent company deposited the said sum of Rs. 3 crores with the District Magistrate, Shahjahanpur on 21.08.2006. The appellants filed their counter affidavit in the writ petition on 08.09.2006 and the writ petition was finally heard and decided by the High Court by its impugned judgment dated 10.04.2017. Impugned orders dated 10.04.2017 and 06.11.2019: High Court allowed the writ petition and passed consequential orders 15. The High Court, in its impugned order dated 10.04.2017, after taking note of the aforesaid background aspects as also the Rules of 1969 and the Excise Manual, in the first place noted the fact that though the validity of Rule 7(11) of Rules of 1969 was questioned in the writ petition but while arguing the matter, learned counsel for the company confined his challenge t....
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.... on account of any negligence on the part of the company, the demand in question was wholly illegal and unsustainable. The High Court proceeded to set aside the demand in question with the following observations and findings: - "29. In order to hold petitioner guilty of negligence, ECUP vide impugned order dated 11.7.2006 while admitting that police officials as well as joint inspection report, possible reason has been given as "short circuit" from electrical supply, but having said so, it has further said that (i) godown is very old and has not been properly repaired; (ii) Distillery is of British period, Distillery and Warehouse both are running in old buildings; (iii) roof of godown is made of abestos sheets and there is possibility of short circuit due to old electrical wire in the godown; (iv) Insurance of excise duty was not obtained, though spirit was insured; (v) licensee was probably negligent in maintenance of electrical equipments; (vi) licensee did not insure electrical equipments; (vii) fire proof of electrical equipments were not of good quality, and this resulted in the incident. Therefo....
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....ourt, learned counsel for the appellants has advanced essentially two-fold contentions: one, that it had been clearly a case of negligence on the part of the respondent company where the fire incident cannot be termed as an act of God; and second, that as per the applicable provisions of U.P. Excise Act, 1910 , the Excise Manual and the Rules of 1969, the demand of excise duty on the liquor lost in fire has rightly been raised. The learned counsel has also addressed the Court on another facet of the case, as regards the effect of insurance claim received by the respondent company towards the cost of IMFL destroyed in fire. 19. Learned counsel has submitted that an act of God is an inevitable, unpredictable and unreasonably severe event caused by natural forces without any human interference, such as earthquake, lightning, flood etc.; it is a natural hazard outside the human control for which, no person could be held responsible. It is submitted that for the fire in distillery to be an act of God, there must have been some such incident like earthquake or lightning but no such natural forces were in operation at the time of the incident; and this incident cannot be attributed to ....
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.... as also the matters concerning duties of excise and countervailing duties is in the domain of the State legislature; and for the present purpose, the matter is governed by the provisions contained in the Act of 1910, the Excise Manual and the Rules of 1969. With reference to Sections 17, 18, 19, 28, 29 and 30 of the Act of 1910 the learned counsel has submitted that no intoxicant can be manufactured and no liquor can be bottled for sale except under the authority and subject to the terms and conditions of a licence granted in that behalf (Section 17); and, as per Section 18, the Excise Commissioner may grant a licence for establishment of distillery and warehouse in which spirit may be manufactured under a licence granted under Section 17. Further, as per Section 19, no intoxicant can be removed from any distillery, brewery, warehouse or the place of storage, unless duty has been paid or a bond has been executed for payment thereof. It is thus submitted that the condition precedent for removal of any intoxicant is actual payment of the duty payable or execution of bond for such payment. Learned counsel has referred to the bond executed in favour of the Governor of Uttar Pradesh by....
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....xcise duty is leviable on the bottle, even if the same is not taken out of the warehouse. 22.1 With reference to Sections 28 and 29 of the Act of 1910, learned counsel would submit that these provisions, respectively empowering the State to impose excise duty and providing for the manner in which the duty is to be levied, clearly show that the excise duty, which in real terms is price of exclusive privilege of the State, may be imposed on the liquor manufactured in the distillery and it is wrong to contend that excise duty cannot be levied on bottled spirits or is liable to be quantified and collected only at the point of issuance of liquor from godown. Learned counsel has particularly referred to the decision of this Court in the case of State of U.P. and Others v. M/s Modi Distillery Etc.: (1995) 5 SCC 753, as regards various features of the demand of excise duty at different stages and different events. The learned counsel has also referred to the decision in the case of State of U.P. and Ors. v. M/s Mohan Meakin Brewery Ltd. and Anr.: (2011) 13 SCC 588. 23. As regards another facet of the stand of respondent that there being regular deployment of the staff of Excise Depar....
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.... the assessee had been compensated by the insurance company with an amount which was much more than the duty involved. 25. Per contra, the learned counsel for the respondent has supported the order passed by the High Court allowing the writ petition and has contended that there had not been any negligence on the part of the respondent company in relation to the incident of fire and no liability could be fastened on it towards excise duty on the liquor destroyed in fire. This apart, the learned counsel would contend, with reference to Article 265 of the Constitution of India, that levy and collection of tax must be authorized by law and in the scheme of the Act of 1910, the Excise Manual and the Rules of 1969, the excise duty could have been collected only at the point of issuance of IMFL from distillery and there was no question of demand of excise duty on the stock of IMFL destroyed due to fire in the godown. The learned counsel has also submitted that in regard to the stock of IMFL destroyed in fire, there was no transfer of property to anyone else and therefore, there was no sale so as to occasion recovery of excise duty. 26. While asserting that the respondent had taken a....
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....the Excise Manual and has submitted that Rule 708 of the Excise Manual absolves the State Government from the responsibility for the destruction, loss or damage of any spirit stored in distillery by fire or theft or by gauging or proof or by any other cause, for the reason that the entire distillery (including godown) is under the lock and key of Excise Department. Learned counsel has referred to Rule 709 of the Excise Manual to submit that in the event of loss, the distilleries are made liable to make good any loss of revenue to the Government only in the event of such loss having been caused due to their negligence. Learned counsel has emphatically argued that in terms of Rule 709, if a distillery has not been negligent in safe custody of the stock of spirit, it cannot be held liable to make payment towards loss of excise duty, if any, due to accident or reasons beyond the control of human agency. 27.1 Yet further, learned counsel has submitted that entire bottling operations including the storage of bottled liquor are done under the strict supervision of the Excise Inspector and the stocks are maintained in separate rooms under joint lock and key of the department and the com....
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....held that Rule 709 of the Excise Manual would be applicable and no duty could be imposed on the respondent as there was no negligence on its part. 28. As regards the effect of insurance and reimbursement of the value of IMFL by the insurance company, learned counsel has referred to the definition of sale in the Sale of Goods Act, 1930 as also in the U.P. Trade Tax Act, 1948, and has submitted that in the stock of IMFL destroyed due to fire, neither there was any transfer of property nor there was a sale; and the claim received from the insurer on account of loss of goods in a fire cannot be termed as consideration. It is also submitted that not taking insurance cover for the excise duty was an irrelevant and immaterial fact because liability to pay excise duty would have arisen only when there was negligence on the part of the respondent company and not otherwise. The learned counsel has also submitted that in fact, the insurance company itself would not have cleared the insurance claim if there was any negligence on the part of the respondent and clearance of insurance claim itself fortifies that there was no negligence on the part of the respondent. It is also submitted that t....
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....otic drugs and narcotics, but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." 33. The law relating to intoxicating liquors and intoxicating drugs in the State of Uttar Pradesh is principally governed by the provisions contained in the U.P. Excise Act, 1910. A few of the relevant definitions contained in Section 3 as also the relevant provisions, which are of direct bearing in the present case, as contained in Sections 17, 18, 19, 28 and 29 read as under:- 3. Interpretation.- In this Act, unless there is something repugnant in this subject or context - (1) "excise revenue" means revenue derived or derivable from any duty, fee, tax, fine (other than a fine imposed by a court of law), or confiscation imposed or ordered under the provisions of this Act, or of any other law for the time being in force relating to liquor or intoxicating drugs; *** *** *** (3a) "excise duty" and "countervailing duty" means any such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 of List II in the Seventh Schedule to the Constitution; ....
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....anufactory, warehouse or other place of storage established under this Act unless the duty (if any) payable under Chapter V has been paid or a bond has been executed for the payment thereof. *** *** *** 28. Duty on excisable articles - (1) An excise duty or a countervailing duty, as the case may be at such rate or rates as the State Government shall direct may be imposed, either generally or for any specified local area, on any excisable article - (a) imported in accordance with the provisions of Section 12(1); or (b) exported in accordance with the provisions of Section 13; or (c) transported; or (d) manufactured, cultivated or collected under any licence granted under Section 17; or (e) manufactured in any distillery established, or any distillery or brewery licensed, under Section 18 : Provided as follows- (i) duty shall not be so imposed on any article which has been imported into India and was liable on such importation to duty under the Indian Tariff Act, 1894, or the Sea Customs Act, 1887. Explanation. - Duty may be imposed under this section at different rates according to the pl....
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.... on the quantity of materials used or by the degree of attenuation of the wash or wort, as the case may be, as the State Government may prescribe : Provided that, where payment is made upon issue of an excisable article for sale from a warehouse established or licensed under Section 18(d), it shall be at the rate of duty which is in force on the article on the date when it is issued from the warehouse." 34. Rules 708, 709 and 813 of the Excise Manual, dealing with the issues pertaining to loss of spirit in distilleries and wastage allowance, read as under: - "708. Government not liable for loss, of spirit in distilleries. - Government shall not be liable for the destruction, loss or damage of any spirit stored in distilleries by fire or theft, or by gauging, or proof, or by any other cause whatsoever. In case of fire or other accident officers in-charge of distilleries shall immediately attend, to open the premises at any hour by day or nights. 709. Distillers responsible for loss etc. of spirit in distilleries. - Distillers shall be responsible for the safe custody of stock of spirit in their distilleries and shall be liable to make good any loss of r....
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....h, inter alia, provide for grant of bottling licence in Form FL-3 to a distiller to bottle spirits; to a brewer to bottle beer; and to a vintner to bottle wines. Various general conditions of such a licence are contained in Rule 6 of these Rules and then, additional special conditions in relation to bottling of IMFL in bond under FL-3 licence are contained in Rule 7. Elaborate provisions have been made in Rule 7 concerning the actual operations of bottling and storage as also supervision thereof. For the present purpose, only sub-clause (11) of Rule 7 needs to be noticed and the same is reproduced hereunder (while omitting other sub-clauses, being not relevant): - "7. Following additional special conditions will be applicable to bottling of Indian Made Foreign Liquor in bond under F.L.-3 licence : *** *** *** (11) (a) An allowance up to one per cent. may be made on the total quantity of spirit stored during a month for actual loss in bottling and storage. The licensee shall be responsible for the payment of duty on wastage in excess of one per cent. (b) When the wastage does not exceed the prescribed limit, no action need be taken by ....
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....aw? 37. With reference to the provisions above-mentioned, the main plank of submissions on behalf of the respondent company has been that the point of quantification and calculation of excise duty being the point of issue from the bonded warehouse and that point/stage having not reached in relation to the liquor destroyed in fire, the question of demand of excise duty would not arise. It has also been submitted that Rule 7(11) of the Rules of 1969 has no application and only Rule 709 of the Excise Manual could apply for which, negligence on the part of the distillery is required to be proved. Before taking up the issue relating to the applicable rule, we may deal with the fundamental question raised on behalf of the respondent, i.e., as to whether the demand is unauthorised for the reason that the point/stage of quantification and calculation of duty had not reached and liquor got destroyed while lying in warehouse. 38. As noticed, such an argument, that the demand of duty remains unauthorised for the point of issue of liquor having not reached, was not raised as such before the High Court nor the High Court had proceeded on that basis. Be that as it may, the submission even ....
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....ction or manufacture of the liquor. Secondly, as was held in A.B. Abdulkadir v. State of Kerala: AIR 1962 SC 922, an excise duty imposed on the manufacture and production of excisable goods does not cease to be so merely because the duly is levied at a stage subsequent to manufacture or production. That was a case on Central Excise, but the principle is equally applicable here. It does not cease to be excise duty because it is collected at the stage of issue of the liquor out of the distillery or at the subsequent stage of declaration of excess wastage. Legislative competence under entry 51 of List II on levy of excise duty relates only to goods manufactured or produced in the State as was held in Bimal Chandra Banerjee v. State of M.P.: 1970 (2) SCC 467. In the instant case there is no dispute that the military rum exported was produced in the State of U.P. In State of Mysore v. D. Cawasji &Co.: 1970 (3) SCC 710, which was on Mysore Excise Act, it was held that the excise duty must be closely related to production or manufacture of excisable goods and it did not matter if the levy was made not at the moment of production or manufacture but at a later stage and even if it was colle....
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.... of spirit manufactured in a distillery established under Section 18. Undoubtedly, the liquor in question was manufactured by the respondent company in its distillery established under Section 18. Thus, the liquor that had been produced, became exigible to excise duty at the end of the distillation process when it was received in storage/bottling tanks or when it was issued from the distillery. To put it differently, the taxable event was production or manufacture of this liquor, for it being a duty upon the goods and not upon sale or proceeds of sale of the goods. 41. As per Section 19, no intoxicant (and that obviously includes the liquor manufactured by the respondent) can be removed from the distillery or the place of storage unless the duty leviable thereupon has been paid or a bond has been executed for the payment thereof. Considering the overall scheme of the Act and the Rules, it may not be out of place to interpret the expression "removal" in Section 19 to include wastage in excess of permissible limit of total quantity of spirit produced or manufactured and stored. A comprehensive look at the scheme of Sections 17 to 19 and 28 and 29 of the Act of 1910 and the enuncia....
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....excess of 1%. This Rule 7(11) makes it clear that even in relation to the wastage in storage, the allowance is only up to 1% of total quantity of spirit stored during a month. This provision may also be read with Rule 813 of the Excise Manual, which provides for free wastage allowance for different kinds of spirit in a distillery with the specified percentage, namely the plain and spiced spirit (0.7%), rectified and sophisticated spirit (0.4%), and denatured spirit (0.5%). The significant aspect of the matter is that though wastage allowance is provided for different kinds of spirit but, the bottled spirit is specifically excluded therein. 44. A comprehensive look at the relevant provisions of law makes it clear that so far as IMFL is concerned, no provision is made in the Excise Manual for any wastage allowance in relation to the bottled sprit, but, in terms of Rule 7(11) of the Rules of 1969, an allowance up to 1% on the total quantity of spirit stored during a month may be allowed for actual loss in bottling and storage. Any allowance for any wastage or loss beyond the same remains, obviously, impermissible. The logic is not far to seek. As noticed, in respect of the liquor t....
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....ery for the safety of stock cannot be attributed to an act of God. The High Court has, however, held that the inference drawn by the Excise Commissioner was nothing but of conjectures and surmises without any material foundation. The High Court has also observed that when a fiscal liability was founded on a condition precedent, i.e., negligence on the part of the person concerned, no responsibility could be fixed unless such negligence was shown to be founded on some material. According to the appellants, the incident in question is attributable only to some negligence on the part of the respondent company and it had not been an act of God for having occurred on account of fault in the electrical installation and short circuit; and the incident was avoidable if proper and necessary care was taken by the respondent company. On the other hand, on behalf of the respondent, though the principles relating to an "act of God" have not been invoked as such before us but the contention has been that the fire was not caused by the negligence of the respondent company in maintaining safe custody of the stock of spirits; and the incident had been the one which occurred for the reasons beyond t....
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....stody of the stock of spirit and towards avoidance of wastage. Any doubt in that regard is effectively quelled by a combined reading of Rules 708 and 709 of the Excise Manual as also Rule 7(11) of the Rules of 1969. The contentions in this regard as urged on behalf of the respondent company are, therefore, rejected. Negligence 48. Now, for entering into the core of this matter, i.e., as to whether the loss of revenue caused to the Government by destruction of liquor in fire could be attributed to any negligence on the part of the respondent company, we may take note of the legal principles related with the liability arising out of, or due to, negligence as also the exceptions and defences in relation to any claim based on negligence. 49. "Negligence" is one such class of "wrongs" that leads to liability. The fundamental jurisprudential principle of "liability" is crisply defined in Salmond on Jurisprudence 12th Edition, p. 349. thus: - "Liability or responsibility is the bond of necessity that exists between the wrongdoer and the remedy of the wrong." "Liability" arises from breach of duty, which may be in the form of an act or omission. We need not delve....
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....r: - "negligence, n. (14c) 1. The failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation; any conduct that falls below the legal standard established to protect others against unreasonable risk of harm, except for conduct that is intentionally, wantonly, or willfully disregardful of others' rights; the doing of what a reasonable and prudent person would not do under the particular circumstances, or the failure to do what such a person would do under the circumstances..... active negligence. (1875) Negligence resulting from an affirmative or positive act, such as driving through a barrier. Cf. passive negligence. advertent negligence. (1909) Negligence in which the actor is aware of the unreasonable risk that he or she is creating; RECKLESSNESS. - Also termed willful negligence; supine negligence. casual negligence. (1812) A plaintiff's failure to (1) pay reasonable attention to his or her surroundings, so as to discover the danger created by the defendant's negligence, (2) exercise reasonable competence, care, diligence, and skill to avoid the danger once it is perceived, or (3) prepa....
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....ssarily consists in thoughtfulness or inadvertence. This is doubtless the commonest form of it, but it is not the only form. If I do harm, not because I intended it, but because I was thoughtless and did not advert to the dangerous nature of my act, or foolishly believed that there was no danger, I am certainly guilty of negligence. But there is another form of negligence, in which there is no thoughtlessness or inadvertence whatever. If I drive furiously down a crowded street, I may be fully conscious of the serious risk to which I expose other persons. I may not intend to injure any of them, but I knowingly and intentionally expose them to the danger. Yet if a fatal accident happens, I am liable, at the most, not for wilful, but for negligent homicide. When I consciously expose another to the risk of wrongful harm, but without any wish to harm him, and harm actually ensues, it is inflicted not wilfully, since it was not desired, nor inadvertently, since it was foreseen as possible or even probable, but nevertheless negligently (c). Negligence then is failure to use sufficient care, and this failure may result from a variety of factors....." 51. Without multiplying the....
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....onsidering whether it could or could not have been prevented by reasonable care : if it could not, then it is an act of God which will relieve from liability, howsoever trivial or common its cause may have been. If this be correct, then the unpredictable nature of the occurrence will go only to show that the act of God in question was one which the defendant was under no duty to foresee or provide against. It is only in such a case that the act of God will provide a defence." R.F.V. HEUSTON. Salmond on the Law of Torts 330 (17th ed. 1977). "A natural act such as a storm, floods or an earthquake which cannot be foreseen and usually absolves a person from liability if damage occurs as a result. Any event so out of the ordinary that it could not have been prevented by any amount of human care and forethought, e.g. lightning, freak tidal waves or floods etc., which relieves a contractor, such as a freight carrier, of any liability for losses suffered as a result of it." ".....The expression 'act of God' signifies the operation of natural force free from human intervention, such as lightning. It may be thought to include such unexpected occurrences of nature a....
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.... to be released from the dam as it reached alarming level because of heavy rains and non-release would have breached the dam; and that the action was taken in public interest and it was occasioned because of the rains, which was an act of God. The appellants, on the other hand, contended that it was sheer negligence on the part of the respondents in not maintaining low level of the water keeping in mind the ensuing monsoon season and, therefore, the damage which the appellants suffered had direct nexus or causal connection with the aforesaid act of negligence and it could not be attributed to the rains; and hence, the respondents could not term it as an act of God and excuse themselves from tortious liability. The Trial Court and the High Court accepted the case of respondents that they were forced to release the water due to the heavy rains; and that the land of the appellants was situated adjacent to the river bank and, therefore, due to heavy rain, the river could have overflown resulting in entering of the water into the fields of the appellants in any case. 54.2.1. In appeal, this Court, while examining the question as to whether it were a case of gross negligence, observed....
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....served that as a rule, negligence is not to be presumed; it is rather to be presumed that ordinary care has been used but that this rule does not apply in the case of common carriers, who, on grounds of public policy, are presumed to have been negligent if goods entrusted to their care have been lost or damaged or delayed in delivery. 55. The present one had not been a case where anything related with the forces of nature like storm, floods, lightning or earthquake had been in operation or caused the fire. When nothing of any external natural force had been in operation in violent or sudden manner, the event of the fire in question could be referable to anything but to an act of God in legal parlance. The observations of High Court in this regard do not appear sound and are required to be disapproved. Inevitable accident 56. The submissions before this Court on behalf of the respondent company had been that the company had taken all precautions which was expected of it and yet if the fire incident took place, it was something beyond human control for which respondent company cannot be held liable. This line of submission, at best, could be taken into another exception to t....
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.... these decisions related with vehicular accidents but the principles therein remain fundamental in operation of res ipsa loquitur. 58.1. Shyam Sunder and Ors. v. The State of Rajasthan: (1974) 1 SCC 690 had been a case where the victim was travelling in a truck whose engine got fire and while jumping from the vehicle, he struck against a stone on the side of the road and died on the spot. The High Court in that case held that merely for the truck catching the fire would not be evidence of negligence on part of the driver; and that res ipsa loquitur had no application. However, this Court, inter alia, pointed out and held as under:- "9.... The maxim res ipsa loquitur is resorted to when an accident is shown to have occurred and the cause of the accident is primarily within the knowledge of the defendant. The mere fact that the cause of the accident is unknown does not prevent the plaintiff from recovering the damages, if the proper inference to be drawn from the circumstances which are known is that it was caused by the negligence of the defendant. The fact of the accident may, sometimes, constitute evidence of negligence and then the maxim res ipsa loquitur applies." ....
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....endant that a reasonable jury could find without further evidence that it was so caused". In Halsbury's Laws of England, 3rd Ed., Vol. 28, at p. 77, the position is stated thus: "An exception to the general rule that the burden of proof of the alleged negligence is in the first instance on the plaintiff occurs wherever the facts already established are such that the proper and natural inference arising from them is that the injury complained of was caused by the defendant's negligence, or where the event charged as negligence 'tells it own story' of negligence on the part of the defendant, the story so told being clear and unambiguous". Where the maxim is applied the burden is on the defendant to show either that in fact he was not negligent or that the accident might more probably have happened in a manner which did not connote negligence on his part....." The respondent company remains liable 59. For what has been discussed hereinabove, this much is apparent that in this case, the warehouse in question indeed got engulfed in fire and that led to destruction of the liquor stored therein. Here, the respondent company could be held liable to pay the excise duty on the ....
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....pects could be gainsaid. 60.3. Though it is true that as per the suggestions made in the reports relating to the fire incident in question, exact cause of fire could not be ascertained but there had been indications that the officers, including the Excise Officer and Station House Officer had seen burnt wires; and it was reported that the fire 'possibly' took place because of short circuit. Taking note of these facts as also the other facts that godown was an old one and the roof of the godown was made of asbestos sheets, the Excise Commissioner, in his order dated 11.07.2006, inferred that short circuit could have taken place in old electric wiring in the godown and in that context, observed that the licencee had not arranged the fire proof electric equipments of good quality, which led to the incident in question. 61. A few words as regards 'short circuit' would also be apposite at this juncture. 61.1. Short circuit is explained in the Dictionary of Technical Terms 11th Edition, p. 369., by F.S. Crispin as follows :- "Short circuit (elec.): A path of low resistance placed across an electrical circuit causing an abnormal flow of current." 61.2. In McGrow-Hill ....
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....ot always be of active negligence or of gross negligence, but it may also be of an inadvertent negligence or of a passive negligence. It does not require much of discussion to say that the goods in question, being highly inflammable, required extra and excessive care for their safe custody; and any laxity or slackness in that regard was impermissible. To put it differently, what was required for ensuring safe custody of the goods in question was that of heightened safeguard measures with foresight. When the respondent had not been able to protect the goods in question from fire within the warehouse and when all other factors, as noticed above, are taken into account, the negligence as contemplated in Rule 709 of the Excise Manual is directly attributable to the respondent company. In other words, even if the present case is taken to be that of inadvertence or of unintentional omission on the part of the respondent company, it would fall within the definition of "negligence" for the purpose of Rule 709 of the Excise Manual. 63.1 In the given set of facts and circumstances, we are unable to endorse the approach and views of the High Court, where it had basically proceeded on the p....
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....goods and for this reason too, it remained rather lax in taking all care against fire. 67. Having examined the matter in its totality, we are clearly of the view that the liability of the respondent company in this matter is rather fortified from the facts that it had taken insurance coverage of the value of liquor and indeed received such claim from the insurer. Further, failure to insure the risk of excise duty liability cannot extricate the respondent from that liability. 68. As noticed, in the scheme of law applicable, when duty of excise is upon the goods and the taxable event is the production or manufacture of the liquor, the liability to pay excise duty had arisen as soon as the liquor was manufactured. Thereafter, when the liquor got destroyed in fire but its value was recovered from the insurer, in our view, these events shall answer to the broad expression "issue of an excisable article for sale from a warehouse" for the purpose of proviso to Section 29(e) of the Act of 1910. Putting it differently, receiving of insurance claim over the value of goods by the respondent related back to the date of fire and the respondent became liable to pay excise duty at the rate ....