TaxTMI 
TaxTMI 
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2022 (1) TMI 312
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....19 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 the Uttar Pradesh Bottling of Foreign Liquor Rules, 1....
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....nts 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 to the questions involved, we may briefly take note of the relevan....
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....n 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, a direction was given with regard to the refilling and testing of the instruments; and Foam Installation was also suggested....
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....d 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 available instrument but the fire was out of control for them. After seeing the horrible condition of fire, immediately started the work to control f....
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....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 reason of Fire incident was discussed." (underlining supplied) Demand of excise duty on the liquor lost in fire 12. In view of the fact that a substantial quantity of the stored liquor g....
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....e 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. 12.4. Yet further, the respondent company stated in its letter dated 05.06.2005 that they had a certificate issued by Fire Department, valid up to 03.09.2003; that appropriate fire protection equipments were installed; that....
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....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 distillery & sealed godown has been running in the old building. The roof of the godown was made of asbestos sheet. The short circuit can take place due to old electric wiring in the godown. In this relation District Officer, Shahjahanpur v....
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....icensee 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 it can be misused and nor it can cause loss of revenue to be received from it. In respect to the abovementioned according to Rule 7(11)(a) of UP Bottling of Foreign Liquor Rules, 1969, the excise duty of Rs. 6,39,32,449.44/- (Rupees Six Crore Thirty Nine Lakh Thirty ....
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....der 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 to the impugned orders of recovery of excise duty essentially on the grounds that the company could have been held guilty only if there was any negligence on its part in causing loss of excise revenue but, in the present case, there was no negligence on the part of the company; and that it was an act of God and, the....
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....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. Therefore, it is not an act of God. When we asked from learned counsel for respondents as to wherefrom respondents got information that fire equipments were not of good quality and have caused incident or that Distillery was negligent in maintenance of electrical equiments, he could not point out any material on record, wherefrom the aforesaid inference drawn by ECUP could have been substanti....
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....y 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 any such force of nature but only to some human fault. Learned counsel would submit that when operation of natural forces is ruled out and the incident had, in fact, taken place, it would obviously be referred to the elements of negligence on the part of the respondent company. The learned counsel has elaborated on the submissions that negligence is a specific tort and essentially refers to a failure to exercise tha....
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....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 the respondent for bottling of IMFL and has submitted that the licencee has been under obligation to observe all the provisions of the Act of 1910 and the rules made thereunder. 21.1 The learned counsel would submit that the distillery having been established under PD-2 licence, the respondent was under obligation to follow the terms and conditions of the licence and correspondingly, has always been under obligation to ....
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.... 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 Department at the distillery; the entire operation being under the control and supervision of the Excise Department; the bonded warehouse being always under the joint lock of Excise Department and the respondent; and liquor being issued only upon the Excise Inspector opening the department's lock, learned counsel would submit that such deployment of Excise Officers is necessary to ensure the implementation of the rules and to safeguar....
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....se 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 all precautions of safe maintenance/storage of the stock of IMFL in the godown of distillery, learned counsel has submitted that the fire extinguishing equipments were installed in the distillery premises and the Fire Department issued No Objection Certificate dated 01.03.2003 on being fully satisfied with the precautions taken by the distillery in respect of the safety against fire; that the Assistant Electrical Inspector issued the ce....
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....hat 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 company. With reference to the Rules of 1969, particularly Rule 7 thereof, the learned counsel would submit that the stock so maintained under the joint lock and key is issued for the purpose of export outside the state of UP or for the purpose of wholesale vend within the state of UP; and it is only at the point of issuance of liquor from the bottling rooms/godowns when the excise duty is liable to be quantified and collected with reference ....
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....e, 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 the respondent company had not earned any profit in the matter and in fact, it pays the excise duty when the same is recovered from the ultimate consumer but in the present case, when the respondent did not pass on and did not recover excise duty from any consumer, the question of levying the same on the respondent does not arise. 29. We have heard learned counsel for the parties at sufficient length and have examined the material placed on ....
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...., 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; *** *** *** (8) "spirit" means any liquor containing alcohol obtained by distillation, whether it is denatured or not; *** *** *** (11) "liquor" means intoxicating liquor and includes spirits of wine, spirit, wine, tari, pachwai, beer and all liquid consisting of or containing alcohol, also any substance which the State Government may by notification declare to be liquor for the purposes of this Act; *** *** *** (22-a) "excisable article" means - (a) any alcoholic liquor for human consumption; o....
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....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 places to which any excisable article is to be removed for consumption, or according to the varying strength and quality of such article. (2) The State Government shall, in imposing an Excise duty or a countervailing duty as aforesaid and in fixing its rate, be guided by the directive principles specified in Article 47 of the Constitution of India. "29. Manner in which duty may be levied.-Subject to such rules as the Excise Commissioner may prescribe to regulate the time, place and manner of payment, such duty may be levied in one or more of the following ways as the State Government may by notification direct : (a) In the case of excisable articles imported under Section 12 (1)- (i) by payment either in the province of import or in the province or territory....
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....lleries 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 revenue caused to Government by their negligence. *** *** *** 813. Wastage allowance. - The free wastage allowances for different kinds of spirit (excluding bottled spirit) stored in a distillery shall be as follows: Per cent (1) Plain and spiced spirit ... ... 0.7 (2) Rectified spirit and Sophisticated spirit ... 0.4 (3) Denatured spirit ... ... 0.5 If the total wastage on any kind of spirit does not exceed 3 per cent duty will be charged on the net wastage in excess of the free allowances. But if the total wastage exceeds 1.5 per cent duty shall be liable to be charged on the whole wastage without allowing for the free allowances at the following rates : (1) Plain and rectified sprits. - At the highest rate of duty leviable on country spirit in the case of plain spirit and at the highest rate of duty leviable on I.M.F.L., in the case of Rectified sprit. (2) ....
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....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 the Excise Inspector incharge but if an excess is found at the time of monthly stock taking the Excise Inspector shall submit a statement to the Collector by fifth day of the month in Form F.L.B.-10 showing the quantity of actual wastage and the duty to be paid by the licensee on the excess wastage. On receipt of the statement, the Collector shall recover the duty from the licensee at the full rate of duty leviable on Indian made foreign spirit. *** *** ***" 36. Before proceeding further we may, at once, summarise that IMFL destroyed in fire in this case undoubtedly answered to the description of "spirit", "liquor" and "excisable article" within the meaning of Clauses (8), (11) and (22-a) of Section 3 of the Act of 1910, for being an intoxicating liquor containing alcohol obtained by distillation; and the same was manufactured under a licence granted in terms of Section 17 in the distillery of the respondent and was kept in the warehouse established in terms of Section 18 o....
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.... 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 otherwise remains untenable and is required to be rejected. 39. It remains a fundamental constitutional mandate, and needs no elaboration, that in terms of Article 265 of the Constitution, both levy and collection of tax must be authorised by law, as held by this Court in the case of Somaiya Organics (supra). It remains equally trite that by virtue of Entry 51 of List II, the State has been authorised to impose duty of excise on alcoholic liquors for human consumption manufactured or produced in the State. The question raised on behalf of the respondent company, about the authority of the appellant-State to levy excise duty on the liquor in question that was destroyed in fire and had not reached the point of issue, could be adequately answered with reference to the principles concerning the event and the point where entitlement of the State to levy excise duty, and corresponding liability of the respondent to make payment thereof, comes into existence. 39.1. In the case of State of U.P. & Ors. v. Delh....
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....n 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 collected from retailer. The differential duty in the instant case, therefore, did not cease to be an excise duty even if it was levied on the exporter after declaration of excess wastage. The taxable event was still the production or manufacture. *** *** *** 17. .... If out of the quantity of military rum in a consignment, a part of portion is claimed to have been wastage in transit and to that extent did not result in export, the State would, in the absence of reasonable explanation, have reason to presume that the same have been disposed of otherwise than by export and impose on it the differential excise duty. A statute has to be construed in light of the mischief it was designed to remedy. There is no dispute that excise duty is a single point duty and may be levied at one of the points mentioned in Section 28." (underlining supplied) 39.2. In the case of M/s Mohan Meakin Brewery Ltd. (supra), the question of exigibility of beer to excise duty arose in respect of excess wastage in the brewe....
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....roduced 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 enunciations of this Court leave nothing to doubt that in respect of the liquor that had undergone the process of distillation, exigibility to excise duty had occurred at the end of the distillation process or when it was issued from the distillery. The point of quantification of this duty, even if linked in point of time to the date of issue for sale in terms of proviso to Section 29, does not relate to the 'event of chargeability' that had occurred as soon as the liquor was distilled and received in the bottling tank or had been otherwise issued from distillery. In other words, the liquor that was lying stored in the bonded warehouse had already become subject to the excise duty, with postponement of actual charging of the duty as per the rate applicable on the date and time of issue for sale from the warehouse. It gets perforce reiterated that taxable event was production or manufacture, and not sale, of the liquor. In this view of the matter, the submission that the levy in question is not authorised by law, and is hit by Article 265 of the Consti....
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....astage or loss beyond the same remains, obviously, impermissible. The logic is not far to seek. As noticed, in respect of the liquor that had undergone the process of distillation, exigibility to excise duty had occurred at the end of the distillation process or when it was issued from the distillery. Thus, any loss or wastage of the bottled spirit would be directly a loss of excise duty it had already become exigible to. The rule making authority has taken abundant care to ensure that there is no pilferage of the excise revenue available to the Government on the bottled spirit by any act of wastage, while making the licencee responsible for payment of duty on wastage in excess of 1% on the total quantity of spirit stored during the month. Thus, neither the submissions on behalf of the respondent company nor the observations of the High Court about the total inapplicability of Rule 7(11) could be accepted. In other words, Rule 7(11) of the Rules of 1969 is required to be taken into account for the legal consequences that so far as the bottled spirit is concerned, the licencee remains responsible for payment of duty on any kind of wastage in excess of 1%. Coupled with this provision....
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....y in maintaining safe custody of the stock of spirits; and the incident had been the one which occurred for the reasons beyond the control of human agency. It has also been contended that the entire distillery (including the godown) has been under lock and key of the department; and the department had been exercising complete control and supervision over the distillery and, therefore, no negligence could be imputed on the respondent. Control of Department over the distillery and godown: effect of 47. In view of rival submissions, we may begin with the issue relating to supervision and control of State Excise Department over the distillery and the godown. The submissions made in this regard on behalf of the respondent company remain baseless and have only been noted to be rejected. In the scheme of the Act of 1910, the Rules of 1969 and the Excise Manual, it is evident that the Government is not liable for destruction, loss or damage of any spirit stored in distillery by fire or theft or any other cause (as per Rule 708 of the Excise Manual). On the other hand, distillery is made responsible for safe custody of the stock of spirit and is also made liable to make good any loss of r....
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....ability" arises from breach of duty, which may be in the form of an act or omission. We need not delve, for the present purpose, on the classification of liability into civil or criminal and remedial or penal and various other jurisprudential features of liability. In the present case, we are primarily concerned with the question of liability arising out of negligence. Having regard to the questions involved and the provisions applicable, it would be appropriate to take into comprehension the meaning and connotation of the term "negligence" with reference to the dictionaries, lexicons and decided cases. 49.1. In Concise Oxford English Dictionary 11th Edition, p. 958., the term "negligence" is defined and explained as under: - "negligence ▪ n. failure to take proper care over something. ➤ Law breach of a duty of care which results in damage." The adjective of this expression is "negligent" and its adverb form is 'negligently'. These expressions, for deeper understanding need to be correlated with the verb 'neglect' that has been defined and explained in the same dictionary as under: - "neglect ▪ v. fail to give proper care or attention to. ➤ fail to d....
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....nger once it is perceived, or (3) prepare as a reasonable person would to avoid future dangers. gross negligence. (16c) 1. A lack of even slight diligence or care. ● The difference between gross negligence and ordinary negligence is one of degree and not of quality. Gross negligence is traditionally said to be the omission of even such diligence as habitually careless and inattentive people do actually exercise in avoiding danger to their own person or property. - Also termed willful and wanton misconduct. 2. A conscious, voluntary act or omission in reckless disregard of a legal duty and of the consequences to another party, who may typically recover exemplary damages. - Also termed reckless negligence; wanton negligence; willful negligence; willful and wanton negligence; willful and wanton misconduct; hazardous negligence; magna neglegentia. inadvertent negligence. (18c) Negligence in which the actor is not aware of the unreasonable risk that he or she is creating, but should have foreseen and avoided it. - Also termed simple negligence. passive negligence. (18c) Negligence resulting from a person's failure or omission in acting, such as failing to remove hazardo....
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.... be to refer to the connotation of the term "negligence" explained succinctly by this Court in the case of State of Maharashtra and Ors. v. Kanchanmala Vijaysing Shirke and Ors.: (1995) 5 SCC 659 as follows: - "9....'Negligence' is the omission to do something which a reasonable man is expected to do or a prudent man is expected to do..." 52. Therefore, it could be reasonably summarised for the present purpose that failure to exercise that care which a reasonably prudent person would usually exercise under similar circumstances would amount to negligence; it is not necessary that negligence would always be advertent one where the wrongdoer is aware of unreasonable risk being created but it may be inadvertent or passive too, arising for want of foresight or because of some omission. However, the question as to whether the liability because of negligence could be fastened on the respondent company or not cannot be determined without dealing with the other aspects related with exceptions and defence to the allegation of negligence. Act of God 53. In its assertions before the Department as also before the High Court, the respondent company attempted to rely upon the principles rel....
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....y unexpected wind and storm does not operate as an excuse from liability, if there is a reasonable possibility of anticipating their happening. An act of God provides no excuse, unless it is so unexpected that no reasonable human foresight could be presumed to anticipate the occurrence, having regard to the conditions of time and place known to be prevailing at....." 54.1. The case of Mahadeva Shetty (supra) related to the loss suffered by the claimant due to the injuries sustained in a vehicular accident that rendered him paraplegic. The bus in which he was a passenger plunged into a pit after rolling down from a great height. The stand of the appellant Corporation in opposition to his claim petition was that the accident was not due to rash and negligent driving but was an act of God. In that context, this Court explained the essential features concerning an act of God in contradistinction to an act or omission of human beings in the following words: - "9. The expression "act of God" signifies the operation of natural forces free from human intervention, such as lightening, storm etc. It may include such unexpected occurrences of nature as severe gale, snowstorms, hurricanes, ....
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....not maintained at an appropriate level to take care of ensuing monsoons. They had also not supported their plea to the effect that had the water been not released, it would have breached the dam and that act would have caused more public harm. This Court held that since the dam was constructed and maintained by the respondents and the appellants suffered losses as a result of release of water from the said dam, onus was on the respondents to prove that they had taken proper care in maintaining appropriate level of water in the dam. This Court further held that the respondents were the owners of the dam in question; and they were expected to keep the dam in such a condition which avoided any loss or damage of any nature to the neighbours or passersby. This Court observed that merely by saying that the level of water in the dam increased because of monsoon rains and that the water was released in public interest could not be treated as discharging the burden on the part of the respondents in warding off the allegation of negligence. While rejecting the defence of an "act of God", this Court explained thus: - "22. .... An act of God is that which is a direct, violent, sudden and irr....
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....e may refer to the principles stated by Salmond thus: - "Accident, like mistake, is either culpable or inevitable. It is culpable when due to negligence, but inevitable when the avoidance of it would have required a degree of care exceeding the standard demanded by the law. Culpable accident is no defence, save in those exceptional cases in which wrongful intent is the exclusive and necessary ground of liability. Inevitable accident is commonly a good defence, both in the civil and in the criminal law. To this rule, however, there are, at least, in the civil law, important exceptions. These are cases in which the law insists that a man shall act at his peril, and shall take his chance of accidents happening. If he desires to keep wild beasts (f), or to construct a reservoir of water (g), or to accumulate upon his land any substance which will do damage to his neighbours if it escapes (h), he will do all these things suo periculo (though none of them are per se wrongful), and will answer for all ensuing damage, notwithstanding consummate care....." 57. To accept the case of respondent company about it being an "inevitable accident", it is to be seen if preventing of the fire in....
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....re the thing is shown to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care." 58.1.2. This Court further explained the operation of this maxim for importing strict liability into negligence cases and observed: - "The mere happening of the accident may be more consistent with the negligence on the part of the defendant than with other causes. The maxim is based on commonsense and its purpose is to do justice when the facts bearing on causation and on the care exercised by defendant are at the outset unknown to the plaintiff and are or ought to be within the knowledge of the defendant (see Barkway v. S. Wales Transo [(1950) 1 All ER 392, 399])." 58.2. In Pushpabai Purshottam Udeshi and Ors. v. M/s. Ranjit Ginning & Pressing Co. (P) Ltd. and Anr. (1977) 2 SCC 745, this Court again explained the application of the principle of res ipsa loquitur and explained various features thereof in the following words: - "6. The normal rule....
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....d supervision over the distillery and godown would not absolve the respondent of its liability. Further, the fire incident in question cannot be termed as an "act of God". 60. The matter then boils down to the question if the fire incident could be said to be an inevitable accident. For that matter, we need to examine as what had been the normal and reasonable requirement for safe custody of the liquor in question and as to what could be deduced from the surrounding factors. 60.1. One of the basic factors to be noticed is that the goods in question were not ordinary goods but had been containing alcohol which, by its very nature, is highly inflammable. Therefore, a particular nature of care which might be sufficient as regards ordinary goods may not be adequate or sufficient for the goods in question. 60.2. On 19.09.2002, the Assistant Electricity Inspector who conducted periodical inspection of the premises in question made two observations. One of them was a minor aspect that 'Caution' plate was not placed at certain prominent place but the other observation was a significant one that at one point of distribution panel, earth wiring was found with thin wire; and it was suggest....
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....pedance, whether made accidentally or intentionally, between two points of different potential in an electric network or system. SEE CIRCUIT (ELECTRICITY); ELECTRICAL IMPEDANCE. Common usage of the term implies an undesirable condition arising from failure of electrical insulation, from natural causes (lightning, wind, and so forth), or from human causes (accidents, intrusion, and so forth). From an analytical viewpoint, however, short circuit represent a severe condition that the circuit designer must consider in designing an electric system that must withstand all possible operating conditions. The short circuit thus is important in dictating circuit design parameters (wire size and so on) as well as protective systems that are intended to isolate the shorted element. SEE ELECTRIC PROTECTIVE DEVICES; ELECTRICAL INSULATION; LIGHTNING AND SURGE PROTECTION." 61.3. In the present case, even when the exact cause of fire could not be ascertained, the indications in the reports like that of Assistant Excise Commissioner dated 02.08.2003 that burnt cables were seen in the debris and possibility had been of short circuit, the only inference could be about some fault or shortcoming in e....
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.... Commissioner's order dated 11.07.2006 by the High Court, while taking the observations and findings therein being of surmises and conjectures, is also required to be disapproved. What the Excise Commissioner had observed in the order dated 11.07.2006 had been of his inferences, which were deduced out of the facts and circumstances of the case and in true application of the principles of res ipsa loquitur. 64. Hence, we have no hesitation in disapproving the order of the High Court and in endorsing the views of the Excise Commissioner in the order dated 11.07.2006. Insurance coverage only of the value of liquor: effect of 65. Before concluding on the matter, it would also be appropriate to deal with yet another feature of this case relating to the insurance coverage taken by the respondent company only of value of liquor and not that of excise duty payable thereupon. 66. Admittedly, the respondent company had taken insurance coverage of the value of liquor and indeed received such value of liquor from the insurer. However, respondent company did not take insurance coverage of the excise duty payable over such value of liquor. The appellants contend that when the distiller has r....
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....Satyapal (supra) wherein remission of duty on account of damage of pan masala in rain water was disallowed, when it was found that the assessee had been compensated by the insurance company with an amount which was much more than the duty involved but, the submissions in the present case that the goods had not been sold and duty has not been recovered from consumers, do not take the case of respondent company any further. It was for the respondent company to take necessary measures and care to ensure that payable excise duty would reach the appellants once the goods had been manufactured. 69. Another facet of this part of matter remains, and we agree with the appellants, that not taking of insurance coverage of the excise duty while taking such coverage on the value of liquor itself amounts to negligence on the part of the respondent company. As noticed, "negligence" has different connotations and any particular act or omission, which may not be negligence in a particular set of facts may still amount to negligence in another set of facts. In the facts of the present case, where excise duty became payable on manufacture of liquor, it was obviously expected of the respondent compan....