Case Note & Summary
The dispute concerned the grant and cancellation of a single FL-16 country liquor license for the area of Kachchi Sarai, Dal Mandi, Sector-II, Varanasi, under the Uttar Pradesh Excise Act. The litigation had a long history involving the fifth respondent, Mohd. Khalil, and later the appellant, Gorakhnath, who was granted the license after the fifth respondent's license was cancelled. Before 1961, the license stood in the name of Mohd. Abdul Hamid, brother of the fifth respondent; in 1961, the fifth respondent's name was added. Abdul Hamid died in March 1979, and the license was renewed solely in the name of the fifth respondent for the excise year 1979-80. On 24 May 1980, the license was cancelled and a temporary license issued to one R.S. Tiwari. The fifth respondent challenged that action, and ultimately the Allahabad High Court allowed his writ petition on 29 August 1986, leading to renewal of his license up to 1991-92. For 1992-93, the fifth respondent applied for renewal, but the District Excise Officer raised a query and no orders were passed. On 4 June 1993, one Surender Tripathi filed an application seeking a temporary FL-16 license in the name of his wife, Shanti Devi. A report was submitted that although the fifth respondent had not applied for renewal for 1993-94, he was still running the business on a temporary license. Acting on that report, the District Excise Officer cancelled the fifth respondent's license on 3 July 1993, treating the shop as vacant. A notification dated 16 October 1993 invited applications for a regular license; eleven persons, including the appellant, applied, and the license was granted to the appellant. The fifth respondent again agitated, and on 20 May 1994, the District Magistrate, Varanasi, accepted his case and directed renewal of the FL-16 license for 1994-95 in his favour, holding that the cancellation of 3 July 1993 was incompetent in law and not warranted on facts. The appellant's appeal to the Additional Excise Commissioner and revision to the Government were dismissed. He then filed a writ petition in the Allahabad High Court, which was also dismissed. The High Court reasoned that once the cancellation was found illegal, no vacancy existed, so the call for fresh applications and grant to the appellant were incompetent; it treated the appellant's license as an interim or temporary arrangement subject to the fifth respondent's claims and held that no notice was required before the appellant's license ended because it was not a cancellation for fault. The appellant contended before the Supreme Court that on 3 July 1993, the fifth respondent had no license to cancel; that the fifth respondent had not applied for renewal for 1993-94; and that his own permanent license could be cancelled only under Section 34 of the U.P. Excise Act with notice. The Supreme Court rejected all contentions. It found that the order of 3 July 1993 expressly purported to cancel the fifth respondent's license and that the fifth respondent was then holding a temporary license, as noted in the District Magistrate's order of 20 May 1994. Therefore, there was a license to cancel, and the argument about non-application for renewal had no substance. The Court held that because the cancellation was later declared illegal, there was never a valid vacancy, and the appellant's grant, regardless of being described as permanent, was only provisional and temporary. Once the fifth respondent's license was restored, the appellant's license came to an end by operation of law; it was not a cancellation under Section 34, so no notice was required. Accordingly, the Supreme Court dismissed the appeal without costs.
Headnote
A) Excise Law - Cancellation and Restoration of License - No vacancy arises when prior cancellation of license is declared illegal - Uttar Pradesh Excise Act, Section 34 - The fifth respondent held a temporary license on 03-07-1993; the District Excise Officer's cancellation of that license was later found incompetent and erroneous by the District Magistrate. Consequently, no vacancy existed for the shop, and the notification inviting fresh applications and the subsequent grant of FL-16 license to the appellant were based on a false premise. Held that the appellant's license, though described as permanent, was only a provisional or temporary arrangement, and once the fifth respondent's license was restored, the appellant's license came to an end by operation of law (Paras Not Mentioned). B) Natural Justice - Right to Notice Before Cancellation - Termination by operation of law does not require notice - Uttar Pradesh Excise Act, Section 34 - The appellant claimed that cancellation of his license without hearing him violated principles of natural justice and Section 34 of U.P. Excise Act. Held that the appellant's license was not 'cancelled' within the meaning of Section 34; rather, it automatically ceased when the fifth respondent's license was restored, and therefore no notice to the appellant was necessary (Paras Not Mentioned). C) Writ Jurisdiction - Article 226 of the Constitution of India - Discretionary relief declined when alternative remedies availed and no fault of appellant - Constitution of India, Article 226 - The High Court declined to interfere because the appellant had availed appeal and revision and had full opportunity to present his case, and the cancellation of appellant's license was not due to any fault of his but solely to restore the prior licensee's rights. Held that there were no grounds to exercise extra-ordinary jurisdiction under Article 226 in favour of the appellant (Paras Not Mentioned).
Issue of Consideration
Whether the order dated 03-07-1993 cancelling the fifth respondent's license was valid and whether a vacancy arose for fresh grant; whether the license granted to the appellant was permanent or merely a provisional/temporary arrangement subject to the fifth respondent's claim; whether cancellation of appellant's license without notice violated principles of natural justice and Section 34 of U.P. Excise Act.
Final Decision
The Supreme Court dismissed the appeal and affirmed the High Court's order. It held that the fifth respondent was holding a temporary license on July 3, 1993, which was cancelled illegally. Therefore, no vacancy arose for the fresh grant; the appellant's license, though described as permanent, was a temporary arrangement. Once the fifth respondent's license was restored, the appellant's license came to an end by operation of law, and it was not a cancellation under Section 34, so no notice was required. No costs.
Law Points
- When a prior cancellation of a license is later declared illegal
- no vacancy arises for a fresh grant
- a subsequent grantee's license is deemed provisional and temporary
- and terminates by operation of law upon restoration of the earlier licensee's license without requiring cancellation under Section 34 or notice.
