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State Of Punjab And Others v. Surinder Kumar & Co. And Others
Factual and Procedural Background
The respondents held leasehold rights to vend Indian-made foreign liquor at 44 retail outlets in Ludhiana under L-2 and L-14 licences for the financial year 1 April 1995 – 31 March 1996. Following inspections, Excise Department officials recorded several illegalities and irregularities in the conduct of the business. Consequently, on 21 August 1995 the competent authority cancelled the respondents' licences.
Challenging the cancellation, the respondents filed CWPs Nos. 12543, 12546 and 12547 of 1995 in the Punjab and Haryana High Court, impleading the then Excise and Taxation Minister, Shamsher Singh Dullo, and alleging mala fides. By order dated 15 September 1995, the High Court declined to adjudicate the mala fides claim and instead relegated the respondents to their statutory appellate remedy under the Punjab Excise Act, 1914, directing the Appellate Authority to decide the appeal within 15 days and to consider any stay application.
The respondents filed an appeal. The Appellate Authority affirmed the finding of illegalities but, in lieu of cancellation, treated the period between 22 August 1995 (cancellation) and 22 September 1995 (High Court’s interim stay) as a substantive suspension of the licences.
Dissatisfied, the respondents initiated a second set of writ petitions (CWPs Nos. 18522-18524 of 1995). This time the Minister was not a party, yet the Division Bench set aside the Appellate Authority’s order and remitted the matter to the Excise and Taxation Commissioner to decide afresh on the alleged mala fides. The State and departmental authorities obtained special leave, giving rise to the present Supreme Court appeals.
Legal Issues Presented
- Whether, after having previously directed the respondents to pursue a statutory appeal, the High Court could subsequently remit the matter to the Excise and Taxation Commissioner to inquire into allegations of mala fides against the (now former) Minister.
- Whether the principle of res judicata embodied in Section 11 of the Code of Civil Procedure barred reconsideration of the mala fides issue that “might and ought” to have been decided in the first round of writ proceedings.
Arguments of the Parties
Respondents' Arguments
- They had not committed any serious irregularities warranting even the limited suspension of licences imposed by the Appellate Authority.
No further detailed arguments are recorded for either side in the opinion.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court observed that in the first writ proceedings, although the Minister was impleaded and allegations of mala fides were raised, the High Court expressly chose not to adjudicate that contention and instead directed the parties to avail the statutory appellate remedy. The Appellate Authority thereafter decided the matter on merits, finding illegalities but substituting cancellation with suspension for a limited period.
In the second writ petitions, the Minister was not even a party, yet the Division Bench ordered a fresh inquiry into mala fides. The Supreme Court held that:
- Once the High Court had, in the earlier writ, declined to examine mala fides and relegated the parties to appeal, the issue “might and ought” to have been raised before the Appellate Authority; accordingly, Section 11 CPC operated as res judicata against reviving that question.
- The High Court therefore lacked jurisdiction to direct the Excise and Taxation Commissioner to investigate mala fides, and its order was unsustainable.
- The respondents' contention that no serious irregularities were proved could not be entertained because they had not appealed against the Appellate Authority's factual findings.
Holding and Implications
Appeals Allowed; writ petitions dismissed.
The Supreme Court restored the Appellate Authority’s order, leaving in place the penalty treating 22 August 1995 – 22 September 1995 as the period of suspension. The decision confines itself to clarifying that issues abandoned or not pursued in earlier proceedings cannot later be revived, reaffirming the bar of res judicata under Section 11 CPC. No broader precedent beyond this procedural principle is established.
Order
1. Leave granted.
2. We have heard learned counsel on both sides.
3. These appeals by special leave arise from the judgment and order of the Division Bench of the Punjab and Haryana High Court, dated 29-5-1996 in CWPs Nos. 18522-18524 of 1995. The respondents had the leasehold right to vend Indian-made liquor at Ludhiana. They had located shops at 44 places to sell under L-2 and L-14 licence of Indian-made foreign liquor in retail. They had the licence for the Financial Year 1-4-1995 to 31-3-1996. The Excise Department officials had noted, on inspection, certain illegalities or irregularities committed in conducting the business and selling in retail the Indian-made foreign liquor. On account thereof, by proceedings dated 21-8-1995, the competent officer cancelled the licence granted to the respondents. Feeling aggrieved by the cancellation order, the respondents filed CWPs Nos. 12543, 12546 and 12547 of 1995. Therein, the respondents impleaded Shamsher Singh Dullo, Minister for Excise and Taxation, as one of the respondents alleging mala fides in the cancellation of licence granted to the respondents. The Division Bench of the High Court by order dated 15-9-1995 allowed the writ petition and remitted the matter to the Appellate Authority to decide the appeal within 15 days from the date of the presentation of the appeal since the respondents had alternative remedy of an appeal provided under the Punjab Excise Act, 1914 (for short “the Act”). The order reads as under:
“Concededly the respondent Minister against whom allegations of mala fides are alleged is no more a Minister. The petitioner has got an alternative remedy of appeal against the impugned order. The petitioner is relegated to the alternative remedy. The respondents undertake not to raise any objection with respect to the limitation for filing appeal if the same is filed within one week. The petitioner may apply for stay of the operation of impugned order before the Appellate Authority and the same shall be considered by the Appellate Authority. The Appellate Authority is further directed to decide the appeal within 15 days from the date of presentation of the appeal. In view of this, the writ petition is disposed of.”
4. On filing the appeal, the Appellate Authority, while upholding that the respondents had committed illegalities and irregularities in conducting the business in violation of the provisions of the Act and the rules made thereunder, felt it expedient instead of cancelling the licence, to treat the period from cancellation of licence till the filing of the writ petitions and grant of stay by the High Court, to be period of substantive suspension as a measure of penalty. Feeling aggrieved by the order passed by the Appellate Authority, the present writ petitions came to be filed. The Division Bench of the High Court in the impugned order set aside the order and remitted the case to the Excise and Taxation Commissioner to decide the matter on the grounds of mala fides alleged against the Minister afresh in the light of the averments made and the contentions on either side. Thus, these appeals by special leave.
5. It is seen that in the batch of the writ petitions, admittedly, the Minister was made co-respondent and allegations of mala fides came to be made against him. The High Court did not decide that question. On the other hand, a reading of the order would indicate that the High Court instead directed the respondents to avail of the alternative remedy of appeal before the Appellate Authority and the Appellate Authority was directed to go into the merits of the matter and decide it according to law. It is seen that the Appellate Authority did go into the merits, found that the respondents committed illegalities and irregularities in conducting the business of vending Indian-made foreign liquor. However, in the matter of imposition of penalty the Appellate Authority had felt it expedient, instead of cancelling the licence, to confine the period from 22-8-1995 till 22-9-1995, the date on which the High Court granted interim suspension of the operation of the cancellation order as “suspended”. It could be seen that in the second batch of writ petitions the Minister was not made a party. It is the settled legal position that the High Court could not have gone into the mala fides and it would not decide the matter on merit on the question of mala fides. In such a situation can the Division Bench direct the Appellate Authority to go into the question of mala fides. It is seen that in the first round of litigation when the High Court had not gone into the question of mala fides, though the Minister was impleaded as a party, it had remitted the matter for disposal on merits. Obviously, the words “might and ought” used in Section 11 of the CPC stand in the way and, therefore, it operates as res judicata for raising the same question in the present writ petitions. The High Court could not have gone into that question, much less giving direction to the Appellate Authority, namely, the Excise and Taxation Commissioner, to go into that question.
6. Shri Rathin Das, learned counsel for the respondents, contends that the respondents had not committed any serious irregularities or illegalities warranting even suspension of the licence for the period mentioned by the Appellate Authority. Unfortunately, that question was not considered by the Division Bench and it had not given any finding thereon. No appeals are filed by the respondents. Under those circumstances, we cannot go into that question. Thus, we hold that the view taken by the Division Bench is clearly unsustainable.
7. The appeals are accordingly allowed and the writ petitions stand dismissed. No costs.
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