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Babu Ram v. State Of Punjab And Another
Factual and Procedural Background
The petitioner (referred to in departmental records as Shri Babu Ram) and one Jamna Dass obtained, by auction, the contract for the vend of country liquor shops for 1948-49 at Sultanpur Lodhi and other places in Punjab. The same party had held the vend in the previous year. The petitioner and Jamna Dass executed separate bonds with separate sureties for half the contract amount each; this practice had been followed by the Excise and Taxation Department for several years. The petitioner paid his share under the bond; Rs. 12,622 (the half share of Jamna Dass) remained unpaid.
Respondents treated the liability as joint and several and, on October 3, 1962, issued a show-cause notice (annexure 'A') calling on the petitioner to explain why the amount should not be recovered as arrears of licence fees for 1947-48 and 1948-49. The petitioner filed objections and later contended that the Deputy Excise and Taxation Commissioner, Jullundur, directed (in an order the petitioner sought to obtain) that the Excise and Taxation Officer, Kapurthala, discharge the petitioner of liability if he had paid his share. The petitioner’s request for a copy was refused by a January 9, 1963 communication (annexure 'B'), which described the order as executive in nature but indicated the petitioner would be discharged if he had paid his share.
After a change of incumbent at the Deputy Excise and Taxation Commissioner’s office, on October 4, 1963 the Excise and Taxation Officer, Kapurthala, sent a memorandum (annexure 'C') stating that the earlier orders could not hold good "in the light of decision of the High Court in the case of Shri Bhagat Singh versus Punjab State" and called upon the petitioner to deposit the requisite amount. The petitioner did not pay and, facing threatened coercive recovery as arrears of land revenue, filed a writ petition on November 20, 1963. The Motion Bench admitted the petition and stayed arrest and recovery proceedings.
The State filed a written statement (date not given) admitting relevant facts, asserting the Deputy Commissioner had acted on the executive side and not judicially, and pleading that the auction terms made liability joint and several. The petitioner made an application (C.M. 683 of 1964) seeking production of the December 15, 1962 order said to be in his favour; the Court ordered the State's counsel to bring the departmental records to hearing. The State ultimately produced a Department file containing an order dated December 17, 1962 by the Deputy Excise and Taxation Commissioner which records a hearing (presence of Shri G.R. Sethi for Shri Babu Ram and the Excise Inspector), verification of payments, and a direction that the E.T.O. Kapurthala discharge Shri Babu Ram of his liability if he had paid his share, leaving the Department to pursue Jamna Dass.
Legal Issues Presented
- Whether the earlier decision of the Deputy Excise and Taxation Commissioner (discharging the petitioner of the disputed liability if he had paid his share) was a quasi-judicial order whose finality could not be set aside by executive action without appropriate authority or proceedings.
- Whether the respondents could treat that earlier decision as an executive act and require the petitioner to pay the disputed sum, particularly in reliance on an alleged High Court decision in Bhagat Singh v. State of Punjab.
- Whether an order in the petitioner's favour could be reversed without giving him notice.
Arguments of the Parties
Petitioner's Arguments
- The Deputy Excise and Taxation Commissioner had passed an order in the petitioner’s favour (discharging him of liability if he had paid his share), and such an order could not be reversed without giving the petitioner notice.
- The earlier decision was quasi-judicial in character; absent any statutory authority to review or set aside that quasi-judicial decision, the Department lacked jurisdiction to treat it as a nullity.
- The petitioner had sought a copy of the favourable order and, after the copy was refused, sought production of the order in proceedings before this Court.
Respondents' Arguments
- In the written statement the State contended that the Deputy Excise and Taxation Commissioner had acted on the executive side and thus had not passed a judicial or quasi-judicial order.
- On the merits, the State pleaded that under the terms and conditions of the auction the liability for payment of the contract was joint and several, and therefore the amount could be claimed from the petitioner.
- The Department relied on an asserted decision of the High Court in Bhagat Singh v. State of Punjab (referred to in departmental communications) to justify treating the earlier order as not binding; however, when requested, State counsel could not produce or locate any such judgment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Deep Chand and another v. Additional Director, Consolidation of Holdings, Punjab, Jullundur, 1964 Cur. L.J. (Pb.) 128 : 1964 P.L.R. 318 | Limits on a judicial or quasi-judicial body's power to review its own decisions; rejection of a wide inherent power of review that would create uncertainty and unpredictability in quasi-judicial decisions. | The Court relied on this Full Bench authority to support the proposition that a quasi-judicial order should not be treated as subject to an unfettered executive review; it underpinned the conclusion that the Deputy Commissioner's decision was final and could not be reversed by executive action. |
| Shri Bhagat Singh v. State of Punjab (referenced in departmental communication) | The Department cited this High Court decision as a basis for treating the earlier order as not holding good (i.e., as supporting reversal), though the exact rule cited was the Department's reliance that the case authorized treating the earlier order as not binding. | The Court noted that State counsel was unable to locate or produce any such judgment; consequently the reference had no effect on the Court's determination and did not justify reversing the Deputy Commissioner's order. |
Court's Reasoning and Analysis
The Court undertook a factual and legal analysis focused on the character of the Deputy Excise and Taxation Commissioner's December 1962 decision and the permissibility of attempting to treat that decision as void or reversed by subsequent executive action.
Step-by-step analysis as reflected in the opinion:
- The departmental record produced to the Court contained an order dated December 17, 1962 by the Deputy Commissioner which records an appearance by the petitioner's advocate, production of payment vouchers and treasury challans, a point raised by the Excise Inspector about joint-and-several liability, and the Deputy Commissioner's reasoned conclusion that the petitioner (Shri Babu Ram) should be discharged of liability if he had paid his share, leaving the Department to proceed against Jamna Dass. The form and content of that order showed the Deputy Commissioner had heard the parties and decided the dispute on the merits.
- The Court rejected the State's characterization of that decision as merely "executive action." The opinion emphasized that the Deputy Commissioner had conducted a hearing, received submissions and evidence, adjudicated competing contentions (including reliance on the Indian Partnership Act), and issued a decision; these indicia demonstrate a quasi-judicial exercise, not a mere executive act.
- The State conceded that no subsequent order of any Excise and Taxation Authority had been produced which varied or set aside the earlier decision. The Court took this concession as important: absent any competent authority's order reviewing or reversing the earlier quasi-judicial determination, the earlier decision remained operative and binding on the parties.
- The Court invoked the reasoning of a Full Bench in Deep Chand (cited above) to reject any broad or inherent power in the Department to review quasi-judicial decisions in a way that would introduce uncertainty and unpredictability. That precedent supported the proposition that a quasi-judicial order cannot be casually nullified by executive fiat.
- The Department's reliance on an alleged High Court decision (Bhagat Singh v. State of Punjab) was examined: State counsel was asked to provide a complete and correct reference but ultimately could not locate or produce the judgment. The absence of any such judgment meant the departmental memorandum purporting to invoke it had no supporting authority before the Court.
- Given the character of the Deputy Commissioner's order, the absence of any competent review or reversal, and the failure of the State to produce any authority justifying its action, the Court concluded that the impugned demand notice (which sought to recover the disputed sum from the petitioner) was made without jurisdiction.
Holding and Implications
Holding: The writ petition is allowed. The impugned demand notice against the petitioner is set aside and the respondents are permanently restrained from making the said demand against the petitioner.
Implications:
- Direct effect: The petitioner (Shri Babu Ram) is relieved of the demand for the disputed Rs. 12,622 insofar as the departmental demand against him is concerned; the respondents are permanently restrained from pursuing that demand against him.
- Finality of quasi-judicial orders: The decision affirms that a decision of an authority that was made after hearing and that decides rights on the merits cannot be treated as an executive act and set aside by departmental fiat without appropriate authority or proceedings. The Court relied on Full Bench authority (Deep Chand) to emphasize limits on review.
- No novel precedent announced: The opinion applies established principles (including the Full Bench authority cited) to the facts; it does not purport to establish a new legal principle beyond those applied.
Disposition in the text: The petition was allowed and the impugned demand order set aside; the respondents were permanently restrained from making that demand.
R.S. Narula, J. - Contract for the vend of country liquor shop for the year 1948-49 at Sultanpur Lodhi and some other places in the Punjab was obtained by the petitioner and one Jamna for a sum of Rs. 25,000/-. The same party had a contract for the vend of country liquor shop during the preceding year. The petitioner and Jamna Dass executed separate bonds with separate sureties half of the amount of the contract. Admittedly the same practice had prevailed with the Excise and Taxation Department for some years prior to that, though it is now alleged in the written statement filed by the State that the said practice was not in accordance with the terms and conditions of the auction. Petitioner had admittedly paid out the amount due under the bond executed by him and by his surety. Rupees 12,622/-, however, remained due as the half share of Jamna Dass. According to the stand now taken up by the respondents the liability for payment of this amount was joint and several between Jamna Dass and the petitioner. 2. On October 3, 1962 a notice of which copy is annexure 'A' to the writ petition, was issued to the petitioner calling upon him to show cause as to why the said amount be not recovered from him on account of the arrears of licence fee for the years 1947-48 and 1948-49. Petitioner filed written objections against the demand. Petitioner's case is that his objections were accepted and the Deputy Excise and Taxation Commissioner, Jullundur, directed the Excise and Taxation Officer, Kapurthala, to discharge the petitioner of the liability. The petitioner applied for a copy of the said order. In reply to that request a communication dated January 9, 1963 (copy annexure 'B' to the writ petition) was sent to the petitioner wherein it was stated that the copy applied for by him could not be granted to the petitioner as the order which had been passed was of an executive nature. In the same communication the petitioner was, however, informed that the Excise and Taxation Officer, Kapurthala, had been directed to discharge the petitioner of his liability for the payment of the outstanding dues if the petitioner had made payment of this share on account of arrears for the country liquor shops at Dalla and Sultanpur. Thereafter there was a change in the incumbent of the office of the Deputy Excise and Taxation Commissioner, Jullundur. On October 4, 1963 the Excise and Taxation Officer, Kapurthala sent to the petitioner a memorandum of which copy is annexure 'C' to the writ petition wherein it was stated that the Deputy Excise and Taxation Commissioner, Jullundur Division, had directed that the orders passed by his predecessor regarding the discharge of petitioner's liability for the payment of outstanding dues could not hold good "in the light of decision of the High Court in the case of Shri Bhagat Singh versus Punjab State" and calling upon the petitioner to deposit the requisite amount in the Government treasury. 3. The petitioner did not pay out the amount in question and when he was under the threat of being coerced to pay the amount as arrears of land revenue he filed this writ petition on November 20, 1963 which was admitted on the next day by the Motion Bench (Falshaw C.J. and Harbans Singh, J.). Arrest and recovery proceedings were stayed by the Motion Bench for the duration of the writ petition. 4. Written statement dated nil has been filed by the Excise and Taxation Commissioner, Punjab, supported by an affidavit dated January 10, 1964, which has not been sworn before any authority but has merely been attested by a Magistrate. All the relevant facts have been admitted in this written statement but it has been averred that the Deputy Excise and Taxation Commissioner in the first instance had dealt with the matter only on the executive side but had not passed any judicial order. It has also been admitted that the petitioner did apply for a copy of the order in his favour and that the copy was in fact refused to him. On merits, it has been pleaded that according to the terms and conditions of the auction the liability for the payment of the entire amount of the contract of vend of country liquor was joint and several of the petitioner and his partner and that the amount was rightly being claimed from the petitioner. 5. On March 13, 1964 the petitioner made an application to this Court (C.M. 683 of 1964) in which he prayed that the order dated December 15, 1962 passed by the Deputy Excise and Taxation Commissioner, Jullundur Division, in his favour be brought up before the Court. Notice of the application was issued to the respondents on April 30, 1964, and after hearing learned counsel for both the parties Jindra Lal J. passed the following order on the said application on May 22nd 1964 :- "Heard counsel for the parties. Let the learned counsel for the State have the records mentioned in the petition in Court at the time of hearing". 6. Learned counsel for the State was asked by me yesterday to quote a complete and correct reference of the alleged order of this Court in Bhagat Singh v. State of Punjab, referred to in the impugned communication of the Excise and Taxation Officer. Mr. P.C. Jain learned counsel for the petitioner stated that he could not trace any such judgment. After having taken time the learned counsel for the State says that he has not been able to locate any such judgment. 7. State counsel has placed before me file of the department containing the order of the Deputy Excise and Taxation Commissioner dated December 17, 1962 which reads as follows :- "Shri G.R. Sethi, Advocate, has appeared on behalf Shri Babu Ram and submitted a list of all payments made by Shri Babu Ram. He has also produced the relevant treasury challans which have been checked by the Excise Inspector, Kapurthala and all the payments have been verified. The Excise Inspector raised the point that Shri Baby Ram being a partner in the vends in responsible for the payment of dues, the responsibility being joint and several. Shri Sethi had controverted this point by referring to the provisions of the Indian Partnership Act and has asserted that from the very conduct of the parties it was quite clear that there was no relationship as partners between Shri Babu Ram and Jamna Dass and this thing was clear from the fact that both these persons submitted separate sureties which were accepted by the department. The E.T.O. Kapurthala should be advised to discharge Shri Babu Ram of his liability for the payment of outstanding dues if he has made payments of his share and he should only tackle the other person Shri Jamna Dass or his descendants. The list along with vouchers was handed over to the Excise Inspector for further necessary action. 8. Mr. P.C. Jain counsel for the petitioner has pressed two points in support of this writ petition. It was firstly contended by him that an order in his favour having been passed by the competent authority, it could not be reversed without giving him a notice. Indeed this is so, but in view of my decision on the second point it would be wholly unnecessary to go into this objection any further. 9. The second and main contention of the learned counsel for the petitioner is that the first decision (quoted above) was given by the competent authority while exercising quasi-judicial powers and that no statutory authority to review that decision being referred to by the learned counsel for the State, the attempt to treat the said quasi-judicial order as a nullity is without jurisdiction. I asked the State counsel and he has frankly conceded that no subsequent order of any Excise and Taxation Authority is available in the record by which the earlier order might have been varied or reversed. In the written statement, an attempt has been made to describe the earlier order in the petitioner's favour as an 'executive action'. This stand of the State is wholly misconceived. The Deputy Excise and Taxation Commissioner heard the Advocate for the petitioner and the Excise Inspector and after hearing them at length and dealing with the matter in detail in a quash-judicial manner decided the dispute between the Excise Department and the petitioner in favour of the latter. Calling the said order an executive decisions seems to be a mere traversity of fact. Once it is held that the earlier order in favour of the petitioner was a quasi-judicial one, it is clear that the Excise Department had no power to reviewing or reverse the same. In fact no order any of any competent authority reviewing or reversing the original order has been produced or relied upon. A Full Bench of this Court in Deep Chand and another v. Additional Director, Consolidation of Holdings, Punjab Jullundur, 1964 Cur. L.J. (Pb.) 128 : 1964 P.L.R. 318, after referring to a contention of the counsel about inherent powers to review, held as follows :- "To concede such a wide power of review would, in my opinion, introduce into judicial and quasi-judicial decisions, disconcerting element of permanent uncertainly and unpredictability tending to give an impression of quasi-judicial lawlessness which I cannot persuade myself to uphold. If Courts do not possess such a wide and sweeping power, it is difficult to accede such a wide power in statutory judicial or quasi-judicial tribunals". 10. After carefully considering all the facts and circumstances of this case I hold that the decision of the Deputy Excise and Taxation Commissioner discharging the petitioner of the liability of the amount in dispute was final and that the same not having been set aside by any competent authority in any appropriate proceedings binds the parties. In that view of the matter the impugned demand notice issued to the petitioner is wholly without jurisdiction and must be set aside. 11. This writ petition is consequently allowed. The impugned demand order against the petitioner is set aside and the respondents are permanently restrained from making the said demand against the petitioner. Petition allowed.
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