Decided on September 18,1963


Cited Judgements :-



- (1.)THE petitioners, in these writ petitions, who are engaged in the manufacture and sale of all kinds of spirituous preparations besides Allopathic tinctures, challenge the right of the State Government to collect fees for assaying the companies' products and the costs of the Excise establishment deputed to supervise the operations of the companies concerned.
(2.)MR. V. K. K. Menon, learned counsel appearing for all these petitioners, as well as the learned Advocate General appearing for the state, the respondent in all these matters, have agreed to treat the pleadings in O. P. No. 1674 of 1962 as representing the stand taken by the various petitioners regarding their grounds of attack, against the levy in question, as well as the stand taken by the State Government to justify the said levies. Therefore, I will refer to the averments in the pleadings in the said writ petition as well as the exhibits filed by the petitioner and the State government in that matter.
The petitioner in O. P. No. 1674 of 1962 is engaged in the manufacture and sale of all kinds of spirituous preparations besides allopathic tinctures. An agreement dated 6 21953 was entered into between the petitioner and the Travancore-Cochin Government, copy of which is Ext. P1. In ext. P1 it is stated that at the request of the company, the Government have been pleased to grant the privilege of manufacture & supply of all kinds of spirituous preparations besides Allopathic tinctures, subject to the various terms and conditions mentioned therein. Though there are several clauses in the said agreement, it is not necessary to refer to all of them, because the controversy relates only to the levy on the basis of some of the conditions in the agreement. Therefore, I will advert only to the relevant clauses in the agreement.

In Clause. 1 of the agreement, the petitioner has been authorised by the Government to manufacture and sell all kinds of spirituous preparations besides Allopathic tinctures. Clause (4) of the agreement provides for the company sending free to the Research Department of the University of travancore, samples of all preparations manufactured by the company; and it is further provided that the Research Department will assay the preparations, on payment of such fees, as may be fixed by Government from time to time and that the said Department will certify as to the spirit content of the preparations. Under clause (9), it is provided that the company agrees to pay to Government, 10 per cent of its annual net profits, and it also provides as to how the net profit is to be calculated. Clause (12) makes provision for any dispute arising between the Government and the company, being referred to the decision of two arbitrators; and it also provides the manner in which the arbitrators are to be nominated. It also makes provision for the nomination of an Umpire in case of difference of opinion between the arbitrators. Clause (17) makes provision for the Company, namely, the licensee, to pay in advance, the cost of the establishment deputed to supervise the operations in the Laboratory and all other charges, namely, pensionary contribution, leave allowance, clothing allowance, contingent charges, house rent allowance. There is general provision in Clause. 18 that the agreement is to be read as subject to any future legislation regarding registration of Chemists, Druggists etc. or any other legislation which may affect all or any of the business carried on by the company such as fixing of standards for drugs etc.

(3.)AT this stage, it may be mentioned that the controversy relates to the right of the Government to collect the amounts provided for in Clause. 4 and 17 of the agreement. So far as the payment of 10 per cent net profits to the Government provided for under Clause. 9 of the agreement is concerned, that has ceased to be a subject of controversy at present in view of the statement in the counter-affidavit made by the government in Para. 3 that the condition provided for in Clause. 9 has been dropped with effect from 14 1961. In fact, a copy of the order passed by the government in this regard is Ext. R. 2 dated 410 1962. It will be seen from Ext. R. 2 that representations appear to have been made to the State Government protesting against the collection of 10 per cent net profits under Clause. 9 of the agreement as also the collection of cost of the Excise Establishment under clause. 17. But the Government passed orders exempting only payment of 10 per cent of the net profit with effect from 141961 but they declined to waive the recovery of the cost of the Excise Establishment under Clause. 17. In fact, it will be seen that this order Ext. R. 2 was passed only on 4101962, i. e. , long after 0. P. No. 1674 of 1962 was filed in this Court. That is why the petitioner has also claimed relief in respect of the collection of this 10 per cent. But, as I mentioned earlier, this does not now arise for consideration.
According to the petitioner, the payment of fees for assaying the company's products under clause (4) of the agreement will come to about Rs. 1, 500/-per year and similarly the cost of Excise Establishment payable under Clause. 17 will come to about Rs. 5,700/-per year.


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