Bhargava, J. - (1.) The respondent, Gopal Chandra Khound, is the holder of a licence of a country liquor shop issued by the appellant. Sub-Divisional Officer and Collector, Shivasagar. The Superintendent of Excise of the Sivsagar Sub-Division, in which the shop of the respondent is situated, Inspected some liquor shops in the month of June. 1965 and discovered that some of the bottles in the shops were not properly sealed. The covers could be turned all round without detaching them from the bottles and without breaking the seal. There could also be seepage from the covers if the bottles were turned up side down. He felt that this left a scope for tampering as well as deterioration in strength of the liquor in storage beyond the permissible limits; and consequently, a few days later on 24th June, 1965, he issued a letter to the Officer-in charge, Warehouses, Jorhat and Nazira, which were issuing the sealed bottles, to take all possible steps to secure the marked closures properly and to ensure that no sealed bottles of liquor with loose closures were issued from the warehouses. A copy of this letter was endorsed as a circular to all the lessees of the liquor shops, including the respondent. In the endorsement to the lessees, the Superintendent of Excise added that the lessee should not take delivery of such liquor in sealed bottles with loose closures and, in case, through heavy rush at the time of issue, some such bottles with loose closures happened to creep into their consignments, they should be returned at once to the Officer-in charge, Warehouse concerned for getting them properly secured.
(2.) Subsequently, on 31st July, 1965, he made a check of the shop of the respondent. He found two bottles on the sale rack with loose covers which appeared to him to be suspicious. He tested their strength and discovered that the strength was far below the strength of issue from the Warehouse. The respondent was expected to store liquor of strength 30 U. P., while the strength of the liquor in these two bottles was 44.9 U. P. and 49.0 U. P. Thereupon, he also checked the remaining 13 battles which were on that sale rack. He found that the strength of 5 of them was 30 U. P., while the remaining 8 had liquor of strength 48.4 or 48.8 U. P. He marked these bottles, took them In his possession, and recorded a report of his inspection. Thereafter, he sent a report to the appellant informing him of this inspection and stating his opinion that the respondent had deliberately diluted and weakened the 30 U. P. liquor in the bottles on the sale rack after having tampered with the seals. He recommended that the respondent should be asked to show cause why his licence should not be cancelled and security forfeited. In pursuance thereof, the appellant issued a notice to the respondent to show cause on 16th August, 1965. The respondent in his explanation denied having diluted or weakened the liquor in the bottles on the sale rack. He explained that the seals were of such a nature that there could be no dilution unless the covers were completely removed, so that, according to him, the charge of dilution was out of question and was absolutely impossible. He suggested in his explanation that, very likely, the deterioration must have taken place in the warehouse before the bottles were issued to him. The explanation contained further details showing cause against the notice issued to him. The appellant asked for comments on this explanation from the Superintendent of Excise. The Superintendent of Excise recorded his comments on 6th September, 1965. On a consideration of these documents, the appellant cancelled the licence of the respondent. The respondent filed an appeal before the Board of Revenue. The Board dismissed the appeal by the order dated 17th January, 1966. There upon the respondent filed a petition under Article 226 of the Constitution before the High Court of Assam and Nagaland. The High Court set aside the order of the appellant and the Board of Revenue. This appeal has, therefore, been brought up to this Court by the appellant against that judgment of the. High Court by special leave.
(3.) The appellant had purported to cancel the licence of the respondent for contravention of Rule 300 of the Rules framed under the Eastern Bengal and Assam Excise Act No. I of 1910, which reads as follows: "300. No licensed wholesale or retail vendor shall wilfully adulterate or add anything to cause the deterioration of any intoxicant sold or kept for sale by him. He shall not sell any Intoxicant which he knows to have been adulterated or to have deteriorated and shall not store such intoxicant or permit such intoxicant to be stored on his premises". The appellant came to the finding that the respondent had wilfully adulterated or caused the deterioration of the liquor in 10 of the bottles which were found by the Superintendent of Excise on his sale rack, and that was the order which was upheld by the Board of Revenue. The High Court noticed the fact that the Board of Revenue had held that there was no direct evidence to show that the respondent had wilfully caused deterioration in the strength of the liquor in question or that some one else did this on his behalf. The Board of Revenue then proceeded to consider whether there were circumstances in the case to justify recording a conclusion against the respondent and, for that purpose, raised a presumption that the respondent must have knowledge that the liquor in the bottles was adulterated, in the absence of proof to the contrary. The High Court rightly pointed out that such a presumption is not justified on the language of Rule 300. The Board of Revenue, in support of its view, had relied upon some sections of the Excise Act which prescribed penal action in cases of possession of adulterated liquor. It is to be noticed that the proceedings against the respondent were taken not on the ground of being in possession of adulterated liquor, but on the ground that he had deliberately adulterated it. There could, therefore, be no presumption that the charge against him must be treated as proved simply because bottles of adulterated liquor were discovered on the rack in his shop. The High Court also noted the fact that the Board was wrong in thinking that the respondent m his explanation did not deny knowledge of the fact that the bottles were adulterated when, in fact, he had done so. The Board having thus gone wrong on the face of the order in this respect of drawing incorrect presumption, the High Court exercised its jurisdiction to issue a writ of certiorari quashing the orders of the appellant and the Board of Revenue on the ground that there was, in fact, no evidence at all on which a reasonable person could have come to the conclusion that the respondent had himself adulterated the liquor in the bottles.;