R.A. Sharma, J. - (1.) PETITIONER is a distillery manufacturing country liquors, Indian made foreign liquors and other spirits. It also had a licence in Form C.L. 1 for the year 1975 -76 for supply of country liquors in respect of Kanpur district. The Excise Commissioner U.P. vide his order dated 15 -5 -1979 has imposed a penalty of Rs. 59,761 -80 on the petitioner at the rate of Rs. 17 -50 per alcoholic litre (as specified in Rule 466 of the U.P. Excise Rules) for delay in supply of the liquors to the licensees so as to compensate the Government for the loss. It is against this order of the Excise Commissioner that this writ petition has been filed before this Court in which on 5 -8 -1980 this Court has passed the following interim order: Issue notice. Standing counsel accepts notice. Having heard counsel for the parties, we direct that the impugned orders dated 10th May, 1979, 17th July, 1980 and 25th July, 1980 shall not be given effect to during the pendency of the writ petition subject to the condition that the petitioner furnishes security for the amount claimed under the said orders other than cash or bank guarantee to the satisfaction of the Excise Commissioner, respondent No. 2 within six weeks. In case of default stay order shall stand automatically vacated. Under Rule 465 of U.P. Excise Rules minimum stock of spirit is required to be maintained by a licensee and when the quantity of the spirit is about to reach the minimum limit, the Excise Inspector is obliged to invite attention of the distiller's agent to the deficiency and inform the Collector, who is entitled to procure spirit from elsewhere and recover the cost from the contractor/licensee or from his deposit, Rule 466 of the aforesaid Rules lays down that if the contractor fails to supply the spirit within reasonable time it can be procured from else where by the Collector and the cost and also the loss, if any accruing to the Government can be recovered from the contractor in addition to the penalty specified therein. Division Bench of this Court in the cases of M/s. K.C. Thapar v. State Writ petition No. 106 of 1979 decided on 27 -7 -1989 and M/s. Saraya Distillery v. State Writ petition No. 74 of 1979 decided on 13 -2 -1990 have laid down that Rule 466 has to be read with Rule 465 in order to find out the liability of the contractor licensee. In the instant case the Excise Inspector neither invited the attention of the distiller's agent to the deficiency nor informed the Collector about it, and the Collector did not procure the spirit from elsewhere. In these circumstances the question of accruing any loss to the Government did not arise. Conditions precedent laid down by Rules 465, 466, not being satisfied, Excise Commissioner had no jurisdiction to impose any penalty under Rule 466.
(2.) LEARNED Standing Counsel has however, invited our attention to Condition No. 11 of the licence of the petitioner, which is quoted below: 11. Failure to supply spirit as specified in condition 10 supra within what the Collector considers a reasonable time shall entail a penalty, as the discretion of the Excise Commissioner, not exceeding Rs. 5 per proof gallons of spirit demanded but not supplied. In such cases the spirit may be purchased by the Collector from elsewhere at his discretion and at the risk of the contractor. The penalty, the cost of the spirit purchased and any loss to Government that may result may be deducted from amount, if any, dues to the contractor or from his deposit or from the price received under condition 2 above, provided that if failure to supply is proved to the satisfaction of the Excise Commissioner to be due to (1) damage to or in the factory of the contractor from causes beyond the contractor's control, or (2) to strikes, pestilence, riot, violence of the mob or other irresistible force, or (3) to failure on the part of the railway authorities to supply sufficient wagons for transport of essential raw materials to and finished products from the contractor's factory, and if immediate notice of the said products from the contractor's factory and if immediate notice of the said cause of occurrence has been given to the Excise Commissioner and Collector, the penalty of Rs. 5 per proof gallons of spirit in this condition will not be exacted from the contractor. According to condition No. 11, (i) a licensee is required to supply the spirit within a reasonable time to be specified by the Collector, (ii) in the event of failure to do so, he is liable to pay the penalty not exceeding Rs. 5 per proof gallons; (iii) in these circumstances the Collector is entitled to procure the spirit from other sources and there after to recover the cost and the loss, if any, accruing to the Government from the licensee; and (iv) if the licensee satisfies the Excise Commissioner about the existence of any of the grounds mentioned in the condition, the penalty will not be imposed. Under this condition penalty can be imposed if the spirit is demanded and not supplied within what the Collector considers a reasonable time and for imposing penalty under this condition it is not necessary that conditions precedent laid down by Rules 465 and 466 should also exist. In the instant case there has been a delay in supplying the spirit and as such, the petitioner is liable to pay the penalty under condition No. 11.
(3.) LEARNED counsel for the petitioner has however, submitted that the penalty could not have been imposed on the petitioner at the rate of Rs. 17.50 per alcoholic litre inasmuch as under condition No. 11, which has been quoted in paragraph 15 of the writ petition, it is to be calculated at the rate not exceeding Rs. 5 per proof gallons of spirit. But in paragraph 13 of the counter affidavit, filed on behalf of the respondents, it has been stated that this condition provides for imposition of penalty at a rate not exceeding Rs. 17.50 per alcoholic litre. As the petitioner is liable to pay penalty under condition No. 11, it has to be calculated only at the rates specified in this condition and not at the rate mentioned in Rule 466. In the instant case we are concerned with the year 1975 -76 and any subsequent increase in the rate of penalty in the condition No. 11 or Rule 466 cannot have retrospective effect. The original license for the year 1975 -76 has not been produced before us and as such, it is not possible to determine the rate specified in condition No. 11 of the license of the petitioner.;