No person can be prejudiced because of an act of a Court: Supreme Court [Read the Judgment]

A Supreme Court Bench [Chitra vs. State of Kerala & Ors] comprising Justice Vikramajit Sen and Justice Shiva Kirti Singh, while ordering refund of license fee due to non-utilization of license for full term, in the event of unforeseeable circumstances, observed that no person can be prejudiced because of an act of a Court.

“We hold that a party is entitled to seek a remission in the payment of licence fee if it is precluded from transacting business on the strength of that licence because of factors and reasons extraneous to it and/or if it is granted the license on the direction of a Court for only a portion of the financial year,” the Bench observed.

The Court was hearing an appeal against a judgment by the Division Bench of the Kerala High Court, which had reversed a Single Bench judgment. The question pertained to the appellant being entitled to pay proportionate annual rent in the relevant year, instead of the full annual fee of Rs. 13 lakhs.

The appellant’s application for a liquor license was rejected due to an amendment to the Foreign Liquor Rules which had resulted in private parties being ineligible for FL3 licenses.

The High Court had opined that the licensee cannot claim only proportionate payment, on the prediction that the license could not be utilized for the full period, due to third party intervention. Based on this observation, the appellant was ordered to pay the entire fee, within three weeks. This amount was paid by the Appellant. The legality of the demand to pay the fee for the entire year, despite the truncated period of use was challenged before the apex Court.

The Supreme Court observed that although the Appellant had applied for the FL3 license which would ordinarily run the course of one financial year, due to interim orders passed by the Courts, the Appellant could only utilize it for a fraction of that period.

“[T]he license could only be granted for the period from 21.12.1999 to 31.3.2000, i.e. till the close of that financial year, owing to unforeseeable circumstances beyond the ken and control of the parties before us,” the Court observed.

The Court referred to the earlier decision in the case of Jayadevan v. Board of Revenue (Excise), 1999 (1) KLJ 87. This decision was in turn referred to in another Division Bench Judgment in Rajagopalan Nair v. Assistant Commissioner of Excise, 1989 (1) KLT 800, wherein the Division Bench directed that the licensee was entitled to remission of payment of kisht because of being disabled to conduct its business on account of the interim orders passed by the Court.

Read the Judgment here.