The Andhra Pradesh High Court has held that a bar licence holder cannot claim a refund of proportionate licence fee for the period during which his licence remained suspended.

The suspension followed his failure to produce the required No Objection Certificate (NOC) under Rule 6(V) of the A.P. Excise (Grant of Licence of Selling by Bar and Conditions of Licence) Rules, 2005.

In doing so, the Court set aside the Single Judge's order directing refund of the proportionate licence fee and dismissed the writ petition filed by the licence holder.

The Court noted that Rule 6 (V) of the 2005 Rules requires production of an NOC from the local authority for renewal of a licence to run a restaurant and bar.

A Division Bench comprising Chief Justice Lisa Gill and Justice Challa Gunaranjan found that the licence holder had failed to produce the NOC despite submitting an affidavit undertaking to produce it within seven days and subsequently seeking further time.

The Court said:

“In our considered opinion, writ petitioner is not entitled to refund of amount in question. This is so for the reason that submission of NOC was required to be submitted along with application seeking renewal in terms of applicable rule. Needful was admittedly not done despite an affidavit being submitted by writ petitioner besides submitting application seeking extension for the period of deposit of same.

In the given facts and circumstances, it is apparent that it is writ petitioner himself, who was responsible for turn of events. In case NOC had been deposited within stipulated period or even period till which order dated 31.07.2008 was passed, it would have been able to carry on its trade.”

The dispute arose from the suspension of a licence granted to the writ petitioner to run a restaurant and bar in Proddatur.

The petitioner had held a Form-2B licence for several years. The Excise authorities renewed his licence after he deposited the first instalment of the licence fee and furnished a bank guarantee for the remaining amount.

The renewal was, however, subject to production of an NOC from the local authority within seven days, in terms of a circular issued by the Commissioner of Prohibition and Excise.

Pursuant to the requirement, the petitioner submitted an affidavit stating that he possessed the NOC, trade licence and food licence and would produce valid documents within seven days.

The NOC was not produced within the stipulated period. The Excise authorities issued a notice requiring its production, following which the petitioner sought further time to submit the same.

While the matter stood thus, another person challenged the renewal of the petitioner's licence before the High Court on the ground that it had been granted without production of the NOC. The High Court, finding prima facie violation of the applicable Excise Rules, passed an order pursuant to which the licence was suspended by the Excise authorities.

The petitioner did not challenge either the suspension of his licence or the order passed in the separate writ proceedings.

Subsequently, G.O.Ms.No.122 dated 06.02.2009 was issued by the State amending Rules 6(V) and 9A(2) of the Rules of 2005, whereby the requirement of production of an NOC was substituted with a trade licence from the local authority.

The petitioner thereafter obtained the trade licence and produced it before the Excise authorities. His licence was consequently restored.

It was thereafter that the petitioner sought refund of the proportionate licence fee for the period during which his licence remained suspended. The Excise authorities rejected the request, leading him to approach the High Court.

The Single Judge allowed the writ petition and directed the authorities to refund the proportionate licence fee for the suspension period.

Challenging the order, the State contended that the petitioner was not entitled to a refund as the suspension resulted from his failure to produce the NOC. It further argued that the suspension was not merely due to the High Court's interim order, as the suspension order specifically recorded that the licence was suspended for “contravention of specific provisions of Rule 6(V) of the Rules, 2005.”

The Division Bench agreed with the State's contention. It found that the petitioner was required to produce the NOC for renewal but failed to do so despite filing an affidavit and seeking further time. The Court noted that the suspension order referred to his failure to produce the NOC and expressly recorded the contravention of Rule 6(V), while also referring to the interim order passed in the separate writ proceedings.

The Court also noted that the NOC was never submitted by the petitioner and that it was only after the change in the Rules that he obtained the trade licence and sought revocation of the suspension.

Holding that the petitioner was not entitled to refund of the proportionate licence fee, the Division Bench found the Single Judge's order unsustainable and set it aside.

Accordingly, the writ petition was dismissed and the writ appeal was allowed.

Advocate for the Appellant: Mr. E. Sambasiva Pratap, Additional Advocate General, with the Government Pleader for Prohibition & Excise.

Advocates for the Respondent: Mr. O. Manoher Reddy, Senior Counsel, with Mr. G. Srinivasulu Reddy.