Holding

The High Court’s direction to the Appellate Authority to entertain the mala fides claim is untenable as the issue is barred by res judicata under Section 11 of the CPC.

Summary

The respondents, who held licences to sell Indian-made foreign liquor in Ludhiana, had their licences cancelled by the Excise Department on grounds of illegalities. They filed writ petitions alleging that the Minister for Excise acted mala fide in the cancellation. The Punjab & Haryana High Court directed the respondents to pursue the statutory appeal under the Punjab Excise Act, 1914, and remitted the matter to the Appellate Authority, also staying the cancellation. The Appellate Authority upheld the illegalities but, instead of cancelling the licence, treated the period between cancellation and the High Court’s stay as a substantive suspension. The High Court later set aside that order and remitted the case to the Excise and Taxation Commissioner to reconsider the mala fides allegation. The Supreme Court held that the High Court could not direct the Appellate Authority to revisit the mala fides issue because Section 11 of the Code of Civil Procedure bars re‑litigation of the same question, thereby operating as res judicata. Consequently, the appeals were allowed and the writ petitions dismissed.

Issues considered

Whether the High Court could direct the Appellate Authority to consider the allegation of mala fides after the same question had been previously barred by Section 11 of the CPC.

Legislation cited

Subjects

res judicataSection 11 CPCmala fidesexcise licence cancellationalternative remedyappellate authoritywrit petitionPunjab Excise Act

Judgment

STATE OF PUNJAB AND ORS. A
v.
MIS SURINDER KUMAR AND CO. AND ORS.

DECEMBER 11, 1996

[K. RAMASWAMY AND G.T. NANAVAT!, JJ.] B

Code of Civil Procedure, 1908 : Section JI - Res Judicata.

Punjab Excise Act, 1914 :

Respondent granted licence for sale of Indian made foreign liq-
c
u01-Licence cancelled for i"egularities in conducting the business-Writ
challenging cancellation-Minister for Excise and Taxation impleaded alleg-
ing ma/a fides against him-High Court without going into merits directed the
respondent to avail altemative remedy of appeal under Excise Act-On appeal
the Appellate Authority upheld that respondents had committed illegalities D
but felt it expedient instead of cancelling the licence, to treat the period from
cancellation of licence till the filing of the writ petitions and grant of •lay by
the High Court, to be period of substantive suspension as a measure of
penaJ(JSecond batch of writ petitions filed against the order of Appellate
Authori(JThe High Court set aside the order and remitted the case to the .E
Excise and Taxation Commissioner to decide the matter afresh on ·the
grounds. of ma/a fides. alleged against the Minister,--Appea/ prefmed before
Supreme Court-fleld in tJie second batch of writ petitions ihe Minister was
not made a party-The High Court could not have gone into the question of
ma/a fides--ln the first round of litigation when the High Court had not gone
into the question of ma/a fides; though the Minister was impleaded as a party, f
· it had remitted.the matter for disposal on merits-Obviously, the words "inight
and ought" used in Section II of the C.P.C. stand in the way and, therefore,
it operates a res judicata for raising the same question subsequently-The
High Court could not have gone into that question, much less giving direction
to the Appellate Authority to go into that question. G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 16976-78
of 1996.

From the Judgment and Order dated 29.5.96 of the Punjab &
Haryana High Court in C.W.P. No. 18522-24 of 1995. H
963
964 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A P.P. Rao and Manoj Swamp for the Appellants.

Rathin Das and Gaurav Banerjee for the Respondents.

The following Order of the Court was delivered :

B Leave granted.

We have heard learned counsel on both sides.

These appeals by special leave arise from the judgment and order of
the Division Bench of the Punjab and Haryana High Court, dated May 29,
C 1996 in CWP Nos. 18522-18524/95. The respondents had the leasehold
right to vend the Indian made liquor at Ludhiana. They had located shops
at 44 places to sell under L-2 and L-14 licence of Indian made foreign
liquor in retail. They had the licence for the financial year April 1, 1995 to
March 31, 1996. The Excise Department officials had noted, on inspection,
D certain illegalities or irregularities committed in conducting the business
and selling in retail the Indian made foreign liquor. On account thereof,
by proceedings dated August 21, 1995, the competent officer cancelled the
licence granted to the respondents. Feeling aggrieved by the cancellation
order, the respondents filed CWP Nos. 12543, 12546 and 12547/1995.
E Therein, the respondents impleaded Shamsher Singh Dullo, Minister for
Excise and Taxation, as one of the respondents alleging mala fides in the
cancellation of licence granted to the respondents. The Division Bench of
the High Court by order dated September 15, 1995 allowed ·the Writ
Petition and remitted the matter to the Appellate Authority to decide the
appeal within 15 days from the date of the presentation of the appeal since
F the respondents had alternative remedy of an appeal provided under the
Punjab Excise Act, 1914 (for short the 'Act'). The order reads as under :

Concededly the respondent Minister against whom allegations of
mala fide are alleged is no more a Minister. The petitioner has got
an alternative remedy of appeal against the impugned order. The
G petitioner is relegated to the alternative remedy. The respondents
undertake not to raise any objection with respect to the limitation
for filing appeal if the same is filed within one week. The petitioner
may apply for stay of the operation of impugned order before the
-
appellate authority and the same shall be considered by the appel-
H late authority. The appellate authority is further directed to decide
STAIB v. SURINDERKR.ANDCO. 965
..
... the appeal within 15 days from the date of presentation of the
appeal. In view of this, the writ petition is disposed of."
A

On filing the appeal, the Appellate Authority, while upholding that
the respondents had committed illegalities and irregularities in conducting
the business in violation of the provisions of the Act and the Rules made
thereunder, felt it expedient instead of cancelling the licence, to treat the
B
period from cancellation of licence till the filing of the writ petitions and
grant of stay by the High Court, to be period of substantive suspension as
a measure of penalty. Feeling aggrieved by the order passed by the Appel·
late Authority, the present writ petitions came to be filed. The Division
Bench of the High Court in the impugned order set aside the order and C
remitted the case to the Excise and Taxation Commissioner to decide the
matter on the grounds of ma/a ftdes alleged against the Minister afresh in
the light of the averments made and the contentions on either side. Thus,
these appeals by special leave.

D
It is seen that in the batch of the Writ Petitions, admittedly, the
Minister was made correspondent and allegations of ma/a [ides came to be
made against him. The High Court did not decide that questions. On the
other hand, a reading of the order would indicate that the High Court
instead directed the respondents to avail the alternative remedy of appeal
before the Appellate Authority and Appellate Authority was directed to E
go into the merits of the matter and decide it according to law. It is seen
that Appellate Authority did go in the merits, found that the respondents
committed illegalities and irregularities in conducting the business of vend·
ing~the Indian made foreigl). liquor. However, in the matter of imposition
of penalty the Appellate Authority had felt it expedient, instead of cancell- F
ing the licence, to confine the period from August 22, 1995 till September
22, 1995, the date on which the High Court granted interim suspension of
the operation of the cancellation order as "suspended''. It could be seen
that in the second batch of Writ Petition the Minister was not made a party.
It is the settled legal position that the High Court could not have been gone G
in the ma/a fides and it would not decide the matter on merit on the
question of ma/a ftdes. In such a situation can the Division Bench direct
the Appellate Authority to go into the question of ma/a ftdes. It is seen
that in the first round of litigation when the High Court had not gone into
the question of ma/a fide;, though the Minister was impleaded as a party,
it had remitted the matter for disposal on merits. Obviously, the words H·
966 SUPREME COURT REPORTS (1996] SUPP. 9 S.C.R.

A "might and ought" used in Section 11 of C.P.C. stand in the way and -.
therefore, it operates as res judicata for raising the same question in the
present writ petitions. The High Court could not have gone into that
question, much less giving direction to the Appellate Authority, namely,
the Excise and Taxation Commissioner, to go into that question.

B Shri Rathin Das, learned counsel for the resrondents, contends that
the respondents had not committed any serious irregularities or illegalities
warranting even suspension of the licence for the period mentioned by the
Appellate Authority. Unfortunately, that question was not considered by
the Division Bench and it bad not given any finding thereon. No appeals
C are filed by the respondents. Under those circumstances, we cannot go into
that question. Thus, we hold that the view taken by the Division Bench is
clearly unsustainable.

The appeals are accordingly allowed and t~e Writ Petitions stand
dismissed. No costs.
D
T.N.A. Appeals allowed and Petitions dismissed.