1. This order will dispose of Civil Writ No. 951/70 and Civil Writ No. 710/70.
2. The Collector of Excise, Delhi Administration , Respondent No. 2 in both the petitioners conducted auction of the license to vend country liquor at three country liquor shops styled as 'Bhuli Bhjatiari, Link Road, New Delhi', 'Shahdara Delhi' and 'Mehrauli'. The highest bidder at the auction in the case of the first two shops was the firm Messrs. Nanak Singh and Company and the highest bid was Rs.175900/- and Rs.146997/- respectively. The highest bidder in respect of the third Mehrauli shop was the firm Bishamber Lal and Company with the highest bid of Rupees Rs. 114760/-. The bids of these auction purchasers were concluded in their favor. According to the allegations in the petition the partners of the firm Nanak Singh and Company, the approved licenses of Bhuli Bhatiari shop were different from the partners of the firm of the same name who were the approved licensees for the Shahdara Shop. Likewise the firm Bishamber Lal and Company the approved licensees of the Mehrauli shop, had also different partners. One Nanak Singh, however, was a common partner in all these firms. According to the case of the petitioner, Nanak Singh ran short of funds and approached the petitioner and his three friends Chuni Lal Grover, Som Parkash Sethi and Baldev Raj for financial assistance. They agreed to assist Nanak Singh but because Nanak Singh was not in a position to give any guarantee for repayment of the loan and interest the parties entered into a partnership in terms of the agreement dated November 7, 1969.
It appears that the three licensees after the auction of the licenses in their favor did not deposit balance of the bid amount. Proceedings for the recovery of the amount so due from them were, thereforee, taken by respondent 1 and 2. A certificate in the prescribed form was issued by the Collector under the Revenue Recovery Act (Act 1 of 1890) and was sent to respondent No. 3, the District Collector and Recovery Officer for initiating the necessary proceedings. Respondent No. 3 in turn moved the Collector of Meerut and the Collector of Gurgaon to recover the amount of Rs. 2,12,290/- from the petitioners in the two petitions. In these circumstances both the petitioners have come up to this Court with petitions under Act 226 of the Constitution praying that the recovery proceedings initiating that the recovery proceedings initiated against them being wholly illegal and not sustainable in law should be quashed and the respondents may be restrained from recovering any amount from them.
3. No affidavit in opposition has been field by respondents 1 and 2. To bring out the point, on which both the writs, to my mind stand conclude, it is sufficient to reproduce the facts as contained in the affidavit filed by Shri. F.S. Zulfiquar-ud-Din on behalf of respondent No. 3 (the District Collection and Recovery Officer) in opposition to C.W. 951/70. In this affidavit, it is not denied that the license for the three country liquor shops were sold in favor of the partners constituting the three firms above named of which the petitioners in both the writ petitions were not partners. But it was urged (according to para 3 of the affidavit) that the petitioner in C. W. 951/70 along with Some Parkash Sethi (petitioner in C.W. 710/70), C.L. Gorver and Baldev Raj had entered into a sub-partnership with Nanak Singh and in terms of this sub-partnership the partners were liable to pay the license-fee to the extent of their shares.
It was further stated that recovery certificates issued by the Collector of Excise, respondent No. 2, had been received by this respondent for purposes of initiating the recovery proceedings against the licensees and that these certificates were directed against Messrs. Nanak Singh and Company and that the names of the defaulters were also mentioned in the certificate which included the name of Nanak Singh, but did not include the name of the petitioners. Respondent No. 3, in execution of these warrants, was able to realise some amount from the named defaulters but it was difficult to realise any further amount because particulars of the defaulters given in the certificate were not complete. Respondent No. 3, thereforee, moved the Assessing Department and asked the partners. By letter dated 2nd June, 1970, the Assessing Department informed the respondent that the dues may be recovered 'from all these connected with business of Nanak Singh and Company'. Enquires thereafter revealed the existence of the sub-partnership referred to above in which the petitioners as stated earlier were partners with Nanak Singh. Respondent No. 3 also received a copy of a balance-sheet of the account of the sub-partnership which was maintained by Nanak Singh. According to this balance-sheet maintained by Nank Singh some amounts were shown due to him (Nanak Singh) from the petitioners. On the basis of this information, because the petitioners in these petitions were not residing in Delhi, respondent No. 3 sent recovery certificates to the Collector of the Districts where they were residing and these recovery proceedings came to be initiated against them.
4. The learned counsel for the petitioners urged that the initiation of recovery proceedings against the petitioners were against law and that at no stage any opportunity had been allowed to the petitioners to substantiate their case or to show that they in fact were not licensees and that no amount was due from them or that the so-called balance-sheet relied upon by respondent No. 3 was in fact a faked document and no amount was due from them to Nanak Singh.
5. After hearing the learned counsel for the parties I think there is merit in this objection. The Punjab Excise Act, 1914 (Act 1 of 1914) as applied to Delhi, it was not disputed before me, contains the law regulating, amongst others, manufacture, sale and intoxicating drugs. it was in order to give effect to the provisions of this Act that the auctions of the country liquor shops referred to above were held S. 60 of this Act provides the method for the recovery of dues and lays down that all excise revenue and all amount due to the Government by any person on account of any contract relating to the excise revenue may be recovered from the person primarily liable to pay the same or from his surety, if any, by distress and sale of movable property or by any other process for the recovery of arrears of the land revenue due from land holders or from farmers of land or this sureties. Recovery under this provision has, thereforee, to be made from a person found to be a person primarily liable to pay the amount determined to be due and it is after this determination that the amount can be recovered as arrears of land revenue. Revenue Recovery Act (Act 1 of 1890) makes provisions for recovery of certain public demand including the arrears of land revenue. Section 3 of this Act provides that where an arrears of land revenue or a sum recoverable as arrear of land revenue is payable to Collector by a defaulter being or having property in a district other than in which the arrears accrued or the sum is payable, the Collector may send to the Collector at that other district a certificate in the form as nearly as may be according to the form prescribed in the Schedule attached to this Act, and the Collector of the other District shall thereupon proceed to recover the amount mentioned in the certificate as arrears of land revenue. The certificate is to be issued to contain, amongst others, the name of the defaulter and such other particulars as may be necessary for his identification and also the amount on which it is due. It is, thereforee, evident that before the recovery proceedings are initiated it is imperative that the identity of the person form whom the recovery is to be made and the quantum of the amount that is sought to be recovered have got to be determined and fixed not by the Collector to whom the certificate is sent for execution to fix the liability on the defaulter named in the certificate.
6. It is the case of the petitioner in both the petitions that neither the Collector of Excise, Delhi Administration, respondent No. 2 nor any other competent authority at any stage gave any notice to the petitioner or determined their liability or indicated the grounds on the basis of which the recovery was sought to be made from them. As stated earlier, respondents 1 and 2 have not filed any affidavit in opposition. Shri. B. N. Kirpal, appearing on behalf of all the three respondents, was unable to show that the liability of the petitioners was at any stage determined by any competent authority. It is in fact clear from the affidavit filed in opposition by respondent No. 3 that it was the Recovery Officer who himself determined this liability of the petitioners and proceeded to recover the balance of the amount that remained unpaid by the defaulters named in the certificate. This recovery is wholly unauthorised and cannot be sustained.
7. The learned counsel for the petitioners contended that as the petitioners were not partners in the licensee firms but were simply sub-partners with one of the partners of that firm, they could under no circumstance, be liable for the amount due from the licensee-firms and this Court may restrain the respondents from taking recovery proceedings against them under any circumstance. This proposition cannot be accepted in the abstract. It is a question of fact in each case as to what is the effect of a particular sub-partnership. It will be open to the competent authority to initiate proceedings against the petitioners to determine if they are liable on the material placed before it.
8. Placing reliance on Section 78 of the Punjab Land Revenue Act, 1887, providing that a person who denied his liability for the arrears of land revenue or any part thereof was entitled to institute a suit in a Civil Court. Shri Kirpal urged that the petitioners had the alternative remedy provided by this provision and relief under Act. 226 of the Constitution should not be allowed to them. The argument cannot be accepted firstly because according to Section 78 the person disputing his liability has first to make the payment before filing the suit and the remedy provided by this provision is thus illusory in the case like the present one and secondly because for reasons already given the entire recovery proceedings against the petitioner are without the sanction of law and are unauthorised.
9. In the case of the Civil Writ 710/70, Shri Kirpal also raised another preliminary objection and contended that the petitioner in this case had committed contempt of this Court and thereforee, in any view of the matter, was not entitled to any relief under Aft, 226 of the Constitution. The concept alleged against him is that he had given wrong and false particulars as to his assets which he was required to disclose by an order of this Court. The relevant facts are that when this Civil Writ 710/70 came up for admission on June 28, 1970, the petitioner in this case was under arrest and detention in execution of the recovery-certificate, referred to earlier. The admitting Bench directed him to be released on his furnishing security in the sum of Rs.5,000/- with one surety in the like amount to the satisfaction of the District Collection and Recovery officer. The learned counsel for the petitioner also gave an undertaking at the bar at that time that the petitioner shall not alienate his assets, moveable or immovable, as they existed on June 26, 1970 till the next date of hearing in the case which was July 14, 1970. On this date when the case came up before the Division Bench the petitioner was called upon to file a list of his moveable and immovable properties supported by an affidavit. With the further direction the order of the admitting Bench dated June 26, 1970 was allowed to continue. It appears that the petitioner, in compliance with this order, filed a list of his properties which, it is now a stated by the respondents to be false in material particulars. This assertion of the respondents is emphatically controverter by the petitioner. He maintains that the list filed by him was absolutely correct and in order. A separate application (being CR. M. (M) 113/70) on this subject is pending in this Court. I do not think that the pendency of that application in the peculiar facts of this case is a bar to the relief being allowed to the petitioner when admittedly the petitioner in the other C.W. 951/70 who is being proceeded against by the respondents in exactly the same circumstances has to be allowed the relief. The preliminary objection for this reason is not sustained.
10. In the result Civil Writs 951/70 and 710/70 are accepted in the above terms and respondent No. 3 or his agent is restrained from taking any recovery proceedings against the petitioners in these two petitions except after receipt of a certificate according to law and the matter is remanded to respondents 1 and 2 for initiating proper proceedings for the determination of the liability of the petitioners in accordance with law.
11. In the circumstances of this case, the parties are left to bear their own costs.
12. Order accordingly.