REPORTABLE  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.  7412-7413     OF 2008 (Arising out of SLP (C) Nos.15533-34 of 2004)

Kopargaon S.S.K. Ltd. … Appellant

Versus

State of Maharashtra & Ors. … Respondents

WITH

CIVIL APPEAL NOS.         ___       OF 2008 (Arising out of SLP (C) Nos.16982-16983 of 2004)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. This appeal is directed against a judgment and order dated 23.9.2003

passed  by  the  High  Court  of  Bombay  at  Aurangabad  in  Writ  Petition

No.3050 of 2003 declining to entertain the writ petitions filed before it.

3. Appellant  has  been  granted  licence  for  manufacturing  spirit  and

potable liquor in terms of the provisions of the Bombay Prohibition Act,

1949 and the Rules framed thereunder.  Respondents, indisputably, posted

some of its employees for supervision of the manufacure or sale of country

liquor from the said factory.  

4. A demand was raised for a sum of Rs.7,43,686/-.  Admittedly, such

supervision charges have been paid in advance.  The State, however, revised

the  salary  of  its  employees  with  retrospective  effect  from  1.1.1996  by

Notification  dated  10.12.1998  for  the  period 1.1.1996  to  31.12.1998.   A

communication dated 17.6.2000 was issued calling upon the appellant  to

pay the arrears of supervision charges for the period 1.4.1996 to 31.12.2000

amounting to Rs.7,43,666/-

5. Questioning  the  legality  and/or  validity  of  the  said  claim,  a  writ

petition (No.4092 of 2000) was filed before the Bombay High Court by the

appellant praying for, inter alia, the following reliefs :

“(B) Hold  and  declare  that  the  demand  notice dated  17.6.2000  and  August  2000 and the circular  dated  17.6.1999,  30.7.1999  issued by  the  Respondents  2,  and  the  demand notice issued by the Respondent No.3 dated 17.6.2000  towards  the  difference  in  the salary  and  wages,  w.e.f.  1.1.1996  i.e., retrospective effect towards the supervision charges  is  therefore  illegal,  arbitrary  and

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violative  of  Article  14,  19(1)(g)  of  the Constitution  of  India;  and  therefore  strike down the same.

(C) Issue  a  Writ  prohibition  or  any  other appropriate Writ, order or directions in the nature of Writ of Prohibition prohibiting the Respondent Nos. 1 to 4, their  officers  and subordinates  from  demanding  and/or recovering  any  amount  towards  the  salary and  wages  with  retrospective  effect  from 1.1.1996 as per the circular dated 30.7.1999 as per the demand notices dated 17.6.2000 and August 2000 and for that purpose issue necessary orders.”

6. Similar other writ applications before the said court were also filed.  A

learned Single Judge of the Bombay High Court,  by a judgment and order

dated 7.12.2000 passed in Writ Petition No.3501 of 2000 opined as under :

“We are also amazed to note that in spite of the fact  that  the  Government  of  Maharashtra  by notification  dated  10.12.1998  decided  to implement  the  Fifth  Pay  Commission’s recommendations,  the  respondents  did  not diligently  and  failed  to  claim  the  supervision charges at the revised rates at least from 1.1.1999. For the first time, such a demand has been raised on 30.5.2000.”

7. The demand was held to be illegal.  Following the said decision, the

writ petition filed by the appellant was allowed, holding :

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“In view of our detailed judgment passed today on Writ Petition No.3501/2000, we allow the petition. Karkhana is liable to pay the supervision charges at  the  revised  rates  from  1.7.2000  as  the  first demand  notice  for  arrears  for  the  period  from 1.1.1996 onwards was issued on 17.6.2000.  Rule made absolute accordingly.”

Concededly, the said orders were not appealed against.  They attained

finality.   

8. One matter involving similar question, however, was brought to this

Court.   The  decision  of  this  Court  is  since  reported  in  Government  of

Maharashtra  &  Ors. v.  Deokar’s  Distillery [(2003)  5  SCC  669].   The

majority opinion rendered in the said decision, inter alia, reads as under :

“This apart, the High Court was also not right in rejecting the writ petition of the respondents at the threshold.  The  High  Court  has  failed  to  notice another  important  factor  that  the  statutory provision  under  Article  309,  namely,  the Notification  dated  10.12.1998  and  the consequential  administrative  instructions/orders issued  for  carrying  out  the  executive  function under  Section  58A  of  the  Prohibition  Act  and Article  162  namely,  the  circular  letter  dated 30.7.1999  had  not  been  challenged  by  the respondents  herein  and,  therefore,  they were not entitled to challenge the demand notice which was merely a consequential communication. The High Court,  therefore,  is  not  right  in  quashing  the demand notice issued by appellant No. 4, namely, the Sub-Inspector of State Excise, in charge of the manufactory of the respondent, without examining

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the validity of or quashing the Rules of 1988 and the  consequential  circular  letter  dated  30.7.1999 issued  by  appellant  No.  2,  namely,  the Commissioner,  since  the  demand  notice  was merely a  consequential  communication  issued  in furtherance of the Rules of 1998 and the circular letter dated 30.7.1999.”

Pursuant to the said decision, the Commissioner of Excise issued a

circular letter, operative portion of which reads as under :

“M/s.  Polychem  Ltd.  &  Ors.  v.  Govt.  of Maharashtra, the Supreme Court had ruled in their decision on appeal No.3494/1991 that recovery of outstanding  of  supervision  charges  with retrospective effect is illegal.  Considering the said decision the units who were provided supervision were  informed vide above circular  of  this  office that  presently  the  difference  of  enhanced supervision  charges  with  retrospective  effect  not be recovered.  Further taking support of Supreme Court  above  decision  some  units  had  filed petitions in Mumbai High Court, Aurangabad and Nagpur Bench and the decision on some of them was in the favour of the units.  A special petition is being filed in Supreme Court against that decision. If the decision of it  is in favour of Govt.  all  the Superintendants  were  informed  that  the outstanding  amounts  should  be  necessarily recovered  with  interest,  vide  above  referred circular and instructions were issued to recover the difference of outstanding.   

Now Supreme Court has ruled that  the orders to recover  outstanding  of  supervision  charges  with retrospective  effect  are  legal.   This  was  the decision  of  Supreme Court  on  the  Civil  Appeal No.7399/2001,  7400/2001  and  1302/2003  and

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Special  Leave  Petition  No.22942/2001  in  M/s. Deokar Distillery and others case on 10.3.2003.

Considering the above decision of Supreme Court, it  is  necessary  to  recover  from those  units  with whose  difference  in  supervision  charges  with retrospective  effect  are  pending.   Therefore,  you are required to submit in the attached format the details  of  suit  outstanding  from  units  in  your district  and submit action taken report.   Copy of Supreme Court  decision is  sent  to  all  Divisional Dy. Commissioner along with this letter.”

In terms of the said circular letter, the appellant was asked to pay the

dues  of  the  supervision  charges  along  with  interest  by  the  Deputy

Superintendent,  State  Excise  Duty,  Kosaka  by  a  letter  dated  26.6.2003.

Appellant  denied and disputed its  liability, inter  alia,  contending that  the

dispute between the parties has been settled by the Bombay High Court in

the aforementioned Writ petition No.4092 of 2000.  It was stated :

“The basis on which you demanded the recovery of the difference amount that is wrong, as the said decision  is  not  applicable  to  us.   By  filing independent petition against  your demand notice, your demand is cancelled.  You have no right to recover the said amount.  This is the ruling of the Supreme Court,  which  is  still  valid.   Therefore, you cannot demand the difference amount.  This is our  position,  which  we have  put  forward in  our letter dated 12.6.2003.  It is for you to decide what to  do.   In spite of this,  your office is  repeatedly issuing warning that action would be taken if the amount  is  not  paid  immediately.   This  is  not proper.”

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9. Notwithstanding  the  said  contention,  several  other  demands  were

raised.   It  is  in  the aforementioned situation,  appellant  filed another  writ

petition  marked  as  W.P.No.3050  of  2003,  inter  alia,  praying  for  the

following reliefs :

“(B) Hold and declare that, the said Maharashtra Civil  Services  (Revised  Pay)  Rules,  1998 dated 11.12.1998 namely sub-section (ii) of Rule (1) is not applicable to the Petitioners along  with  circular  dated  17.6.1999  and 30.7.1999  being  illegal,  arbitrary  and violative of Articles 14, 19(1)(C) and 19(1) (G) of the Constitution of India and quash and set  aside the same along with  circular dated  17.6.1999, 30.7.1999,  17.6.2000 and 29.4.2003  and  for  that  purpose  issue necessary orders;

(C) Hold and declare  that,  the demand notices dated  20.5.2003,  10.6.2003  and  26.6.2003 are illegal, arbitrary and violative of Articles 14,  19(1)(C)  and   19(1)(G)  of  the Constitution of India and therefore same are liable  to  be quashed and set  aside and for that purpose issue necessary orders;

(D) Hold  and  declare  that  the  said  demand notices are illegal, arbitrary and violative of Articles  14, 19(1)(C) and  19(1)(G) of  the Constitution of India and Section 114 of the Bombay Prohibition  Act,  1949 and further declare  that  the  State  is  not  entitled  to charge the said interest in pursuance of the demand notices dated 20.5.2003, 10.6.2003

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and  26.6.2003  and  for  that  purpose  issue necessary orders.”

10. During  the  pendency  of  the  said  writ  application,  the  respondents

withdrew the said demand letter, stating :

“With  reference  to  above subject,  it  is  informed that  Dy.  Superintendent,  State  Excise  Duty, officiating  Kopargaon  S.S.K.  Ltd.,  Kolpewadi, Tal.  Kopargaon  had  erroneously  issued  demand letter No.Supervision 112003/333 dated 20.5.2003 regarding  recovery  of  Supervisory  charges  with retrospective  effect.   As  Superintendent  I  am withdrawing the said letter.

You are requested to arrange to bring this to the notice of the High Court, Aurangabad Bench on 12.11.2003.”

11. Despite the same, a Division Bench of the High Court, in view of this

Court’s judgment in  Deokar’s Distillery (supra), dismissed the appellants’

writ application, opining :

“When the matter comes up for hearing, on behalf of the respondents, learned G.P. produces a letter dated 12.11.2004 setting out therein that demand letter dated 20.5.2003 for recovery of supervision charges  with  retrospective  effect  has  been withdrawn vide letter No.SUP/112003/7553 dated 12.11.2003  and  that  the  officer  would  be recovering the supervision charges as per the order of  this  Court  dated  28.9.2000  as  passed  in  Writ Petition  No.4092/2000.   In  other  words,  the

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demand  for  interest  has  been  withdrawn  and consequently  the  Respondents  cannot  demand interest  from the  Petitioners.   The  only  demand can be in respect of the supervision charges, which has  been upheld  by this  Court  by the impugned order  referred  to  earlier.   Considering  that  the letter  dated  20.5.2003  has  been  withdrawn, nothing further survives.  In so far as to claim any charge  with  retrospective  effect  and  interest thereon,  nothing further  survives  in this  petition. Rule in both the Petitions discharged.  There shall be no order as to costs.”

12. Mr.  Savant,  learned  senior  counsel  appearing  on  behalf  of  the

appellant,  would contend that keeping in view the earlier decision of this

Court, the impugned judgment cannot be sustained.

13. Mr. Chinmoy Khaladkar, learned counsel appearing on behalf of the

respondent, on the other hand, urged that the cause of action for which the

earlier  writ petition was filed was different  from that  of the writ  petition

filed later.   

Indisputably,  the  claim  of  the  respondent  was  based  on  the

notification  implementing  recommendations  of  the  Fifth  Pay  Revision

Commission, pursuant whereto and in furtherance whereof, the pay of the

concerned  employees  had  been  revised  with  retrospective  effect  from

1.1.1996.  Admittedly, the matter relating to payment of supervision charges

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is governed by the provisions of Section 58-A of the Bombay Prohibition

Act  and the  Rules  framed by the  State  known as Country Liquor  Rules.

According to the appellants, the supervisory staff had been employed under

sub-rule (12) of Rule 6; the supervisory charges were required to be paid to

the State Government quarterly in advance.  Under sub-rule (2) of Rule (2)

of the Liquor Rules, 1976, the superivision charges are to be paid annually

in  advance.   It  is  also not  in dispute,  although not  very relevant  for our

purpose, that the appellant is entitled to recover the supervision charges or

other charges from its customers by including such sum in the price of the

liquor.

14. Appellant in Writ Petition No.4092 of 2000, indisputably questioned

the  right  of  the  respondents  to  recover  the  supervision  charges  with

retrospective effect.  It was furthermore contended therein that in any event

no interest was payable on the said charges, particularly in view of the fact

that although the notification was issued in the year 1998 the demand was

made in the year 2000.  The said writ petition was allowed opining that the

difference in payment of supervision charges was not recoverable.  The said

order  of  the  High  Court  dated  7.12.2005  attained  finality.   It  would,

therefore, operate as res judicata.

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15. Submission  of  Mr.  Khaladkar  that  the  demands  were  for  different

charges,  namely, one in  respect  of  pay and the  other  in  respect  of  leave

salary etc. cannot be accepted.  The basis for both the claims was the same.

If the principle of res judicata applies in a writ proceeding, no fresh demand

could have been raised by the respondents.  We may notice that even the

Commissioner of Excise,  only keeping in view that aspect of the  matter,

issued a circular only in respect of those distilleries from whom the charges

were yet to be realized.  The said circular had not and, in fact, could not

have any application in respect of those cases where the dispute between the

parties had attained finality.  It is no longer res integra that the principles of

res judicata apply in writ proceedings. It was so held in Ishwar Dutt v. Land

Acquisition Collector & Anr. [(2005) 7 SCC 190], wherein this noticed :

“23.  Yet  recently  in  Swamy  Atmananda  and Ors. v.  Sri Ramakrishna Tapovanam and Ors. [(2005)  10 SCC 51] one of  us was a party,  this Court observed :

"The object and purport  of principle of res judicata  as  contained  in  Section  11  of  the Code  of  Civil  Procedure  is  to  uphold  the rule of conclusiveness of judgment, as to the points decided earlier of fact, or of law, or of  fact  and  law,  in  every  subsequent  suit between the same parties.  Once the matter which  was  the  subject-matter  of  lis  stood determined by a competent  court,  no party thereafter can be permitted to reopen it in a subsequent  litigation.  Such  a  rule  was brought into the statute book with a view to

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bring  the  litigation  to  an  end  so  that  the other side may not be put to harassment.

The principle of res judicata envisages that a judgment  of  a  court  of  concurrent jurisdiction  directly  upon  a  point  would create a bar as regards a plea, between the same parties in some other matter in another court,  where  the  said  plea  seeks  to  raise afresh the very point that was determined in the earlier judgment."

24. It was further noticed:

"In  Ishwardas v.  the  State  of  Madhya Pradesh and Ors. [AIR 1979 SC 551], this Court held:

"...In order to sustain the plea of res judicata it is not necessary that all the parties to the two litigations must be common. All that is necessary is that the issue should be between the same parties  or  between  parties  under whom they or any of them claim..."

16. Yet  again  in  Swamy  Atmananda  &  Ors. V.  Sri  Ramakrishna

Tapovanam & Ors. [(2005) 10 SCC 51], this Court held :

“The  object  and  purport  of  the  principle  of  res judicata as contended in Section 11 of the Code of Civil  Procedure  is  to  uphold  the  rule  of conclusiveness  of  judgment,  as  to  the  points decided earlier  of fact,  or of law, or of  fact  and law,  in  every subsequent  suit  between  the  same parties.   Once the matter which was the subject- matter  of  lis  stood  determined  by  a  competent

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court,  no  party  thereafter  can  be  permitted  to reopen it  in a subsequent  litigation.   Such a rule was brought into the statute-book with a view to bring the litigation to an end so that the other side may not be put to harassment.

The  principle  of  res  judicata  envisages  that  a judgment  of  a  court  of  concurrent  jurisdiction directly upon a point would cleate a bar as regards a  plea  between  the  same  parties  in  some  other matter in another court, where the said plea seeks to raise afresh the very point that was determined in the earlier judgment.”

17. It was, however, contended that the question of applicability of the

principles of res judicata was not raised before the High Court.  We have

noticed hereinbefore that the said questions were clearly raised even in the

responses to the notices of demand.   

18. For  the  reasons  aforementioned,  the  impugned  order  dated

23.09.2003 and judgment dated 13.11.2003 cannot be sustained which are

set  aside accordingly.  The demand notices impugned in W.P.No.3050 of

2003  are  quashed.   The  appeals  are  allowed  with  costs.   Counsel’s  fee

assessed at Rs.25,000/-.

……………….…..………….J. [S.B. Sinha]

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..………………..……………J. [Cyriac Joseph]

New Delhi; December 18, 2008.

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