Court rules on equity, permitting refund for 171 days of business closure during pandemic, subject to proof of non-transaction
In a significant ruling, the Madras High Court has granted a partial refund of liquor license and privilege fees to bar and hotel owners for the period of enforced closure due to the COVID-19 pandemic. The decision, made by a division bench comprising Dr. G. Jayachandran and N. Mala, comes in response to appeals filed by the State of Tamil Nadu challenging a single judge's order that had allowed full refunds.
The case centered around the interpretation of Rule 24-A of the Tamil Nadu Liquor (License and Permit) Rules, 1981. The rule mandates the surrender of a license for a refund of fees, but the proviso to Rule 24-A allows for a proportionate refund if no business is transacted for part of the year. The appellants argued that the proviso cannot function as a standalone provision, and refunds should only be granted upon surrender of the license.
The respondents, who held F.L.III licenses, contended that the government-imposed lockdown during the pandemic forced them to shut operations, and thus, they were entitled to refunds for the period they could not conduct business.
The court agreed that the circumstances of the pandemic were exceptional and beyond the control of the licensees. It determined that while the full refund could not be granted without surrendering the license, a partial refund for the 171 days of closure was justifiable on equitable grounds. This is contingent upon the licensees providing proof of non-transaction during the specified period.
Justice N. Mala, writing for the bench, emphasized that the COVID-19 pandemic was a force majeure event, and the inability to operate was not due to any fault of the licensees. The court instructed the Commissioner of Prohibition and Excise to process refund claims within 12 weeks upon submission of necessary evidence by the respondents.
This judgment is a notable instance of the judiciary balancing statutory provisions with equitable considerations, acknowledging the unique challenges posed by the pandemic on businesses.
Bottom Line :
License and privilege fees under Rule 24-A of the Tamil Nadu Liquor (License and Permit) Rules, 1981, cannot be refunded without surrender of the license. However, under exceptional circumstances such as the Covid-19 pandemic, partial refund for the period of non-business due to force majeure can be allowed on equity, subject to proof of non-transaction of business.
Statutory provision(s): Tamil Nadu Liquor (License and Permit) Rules, 1981 - Rule 24-A and Proviso
State of Tamil Nadu v. Suguna Vilasa Sabha, (Madras)(DB) : Law Finder Doc id # 2958511
