Allowed

Delta Pleasure Cruise Company Pvt. Ltd. Thr. Auth. Rep. Manoj Jain and Anr. v. State of Goa Thr. Secretary and Anr.

Bombay HC6 Apr 2023WP/50/2023

Case brief

AI extract

What is this about?

This judgment addresses multiple writ petitions challenging the State of Goa's demand for Annual Recurring Fees and penal interest for casino operations during COVID-19 lockdowns. The Court held that casino licensing is a privilege regarding an extra commercium activity, not a contract protected by Article 14. Lockdown orders were welfare state actions, not contract breaches. Petitioners cannot cl

What did the court decide?

Impugned order insisting on ARF discharged. State will not recover 12% penal interest if principal ARF paid within four weeks. Interim orders vacated.

Delta Pleasure Cruise Company Pvt. Ltd. Thr. Auth… — Service and Employment | Bombay HC (2023)

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201-41-2023 (F) & ORS.DOC

¶2

Suchitra

¶3

IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO. 92 OF 2023

¶4

DELTA CORP. LIMITED, A company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at 10, Kumar Place 2408, General Thimayya Road, Pune-411 001, through its authorized representative, Shri Premanand Gawas, Aged 39 years, Indian National, having his Office address at Delta Pleasure Cruise Company Ltd., Fisheries Department Building, Ground Floor, D. B. Road, Panaji, Goa 403 001.

¶5

SHRI PREMANAND GAWAS Shareholder of Petitioner No.1 Aged 39 years, Indian National, having his office at Fisheries Department building, ground floor, D. B. Road, Panaji Goa – 403 001. … Petitioners

¶6

Versus

¶7

STATE OF GOA, through the Secretary, Department of Home, Porvorim Goa.

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UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL) Government of Goa, Secretariat, Porvorim Goa. … Respondents

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Page 1 of 75 6^th April 2023

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201-41-2023 (F) & ORS.DOC

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WITH WRIT PETITION NO. 50 OF 2023

¶12

DELTA PLEASURE CRUISE COMPANY PVT. L.T.D. A Company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at Delta Centre, H.No.850, Off NH-17, Porvorim Goa, through its authorized representative, Shri Manoj Jain, Aged 41 years, Indian National, having his office address at Delta Pleasure Cruise Company Ltd., Fisheries Department Building, Ground Floor, D. B. Road, Panaji, Goa 403 001. 2. SHRI MANOJ JAIN, aged 41 years, Indian citizen, having his office address at Fisheries Jetty, Fisheries Department Building, D. B. Road, Panaji, Goa. Shareholder 403001, a director of Petitioner No.1. … Petitioners Versus 1. STATE OF GOA, through the Secretary, Department of Home, Porvorim Goa.

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UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa, Secretariat, Porvorim Goa. … Respondents

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Page 2 of 75 6^th April 2023

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201-41-2023 (F) & ORS.DOC

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WITH

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WRIT PETITION NO. 40 OF 2023

¶18

HIGH STREET CRUISES AND ENTERTAINMENT PVT. L.T.D. A Company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at Bayside Mall, 2nd Floor, Opp. Sobo Central Mall, Tardeo Road, Haji Ali, Mumbai 400 034, through its authorized representative, Shri Shailendra Singh, Aged 44 years, Indian National, having his office address at Delta Pleasure Cruise Company Ltd., Fisheries Department Building, Ground Floor, D. B. Road, Panaji, Goa 403 001

¶19

SHRI SAILENDRA SINGH, Aged 44 years, Indian National, having his office address at Delta Pleasure Cruise Company Ltd., Fisheries Department Building, Ground Floor, D. B. Road, Panaji Goa 403 001.

¶20

Versus 1. STATE OF GOA, through the Secretary, Department of Home, Porvorim Goa. 2. UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa, Secretariat, Porvorim Goa. … Respondents

¶21

Mr Darius Khambata, Senior Advocate, Mr H. Narsappa, Senior Advocate with Mr Parag Rao, Mr Vivek Shetty, Ms Sherna

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Page 3 of 75 6^th April 2023

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201-41-2023 (F) & ORS.DOC

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Doongaji, Ms Aditi Bhansali, Mr Akhil Parrikar and Ms Saumya Drago, Advocates for the Petitioners .

¶25

Mr D. Pangam, Advocate General with Mr S. Priolkar, Additional Government Advocate in W.P. No.92/2023 with Mr S. P. Munj, Additional Government Advocate in W.P. No.50/2023, with Mr S. Parab, Additional Government Advocate in W.P. No.40/2023 for the Respondents .

¶26

WITH

¶27

WRIT PETITION NO.161 OF 2023 WITH

¶28

MISC. CIVIL APPLICATION NO.202 OF 2023 (F) IN WRIT PETITION NO.161 OF 2023 WITH MISC. CIVIL APPLICATION NO.497 OF 2023 (F) IN WRIT PETITION NO.161 OF 2023

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VM SALGAOCAR CORPORATION PRIVATE LIMITED THR. AUTH. R.E.P. ANTHONY E BARRETO AND ANR. … Petitioners

¶30

Versus

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STATE OF GOA THR. THE SECRETARY AND ANR ... Respondents

¶32

Mr Darius Khambata, Senior Advocate, Mr H. Narsappa, Senior Advocate with Mr Parag Rao, Ms Janki Garde, Mr Akhil Parrikar and Ms Saumya Drago, Advocates for the Petitioners .

¶33

Mr D. Pangam, Advocate General with Mr Geetesh Shetye, Additional Government Advocate in W.P. No.161/2023 for the Respondents .

¶34

WITH

¶35

WRIT PETITION NO. 41 OF 2023 (F)

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SILVER SPRINGS PLEASURE RESORT PVT. LTD., A company,

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201-41-2023 (F) & ORS.DOC

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incorporated under the provisions of the Companies Act, 1956 and having its registered office at Varca Beach, Varca, Salcete Goa 403 721 through its authorized representative, Shri Lloyd George Jathanna, Aged 45 years, married, Indian National, resident of Flat # 102, Saileela Apartment, Sai Colony, Belthur Village, Kadugodi, Bangalore – 560067, Karnataka.

¶40

SHRI LLOYD GEORGE JATHANNA, Aged 45 years, Indian National, residing at Flat # 102, Saileela Apartment, Sai Colony, Belthur Village, Kadugodi, Bangalore – 560067, Karnataka Associate Vice-President Operations Finance of Petitioner No.1.

¶41

... Petitioners

¶42

Versus

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STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

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UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa, … Respondents Secretariat, Porvorim Goa.

¶45

Mr Parag Rao and Mr Rohan Rajadhyaksha with Mr Percis Anklesaria, Mr Anupam Sambhus, Ms Arunima Kumari, Mr Akhil Parrikar and Ms Saumya Drago, Advocates for the Petitioners.

¶46

WITH

¶47

WRIT PETITION NO. 32 OF 2023

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1. GOA COASTAL RESORTS AND RECRATION PRIVATE LIMITED

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201-41-2023 (F) & ORS.DOC

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A company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at Hotel Neo Majestic, Plot No.104/ 1A, Opp. Azad Bhavan, Porvorim, Bardez, Goa - 403521, through its authorized representative, Shri. Raghuvir Shirodkar, Aged 32 years, Indian National, having his Office at Hotel Neo Majestic, Plot No.104/1A, Opp. Azad Bhavan Porvorim, Bardez, Goa – 403521.

¶52

SHRI. MUKESH GULATI aged 61 Years, Indian National, residing at D8, Ocean Park, Dona Paula, Tiswadi, Goa 403004 shareholder of Petitioner No.1. … Petitioners

¶53

Versus

¶54

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

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UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa, Secretariat, Porvorim, Goa. … Respondents

¶56

WITH

¶57

WRIT PETITION NO. 2690 OF 2022 (F)

¶58

GOAN HOTELS AND REALTY PRIVATE LIMITED, A company incorporated under the provisions of the Companies Act, 1956 and having its registered office at DB Central, Maulana Azad Road Rangwala Compound, Jacob Circle

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201-41-2023 (F) & ORS.DOC

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Mumbai 40001, India , through its authorized representative - Shri. Deepak Semor, Aged 54 years, Indian National, resident of Flat No. 514, Gera Astoria, Caranzalem, Tiswadi Goa.

¶62

SHRI. HIFZURREHMAN KADIWAL ABDULLAH, Aged 60 years, Indian National, Having his office at D.B. Central, Maulana Azad Road, Rangwala Compound, Jacob Circle, Mumbai 40001, India. … Petitioners

¶63

Versus

¶64

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

¶65

UNDER SECRETARY, Department of Home (General), Government of Goa, Secretariat, Porvorim, Goa. … Respondents

¶66

WITH WRIT PETITION NO. 51 OF 2023

¶67

GOLDEN PEACE HOTELS AND RESORTS PRIVATE LIMITED A company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at Hotel Neo Majestic, Plot No.104/ 1A, Opp. Azad Bhavan, Porvorim, Bardez, Goa - 403521, through its authorized representative, Shri. Rigveda D. Amonkar,

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201-41-2023 (F) & ORS.DOC

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Aged 31 years, Indian National, having his Office at Hotel Neo Majestic, Plot No.104/1A, Opp. Azad Bhavan Porvorim, Bardez, Goa – 403521.

¶71

SHRI. MUKESH GULATI aged 61 Years, Indian National, residing at D8, Ocean Park, Dona Paula, Tiswadi, Goa 403004 shareholder of Petitioner No.1. … Petitioners

¶72

Versus

¶73

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

¶74

UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa, Secretariat, Porvorim, Goa. … Respondents

¶75

WITH
 WRIT PETITION NO. 19 OF 2023

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GOLDEN PEACE INFRASTRUCTURE PRIVATE LIMITED A company, incorporated under the provisions of the Companies Act, 1956 and having its registered office at Hotel Neo Majestic, Plot No.104/ 1A, Opp. Azad Bhavan, Porvorim, Bardez, Goa - 403521, through its authorized representative, Shri. Rigveda D. Amonkar, Aged 31 years, Indian National, having his Office at Hotel Neo Majestic, Plot No.104/1A, Opp. Azad Bhavan Porvorim, Bardez, Goa – 403521.

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Page 8 of 75 6^th April 2023

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201-41-2023 (F) & ORS.DOC

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SHRI. MUKESH GULATI aged 61 Years, Indian National, residing at D8, Ocean Park, Dona Paula, Tiswadi, Goa 403004 shareholder of Petitioner No.1. … Petitioners

¶80

Versus

¶81

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

¶82

UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa Secretariat, Porvorim Goa. … Respondents

¶83

WITH

¶84

WRIT PETITION NO. 2675 OF 2022 (F)

¶85

M/s GOLDFINCH RESORTS PVT LTD, A company, incorporated under the provisions of the Companies Act, 1956 and having its registered office, Sy No. 34/1-B, Chimbel, Tiswadi, Goa403402 through its authorized representative, Shiv Bose, Aged 42 years,

¶86

SHRI. SHIV BOSE, Aged about 42 years, Indian citizen, having his office address Double Tree by Hilton, Goa - Panaji Kadamba Plateau, Panjim Old Goa Bypass Road Panaji - 403006 Goa. ... Petitioners

¶87

Versus

¶88

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

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201-41-2023 (F) & ORS.DOC

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UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa Secretariat, Porvorim Goa. … Respondents

¶92

WITH

¶93

 WRIT PETITION NO. 31 OF 2023

¶94

GOLDEN GLOBE HOTELS PRIVATE LIMITED, A company incorporated under the provisions of the Companies Act, 1956 and having its registered office at Flat No. 4, R.R. Apartment, 3-4, Manglapur, Mehrauli, New Delhi 110030, through its authorized representative, Shri. Amit Garg, Aged 33 years, Indian National, having his Office at First Floor, Kamla House, D.B. Marg, Panaji, Goa-403001

¶95

SHRI. LAKHRAM GOYAL, aged 29 Years, Indian national, residing at 436/16, Civil Line, Gurugram, Haryana-122001 shareholder of Petitioner No. 1. … Petitioners

¶96

Versus

¶97

STATE OF GOA, through the Secretary, Department of Home, Porvorim, Goa.

¶98

UNDER SECRETARY, DEPARTMENT OF HOME (GENERAL), Government of Goa Secretariat, Porvorim Goa. … Respondents

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Page 10 of 75 6^th April 2023

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201-41-2023 (F) & ORS.DOC

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Mr Parag Rao, Mr Akhil Parrikar and Ms Saumya Drago, Advocates for the Petitioners .

¶102

Mr D. Pangam, Advocate General with Mr S. Priolkar, Additional Government Advocate in W.P. No.31/2023, with Ms S. Kamat, Additional Government Advocate in W.P. No.19/2023, with Ms Maria Correia, Additional Government Advocate in W.P. No.51/2023, with Mr Tukaram Gawas, Additional Government Advocate in W.P. No.2675/2022 (F), with Mr Prashil Arolkar, Additional Government Advocate in W.P. No.32/2023, and with Ms Sapna Mordekar, Additional Government Advocate in W.P. No.2690/2022 (F) for the Respondents .

¶103

CORAM: M. S. SONAK & VALMIKI SA MENEZES, JJ.

¶104

Reserved on: 30^th MARCH 2023 Pronounced on: 6^th APRIL 2023

¶105

JUDGMENT: ( Per M. S. Sonak, J.)

¶106

1. Heard the learned counsel for the parties.

¶107

2. Since substantially common issues of law and facts arise in all these petitions, the learned counsel for the parties agree that common judgment and order could dispose of the same. Accordingly, with consent, we treat Writ Petition No.92 of 2023 as the lead petition.

¶108

3. Under the provisions of the Goa Public Gambling Act, 1976 (the said Act), the Petitioners have been issued licenses to

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201-41-2023 (F) & ORS.DOC

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operate offshore and onshore casinos in the State of Goa. These
licenses are subject to several terms and conditions, including the
payment of Annual Recurring Fees (A.R.F.) prescribed in the
statutory notification issued under the said Act.

¶112

4. To combat Covid'19 Pandemic and for public safety and health concerns, lockdown orders were issued by the National and State Governments. For periods between 01.04.2020 and 31.10.2020 and 01.05.2021 and 30.09.2021 (closure periods), most of the business operations, including the Petitioners' casino operations, were ordered to be closed. By way of concession, the State Government deferred the issue of payments during periods affected by partial or even complete closure of casino operations by not insisting upon immediate payments.

¶113

5. However, upon considering the Petitioners' representations, the State, by its impugned order dated 25.11.2022 (published in the Official Gazette dated 01.12.2022), directed the Petitioners to pay the arrears of A.R.F. for the closure periods along with penal interest at the rate of 12% per annum. The State's affidavit shows that this amount comes to 321,66,66,668/- (Rupees Three ₹ Hundred Twenty-One Crores Sixty-Six Lakhs Sixty Six Thousands Six Hundred and Sixty-Eight Only ). The Petitioners, on various grounds, contend that the State should not be

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permitted to insist upon recovery of arrears towards A.R.F.
Hence, the present petitions.

¶117

6. PETITIONERS' CONTENTIONS

¶118

6.1 Petitioners contend that the casino operations which the
Petitioners undertake are "authorized games" under Section 13A
of the said Act. Therefore, after paying necessary and prescribed
license fees, they submit that the Petitioners have been issued
licenses under the said Act.

¶119

6.2 Petitioners contend that their legal relationship with the
State qua such casino operations in pursuance of such licenses is
"purely contractual". Therefore provisions and principles of
contract law would govern their relationship. Moreover, since
Government is a contracting party, the principle of non-
arbitrariness and fairness, as guaranteed by Article 14 of the
Constitution, would also apply.

¶120

6.3 The Petitioners contend that the Government, after
ordering the closure of casino operations during the above closure
periods, cannot arbitrarily, unreasonably and unfairly insist that
the Petitioners (licensees) should pay A.R.F. with penal interest at
the rate of 12% per annum for the closure periods. They submit

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that such insistence on the part of the State is arbitrary and
infringes the guarantee of non-arbitrariness enshrined in Article
14 of the Constitution of India. They point out that even during
the partial closure periods, the Petitioners, without demur, have
fairly paid the A.R.F. Still, the absence of reciprocal fairness by the
State Government violates Article 14 of the Constitution of India.

¶124

6.4 The Petitioners have pointed out how the State
Government has granted exemptions or concessions to specific
sectors like transportation. Therefore, they submit that by
insisting the Petitioners pay the A.R.F. during closure periods,
there is hostile discrimination against them, thereby infringing
Article 14 of the Constitution.

¶125

6.5 The Petitioners submitted that the State must act fairly,
reasonably and not arbitrarily, even in purely contractual matters.
They rely on Ramana Dayaram Shetty Vs International Airport
Authority of India and others1, Kumari Shrilekha Vidyarthi and
others Vs State of U. P. and others2, Jamshed Hormusji Wadia Vs
Board of Trustees, Port of Mumbai and another3, Bharat
Petroleum Corporation Ltd., Vs Maddula Ratnavalli and others4,
and M. P. Power Management Company Ltd., Vs Sky Power

¶126

1 (1973) 3 SCC 489

¶127

2 (1991) 1 SCC 212

¶128

3 (2004) 3 SCC 214

¶129

4 (2007) 6 SCC 81

¶130

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Southeast Solar India Private Limited and others5 in support of
these contentions.

¶133

6.6The Petitioners also invoked the Doctrine of legitimate
expectation. They submit that the Government, by deferring the
payments scheduled during the partial and complete closure
periods, held out that there might be no insistence of A.R.F., at
least during the entire closure period. However, without assigning
any reason, the impugned order dated 25.11.2022 dashes all such
legitimate expectations by insisting upon the payment of A.R.F.
arrears and that too with a 12% per annum penal rate. Mr H.
Narsappa articulately described the impugned order as "the
unkindest cut of all." He relied on Food Corporation of India Vs
M/s. Kamdhenu Cattle Feed Industries6, State of Jharkhand and
others Vs Brahmputra Metallics Ltd., and Another7and Parisons
Agrotech Private Limited Vs Union of India and others8 to
expound the Doctrine of legitimate expectations.

¶134

6.7The learned counsel for the Petitioners also relied upon Zee
Telefilms Ltd., and Another Vs Union of India and others9,
Pitabash Chhotaray Vs Orissa State Financial Corporation and

¶135

5 (2023) 2 SCC 703

¶136

6 (1993) 1 SCC 71

¶137

7 2020 SCC Online SC 968

¶138

8 (2015) 9 SCC 657

¶139

9 (2005) 4 SCC 649

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Another10, Lloyd Electric and Engineering Limited Vs State of
Himachal Pradesh and others11, Bharati Airtel Limited Vs Union
of India12and Union of India and another Vs Association of
Unified Telecom Service Providers of India and others13to submit
that even the contracts having some statutory underpinning
would nevertheless constitute "contracts" and would be governed
by the provisions of the Contract Act etc. Some decisions were
also relied upon to support the contentions that while Article
19(1)(g) may not apply to gambling, Article 14 of the
Constitution would apply. The learned counsel submitted that
once the contracts were entered into permitting the casino
operations, the State could never refuse to be bound by the
mandate of Article 14 of the Constitution of India.

¶143

6.8The Petitioners contend that the Covid'19 Pandemic was a
Force Majeure event. Therefore, the Government, even under the
Contract law, cannot insist upon the recovery of A.R.F during the
closure period. The learned counsel for the Petitioners relied on
R. Narayanan Vs The Government of Tamil Nadu and others14
and Geeta Jeena Vs Government of N.C.T. of Delhi and others15

¶144

10 1987 SCC Online Ori 46

¶145

11 (2016) 1 SCC 560

¶146

12 (2015) 12 SCC 1

¶147

13 (2011) 10 SCC 543

¶148

14 W.P.(MD) No.19596 of 2020 and W.M.P. (MD) Nos. 16318 & 16320 of 2020 (Madurai Bench of Madras High Court)

¶149

15 (2021) SCC Online Del 4871

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to show how Madras and Delhi High Courts have addressed the
issues of the impact of the Covid'19 Pandemic on contracts
entered into by and on behalf of the State or instrumentality of
the State.

¶153

6.9Mr Rao and Mr Rajadhyaksha, learned counsel for some of
the Petitioners, submitted that A.R.F. was nothing but a fee for
services purportedly rendered or to be rendered by the
Government. They submitted that hardly one or two officers
could regulate the Petitioners' casino operations. They submitted
that during the closure period, there was no regulation. Therefore,
at least during the closure period, there was no correlation
between the fees insisted and the services rendered (quid pro
quo ), even in the broadest sense. They relied on Vam Organic
Chemicals Ltd. & Anr vs. State of U.P. & Ors.16, Yog
Advertising & Marketing Services & Anr. vs. Municipal
Corporation of Greater Mumbai & Anr.17, State of U.P. &
Ors. vs. Vam Organic Chemicals Ltd. & Ors.18, A.P. Paper
Mills Ltd. vs. Govt. of A.P. & Anr.19, B.S.E. Brokers' Forum,
Bombay & Ors. vs. Securities and Exchange Board of India
& Ors.20and Secunderabad Hyderabad Hotel Owners'

¶154

16 (1997) 2 SCC 715

¶155

17 2016 SCC Online Bom 62

¶156

18 (2004) 1 SCC 225

¶157

19 (2000) 8 SCC 167

¶158

20 (2001) 3 SCC 482

¶159

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¶161

Association & Ors. vs. Hyderabad Municipal Corporation
Hyderabad & Anr.21 in support of this contention.

¶162

6.10 Mr Narsappa learned Senior Advocate for the petitioners in
Writ Petition No.161 of 2023 submitted that the petitioners had
already applied to reduce the gaming area from 297.50 sq. mtrs.
to 99.88 sq. mtrs. By its communication dated 16.04.2021, he
presents that the State informed the petitioner that this request to
reduce the gaming area had been accepted. Accordingly, A.R.F.
for the period from 01.11.2020 to 31.01.2021 was waived.

¶163

6.11 Mr Narsappa submits that the request to reduce the
gaming area was made on 21.05.2020. Accordingly, the A.R.F. for
the period from 21.05.2020 to 31.01.2021 ought to have been
waived. On this basis, Mr Narsappa urged that the petitioner in
Writ Petition No.161/2023 be granted relief in terms of prayer
clause (H.H.) by issuing challans from April 2020 or 21.05.2020
on the reduced gaming area of 99.88 sq. mtrs.

¶164

6.12 Mr Narsappa submitted that the Petitioners claimed relief
based upon a combination of contractual breaches by the
Government, the force majeure event, legitimate expectation, and

¶165

21 (1999) 2 SCC 274

¶166

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mostly the Government's arbitrary and unreasonable action
infringing Article 14 of the Constitution.

¶169

6.13 However, the learned Counsel for the Petitioners clarified
that the Petitioners were neither relying upon the contractual
Doctrine of frustration nor claiming any exemptions or waivers.

¶170

6.14 For all the above reasons, the Petitioners urge that the
impugned order dated 25.11.2022, by which the State insists that
the Petitioners pay A.R.F. during the closure period, be quashed
and set aside.

¶171

7. GOVERNMENT'S DEFENCE

¶172

7.1 Learned Advocate General for the State of Goa pointed out
that casino operations are res extra commercium; therefore, the
casino business is not entitled to the protection of Article 19(1)(g)
and only limited protection of Article 14 of the Constitution.

¶173

7.2 Learned Advocate General submitted that even the Goa
Public Gambling Act, 1976, was enacted to provide the
punishment for public gambling and keeping of common gaming
houses in the State of Goa. He submits, however, that under
Section 13A of the said Act, an exception was made by
authorizing any game of electronic amusement/ slot machines in

¶174

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Five Star hotels and offshore vessels as may be notified. He
submitted that this privilege could be granted to the licensees
subject to such conditions, including payment of recurring and
non-recurring fees as prescribed.

¶177

7.3Learned Advocate General submitted that there was no
contract between the State and the petitioners for casino
operations. Instead, this was a case of grant of privilege subject to
terms and conditions, including payment of recurring and non-
recurring fees, as may be prescribed. He submitted that the terms
and conditions subject to which such privilege was granted to the
petitioners are mainly contained in notification dated 09.11.1995
and the subsequent notifications amending this notification. He
pointed out that under these notifications, a license to operate
casinos is issued for five years, for which an initial fee is
prescribed. In addition, the licensees are duty-bound to pay
annual recurring fees at the prescribed rates in advance on or
before March 31 of every year by depositing the same in
Government Treasury.

¶178

7.4 Learned Advocate General submitted that no notification
clauses permitted any waiver or exemption from payment of
A.R.F. Furthermore, he pointed out that there was no clause in
any of the notifications based on which the licensees could be

¶179

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¶181

relieved of the obligation to pay A.R.F. Accordingly, he submits
that for the year 2020, the petitioners were duty-bound to pay
A.R.F. on or before 31.03.2020 and 31.03.2021.

¶182

7.5Learned Advocate General submitted that by defaulting on
such payments, the petitioners could not insist on any exemption
of A.R.F. for the closure periods between 01.04.2020 and
31.10.2020 and 01.05.2021 and 30.09.2021. He submitted that
the defaults were even before the two closure periods, and
therefore, the Petitioners must not be allowed any leeway based
upon the subsequent lockdown orders.

¶183

7.6Learned Advocate General submitted that even if it is
assumed that the licenses issued to the petitioners had created a
contractual relationship between the Government and the
petitioner-licensees, this was a case of a completed contract to
which the Doctrine of frustration would never apply. He
submitted that this was not a case of a contract or, in any case, an
executory contract.

¶184

7.7 Learned Advocate General offered that there was nothing in the terms and conditions of the license based on which any waivers or exemptions could be claimed due to Force Majeure. He pointed out that such a concept was neither recognized

¶185

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¶187

expressly nor impliedly in the terms and conditions subject to
which the petitioners' privilege or license was granted.

¶188

7.8Learned Advocate General submitted that since the
petitioners had no fundamental right to undertake casino
business, even the rights under Article 14 of the Constitution of
India cannot be applied with full vigour qua the petitioners. In
any case, he submitted that there was nothing arbitrary,
unreasonable or unfair in the State's action.

¶189

7.9Learned Advocate General pointed out that several
concessions were extended to the petitioners, and because some
additional benefits may have been extended in other sectors, there
was no ground to allege discrimination. He submitted that
whether to extend concessions or the adequacy of the concessions
is within the realm of executive and fiscal policy. Therefore, he
proposed that a judicial review in such areas must be limited.

¶190

7.10 Learned Advocate General submitted that the petitioners' license continued uninterrupted even during the so-called closure periods. He offered that the distinction between tax and fee is now almost obliterated.

¶191

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¶193

7.11 Learned Advocate General submitted that the State's regulation did not cease even during the so-called closure periods. He offered that regulation was necessary to ensure obedience to several directives issued under the Disaster Management Act or other legislations. He submitted that fairness in such matters is not a one-way street, and there are no pleadings about the petitioners being in a position to undertake casino operations at the height of the covid Pandemic.

¶194

7.12 Finally, learned Advocate General submitted that there was nothing unreasonable in the A.R.F. rates and no direct challenge to such rates in any of the petitions.

¶195

7.13 Learned Advocate General relied on Shukr Sudin Sinai Usgaonkar vs State of Goa22, Amar Chandra Chakraborti vs Collector of Excise, Government of Tripura & Ors.23, State of Bihar and Ors. vs. Nirmal Kumar Gupta24, Assistant Excise Commissioner & Ors. vs. Issac Peter & Ors.25, Mary vs. State of Kerala & Ors.26, Ramanand & Ors. vs. Dr. Girish Soni & Anr.27, Raja Dhruv Dev Chand vs. Raja Harmohinder Singh

¶196

22 WP NO.72/2021 (High Court of Bombay at Goa)

¶197

23 (1972) 2 SCC 442

¶198

24 (2013) 2 SCC 565

¶199

25 (1994) 4 SCC 104

¶200

26 (2014) 14 SCC 272

¶201

27 2020 SCC OnLine Del 635

¶202

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¶204

& Anr.28, M/s. Koushik Group vs The State of Telangana &
Ors.29, Small Scale Industrial Manufacturers Association
(Regd.) vs. Union of India & Ors.30, Indian School, Jodhpur
& Anr. Vs State of Rajasthan & Ors.31, K. Ramanathan vs
State of Tamil Nadu & Anr.32 and Jalkal; Vibhag Nigam &
Ors. vs Pradeshiya Industrial and Investment Corporation &
Anr.33 in support of his contentions.

¶205

7.14 Based upon the above contentions, the Learned Advocate
General submitted that these petitions should be dismissed, and
the petitioners must be directed to pay the A.R.F.

¶206

8.Learned Advocate General, however, submitted that, as an
additional concession, the State Government would not insist
upon the 12% penal interest levy on A.R.F. during the closure
period. Therefore, he proposed that this demand of 12% penal
interest in the impugned order dated 25.11.2022 may be
considered dropped, provided the petitioners pay the A.R.F. dues
at the earliest.

¶207

28 (1968) 3 SCR 339

¶208

29 WP No.27097/2021 – High Court of the State of Telangana at Hyderabad

¶209

30 (2021) 8 SCC 511

¶210

31 (2021) 10 SCC 517

¶211

32 (1985) 2 SCC 116

¶212

33 2021 SCC OnLine SC 960

¶213

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¶215

9. CONSIDERATION OF THE RIVAL CONTENTIONS

¶216

The Goa Public Gambling Act, 1976 (said Act)and the
Notifications issued thereunder. (Statutory provisions)

¶217

9.1The said Act was enacted to provide punishment for public
gambling and keeping common gaming houses in the State of
Goa. Sections 3 and 4 of the said Act ban and provide
punishment for keeping common gaming houses and gaming in
such common gaming houses.

¶218

9.2 Section 13A of the said Act, however, reads as follows:-

¶219

“13A. Authorized Game.– (1) Notwithstanding
anything contained in this Act, the Government may
authorized any game of electronic amusement/slot
machines in Five Star Hotels {and such table games and
gaming on board in vessels offshore as may be notified}
subject to such conditions, including payment of such
recurring and non-recurring fees, as may be prescribed.

¶220

(2) The provisions of this Act shall not apply to any game
authorized under sub-section (1)."

¶221

9.3 Thus, notwithstanding the prohibition to keep a common
gaming house or for gaming in common gaming houses, under
Section 13A of the said Act, the Government is empowered to
authorize any game of electronic amusement/slot machines in

¶222

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¶224

Five Star hotels and offshore vessels as may be notified subject to
such conditions, including payment of such recurring and non-
recurring fees a may be prescribed. Sub-section (2) of Section 13A
provides that the provisions of the said Act shall not apply to any
game authorized under sub-section (1).

¶225

9.4 The terms and conditions, including payment of such
recurring and non-recurring fees, were first notified and
prescribed in a notification dated 09.11.1995 (principal
notification). This notification was amended from time to time,
prescribing inter alia for higher rates of recurring and non-
recurring fees and prescribing the mode and manner of
determining and paying such fees.

¶226

9.5 Petitioner No.1 in Writ Petition No.92/2023 (the lead
petition) has a valid licence to conduct onshore and offshore
casino operations. Accordingly, such licences are issued under the
said Act and must comply, inter alia, with the conditions in the
notifications issued thereunder.

¶227

9.6The petitioners have pleaded that the latest and the relevant
amendment to the principal notification dated 09.11.1995 is
contained in the notification dated 27.02.2018. In terms of these
notifications, a licensee must pay a non-recurring license fee of

¶228

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¶230

Rupees Fifty Lakhs in respect of an onshore casino and Rupees
One Crore for an offshore casino license. Further, a licensee must
pay an annual recurring fee (A.R.F.) depending upon the land-
based casino's casino area in a Five Star Hotel and the total
passenger capacity in an offshore vessel.

¶231

9.7The principal notification and the notification dated
27.03.2018 provided that a uniform period from April 1 to
March 31 shall be maintained to pay A.R.F. Furthermore, the
principal notification prescribes that the A.R.F. was payable "in
advance" on or before March 31 every year, which amount shall
be deposited into the Government Treasury by means of challan
under the head of an account as specified by the authority and
shall furnish a copy of the challan to the Home Depart of the
Government.

¶232

9.8 Thus, the scheme of the provisions in Section 13A of the
said Act read with the notifications issued thereunder from time
to time that the licensees must pay a one-time non-recurring fee
at the time of a five-year license issue. Further, such licensees
must pay in advance on or before March 31 of every year, A.R.F.,
as prescribed. Therefore, subject to the rights of the Government
to modify the rates, the license fees comprising of two
components of the non-recurring (one time) and the annual

¶233

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¶235

recurring fees (for five years, but payable in advance on or before
March 31 of every year) was pretty certain and determined. The
licensees were made aware that these would be the fees payable for
the license to operate their casinos, whether onshore or offshore.
There was no ambiguity on this count. Therefore it would not be
correct to equate the recurring fees with licence fees or rentals
where a licensor or lessor grants premises to a licensee or lessee.

¶236

COMPLIANCES AND COVID-19 PANDEMIC.

¶237

10. Accordingly, in all these cases, there is no dispute about the
payment of the non-recurring (one-time) license fees for the issue
of licenses to the petitioners. Presumably, all the petitioners, who
claim to have valid licenses, have paid this amount at the stage of
issue of licenses to them.

¶238

11. Therefore, for the periods 01.04.2020 to 31.03.2021 and
01.04.2021 to 31.03.2022 (closure periods), the petitioners were
bound to pay A.R.F. on or before 31.03.2020 and 31.03.2021.
This is clear from the licenses issued to the petitioners and the
two notifications containing the terms and conditions subject to
which such licenses were given to the petitioners.

¶239

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¶241

12. The petitioners failed to pay A.R.F. on or before
31.03.2020 and 31.03.2021. This implies that the Petitioners
defaulted even before the two closure periods. The petitioners'
case is that the Covid'19 Pandemic was raging, and therefore, the
petitioners had represented to the Government to relieve them
from the obligation to pay A.R.F. It is further the petitioners' case
that the Government was considering these representations.
Therefore, even the Government did not adopt any coercive
measures like cancellation of the license or closure of the casino
operations, even though the A.R.F. was not paid despite repeated
demands from the Government.

¶242

13. The petitioners and the respondents are ad idem about
Covid'19 Pandemic conditions during the above period. The
National and State authorities, by invoking the provisions of the
Disaster Management Act, 2005 (D.M.A.), the Epidemic
Diseases Act, 1897, the Code of Criminal Procedure and even
some provisions of the Indian Penal Code, 1860, were
constrained to issue notifications and orders to combat the
Pandemic requiring the citizens and non-citizens alike to take
adequate measures to contain its spread and impact. These
measures included the imposition of total or partial lockdowns,
quarantine protocols, travel restrictions, restrictions on entry and

¶243

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¶245

exit into the States, etc. As a result, this event was declared a
"National Disaster".

¶246

14.The petitioners have referred to the directives issued by at
least three different and distinct authorities: (i) The National
Government and National Authorities like the National Disaster
Management Authority (NDMA) etc.; (ii) The State Government
and State Authorities like the Health Department etc.; (iii)
Statutory Independent Authorities like Executive Magistrates
directing all gymnasiums, cinema theatres, public swimming
pools, casinos, spa and massage parlours, night clubs and
multiplexes, etc., to shut down their operations for specified
periods to combat and contain the spread of the Pandemic.

¶247

15. These orders and directives were issued inter alia under the Disaster Management Act, 2005 (D.M.A.), Epidemic Diseases Act,1987, Cr. P.C., and other National or State Legislations. Some of the orders and directives may trace their source to the executive powers of the National and State Governments. Significantly, no such lockdown or closure orders are challenged by any Petitioners. Instead, the Petitioners rely upon them to contend that the State Government must not recover the A.R.F. proportionate to the closure periods on the grounds of fairness and force majeure.

¶248

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¶250

16.The Petitioners have pleaded that they have paid the A.R.F.
during the partial closure periods without demur. However, the
petitioners contend that during the two closure periods when, in
pursuance to the above-referred orders, the petitioners' casino
operations were stopped entirely, the petitioners must be relieved
from the payment of A.R.F.

¶251

THE STATUS OF LEGAL RELATIONS BETWEEN THE CASINO LICENSEES AND THE GOVERNMENT

¶252

 THE CHARACTER OF THE FEES LEVIED UNDER THE
SAID ACT AND NOTIFICATIONS.

¶253

17.For proper evaluation of the Petitioners' contentions, it is
first essential to determine the legal relationship between the
Government and the Petitioners under which they are permitted
to operate casinos in the State of Goa. Related to this issue is the
character of the "license fees" that the petitioners must pay under
the licenses issued under the said Act and the notifications issued
thereunder.

¶254

18.The legal status of the Government by itself or through
private players engaging in liquor or gambling activity is
reasonably well settled by several Constitution Bench decisions of
the Hon'ble Supreme Court. It is accepted that no person or
citizen has any fundamental right to engage in such activities
because they are extra commercium. Such activities attended by

¶255

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¶257

danger to the community can be entirely prohibited by the
Government or permitted under such conditions as would limit,
to the utmost, its evils. The Government can determine the
manner, mode and extent of regulation at its discretion. These are
legislative and executive will and policy matters, where judicial
review would be minimal.

¶258

19.The Courts have held that given the pernicious nature of
such activities, and their impact on health, morality and general
well-being, they are treated as extra commercium, requiring
legislative and executive control. Therefore, neither can such
activities be regarded as legitimate subjects of trade, occupation or
business under Article 19(1)(g) of the Constitution, nor can these
activities be treated on the same basis as other legitimate trades
while considering Article 14 of the Constitution. (See Hari
Shanker & Ors. vs. Deputy Excise Taxation Commissioner &
Ors.34, Coowarji B Bhavasha vs Excise Commissioner35, Amar
Chandra Chakraborty vs Collector of Excise, Government of
Tripura36).

¶259

20.The circumstance that the said Act styles the petitioners'
activity as "authorized game" or that the Government has licensed

¶260

34 (1975) 1 SCC 737

¶261

35 AIR 1954 SC 220

¶262

36 (1972) 2 SCC 442

¶263

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¶265

the petitioners to undertake casino operations does not render the
activity any less extra commercium. Based upon such
circumstances, the activity cannot enjoy the protection of Article
19(1)(g). The extra commercium character of such activity is also
not an irrelevant circumstance to determine the extent of
protection that could be extended under Article 14 to the
petitioners engaged in such activity.

¶266

21.In B.R. Enterprises v/s. State of UP & Ors.37 in the
precise context of gambling (lottery), the Hon'ble Supreme Court
held that merely because a lottery transaction is operated by the
State itself will not change its character as res extra commercium.

¶267

22.The Constitution Bench in R.M.D. Chamarbaugwala
(supra) holds that activities which encourage the spirit of a
reckless propensity for making easy gain by lot or chance lead to
the loss of hard-earned money of the undiscerning and
improvident common man and thereby lower his standard of
living and drive him into a chronic state of indebtedness and
eventually disrupt the peace and happiness of his humble home
could possibly have been intended by such Constitution makers
to be raised to the status of trade, commerce or intercourse and to
be made the subject matter of a fundamental right guaranteed by

¶268

37 1999 (9) SCC 700

¶269

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¶271

intended by such Constitution makers to be raised to the status of
trade, commerce or intercourse and to be made the subject matter
of a fundamental right guaranteed by Article 19(1)(g) of the
Constitution. The Constitution Bench found it difficult to
persuade itself that gambling was ever intended to form any part
of this ancient country's trade, commerce, or intercourse to be
declared free under Article 301. Finally, the Constitution Bench
concluded that gambling activities, from their very nature and
essence, are extra commercium.

¶272

23.The Constitution Bench decisions have further explained
that only the State has the exclusive privilege to deal with such
extra commercium activities involving liquor and gambling.
Additionally, without altering the extra commercium character of
such activities, the State can part with this exclusive privilege to
private players subject to terms and conditions, including
payment of consideration. The object of such terms and
conditions, by and far, must be to limit the evils of these
pernicious activities and even to earn substantial revenue which
could be employed for welfare activities of the State.

¶273

24.In State of Orissa vs Harinarayan Jaiswal,38 it was held

¶274

that the fact that a Government was the seller does not change the

¶275

38 (1972) 2 SCC 36

¶276

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¶278

legal position once its exclusive right to deal with the privilege to
vent liquor was conceded. If the Government owns those
privileges, reliance on Article 19(1)(g) or Article 14 of the
Constitution becomes irrelevant. The citizens cannot have any
fundamental right to trade or conduct business in the properties
or rights belonging to the Government, nor can there be any
infringement of Article 14 if the Government tries to get the best
available price for its valuable rights.

¶279

25.In Nashirwar vs State of M.P.,39 it was held that the
history of excise law shows that the State has the exclusive right or
privilege of manufacturing and selling liquor. Therefore, there was
nothing wrong with the State holding a public auction and
granting such privilege only to the highest bidder. Merely because
of a fee element included in the price, there was no question of
challenging this element as arbitrary or unconstitutional.

¶280

26.Based on the above decisions, we think that the
Government, in the present case, has only parted with its
exclusive privilege to the petitioners to deal in gambling activities
for "consideration". That such consideration is styled as a non-
recurring or recurring fee is not determinative of its true
character.

¶281

39 (1975) 1 SCC 29

¶282

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¶284

27.This legal relationship between the Government and the
Petitioners is governed by the provisions of the said Act and the
licences issued under the notifications made thereunder.
Therefore, it would not be correct to compare this legal
relationship with relationships like 'licensor-licensee' regarding
some premises, etc.

¶285

28.Regarding the scope of such relationships and the true
character of the fees charged, the Constitution Bench decision in
Hari Shankar & Ors. (supra), is instructive. Therein, it was held
that the right to deal with intoxicants or gambling was not some
fundamental right vested in any citizen. Under its regulatory
powers, the State had the right to prohibit absolutely every form
of such activity. In all their manifestations, such rights are vested
in the State; indeed, without such vesting, there can be no
effective regulation of the various forms of such activities.

¶286

29.The Constitution Bench referred to the American
Jurisprudence (Vol. 30), stating that engaging in liquor traffic is
not inherently unlawful; nevertheless, it is a privilege and not a
right, subject to governmental control. The power of control is an
incident of the society's right to self-protection, and it rests upon
the right of the State to care for the health, morals and welfare of
the people.

¶287

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¶289

30.The Constitution Bench was concerned with the terms and
conditions of licenses for liquor vends granted to the petitioners
through public auctions. The terms and conditions of such
licenses, including the variable and fixed fee components payable
by the licensees to the Government, were challenged as being
arbitrary, unreasonable and having no reasonable correlation with
the services rendered by the Government.

¶290

31.As in the present case, it was contended that such levy,
without any nexus with corresponding Government services,
would convert such fees into 'taxes', which the Government was
not empowered to exact. The Constitution Bench rejected all
such contentions after holding that the bid amount, fixed and
variable fees were nothing but the consideration that the
petitioners had agreed to pay for the State parting with its
exclusive privilege.

¶291

32.The Constitution Bench first rejected the plea by holding
that the petitioners were successful bidders at the liquor vending
auction. The terms and conditions, inter alia, regarding the
license fees, were quite clear, and the bidders accepted such terms
and conditions with open eyes. Therefore, the Court held that
those who contract with open eyes must accept the contract's
burden and its benefits. After accepting such terms and

¶292

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¶294

conditions and even deriving the benefits from them for some
time, the auction purchasers cannot, by writ petitions, question
such terms and conditions (including the rates of license fees).

¶295

33.The Court pointed out that had the Petitioners' venture
succeeded, they would have relied upon those terms and
conditions to find a legal claim. The Court held that reciprocal
rights and obligations arising from a contract do not depend on
their enforceability upon whether a contracting party finds it
prudent to abide by the terms of the contract. By this test, no
contract could ever have a binding force. These observations
squarely apply to the cases under consideration because the
petitioners, too, accepted the terms and conditions of the license
prescribed by the said Act and the notifications issued thereunder
with their open eyes and even derived benefits when the going
was good.

¶296

34.The Constitution Bench further explained that the fees
were only consideration for parting with the exclusive privilege.
One of the purposes of the State's regulation was to raise revenue.
The license fee, though described as a "fee", was more like a
revenue collected by the grant of contracts to carry on trade in
liquor. Therefore, such consideration cannot be questioned as

¶297

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¶299

excessive by referring to the Constitutional rights in Articles 14
and 19.

¶300

35.The Constitution Bench held that since rights regarding
intoxicants belong to the State, it is open to the Government to
part with those rights for consideration. If the Government owns
those privileges, reliance on Article 19(1)(g) or Article 14
becomes irrelevant. Citizens cannot have any fundamental right
to trade or conduct business in the properties or rights belonging
to the Government, nor can there be any infringement of Article
14 if the Government tries to get the best available price for its
valuable rights. The Court held that the power of the
Government to charge a price for parting with its rights and not
the mode of fixing that price is what constituted the essence of
the matter. Nor does the label affixed to the price determine the
true nature of the charge levied by the Government or its right to
impose the same.

¶301

36.The Constitution Bench (at para 56), after explaining the
difference between "tax", "fee", and "excise duty", held the
amounts charged to the licensees through the medium of auctions
or the "fixed fee" which it charged to the vendors of foreign
liquor having a license in Forms L-3, L-4 and L-5 need bear no
quid pro quo to the services rendered to the licensees. The word

¶302

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¶304

"fee" is not used in the Act or the Rules in the technical sense of
the expression. The expressions "license fee" or "fixed fee" means
the price or consideration which the Government charges the
licensees for parting with its privileges and granting them to the
licensees. As the State can carry on a trade or business, such a
charge is the normal incident of atrading or business transaction.

¶305

37.The Constitution Bench cited a passage from American
Jurisprudence (Vol. 30, pp.642, 645) based on the decisions in
Gundling v. Chicago, Phillips v. Mobile and Richard v.
Mobile. It says:

¶306

"The familiar principle that the imposition of licence
fees on useful and honourable occupations must not exceed
the cost of issuing the licence, plus the expense of
inspecting andregulating the business licensed is not
necessarily applicable to a liquor license. The liquor traffic
is not something which is licensed for the purpose of
promoting it. Indeed, licence fees may be exacted in
amounts intended to discourage participation in the
business. The courts have quite generally refused to hold
that the licence fee imposed, merely because it is large, is a
tax, where the object is to control, regulate, and restrict,
and not to encourage the liquor traffic, the revenue being
the result of the system and not the motive for its adoption.
The higher the fee imposed for a licence, it is sometimes
said, the better the regulation, as the effect of a high fee is
to keep out the business those who are undesirable, and to
keep within reasonable limits the number of those who
may engage in it."

¶307

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¶309

38.The Constitution Bench held that no statute forbids the
Government from trading in its own rights or privileges. Far from
doing so, the Statute under consideration expressly empowers it
by Sections 27 and 34 to grant leases of its rights and issue the
requisite licenses, permits or passes on payment of such fees as
prescribed.

¶310

39.The Constitution Bench reiterated thatthe "license fee" or
"fixed fee" does not have to conform to the requirement that it
must bear a reasonable relationship with the services rendered to
the licensees. The amount charged to thelicenseesis not a fee
properly so-called nor indeed a tax but is in the nature of the
price of a privilege, which the purchaser has to pay in any trading
or business transactions. The Court held that the amount payable
by the licensees based on the bids offered by them in auctions and
based on "fixed and assessed fees" is neither a fee in the technical
sense nor a tax but is like the price of a privilege, there is no
question of the Financial Commissioner lacking the power to
organize auctions to authorize the recovery of any amount which
is not a fee properly so-called.

¶311

40.Accordingly, by applying the above principles to the facts of
the present case, it is apparent that the State Government, in this
case, has only parted with its exclusive privilege and permitted the

¶312

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¶314

petitioners to undertake casino operations, which are otherwise
not even the legitimate objects of any trade, occupation or
business. The license fee so-called is the price or the consideration
for parting with such privilege, which is exclusively owned and
controlled by the State Government.

¶315

41.Therefore, even though Section 13A of the said Act or the
notifications issued thereunder refer to such charges as "fees",
"non-recurring fees", or "recurring fees", it is not the terminology
that is decisive. Very clearly, these amounts are nothing but
consideration for the Government parting with its exclusive
privilege to deal in gambling, which is otherwise prohibited under
the said Act.

¶316

QUID PRO QUO AND THE REASONABLENESS OF FEES.

¶317

42.Based upon the discussion on the legal relationship between
the Casino licensees (Petitioners) and the State Government and
the true character of the fees, the arguments based on quid pro
quo, the correlation between the fee rates and services rendered by
the Government, whether during closure periods or otherwise,
reasonableness will have to be rejected.

¶318

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¶319

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¶320

43.The decisions relied upon by Mr Rao and Mr Rajadhyaksha
were not even remotely in the context of the consideration
charged by the Government for parting with its exclusive privilege
to deal with extra commercium activities involving liquor and
gambling. These decisions, therefore, cannot be applied in the
context of the fundamental issues that arise in these petitions.
Based upon such contentions, the petitioners cannot wriggle out
of the contractual obligations solemnly undertaken by invoking
the extraordinary jurisdiction and, to some extent taking undue
advantage of a National disaster.

¶321

44.As it is, there is gradual obliteration of the distinction
between a tax and a fee on a conceptual level, as explained by the
Hon'ble Supreme Court in paragraphs 55, 56, and 60 in Jalkal
Vibhag Nagar Nigam and ors (supra), the distinction between a
tax and fee has substantially been effaced in the development of
our constitutional jurisprudence. This differentiation, based on
the element of a quid pro quo in the case of a fee and its absence
in the case of a tax, has gradually, yet steadily, been obliterated to
the point where it lacks any practical or constitutional
significance. The service may not be provided directly to a
person as distinguished from a general service provided to the
members of a group or class of which that person is a part.

¶322

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¶324

45.The Court holds that as the law has progressed, it has come
to be recognized that there need not be any exact correlation
between the expenditure incurred in providing a service and the
amount the State realizes. The Court explained that the gradual
obliteration of the distinction between a tax and a fee on a
conceptual level has been the subject matter of several decisions of
this Court. Because of this consistent line of authority, the
practical and even constitutional distinction between a tax and a
fee has been weathered down.

¶325

46.In the present cases, it would not be correct to hold that the
State renders no regulatory or other services to the Petitioners in
particular and the casino operators in general. For example, most
casino vessels are parked in the Mandovi River, accessible from
spots that could be legitimately described as the heart of the
Capital city's commerce.

¶326

47.The pressures the very existence of such casino vessels in the
Mandovi River exerts not only on the navigation but on parking,
clearance of garbage, regulation to ensure that no sewage is
discharged in the river, and policing because of the nightly hours
through which such casino operates, cannot simply be wished
away. Government staff is involved in regulation. Similar services

¶327

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¶329

are rendered by the State even to onshore casinos and the
thousands of tourists that flock to such casinos.

¶330

48.Additionally, that such licenses were issued to the
petitioners without even a modicum of attempt to determine the
price that some highest bidders would be willing to pay for such
privilege is not an irrelevant factor. At least offshore casinos are
parked right in the centre of the Mandovi River, at a spot that can
be described as the city's heart. This is public property. The
Government is entitled to get the best price. The public trust
doctrine requires that even the use of public property must be
permitted to the highest bidder unless there are convincing
reasons to admit otherwise. Therefore, the license fee rates and
their manner of recovery must also be considered from this
perspective in the present case.

¶331

49.Therefore, Mr Rao's contention about only one or two
officers being sufficient to regulate the activities conducted by the
casinos cannot be accepted. The arguments based upon the
principle of quid pro quo, whether during or beyond the closure
periods, also cannot be accepted.

¶332

50.Firstly, the levy, though styled as fees, is nothing but the
consideration that the Petitioners must pay to the State

¶333

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¶334

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¶335

Government for parting its exclusive privilege to deal in the
pernicious activity of gambling. Second, The State Government
renders regulatory services for such activities, which meets the test
of broad correlation, even though such compliance may not be
essential.

¶336

ARBITRARINESS, UNREASONABLENESS, AND UNFAIRNESS.

¶337

51.The petitioners' next contention is about the alleged
'palpable arbitrariness, unreasonableness and unfairness' in the
Government insisting that the petitioners pay A.R.F. during the
two closure periods.

¶338

52.The proposition that the Government must not act
arbitrarily, unreasonably or unfairly in the contractual sphere
(whether at the stage of entering into the contract or during its
execution) is well-established and admits of no serious debate.
Moreover, the decisions referred to in para 6.5 support this
proposition.

¶339

53.Therefore, the only question is whether the Government, in
the facts and circumstances of the present case, has acted with
'palpable arbitrariness, unreasonableness and unfairness' by not
exempting the petitioners from paying A.R.F. during the closure

¶340

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¶341

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¶342

periods and insisting upon compliance with the terms and
conditions of the license as prescribed by the said Act and the
notifications issued thereunder.

¶343

54.The foundation of the above argument was based upon the
decisions of the learned Single Judges of the Madras and Delhi
High Courts in R. Narayanan (supra) and Geeta Jeena (supra).
The petitioners also contended that the Government, as a
contracting party prohibited casino operations during the closure
period. Therefore, the Government's insistence that the
petitioners pay A.R.F. during this period was palpably arbitrary,
unreasonable and unfair, thereby infringing Article 14 of the
Constitution.

¶344

55.The above argument proceeds on at least two premises
assumed by all the petitioners. First, the Government, acting as
one of the contracting parties, breached the contract by
preventing the petitioners (other contracting parties) from
undertaking casino operations during the peak of the pandemic
crisis (closure periods). Second, the petitioners were prevented
from undertaking the casino operations under their license during
the two closure periods, solely and exclusively due to the closure
or lockdown orders issued by the State Government. If the

¶345

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¶346

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¶347

petitioners' assumptions are not suitable or justified, then the
petitioners' arguments must fail.

¶348

56.Regards the first assumption, there is no serious allegation
of breach of contract by the Government in the pleadings. Even
during arguments, we found considerable hesitation in alleging
any direct breach of contract on the Government's part. However,
it was submitted that, in a sense, the Government breached the
contract by ordering a lockdown or closure of the casino business.
Even this hesitant argument was backed by no pleadings.

¶349

57.In imposing lockdowns or closures of several operations,
industries and activities (of which a casino is only one), the State
Government, in our opinion, was not acting as a "contracting
party" or "licensor" under some contract with the petitioners.
These decisions were in the context of the State Government's
duty and capacity as a welfare State. If the State Government were
to have confused its role under the so-called contracts with the
casino operators and its role as a welfare State, that would perhaps
amount to an arbitrary exercise of power. The State's role under a
contract cannot detract from or even influence the State's role as a
welfare State.

¶350

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¶351

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¶352

58.The observations in the decisions cited on behalf of the
Petitioners about the State wearing two hats, speaking in two
voices, or acting as Dr Jekyll and Mr Hyde were in an entirely
different context. The Government's role as a contracting party
and as a welfare State combating a pandemic cannot be confused.
The petitioners have failed to plead and establish any breach on
the State Government's part.

¶353

59.Further, the petitioners could not demonstrate that the
State Government acted as a contracting party or a licensor when
it issued the lockdown or closure orders at the height of the
Covid'19 Pandemic. Significantly, there was no challenge to the
so-called breaches or the lockdown or closure orders that had no
nexus whatsoever with the so-called contracts or even the
provisions of the said Act and notifications issued thereunder. For
all these reasons, the first of the assumed premise fails.

¶354

60.Regarding the second assumed premise, it is significant to
note that none of the petitioners has, and perhaps could have,
pleaded that they were in any realistic position during the closure
periods to undertake their casino operations. Neither any
pleadings nor contentions urged that if the State Government had
not imposed the lockdowns, the Petitioners could have
realistically undertaken the casino operations during the peak

¶355

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¶356

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¶357

epidemic periods, the National Government directives or
directives by Magistrates acting under Section 144 Cr.P.C.,
notwithstanding.

¶358

61.The National Government or the National Disaster
Management Authority functioning under the D.M.A. had no
direct nexus with the so-called contracts between the petitioners
and the State Government. Yet, these authorities issued
lockdowns and closure directives binding on the State
Government and all those to whom they were directed and
intended to apply. Therefore, even absent the lockdown or closure
directives by the State Government, the petitioners were in no
position to undertake the casino operations during the closure
periods when the Covid'19 Pandemic was at its peak.

¶359

62.Even the Magistrates acting under the Cr. P.C. cannot be
equated to the "State Government" acting as a contracting party
or a licensor under a casino licence. The Magistrates exercise
independent powers and jurisdiction under the Cr. P.C., which
has nothing to do with the so-called contracts between the
petitioners and the State Government. Therefore, even absent the
lockdown or closure directives by the State Government, the
petitioners were in no position to undertake the casino operations

¶360

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¶361

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¶362

during the closure periods when the Covid'19 Pandemic was at its
peak.

¶363

63.The lockdown restrictions or closure directives by the
National, State or independent authorities apart, the
circumstances during the peak epidemic were such that none of
the Petitioners has even claimed they were pragmatically poised to
undertake casino operations during the two closure periods.

¶364

64.Under the said Act and the notifications issued thereunder,
the people from the State of Goa (locals) are barred entry in
casinos, whether during Covid times or otherwise. Therefore,
casinos rely and can rely only on foreign and domestic tourists.

¶365

65.There is no dispute that during the peak epidemic periods
(including the two closure periods), there were unprecedented
travel restrictions, quarantine protocols, and other remedial or
preventive measures to contain the effects and spread of the
Covid'19 Pandemic. Considering the unprecedented death toll
and shortage of medical literature dealing with the deadly virus,
even the tourists, out of self-survival instinct, were not venturing
out or gambling on their lives.

¶366

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¶367

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¶368

66.Therefore, the petitioners have not and could not have
pleaded that, but for the State Government's lockdown or closure
orders, they were fully poised to undertake their casino activities
during the closure periods at the height of the Covid'19
Pandemic. Moreover, there are no pleadings, and there is material
to the contrary that even absent the State Government's closure
orders, the Petitioners were in no position to operate their casinos
during the two closure periods. Therefore, even the second
premise of the petitioners' arguments also fails.

¶369

67.Therefore, there was nothing arbitrary or unreasonable in
imposing the lockdowns. There was also nothing arbitrary or
unreasonable in denying exemptions or waivers. Moreover, in the
absence of any pleadings that the petitioners were in a position to
continue with their casino operations and it is only on account of
the closure orders or the lockdown orders imposed by the State
Government that the petitioners have incurred some losses, there
is no question of grant of any relief to the petitioners.

¶370

68.As a corollary, we cannot discount the Government's
contention about the petitioners attempting to obtain undue
advantage from the unfortunate circumstance in which the State
Government had to issue lockdown or closure directives. Based
on such undue and unfair advantage, the petitioners cannot

¶371

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¶373

deprive the State Government of the much-needed revenue of
almost Rs.321 Crores (Rupees Three Hundred & Twenty-One
Crores).

¶374

69.The Petitioners' argument (without any pleadings to back
such argument) that they were forced by or, in any case, only by
the lockdowns or the closure orders issued by the State
Government sounds opportunistic and to obtain undue
commercial advantage from a National disaster.

¶375

70.Besides, apart from vaguely arguing (without adequate
pleadings) that the State Government as the contracting party was
in breach of the contract by closing down casino operations at the
height of the epidemic crisis, none of the Petitioners challenged
the so-called breach. Instead, the attempt is to draw an
unprecedented gain of about Rupees Three Hundred & Twenty-
One crores by not paying the agreed consideration merely because
this portion was deferred and payable as A.R.F. As it is, during
these two closure periods, even absent the closure orders, the
Petitioners were not in any position to undertake casino
operations.

¶376

71.At least a writ Court exercising extraordinary and equitable
jurisdiction cannot assist the Petitioners' attempt and deprive the

¶377

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¶379

State of its legitimate revenue of almost Rs. 321 Crores (Rupees
Three Hundred & Twenty-One Crores)for parting with its
exclusive privilege. Moreover, any financial relief to the Petitioners
in such tragic circumstances would be at the cost of taxpayers,
many of whom were also seriously affected by the national
disaster. This figure is very high for a small State like Goa, which
is reeling under severe fiscal debt.

¶380

72.If the State were not to insist upon recovery of this amount,
the burden would pass on to the honest taxpayers, who would
have to pay more or those in need, who would receive
proportionately less welfare and development. Indeed, it is
unreasonable to expect that such extra commercium activities
should be directly or indirectly subsidized by the taxpayers or
waiver of Rs.321 crores (Rupees Three Hundred & Twenty-One
Crores) be granted in such tragic circumstances to casino
operators.

¶381

73.By the Petitioners' logic, similar waivers or exemptions
from the payment of crores of rupees might have to be granted by
the Government to several establishments, licensees, etc.,
including perhaps the entire liquor industry because even Bars
were affected by the lockdowns. The learned Counsel for the
Petitioners argued that the Hon'ble Supreme Court had rejected

¶382

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¶383

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¶384

the floodgates argument. True, but that was mainly in the context
of opening the floodgates of access to justice. Given the State's
limited resources and priorities, such issues are not irrelevant in
determining the reasonability of the State's action.

¶385

74.In this case, the petitioners seek to pass off their burden to
the people and honest taxpayers. This petition is an attempt to
seek public subsidies for the casino operations. Ultimately, the
State Government functions based on the taxes collected from its
people. Suppose the State Government is compelled to forego this
amount of Rs.321 crores (Rupees Three Hundred & Twenty-One
Crores). In that case, this amount will ultimately have to be
recouped by taxes or by abandoning or postponing some of its
functions as a welfare State. The question of reasonableness,
arbitrariness and fairness must also be considered from this
perspective. This perspective is not entirely irrelevant, as suggested
on the petitioners' behalf.

¶386

75.In State of M.P. V/s. Nanldlal Jaiswal40, the Hon'ble
Supreme Court has held that while considering the applicability
of Article 14 to a case of grant of exclusive right or privilege to
manufacture and sell liquor, the courts must bear in mind that
having regard to the nature of the trade or business, the Court

¶387

40 1986 4 SCC 566

¶388

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¶389

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¶390

should be slow to interfere with the policy laid down by the state
government for grant of licenses for manufacture and sale of
liquor.

¶391

76.Accordingly, because of the inherently pernicious nature of
the commodity, the Court would allow a considerable measure of
latitude to the State Government in determining its policy of
regulating the manufacture and trade in liquor. Moreover, the
grant of licenses for the manufacture and sale of liquor would
essentially be a matter of economic policy where a court would
hesitate to intervene and strike down what the State Government
has done unless it appears to be plainly arbitrary, irrational or
irrational or malafide.

¶392

77.Similar principles would apply to gambling through casino
operations. The Hon'ble Supreme Court has rejected contentions
quite similar to those of the present Petitioners in the context of
the liquor trade. Accordingly, the Petitioners do not invoke
Article 14 by alleging discrimination inter se between the casino
operators. These Petitions are by practically all or on behalf of all
the casino operators in the State.

¶393

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¶394

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¶395

78.In State of Bihar v/s. Nirmal Kumar Gupta41, the
statutory rules required the auction purchaser to pay the licensing
fees from the settlement date, not the actual license issue date.
However, the petitioner contended, and the High Court allowed
the payment of license fees from the date of the license by holding
that before the license issue, no production was possible. The
High Court, in effect, condoned the non-payment of license fees
for the period between the date of settlement and the date on
which the license was issued.

¶396

79.The Hon'ble Supreme Court, upon considering Nandlal
Jaiswal (supra), P.N. Krishna v/s. Government of Kerala42,
Govt. of T.N. V/s. K. Vinayagya Murthy43 and State of
Punjab v/s. Diwan's Modern Beverages Ltd.44 held that the
nature of the liquor trade, the role of the State, the economic
concept of the policy, the limited attractability of Article 14 of the
Constitution as regards the legislation or policy, the restriction
inherent in the policy and the duty of the Court were sufficient
factors not to condone the default in payment of the license fee
from the date of settlement.

¶397

41 ( 2013) 2 SCC 565

¶398

42 ( 2002) 7 SCC 104

¶399

43 ( 1972) 2 SCC 442

¶400

44 (2004) 11 SCC 26

¶401

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¶402

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¶403

80.In Issac Peter (supra), the Hon'ble Supreme Court was
concerned with the issue of the failure on the State's part in
supplying arrack undertaken by it to supply and whether, on this
ground, the licensees were entitled to rebate/remission in the
amounts payable by them under the contracts. The licensees, like
the petitioners in the present case, had invoked Article 14 of the
Constitution and the doctrines of reasonableness, fairness and
non-arbitrariness. The licensees had also relied upon decisions of
the Hon'ble Supreme Court similar to those of the present
petitioners.

¶404

81.The Hon'ble Supreme Court, however, held that the
contract between the parties was governed by statutory provisions,
i.e. provisions of the Act, Rules, the conditions of the license and
the counterpart agreement. They constitute the terms and
conditions of the contract. They are binding both upon the
Government and the licensee. Neither of them can depart from
them. It is not open to any officers of the Government to either
modify, amend or alter the said terms and conditions, not even to
the minister for excise.

¶405

82.The Court held that when conditions are statutory, it
would not be permissible to say that some other condition or
term was agreed upon or implied between the parties, which is

¶406

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¶407

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¶408

not found therein. Moreover, even any implied term should be
consistent with the express terms of the contract and not
otherwise.

¶409

83.The Court ruled that there was no statutory obligation on
the State to supply to the licensees any arrack beyond the
minimum guaranteed quota. Besides, the Court found that the
Government had supplied whatever it could, and merely because
the licensees may have incurred commercial losses, their
arguments based on arbitrariness, unreasonableness or the
principle of Sections 55 and 56 of the Contract Act could not be
countenanced. (Here, the Petitioners before us have clarified that
they were not invoking the Doctrine of frustration).

¶410

84.The Court held that the licensees took a calculated risk or
were not wise in offering their bids. These could not be grounds
for relieving them of their contractual obligations. The Court
held that in such contracts, there is always an element of risk.
Many unexpected developments may occur, which may either
cause loss to the contractor or result in large profits. Take the case
of an arrack contractor. There may be abundant supplies in one
year accompanied by good crops induced by favourable weather
conditions; the contractor will make substantial profits during the
year. In another year, the conditions may be unfavourable and

¶411

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¶412

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¶413

supplies scarce. The contractor may incur a loss. Such contracts
do not imply a warranty - or a guarantee - of a profit to the
contractor. It is business for the contractor - profit and loss being
normal business incidents. There is no room for invoking the
Doctrine of unjust enrichment in such a situation. The said
Doctrine has never been invoked in such business transactions.
The remedy provided under Article 226, or for that matter, suits,
cannot be resorted to wriggle out of the licensees' contractual
obligations.

¶414

85. The Court also rejected the arguments based on the Doctrine of fairness by pointing out that this Doctrine can certainly not be invoked to amend, alter or vary the expressed contract terms between the parties. This is so, even if the contract is governed by the statutory provisions, i.e., where it is a statutory contract – or rather more so. It is one thing to say that every contract must be construed reasonably and with regard to its language. But that is not what the licensees say. They seek to create an obligation on the other party to the contract because it happens to be the State. They are not prepared to apply the same rule in a converse case, i.e., where the State has abundant supplies and wants the licensees to lift all the stocks. The licensees will undertake no obligation to lift all those stocks even if the State suffers a loss. This one-sided obligation, in modification of Page 60 of 75 6^th April 2023

¶415

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¶416

express terms of the contract, in the name of duty to act fairly, is
what the Court could not appreciate.

¶417

86.The Court held that in the contracts freely entered into
with the State, there is no room for invoking the Doctrine of
fairness and reasonableness against one party to the contract
(State) to alter or add to the terms and conditions of the contract
merely because it happens to be the State. In such cases, the
mutual rights and liabilities of the parties are governed by the
terms of the contracts (which may be statutory in some cases) and
the laws relating to contracts. It must be remembered that these
contracts are entered into pursuant to public auction, floating of
tenders or by negotiation. There is no compulsion on anyone to
enter into these contracts. It is voluntary on both sides. There can
be no question of the State power being involved in such
contracts. It bears repetition to say that the State does not
guarantee profit to the licensees in such contracts. There is no
warranty against incurring losses. It is a business for the licensees.
Whether they make a profit or incur a loss is no concern of the
State. In law, it is entitled to its money under the contract. It is
not as if the licensees will pay more to the State if they make
substantial profits.

¶418

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¶420

87.The petitioners claim that they are not seeking any
exemptions or waivers. Yet, in support of their charge of
discrimination, the petitioners have pleaded that some commuters
or specified industries were granted some concessions, and no
concessions have been granted to the petitioners. In our opinion,
the claim that the petitioners are not claiming any exemptions or
waivers is only a play of words or an exercise in semantics.

¶421

88.In fact, the petitioners are seeking exemptions or waivers by
challenging the impugned communication that denies them
waivers, exemptions, or refuses to relieve them from their
contractual obligations. The contention is not put forth plainly
only because the petitioners know that a writ of mandamus
would not lie to compel the State Government to give waivers
and exemptions. Therefore, what the petitioners cannot get
directly, the petitioners must not seek indirectly.

¶422

89.The State Government, in this case, after considering the
petitioners' position and representations, did not insist upon the
petitioners paying A.R.F. in terms of the statutory schedule.
Besides, even penal interest of 12% p.a. has been waived.
Therefore, extending the payment schedule and giving the
petitioners sufficient time to recoup any alleged losses was
certainly a concession granted by the State to the petitioners.

¶423

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¶424

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¶425

90.However, to expect that the State Government should
extend the same concessions or similar concessions as may have
been extended to some small shopkeepers or some commuters or
to those who were on the verge of being completely crushed due
to the Pandemic is not by any means either a reasonable or a
legitimate expectation. Nevertheless, no arbitrariness or unfairness
could be alleged if the State does not yield to such insistence or
expectation.

¶426

91.The Doctrine of equality in Article 14 does not require the
State to treat all alike. Only the like must be treated alike. Besides,
whether any concession is necessary, the concession's nature and
quantum are all executive and fiscal policy matters. Typically the
Courts have a very minimal role in such issues.

¶427

92.The Government's position in a welfare State is comparable
to that of parents in a family set-up. In distressed situations, the
parents must take several measures to make ends meet. For
example, parents may have to make additional provisions to
provide milk to the youngest or the most vulnerable, whose
survival may be at stake. The elder or the robust siblings made to
pull on without milk for some days cannot complain of hostile
discrimination. Any such insistence might sound unfair and
unreasonable. Equality guaranteed by Article 14 is amongst

¶428

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¶429

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¶430

equals. Therefore, adopting equal standards to unequal situations
might equally violate Article 14 of the Constitution.

¶431

93.In Small Scale Industrial Manufacturers' Association
(supra), the Hon'ble Supreme Court explained that the scope of
judicial review in such matters is minimal. Accordingly, several
reliefs were applied for considering the Covid'19 Pandemic
situation. The reliefs included a grant of moratorium to repay
loans, waiver of the moratorium period already granted, waiver of
interest during the moratorium period, etc.

¶432

94.The Hon'ble Supreme Court held that the judges are not
experts in economic and fiscal regulatory matters and thus should
not encroach upon these areas and must be more reluctant to
impugn the judgment of the experts who may have concluded
unless the Court is satisfied that the decision is illegal itself.
Merely because some class/sector may not be agreeable and/or
satisfied with such packages/policy decisions, the courts, in the
exercise of the power of judicial review, must not ordinarily
interfere with the policydecisions unless such policy could be
faulted on the grounds of malafides, arbitrariness and unfairness.

¶433

95.Wisdom and advisability of economic policy are ordinarily
not amenable to judicial review. Further, economic activities

¶434

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¶436

should be viewed with greater latitude than laws touching civil
rights such as freedom of speech, religion, etc. Policy decisions
regarding various financial/relief packages declared by the
Government and R.B.I. must not ordinarily be judicially
reviewed. Accordingly, no writ of mandamus is issued for
granting such packages or modifying such packages.

¶437

96.In Indian School, Jodhpur & Ors. (supra), taking note of
the disastrous effects of the Covid'19 Pandemic, the Rajasthan
High Court ordered the scaling down of the fee structure of
private unaided schools. However, the Hon'ble Supreme Court
reversed the High Court by holding that the fee structure
formulated under the Statute could not have been interfered with,
even based on humanitarian considerations by some executive
action completely disregarding the statutory mechanism.

¶438

97.The contention about the D.M.A. Act, 2005, obliging the
D.M.A. to formulate policies and plans to include mitigation
measures for persons affected by the disaster, was disposed of by
holding that such measures are aimed merely at reducing the
risk/impact or the effects of a disaster. Therefore, expansive
meaning cannot be assigned to the provisions of the D.M.A. Act
to include the powers to reduce school fees of private unaided
schools, albeit fixed following the law.

¶439

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¶441

98.In K. Ramanathan (supra), The Hon'ble Supreme Court
was concerned with the provisions of the Essential Commodities
Act, 1955, which empowered the Government to regulate several
aspects of essential commodities like sale, purchase,
transportation, storage, price fixation, etc. Specific measures
adopted by the State under this Act were challenged.

¶442

99.The Hon'ble Supreme Court turned down the challenge by
observing that surely, when a part of the country is verging on
conditions of acute shortage or even famine, it is expected of the
Government to procure foodstuffs from surplus areas and
transport the same for distribution in deficit areas. In the State of
Tamil Nadu, like some other States, rice and paddy are the two
most essential for the sustenance of human life. It is amply borne
out from the material on record that due to the failure of the
southwest and northeast monsoons in successive years and the
consequent poor rainfall, there was a steep fall in paddy
production. In the circumstances, the State Government had no
other alternative not only to reimpose a compulsory levy on the
producers of paddy to the extent of 50% but also to introduce a
scheme for a monopoly purchase of paddy by the Government to
build up its buffer stock for distribution through the public
distribution system throughout the State. Hence, if one part of
the State faces a famine or even an acute shortage of foodstuffs, it

¶443

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¶445

is not unreasonable for the Government to acquire foodstuffs
from the surplus areas and distribute them in areas where they are
most needed.

¶446

100.In our opinion, the issue of exemptions and waivers are
issues in the realm of fiscal or executive policy. Judicial review is
minimal. Courts seldom direct the executive to formulate a policy
or interfere with a policy's terms unless demonstrated as arbitrary
and unreasonable.

¶447

101.The petitioners, as noted earlier, should have deposited the
A.R.F. on or before March 31 of the relevant year. This is what
the petitioners failed to do. Merely because the State Government
may not have insisted upon timely deposits does not mean that
the petitioners can take some advantage of these gestures of the
State Government. The State Government has extended
concessions to the petitioners by deferring the payments. Learned
Advocate General's statement about dropping interest @ 12% p.a.
on the arrears is also, in a sense, a concession.

¶448

102.For all the above reasons, the State Government's denial of
waiver or exemptions cannot be held as a palpably arbitrary,
unreasonable or unfair exercise of power. Neither the facts nor the
precedents support such contention. Therefore, the State

¶449

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¶450

201-41-2023 (F) & ORS.DOC

¶451

Government has not breached the equality mandate under Article
14 of the Constitution. Thus, the Petitioners cannot wriggle out
of their obligations based upon such a contention.

¶452

DOCTRINE OF LEGITIMATE EXPECTATION.

¶453

103.The arguments based on the Doctrine of legitimate
expectation also cannot be accepted in the present case. Food
Corporation of India (supra) provides that whether an
expectation is legitimate is a question of fact that must be
determined not according to the claimant's perception but in the
larger public interest. Further, legitimate expectation becomes
enforceable if State fails to give due weight to it.

¶454

104.In this case, as noted earlier, it is not as if the State
Government did not consider the petitioners' contentions and
representations. Some concessions were extended. Even the
interest component has now been waived. A statute and statutory
notifications govern the relationship between the parties. No
breach on the Government's part has been pleaded or established.
In such a situation, therefore, based on the Doctrine of legitimate
expectation, no relief can be granted to the petitioners.

¶455

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¶456

201-41-2023 (F) & ORS.DOC

¶457

105.Issac Peter (Supra) considers the scope of this Doctrine in
similar circumstances. As discussed above, the findings and
observations suffice to reject the contention based on the
legitimate expectation doctrine.

¶458

FORCE MAJEURE

¶459

106.Insofar as a force majeure event is concerned, firstly, there is
no clause in the so-called contract on which such a claim could be
raised. Secondly, the material on record indicates that the
petitioners were already in default by not paying the A.R.F. on or
before March 31 in advance. Thirdly, the obligation to pay the
recurring and non-recurring fees crystallized on the license issue
date.

¶460

107.The license fees, as noted earlier, are nothing but the
consideration that the petitioners must pay for the State parting
with its exclusive privilege. The State could have charged this
amount for the five-year term in advance at the license issue stage
or could have charged this amount in convenient instalments.

¶461

108.The State Government, in this case, has adopted a
combination of two modes. A portion was charged as a non-
recurring fee at the time of issue of the license. The balance had

¶462

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¶463

201-41-2023 (F) & ORS.DOC

¶464

to be paid through annual recurring fees in advance each year.
Thus, there were no further obligations to be discharged by the
State Government in this regard.

¶465

109.The argument based on force majeure purports to equate
the legal relationship to that of a license under the Easements Act
or a lease under the Transfer of Property Act. As noted earlier, this
is not correct. The petitioners, it appears, seek to draw undue
mileage from a tragic national disaster by using this crisis in a self-
serving manner. At least the Writ Court cannot lend assistance to
such a cause.

¶466

110.The decision in the case of R. Narayanan (supra) is
distinguishable. That was a case of a lessee of the Corporation,
and the Court, ultimately invoked the principles of force majeure
even though the same was not a part of the contract. Similarly,
Geeta Jeena (supra) is also distinguishable on the same ground.

¶467

111.These two cases are in no manner comparable to the
petitioners' case. The Court noted that the license fee currently
demanded was not very high, and the number of tenders was
lapsing as there were no bidders for these shops. Thus, it was held
that the DTIDC would not incur any losses if the allottees were
given an extension to the license, subject to payment of the

¶468

Page 70 of 75 6^th April 2023

¶469

201-41-2023 (F) & ORS.DOC

¶470

license fee as per the license agreement and the nominal
enhancement for a further period. No special circumstances as
prevailed in the said two cases obtained in the present cases.
Besides, the position of small shop-holders in the said two
decisions is incomparable to the position of the Petitioners in the
current cases.

¶471

112.Both the decisions relied upon by the petitioners were not
concerned with the consideration for the grant of a privilege. The
so-called contracts between the Government and the petitioners
are not executory. These are cases where the consideration
amount was fixed. Only a portion of the consideration amount
had to be paid over five years through annual recurring fees.
Therefore, based on the force majeure event, the petitioners can
claim no exemptions or waivers. Consequently, denying such
exemptions or waivers by the impugned communication cannot
be stigmatized as an arbitrary or illegitimate exercise of powers by
the State Government.

¶472

113.In Haliburton Offshore Services vs Vedanta Ltd. &
Anr.45, the Delhi High Court held that every breach by non-
cannot
performance be justified or excused merely on the
invocation of COVID'19 as a force majeure condition. The force

¶473

45 2020 SCC OnLine Delhi 542

¶474

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¶475

201-41-2023 (F) & ORS.DOC

¶476

majeure clause is to be interpreted narrowly and not broadly. The
parties should be compelled to adhere to contractual terms and
conditions, and excusing non-performance would be only in
exceptional situations. The Court found that the contractor had
breached the contractual terms even before the lockdown.

¶477

114.The Delhi High Court in Ramanand vs Girish Soni (supra)
held that waiver claims could be considered if the force majeure
clause expressly provides for it. Without such a clause, the
relationship between landlord and tenant is governed by the
Transfer of Property Act 1882. The Court referred to the
provisions of Section 108(B)(e), which requires that the property
be wholly destroyed or rendered permanently unfit for use before
any exemption or waiver could be claimed.In Raja Dhruvdev vs
Mohinder Singh (supra), the Hon'ble Supreme Court has held
that the expression "substantially and permanently unfit" does
not include a temporary non-use.

¶478

115. Thus, it is not as if, based upon a force majeure event, the Courts have invariably granted waivers or exemptions. Because the State is one of the contracting parties and is expected to act fairly and reasonably, exemptions or waivers cannot be granted under all circumstances. The private contracting parties cannot be invariably excused from compliance with their contractual Page 72 of 75 6^th April 2023

¶479

201-41-2023 (F) & ORS.DOC

¶480

obligations. The Government extended some concessions. The
issue as to whether such accommodations were adequate or not is
not a matter which admits critical examination in judicial review.
These are essentially matters of executive and fiscal policy.

¶481

116.For all the above reasons, no relief based upon the force
majeure doctrine can be granted to the Petitioners.

¶482

WRIT PETITION NO.161/2023

¶483

117.Insofar as W.P. No. 161 of 2023 is concerned, based upon
the area reduction, some benefit is already granted to the
petitioners. However, the petitioners now claim that similar
benefits should be extended by the same logic even for the earlier
period.

¶484

118.At least in the returns filed on behalf of the State
Government, there is no precise response to this argument or this
ground. However, an affidavit dealing with the main grounds in
this batch of petitions was filed. At the same time, we are unsure
whether benefits must be extended without determining relevant
factual aspects like actual user etc. Examination of this issue by
the Court would possibly involve investigating the disputed

¶485

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¶486

201-41-2023 (F) & ORS.DOC

¶487

questions about the dates from which the reduction of gaming
areas would apply and other such matters.

¶488

119.Therefore, the interests of justice would be met if the
petitioner in Writ Petition No.161/2023 is permitted to represent
the Government on the impact of the request to reduce the
gaming area on the quantum of license fees demanded. If such
representation is made, the State Government must dispose of the
same according to the law as expeditiously as possible and within
three months from receipt. Therefore, all contentions of all parties
on this issue are kept open.

¶489

CONCLUSION AND RELIEF.

¶490

120.The challenge to the impugned order dated 25.11.2022
fails and is rejected. However, in terms of the learned Advocate
General's statement, the State Government will not recover the
12% penal interest referred to in the impugned order dated
25.11.2022. This is provided the Petitioners pay the entire
principal amount within four weeks.

¶491

121.Therefore, these petitions are disposed of, and the interim
orders are hereby vacated. Accordingly, the concerned respondents
can withdraw the amounts deposited by the petitioners in this

¶492

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¶493

201-41-2023 (F) & ORS.DOC

¶494

Court since this amount represents only fifty per cent of the
arrears of A.R.F.

¶495

122.The Rule in these petitions is disposed of in the above
terms. However, liberty is granted to the Petitioners in Writ
Petition No. 161/2023, as indicated in paragraph 119 above.

¶496

123.Misc. Civil Applications in all these Petitions are also
disposed of.

¶497

124.No orders for costs.

¶498

VALMIKI SA MENEZES, J. M. S. SONAK, J.

¶499

SUCHITRA NANDAN SINGBAL Digitally signed by SUCHITRA NANDAN SINGBAL Date: 2023.04.06 16:08:16 +05'30'

¶500

Page 75 of 75 6^th April 2023

Delta Pleasure Cruise Company Pvt. Ltd. Thr. Auth. Rep. Manoj Jain and Anr. v. State of Goa Thr. Secretary and Anr.

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Delta Pleasure Cruise Company Pvt. Ltd. Thr. Auth. Rep. Manoj Jain and Anr. v. State of Goa Thr. Secretary and Anr.

Case brief

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What the court decided

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