Demand on Gambling Casinos for Arrears of ₹321.66 Cr ARF during Covid: Bombay HC at Goa directs to Pay Principal, waives Interest [Read Order]

The Bombay High Court at Goa has directed the petitioner companies to pay the principal amount demanded on gambling casinos for arrears of ₹321.66 Cr Annual Recurring Fees (A.R.F.) during covid and waived the interest.

The Petitioners have been issued licenses to operate offshore and onshore casinos in the State of Goa under the provisions of the Goa Public Gambling Act, 1976. These licenses are subject to several terms and conditions, including the payment of ARF prescribed in the statutory notification issued under the Gambling Act.

As a part of safety in Covid'19 Pandemic lockdown for periods between 01.04.2020 and 31.10.2020 and 01.05.2021 and 30.09.2021 (closure periods) affected the Petitioners' casino operations. 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.

The State 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 Petitioners, on various grounds, contended that the State should not be permitted to insist upon recovery of arrears towards A.R.F.

It was contended 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.

The Petitioners also invoked the Doctrine of legitimate expectation. They submitted 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.

The Petitioners contended 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. It was argued by the petitioners that they have paid the A.R.F. during the partial closure periods without demur.

The State Government has adopted a combination of two modes where a portion was charged as a non-recurring fee at the time of issue of the license. The balance had to be paid through annual recurring fees in advance each year.

The Two Judge Bench comprising Justice Valmiki Sa Menezes and Justice M S Sonak 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. Further held that the Petitioners pay the entire principal amount within four weeks and waived the interest.

To Read the full text of the Order CLICK HERE

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