K. N. Guruswamy Vs. The State of
Mysore & Ors  INSC 74 (24 May 1954)
BOSE, VIVIAN MAHAJAN, MEHAR CHAND (CJ)
BHAGWATI, NATWARLAL H.
AIYYAR, T.L. VENKATARAMA
CITATION: 1954 AIR 592 1955 SCR 305
CITATOR INFO :
D 1960 SC 350 (8,16) R 1963 SC 264 (5) R 1965
SC1992 (10) R 1973 SC 205 (3,4) D 1974 SC 651 (18) RF 1977 SC1496 (18) D 1984
SC1030 (17) R 1985 SC1147 (14) RF 1988 SC 157 (8)
Constitution of India, Art. 226-Writ of
mandamus-Mysore Excise Act, 1901, rules. T (1 and 2), II(8 and 10)--Auction of
liquor shops-Sale knocked down to highest bidder -Sale subject to confirmation
by Deputy Commissioner-Sale cancelled by Excise Commissioner on a higher
offer-Deputy Commissioner directed to accept the tender-Tender accepted-
Whether wrong--Whether a writ of mandamus should issue under the circumstances.
The appellant G and the fourth respondent T
were rival liquor contractors for the sale of a liquor contract for the year
1953-54 in the State of Mysore. The contract was auctioned by the Deputy
Commissioner under the authority conferred upon him by the Mysore Excise Act,
1901. The appellant's bid was the highest and the contract was knocked down in
his favour subject to formal confirmation by the, Deputy Commissioner. The
fourth respondent was present at the auction but did not bid. Instead of that
he went direct to the Excise Commissioner and made a higher offer. The Excise
Commissioner cancelled the sale in favour of G and directed the Deputy Commissioner
to take action under rule II. 10. The latter accepted T's tender. The
appollant's application for a writ of mandamus was dismissed by the High Court
but he was granted a certificate under article 133(L) of the Constitution.
Held, (i) that the appellant’s prayer for a
writ of mandamus could not be granted as the Excise Commissioner exercised his
authority (though a little irregularly because the matter did not reach him
through the proper channel) and the cancellation of sale by him under the
circumstances was proper.
(ii)The subsequent action of the Deputy
Commissioner in granting the contract to T was wrong because the arbitrary
improvisation of an ad hoc procedure to meet the exigencies of a particular
case adopted in the secrecy of an office cannot be accepted.
(iii)What the Legislature has insisted on is
that wherever there is a departure from the methods of auction and tender
provided for in the Rules, the departure must be sanctioned by Government and
must be "notified". The matter cannot be left to the arbitrary
discretion of some lesser authority.
(iv)The relief of a writ prayed for by the
appellant to cancel the contract given to T could not be granted in the present
case as barely a fortnight was left for the contract to expire and the grant of
a writ would therefore be ineffective end meaningless.
306 The relevant sections of the Mysore
Excise Act and the rules made there under &re given in the judgment.
State of Assam v. Keshab Prasad Singh'and
Others ( S.C.R. 865) and Commissioner of Police, Bombay v. Gordhandas
Bhanji 19521 S.C.R. 135) referred to.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
212 of 1953.
Under article 133(1) of the Constitution of
India against the Judgment and Order dated the 10th July, 1953, of the Mysore
High Court in Civil Petition No. 116 of 1953.
M.C. Setalvad Attorney-Generalfor India, (H.
J. Umrigar and Rajinder Narain, with him) for the appellant.
Nitoor Sriniva8a Rao, Advocate-General Of
Mysore, (R. Ganapathy Iyer, with him) for respondents Nos. 1 to 3.
M. S. K. Aiyangar for respondent No. 4.
1954. May 24. The Judgment of the Court was
delivered by BOSE J.-We are concerned in this appeal with the sale of a liquor
contract for the year 1953-54 in the State of Mysore.
The appellant, Guruswamy, and the fourth
respondent, Thimmappa, are rival liquor contractors. The contract for the City
and Taluk of Bangalore was auctioned by the third respondent, the Deputy
Commissioner, on 27th April, 1953.
The appellant's bid of Rs., 1,80.000 a month
was the highest, so the contract was knocked down in his favour subject to
formal confirmation by the Deputy Commissioner. n le same ay the appellant
deposited RS. 1,99,618-12-0.
The fourth respondent, Thimmappa, was present
at the auction but did not bid. Instead of that he went direct to the Excise
Commissioner behind the appellant's back and made an offer of Rs. 1,85,000.
On 11th May, 1953, the Excise Commissioner
passed the following order:- " The highest bid received in the recent
auction sale is Rs. 1,80,000 per mensem. As Sri Thimmappa 307 has now offered
Rs. 1,85,000 per mensem, the sale held by the Deputy Commissioner is cancelled.
The Deputy Commissioner, Bangalore District, is requested to take further
action under rule 10 of the Rules regulating the the sales of Excise
The tender given by Sri Thimmappa is herein
enclosed." The same day the Deputy Commissioner informed the appellant
that the sale had been cancelled by the Excise Commissioner and on 16th May,
1953, he was given a copy of the Excise Commissioner's order.
On 12th May, 1953, the Deputy Commissioner
made the following order:
" The Toddy sale held on the 27th April,
1953, in which a bid of Rs. 1,80,000 per month was secured. This sale has been
cancelled by the Excise Commissioner in view of the fact that a higher tender
of Rs. 1,85,000 per month has been received from Sri T. Thimmappa.
2. In these circumstances, the tender of Sri
T. Thimmappa is accepted." Protests and appeals were made to various
autborities but they proved infructuous, so, on 19th June, 1953, the appellant
applied to the State High Court at Mysore for a writ of mandamus. The petition
was dismissed but the appellant was granted a certificate under article 133(1)
of the Constitution and so has come here.
The matter is governed by the Mysore Excise
Act of 1901 and the Rules made under it. Section 15 of the Act prohibits the
sale of liquor without a licence from the Deputy Commissioner. Section 16
provides that- "It shall be lawful for the Government to grant to any person
or persons on such conditions and for such period as may seem fit the exclusive
or other privilege.............................
(2) of selling by retail any country liquor
within any local area.
308 No grantee of any privilege under this
section shall exercise the same until he has received a licence in this behalf
from the Deputy Commissioner." Section 29 authorises Government to make
rules for the purpose of carrying out the provisions of the Act.
The notification containing the Rules is
headed- ".......... the Government of His Highness the Maharaja of Mysore
are pleased to frame the following rules to regulate the disposal of the
privilege of retail vend of intoxicating liquors Then comes Rule I. 1. It runs-
"The privilege of retail vend of excisable articles shall be disposed of
either by auction or by such other method as may be notified by
Government." Rule I. 2. is also relevant. It says- "In cases where
the right of retail vend is permitted by Government to be disposed of by calling
for tenders, a notification calling for the same shall be published by the
Excise Commissioner in three successive issues of the Mysore Gazette, after
obtaining the previous approval of the Government there for." Then follow
a series of rules about auctions. Out of them, Rule II. 8 is all we need note.
It runs- ,, The shops will be knocked down to the highest bidder, but the sale
will be subject to formal confirmation by the Deputy Commissioner, who shall be
at liberty to accept or reject any bid at his discretion. Such formal
confirmation will be tantamount to an acceptance of the bid unless revised by
the Excise Commissioner for special reasons ".
Finally, we come to Rule II. 10. It is as
"Shops remaining unsold at the first
auction or shops, the sales of which have not been confirmed but cancelled,
will ordinarily be disposed of by re-auction or by tender or otherwise at the
discretion of the Deputy Commissioner later on." This Court had occasion
to observe in State of Assam v.
Keshab Prasad Singh and Others(1)-a fisheries
case that the sale of these licences forms such a lucrative (I) Civil Appeal
No. 176 of 952.
309 source of revenue that State Legislatures
have deemed, it wise not to leave the matter to unfettered executive;
discretion; accordingly legislation has been
enacted in most parts of India to regulate and control the licensing of these
trades; Acts are passed and elaborate Rules are drawn up under them. It is
evident that there is a policy and a purpose behind it all and it is equally evident
that the fetters imposed by legislation cannot be brushed aside at the pleasure
of either Government or its officers. The Rules bind State and subject
The Act and the Rules make it plain that
liquor licensing in the State of Mysore can only be done in certain specified
ways and such discretion as is left to the authorities is strictly controlled
by Statute and Rule.
Rule I. I gives two options: the licences
must either be sold by auction or "by such other method as may, be
notified by Government". It is not by such other method as may be desired
by Government or thought fit by it but by such other method as may be notified.
The notification is of the essence, and for good reason : these are matters of
public concern and of importance to the State because of the revenue reaped. It
is necessary therefore that all and sundry should know what is what by public
notification in the Gazette and it is important that this should not be left to
arbitrary executive pleasure.
Rule I. 2 indicates one of the many shapes
the "otherwise" can take one of the "otherwise" methods can
be by calling for tenders. But if that is selected, then a further fetter is
forged. There must be a public call for the tenders by publication in no less
than three successive issues of the Mysore Gazette, and more, the approval of
the Government must first be, obtained. The careful elaboration of this Rule
precludes us from holding that it can be by-passed or ignored at the will and
pleasure of an executive officer.
But the authorities are not tied down to the
method of auction and tender; that may be undesirable for a variety of reasons,
the urgency of the situation being 310 one of them; nor are they bound to
follow Rule I. 2 as an alternative. They have a discretion under Rule I. I and
can act "otherwise". But if they wish to do that, then it is
essential that due notice and publicity be given of the "otherwise"
method in a Government notification as Rule I. 1 directs. The Gazette is issued
every week and where necessary a special edition of the Gazette can be issued
at a day's notice, so the urgency of the matter is no real reason for bypassing
the Rules. What the Legislature has insisted on is that whenever there is a
departure from the methods of auction and tender provided for in the Rules, the
departure must be sanctioned by Government and must be "notified".
The matter -cannot be left to the' arbitrary discretion of some lesser
In the present case, there has not been any
notification in the Gazette to bring the "otherwise" portion of Rule
I. I into play, nor have tenders been called for in the only way which Rule I.
2 permits. We are therefore left with the normal mode of sale contemplated by
the Rules, namely public auction.
It is admitted that the contract was auctioned
on 27th April, 1953; it is admitted that the appellant bid up to Rs.
1,80,000 and it is admitted that that was the
it is also admitted that the contract was
knocked down in his favour. But that was not final because under Rule II. 8 the
sale was expressly subject to the formal confirmation of the Deputy
Commissioner who is given a discretion to accept or reject a bid. The Deputy
Commissioner did not give his sanction but equally he did not exercise his
But that can be treated as an irregularity in
this case because even if sanction had been given it was subject to revision by
the Excise Commissioner "for special reasons".
That fact distinguished this case from
Commis8ioner of Police, Bombay v. Gordhandas Bhanji(1).
Now the Excise Commissioner exercised his
authority : a little irregularly it is true because the matter did not reach
him through the proper channel; but that would not call for interference -by
way of a writ.
(I)  S .C.R. 135 311 The substance of
the thing is there and as the High Court was not a Court of appeal-it could not
have been called upon to correct a mere technical error in the exercise of a
jurisdiction which was otherwise valid. It must be remembered that the Excise
Commissioner was not a Court of law whose seisin was dependent upon the filing
of a regular appeal. The sale was cancelled and a reason was given; and the
fact that Government would be able to get an extra Rs.
5,000 a month as revenue is certainly a good
reason. The cancellation was therefore proper and as the appellant obtained no
right to the licence by the mere fact that the contract had been knocked down
in his favour (the acceptance being subject to sanction) the appellant's first
relief asking for a mandamus to confirm his right to the licence for 1953-54
cannot be granted.
We now pass on to the subsequent action of
the Deputy Commissioner in giving the contract to Thimmappa. It was contended
that the Deputy Commissioner acted within the ambit of his powers because Rule
II. 10 gives him an absolute, discretion either to re-auction or act
"otherwise" and no fetters are placed upon the "otherwise".
It was argued that the Rules which precede Rule 11. 10 deal with the initial
stages; they require either an auction or the calling for tenders by
notification under Rule 1. 2, or such other method as may have been duly
notified; but once there is an auction and it is cancelled under Rule II. 8,
then the authorities are no longer bound by any rules and have an absolute and
unfettered discretion. The urgency of the situation at that stage is advanced
as a reason.., We are unable to agree, The same word appearing in the same
section of the same set of Rules must be given the same meaning unless there is
anything to indicate the contrary.
The full content of the "otherwise"
is specified in Rule I.
1. It must be construed in the same sense in
Rule II. 10.
But that apart, this would, in our opinion,
run counter to the policy of the Legislature which is that matters of such
consequence to the State revenue cannot be dealt with arbitrarily and in the
secrecy of an office. Whatever is done must be done either under the Rules or
under a notification 312 which would receive like publicity and have like
force, and of which the people at large would have like notice.
Arbitrary improvisation of an ad hoc
procedure to meet the exigencies of a particular case is ruled out. The grant
-of the contract to Thimmappa was therefore wrong.
The next question is whether the appellant
can complain of this by way of a writ. In our opinion, he could have done so in
an ordinary case. The appellant is interested in these contracts and has a
right under the laws of the State to receive the same treatment and be given
the same chance as anybody else. Here we have Thimmappa who was present at the
auction and who did not did not that it would make any difference if he had,
for the fact remains that he made no attempt to outbid the appellant. If he had
done so it is evident that the appellant would have raised his own bid.
The procedure of tender was not open here
because there was no notification and the furtive method adopted of setting a
matter of this moment behind the backs of those interested and anxious to
compete is unjustified. Apart from all else, that in itself would in this case
have resulted in aloss to the State because, as we have said, the mere fact
that the appellant has pursued this writ with such vigour shows that he would
have bid higher. But deeper considerations are also at stake, namely, the
elimination of favouritism and nepotism and corruption not that we suggest that
that occurred here, but to permit what has occurred in this case would leave
the door wide open to the very evils which the Legislature in its wisdom has
endeavoured to avoid. All that is part and parcel of the policy of the
None of it can be ignored. We would therefore
in the ordinary course have given the appellant the writ he seeks.
But, owing to the time which this matter has
taken to reach us (a consequence for which the appellant is in no way to blame,
for he has done all he could to have an early hearing), there is barely a
fortnight of the contract left to go. We were told that the excise year for
this contract (1953-54) expires early in June. A writ would therefore be
ineffective and as it is not our practice to issue 313 meaningless writs we
must dismiss this appeal and leave the appellant content with an enunciation of
the law. But as he has in reality won his case and is prevented from reaping
the full fruits of his victory because of circumstances for which he is not
responsible, we direct that the first respondent, the State of Mysore, and the
fourth respondent, Thimmappa, pay the appellant his costs here and in the High
Court. The other respondents will bear their own costs.