P. Bhooma Reddy Vs. State of Mysore
& Ors [1968] INSC 309 (5 December 1968)
05/12/1968 BACHAWAT, R.S.
BACHAWAT, R.S.
SIKRI, S.M.
HEGDE, K.S.
CITATION: 1969 AIR 655 1969 SCR (3) 14 1969
SCC (1) 68
CITATOR INFO :
RF 1972 SC2205 (26) D 1984 SC1030 (17)
ACT:
Mysore Excise (Disposal of Privileges of
Retail Vend of Liquors) Rules, 1967, rr. 12, 17(2)(4) and 19(1)(3) and (4)-
Liquor shops in more than one tehsil-Whether r. 19(1), (3) and (4)
applicable-'At once' meaning of-Whether Divisional Commissioner can revise his
own order-R. 12 Scope of-R.
17(4), scope of-When next highest bid can be
accepted.
HEADNOTE:
The appellant was the highest bidder for the
exclusive privilege of retail vend of toddy and arrack for the year 1968-69, in
a group of 1168 shops situated in 19 tehsils in the districts of Raichur and
Gulbarga. He made the deposits of money required under rr. 7(f) 'and 10 of the
Mysore Excise (Disposal of Privileges of Retail Vend of Liquors) Rules, 1967
made under s. 71 of the Mysore Excise Act, 1965.
The highest bid of the appellant was accepted
and confirmed by the Divisional Commissioner of Gulbarga under r. 17(1) on June
4, 1968. Thereafter, the appellant made further deposits required by rr. 17(5)
and 19(2). In all he deposited about Rs. 40 lakhs by June 15. On June 18 he
applied to the Divisional Commissioner for the issue- licence. He however, did
not comply with r. 19(1) and (3) which required that a statement of immovable
Properties should be furnished and that he should furnish security or sureties,
respectively. The Divisional Commissioner Gulbarga issued a notice to the
appellant to show cause why the sale should not be cancelled and the deposits
already made forfeited under r. 20(2). The appellant prayed for two months time
for compliance with the requirements of r. 19, but the Divisional Commissioner
rejected the application and cancelled the sale. He did not pass any order
forfeiting the deposits.
The appellant filed a writ petition in the
High Court for quashing the order and under directions of the Court deposited
another Rs. 50 lakhs. The 4th respondent, who was the next highest bidder
applied to be made a party to the petition and contended that the appellant was
a benamidar for other persons and so acceptance of his tender was forbidden by
r. 12. The High Court dismissed the writ petition holding (1) that the
appellant did not comply with the mandatory requirements of r. 19 in that he
did not furnish the statements and apply 'at once' for licences as required by
r. 19(1); (2) the appellant was a benamidar; and (3) the authorities should
consider the advisability of -accepting the bid of the 4th respondent. On the
very next day after the judgment of the High Court, the respondent- State
issued licences in respect of 1168 shops to the 4th respondent.
In appeal to this Court.
HELD : The licences issued to the 4th
respondent should be cancelled and a writ of mandamus should issue for the
grant of licences to the appellant. [26 A] 15 (1)(a) The opening part of r.
19(4) requires the purchaser to furnish to 'the tehsildar' the location of
shops and the boundaries of the shop sites that is to the tahsildar within
whose tehsil the shops are situated. If the shops are situated in more than one
tehsil, the details can be fur- nished to the several tahsildars, but in such a
case it is not possible to give effect to the last part of the sub-rule and
also to the provisions of sub-rr. (3) and (4). The statement of immovable
properties under the last part of sub-r. (1) can be furnished to only one tahsildar
so that he can peruse the same; and on such perusal or on independent inquiry
ascertain under sub-r. (3) whether or not purchaser is of doubtful solvency and
satisfy himself under sub-r. (4) whether or not the value of the immovable
property tendered as security is adequate. Sub-rr. (3) and (4) do not
contemplate findings by more than one tahsildar nor do they provide any
machinery for resolving the conflict of opinion, if any, between two or more
tahsildars. The last part of sub-r. (1) and sub-rr. (3) and (4) do not apply
where the shops are situated in two or more tahsils. Consequently, those
provisions were not attracted to the sale in the present case and the appellant
was not required to comply with those provisions. [22 E] (b) In the absence of
'an independent enquiry under sub-r.
(3), the appellant could not be regarded as a
person of doubtful solvency.
(c) Under the Mysore Excise Licences (General
Conditions) Rules, 1967, a licencee is required to commence his business on
July 1. The expression 'at once' in r. 19(1), means within a reasonable time
before July 1. In the present case, the appellant sufficiently complied with
subrule. [23 D-E] (d) Under r. 17(2) it is only the excise commissioner or the
State Government that could revise the order of the divisional commissioner
confirming a sale and the divisional commissioner himself was not authorised to
revise his, own order or cancel it. [23 G] Therefore, the High Court was in
error in holding that the appellant committed breaches of r. 19.
[Rule 19 is clumsily drafted, its import is
not clear, its tight time schedule works hard-ship and its procedure is
cumbersome. The Government should immediately consider the question of
redrafting the rule.] [24 C-D] (2) The appellant was a retired inspector
drawing a pension of about Rs. 75 per month and, is not an income-tax or
wealth-tax assessee. He evidently has the backing of powerful financiers, but
the purchase is not illegal merely because the appellant obtained necessary
funds from some financiers. The onus of proving that appellant was a benamidar
was on the 4th respondent and from the materials on record it is not possible
to hold that he is a benamidar for some other person. [25 D] (3) Under r.
17(4), it is only when the highest bid is rejected that the next highest bid
may be considered. Where there is an acceptance of the highest offer and 'if
for some reason it is revised, r. 17(4) cannot be invoked. In such a case there
must be a fresh disposal of the right of retail vend of liquor in accordance
with the Rules. Therefore, the High Court erred in observing that the
'authorities should consider the -advisability of accepting the 4th respondents
bid. [26 E]
CIVIL APPELLATE JURISDICTION: Civil. Appeal
No. 2095 of 1968.
16 Appeal from the judgment and order dated
September 17, 1968 of the Mysore High Court in Writ Petition No. 1889 of 1968.
D. Narsaraju, M. C. Chagla, R. V. Pillai,
Subodh Markendya and M. Narayana Reddy, for the appellant.
M. C. Setalvad, B. R. L. Iyengar and S. P.
Nayar, for respondents Nos. 1 to 3.
M. K. Nambyar, Shivaswamy and R.
Gopalakrishnan, for respondent No. 4.
The Judgment of the Court was delivered by
Bachawat J. This appeal raises the question of the legality of the cancellation
of the sale to the appellant of the exclusive privilege of retail vend of toddy
and arrack for the year 1968-69 in a group of 1168 shops in Raichur and
Gulbarga districts under the Mysore Excise Act, 1965 and the Mysore Excise
(Disposal of Privileges of Retail Vend of Liquors) Rules, 1967. On May 10, 1968
the excise commissioner of Mysore published a notice stating that the exclusive
privilege would be sold by tender-cum-auction by the divisional commissioner,
Gulbarga on May 28 and inviting tenders by May 27. On May 27, the appellant
made a tender offering Rs. 9,99,999/- towards the monthly rental of the shops
and deposited the requisite earnest money amounting to Rs. 1,85,168/- as
required by r. 7(f). Respondent No. 4 K.V. Niranjan made a tender offering Rs.
9,69,999/- towards the monthly rental. The appellant was the only bidder
present at the auction on May 28. His offer being the highest was accepted by
the divisional commissioner, Gulbarga, under r. 17(1). The appellant deposited
another sum of Rs. 8,14,831/- which together with the earnest money made up one
month's rent as required by r. 17(5). On June 4, the divisional commissioner,
Gulbarga, confirmed the sale under r. 17(1).
On June 6, the deputy commissioner, Gulbarga,
issued a notice asking the appellant to make deposits according to r. 19
immediately and to obtain licences from the concerned tahsil officers after
completing other formalities. Under r. 19(2) the appellant was required to
deposit another one month's rent within 15 days from the date of the sale. By
June 15, the appellant deposited in all Rs. 39,99,996/- amounting to 4 months'
rent. By a letter (Ex. B-1) the appellant informed the excise commissioner that
he had deposited 4 months' rent as required by circular No. EXE. 1.
15 7 5 issued by the excise commissioner on December
12, 1967 and asked for permission to obtain licences from the deputy
commissioners of Raichur and Gulbarga. On June 18/19 he applied to the
divisional commissioner, Gulbarga, for the issue of licences. On. June 19, the
divisional commissioner, issued a 17 notice to the appellant stating that as he
had not submitted a solvency certificate of his property or the property of his
sureties he was required to deposit the balance to make up six months' rent as
required by r. 19 (3 ) (i) and to furnish security for six months rental or
sureties as require by r. 19(3) (ii) and (iii) by June 25, and that in default
action would be taken under r. 20(2). A notice to the same effect was given
orally on June 19, when he met the divisional commissioner at Bellary. On June
22, he presented a petition under s. 62 to the, state government asking for the
issue of licences, as he had complied with the conditions of the circular. In
view of the subsequent writ petition the government did not pass any orders on
this petition. The notice dated. June 19 was received by the appellant on June,
23. On June 25, he wrote to the divisional commissioner stating, that he had
complied with the conditions of the rules read with the, circular and was
entitled to the licences, that he had reason to believe that necessary orders
would be passed by the state: government on his petition under s. 62 and that
if necessary, the terms for compliance with the requirements of r. 19 be
extended.
by two months. On the same date the
divisional commissioner, rejected the application for extension of time, and
issued a notice to the appellant asking him to show cause before June 26,why in
view of the non-compliance with the notices dated June 6 and 19, the sale
should not be cancelled and the deposits already made should not be forfeited
to the government. The notice was served on his advocate on June 25 at 7.40
p.m. On June 26, the. appellant submitted a petition to the divisional
commissioner stating that he had complied with the terms of r. 19 and the
circular, that abrupt cancellation of the sale would result in irreparable
injury and that in any event the time to deposit the balance two, months'
rental be extended for a reasonable time. By an order dated June 26, (Ex. J),
the divisional commissioner rejected the application for extension of time and
cancelled the sale starting that (1) the appellant did not "at one&'
apply in writing, for licences in accordance with r. 19(1); (2) though he
deposited two months' rent as required by r. 19 (2), he did not file a
statement of his immovable properties in accordance with r. 19(1); and should
therefore be, considered as a person of doubtful solvency; (3) he was,
therefore, required to deposit another 2 months' rent under r. 19 (3) (i) and
to furnish securities for six months' rental or surety under r. 1 9 ( 3 ) (ii)
and (iii) ; (4) he failed to comply with r. 19 in spite of notices dated June 6
and' June 19; (5) the circular issued by the excise commissioner was opposed to
r. 19 and could not be acted upon; (6) that even under the circular he was
required to give two months' collateral security in addition to 4 months' cash
deposit if he was a person, of doubtful solvency; and (7) that the sale
conducting officer has no power to extend the time for compliance with the
formalities..
18 On June 28, the appellant filed writ
petition No. 1889 of 1968 against the State of Mysore and others in the High Court
of Mysore for quashing the order dated June 26, (Ex. Jr) and for the grant of
licences to him to vend liquors in the combined groups of shops in Raichur and
Gulbarga ,districts and for other reliefs. The appellant submitted that (1) he
had complied with the rules read with the cir- cular; (2) he did not file any
statement of his immovable properties under r. 19(1) as he had immovable
properties in Andhra Pradesh; (3) as there was no inquiry nor, finding by any
tahsildar ,that he was of doubtful solvency r. 19(3) was not attracted; (4)
,the divisional commissioner, Gulbarga, was not competent to ask for deposits and
security under r.
19(3), nor was he competent to pass an order
cancelling the sale; and (5) r. 19(3) was violative -of Arts. 14 and 19 of the
Constitution.
On June 28, the High Court admitted the writ
petition and ,directed the state government to stay further proceedings and to
issue licences to the appellant. Subsequently the High Court ,confirmed the
stay order on condition that the appellant would deposit another two months'
rent. The appellant deposited about Rs. 20,00,000/- in accordance with the
order. On June 30, the divisional commissioner granted licences to him. On July
1, he commenced his business in all the 1168 shops. Thereafter he ,duly
deposited about Rs.
30,00,000/- on account of rent for the months
of July, August and September. The state government, the excise -commissioner
and the divisional commissioner filed separate affidavits disputing the
appellant's contentions. The rival -tenderer, K. V. Niranjan was added as
respondent No. 4 in W.P. No. 1889 of 1968 on his own application under an order
of the High Court dated July 7. K. V. Niranjan filed an affidavit stating that
the appellant was a benamidar for other persons and the acceptance of his
tender was forbidden by r. 12. K. V. Niranjan also filed W.P. No. 2088 of 1968
for quashing the orders of the divisional commissioner dated May 28, and June
4, whereby the appellant's tender was accepted and for a mandamus directing the
acceptance of his next highest tender under r. 17(4).
The two writ petitions were heard together
and were dismissed by the High Court by a common judgment delivered on
September 17. The High Court held that (1) the appellant did not comply with
the mandatory requirements of r. 19; (2) r. 19(3) -was not ultra vires the
rule-making power under s.
71 nor violative of Arts. 14 and 19, and the
appellant was estopped from challenging it; (3) the circular of the excise
commissioner could not modify r. 19; the appellant could not rely on the
circular as he came to know of it long after the sale, nor had he complied with
its terms by depositing the entire four months rent before 19 June 12;(4) the
appellant was a benamidar for other person or persons and in view of r. 12 was
incompetent to bid and (5) the, order dated June 26 (Ex. J) was valid. On these
findings the High Court dismissed W.P. No. 1889 of 1968.
With regard to W.P. No. 2085 of 1968 the High
Court said that as the sale to the appellant had been cancelled by Ex.
J, it was not necessary to set aside the
order accepting and confirming his bid. The High Court held that under r. 17
(4) it was not obligatory on the officer conducting the sale to accept the next
highest offer of respondent No. 4. The High Court, however, said "in the
circumstances of the case, it is necessary to observe that the authorities concerned
will consider the advisability of accepting the bid of the fourth respondent,
subject to his complying with all the requirements of the Act and the
Rules." With these observations the High Court dismissed W.P. No. 2085 of
1968.
By a telegram dated September 18, the excise
commissioner instructed the divisional commissioner, Gulbarga, to direct the
tahsildars of Raichur and Gulbarga to issue licences to respondent No. 4 on his
complying with certain conditions.
On the same date licences were issued to- respondent
No. 4.
On September 19, the High Court dismissed an
application for stay of operation of its order dated September 17, and on the
same day granted to the appellant a certificate under Art. 1 3 3 ( 1 ) (b) of
the Constitution. On September 25, the appellant filed a stay application in
this Court. On September 27, the Court passed an order restraining the
respondents from forfeiting the deposits made by the appellant.
It is convenient at this stage to refer to
the relevant provisions of the Mysore Excise Act, 1965 and the Mysore Excise
(Disposal of Privileges of Retail Vend of Liquors) Rules, 1967. Section 3(1) of
the Act provides that the excise commissioner, "shall be the chief
controlling authority in all matters connected with the administration of this
Act." Section 15(1) provides that "no intoxicant shall be sold except
under the authority and subject to the terms and conditions of a licence
granted in that behalf." Under S. 15 (2) a licence for sale can be granted
(a) by the deputy commissioner if the sale is within a district or (b) by the
excise commissioner if the sale -is in more than one districts Section 17 ( 1 )
(b) empowers the state government to lease to any person, on such conditions
and for such period as it thinks fit the exclusive or other right of selling by
the wholesale or by retail any Indian liquors within any specified area.
Contravention of the Act or any Rules made thereunder is punishable under s.
32. Section 71 empowers the state government to make rules. Rule 3 of the Mysore
Excise (Disposal of Privileges of Retail Vend of Liquors) Rules, 1967 provides
that the right of retail vend of liquors shall 20 be disposed of by tender or
by auction or by tender-cum- auction. The auction is conducted by the deputy
commissioner or the divisional commissioner under r. 5 and the tender has to be
made to them under r. 7 (1). The tenderer is required by r. 7 (f ) to deposit
as, earnest money an amount equal to 1/4 of the shop rental of the previous
year of the shop or groups of shops. The appellant complied with the
requirement of r. 7 (f ). Rule 10 requires an intending bidder or tenderer to
furnish a certificate of his solvency or two sureties having similar
certificates or bank guarantee or cash deposit to cover four times the earnest
money fixed under rule 7(f). It is not disputed that the appellant made
sufficient cash deposits in compliance with r. 10. Rule 12 read & :
"Benami bids not allowed. No person except a power of attorney holder
shall be entitled to bid for another person." The sale to the appellant
was not cancelled on the ground that he bid for another person. Rule 17
regulates the procedure at sales.
Rule 17(1) empowers, the officer conducting
the auction to accept the highest offer. The acceptance is subject to the condition
of confirmation by the deputy commissioner or by the divisional commissioner.
The confirmation is effective unless revised by the excise commissioner or the
government.
Rule 17(2) empowers the excise commissioner
or the government to revise the order of confirmation. Rule 17(4) provides that
if the officer conducting the sale rejects the highest bid or offer, he may
either accept the next highest bid or offer or re-sell the shop. Rule 17 (5)
requires the person whose bid is accepted to make a further deposit which
together with the earnest money would make up one month's rent. The appellant
made the deposit required by r. 17(5).
His bid was accepted and was later confirmed
by the divisional commissioner. Neither the excise commissioner nor the state government
passed any order under r. 17(2) revising the decision confirming the acceptance
of his bid.
Rule 19 provides as follows :- "19
Successful bidder to apply for licence:
Every person to whom the right of retail vend
of liquors is sold or whose tender in respect thereof has been accepted under
these rules and who has made deposits as hereinbefore provided shall (1) at
once apply in writing for licence for such shop confirmed in his name and
within a week thereafter furnish to the Tahsildar the, details of boundaries of
the site selected by him for the location of the shop and a statement in the
prescribed form annexed to the notification showing details of the immovable
property possessed by him or in which he has an interest together with accurate
and full details of encumbrances, if any, thereon;
22 (5) The purchaser shall get the bond and
the mortgage deed registered under the Indian Registration Act, 1908 at his
expense.
(6) The purchaser or his surety shall produce
an encumbrance certificate in cases where immovable property is mortgaged to
the Governor of Mysore." It is not alleged that the appellant did not
furnish the details of the shop sites as required by r. 19 sub. r. (1) within
15 days of the date of the confirmation of the sale.
The appellant made a deposit of two months
rent as required by r. 19 sub-r. (2). The appellant did not furnish a statement
of immovable properties under r. 19 sub-r. (1) nor did not he furnish security
or sureties under r. 19 sub-r.
(3). It is also alleged that he did not apply
for licences at once as required by r. 19 sub-r. (1). Rule 20(2) provides :
"On failure to comply with the provisions of rr.
17 and 19 the deposits already made shall be
forfeited and the right of retail vend of liquors in such shop or groups
disposed of in such manner under these rules, as the Excise Commissioner may
direct". No order was passed by the excise commissioner under r. 20(2).
In our opinion, the provision of r. 19sub.
r.(1) requiring the successful bidder to furnish a statement of his properties
to the Tahsildar and the provisions of r. 19 sub- rr. (3) and (4) do not apply
where the shops in respect of which the right of retail vend is sold is
situated in more than one tahsil. The opening part of r. 19 sub-r.(1) requires
the purchaser to furnish to "the tahsildar" the location of the shops
and the boundaries of the shop sites.
The expression "the tahsildar" is
not defined, but it is reasonable to think that the details regarding the shops
should be furnished to the tahsildar within whose tahsil the shops are
situated. If the shops are situated in more than one tahsil, the details can be
furnished to several tahsildars. But it is not possible to give effect to the
last part of sub-rule (1) and the provisions of sub-rr. (3) and (4) in cases
where the shops are situated in more than one tahsil. The statement of
immovable properties under the last part of sub-r. (1 ) can be furnished to,
only one tahsildar so that he can peruse the same and on such perusal or on
independent inquiry ascertain under sub-r. (3) whether or not the purchaser is
of doubtful solvency and satisfy himself under sub-r. (4)whether or not the
value of the immovable properties tendered as security is adequate. Sub- rr.
(3) and (4) do not contemplate findings by more than one tahsildar nor do they
provide any machinery for resolving the conflict of opinion, if any, between
two or more tahsildars. In our opinion, the last part of sub-r. (1) and the
provisions of sub-rr. (3) and (4) do not apply where the shops are situated in
two or more tahsils.
23 The right of retail vend sold to the
appellant is in respect of shops situated in 19 Tahsils in the districts of
Raichur and Gulbarga Consequently, those provisions were not attracted to this
sale and the appellant was not required to comply with those provisions.
The divisional commissioner, Gulbarga, could
not record a finding under r. 19 sub-r. (3) that the purchaser was of doubtful
solvency. Even a tahsildar could not record such a finding without making an
independent inquiry where no statement regarding. immovable properties was
furnished under sub-rule (1). No independent inquiry under sub-r. (3) was made
by any tahsildar For this reason also the appellant cannot be regarded as a
person of doubtful solvency and he was therefore not required to comply with
the provisions of sub-r. (3). The appellant has so far deposited about Rs.
90,00,000/- and it is impossible to believe that he is a person of doubtful,
solvency.
The remaining charge is that the appellant
did not "at once"' apply for licences. Rule 20(2) provides for the
forfeiture of the deposits on failure to comply with the provisions of r. 19.
Under the Mysore Excise Licences (General Conditions) Rules, 1967 a licensee is
required to commence his business on July 1. The purpose of the Act and the
Rules is achieved if the application for licence is made within sufficient time
so as to enable the issue of licences before July 1. Having regard to the
object of the Act and the Rules the expression "at once" in r. 19
sub.-r. (1) means within a reasonable time before July 1. It could not have,
been intended that the deposits would be forfeited where the purchaser applies
for licence within a reasonable time. The appellant sufficiently complied with
r. 19 sub-r.
(1) by applying under Ex. B, to the excise
commissioner for permission to obtain licences and by applying to the
divisional commissioner on June 18 for the issue of licences.
The divisional commissioner, Gulbarga was not
competent to pass the impugned order (Ex, J) cancelling the sale. Only the
excise commissioner or the state government could under r. 17(2) revise his
previous order confirming the sale and on such revision cancel the sale. The
divisional commissioner, Gulbarga was not authorised by r. 17(2) to revise his
own order or to cancel it. In hi-,, notice dated June 19, the divisional
commissioner, Gulbarga, stated that he would take action under r. 20(2). In his
notice dated June 25, he asked the appellant to show cause why the sale should
not be cancelled and why the deposits already made should not be forfeited to
the government. But he did not pass any order forfeiting the deposits. Nor was
he competent to pass any order under r. 20(2). Only the excise commissioner
could pass such an order.
24 It follows that the High Court was in
error in holding that the appellant committed -breaches of r. 19. The finding
of the divisional commissioner, Gulbarga, that the appellant committed such
breaches is erroneous, nor was he competent to record the finding or to pass an
order cancelling the sale.
In view of this conclusion it is not
necessary to consider whether r. 19 sub-r. (3) offends Arts. 14 and 19 of the
Constitution and we express no opinion on the question. We cannot agree -with
the proposition that the appellant is estopped from challenging the
constitutionality and vires of the sub-rule. It is true that .r. 24 provides
that the purchaser shall be bound by all the rules. But if r. 19 sub-r. (3)
offends Arts. 14 and 19 it is non est and there can be no question of the
appellant being bound by a rule which does not exist. Though we express no
opinion on the vires ,of the sub-rule, we must observe that r. 19 is clumsily
drafted, its import is not clear, its tight time- schedule works hardship and
its ,procedure is cumbersome.
The government should immediately ,consider
the question of re-drafting r. 19. It may be noted that Mr. Narasaraju conceded
that r. 19 is not beyond the rule-making powers of the state government.
The appellant relied on the circular No.
EXE.1.1575/67 (Ex. E) dated December 12, 1967. Exhibit E is a letter from 'the
excise commissioner to the deputy commissioner, Bangalore, ,,on the subject of
securities to be furnished by the excise contractors. The letter stated that
the procedure of r. 19 was number-some and not clear, that several deputy
commissioners sought clarifications on 'the subject and that the state
government had -been moved to clarify and simplify the matter. The excise
commissioner directed that pending receipt of the government order the
following procedure should be followed : In addition to obtaining two months'
cash deposits, (1) two months cash security might be accepted and in the
absence of cash security four months' collateral security might be insisted;
(2) if the deputy commissioner/tahsildar was doubtful about the solvency of the
contractor -he could insist on six months' collateral security and (3) while
-accepting the collateral securities care should be taken to see that "the
contractor executed the necessary mortgage bond. Admittedly, similar
instructions were issued to other deputy commissioners -and were enforced in
several districts. There is a dispute on the ,question whether the circular was
sent to the districts of Gulbarga and Raichur. In so far as the circular
attempted to modify r. 19 it was in-effective. The excise commissioner, had no
power to -abrogate or modify a rule framed under s. 71. On behalf of the
appellant it was argued that as the chief controlling authority the ,excise
commissioner could frame regulations under S. 3 read with r.
24 and could issue general instructions on
the subject of taking 25 security in cases not covered by r. 19. We express no
opinion on this question, as the government has already withdrawn the circular.
But we must observe that relying on this circular the appellant deposited two
months' rent as required by the circular in addition to the two months' rent as
required by r. 19 sub-r. (2) and that such deposits were duly made within 15
days from the date of the sale.
However, it is not necessary for the
appellant to rely on the terms of the circular. He has complied with the
provisions of r. 19 and the sale in his favour cannot be cancelled.
On behalf of respondent No. 4 it is argued
that the appellant bought the right of retail vend as benamidar for some other
person, that his benami bid was opposed to r. 12 and could not be accepted and
that as the sale of liquor by the real buyer without a licence in his favour
was illegal in view of ss. 15 and 26, the appellant was not entitled to any
relief in view of the decision in Venkata Subbayya v.
Attar Sheik Mastan(1). The onus is upon the
respondent to prove that the appellant made a benami purchase. It appears that
the appellant is a retired inspector drawing a pension of about Rs. 75/- per
month. He is not an income-tax or a wealth-tax assessee, He does not own any
property in Mysore State. The appellant says that he owns immovable properties
in Andhra Pradesh but he did not file the title deeds in respect of them.
However, the appellant was in possession of a large amount of ready cash.
Before June 25, he deposited about Rs. 40 lakhs and thereafter deposited about
Rs. 50 lakhs. There can be no doubt that the appellant has the backing of
powerful financiers. There is no specific charge that some named person is the
real purchaser. From the materials on the record it is not possible to record a
finding that the -appellant is a benamidar and that that some other person is
the real purchaser. The purchase is not illegal merely because the appellant
obtained the necessary funds from some financiers. The government never alleged
that the appellant's bid was a benami bid and opposed to r. 12. His bid was
accepted and such acceptance was subsequently confirmed. Under r. 17(1) the
confirmation is effective until revised by the appropriate authority. It is
neither alleged nor proved that sonic person other than the appellant had been
managing the shops and selling liquor in contravention of s. 15. Respondent
No.4 has failed to establish contravention of either r. 12 or s. 15. The High
Court was in error in holding that the appellants bid was opposed to r. 12.
Having regard to the fact that the appellant
had already deposited about Rs. 40 lakhs the divisional commissioner, Gulbarga,
acted rather precipitately and harshly in cancelling the sale.
(1) A.I.R. 1949 Mad. 252.
Sup CI/69-3 26 For the reasons already given the
order of cancellation (Ex.J) is invalid. The order must be set aside and a writ
of mandamus must issue for the grant of licences to the appellant.
Some complication arises out of the fact that
the licences have been granted to respondent No. 4 after the disposal of the,
writ petitions by the High Court. Licences cannot be given to both the
appellant and respondent No. 4 for retail vend of liquors in respect of the
same groups of shops. In order to give effect to our order for the issue of
licences in favour of the appellant it is necessary to give the further
direction that the licences issued to respondent No. 4 should be cancelled. We
can give this direction as respondent No. 4 is a party to this appeal.
While holding that r. 17 sub-r. (4) did not
compel the officer conducting the sale to accept the next highest offer of
respondent No. 4 the High Court observed that the authorities concerned should
consider the advisibility of accepting his bid. This observation is not in
accordance with law and has given rise to unnecessary complications.
Rule 17(4) provides that "if the officer
conducting the sale rejects the highest bid or offer, he may either accept the
next highest bid or offer or re-sell the shop." The sub-rule cannot be
invoked if the officer conducting the sale has accepted the highest offer. In
the present case, the officer accepted the appellant's highest offer and later
confirmed it. The confirmation is still effective under r.
17(1). If for some reason the confirmation is
subsequently revised or set aside, the officer cannot act under r. 17(4).
In such a case there must be a fresh disposal
of the right of retail vend of liquor in accordance with the Rules. It follows
that the bid of respondent No. 4 could not be accepted under r. 17(4) after the
disposal of the writ petitions on September 19.
It is rather surprising that the Government
acted so hastily and issued licences to respondent No. 4 on or about September
18. It is not quite clear how licences in respect of 1168 shops could be issued
on a single day. The effect of this precipitate action on, the part of the
government was that the appellant could not on the next day obtain a stay of
the operation of the High Court's order. There is ground for suspecting that
the government was favouring respondent No. 4.
In the result the appeal is allowed with
costs in this Court and in the High Court. The order passed by the High Court
is set aside. Writ Petition No. 1889 of 1968 is allowed.
The order dated June 26, 1968 (Ex. J) is set
aside.
Respondents 1 and 2 ;ire directed to grant
immediately licences to the appellant to vend liquors in the combined groups of
shops in Raichur and 27 Gulbarga districts for the remaining period of the year
1968-1969. Respondents 1 and 2 are also directed to cancel forthwith the
licences issued to respondent No. 4 in respect of the aforesaid groups of
shops.
Y.P. Appeal allowed.
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