State
of Madhya Pradesh & Ors Vs. M/S M.V. Vyavsaya
& Co. [1996] INSC 1518 (28 November 1996)
B.P.
Jeevan Reddy, Suhas C. Sen B.P. Jeevan Reddy.J.
ACT:
HEAD NOTE:
THE
28TH DAY OF NOVEMBER, 1996 Present:
Hon'ble
Mr.Justice B.P.Jeevan Reddy Hon'ble Mr.Justice Suhas C. Sen Satish K. Agnihotri,
Adv. for the appellants.
The
following Judgment of the Court was delivered :
The
several orders made by a learned Single Judge of the Madhya Pradesh High Court
in a writ petition, impugned herein, made in total disregard of the basic norms
governing the exercise of writ jurisdiction by the High Court, disclose a
disturbing state of affairs affecting public finances. The facts stated
hereinafter speak for themselves.
For
the year 1995-96 [commencing on April 1, 1995 and ending with June 30, 1996],
public auctions were held for grant of licences for country liquor as well as
Indian made foreign liquor [IMFL] in Madhya Pradesh, sometime in the months of
February-March, 1995. The respondent-firm was the highest bidder in respect of Gwalior
Township Group No.2, comprising twelve shops of country liquor and seven shops
of IMFL, in a sum of Rs. 8.52 crores. Its bid was accepted. The appellants say
that according to the rules and the conditions specified in the auction notification,
any person desiring to participate in the auction shall have to pay an amount
equivalent to twenty percent of the amount of the licence fee of the preceding
excise year. If his bid is accepted, he has to deposit an amount equivalent to
1/6th of the total bid in cash or by bank draft soon after the auction, which
amount shall be adjusted against the licence fee payable for the last two
months of the excise year. In addition say, has to furnish a bank guarantee or
a bank draft or a banker's cheque/order for an amount equal to 1/12th of the
total bid amount during the course of the excise year. The appellants say that
the respondent-firm deposited 1/9th of bid amount, i.e., Rs. 1,42,00,000/- and
took out the licences but failed to furnish the bank guarantee to the extent of
1/12th of the bid amount as required by rules/conditions of auction. The
appellants say further that the respondent has also subsequently failed to pay
the monthly rental for the month of May 1995. For the aforesaid defaults, they
say, notices were given proposing cancellation of licence granted to it. Under
this show cause notice, the respondent was called upon to explain by May 19, 1995 why its licences should not be
cancelled and the group be re-auctioned. [These facts are taken from the
counter- affidavit filed by the District Excise Officer in the High Court.] On May 17, 1995, the respondent filed Writ Petition
No.711 of 1995 in the Madhya Pradesh High Court [Gwalior Bench] complaining
that though he has complied with all the auction and rules, the authorities are
not issuing the permits and other forms on account of which their shops are
facing closure. The respondent also complained that while not issuing the
permits and other forms, the authorities are proposing to cancel the writ
petitioner's licences, which was characterised as unjust and illegal. It prayed
for the issuance of a writ "directing the respondents [State of Madhya Pradesh and the Excise authorities] not to
withhold the permits and issue forms of the petitioner and to ensure that the
supply of liquor is made to the petitioner as per the terms and conditions of
the licence". Interim relief was also asked for in the same terms.
The
writ petition came up before the Vacation Judge who directed notice to the
respondents in the writ petition. On May 22, 1995, a learned Single Judge heard both
the parties and passed orders, directing the authorities, "not to re-
auction the liquor shops which are subject-matter or Writ Petition No. 602/1995
and Writ Petition No. 711/1995. The requisite supply would also be made to the
petitioner. The petitioner in both the petitions, i.e., W.P.No. 602 of 1995 and
W.P.No.711 of 1995 has given an undertaking to this Court that all financial
commitments to which he may ultimately be found liable would be met by
him". [Emphasis supplied]. This order was passed after noticing the case
of both the writ petitioner and the authorities. It is significant to notice
the purport of the order: the authorities were restrained from conducting a reauction;
they were also directed to make the requisite supplies - all on a mere
'undertaking' of the firm [licencee] to pay amounts which may ultimately be
found payable.
The
matters came up before the learned Single Judge again on August 11, 1995. The order on this pay refers to
two other writ petitions filed by the respondent firm, viz., Writ Petition Nos.
955 of 1995 and Writ Petition Nos. 1060 of 1995. The last para of the order,
which is the only material para, reads: "The learned counsel for the
petitioner has pointed out that in the letter dated 3rd of August, 1995 some
sale price has been mentioned. According to him, such course was never adopted
earlier. It may be seen that the petitioner is not to deposit any amount now.
As such, this amount would also be dealt with at the time when the judgment is
pronounced. So far as seized liquor is concerned, if the petitioner deposits
the requisite duty, it would be entitled to have the same. This would be again
subject to the final decision." Not only it was observed, without giving
any reasons, that the licencee-firm "is not to deposit any amount
now", the authorities were directed to release the seized liquor on
payment of 'duty' alone. No reference to nor any direction to the licencee to
pay the arrears of licence fee and other amounts due was made.
On August 25, 1995, the matter was taken up again in
the forenoon. It was ordered that the matter will be taken up after lunch and
that till then no further action be taken. After lunch, the learned Judge
noticed the contentions of the parties and posted the matter to August 28, 1995. Till then, it was directed that no
further action be taken. The matter appears to have been taken up again on August 30, 1995. The second para of the order
passed on that day, which alone is relevant, reads: "The State is
agreeable to hand over 1/4th of the liquor which was taken possession of on
22nd of August, 1995. The petitioner is permitted to sell the same. This is,
however, subject to the condition that the entire sale proceeds of this liquor
and also other sales made on 30th of August, 1995 and 31st of August, 1995 are
deposited with the State authorities".
On September 4, 1995, two different orders were passed.
The
first order refers to an earlier order dated August 21, 1995 whereunder the
statement of the writ petitioner that he would deposit a sum of Rupees five lakhs
on September 1, 1995 was recorded. The order says that the petitioner has since
deposited the said amount and then says. "the State is agreeable to
release the remaining seized stock. This is, however, subject to certain
riders. These riders are that the sales be made at one or two shops only. The
further rider is that these sales have [to be] made under the supervision of
the officials of Excise Department.
Accordingly,
the Excise Department would release the seized stock and permit the sale at two
retail outlets. The functionaries of the Excise Department would not interfere
with sale process. Whatever sale amount is received, it would be handed over to
the office after obtaining that day.
The
interim order passed on 25th of August, 1995 shall continue". The second
order passed on that day disposes of Writ Petition No. 711 of 1995 as having
become infructuous.
It
reads:
"1.
The prayer made in this petition is more or less rendered infructuous. The
grievance of the petitioner was that permits are not being issued to it even
though the requisite amount is being deposited in the treasury. The challans on
the basis of which supply of liquor was being claimed stands exhausted.
The
grievance of the petitioner does not survive.
2.
This petition is disposed of accordingly." Though Writ Petition No. 711 of
1995 was disposed of as stated above on September 4, 1995, the matter came up again before
the learned Judge on September
11, 1995. The learned
Judge ordered, ".....Some challans have been placed on record. The State
will taken notice of the same and release the liquor. This is, however, subject
to the condition that the entire sale proceeds would be deposited with the State.
The
State would be at liberty to supervise the source from which the liquor is
purchased and also supervise the shops from where liquor is to be sold. Seizure
of this liquor would not be effected". The learned Judge made a further
curious direction to the following effect: "As there is a constant
dispute, Shri H.D. Gupta, Advocate, is appointed as Commissioner. In future any
grievance of this nature be brought to his notice and he would act as conduit
between the State and the petitioner. The State would release liquor on the
same terms as being done in the month of April 1995".
The
aforesaid Commissioner was to get a fee of Rs. 250/- for every grievance on any
single day.
The
matter was again taken up on September 14, 1995.
The
learned Judge refers to a statement of the petitioner's counsel that the
petitioner "would be depositing a sum of Rs. one lac for the purpose of
purchasing the liquor" and notes his request that he should be given back
some amount for re-investment. The learned Judge accordingly directed that
"the petitioner be given liquor on the day the challan is filled up. 75%
of the State proceeds would be deposited with the State and 25% be kept by the
contractor for reinvestment." On September 19, 1995, matter was taken up again. The learned
Judge noticed the grievance of the State that the petitioner is not depositing
the licence fees and also noted the contention of the writ petitioner that is
not doubt in arrears but these arrears have mounted only because of non- supply
of liquor form time to time. The learned Judge also noted the grievance of the
writ petitioner that its employees were threatened with arrest also. On the
basis of the said representation and in view of the alleged constant disputes
between the parties, the learned Judge made yet another curious direction to
the following effect: "The petitioner to give requisite facts and figures
before the commission. The commission to furnish its report by 25th September 1995. The commission would consist of Shri
R.A. Roman and Shri H.D. Gupta, Advocates. They would be paid a fee of Rs.
2500/- each". The learned Judge then referred to the statement of the writ
petitioner that it had deposited a sum of Rs. 82,000/- and stated that on such
deposit, liquor would be supplied at the rates at which supplies were made in
April, 1995. The learned Judge also made certain further directions with
respect to part deposit of sale proceeds and part release in favour of the writ
petitioner.
We may
mention that though we Called for the records of the writ petition, the records
sent to us do not contain orders dated August 25, 1995, August 25, 1995, August
30, 1995, September 4, 1995 [first order, as we have called it], September 11,
1995, September 14, 1995 and September 19, 1995. These orders have, of course,
been supplied by the State in the material paper book filed by it and are taken
from the said material paper book.
The
State has preferred the present Special Leave Petition against the aforesaid
orders. This court entertained the same and passed an order on December 8, 1995 staying the operation of the orders
impugned in the Special Leave Petition. The Court further directed that
"the respondent [writ petitioner] shall not be entitled to lift any
supplies unless he pays up all the arrears due". It is brought to our
notice that pursuant to the said order, the Commissioner of Excise has stopped
all supplies of liquor to the respondent from the date of receipt of a copy of
the order and that all the concerned shops were taken possession of by the department
on December 12, 1995 and re-auctioned on December 23, 1995. It is further
stated in the letter dated 185th March, 1996 from the Excise Officer, Gwalior
to the Deputy Commissioner [Excise], Gwalior Division- a copy o which has been
placed before us by the learned counsel for the State- appellant- that as on
the date of re-auction, the total amount due from the respondent-firm was in
sum of Rs.2,88,54,431/-.
Though
the respondent is served, it has neither appeared nor is it represented by
counsel. After hearing the learned counsel for the petitioner-State, we called
upon the Madhya Pradesh High Court [Gwalior Bench] to sent to this Court the
entire records of this writ petition [No. 711 of 1995] which have accordingly
been sent. We have perused the same.
Leave
granted.
It has
been repeatedly held by this Court that the power of the high Court under
Article 226 of the Constitution is not akin to appellate power. It is a
supervisory power. While exercising this power, the court does not go into the
merits of the decision taken by the authorities concerned but only ensures that
the decision is arrived at in accordance with the procedure prescribed by law
and in accordance with the principles of natural justice wherever applicable.
Further, where there are disputed questions of fact, the High Court does not
normally go into or adjudicate upon the disputed questions of fact. Yet another
principle which has been repeatedly affirmed by this Court is that a person who
solemnly enters into a contract cannot be allowed to wriggle out of it by
resorting to Article 226 of the Constitution. This Court has also repeatedly emphasised
the inadvisability of making interim orders which have the effect of depriving
the State [the people of the State] of the revenues legitimately due to it. The
court should not take upon itself the responsibility of staying the recovery of
amounts due to State unless a clear case of illegality is made out and the
balance of convenience is duly considered. Otherwise, the odium of unlawfully
depriving the State/the people of the monies lawfully due to it/them would lie
upon the court.
Particularly
in the case of excise contracts, generally speaking, it is well nigh impossible
to recover any arrears after the event. It is for this reason that the rules of
all the States insist upon adequate deposits and securities beforehand to be
adjusted towards the last months of the year. These provisions and the spirit
underlying them cannot be ignored or violated. Now, in the case of this
contract, the loss to the State is the whopping sum of Rs.2,88,54,431/-. How
much of this loss is attributable to the impugned orders is difficult to assess
but it can be said with certainty that but for these orders, the State would
have conducted the re-auction in the month of May 1995 itself in which event
the loss to the State would have been far less. The respondent-firm carried on
till December, 1995 without properly and fully paying the amounts due under the
orders of the court. A very, very sad tale.
In
Chief Constable of the North
Wales Police v. Evans
[1983 (3) All. Eng. Reports 141], the House of Lords has observed that
"the purpose of judicial review is to ensure that the individual receives
fair treatment, and ensure that the individual receives fair treatment, and not
to ensure that the authority, after according fair treatment, reaches on a
matter which it is authorised or enjoined by law to decide for itself a
conclusion which is correct in the eyes of the court". The principle has
been referred to with approval in innumerable decisions of this Court. This
decision clearly sets out the limits of the supervisory power under Article 226
of the Constitution and emphasises that the jurisdiction under the said Article
is nether unlimited nor unrestrained, much less unguided.
A
Constitution Bench of this Court held in Har Shankar & Ors. v. The Deputy
Excise and Taxation Commissioner & Ors. [1975 (1) S.C.C. 737] that
"the writ jurisdiction of High Courts under Article 226 of the
Constitution is not intended to facilitate avoidance of obligations voluntarily
incurred". Of course, where there is a statutory violation, interference
would be permissible even in the case of a contract but not where the relevant
facts are disputed and which dispute calls for an elaborate enquiry which
cannot be conveniently done by the High Court in a writ petition.
A
perusal of the orders extracted hereinabove show that the learned Single Judge-
it appears that almost all the orders are made by the same learned Judge [T.S. Doabia,
J.]- has not kept in view any of the norms governing the exercise of writ
jurisdiction of the High Court. The relevant facts were seriously disputed
before him, each party alleging that the other has violated the terms and
conditions of licence and the rules. The repeated interim orders passed
permitting the supply of liquor to the writ petitioner, sale of liquor by the
writ petitioner under the supervision of the authorities, partial deposits of
the amounts with the authorities and release of the balance of the amounts of
the writ petitioner, appointment of an advocate commissioner to act as a
"conduit" between the State and the writ petitioner and appointing a
"commission" comprising of two advocates to look into and decide the
daily dispute arising between the parties - are all the outcome of a total
disregard of the norms governing the writ jurisdiction. We are surprised that
such orders could ever have been passed by the High Court- at any rate, without
safeguarding the interests of the State. The proper course for the High Court
was to brought to their notice that it involved disputed question of fact. It
is equally relevant to notice that in none of the orders mentioned hereinabove
has the learned Judge recorded any finding that the State or its authorities have
acted in contravention of the law or that they have failed to perform any of
their duties enjoined by any of the relevant statutory provisions. Similarly,
no finding is recorded that the licencee [respondent herein] has done what all
it had to do under the terms of the contract and the law. Indeed, at one stage,
the respondent- firm admitted that it is in arrears of excise revenue but it
blamed it on the alleged wrongful acts of the authorities.
Yet
the learned Judge went on supervising the case on an almost day-to-day basis.
This was certainly no part of the High Court's function. It has also resulted
in substantial loss of revenue to the State- to the people.
For
the above reasons, the appeals are allowed and the orders impugned herein are
set aside. The writ petition No.711 of 1995 is dismissed. The question then
arises- what should happen to the huge arrears due from the respondent.
The
order dated May 22,
1995 records an
"undertaking" given by the licencee-firm to the High Court to the
effect that "all financial commitments to which he may ultimately be found
liable would be met by have been dismissed. His licences have been cancelled,
re-auction conducted and loss due to the State - to the people - has been
ascertained. The High Court ought to enforce the undertaking now by proceeding
against the respondent-firm [licencee] and all its partners. The violation of
the undertaking, it needs to be mentioned, amounts to contempt of court. It is
the duty of the court to try to repair the damage to the extent possible. No
one should be allowed to suffer on account of the act(s) of the court. We,
therefore, request the High Court to initiate appropriate proceedings for
enforcing the "undertaking" aforesaid. Even otherwise, the interim
orders passed are always subject to the final orders in the matter.
The
interim orders can always be corrected or revised at the final stage.
Since
the respondent is not represented before us, we are desisting from imposing
penal costs which we would have imposed otherwise.
Back
Pages: 1 2
