Full Judgment Text
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PETITIONER:
P. BHOOMA REDDY
Vs.
RESPONDENT:
STATE OF MYSORE & ORS.
DATE OF JUDGMENT:
05/12/1968
BENCH:
BACHAWAT, R.S.
BENCH:
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
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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
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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]
JUDGMENT:
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
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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
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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.
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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
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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
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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.
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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
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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).
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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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