Full Judgment Text
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PETITIONER:
STATE OF MADHYA PRADESH & ORS.
Vs.
RESPONDENT:
M/S.M.V. VYAVSAYA & CO.
DATE OF JUDGMENT: 28/11/1996
BENCH:
B.P. JEEVAN REDDY, SUHAS C. SEN
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
B. P JEEVAN REDDY, J.
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 sex 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
license fee of the preceding exercise 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 license
fee payable for the last two months of the exercise year. In
addition thereto, the successful bidder, the appellants 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 within seven days of the auction, to be
adjusted during the course of the excise year. The
appellants say that the respondent-firm deposited 1/6th of
the bid amount, i.e., Rs. 1.4200.000/- 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 action. 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,
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1995 why its licences should not be cancelled and the group
be re-auctioned. [These faces 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
conditions of 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 played for the issuance of a writ "directing the
respondents [State of Madhya Pradesh and the Excise
autorities] not to withhold the permits and issue forms of
the petitioner and to ensue that the supply of liquor is
made to the pettioner as per the terms and conditions of the
licence". Interim relief was also asked for in same terms.
The writ petition came up befoer 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 authorites, "not to re-
auction the liquor shops which are subject matter of 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 re-action ;
they were also directed to make the requisite supplies - all
on a mere ’undertaking’ of the firm [licencee] to pay
amounts which may ultimates be found payable.
The matters came up before the learned Single Judge
again on August 11, 1995. The order on this day refers to
two other writ petitions filed by the respondent firm, viz.,
writ Petitions 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 licence-firm "is not to
deposit to release the seized liquor on payment of ’duty’
alone. No reference to nor any direction to the licence 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
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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
31,1995 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 tow 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
sales at two retail outlests. The functionaries of the
Excise Department would not interfere with the sale process.
Whatever sale amount is received it would be handed over to
the office after obtaining the receipt at the end of the
closure of the business 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
requested amount is being deposited
in the treasury. The challans on
the basis of which supply of liquor
was being claimed stands exhausted.
The requisite supply has been made.
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 take 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 purchase 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 released
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 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 be should be given back some amount
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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 sale 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 it is no doubt in
arrears but these arrears have mounted only because of non-
supply of liquor from time to time. the learned Judge also
noted the grievance of the writ petitioner the 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 make 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 of September 1995.
The commission would consist of Shri R.A. Roman and Shri
H.D. Gupat 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 petitioner the records sent to us do not contain
orders dated August 25,1995, august 30,1995 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.
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
18th March , 1996 from the Excise officer Gwalior to the
Deputy Commissioner [Excise } Gwalior Division a copy of
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 a sum
of Rs.2,88,431/-.
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 send 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 endures that the decision is
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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 tame 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 for this reason that the rules of all the
states insist upon adequate deposits and securities befor e
hand to be adjusted towers 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 July paying the amounts due under of the court.
A 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 not to
endure that the authority after according fair treatment
reaches on matter which it is authorised of enjoined by law
to decide for itself a conclusion which is correct in the
eyes of the 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 neither unlimited nor unrestrained much less
unguided.
A Constitution Bench of this court held in Harstate and
the writ petitioner and appointing a "commission "
comprising of two advocate to look into and decided the
daily disputes arising between the parties- are all the out
come 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 as to dismiss the writ petition at the
very inception when it was brought to their notice that it
involved dispute questions 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 ] ha 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
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revenue but it blamed it on the alleged wrongful acts of the
authorities. Yet the learnedd Judge went on supervising the
case on an almost day-to-day basis. This was certainly no
part of the High courts function. It has also resulted in
substantial loss of 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 him" the writ petitions filed
by the respondent - firm 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.