Success in lottery process without completion of formalities does not constitute a license or valid contract.

The petitioner’s father was declared successful in a lottery process for an "Indian Made Foreign Liquor Shop" for the FY 2020-2021

However, he did not complete the formalities, did not deposit the license fee, and did not accept the lottery

Consequently, the State forfeited his Earnest Money Deposit (EMD) of ₹11.25 lakh and later sought to recover the subsequent loss of revenue (after allotting the shop to a third party) from him via an order dated 16.07.2020

The petitioner’s father's appeal was dismissed on 06.08.2024; following his death on 18.09.2024, the petitioner filed a revision which was also dismissed on 19.02.2025

The petitioner challenged these orders, arguing that no contract existed as he never became a "licensee"

Whether a successful bidder who fails to complete formalities or deposit license fees can be legally classified as a "holder of a licence" under Section 36 of the Uttarakhand Excise Act, 1910

Whether the State can recover the shortfall/loss of revenue from an allottee who has not yet executed a contract or received a license

The Court interpreted the Explanation to Section 36 of the Uttarakhand Excise Act, 1910, which defines "holder of a licence" to include a person whose tender or bid has been accepted even if the physical license is not yet received

It further examined Rule 18 of the Uttaranchal Excise (Settlement of Licenses for Retail Sale of Foreign Liquor and Beer) Rules, 2001, which mandates that revenue shortfalls are recoverable from an "outgoing licensee" who surrenders their license

Additionally, the court applied the general principle of contract law that a selection in a lottery process constitutes a mere offer, which does not amount to a binding contract until accepted and formalities are completed

The Court rejected the State's reliance on Section 36 and Rule 18. It reasoned that the "Explanation" to Section 36 was inapplicable because the petitioner’s father never completed the requisite formalities or deposited the license fee; thus, mere success in a lottery does not automatically confer the status of a "holder of licence"

Regarding Rule 18, the Court held it only applies to those who have already been granted a license and subsequently surrender it

The Court observed that since the offer was never formally accepted through the completion of statutory formalities, no contract was executed between the parties

Consequently, while the State was entitled to forfeit the EMD and blacklist the petitioner, it had no legal basis to recover the difference in revenue

It held that a person is only a "licensee" once formalities are completed and fees are deposited; a mere allottee cannot be held liable for revenue loss under Rule 18 of the 2001 Rules