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TMI Blog1976 (10) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciating the arguments of counsel for the parties. The Collector of Mayurbhanj issued a notice on February 3, 1970 by which he invited tenders for the grant of licences for establishing 70 outstill shops for 1970-71. Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rs. 34,000/-per month. His bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector. Ajodhya Prasad accordingly deposited Rs. 68,000/- on account of two months' "fees", in advance, as required by rule 103 of the Board's Excise Rules, 1965. Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by the Excise Commissioner on March 16, 1970. The Board of Revenue also refused to interfere. Ajodhya Prasad claimed that in the mean time he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1,50,000/-. He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970. He approached , the Superintendent of Excise for depositing Rs. 34,000/- for the month of April, but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lege. In taking that view the High Court stated that notice had not been issued under section 22 (1) of the Act and the Collector had no authority to issue such a notice In that view of the matter, the High Court did not express any final opinion as to whether the licence was to be granted for an exclusive privilege to manufacture and sell 'liquor. The High Court accordingly quashed the direction of the State Government dated April 15, 1970 for re-auctioning the license and declared that rule 103(1) of the Board's Excise Rules was ultra vires the Act. Appeals Nos. 1892 and 1893 of 1971 are directed against that judgment of the High Court dated May 15, 1970, on certificates. The State Government issued the Bihar and Orissa Excise (Orissa Amendment) Ordinance of 1970 and the State Government issued a fresh order dated August 19, 1970 under the provisions of the amended section 29(2) of the Act for fresh settlement of the shops, and wrote to the Collector of Mayurbhanj to call for tenders in accordance with that order. The Collector called for tenders within a week. Ajodhya Prasad thereupon filed another writ petition (O.J.C. 'No. 850 of 1970) for quashing the Collector's tender not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed and the Collector was directed to issue the license for the seven shops to him. Siba Prasad Saha who filed the writ petition (No. 786 of 1970) in August 1970, after the first judgment of the High Court dated May 15, 1970 for refund of the license fee and for non-payment of any fee in the future, as he was a licensee for several liquor shops, amended it in the light of the subsequent developments. The High Court took the view in its judgment dated April 16, 1971 that sections 2 to 5 of the Amending Ordinance, or the Amending Act (17 of 1970) were not made retrospective. It took note of this Court's decision in Krishna Kumar Narula etc. v. The State of Jammu and Kashmir and others ([1967] 3 S.C.R. 50) that a citizen had the fundamental right to carry on business in liquor and all that the State could do. was to impose reasonable restriction thereon. It also held that in so far as section 29(2) of the Act provided that the sum payable under sub-section (1) thereof shall be determined "otherwise" than by calling tenders or by auction, it was unconstitutional That portion ,of sub-section (2)(a) was therefore struck off. The High Court held further that what was realised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and 1226 of 1970. Those judgments have given rise to civil appeals Nos. 2071, 1855- 1863 and 351-359 Of 1972 (cross-appeals). O.J. Cs. Nos. 859 and 863 of 1970 were diposed of by separate judgments dated September 6, 1971 which followed the earlier judgment dated April 16, 1971 in Siba Prasad Saha's case and that has given rise to appeals Nos. 1235 and 1236 of 1972. The Bihar and Orissa Excise (Orissa Second Amendment) Act, 1971 (10 of 1971) was passed to set right the defects in the law. Stated briefly that Act made the amendments to sections 2, 7, 29, 37' and 90 retrospective and validated the earlier acts. A writ petition (O. J.C. No. 589 of 1972) was filed to challenge the vires of section 22 and 29 of the Act. The main judgment in the matter was delivered in O.J.C. No. 1036 of 1971, on January 3, 1974. In that judgment the High Court examined the challenge to the vires of sections 22 and 29 of the Act and the claim for refund of the money already paid with reference to the amendments to the Act. It followed the earlier decision in Siba Prasad Saha's case of April 16, 1971 (I. L.R.1971 Cuttack 777) and dismissed the writ petitions and that/ms led to the filing of civil appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue any public notice for purposes of sub-section (1) of section 22. A reading of the Collector's notice, which admittedly was in Form G.L. 10, shows that it related to the auction of the right to open a shop at the site named in the notice and the payment of the license fee therefor. The High Court therefore went wrong in holding that the issue of the notice in Form G.L. 10 negatived the contention that what was proposed to be given was the exclusive privilege to manufacture and sell country liquor. By virtue of section 7(1), the administration of the Excise Department and the collection of excise revenue within the district vested in the Collector, and we are unable to think, that his notice in Form G.L. 10 was sufficient to show that the exclusive privilege for retail sale of country liquor, under the outstill system, was not proposed to be given to the successful bidders at the auction. The true nature of the proceeds of the auction held by the Collector in such a case has been examined by this Court in Nashirwar etc. etc. v. The Slate of Madhya Pradesh, [1975] 2 S.C.R. 861) Har Shankar and others v. The Dy. Excise and Taxation Commissioner and others ([1975] 3 S.C.R. 254) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the licenses issued to them was "clearly an exclusive privilege within the meaning of section 22(1) of the Act" and that it has expressly been provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "conSideration" of the exclusive privilege under section 22. There can be no doubt therefore that the High Court erred in taking a contrary view. The High Court has tried to support its view by referring to the condition stated in Form G.L. 10 for the opening of additional shops during the currency of the license, and has stated that an exclusive privilege under section 22 "cannot comprehend exercise o[ such power once it is granted for a specified period." This was clearly an erroneous view because it is not disputed before us that no such condition was inserted in the license at all. What the licensee therefore received under the license was an exclusive privilege of manufacturing and selling liquor under the outstill system within the meaning of section 22 of the Act. The High Court has held that after the acceptance of the bid all that remained was to issue a license and that the Collector committed an illegality in ordering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilege" in question: Sub-section (2) of section 22 enacts that a grantee of such a privilege shah not exercise it "unless or until he has received a license in that behalf from the Collector or the Excise Commissioner." The powers of the Government to reject a bid were thus reserved both under the provisions of law and by the express declarations made before the auction. At any rate we do not find any basis for the creation of a right merely by making a bid. The extent of the powers of the government in such matters has been indicated by this Court in State of Orissa and others vs..Harinarayan Jaiswal and others (supra). So long as these powers are not used in an unreasonable or mala fide manner, their exercise cannot be questioned. In the cases before us, it could not be said that either the Government or any of its officers abused the power by acting either unreasonably or in a mala fide manner, and we find no justification for the argument that it was not permissible for the State Government to issue.the directions for reauction even when it found that the bids at the auction were unsatisfactory. The High Court has taken the view that rule 103(1) of the Board's Excise Rules reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion of the State Government to accept or reject any tender without assigning any reason therefor to order for calling of fresh tender or otherwise as the case may be." It will be recalled that the High Court has taken the view that the order dated August 19, 1970 and the tender notice issued in pursuance thereof were bad in law and were liable to be quashed. The High Court has taken the view that section 29(2)(a) did not authorise the exercise of "such absolute and naked power in determining the sum of money" as was sought to be done by the order dated August 19, 1970. It appears to us however that the power to accept or reject a tender without assigning any reason cannot be said to be arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides. that (i) it shall be exercised in the interest of the Excise revenue", (ii) by the specified authority, and (iii) under such control as may be specified. As has been stated, the State Government retained the power of accepting or rejecting the tender, or for calling of a fresh tender, to itself, and such an order cannot be said to be an "absolute" or "naked" power of the nature apprehended by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case (supra) with specific reference to Narula's case, and it was reiterated that "there is no fundamental right to do trade or business in intoxicants" and that "in all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants." The contrary view of the High Court in impugned judgment is incorrect and must be set aside. The other grievance of the appellant State is that the High Court struck down the expression "or otherwise" from clause (a) of subsection (2) of 29 of the Act as unconstitutional. We have given our reasons for the contrary view, and the High Court therefore went wrong in striking down the expression "or otherwise". The High Court has also held that as sections 2 to 5 of the Amending Act of 1970 were not made retrospective in operation, the effect of section 6 amounted to a direction by the Legislature to the State to disregard the decision in Ajodhya Prasad's case that the amount realised by auction was illegal and that section 6 was therefore ultra vires the powers of the Legislature. It will be sufficient to say in this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of 1971) has substituted a new sub-section (2) for the old sub-section as follows, providing for auction, and it has been stated that it shall be "deemed always to have been substituted".- "(2) The sum payable under sub-section (1) shall be determined as follows,- (a) by auction or by calling tenders or otherwise as the State Government may, in the interest of excise revenue by general or special order direct." Then follow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants made by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Board's Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal separately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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