TMI Blog1980 (4) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... r to enable it to record its findings on two outstanding questions: (1) whether it was necessary according to the Rules which were in force at the relevant time to give adequate publicity to the reauction and, (2) if so, whether such publicity was in fact given to the reauction. - Civil Appeal No. 1507/1969 - - - Dated:- 21-4-1980 - CHANDRACHUD, Y.V. (CJ), SHINGAL, P.N. AND REDDY, O. CHINNAPPA, JJ. S. N. Kacker Sol. Genl., Ravinder Rana and M. N. Shroff for the Appellant Tirath Singh Munjral, H. K. Puri and V. K. Bahl for the Respondent JUDGEMENT CHANDRACHUD, C.J.- This is an appeal by certificate granted by the High Court of Punjab and Haryana under Article 133(1)(a) of the Constitution in regard to its judgment dated March 12, 1968 in Civil Writ No. 1376 of 1967. On March 16, 1967 the Excise and Taxation Commissioner, Haryana, appellant No. 2 herein, announced by publication of a notice that excise auctions for the financial year 1967-68 will be held on March 27, 1967. The terms and conditions in regard to the auction of retail vends of country spirits were set out in a pamphlet issued along with the notice. Those terms and conditions did not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer month, the consumption of liquor was less as compared with the consumption during winter months and that, there was in fact no default on their part as alleged in the notice sent to them. On May 17, 1967, the Collector and Deputy Excise Taxation Commissioner, Haryana, passed an order, after hearing the respondents, cancelling their licence under section 36(b) and (c) of the Punjab Excise Act with immediate effect and stating that the vend will be resold on May 23, 1967 at 10.00 A.M. in the office of the Excise and Taxation Officer, Rohtak, at the risk of the respondents. On May 22, 1967 respondents filed a Writ Petition (No. 900 of 1967) which was dismissed by the High Court of Punjab and Haryana on May 26, on the ground that it was premature. In pursuance of the order dated May 17, the Biswan Meel vend, Sonepat, was reauctioned on May 23, 1967, the highest bid received being of 15,000 litres, which in terms of money comes to ₹ 2,46,000.00 The difference between the amount which the respondents were liable to pay under their bid and the amount realised in the reauction comes to ₹ 7,41,577.40. On July 11, 1967 respondents were served with a notice dated Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the same or any part thereof is forfeited or adjusted against any amount of fee, duty or penalty due from him in respect of his licence. In the event of the amount of security deposit or any part thereof being forfeited or adjusted as aforesaid the deficiency shall be made good by him within seven days of the happening of such an event failing which the licence shall be liable to cancellation by the Authority by which it was granted. 36. (23) (2) A person to whom a country spirit shop is sold shall pay the amount or licence fee as calculated under clause (16) in 22 equal instalments, each instalment being payable on the 10th and 25th of each month starting from the month of April. In the event of failure to pay the instalment by the due date, his licence may be cancelled. 36. (23) (3) Notwithstanding anything contained in sub-clause (2)(a) the licensee shall be entitled to deduct from the amount of the licence fee to be paid by him such amount of still-head duty as may have been actually paid by him on the quota of country spirit actually lifted by him not exceeding the amount of such duty payable in respect of the quota bid by him at the time of auction. 36. (24) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant Rules of 1966 by holding that the levy, charge or recovery of any amount of still-head duty in respect of liquor which had not been actually lifted by the licensee was not justified and that the demand to that extent was liable to be quashed. In the instant case, since the liability under the 1967 rules was of a similar nature as the liability under the 1966 Rules, the High Court followed the Judgment in Bhajan Lal, (supra) quashed the levy and set aside the order whereby the respondents licence was cancelled and they were called upon to pay the difference between the amount which they had agreed to pay under the terms of their auction and the amount realised in the re-auction of the vend. The sheet-anchor of the respondents argument before us is that the decision of the High Court in Bhajan Lal was affirmed by this Court in Civil Appeals 1042 and 1043 of 1968 (decided on August 21, 1972) and since, in the instant case, the High Court has merely followed the decision in Bhajan Lal, the State s appeal must fail. If the matter were to rest there, as assumed by the respondents counsel Shri Tirath Singh Munjral, the contention would be unassailable because the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab and Haryana asking that the auction be quashed and the respondents be restrained from enforcing the obligation arising under its terms and conditions. The High Court having dismissed the writ petitions, the licensees filed an appeal to this Court by certificate. What is important for our purpose in this appeal is that the State of Punjab, which was respondent to the appeal in Har Shankar, (supra) raised a preliminary objection to the maintainability of the writ petitions filed by the appellants and that objection was upheld by this Court. The preliminary objection was that such of the appellants who offered their bids in the auctions did so with a full knowledge of the terms and conditions attaching to the auctions and that they could not be permitted to wriggle out of the contractual obligations arising out of the acceptance of their bids. Holding that the preliminary objection was well-founded, this Court observed: Those interested in running the country liquor vends offered their bids voluntarily in the auctions held for granting licences for the sale of country liquor. The terms and conditions of auctions were announced before the auctions were held and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mance of those conditions, like the sale of liquor being less in summer than in winter, can provide no justification for not complying with the terms of the contract which they had accepted with open eyes. The respondents could not therefore invoke the writ jurisdiction of the High Court to avoid the contractual obligation incurred by them voluntarily. On this ground alone, the State is entitled to succeed in this appeal. The judgment in Har Shankar was followed in Sham Lal v. State of Punjab wherein, appellants were the highest bidders in an auction for the sale of country liquor vends at various places in the State of Punjab. The appellants were called upon by the State to pay the amounts which they were liable to pay under the terms of the auction, whereupon they filed writ petitions in the High Court to challenge the demand. Relying upon the passage from Har Shankar (supra) extracted above, the Court held that the licensees could not be permitted to avoid the contractual obligations voluntarily incurred by them and that therefore the High Court was right in refusing to exercise its jurisdiction under Article 226 of the Constitution in their favour. In view of these decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound canvassed by the learned Solicitor General which was also urged and accepted in Har Shankar. It was observed in Har Shankar that the main focus of controversy on the merits of the matter related to the power of the Government to levy and realize large licence fees either through the medium of auctions or on scales fixed under the rules. After referring to the long history of liquor licensing and after considering the various provisions of the Punjab Excise Act 1914 and the Rules framed thereunder, this Court held that since rights in regard to the manufacture and sale of intoxicants are vested in the State, it is open to it to part with those rights for consideration; that the amounts which are charged to the licensees who offer their bids in auction sales of vends are neither in the nature of a tax nor in the nature of excise duty; and that, the true nature of the charge which the Government levies in such cases is that it is a price which the State charges as a consideration for parting with its privileges in favour of the licensee. Such a charge is a normal incident of a trading or business transaction. What the State could itself do in the exercise of its privilege, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the production or manufacture of goods produced or manufactured within the country. The respondents cannot therefore complain that they are being asked to pay excise duty or still-head duty on quota of liquor not taken, lifted or purchased by them. The respondents agreed to pay a certain sum under the terms of the auction and the Rules only prescribe a convenient mode where by their liability was spread over the entire year by splitting it up into fortnightly instalments. The Rules might as well have provided for payment of a lump sum and the very issuance of the licence could have been made to depend on the payment of such sum. If it could not be argued in that event that the lump sum payment represented excise duty, it cannot be so argued in the present event merely because the quota for which the respondents gave their bid is required to be multiplied by a certain figure per proof litre and further because the respondents were given the facility of paying the amount by instalments while lifting the quota from time to time. What the respondents agreed to pay was the price of a privilege which the State parted with in their favour. They cannot therefore avoid their liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which they are liable to make. There is however one other point which cannot be overlooked and on which the respondents may possibly have a plausible case. It is urged by Shri Tirath Singh Munjral for the respondents that the re-auction which was held on May 23, 1967 was not in accordance with the Rules and therefore, the respondents cannot be called upon to pay the difference between the amount which they had agreed to pay and the amount which was fetched in the reauction of the vend. In paragraph 14 of the writ petition, it is averred that the respondents were never informed as to where and at what time the resale of the vend would be held on May 23, that no notice of the intended resale was given as required by Rule 36(3) of the Punjab Liquor Licence Rules 1956, that in fact no other notice was published or affixed at any conspicuous public place notifying the proposed resale nor indeed was the resale announced even by the beat of drum. According to the respondents, no wide publicity was given to the reauction and even the residents of the adjoining villages who would have been interested in offering bids were not aware of the reauction. All that happened on May 23, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swan Meel village. The High Court has not even made a reference to these affidavits, while dealing with the particular point (namely, contention No. 2 before the High Court), which bears out what we have stated above that it really misdirected itself while examining the contention raised by the respondents in regard to the absence of due publicity for the reauction. This makes it necessary to remand the matter to the High Court in order to enable it to record its findings on two outstanding questions: (1) whether it was necessary according to the Rules which were in force at the relevant time to give adequate publicity to the reauction and, (2) if so, whether such publicity was in fact given to the reauction. If the officers of the State have defaulted in carrying out their obligation, if any, in the matter of giving due publicity to the reauction, the consequence could be that the respondents may not be liable to pay the difference between the amount which they were liable to pay and the amount realised in the reauction. In the result, except for the contention in regard to the two questions mentioned in the preceding paragraph, the State must succeed. We shall, however, have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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