TMI Blog1974 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In exercise of the powers conferred under Section 22 of the Bihar and Orissa Excise Act, 1915 (hereinafter referred to as the Act ), read with Clause 218 of the Instructions issued by the Board of Revenue, Bihar (hereinafter referred to as the Board ), in exercise of its powers under Section 90 of the Act, tenders were invited for supply of country spirit to Government warehouses for the period commencing from the 1st April, 1968 to the 31st March, 1971. The petitioner, along with several others, filed its tender, and, ultimately, the tenders filed by the petitioner and Messrs. Lakshmi Narayan Ram Narayan of Ranchi group of distilleries were accepted by the State Government. Exclusive privilege for supply of country spirit to the Government warehouses of North Bihar was granted to the petitioner, and for South Bihar to the said Messrs. Lakshmi Narayan Ram Narayan. By letter No. 1428, dated the 13th March, 1968, acceptance of the tender of the petitioner was communicated to it. A copy of that letter is annexure 1 to C. W. J. C. No. 1361 of 1973 and annexure 2 to C. W. I. C. No. 1417 of 1973. The relevant portion of that letter reads as follows :-- ..... I am directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the writ application filed by M/s. S. K. G. Sugar Ltd., which is pending before the Hon'ble Court. The said proceedings were signed by the representatives of the two contractors. According to the petitioner, by a letter, dated the 11th July, 1968 (Annexure 3 to C, W. J. C. No. 1361 of 1973), it informed the Commissioner of Excise that it had maintained supply of the country spirit on the basis of arrangement which existed during the contract period 1965-68 till the disposal of the writ application, but the rate for supply after the 1st April, 1968 would be 42 paise per London Proof litre (hereinafter referred to as L. P. Litre ). The relevant portion of the said letter reads thus :-- .....By an agreement dated 28-3-1968, we as well as Messrs. Lakshminarain Ram Narain agreed to supply country spirits on the basis of the arrangements which existed during the contract period 1965-68 till the disposal of the writ application. We have maintained the supplies as per agreement dated 28-3-1968. For supplies made with effect from 1-4-1968 we are being paid by the Department @ 33 paise per L. P. Litre. We have accepted payments at this rate entirely on provisional basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , submitted that our bills for the current supplies at the old contract rate should be treated as provisional bills as indicated by us earlier vide our letter No. SKJ. SKG : DIST : 3862 dated 11-7-1968 and the Government should consider paying us at least at the rate indicated by them in their letter dated 13-3-1968 in acceptance of our tender, unless the same is modified and raised by the Hon'ble Supreme Court to the level of the price paid to M/s. Ranchi Group of Distilleries..... 6. The Supreme Court, by its judgment and order, dated the 26th March, 1971, dismissed both the appeals as having become infructuous as the period of the contract was to expire on the 31st March 1971. The petitioner, by a letter, dated the 30th March, 1971 (Annexure 5 to C. W. J. C. No. 1361 of 1973), informed the Excise Commissioner regarding the dismissal of the appeal by the Supreme Court and claimed payment of the difference between 33 paise per L. P. litre, as paid to it, and 42 paise per L. P. litre, as agreed to by the State Government in its letter, dated the 13th March, 1968, for the supplies made during the period 1968-71. The petitioner renewed its prayer by another letter, dated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is C. W. J. C. No. 1361 of 1973 for a writ of mandamus directing the State of Bihar and the Commissioner of Excise to pay the said amount of Rs. 8,40,048.97 paise, which the petitioner claims to be entitled to in view of the order of the State Government contained in annexure 1'' as well as the order of the Member of the Board (Annexure 8 ). According to the petitioner, the respondents are amenable to the jurisdiction of this Court as they have neglected and refused to perform their statutory obligations as well as to comply with the orders passed by the Member of the Board. 9. C. W. J. C. No. 1417 of 1973 has been filed by the State of Bihar and the Commissioner of Excise for quashing the aforesaid order of the Member of the Board, dated the 11th May, 1973, a copy whereof is annexure 1 to C. W. J. C. No. 1417 of 1973, because according to the petitioners, the said order is illegal and without jurisdiction and, as such, not binding on the State Government. According to the petitioners of C. W. J. C. No. 1417 of 1973, no doubt, exclusive privilege for supply of country spirit in North Bihar had been granted to the petitioner at the rate of 42 paise per L. P. litre and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Court, and not this Court for exercise of its powers under Articles 226 and 227 of the Constitution. 11. A bare reference to the provisions of the Act and the rules framed thereunder will show that the Board is vested with supervisory powers over the Excise Department and it can exercise its powers in respect of grant of exclusive privilege regarding the manufacture, supply, storage and sale of intoxicants, country spirit, liquor etc., Section 22 of the Act reads as under :-- (1) The State Government may grant to any person, on such conditions and for such period as it may think fit. the exclusive privilege- (a) of manufacturing, or supplying wholesale, or (b) of manufacturing and supplying wholesale, or (c) of selling wholesale or retail, or (d) of manufacturing or supplying wholesale and selling retail, or (e) of manufacturing and supplying wholesale and selling retail any country liquor or intoxicating drug within any specified local area : Provided that public notice shall be given of the intention to grant any such exclusive privilege, and that any objection made by any person residing within the area affected shall be considered before an exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, to delegate to the Board the powers conferred on the Provincial Government by the portions of the Act specified below :-- ***** (4) Section 22, Sub-section (1), Clauses (a) and (b) power to grant the exclusive privilege of manufacturing or supplying wholesale or of manufacturing and supplying wholesale country liquor or any intoxicating drug, 13. In view of the aforesaid notification, it cannot be disputed that the State Government has appointed the Excise Commissioner to have control of the administration of the Excise Department and the collection of excise-revenue, subject to the general control of the Board. Section 8 of the Act prescribes that the Collector shall be subject to the control of the Excise Commissioner, and the Board may revise any order passed by the Collector or the Excise Commissioner. Section 8 reads thus :-- (1) The Collector shall, in all proceedings under this Act, be subject to the control of the Excise Commissioner, and shall, in such matters as the State Government may direct, be subject to also to the control of the Commissioner of the Division. (2) Orders passed under this Act or under any rule made hereunder shall be appealable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government had granted the exclusive privilege to the petitioner for supply of country spirit to the warehouses of the State Government for the period 1968-71 in respect of certain area of Bihar at the rate of 42 paise per L. P. litre. As already indicated, according to the State, this order never came into force in view of the writ application filed by the petitioner and the operation of the said order having been stayed by this Court as well as by the Supreme Court; and the supply for the period in question had been made on the basis of the arrangement arrived at between the parties in the meeting of the 28th March, 1968. In this connection it was also submitted by the learned Advocate-General that no licence, as contemplated under Sub-section (2) of Section 22, had been received by the petitioner from the Collector or the Excise Commissioner, and, as such, there was no concluded contract on the basis of which the petitioner could found its claim. In support of his contention, learned Advocate-General has drawn our attention to the cases of Mulamchand v. State of Madhya Pradesh AIR 1968 SC 1218), K. P. Chowdhry v. State of Madhya Pradesh AIR 1967 SC 203) and Laliteshwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was nothing in the relevant file to show that the Excise Commissioner had agreed to the payment at the rate of 42 paise per L. P. litre. The affidavit has been sworn by an assistant of the Excise Department. But there is nothing in the counter-affidavit to show that the said assistant was working in the office of the Excise Commissioner at the relevant time. In the last paragraph of the counter-affidavit the said assistant has stated that the contents of paragraphs 2 to 15 of the counter-affidavit were true to his knowledge derived from the records of the case. In that view of the matter, I am not inclined to place much reliance on the aforesaid statements. It cannot be imagined that, when the State Government had granted the privilege of supply at the rate of 42 paise per L. P. litre, as conveyed by the letter, dated the 13th March, 1968, the petitioner would agree to supply at the rate of 33 paise per L. P. litre for the whole (period. The dispute in the writ application was for a larger area and for a higher rate. In that writ application, the petitioner had claimed that the area which ought to have been allotted to it had been allotted to Messrs. Lakshmi Narayan Ram Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment. I am inclined to hold that there has been a substantial compliance of Section 22 (2) of the Act. Under Sub-section (2) of Section 22, the grantee has to receive the licence from the Collector or the Excise Commissioner before he starts making supplies. When the Excise Commissioner, in the meeting held on the 28th March, 1968, asked the petitioner to continue to supply on the basis of the existing arrangements till the matter was decided by this Court, the petitioner made the supplies during the period 1968-71 on the basis of the order of the Excise Commissioner, although a formal licence in Form 27 had not been issued to it. The right for making the supply of the country spirit flows from Sub-section (1) of Section 22. Subsection (2) only fixes a restriction as to since when the said right shall be exercised. 16. This aspect of the matter has been considered in several judgments of the Supreme Court, where it has held that Courts have power in appropriate cases to compel performance of the obligations imposed upon departmental authorities by orders which are executive in character, when they find that any person has acted to his detriment on solemn promises made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween 42 paise and 33 paise per L. P. litre, which had already been paid to the petitioner, and his order cannot be said to be in any manner illegal, arbitrary or un-just. The argument of the learned Advocate-General that the claim of the petitioner is mere contractual which could be enforced only in the Civil Court is also without any substance, since it has already been held that, while granting the privilege to the petitioner, the respondent State had exercised a statutory power conferred under the Act, and, as such, it cannot be equated with those contracts which are entered into between the State Government and a citizen in exercise of its executive powers. 18. On behalf of the State, reliance have been placed on a Bench decision of this Court in B. K. Sinha v. State of Bihar AIR 1974 Pat 230), where this Court dismissed a writ application filed by a contractor whose contract had been cancelled by an Executive Engineer. Even in that case their Lordships have clearly drawn a distinction between contracts which are executed in exercise of the executive powers and contracts which are statutory in nature. In that case it was observed as follows :-- I am conscious of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Department, it was observed :-- The High Court summarily rejected the petition observing that the supply of liquor to the appellant was under a contract to the Government and 'if the Government had committed a breach of the contract the remedy is elsewhere.' It cannot, without further investigation, be said that the rights and obligations arising under a licence issued under a statutory authority are purely contractual. 19. A submission was made on behalf of the petitioner that the State had realised at the rule of 48 paise per L. P. Litre as cost price from the retailers, although the supplies had been made by the petitioner during the relevant period at the rate of 33 paise per L. P. litre, and, as such, there is no question of the State being a loser in any manner if it were to pay the petitioner the amount as directed by the Member of the Board. In the counter-affidavit, filed on behalf of the State it has been stated that the amount in excess of 33 paise which had been realised from the retailers has already been adjusted towards additional surcharge. During the course of the hearing, learned Advocate-General, who was followed by Mr. Lakshman Sharan Sinha, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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