' \

SABIR AHMED

UNION OF INDIA AND ORS.

April, 18, 1980

(R. S. SARKARIA AND R. S. PATHAK, JJ.J

Conservarion of Foreign Exchange and PrevenJion of S1nuggling Activities Act, 1974, Section 11, Scope of-Whether Central Goverrunen\ is bound ro consider the application of the detenu's representation and non-consideration thereof is illegal-Whether it is a Constitutional right of the detenue.

The pletitioner challenged the detention of his brother Dawood Hasan Sheikh Ibrahim, under, the Conservation of 'Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The detention order was passed on October 2, 1979 by the detaining authority. The representation made by e detenu on November 14, 1979 to the detaining authority in which inter alia he asked for supply of the copies of dbcuments and statements relied upon in thegrounds of detention, was rejected on December 10, 1979 by the Minister of State in the Home Ministry of State Government, by virtue of the authorisation to deal with the r:epresentations of detenus by a Standing Order made by the Chief Minister on December 3, 1979. In the meantime, the Advisory Board met and considered' the representation of the detenue and made a report to the Government on December 6, 1979. The said Minister had dealt with the representation and rejected it after the Board had made its report to the Gcivernment.

On November 19, 1979, the detenu made an application io the Central 'Govemmeht for revocation of the order of his detention under section 11 of

COFEPOSA and this has not been dealt with by that Government.

The petitioner inter alia, contended that the detenu had a right to move the Central Government for revocation of the order of detention and non consideration vitiates the . detention.

Allowing the petition, the Court ,

HEID: ! , Section 3(2) of COFEPOSA lll<llldates the State Government 'tO; send a . report to the Central Government.

But it does not mean that the G representation made by the detenu, if any, should also be sent along with that report, [7 42 El

2. The Central Government is under a duty to consider the representation made toit by the detenu for revoking his detention, even if it s-imply repeats the same allegations, statement of facts, and arments which were contained in the representation made: to the detaining authority. .It is common experience that an argument or submission based on certain facts, which does not appeal -to a tribunal or authOfity of first instance, - may find acceptance with a higher tribunal or supetvisory authority. [742 EFJ ,

SABIR AHMBD v. UNION (Sarkaria, !.) 739

3. Whether or not the detenu has under Section 11 a legal right to make a representation to the Central Government is not the real question. The nub of the matter is, whether the power confrred by Section 11 on the Central ' Government, carried with it a duty to consider any representation made by the deteD.u, expeditiously. The power under Section 11 may either be exercised if on information received by the Central Government from its own sources including that supplied undor Sectio.n 3 by the State Government, or, from the detenu in the form of a petition or representation. , Whether or not the Central Govrnment on such petitioll/representation revokes the detention is a matter of discretion. But this discretion is coupled with a duty, that duty is inherent in the very nature of the jurisdiction. [742 F-H, 743 A]

4. The power under s'ection 11 is a supervisory powe(. It is intended to be an additional check or safeguard against the improper exercise of its power of detention by the detaining authority or the State Government. If this sta C tutory safeguard is to retain its meaning and efficacy, the Central Government must discharge its supervisory responsibility with constant 'vigilance and watchful care. The report received under section 3, or any communication or petition received from the detenu must be considered with reasonable expedition. [743 A-BJ

S. What is 'reasonable expedition' is a question depending on the circums- D

ta~ of the particular case. No hard and fast rule as to the measure of reasonable time can be laid down.

But it certainly does not cover the delay d, ue to' negligence, callous. inaction, avoidable redtapism and unduly protracted procrastination. [743 B-Cl '

In the instant case, in the absence of a specific denial in the counteraffidavit , of the Central Govt., inescapable conclusion is that the Central Gov- E ernment has not at all considered the repr'esentation made by the detenu requesting for revocation of his detention under section 11 of COPE.POSA. [745 &Fl

Shyiun Amba/al Siroya v. Union of India, [1980] 2 SCR 1078 and Tara Chand v. State of Raiasthan and Ors., (W.P. No. 1639179) deci<fed on February 13, 1980 followed.

Dhana Aliklum v. State of West Bengal, [1975] Suppl S.C.R. 124; distinguished.

Ram BaU Rajabhar v. State of West Bengal and Ors., [1975] 2 S.C.R. 63, referred to.

ORIGINAL JURISDICTION ' Writ Petition No.. 168 of 1980. (Under Article 32 6f the Constitution)

Harjinder Singh for the Petitioner.

M. N. Shroff for the-Respondent.

The Judgment of the Court was delivered by

SARKARIA, J. This is a writ petition filed by one Sabir Ahmed to challenge the detention of his brother, Dawood Hasan Sheikh

74:0 SUl'REME COURT REPOil.TS

.Ibrahim, under the Conservation of Forei&n Exchange and Preven

tio11. of Smuggling Activities Act, 1974 (hereinafter referred to ail the

COFEPOSA).

The detenu was in the custody of the Customs whee. on September 8, 1979, he was produced before the Metropolitan Magistrate, Esplanade Court, Bombay and was remanded to judicial custody and later on granted bail by the Sessions Judge by an order, dated September 28, 1979.

On October 2, 1979, an order of detention passed under Section 3(1) of COFEPOSA by_'Shri Pradhan, the Secretary to Maharashtra Government in the Home Department, was served on him.

The grounds-0f detention were also served on him on the same date.

On November 14, 1979, the detenu made a representation to the detaining authority, in which he inter a/ia asked for supply of the copies of doc1ljllents and statements relied upon in the'grounds of detention. The representation of the detenn was not dealt with by

Shr~ Pradhan, but by the Minister of State in the Home Ministry of the State Government, and was rejected on December 10, 1979.

The Minister is said to .have been 'aut\lorised to deal with the representation of detenus by a Standing Order made by the Chief Minister on December 3, 1979.

In. the mentime, the Advisory Board met and considered the representation of the detenu and tnade a report to the Government on December 6, 1979 for approval of the detention. The said Minister had dealt with the representation and rejected it after the Board had made its reports to the -Oovernment.

On November, 19, 1979, the detenu made an application to the Central Government for revo9ation of the• order :of his detention under Section 11 of COFEPOSA, and this has not been dealt with by that Government till today.

Mr. Jeth Malani, appearing for the detenu, has made four sub missions ·

i ' .

(1) The Minister of State was not competent to dispose of the representation of the detenu, because the Order dated December 3, )- 1979, made by the Chief Minister did not invest him with the neces sary authority to dispose of the representation.

(2) The representation has not been dealt with expeditiously , by the State Government. On the other hand, it was mechanically sent for remarks to the customs Department on November 18, 1979, and

"; :---

' SAJllR AHMED v. UNION (Sarkaria, J.) Ul

tnereafter the report of the Customs Department was received by the

State Government on November 28, 1979.

(3) The application of the detenu for oblaiui1ig copies of the relevant documents was improperly rejected, and as a result, he has been deprived of his constitutional right of making an effective representation.

(4) The detenu had a right to move the Central Government for revocation of the order of his detention. For that purpose, he submitted a petition addressed to the Central Government on November 19, 1979. But, the Central Government has callously ignored it and has not dealt with it so far. This delay and inaction fo(anin.definite period, which now exceeds four months, vitiates the detention. Reliance for this contention has been placed on two recent judgments of this Court in Shyam Ambalal Siroys v. Union of India & Ors.(1) by a Bench of three learned Judges; and Tara Chand v. The State

of~Rajasthan & Ors. (W. P: (Crl) No. 1639 of 1979, decided on February 13, 1980, by a Bench of two learned Judges).

We will take the last contention first, because, in the course of his arguments, the learned counsel for the petitioner while; reserving his arguments on other points, has dealt with this point only.

On the other hand, regarding contentioU:4, IMr. Datar, appearing for the Central Government, submits that Section 11 of COFEPOSA merely confers a discretion on the Central Government to revoke or modify an order of detention made by the State Government.

It does not confer any right or privilege on the detenu to make a representation to the Central Government under that Section ..

In line with the same argument, Mr. Nain, appearing for the respondent•State, submits that Section 11 merely gives a power which is to be exercisd by the.Central Government suo motu after receiving the report from the State Government under Section 3(2). It i(conceded that the power conferred on the Central Government under

Section II is a supervisory power but that, according to the learned counsel, does not mean that the. detenu has been invested with a right to move the Central Government for revoking the detention. Mr.

Nain further tried to distinguish~ the Syham Ambalal Siroya's case

(ibid) on the ground that therein, the Eietaining authority was the Central Government, while in the instant case, the order was passed by the State Government.

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74.2 I

SUPREME COURT REPORTS [1980] 3 s.c.11:.

A Both the learned counsel, appearing for the respondents, relied upon the decision of thiS Court in Mohd. Dhana Ali Khan v. State of West Benga/(I) Counsel further submitted that what has been said by . Fazal Ali, J. in Mohd. DhanaAli Khan's case, conflicts with the ratio of Shyam Ambalal Siroya's and Tarachand relied upon by the peti- •

tioner. It is urged that on account of thiS conflict, the matter should be referred to a larger Bench for reconsideration. It is maintained that the last mentioned two cases have not been correctly decided.

If the ratio of these two decisions-proceeds the argument-is liberally applied, then it mean~ that the detenu has a right to vex the Central " Government by making endless representations even where no new 1 c facts have come to light.

In the alternative, Mr. Nain contended that oniy in a case where

I • the representation is based on the discovery of new matter or fac\8, the Central Government may be required to consider it. The proper course for the Court even in such cases, according to Mr. Nain, is to issue a direction to the Central Governnient to consider the represen- D tation within a period specified by it and not to quash the detention, In this connection reference was made to Ram Bali Rajbhar v. The

State of West Bengal & Ors. (2).

It is true that Section 3(2) of COFEPOSA mandates the State ..

Government to send a report to the Central Government. But it does B not mean that the representation made by the detenu, if any, should ~- also be sent along with that report. There appears to be no substance in the contention that the Central Government is under no dnty to consider a representation made to it by the detenu for revoking his detention, if it simply repeats the same allegations, statement of facts, r

and arguments which were. contained in the representation made to the detaining authority. It is common experience that an argument or submission based on certain facts, which does not appeal to a tribunal or authority of first instance, may find acceptance with a higher tribunal or supervis91'Y authority. Whether or not the detenu has under section 11 a legal right to make a representation to the Central Govci; nment

'G is not the real question. The nub of the matter is, whether the power • conferred by Section 11 on the Central Government, carries with it a duty to consider any representation made by thedetenu, expcditiously.

The power under section 11 may either be exercised if on information ··rreceived by the Central Government from its own sources including that' supplied under Section 3 by the State Government, or, from the ... detenu in the form of a petition or representation. Whether or not the . , H (!) (1975] Supp. SC.R. 124.

(2) [19751 3 S.C.R. 63.

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SABIR AHMED v. UNION (Sarkar/a, J.) , 74 3

Cel!tral Government on such petition/representation revokes the detention is a matter of discretion. But this discretion is coupled with a duty. That duty is inherent in the very nature of the jurisdiction. The power under section II is a supervisory power. It is intended to be an additional check or safeguard against the improper exercise of its power of detention by the detaining authority or the State Government.

If this statutory safeguard is to retain its meaning and efficacy, the Central Government must discharge its supervisory responsibility with constant vigilance and watchful care. The report received under Section

3, or any communication or petition received from the detenu must be considered with reasonable expedition. What is 'reasonable e1 pedition' is a question depending on the circumstances of the parti cular case. No hard and fast rule as to the measure of reasonable time can be laid down. But it certainly does not cover the delay due to negligence, callous inaction, avoidable redtapism and undulyprotracted procrastination.

The plea specifically taken by the writ petitioner in Ground No.

XXII of his affidavit, runs as under '.

"The petitioner says that he made a representation to the .

Central Government for revocation of the detention order under section 11 of the COFEPOSA. The Central Government has not considered the said representation and thus the detenu's continued. detention is illegal."

Earlier, in paragraph 7 of his affidavit, also, he had mentioned that he had sent a communication to the Central Government, De

partment of Revenue, COFEPOSA Branch, asking fer revocation of the detention order, b11t no reply had been received. In spite of.the fact that this ground was specifically taken, Mr. R.K. Thawani, Deputy Secretary to the Government of India, Ministry of Finance, has not in bis counter-affidavit said anything with regard to this plea or the facts alleged in the affidavit of the writ-petitioner. The conclusion is, therefore inescapable that the Central Government has not at all considered the petition made by the detenu requesting for revocation of his detention under section 11. According to the allegations in the writ petition, this written communication was sent by the detenu to the Central Government on November 19, 1979. We are now in the middle of March, 1980.

Contrary to the counter-affidavit filed hy Mr. S. M. Sule, Under- Secretary to the Government of Maharashtra, Home Department, Mr. Nain suhmitted that, in his opinion, the Central Government did not consider the representation/petition of the datenu because it

, , ·•°ik~M+i

Sll~REMf, COuRT RBPORTS [1-980) 3 s.c.R, ·

/>. might be labouring under a misappre)lension that once a writ petition for habear r.orpus has been filed on behalf of the detenu and the court .. is seised of the ca; e, anything done. by the Government thereafter might tamount to contempt of col)rt. The apologetic explanation imagined by him contrary to the stand taken in Mr. Sule's counter-affidavit,

is hardly an excuse for not performing its statutory duty by the Central Government, Although, about four months have gone by since the -t despatch of the representation by the detenc, yet the Central Government has not applied its mind to it. It has just ignored it.

The ratio of Tara Chand's case and Shyam Ambalal Siroya'• case ~- 'l- -c

applied with all its force to the facts of the instant case. The decision '1 i11 Mohd. Dhana Ali Khan, (sµpra) stands on its own peculiar facts. ,,

In principle, there is no conflict between the ratio of that case and the two subsequent decisions aforesaid.

In Tara Chand's case, the order of detention was passed by the

Government of Rajasthan, and the detenu .had addressed a represen-

'.D tation to the President, who forwarded it to the Finance Ministry of the Union Government for necessary action. It was common ground ;. that the representation was not considered by the Union of India, nor was any order passed on it. On these facts, :Murtaza Fazal Ali, J., speaking for the Court, held that section 11(1) of the COFEPOSA ''clearly enjoins that the Central Government may revoke or modify

' ~I <E an order passed by the State Government. .. Once a representation is made to the Central Government, it is duty .bound to consider the .,

$!Ifie in order to exercise its discretion either in rejecting or accepting it. If there is inordinate delay in considering •the representation that would clearly amount to violation of the provisions of Article 22(5)

,.F so as to render the detention unconstitutional and void."

,' ' The ratio of Tara Chand's case was followed in Shyam Ambala/ '-'t Siroya'• case, wherein a stand similar to the one before us was taken .

. by the Central Government in the counter-affidavit filed on its behalf .. • The stand taken was that the detention order was not vitiated merely because the CentralGovernment had not considered the representa- -G tion of the detenu made to it for revocation of the detention under section _ 11 of the COFEPOSA. The Court rejected this contention ')--. with this observation; •

"The power of the Central Government to revoke the order of detention implies that the detenu can make a representation JH for exercise of that power. Any petition for revocation of an order of detention should be dealt with reasonable expedition ••• It may be permissible for the Central Government to ke reson• I Ii Si!

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SABIR AHMED v. UNION (Sarkaria, J.) 745

--able time for disposing any revocation petition. But it would not be justified in ignoring the representation for revocation of the detention as ~. statutory duty is cast upon the Central Government. It is necessary that the Government should apply its mind and either revoke the order of detention or dismiss the petition, declining to order for revocation."

In that case, the representation addressed to the Central Govern ment was not forwarded to the Central Government and, as such, was left unattended for nearly four months.

It is true that in Shyam Ambalal Siroya's case, the detaining autho rity was a Additional Secretary to the Central Government. But he did not derive his authority to pass the detention order from the rules of business framed by the Central Government under Article 77(3) .of the Constitution. Such authority was given to him under the statute itself. It is, therefore, not correct to say that in that case, the order passed by the detaining authority was to be deemed an order passed by the Central Government itself. In any case, so far as the ratio of that decision is concerned, this is a distinction without a difference. -

Shyam Amdalal Siroya's case was a decision rendered by a Bench of three learned Judges. We are bound by the ratio of the two afore said decisions. Respectfully following the same, we hold that since a repre•entation made by the detenu to the Central Government has been ignored and left unattended for a period of about four months, the detention cannot be justified as being according to procedure presiribed by law. In view of the stand taken by the respondent-Sine in the coun !er-affidavit filed on its behalf, we do not feel inclined, in the circumstances of the case, to issue a direction to the Central Go

vernment to consider and dispose of the representation of the detenu, now.

We, therefore, allow this writ petition and set aside the detention and direct release of the detenu.

These, then, are the reasons which we now give in support of our order, dated March 14, 1980, by which we allowed Sabir Ahmed's writ petition and ordered the detenu's release.

S.R.

Petition allowed.

9-403 SCI/80

SABIR AHMED

UNION OF INDIA AND ORS

April, 18, 1980

R. S. SARKARIA

R. S. PATHAK, JJ

Activities Act, 1974

Section 11

Dawood Hasan Sheikh Ibrahim

October 2, 1979

November 14, 1979

December 10, 1979

December 3, 1979

December 6, 1979

November 19, 1979

section 11

Central Government

Section 3(2)

Section 11

Section 11

Central ' Government

Section 11

Central Govrnment

section 3

section 11

[1980] 2 SCR 1078

[1975] 2 S.C.R. 63

Article 32

Harjinder Singh

M. N. Shroff

SARKARIA

Sabir Ahmed

Dawood Hasan Sheikh

.Ibrahim

Smuggling Activities Act, 1974

September 28, 1979

Section 3(1)

Pradhan

Pradhan

November, 19, 1979

Section 11

Jeth Malani

December 3, )- 1979

November 18, 1979

November 28, 1979

February 13, 1980

Datar

Section 11

Nain

Section 11

Section 3(2)

Syham Ambalal Siroya

Fazal Ali

Mohd. DhanaAli Khan

Shyam Ambalal Siroya

Tarachand

Central " Government

Central Governnient

Section 3(2)

section 11

Central Govci

Section 11

section 11

Section 3

Section

3

section 11

R.K. Thawani

Government of India

section 11

S. M. Sule

Sule

Tara Chand

Shyam Ambalal Siroya'•

Mohd. Dhana Ali Khan

Union of India

Murtaza Fazal Ali

section 11(1)

Article 22(5)

Shyam Ambala/

CentralGovernment

Central Govern ment

Article 77(3)

Shyam Amdalal Siroya

Sine

Central Go

March 14, 1980

Sabir Ahmed


STATE OF HARYANA AND ORS.

JAGE RAM AND ORS.

April 21, 1980'

[Y. V. CHANDRACHUD, C.J., P. N. SHINGHAL

AND 0. CHINNAPPA ; REDDY, JJ.]

Writ Jurisdiction-Article 226 of the Constitution of India, 19SOc- Petition under reciprocal rights and obligations arising out of Contract cannot _. be enforced-Excise duty, Fees, and Price for parting with the Privirege by

-....J Sttile, explained-Punfab Excise Act (Act 1 of 1974) and Pun/ab Iiftlor ' O Licence Rules, 1956 as amended upto 22-3-68-Whether notice of reauction

necessary under Rule 36(3) of the Liquor Licence Rules.

In the auction for the financial year 1967-68 held on March 27, 1967 for the .retail vend known as "Biswan Mee!" Sooepat, the respondents offered the highest bid for a quota of Rs. 62, 100 proof litres for which they became liablo under condition 14(iii) of the auction to pay an amount calculated at the rate of Rs. 17.60 per litre that is to say, Rs. 10,92,960-00. On the bid being lrnoUed in their favour, respondents deposited a •nm of Rs. 45,527-50 being 1/24th of the total amount payable by them by way of security for the due performance of the terms of the auction, as required by conditii>n No. 15(1) 0f the auction and Rule 36 (22A) of the Punjab Liquor Licence Rule<, 1956 as amended.

They started operating the vend from April I, 1967.

The successful bidder who is granted licence for retail sale of country liquor is required by condition No. 15(ii) of the auction read with rule 26(23):(2),

to pay the licence fee in 22 equal instalments, each instalment being PllY•ble before the 10th and 25th of every month, commencing on April 10. On the failure of the respondents to pay the instalments due for the periods ending with April 10 and 25 1967, the Excise and Taxation Officer, Rohtak, gave them notices dated 15th and 25th April, 1967 calling upon them to make good the short-fall of Rs. 33,827.20 and Rs. 5,898.80 respectively, before April 20 and April 30, 1967. Since the respondents did not pay the amount, the Deputy Excise and Taxation COmmissioner, Headquarters, Haryana, gave them a notice calling upon them to show cause, within two days of the receipt of the notice, why their licence should not be cancelled under section 36(c) of the Punjab Excise Act, for their failure to comply with the terms of the auction in the matter of payment 0£ the two instalments. By their reply dated May 12, 1967, the respondents stated that they were illiterate villagers, that the terms of auction were not expl-ained to them, that the district of Rohtakl was in the grip of a severe drought leading to a fall in the sale of li(J, uor, that April being a sum ... 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 hear ing 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 AM. in the office of the Excise and Taxatioo Officer Rohtak, at the risk of the respomfen!S.

- '

lli&YANA V, .JAGll MM 747

tOa May 22, 1967 respondents filed a Writ Petition (No. 900 of 1967) wh A. was by the High Court of Punjab and Haryana on May 26, on the i:r<lllMI lbat it was premature.

Jn pirsuance of the order dated May 17, the "Biswan Meel" vend, Sonepat, was rauctioned on May 23, 1967, the highest bid received being of 15000

litres, ..tiich in terms 0£ money comes to Rs. 2,46,000.00. The dilfen:nce between the amount which the respondents were liable to pay under their bid B and tile, amount realised in the reauction comes to Rs. 7,41,577.40.

On July 11, 1967 respondents were served with a notice dated July 7 by whi<lh they were called upon to pay the aforesaid amoont, failing which, they were warned, the amount was liable to be recovered as arrears of land revenue. On July 18, respondents filed a Writ Petition in the High Court challenging 1be legality of the aforesaid notice.

C an earlier decision in Bhajan Lal Saran Singh & Co. v. State of PunjMI. '""' Ors., [1967] Current Law Journal, p. 460, which was affirmed by this G>urt in CA 1042 and 1043/()8 dt. 21-8-72, the High Court allowed the

writ petition and quashed the order cancelling the respondents' licence and cajlin!l upon them to pay the difference between the amount payable by them under tlteir bid and the amount realit; ed in the reauction of the vend. It has given to the appellants a certificate to appeal to this Court under Articlel33(1)

(a) of tile Constitution since the subject matter in dispute was .of the value of meie lban Rs. 20,-000 at the time when the Writ Petition was filed, as also on lhe ..,.le of the proposed appeal.

Allowmg the appeal, the Court

HIU:>:: I. The Writ jurisdiction of the High Court under Article 226 of the a..stitution is not intended to facilitate aYOidance of contractual obligations W>lontarily incurred by the petitioner. (755 D]

In the instant case the High Court was in error in entertaining the writ petitions for the purpose of examining whether the respondents could avoid their contractual liability by chailenging the Rules under which the bids offered by them -were accepted and under which they became entitled to conduct their

busiiiess. It cannot ever be that a licensee can work out the licence if he finds it .profi1able to do so; and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business... The occurrance of commercial difficulty, inconvenience or hardship in the pedormance of those conditions, like the sale of liquor being less in sum~ mer than in winter, can provide no justification for not complying with the terms of the -00ntract which they had accepted with open eyes.

[755 F, 756 C-DJ

Har Shanker and Ors. v. The Deputy Excise and Taxation Con1missioner and flirs., [1975] 2 SCR 254 @ 266; Sham Lal v. State of Punjab, AIR 1976 SC 2045, fdlowed.

BMjan Lal Saran. Singh & Co. v. State of Puniab, [1967] Current Law

Jciurnal, p. 460; Overruled.

2. 'lkre is no doubt that a distinction does exist between the Rules which were im)1Ugned in Bhajan Lal, and in the instant case on one hand and the

SUPREME COURT REPORTS

[1980] 3 S.C.R,

Rules which were impugned in Har Shanker's case on the other. Jn'' f~~ in , '' ' '. ·"'\. ' Har Shanker's case the impugned Rules were those as amended on Z2;:l-68 in order to meet the judgment of the High Court under appeal in the instant case.

Even assuming that there is a material difference in the Rules which are im~

pugned in the instant case and those in Har Shanker's, ye1t the jurisdiction of the High Court is a bar to the respondents to wriggle out ~Jf their cOD.tractual obligation. [756 E-H]

In Har Shanker's case, 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 these rights for consideration; tha.t the amounts Which are 'Charged

to the licensees who offer their bids in auction sals of vends are neither in the nature cf a tax nor in the nature of excise duty; and that, the true natur.e of the charge which the Government levies in such cases is that it is price which the State charges as a consideration for parting with its privileges in favour of 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. authorises ae.other to do by charging a price for parting with its privilege.

A price can neither be a tax nor excise duty. Therefore, even if any concession was made in the High Court, the true legal position that the amounts whi<; h the respondents became liable to pay under the terms of the auction is not excise or stltl-head duty but is a price which the Government charged for parting with its privilege, during the cUrrennt of the period covered by the contract. 'Ihe amount which the respondents agreed to pay to the State Government under the terms -of the

suction is neither a fee properly so called which would require! the existence of a quid pro quo, nor indeed is the amount in the nature of e.xcise duty, which by reason of the constitutional constraints has to be primarily a duty on the production or manufacture of goods produced or manufactured within the country. The requirement to multiply by a certain figure per proof-litre the quota for which the respondents gave their bid by a certain figure and the facility of paying the amount by instalments while lifting the quota from time to time, do not make such payment an excise or still-head duty. What the Government is trying to recover from the respondents is not excise duty on undrawn liquor. [757 B-D, 758 A-C, E-F, 759 A]

Panna Lal v. State of Rajasthan. [1976] I SCR 219; Bimal Chandra BQllerjee v. State of Madhya Pradesh, [1971] I SCR 844; State of Madhya l'rBdesh v. Firm Gappu Lal etc., [1976] 2 SCR 1041 and Excise Commissioner U.P., Allahabad v. Ram Kumar, [1976] Suppl. SCR 532; distinguished.

[The Court remanded the case for a finding on the following two questions ; ( 1) Whether it was necessary according to the rules in force at the felevant

,.G time .to give adequate publicity to the reauction and (2) if so, when such publicity was in fact given to the reauction on May 23, 1967]

CIVIL APPELLATE JURISDICTir.N : Civil Appeal No. 1507/1969.

From the Judgment and Order dated 12-3-1969 ol' the Punjab and Haryana High Court in Civil Writ No. 1376/67.

s, N. Kacker So!. Genl., R.arinder Rana and M. N. Shroff for the Appellants. ·

...

HARYANA V. JAGE Rl'\M (Chandrachud, C.J.) 7 49

.: . "Tinath Singh Munjral. H. K. Puri and V. K. Bahl for Respondent No._.,!

 "' the Judgment of the Court was delivered by

CttA1''DRACHUD, C.J.-This is an appeal by certificate granted by the High Court of Punjab and Haryana under Article 133(l)(a) of the C11nstitution 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 terins and conditions in regard to the auction of retail C vends of country spirits were set out in a pamphlet issued along with the riotice. Those terms and conditions did not accord with the rules thelt'prevailing but were evidently announced so as to comply with the requirement of the new rules which were being brought into force.

The , amended rules issued by the Excise and Taxation Commissioner (Financial Commissioner) were published in the Government Gazette D dated March 31, 1967 and came into effect ori April I, 1967.

In the auction held on March 27, 1967 for the retail vend known air "Biwan Mee!", Sonepat, respondents offered the highest bid for a quota of 62,100 proof litres for which they became liable, under conditibti"l4(iii) of the auction, to pay an amount calculated at the rate of E Rs. '17 60 per litre, that is to say, Rs. 10,92,960 00. On the bid being kri6cked in their favour, resp•mdents deposited a sum of Rs. 45,527 50, being I/24th of the total amount payable by them, by way of security

fo~, the due performance of the terms of the auction, as required by condition No. 15(1) of the auction and Rule 36(22-A) of the Punjab Liquor Licence Rules, 1956 as amended. They started operating the F vend from April I, 1967.

The successful bidder who is granted licence for retail sale of country liquor isrequired by condition No. 15(ii) of the auction read with Rule

36(23,(2); to pay the licence fee in 22 equal instalments, each instalment'being payable before the 10th and 25th of every month, commen- G. cing bn "April 10. On the failure of the respondents to pay the instalments due for the periods ending with April 10 and 25, 1967, the Excise arid-Taxation Officer, Rohtak, gave them notices dated 15th and 25th

April; 1967 calling upon them to make good the short-fall of Rs. 33,827 20 and Rs. 5,898 80 respectively, before April 20 and April 30, l9fi7. Since the respondents did not pay the amount, the Deputy

H !

Exe~: , and Taxation Commissioner, Headquarters, Haryana, gave . thew,, a. notice calling upon them to show cause, within two days of the

750 E:f9illlOJ 3 rc.R.

reseipt of the notice, why their liGence should not be cancelletf .Wer section 36(c) of the Punjab Excise Act, for their failure to comp!J wtih the terms of the auction in the matter of payment of the two instal. ments. By their reply dated May 12, 1967, the respondents stated that th\:y were illiterate villagers, that the terms of auction were not explained to them, that the district of Rohtak was in the grip elf a severe drought leading to a fall in the sale of liquor, that April btiag a summer 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, 1%7, the Collector and Deputy Excise & Taxation Commissioner, Haryana, passed an order, after hearing the respondents, cam:efling 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 IO 00 A.M. in the office of the Excise and Taxation Olker, Rohtak, at the risk of the respondents.

On May 22, 1967 respondents filed a Writ Petition (No. 900 of 1%7) which was dismissed by the High Court of Punjab and HttrJl'lf!lll on May 26, on the ground that it was premature.

In pursuance of the order dated May 17, the "Biswan Mecl" wild, Sonepat, was reauctioned on May 23, 1967, the highest bid received being of 15,000 litres, which in terms of money comes to Rs. 2,46,!XnOO The difference between the amount which the respondents were liable to pay under their bid and the amount realised in the reauction CO!llCS to Rs. 7,41,577 40.

On July 11, 1967 respondents were served with a notice dated July 7 by which they were called upon to pay the aforesaid amount, faifillg which, they were warned, the amount was liable to be recovered as arrears of land revenue. On July 18, respondents filed the present Writ Petition in the High Court challenging the legality of the afO£esaid notice. The High Court allowed the Writ Petition and quasheQ the order cancelling the respondents' licence and calling upon them t1> pay

the difference between the amount payable brth.em under their bid; and the amount realised in the reauction of the vend. It has given to the appellants a certificate to appeal to this Court under Article 133(fX; I) of the Constitution since the subject matter in dispute was of the wlae of more than Rs. 20,000 at the time when the Writ Petition was •it, as also on the date of the proposed appeal.

ff It is no longer in dispute that the auction at which the responthls' bid was accepted is go\terned by the Punjab Liquor Licence Re, 1956 as amended by the notification dated March 3l, 1967 isu~

I }

HAllWINA v. JAG!! MM (Clumdrar:hud; C.1.) 751

the Excise and Taltation Commissioner, Haryana, which came into A force on April I, 1967. The amended rules, in so for as they a~ rele- \'ant for our purpose, read thus :

36. (I) Subject to such changes as the Financial Commisioner may make each year before the annual auctions the Coffector shall, on the basis of the probable sales during the next licence year determine, in the case of country liquor vends, the minimum quota of country liquor and the licence fee calculated thereon . . . . . . . . The minimum quota and the licence fee calculated thereon .......... , for each vend shall be an- .nounced by the Presiding Officer at the time of auctions.

36. (16) Bids in respect of country liquor vends shall be received in terms of quota of country spirit in proof litres to be lifted during the whole year, and the successful bidder shall be 'liable to , pay licence fee calculated by multiplying the .quota bid by Rs. 17 6.

36. (22-A) A person to whom a country spirit shop has been sold shall deposit in a Government Treasury under head "Licence fee on country spirit" subordinate to Majo ead "X-State Excise Duties" by way of security an amount equivalent to one-twenty-fourth of the amount of the licence fee determined under clause (16) within a period of seven days of the date .of auction and the aforesaid amount of security shall be refundable to him at the end of the year, 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 beinl} 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 ;; old shall pay the amount or licence fee as calculated nuder .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 <I ue date, his licence may be cancelled.

36. (23) (3) Notwithstanding anything contained in subelause (2)(a) the licensee shall be entitled to deduct from the amount of the licence fee to be paid by him such amount of ;; till-head duty as may have been actually paid by him on the

[1980) 3 S.C.R.

i\. 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) When a licence has been cancelled, the Collector or an Officer not below the rank of Excise and Taxation Officer authorised by him in this behalf may resell it by public auction or by private contract in accordance with the procedure laid down in this rule and any deficiency in the licence fee and all expenses of such rsale or attempted resale shall be recoverable from the defaulting licensee in the manner laid down in section 60 of the Punjab Excise Act, 1914 ...... .

The High Court has summarised correctly the position emerging out of these rules in these words :

"The auction is on the basis of the quota that has to be lifted for each. particular shop. In order to convert it in terms of money, each proof litre bid is multiplied by Rs. 17 60 and that is how, the fee for a particular shop is fixed. The licensee is required to deposit one-twenty-fourth of the amount so arrived at as security. He is then to lift the quota specified for each month in the Rules and if he fails to do so, the amount shortlifted in terms of the licence-fee for that month is deducted from his security amount and he is required to make good the defi- E ciency in the security. He may not sell even a litre of liquor; but whatever quota of liquor he has bid for, the money value of that quota by multiplying it by Rs. 17 60 per litre has to be paid by him. There is no escape from this."

One of the contentions raised before the High Court was that the licence fee charged to the respondents, for failure to pay' which ttei'r licence was cancelled, was not fee properly so called but'was 'stillhead' duty or excise duty; and the rule requiring the payment of such duty, even when no quota of liquor was actually lifted by the licensee, was unconstitutional for the reason that there can be no liability to pay still-head duty or excise duty unless the licensee'; takes or lifts the liquor.

The High Court compared the Punjab Liquor Licence Rules of 1956 as they existed in 1966 and the Rules as amended in 1967 and carre to the conclusion that, in substance, there was no difference in the nature of payment which the licensee was)iabl(to'.make under the two sets of rules ; what he has to pay under toth is still-head duty or, excise duty,

In M/s. Bhajan Lal Saran Singh & Co. v. The State of Punjab and others,(1-) (Civil Writs Nos. 538 and 1991 of 1966), the High Court had

(l) (1967) Corren! Law Journal 460.

j...

HARYANA v. JAGE RAM (Chandrachud, C.J.) 763

struck down the relevant Rules of 1966 by holding tharthe levy, charge or recovery of any amount of still-head duty in respect ofliquor 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 reaiiction of the vend.

The sheet-anchor of the respondents' argument before us is that the decision of the High Court in Bhqjan 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 dedsion 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 ; vlunjral, the contention would be unassailable b<cauce the position would then approximate to the application of a mathematical formula: Bhajan Lal was affirmed by this Court; the judgment of the High Court in the instant case follows Bhajan Lal; the judgment under appeal must therefore be upheld. But after the decision of the High Court in Bhajan Lai (supra) was affirmed by this Court on August 21, 1972, the legal position has been further examined by a Constitution Bench of this Court in Har Shankar & Ors. v. The Dy. Excise & Taxation. Commissioner & Ors.(1). The learned Solicitor Grnual places strong reliance on that decision and contrnds that the jLdpur.1 cf t.he High Court must, in the light of that decision, be over-rukd. We must proceed to consider the decision in Har Shankar straightaway.

Har Shankar was a case from Punjab and though the instant case is from Haryana, the liquor auctions in bo1h 1he cases are governed by the Punjab Excise Act, I cf 1914, and 1he Punjab Liquor Licence Rules, 1956, as al)1ended from time to time. Har Shankar' s case has an interesting relationship with the present proceedings because it was as 'I result of the decision of the Punjab and Haryana High Court in the:instant case, which was rendered on March 12,. 1968 that the Punjab Liquor Licence Rules were further amended on March 22 and the auction impugned in Har Shankar was held on March 23, 1968. The liability arising under the auction in Har Shankar was upheld by the High -Court and this Court, not t1"dc r the Rules which are relevant in 1he instant case, but under the Rules which were amended in order

(I) [1975] 3 S.C.R 254.

754 SU!'llt!Ml! COURT R~PORTS [198-0J 3 i.C, ll.

to meet the judgment of the High Court in the instant case. Tlli&, from the respondents' point of view, would apparently fUrnisb an imjloTtant consideration for distinguishing the decision in Har Slidar But, as we will presently point out, the Solicitor General relies upon that decision on an aspect which is altogether different and of fundamental importance .

In Har Shankar, the appellants' bid was accepted in an auction held on March 23, 1968 for the right to sell country liquor at two vends in Ludhiana. the appellants paid the security deposit but were unable to meet their obligation under the conditions of auction and fell in arrears. When the State demanded the payment, threatened to cancel the licences granted to the appellants and declared its intention to resale the vends, the appellants filed writ petitions in the High Ctmrt of Punjab and Haryana asking that the auction be quashed and the repondents 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 certifcate .

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 tre \\rit petitions filed by the appellants and that objection was upre!d by this Court.

The preliminary objection was that such of the appellants who offer<d their bids in the auctions did so with a full knew ledge oft he 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 the bidders participated in the auctions without a demur attd with full knowledge of the commitments which the bids involved.

The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Govero.- ment. The Government's acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them. The successful bidders were then granted licencelio

HAll.YANA v. JAOll RAM (Chandrachud, C.l.) 755

e1'idencing the terms of contract between them and the Govern- 1*111, under which they became entitled to sell liquor. The Ucellllees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit.

O!mmercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of trading transactions. Those who contract with open eyes must accept the burdens ofthe contract along with its benefits. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded', would have relied upon those very powers to found a

al claim. Reciprocal rights al'd obligations arising out of coatract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force.'' (page 263),

At page 266 of the Report, the Court further observed that the writ jurisdiction of High Courts under Article 226 was not intended to facilitate avoidance of obligations voluntarily incurr<d.

The Writ Petitions filed by the respondents in the High Court in the instant case are open precisely to the same obj<ction which was upheld -by this Court in Har Shankar (supra). They entered into a contract with the State authorities with the full knowledge of conditions which they had to carry out in the conduct of their business, on which they had willingly and voluntarily embarked. The occurrence of a commercial difficulty inconvenience or hardship in the performance 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 res- :pondents 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 P:i, yab(I) 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 amOllJlts which they were liable to pay under the terms of the auction,

(tl A.I. R. 1976 S.C. 2045.

.'(56

SUPREME <; OURT REPORTS

[198~ 3 S.C.R.

whereupon they filed writ petitions in the High Court to cb.allenge the demand. Relying upon the passage from Har Shankar {pra)' extracted above, the Court held that the licensees could not be• per milted to avoid the contractual obligations voluntarily incurr•i:l by them and that therefore the High Court was right in refusing to exer cise its jurisdiction under Article 1226 of the Constitution iu theif favour. .

In view of these decisions, the preliminary objection raised by the learned Solicitor General to the maintainability of the writ peiitions filed by the respondents has to be upheld. We hold accordingly-that the High Court was in error in entertaining the writ petitions for the purpose of examining whether the respondents could avoid theif con tractual liability by challenging the Rules under which the bids offored by them were accepted and under which they became entitled to conduct their business. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so; and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.

Learned counsel for the respondents has called our attention to the distinction, which this Court drew in Har Shankar, (supra) between the Rules which were impugned in Har Shankar on one hand, and those which were impugned in Bhajan Lal, (supra) and in the instant case on the other. There is no doubt that such a distinction exists.

In fact, the judgment of the Punjab and Haryana High Court which is impugned before us was specifically referred to at page 282 of the Report in Har Shankar but was distinguished on the ground that the rules in the two sets of cases were different. As we have already pointed out, the licensing rules were r_amended on March 22, 1968

bause of the judgment which the High Court gave in this case on March 12, 1968 and the auction in Har Shankar was held in pursuance of the amended rules on March 23, 1968. But that, to our mind, is a separate matter altogether. Even if it be true that there is difference between the rules involved in the present case and those which .came up for examination in Har Shank or, the preliminary objection rests .on an entirely different basis which would remain unaffected by the <!iffer ence in the two sets of Rules.

We must therefore affirm that, even assuming that there is a material difference in the Rules which are)ele vant for our purpose and the Rules which were impugned iµ _Har Shankar, (supra 1 the w1 it petitions filed by the respondents are liable tcr fail on the narrow ground on which the preliminary objection o(the State was upheld in Har Shankar.

HARYANA v. JAGE RAM (Chmulrachud, C.J.) 75.7

Apart from the:ract that the respondents' writ petitions are liable tB fail on the ground stated above, the State's appeal must succeed on another ground 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 realise 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 consi

deration; 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 trad

ing or business transaction. What the State could itself do in theexercise of its privilege, it authorizes another to do by charging a., price for parting with its privilege. A price can neither be a tax nor .exeise duty.

The High Court has recorded in its judgment a concession said to have been made by the learned Advocate General on behalf of the State -of Haryana that "Rupees 17 60 is the still-head duty per proof litre".

In the application dated May 2, 1968 filed by the State Government in the High Court for certificate to appeal to this Coc•rt, it was stated that

ia the interest of justice it was necessary that the points involved in the writ petition be decided by the Supreme Court since they affected "lacs

of rupees as excise duty". This makes it plausible that the concession was made. But considering the tenor of the arguments advanced -0n behalf of the State Government in the High Court, it does not appear likely that any concession was made by the Advocate General regarding the nature of the charge. It is disputed before us that the Advocate General made any such concession and indeed even in the Memorandum of Appeal which was filed in this Court, it was stated specifically that the High Court was in error in saying that the Advocate General had made the particular concession and that, as a matter of fact, "it was vehemently argued by the Advocate General that the auction was only in terms of money which was to represent the amount of

fee for the privilege of selling country liquor at a particular shop; only the amount of money was to be calculated by multiplying the number of proof litres bid by Rs. 17 60 p.". We might add that:the

SUPREME COURT REPORTS [1980] 3 S.C.ll.

concession, if any, made by the Advocate General in the High Court cannot affect the true legal position that the amount which the respondents became liable to pay under the terms of the auction is not excise or still-head duty but is a price which the Government charged .for parting with its privilege, during the currency of the period covered by the contract.

On this consideration also, apart from the validity of the prelimi nary objection, the respondents' writ petition is liable to fail. The amount which the respondents agreed to pay to the State Government under the terms of the auction is neither a fee properly so called which would require the existence of a quid pro quo, nor indeed is the amount in the nature of excise duty, which by reason of the constitutional constraints has to be primarily a duty on the prod8ction or manufacture of goods produced or manufactured within the country. The res pondents 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 re presented excise duty, it cannot be so argued in the present event merely because the quota for which the respondents gave their l>id 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 by contending that the paymeut which they were called upon to make is truly in the nature of excise duty and thatlno such duty can be imposed on liquor not lifted or purchased by them.

In Panna Lal v. State of Rajasthan(l) it was held by this Court that the licence fee stipulated to be paid by the licensees was the price or consideration or rental which the Government charged them for parting with its privilege and that it was a normal incident of trading or business transaction. It is true that the Court also said that no excise duty could be collected on undrawn liquor but it held that while enforcing the payment of the guaranteed sum or the stipulated sum mentioued in the licences, the Government was not seeking to levy or recover e!ci.se

(I) {197611 SCR. 219.

HA'RYANA v. JAGE llAM (ChandrllChud, C.1.) 759

duty on undrawn liquor. In the instant case too, what the Govern- 4- t is trying to recover from the respondents is in essence the price of the privilege with which it has parted in their favour and not excise dnty on undrawn liquor.

Strong reliance was placed by the respondents on the decisions of .Ws Court in Bimal Chandra Banerjee v. State of Madhya Pradesh, (1), IJ State of Madhya Pradesh v. Firm Gappulal etc. (2) aud Excise Com" mis4ioner, U.P., Allahabad v. Ram Kumar(3) in support of their contention that what they are called upon to pay by the Government is excise duty. In Bimal Chandra Banerjee,(!) it was held by this Court that tile levy of excise duty on undrawn liquor was beyond the power of the State Government and that therefore the rule imposing the condition C' to that effect was invalid. That decision was followed in tbe Madhya Pradesh case(2) where also, the licensees were required to pay what was described as "Pratikar", which was nothing but excise duty on undrawn liquor. The same situation obtained in the U.P. case(3) because, the real nature of the payment which the licensees were required to make there was excise duty on undrawn liquor.

These decisions cannot help the respondents because the true position, as stated earlier, is that the amount which the respondents are called upon to pay is not excise duty on undrawn liquor but is the price of a privilege for which they offered their bid at the auction of the vend which they wanted to conduct.

Thus the respondents must fail in their contention both on account of the objection to the maintainability of their writ petition and on

merits concerning the nature of the payment which they are liable to tnake.

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 reauction 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 thee vend would be held on May 23, that no notice of the intended resale was give1;1 as required by Rule 36(3) of the Punjab Liquor Licence Rules

.~ [1971] I SCR. 844. ~

{1976] 2 SCR. 1041.

(3) [1976] supp], SCR. 532.

SUPREME COURT REPORTS [1980] 3 s.c.R.

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 to the respondents, was that one Lal Chand, a leadii:tg licensee of Haryana, went to the office of the Excise & Taxation Officer, Rohtak, and managed to have his bid accepted. These irregularities it is contended, resulted in the startling consequence that whereas in the auction held on March 27, 1967 the highest bid, namely, of the respondents was for a quota of 62,100 litres equivalent to Rs. 10,92,960 00. in the reauction held on May 23, 1967 the highest bid was only for a quota of 15,000 proof litres equivalent to Rs. 2,46,400 00.

In the counter-affidavit dated August 16, 1967 filed by Shri Pritam Singh,'.Deputy, Excise & Taxation Commissioner, the allegations made in paragraph 14 of the writ petition are deniecl by saying that the reauction held on May 23, 1967 "was duly published in accordance with rules".

The High Court has rejected the contenction of the respondents in this behalf. But it seems to us that its judgment on this' aspect of the matter suffers, with respect, from a misunderstanding of the grievance of the respondents. Their main grievance that du'e publicity was not given to the reauction, as a result of which proper bids were not received, has been overlooked by the High Court and it merely dealt with the question whether the respondents themselves had notice of the reauction and whether the date of the reauction ought to have been fixed by the Financial Commissioner himself and by no other person. The High Court is right that the respondents did have notice of the reauction, as is clear from the order dated May 17, 1967 passed by the Deputy Excise & Taxation Commissioner, Headquarters, Haryana, while cancelling the' respondents' licence.

It also appears clear that the date of the reauction need not be fixed by the Financial Commissioner himself. But there is no discussion whatsoever in the judgment of the High Court, on the question as to whether due publicity was given to the reauction"'as required by the Rules. In\ paragraph 14 of their rejojnder aflidavit filed in the High Court on September 14, 1967, respondents had stated that it was incorrect that the reauction was duly published in accordance with the Rules. Along wih their rejoinder, respondents filed affidavits of three Sarpanchas, three members of the Pancha:yatsand a Lamberdar to show that no notice whatsoever was given of

.. ~

y '"

HARYANA v. JAGE RilM ( Chandrachud, C.1.) 761

the reauction to the people in the vicinity of Biswan Mee! 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 1n order to enable it to record its findings on two outstanding questions: (I) whether it was necessary according to the Rules which were in force at the relevant time to give adequate publicity to the reauction

ang, , (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 to await the findings of the High Court on the .two points mentioned above before passing the fuial order, which can only be done after the findings of the High Court are received. we direct the High Court to decide the aforesaid questions on the material as it stands on the record and on such further material as the parties may desire to adduce. The State, especially, may like to file a further affidavit in reply to the rejoinder affidavit of the respondents along with which the affidavits of three Sarpanchas, three members of certain Panchayats and of a Lamberdar were filed. The High Court will certify its findings to this Court within three months from to-day.

:S.R.

Appeal allowed in part .

'10-463SCI/80

' 1-.

}<'

STATE OF HARYANA AND ORS

JAGE RAM AND ORS

Y. V. CHANDRACHUD, C.J.

REDDY, JJ.

Article 226

Constitution of India

Punfab Excise Act

Licence Rules, 1956

Rohtak

15th and 25th April, 1967

April 20 and April 30, 1967

Haryana

section 36(c)

May 12, 1967

Rohtakl

May 17, 1967

section 36

May 23, 1967

High Court of Punjab and Haryana

July 11, 1967

Article 226

Har Shanker

[1975] 2 SCR 254

AIR 1976 SC 2045

Bhajan Lal

[1976] 2 SCR 1041

N. Kacker So!. Genl

R.arinder Rana

M. N. Shroff

HARYANA V. JAGE

Chandrachud

Tinath Singh Munjral

H. K. Puri

V. K. Bahl

Article 133(l)(a)

March 31, 1967

March 27, 1967

Punjab Liquor Licence Rules, 1956

15th and 25th

April; 1967

section 36(c)

May 17, 1%7

section 36(b)

May 22, 1967

Article 133(fX; I)

10th and 25th of each month

section 60

Punjab Excise Act, 1914

Bhqjan Lal

August 21, 1972

Tirath Singh

Bhajan Lai

Har Shankar

Punjab

Punjab Liquor Licence Rules, 1956

Punjab and Haryana High Court

March 12,. 1968

March 23, 1968

[1975] 3 S.C.R 254

Har Slidar

Ludhiana

High Ctmrt of Punjab and Haryana

State of Punjab

Article 226

Article 1226

March 22, 1968

March 12, 1968

Har Shank

May 2, 1968

Supreme Court

SUPREME COURT REPORTS [1980] 3 S.C.ll

Bimal Chandra Banerjee

Madhya Pradesh

Tirath Singh Munjral

1976] 2 SCR. 1041

Lal Chand

August 16, 1967

Pritam Singh,'

September 14, 1967