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1990 DIGILAW 458 (PAT)

Lakshmi Narain & Sons, Ranchi Distillery v. State of Bihar

1990-12-17

AFTAB ALAM, S.B.SANYAL

body1990
JUDGMENT S.B. Sanyal, J. Both these writ petitions have been heard together and are being disposed of by this judgment. In both the writ petitions the order impugned is dated 1.11.1989 passed by the Commissioner of Excise. 2. The moot question involved is : Whether the source of procurement of silent spirit which is admittedly the basic material for the manufacture of spiced liquor is an essential condition and material term of the tender notice for the grant of privilege to manufacture spiced liquor ? C.W.J.C. No. 9404 of 1989 3. Facts : on 28.9.1987 a notice inviting tender for the grant of exclusive privilege for manufacture find supply of whole• sale spiced country liquor is Bihar for the period 1.4.1988 to 31.3.1991 was issued. Pursuant to the said notice inviting tender the petitioner including respondent no. 4 were applicants disclosing the source of procurement of silent spirit as was required under clause 4 of Schedule II of the tender notice. There were several tenderers including the petitioner and respondent no. 4. The petitioner and respondent no. 4 drew the samples of silent spirit from Vat no. 3 of Ranchi Distillery along with the samples of spiced liquor disclosing the source of procurement of spirit from Ranchi Distillery and Distillery at Balsiri which is coming up in the State of Bihar. 4. On 16.3.1988 (Annoxure-7) respondent no. 4 was asked by the Commissioner of Excise that it could be granted the licence on its fulfilment of condition no. 1, which required that by the 15th April, 1988, it must guarantee that it could be able to procure the demineralised water and silent spirit from Rancbi Distillery, samples of which were submitted along with its tender. On 1st March, 1988 (Annexure-8) Sheo Narain Jaiswal describing himself as partner and holder of general power of attorney of the petitioner-firm wrote to the Member. Board of Revenue that there had been a serious family dispute between the partners for a considerable period and, therefore, the petitioner firm or anyone could not run Ranchi Distillery. It would, therefore, be futile to grant licence to the petitioner firm sought for by Sri Jagat Narain Jaiswal on behalf of the firm. On 8th June, 1988 (Annexure-9) the Commissioner of Excise intimated to respondent to. It would, therefore, be futile to grant licence to the petitioner firm sought for by Sri Jagat Narain Jaiswal on behalf of the firm. On 8th June, 1988 (Annexure-9) the Commissioner of Excise intimated to respondent to. 4 that in view of the non-fulfilment of the conditional grant by 15th April, 1888, the Member, Board of Revenue has been pleased to withdraw approval of its tender. 5. Respondent no. 4 thereafter filed various representations which was also objected to by the petitioner. Board of Revenue was requested to reconsider the matter and recall the withdrawal of the Conditional grant. On 1.11.1989 (Annexure 12) respondent No. 4 was intimated that after careful consideration the order rendered on 16. 3. 1988 (Annexure 7) was revived and respondent no. 4 was accorded permission to procure demineralised water and silent spirit from any source in the State of Bihar. On 7.11.1989 the petitioner filed this writ petition assailing the said order (Annexure 12), which wall passed without inviting fresh tender and providing the petitioner-firm the same opportunity, and this Court on 10.11.1989 stayed the operation of the order dated 1.11.1989 (Annexure 12). C.W.J.C. No. 9618 of 1989 6. Admittedly the petitioner was not a tenderer, but seeks quashing the order dated 1.11.1989 (Annexure 9), inter alia, on the ground that respondent. Excise Department acted arbitrarily and illegally in repeating its earlier order of cancellation dated 8.6.1988 ranting conditional grant of privilege to respondent No.4. M/s. Sheo Narain Jaiswal Private Ltd. as also varying the conditional grant in relation to source of supply of spirit of which samples were furnished and by extending the right to acquire silent spirit from any source in the State of Bihar without affording the same opportunity to one and all. It is said, had that been known so in the notice inviting tender, it could also have been a tenderer. So goes on the petition. 7. Counter-affidavits have been filed on behalf of the state and the Department in both the cases as also by respondent No.4. M/s S.K.G. Sugar Limited bas filed an intervention petition in C.W.J.C. No.9404/89, which is respondent No.5 in C.W.J.C. No. 9618/89. 8. So goes on the petition. 7. Counter-affidavits have been filed on behalf of the state and the Department in both the cases as also by respondent No.4. M/s S.K.G. Sugar Limited bas filed an intervention petition in C.W.J.C. No.9404/89, which is respondent No.5 in C.W.J.C. No. 9618/89. 8. The stand of the State of Bihar in its counter affidavit inter alia, is that for the period 1.4.1988 to 31.3.1991, the Department granted the privilege to M/s S.K.G. Sugar Limited, and one M/s Sheo Narain Jaiswal private Limited on 16th March 1988. This letter would reveal that the grant of privilege to M/a Shea Narain Jaiswal Private Limited (respondent no. 4) was on the condition that the said respondent would be able to procure silent spirit from Ranchi Distillery, out of which the samples of silent spirit and demineralised water were produced along with the tender. This condition was imposed because there was an internal dispute between the petitioner-film and Sheo Narain Jaiswal, who was 1/6th partner thereof, but no such condition was stipulated for M/s S.K.G. sugar Limited. It is said that there are only four Distilleries in Bihar manufacturing silent spirit/plain spirit, by Mcdowel at Hatidah and Mirganj, who are engaged in manufacturing India made foreign liquor and were not tenderers for the grant of any privilege to manufacture spiced country liquor. Out of the two other Distilleries, Ranchi Distillery was closed and S.K.G. Distillery was granted the privilege because of the availability of silent spirit from their own Distillery. Respondent no. 4 was granted the privilege, as it had submitted its sample of spiced country liquor from Ranchi Distillery. Respondent no. 4, however, failed to comply with the Condition no. 1 of the grant and. therefore, the Department withdrew the conditional grant under the orders of the Board of Revenue. Respondent no. 4 kept on making representations and the Board of Revenue after obtaining comments of the Excise Commissioner examined the matter afresh. The relevant factors taken into consideration in withdrawing the order of recall were (a) the manufacture of spiced country liquor would be the sole menopoly of M/s. S.K.G. Sugar Ltd. for a period of three years, which ill against the Board's Instruction no. 209, contained in Bihar and Orissa Excise Manual (volume III); (b) the grant to respondent no. The relevant factors taken into consideration in withdrawing the order of recall were (a) the manufacture of spiced country liquor would be the sole menopoly of M/s. S.K.G. Sugar Ltd. for a period of three years, which ill against the Board's Instruction no. 209, contained in Bihar and Orissa Excise Manual (volume III); (b) the grant to respondent no. 4 was not cancelled, but merely withdrawn and by the impugned order the grant has been revived; (C) there bas been no breach of any condition by respondent no. 4 but mere failure to fulfil a condition of grant and the withdrawal order was not passed in a participatory proceeding; (d) the closure of Ranchi Distillery merited reconsideration of the condition imposed; and (f) three tenderers had mentioned the source of supply of silent spirit outside the State, which, however, was dependent on proper allocation by the Government of India under the Industries (Development Regulation) Act, 1951. 9. For the reasons aforesaid, respondent no. 4 was allowed to obtain silent spirit from any Distillery in Bihar only in order to comply with the Board’s instruction in relation to the principles of grant of monopoly. The action by the State was taken in good faith without causing any injury to anyone much less to the present writ petitioners, since the State bas the exclusive right to deal with intoxicant with all its manifestations and no individual right has been infringed by the impugned order. The writ petitions, therefore, do not merit any consideration. 10. Respondent no. 4, Sheo Narain Jaiswal, one of the Directors of M/s Sheo Narain Jaiswal Private Limited, in his counter-affidavit, inter alia, stated that the Ranchi Distillery was never owned by M/S Lakshmi Narain and Sons. A spurious partnership firm cannot claim ownership of Ranchi Distillery nor has a locus standi to file the writ petition. The said firm has no legal existence. The petitioner's tender having been rejected and the petitioner-firm having withdrawn the security deposit what transpired between respondent no. 4 and the State in course of negotiation is none of the petitioner's concern. The Government deliberation on the representation of respondent no. 4 cannot be questioned as violative of Article 14 or any other provision of the Constitution of India, since the petitioner has no locus standi in the dispute between the petitioner on the one hand and respondent no. 4 on the other. The Government deliberation on the representation of respondent no. 4 cannot be questioned as violative of Article 14 or any other provision of the Constitution of India, since the petitioner has no locus standi in the dispute between the petitioner on the one hand and respondent no. 4 on the other. The Government has large measure of latitude in relation to intoxicant. The Ranchi Distillery being out of commission by a prohibitory judicial order, the condition imposed was unsustainable and impractical and the State Government by the impugned order relaxed the condition, which, however, did not affect the right of any other tenderer. The consideration of the representation of respondent no. 4 was pending and therefore, the question of considering the claim of other tenders or inviting fresh tenders could not arise. Further, the petitioner having net challenged the original grant nor could it have done so after long delay, the petition is fit to be dismissed. 11. It has also been averred that one can maintain the lame quality and the end product by procuring silent spirit from other sources as well. In short, it has been contended that the withdrawal of Condition no. 1 indicating the source of supply of silent spirit and demineralised water and allowing respondent no. 4 to obtain the same from other sources within the State of Bihar de not in any way affect the approved samples. 12. C.W.J.C. No. 9404 of 1989 was filed on 7-11-1989 and on 10.11.1989 while allowing time to respondent no. 4 to show cause operation of the impugned order dated 1-11-1989 (Annexure-12) was stayed till further orders by a Bench of this Court. Counter affidavits appear to have been filed both the respondent no. 4 and the State and the matter was put up on 23-7-1990 for admission. The application was admitted and was directed to be put up for hearing by a Division Bench on 27th August, 1990, subject to part-heard and interim order earlier passed was allowed to continue. The matter was put up for hearing on 28-8-1990 before a Bench of this Court. The said Bench being disinclined to hear the cases, the matter has come before us. 13. Mr. Radha Mohan Prasad, learned counsel for respondent no. 4 raised a preliminary objection. The matter was put up for hearing on 28-8-1990 before a Bench of this Court. The said Bench being disinclined to hear the cases, the matter has come before us. 13. Mr. Radha Mohan Prasad, learned counsel for respondent no. 4 raised a preliminary objection. According to the learned counsel, in effect the petitioners seek quashing of the order dated 16-3-1988 (Annexure-7) in C.W.J.C. no 9404/89 accepting the tender of respondent no. 4, after lapse of more than one year. The impugned order dated 1.11.1989, according to the learned counsel, is only a consequential one. The petitioner further had withdrawn even the security money in the year 1988 itself. Therefore, the petitioner cannot now meddle with the matter. This point will be considered at an appropriate time. 14. Suffice it to say at this stage that the order impugned is an order dated 1.11.1988 and this Court has been moved on 7.11.1989 and, therefore, apparently there is no delay in moving this Court. 15. The question for consideration is whether modification of the terms of tender notice requiring source of supply of two essential ingrediants in the manufacture of spiced liquor, namely demineralised water and silent spirit by the impugned order is violative of any provision of law or rules made in that behalf or the respondents have acted arbitrarily with a view to favour certian person. 16. It is true that there is no fundamental right of a citizen to carryon trade or business in liquor and the state Government has a large measure of latitude in determining its policy regulating manufacture and trade in liquor. The court would, therefore, hesitate to intervene and strike down what the State Government has done, unless it appears to be arbirrary irrational or malafide. If, however, the State decides to grant right or privilege, it cannot Act, at its sweet will or arbitrarily. In the case of State of Madhya Pradesh Vs. Nandlal (A.I.R. 1987 S.C. 251) it was held that the State cannot ride roughshod over the requirement of Article 14. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. 17. In the case of State of Madhya Pradesh Vs. Nandlal (A.I.R. 1987 S.C. 251) it was held that the State cannot ride roughshod over the requirement of Article 14. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor. 17. The terms and conditions of the notice inviting tender (Annexure-2) required, inter alia, furnishing of samples of silent spirit and demineralised water along with the tender and further required full disclosure of the source wherefrom silent spirit and demineralised water are procured and to be procured. It also required samples of finish product to accompany the tender. Pursuant to the notice inviting tender (hereinafter referred to as N.I.T.) the tenderers furnished their samples of silent spirit and demineralised water as also the source of procurement along with samples of finished product on consideration of the samples as also the source of supply, the tender of respondent No. 4 was accepted and a conditional grant was made requiring respondent No.4 to give a declaration within a stipulated period that he would be able to produce silent spirit and demineralised water from the same source for the period the privilege is accorded. Respondent No.4 failed to fulfil the requirement of conditional grant, consequently, it was recalled. 18. Up to this stage the action of the State Government is unquestionable. 19. Respondent No.4, as noticed earlier, thereafter entered into a negotiation for varying the terms and conditions of the grant, inasmuch as Ranchi Distillery, the source disclosed in the tender, is under a family dispute and, therefore, cannot be a source of supply of demineralised water and silent spirit. By the impugned order, respondent No. 4 was allowed to procure silent spirit and demineralised water from any source in the State of Bihar. 20. The condition of source of supply of two essential Ingredients of which samples of raw material and finished product were furnished, was relaxed-nay in one sense, as contented by the petitioner's counsel, a tenderer was not required to disclose the source of procurement of demineralised water and silent spirit, of which samples are required to be furnished along with tender for approval before the grant is made. 21. In my opinion, this pre-condition does not appear to be a mere formality and/or viability of the tenderers, but involves public interest as well. As contended by Mr. 21. In my opinion, this pre-condition does not appear to be a mere formality and/or viability of the tenderers, but involves public interest as well. As contended by Mr. Jitendra Narain Singh, learned counsel for the petitioner, in a case of mishap, the investigating agency can identify the manufacturer of two essential ingredients which go into the production of the spiced country liquor consumed. Further by withdrawal of the condition of grant, the sample furnished and approved at the time of tender is made nugatory and irrelevant. The declaration of the source and sample furnished serve duel purpose, on amongst others, the viability of the tenderers and public interest in general. 22. The requireument to fulfil the precondition, it is urged, has caused prejudice to one of the petitioners, who refrained from applying being unable to disclose the source of procurement and the other for not having been provided the same opportunity. The rule in Ramann Dayaram Shetty V. International Airport Authority (A.I.R. 1979 S.C. 1628) fully applies to the facts of the present case, It is not a case of slight deviation from the terms of N.I.T. but in effect deleting one of the essential terms and condition by allowing respondent no. 4 to procure the two raw materials from any source, thus giving a goby even to the samples of raw materials procured from the disclosed source as per tender notice. 23. Mr. Sunil Kumar, learned counsel for respondent no. 4. may be somewhat right that the petitioner of C.W.J.C. No. 9404/89 cannot be said to have suffered any real prejudice since the deviation in the terms of the N.I.T. did net deprive it of its tight to be considered for the contract, since its tender had received due and full consideration. But, as far as C.W.J.C. No. 9618/89 is concerned, the grievance is that it had refrained from being a contender as it was not able at that stage to disclose continuous source of supply of silent spirit and demineralised water. Had it been that the source of supply could be from any place in the State of Bihar and be further variable depending on the exigencies, it would have certainly been a contender for the grant of privilege. The reliance placed by Mr. Sunil Kumar to the case of M/S G.J. Fernandoz Vs. Had it been that the source of supply could be from any place in the State of Bihar and be further variable depending on the exigencies, it would have certainly been a contender for the grant of privilege. The reliance placed by Mr. Sunil Kumar to the case of M/S G.J. Fernandoz Vs. State of Karnataka and others (A.I.R.) 1990 S.C. 958) does not advance his contention inasmuch as in that case it was held that “injustice is less apparent where the attempt of the applicant before the Court is only to gain immunity from competition.” It is just the otherwise here. Further, a slight deviation from the N.I.T. in the said case did not result in substantial prejudice or injustice to any of the parties involved or deviation affected public interest in general. 24. The variation, any ommission of one of the essential conditions of eligibility at the time of considering the tender, amounts denial of equal opportunity of those who considered themselves inelligible, as held in Ramann Dayaram Shetly's case (supra). The administrative authority is bound by the Dorms, standard procedures laid down by it. Disregard of the norms or standardars would invalid its action unless based on some valid principle. 25. The arbitrary action of the State is most mainifest as the sample of raw material approved from the disclosed source may most likely to very with the variable source of supply of two most important constituents of the finished product. The other contenders' sample may not be acceptable, because it did not conform to the standard of sample furnished by respondent no. 4. By allowing change of the procurement source of approved sample of respondent no. 4, the furnishing of samples which was an essential requirement was given a goby. 26. The only principle urged on behalf of the State in committing this essential condition was to do away with the monopoly of M/s S.K.G. Sugar. If that was the principle for doing away with the norms and standards prescribed by it, an opportunity should have been afforded to all the tenderers to achieve this objective. 27. I, thus, conclude that in rendering the impugned order, the Revenue has acted arbitrarily in order to favour respondent no.4 and by ignoring public interest in general. If that was the principle for doing away with the norms and standards prescribed by it, an opportunity should have been afforded to all the tenderers to achieve this objective. 27. I, thus, conclude that in rendering the impugned order, the Revenue has acted arbitrarily in order to favour respondent no.4 and by ignoring public interest in general. The requirement to disclose the source of procurement of the raw materials and the sample of the final product is the heart of the tender notice. The material term of the tender notice could not have been changed without affording the same opportunity to all concerned. The Revenue, in my opinion, chose to grant the privilege in a manner other than one envisaged in the tender notice on contrary terms. All concerned ought to have notice of it and failure of the Revenue to provide the said notice has vitiated the order impugned. 28. I do not find that there is any substance in the preliminary objection of the learned counsel for respondent no. 4, since the petitioner was prompt in moving this Court no sooner the essential condition of the tender notice was changed. I find no substance in the argument of learned counsel for respondent no. 4 that this writ petition seeks to negate the conditional grant dated 16.3.1988. On the contrary, the impugned cause of action is of making the grant unconditional. 29. In the result, the writ petitions arc allowed and the impugned orders contained in Annexuro-12 in C.W.J.C. no. 9404/89 and Annexure 9 in C.W.J.C. No. 9618/89 are quashed and the Revenue is directed to re-tender the privilege if it decides to grant such right or privilege to public. There will no order as to costs. Aftab Alam, J. I agree. Applications allowed.