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2004 DIGILAW 220 (ORI)

Ramnivas Agarwal v. State of Orissa

2004-05-06

A.K.PATNAIK, M.M.DAS

body2004
JUDGMENT A. K. PATNAIK, J. — The petitioner has filed this writ petition challenging the settlement of the Bissam-Cuttack country liquor (Out Still) shop in favour of Shri Sanjay Sahu opposite party No. 7. 2. The relevant facts briefly are that a sale notice was issued on 1.7.2002 by the Superintendent of Excise, Rayagada pursuant to the direction of the Collector, Rayagada for sale of different country liquor (Out Still) shops in the district of Rayagada including Bissam-Cuttack O.S. shop for the remaining period of the year 2002-2003 by way of public auction followed by negotiation on 17.7.2002 at 10.00 A.M. in the Conference Hall of the Collectorate at Rayagada. The said sale notice stipulated, inter alia, that intending bidders will furnish solvency certifi¬cate and no-due certificate relating to area of excise revenue amongst other documents which shall be verified by the Superin¬tendent of Excise, Rayagada on 15.7.2002 between 10.00 A.M. to 5.00 P.M. in presence of the intending bidder or their agents legally authorised by them for the purpose. The petitioner’s case in the writ petition as well as the rejoinder-affidavit is that he furnished the solvency certificate issued by the Sub-Collector, Patnagarh certifying that the petitioner is solvent to the extent of Rs. 10 lakhs as also the no-due certificate of his shops in Bolangir District and thereafter deposited a sum of Rs. 1,000/- for issue of a Hall Ticket for the auction on 17.7.2002 and the Hall Ticket was issued to him and when the Bissam-Cuttack O.S. shop was put to auction, the petitioner initially bid Rs. 50,000/- and thereafter gave his final offer of Rs. 1 lakh for the said shop, but the A.D.M. who was the Presiding Officer for the auction ignored the said highest offer of the petitioner and settled the Bissam-Cuttack O.S. shop along with Gudari O.S. shop with Shri Sanjay Sahu for a sum of Rs. 65,000/- on 17.7.2002. The petitioner has filed this writ petition on 25.7.2002 praying for quashing the settlement of the said Bissam-Cuttack O.S.shop in favour of Shri Sanjay Sahu and for settlement of the said shop in favour of the petitioner. 3. Pursuant to the impugned settlement in favour of Shri Sanjay Sahu, licence has been granted to Shri Sanjay Sahu for the remaining period of 2002-2003 and thereafter renewed for the year 2003-2004. 3. Pursuant to the impugned settlement in favour of Shri Sanjay Sahu, licence has been granted to Shri Sanjay Sahu for the remaining period of 2002-2003 and thereafter renewed for the year 2003-2004. The petitioner has amended the writ petition and has prayed for quashing the renewal of the licence in favour of Sri Sanjay Sahu for 2003-2004. On 31.3.2004, the petitioner filed Misc. Case No. 1 of 2004 with a prayer to direct that the said licence should not be renewed for 2004-2005 and the Court passed orders that the matter requires to be heard and disposed of imme¬diately and directed the matter to be listed for hearing at the stage of admission on 7.4.2004. Thereafter on 12.4.2004 the writ petition was heard at length when the Court was informed that in the mean while the licence had been renewed in favour of Sri Sanjay Sahu for 2004-2005 and the Court directed that the said renewal of licence in favour of Sri Sanjay Sahu for 2004-2005 shall remain stayed and Sri Sanjay Sahu shall not be allowed to operate the O.S. shop at Bissam-Cuttack and reserved the writ petition for judgment. 4. At the hearing, Mr. Bijan Ray, learned counsel for the petitioner, vehemently submitted that the petitioner had submit¬ted all documents including a solvency certificate and no-due certificate and the Superintendent of Excise, Rayagada after being satisfied that the requisite documents had been furnished by the petitioner issued a Hall Ticket on payment of a sum of Rs. 1,000/- by the petitioner so that the petitioner could partici¬pate in the auction and at the auction the petitioner did partic¬ipate initially bidding an amount of Rs. 50,000/- and raising his bid to Rs. 1 lakh, but the bid of the petitioner was not accepted and instead, the Bissam-Cuttack O.S. shop together with another O.S. shop at Gudari was settled only for a sum of Rs. 65,000/- in favour of Shri Sanjay Sahu. Mr. Ray submitted that the Court should not now accept the false story given out by the authori¬ties in the counter-affidavit that the Hall Ticket was issued to the petitioner for participation in auction due to over-sight and mistake and that the petitioner actually was making his bid from outside the Hall. According to Mr. Mr. Ray submitted that the Court should not now accept the false story given out by the authori¬ties in the counter-affidavit that the Hall Ticket was issued to the petitioner for participation in auction due to over-sight and mistake and that the petitioner actually was making his bid from outside the Hall. According to Mr. Ray, this story now given by the authorities in their counter-affidavit is an after-thought meant to cover up their arbitrary and mala fide action in making the settlement of the Bissam-Cuttack O.S. shop along with another O.S. shop at Gudari in favour of Shri Sanjay Sahu at a low price of Rs. 65,000/-. Mr. Ray cited the decision of the Supreme Court in Lakshmanasami Gounder v. C.I.T., Selvamani and others, 1992 (1) SCC 91 , wherein it has been held that the dealing of the authori¬ties in a public auction should be free from suspicion and should be free from bias, favouritism, neopotism, etc. He also relied on the decision of the Supreme Court in K. N. Guruswamy v. The State of Mysore and others, AIR 1954 SC 592 , for the proposition that State revenue cannot be dealt with arbitrarily and in the secrecy of an office. He also cited the decision of the Supreme Court in State of Orissa and others v. Harinarayan Jaiswal and others, AIR 1972 SC 1816 , in which the Supreme Court has held that the pur¬pose of public actions held under Sections 22 and 29 of the Bihar and Orissa Excise Act, 1915 is to get the highest possible price because raising of revenue is one of the important purposes of the said provisions of Sections 22 and 29 of the Act. Mr. Ray argued that in the present case since the bid of the petitioner was Rs. 1 lakh, the Presiding Officer of the auction could not have settled the Bissam-Cuttack O.S.shop along with another O.S. shop at Gudari in favour of Shri Sanjay Sahu ignoring the afore¬said law laid down by the Apex Court that highest revenue is one of the objects of sale of an O.S.shop. According to Mr. Ray, this is a fit case in which the Court should quash the settlement in favour of Shri Sanjay Sahu and direct that the Bissam-Cuttack O.S. shop be settled in favour of the petitioner. According to Mr. Ray, this is a fit case in which the Court should quash the settlement in favour of Shri Sanjay Sahu and direct that the Bissam-Cuttack O.S. shop be settled in favour of the petitioner. Mr.Ray further submitted that the Presiding Officer of the public auction could not have tagged the Bissam-Cuttack O.S. shop along with the Gudari O.S. shop and settled the two shops in favour of Shri Sanjay Sahu and such clubbing of the two shops is contrary to the terms in the sale notice as well as the relevant Excise Rules. He also cited the judgments of the Supreme Court in Ram and Shyam Company v. State of Haryana and others, AIR 1985 SC 1147 , and in Munindra Nath Upadhyaya v. State of U.P. and others, AIR 1992 SC 566 , in support of his submission that the Court can issue a mandamus and grant other relief in such cases when the Court finds that the grant of a contract pursuant to a public auction or tender is arbitrary or unfair or is not in the interest of public revenue. 5. Mr. Debasis Das, learned Additional Government Advo¬cate, on the other hand, relied on the averments in the counter-affidavit filed on behalf of opposite parties 1 to 5 in which it is stated that the solvency certificate furnished by the peti¬tioner was defective inasmuch as it carried no R.M.C. number and the petitioner had not furnished no-due certificate before the concerned authorities for verification and for these reasons, the authorities who verified the documents of the bidders did not recommend issue of a Hall Ticket to the petitioner and yet a Hall Ticket had been issued to the petitioner due to over-sight and mistake. He argued that since the petitioner was not entitled to participate in the public auction for defect in his solvency certificate and for non-submission of no-due certificate, he was not entitled to participate in the auction merely because a Hall Ticket was issued in his favour due to over-sight and mistake. He further submitted that in fact at the time of bidding, the peti¬tioner was not present in the Hall but remained outside the Hall at the door as he was not allowed to enter inside the Hall and while standing at the door he gave a bid call of Rs. He further submitted that in fact at the time of bidding, the peti¬tioner was not present in the Hall but remained outside the Hall at the door as he was not allowed to enter inside the Hall and while standing at the door he gave a bid call of Rs. 50,000/- and the same was entered in the bid sheet in a confusion but when the mistake was detected later on, the entry in the bid sheet relat¬ing to his bid of Rs. 50,000/- was scored through by the con¬cerned authority Mr. Das relied on the stipulations in paragraph 4(iii) of the sale notice that an intending bidder has to furnish his solvency certificate as well as the no-due certificate to be eligible to participate in the auction. He also relied on the stipulations in paragraph 5 of the sale notice to the effect that the Presiding Officer of the auction can put the shops into sale either severally or in a lot as he considers fit and argued that the A.D.M. who was the Presiding Officer of the auction tagged on the Bissam-Cuttack O.S. shop with the O.S. shop at Gudari and settled the two shops in one lot in favour of Shri Sanjay Sahu at Rs. 65,000/- when he found that there was no bidder for the O.S. shop at Gudari. He further submitted that since two shops have been settled in favour of Shri Sanjay Sahu at more than the combined reserved price for the two shops in accordance with the policy of the Government, there is no arbitrariness and illegali¬ty in the settlement of the shops in favour of Shri Sanjay Sahu nor any loss of revenue. 6. Mr. N. Patra, learned counsel for Shri Sanjay Sahu reiterated the said submission of Mr. Debasis Das, learned Addi¬tional Government Advocate and further submitted that the aver¬ments of the petitioner in the writ petition supported by his affidavit and the avernments in the affidavits of Shri Ch. Venugopal and Shri B. V. Rama Rao who according to the petitioner were also inside the Hall at the time of bidding in the auction on 17.7.2002 for Bissam-Cuttack O.S. shop are at variance and therefore the case of the petitioner that he was present inside the Conference Hall and he participated in the public auction for the Bissam-Cuttack O.S. shop should not be accepted. He further submitted that the affi¬davit of Shri Sanjay Sahu filed on 14.8.2003 would show that pursuant to the impugned settlement of the Bissam-Cuttack O.S.shop in favour of Shri Sanjay Sahu, the licence for Bissam-Cuttack O.S. shop has been granted to Shri Sanjay Sahu on 19.7.2002 for the year 2002-2003 and Shri Sanjay Sahu has already spent a sum of Rs. 9,15,000/- excluding the licence fee and duty on M.G.Q. for the said O.S. shop and thereafter the licence has been renewed on 31.3.2003 for the year 2003-2004 and Shri Sanjay Sahu has paid the requisite licence fee for the said period. Mr. Patra submitted that in case the impugned settlement made in favour of Shri Sanjay Sahu is set aside at this stage by this Court, Shri Sanjay Sahu will suffer immense loss and prejudice. He cited the decision of the Supreme Court in Ramana Dayaram Shetty v. The International Airport Authority of India and others, AIR 1979 SC 1628 , in which the Supreme Court refused to interfere with regard to the contract in favour of the respondent No. 4 in that case on the ground that the respondent No. 4 had incurred expend¬iture aggregating of Rs. 1,25,000/- after the contract was award¬ed after holding that it would be most iniquitous to set aside the contract of the respondent No. 4 at the instance of the appellant. 7. The questions to be decided in this writ petition are whether the impugned settlement of Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu is liable to be set aside and whether a writ or direction should be issued to the authorities to settle the said O.S. shop in favour of the petitioner. In Lakshmanasami Gounder v. C.I.T., Selvamani and others (supra), the Supreme Court held : “.......Public auction is one of the modes of sale intending to get highest competitive price for the property. Public auction also ensures fairness in actions of the public authorities or the sale officers who should act fairly, objectively and kindly. Their auction should be legitimate. Their dealing should be free from suspicion. Nothing should be suggestive of bias, favouritism, nepotism or beset with suspicious features of underbidding detri¬mental to the legitimate interest of the debtor. The fair and objec¬tive public auction would relieve the public authorities or sale officers from above features and accountability. Their auction should be legitimate. Their dealing should be free from suspicion. Nothing should be suggestive of bias, favouritism, nepotism or beset with suspicious features of underbidding detri¬mental to the legitimate interest of the debtor. The fair and objec¬tive public auction would relieve the public authorities or sale officers from above features and accountability. Any infraction in this regard would render the sale invalid.” Thus, in the said judgment, the Supreme Court held that the officers who conduct a public auction should ac fairly, objec¬tively and kindly and their action should be legitimate and their dealing should be free from suspicion and nothing should be suggestive of bias, favouritism, nepotism or beset with suspicious features of underbidding detrimental to the legitimate interest of the bidder and any infraction in this regard would render the sale invalid. 8. Applying the aforesaid law laid down by the Supreme Court to the facts of the present case, we find that there are various features in the public auction which raise strong suspi¬cion that the Presiding Officer conducting the auction was inter¬ested in somehow favouring Shri Sanjay Sahu with the settlement of the Bissam-Cuttack O.S. shop and therefore acted with the bias against the petitioner. First, the case of the petitioner is that after verification of his documents including the solvency cer¬tificate and no-due certificate he was issued with a Hall Ticket on 17.7.2002 after depositing a sum of Rs. 1,000/- to enable him to participate in the public auction. The case of the State-opposite parties in the counter affidavit on behalf of the State-opposite parties by the Superintendent of Excise, Rayagada is that due to want of required documents, particularly, the solven¬cy certificate and the no-due certificate, the petitioner was not entitled to participate in the said auction and for this reason the officers who verified the documents have not recommended for issue of Auction Hall Ticket to the petitioner but the Auction Hall Ticket was issued to the petitioner due to over sight and mistake. This story of the State-opposite parties suggests bias of the Presiding Officer of the auction against the petitioner. Second, the case of the petitioner in the writ petition is that he participated in the public auction and initially made a bid for the shop at Rs. 50,000/- and gave his final offer of Rs. This story of the State-opposite parties suggests bias of the Presiding Officer of the auction against the petitioner. Second, the case of the petitioner in the writ petition is that he participated in the public auction and initially made a bid for the shop at Rs. 50,000/- and gave his final offer of Rs. 1,00,000/- for the Bissam-Cuttack O.S. shop but the A.D.M. ignored the said highest offer of the petitioner and asked the Excise Officers not to record the bid of Rs. 1,00,000/- of the petitioner. The case of the State-opposite parties in the counter affidavit filed on their behalf by the Superintendent of Excise, Rayagada is that at the time of bidding call the petitioner was not present in the hall among the participants and was standing outside the Hall at the door without being allowed to enter inside the hall and while standing at the door, he gave a call of Rs. 50,000/- and such bid call by the petitioner at Rs. 50,000/- created confusion and the officer-in-charge recorded the said bid call of Rs. 50,000/- of the petitioner thinking that the call came from one of the participants sitting inside the hall and after this mistake was detected subsequently, the bid call of Rs. 50,000/- made by the petitioner was scored through. This story of the State-opposite parties again is indicative of bias of the Presiding Officer of the auction against the petitioner. Third, the case of the peti¬tioner in the writ petition is that the A.D.M. settled the Bissam-Cuttack O.S. shop along with one Gudari O.S. shop with Shri Sanjay Sahu for a sum of Rs. 65,000/- although Bissam-Cuttack O.S. shop was not put to auction in lot along with Gudari O.S. shop. The case of the State-opposite parties in the counter-affi¬davit filed on behalf of the said opposite parties by the Super¬intendent of Excise, Rayagada is that as no bidder was interested for Gudari O.S.shop, the same was tagged with Bissam-Cuttack O.S. shop and was settled for Rs. 65,000/- with Sri Sanjay Sahu as the said price of Rs. 65,000/- was above the reserve price for the two shops. Paragraph (v) of the Sale Notice dated 1.7.2002 stated that the Presiding Officer of the auction “may also put the shops to auction either severally or in lots as he considers necessary subject to confirmation by the Excise Commissioner”. 65,000/- with Sri Sanjay Sahu as the said price of Rs. 65,000/- was above the reserve price for the two shops. Paragraph (v) of the Sale Notice dated 1.7.2002 stated that the Presiding Officer of the auction “may also put the shops to auction either severally or in lots as he considers necessary subject to confirmation by the Excise Commissioner”. Thus, the A.D.M. who was the Presiding Officer of the public auction was empowered to put the Bissam-Cuttack O.S. shop and the O.S. shop at Gudari to auction either severally or in lot. Having put the Bissam-Cuttack O.S. shop to auction separately from the proposed auction of Gudari O.,S.shop he was not empowered to tag the aforesaid two O.S. shops together and settle the two O.S. shops at Rs. 65,000/- in favour of Shri Sanjay Sahu. This conduct of the Presiding Officer of the auction raises a strong suspicion that he was interested in somehow settling the Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu. The fact that the two O.S. shops have been settled in his favour at Rs. 65,000/- which is more than the reserve price of the two O.S. shops cannot remove such suspicion of interestedness of the Presiding Officer of the auction in making the settlement of the Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu. We are thus of the view that the impugned settlement of the Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu is liable to be set aside on the ground that the public auction pursuant to which the settlement was made is not free from suspicion and is suggestive of favouritism of the said Presiding Officer in favour of Shri Sanjay Sahu contrary to all norms of fairness. But on the materials before us we cannot possibly hold that the petitioner was the highest bidder for the Bissam-Cuttack O.S.shop at the auction and was therefore entitled to the settlement of the said O.S. shop in his favour. For this reason, we are not inclined to direct settlement of the said O.S. shop in favour of the petitioner. 9. In Ramana Dayaram Shetty v. The International Airport Authority of India and others (supra) cited by Mr. Patra, the Supreme Court held in the portion of the decision relied on by Mr. For this reason, we are not inclined to direct settlement of the said O.S. shop in favour of the petitioner. 9. In Ramana Dayaram Shetty v. The International Airport Authority of India and others (supra) cited by Mr. Patra, the Supreme Court held in the portion of the decision relied on by Mr. Patra : “........It is difficult to understand why the appellant should have waited until November 8, 1977 to file the writ peti¬tion when the tender of respondents 4 was accepted as far back as April 19, 1977. The explanation given by the appellant is that he was not aware of the acceptance of the tender of respondents 4 but that its rather naive explanation which cannot be easily accepted. It is not possible to believe that the appellant who was so well connected with A.S. Irani and G.S. Irani did not know that A.S. Irani had filed to obtain the contract for running the restaurant and the snack bars and that this contract had been awarded to respondents 4 as a result of which A.S.Irani was being pressed to close down his restaurant and snack bars. We have grave doubts whether this writ petition was commenced by the appellant bona fide with a view to protecting his own interest. Moreover, the writ petition was filed by the appellant more than five months after the acceptance of the tender of respondents 4 and during this period, respondents 4 incurred considerable expendi¬ture aggregating to about Rs. 1,25,000/- in making arrangements for putting up the restaurant and the snack bars and in fact set up the snack bars and started running the same. It would now be most inequities to set aside the contracts of respondents 4 at the instance of the appellant. The position would have been dif¬ferent if the appellant had filed the writ petition immediately after the acceptance of the tender of respondents 4 but the appellant allowed a period of over five months to elapse during which respondents 4 altered their position. We are, therefore, of the view that this is not a fit case in which we should interfere and grant relief to the appellant in the exercise of our discre¬tion under Article 226 of the Constitution”. We are, therefore, of the view that this is not a fit case in which we should interfere and grant relief to the appellant in the exercise of our discre¬tion under Article 226 of the Constitution”. It is clear from the aforesaid decision of Supreme Court that the Supreme Court refused to set aside the contract of the respondent No. 4 of that case at the instance of the appellant because the appellant had filed the writ petition more than five months after the acceptance of the tender of the respondent No. 4 and within this period of five months the respondent No. 4 had incurred expenditure of a huge sum aggregating to Rs. 1,00,000/- in making the arrangements to put up the restaurant and the snack bars. In the said decision, the Supreme Court further made it clear that the position would have been different if the appellant would have filed the writ petition immediately after acceptance of the tender of the respondent No. 4. In the present case, on the other hand, the auction was held on 17.7.2002 and the petitioner has filed the writ petition on 25.7.2002. There was thus a gap of only 8 days between the date of the impugned auction and the date of filing of the present writ petition. That apart, pursuant to the impugned settlement in favour of Shri Sanjay Sahu, he has been issued with a liecence and he has operated the Bissam-Cut¬tack O.S. shop not only for the remaining period of 2002-2003 for which the auction was held but also for a further period of one year, i.e. 2003-2004. On these facts, it will not be proper for us not to set aside the impugned settlement of Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu with prospective effect, particularly when we have found that the said settlement is not free from a strong suspicion of favouritism in favour of Shri Sanjay Sahu contrary to all norms of fairness. For this reason also we are not inclined to allow Shri Sanjay Sahu to continue to operate the Bissam-Cuttack O.S. shop till a fresh settlement of the said shop is made in accordance with law although an oral prayer in this regard was made by Mr. Patra, learned counsel for Shri Sanjay Sahu. 10. For this reason also we are not inclined to allow Shri Sanjay Sahu to continue to operate the Bissam-Cuttack O.S. shop till a fresh settlement of the said shop is made in accordance with law although an oral prayer in this regard was made by Mr. Patra, learned counsel for Shri Sanjay Sahu. 10. In the result, the impugned settlement of Bissam-Cuttack O.S. shop in favour of Shri Sanjay Sahu is set aside with prospective effect and the State-opposite parties are directed to make a fresh settlement of the said Bissam-Cuttack country liquor (Out Still) shop in accordance with law by the 30th June, 2004. The writ petition is allowed to the extent indicated above. Considering the facts and circumstances, the parties shall bear their own costs. M. M. DAS, J. I agree. Application allowed.