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2009 DIGILAW 4052 (MAD)

K. Vinayakamurthy v. Union of India, Rep. by the Secretary to Government, Pondicherry & Another

2009-10-05

C.T.SELVAM, ELIPE DHARMA RAO

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Judgment :- Elipe Dharma Rao, J. The executive right to vend arrack in Shop No.3, Periavirampattinam, Pondicherry and Shop No.12, Murugampakkam, Pondicherry for the year 1982-83, commencing from 7. 1982 to 30.6.1983 was auctioned by the respondents on 16. 1982, wherein one A.D. Gopinath was emerged as the highest bidder for a sum of Rs.7,500/= per month in respect of Arrack Shop No.3 and Rs.13,000/= per month in respect of Arrack Shop No.12. His highest bid was provisionally accepted, subject to confirmation by the Government, but, thereafter, the Government decided not to confirm the highest bids offered for as many as 52 arrack shops, including that of the bids offered by the said A.D. Gopinath, and by the order dated 7. 1982, the Government has rejected the bids. 2. This decision of the Government was challenged before this Court in a batch of writ petitions by the aggrieved persons, including the Writ Petition Nos.5003 and 5008 of 1982 filed by the said A.D. Gopinath on 7. 1982, seeking to quash the said orders of the Government dated 7. 1982 and also for a direction to the Government of Pondicherry to confirm the highest bids offered by the respective petitioners therein. 3. While so, on 7. 1982, both the above said Arrack shops were re-auctioned, wherein the appellant deposited a sum of Rs.79,750/= as Earnest Money Deposit and participated in the auction. His bids of Rs.13,150/= and Rs.38,350/= per month for arrack shop Nos.3 and 12 respectively were provisionally accepted, subject to confirmation by the Government. 4. A learned single Judge of this Court, by the common order dated 27. 1982 in the batch of writ petitions including Writ Petition Nos.5003 and 5008 of 1982 filed by the said A.D. Gopinath, has quashed the impugned orders of cancellation of bids, but has declined to issue the Mandamus of directing the respondents to accept the highest bids of the respective parties. On the next day, i.e. on 27. 1982, the said A.D. Gopinath died. 5. Thereafter, this decision in rejecting the relief of Mandamus by the learned single Judge was challenged by the legal representatives of the said A.D. Gopinath by filing Writ Appeals No.561 and 562 of 1982, while the Government of Pondicherry has challenged the said order in granting writ of certiorari, thereby quashing the rejection orders passed by the Government, by filing Writ Appeals No.678 and 679 of 1982. A Division Bench of this Court has passed consent interim orders in C.M.P.Nos.11479 and 11480 of 1982 in W.A.Nos.561 and 562 of 1982, permitting the legal representatives of late A.D.Gopinath to run both the shops on condition that they should deposit the kist amount offered by late A.D.Gopinath in the auction held on 16. 1982. But, the legal heirs of the deceased A.D.Gopinath have failed to comply with the conditions within the stipulated period. 6. Thereafter, when the writ appeals filed by the legal heirs of the deceased A.D. Gopinath and the Government of Pondicherry were taken up for consideration, on 211. 1982 by a Division Bench of this Court, it was submitted on the part of the legal heirs of the deceased A.D. Gopinath that they were not interested in running both the arrack shops. Therefore, recording the said statement made by the legal heirs of the deceased A.D. Gopinath, the writ appeals filed by them were dismissed and the writ appeals filed by the Government of Pondicherry were allowed by a Division Bench of this Court by the order dated 211. 1982. Thereafter, the Deputy Commissioner of Excise, Government of Pondicherry, by the order dated 12. 1982 has confirmed the bid in favour of the appellant for the lease period from 12. 1982 to 30.6.1983. 7. Immediately, the appellant herein has filed W.P.No.9638 of 1982, praying to direct the respondent to refund the deposit amount of Rs.79,750/= made by him, as per the auction rules, on the ground that on 18. 1982 he has represented to the Deputy Commissioner of Excise that in view of the efflux of time, he is not prepared to run the arrack shops. In this writ petition, a report has been submitted by the Secretary to Government, Revenue and Excise Department, Government of Pondicherry, stating that the appellant/petitioner happened to be the highest bidder in respect of shop No.5 Embalam and a portion of the Earnest Money Deposit already paid by him was adjusted towards the security deposit to be offered by him for the said shop at Embalam. Considering the rival pleas, a learned single Judge of this Court has dismissed the said writ petition by the order dated 23. 1988, observing as follows: “5. Considering the rival pleas, a learned single Judge of this Court has dismissed the said writ petition by the order dated 23. 1988, observing as follows: “5. From the stands projected by the parties, it is found that while the petitioner would state that there is every warant on facts for refund of the deposit made by him, the respondents would not admit this claim of the petitioner. It must be noted that here the petitioner would concede that a sum of Rs.43,695/= is due by him to the respondents in respect of his bid for another Shop No.5 Embalam and the petitioner is willing (to) have adjustment of this sum, out of the amount of deposit made by him and he claims refund of the balance alone. On assessment of the contentions put forth by both the sides, I am convinced, the controversy is not one which could be appropriately resolved by this court exercising writ powers. The petitioner has to resort to the ordinary civil process in this behalf. In this view, this writ petition is dismissed. There will be no order as to costs. It is needless to state that if the petitioner is to fact any bar of limitation, he can certainly point out the time taken in the presentation of the writ petition and plead for exclusion of that time, which plea, I assure will have a proper consideration at the hands of the Civil Court." 8. This order of the learned single Judge was challenged by the petitioner/appellant in Writ Appeal No.911 of 1988, wherein the First Bench of this Court has also dismissed the said writ appeal, by the judgment dated 8. 1988, affirming the view of the learned single Judge that this point has to be decided only in a civil suit. In arriving at this conclusion, the First Bench of this Court has held: 1. There is no claim on the part of the appellant/petitioner that Rule 152(7) of Pondicherry Excise Rules, 1970 [which is in pari materia with the impugned Rule 152(6)] and so long as the rule is not struck down, no objection could be taken that the State cannot any longer apply the relevant rule. 2. There is no claim on the part of the appellant/petitioner that Rule 152(7) of Pondicherry Excise Rules, 1970 [which is in pari materia with the impugned Rule 152(6)] and so long as the rule is not struck down, no objection could be taken that the State cannot any longer apply the relevant rule. 2. Only because of the stay order obtained by the first successful bidder, the respondents were prevented from taking further steps in accordance with the Rules, subsequent to the re-auction and it was only when the writ appeals were withdrawn by the legal heirs of Gopinath, the respondents could take the immediate step of confirmation of the sale in favour of the petitioner. 3. This is not a case wherein the petitioner/appellant is called upon to pay kist for the period during which Gopinaths heirs have conducted the shop and he is not called upon to pay a single pie for any day prior to 12. 1982 i.e. the date on which his offer was confirmed and when he was called upon to run the shop, nothing prevented him from running the shop for the rest of the period. 4. It is common knowledge that in excise trade, when the kist is for monthly period, even for truncated period, shops are opened and conducted and being fully conscious of the conditions stipulated under the rules, and having partaken in the auction, and as pointed out above, when the rules have not been held to be invalid, he cannot make a grievance that the rule is applied as against it. .5. When the intention of the Government is to keep alive the offers received, and when a bidder is prevented from withdrawing the offer till a final decision is taken, his letter dated 28. 1982 was contrary to the rules and that was why it was not acted upon and there is no illegality committed by the respondents in not ascending to this request. 6. Respondents relied upon a letter dated 28. 1982 was contrary to the rules and that was why it was not acted upon and there is no illegality committed by the respondents in not ascending to this request. 6. Respondents relied upon a letter dated 28. 1982 written by petitioner wherein he has stated that during the lifetime of Gopinath, they had by a joint agreement taken the shops in the first auction and in respect of which there are many disputes between them and now that he is dead, petitioner had taken steps in the High Court to obtain stay and therefore, the authorities may not give him permission to run the shop. This letter clearly brings about the collusiveness between the parties and with an ulterior purpose, they have initiated proceedings in court. 7. When the Rules are binding upon petitioner and when he had no authority to withdraw the bid irrespective of the time that may be taken to accept the bid during the relevant excise year, his request for withdrawal of his bid on 22. 1982 being opposed to Rules, there is no scope to refund the Earnest Money Deposited by him. When the rules do not permit withdrawal of the bid and when petitioner had not for obvious reason, chosen to run the shop on and from 12. 1982, he cannot claim refund of the earnest money deposit made by him. 9. It has been fairly accepted on either side that this judgment of the First Bench of this Court has attained finality, since not challenged. Thereafter, the appellant/petitioner has initiated the present proceedings in the month of February, 1989. 10. In W.P.No.2801 of 1989, the appellant/petitioner has prayed to quash the confirmation order dated 12. 1982, relating to Arrack Shop No.3 Ariyankuppam (Periyavirampattinam) for the year 1982-83 and to quash the same and to direct the respondents to refund to the petitioner the Earnest Money Deposit together with the interest at 9% on the same. Likewise, in W.P.No.2804 of 1989, he has prayed to quash the confirmation order dated 12. 1982 relating to Arrack Shop No.12 (Marungapakkam), Pondicherry Municipality and to direct the respondents to refund to him the Earnest Money Deposit together with interest at 9% on the same. 11. Likewise, in W.P.No.2804 of 1989, he has prayed to quash the confirmation order dated 12. 1982 relating to Arrack Shop No.12 (Marungapakkam), Pondicherry Municipality and to direct the respondents to refund to him the Earnest Money Deposit together with interest at 9% on the same. 11. InW.P.Nos.2802 and 2803 of 1989, the petitioner has prayed to declare that Rule 152(6) of the Pondicherry Excise Rules relating to lease of the right of retail vend of liquors is bad in law and to strike down the same. 12. On a perusal of the entire materials placed on record it is clear that only taking cue from the observations made by the First Bench of this Court in W.A.No.911 of 1988 that the Rule does not permit refund of the Earnest Money Deposit, the appellant/petitioner has come forward to file all these writ petitions, with two writ petitions challenging the Rule 152(6) of the Pondicherry Excise Rules. 13. At this juncture, it is relevant to point out that in Grih Kalyan Kendra Workers Union Vs. Union Of India [ (1991) 1 Scc 619 ], the Honourable Apex Court has categorically held that question raised and disposed of in earlier writ proceedings cannot be raised again in fresh writ petition. .14. In Ishwar Dutt Vs. Land Acquisition Collector [ (2005) 7 Scc 190 ], the Honourable Apex Court has held that: ."The principle of res judicata is applicable to writ proceedings. It is also applicable to subsequent suits where the same issues between the same parties had been decided in an earlier proceeding under Article 226 of the Constitution. In order to sustain the plea of res judicata it is not necessary that all the parties to the two litigations must be common. All that is necessary is that the issue should be between the same parties or between parties under whom they or any of them claim." 15. Since the issue of refund of Earnest Money Deposit pleaded and urged by the petitioner/appellant in the earlier proceeding has been rejected upto the level of the Division Bench of this Court, he is estopped from raking up the same plea again in these proceedings, since the principles of res judicata will come into operation. Since the issue of refund of Earnest Money Deposit pleaded and urged by the petitioner/appellant in the earlier proceeding has been rejected upto the level of the Division Bench of this Court, he is estopped from raking up the same plea again in these proceedings, since the principles of res judicata will come into operation. Therefore, the second part of the prayer in W.P.Nos.2801 and 2802 of 1989, connected to Writ Appeal Nos.1897 and 1898 of 2000, seeking refund of the Earnest Money Deposit with interest at 9% is rejected. 116. However, since the issue of acceptance or non-acceptance of the letters of withdrawal addressed by the petitioner to the authorities is directly dependant on the decision to be arrived at by us regarding the ultra vires or intra vires of the impugned Rule 152(6) of the Pondicherry Excise Rules, so as to verify the legality or otherwise of the confirmation order dated 12. 1982, we shall now proceed to discuss this legal aspect. 117. Mr. G. Masilamani, the learned senior counsel appearing for the appellant would strenuously argue that the re-auction was conducted on 7. 1982 regarding the exclusive right to vend arrack for the year 1982-83, commencing from 7. 1982 to 30.6.1983, wherein the petitioner/appellant emerged as a highest bidder. But, when the authorities have failed to confirm the bids, in spite of lapse of a period of three months, the petitioner/appellant has represented to the authorities concerned withdrawing his bid, but without considering the same, the impugned orders of confirmation were passed on 12. 1982 and the respondents placed strong reliance on Rule 152(6) of the Pondicherry Excise Rules, which, ex facie, appears to be illegal and violative of Articles 14, 19 (1)(g) and 300(A) of the Constitution. 118. The impugned Rule says that "a bid once offered shall not be withdrawn." Before entering into deciding the fray, it must be mentioned that there is no fundamental right to trade in intoxicants, like liquor has been conclusively held by the Honourable Apex Court in State Of A.P. Vs. Mc.Dowell & Co. [ (1996) 3 Scc 709 ], where taking note of some of the earlier Constitution Bench decisions of the Honourable Apex Court, the argument that a citizen of this country has a fundamental right to trade in intoxicant liquor was once again emphatically repelled. That issue is, thus, no longer res integra. Mc.Dowell & Co. [ (1996) 3 Scc 709 ], where taking note of some of the earlier Constitution Bench decisions of the Honourable Apex Court, the argument that a citizen of this country has a fundamental right to trade in intoxicant liquor was once again emphatically repelled. That issue is, thus, no longer res integra. The following observations of the Honourable Apex Court in the above case are educative: “39. The contention that a citizen of this country has a fundamental right to trade in intoxicating liquors refuses to die in spite of the recent Constitution Bench decision in Khoday Distilleries (1995) 1 SCC 574 . It is raised before us again. In Khoday Distilleries this Court reviewed the entire case-law on the subject and concluded that a citizen has no fundamental right to trade or business in intoxicating liquors and that trade or business in such liquor can be completely prohibited. It held that because of its vicious and pernicious nature, dealing in intoxicating liquors is considered to be res extra commercium (outside commerce). Article 47 of the Constitution, it pointed out, requires the State to endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and all drugs which are injurious to health. For the same reason, the Bench held, the State can treat a monopoly either in itself or in an agency created by it for the manufacture, possession, sale and distribution of liquor as a beverage. The holding is emphatic and unambiguous. Yet an argument is sought to be built upon certain words occurring in clauses (e) and (f) of the summary contained in para 60 of the decision. In these clauses, it was observed that creation of a monopoly in the State to deal in intoxicating liquors and the power to impose restrictions, limitations and even prohibition thereon can be imposed both under clause (6) of Article 19 or even otherwise. Seizing upon these observations, Shri Ganguly argued that this decision implicitly recognises that business in liquor is a fundamental right under Article 19(1)(g). If it were not so, asked the learned counsel, reference to Article 19(6) has no meaning. We do not think that any such argument can be built upon the said observations. In clause (e), the Bench held, a monopoly in the State or its agency can be created ‘under Article 19(6) or even otherwise’. If it were not so, asked the learned counsel, reference to Article 19(6) has no meaning. We do not think that any such argument can be built upon the said observations. In clause (e), the Bench held, a monopoly in the State or its agency can be created ‘under Article 19(6) or even otherwise’. Similarly, in clause (f), while speaking of imposition of restrictions and limitations on this business, it held that they can be imposed ‘both under Article 19(6) or otherwise’. The said words cannot be read as militating against the express propositions enunciated in clauses (b), (c), (d), (e) and (f) of the said summary. The said decision, as a matter of fact, emphatically reiterates the holding in Har Shanker (1975) 1 SCC 737 that a citizen has no fundamental right to trade in intoxicating liquors. In this view of the matter, any argument based upon Article 19(1)(g) is out of place.” 19. In Khoday Distilleries Ltd. Vs. State Of Karnataka [ (1995) 1 Scc 574 ], the Honourable Apex Court, after considering all the case laws in the liquor trade, summarised the law on the point wherein they have categorically held that the State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory. 20. In the cases on hand, the Government of Pondicherry has framed its Excise Rules, keeping in mind the fact that the trade or business in potable liquor is a res extra commercium. 21. Rule 155(1) of the Pondicherry Excise Rules contemplates that: "Whenever the Deputy Commissioner has accepted provisionally a tender, offer or bid he shall, forthwith submit to the Government through the Excise Commissioner the records of the proceedings conducted by him for confirmation." 22. Rule 155(2) reads as follows: "The Government shall, on a consideration of the records under sub-rule(1) pass an order confirming the disposal of the right to retail vend of liquor or refusing to confirm it. The order shall forthwith be communicated to the person concerned." 23. Citing the above Rules, on the part of the petitioner/appellant, it has been argued that though no time limit has been fixed in both the above sub-Rules of Rule 155, the authorities have to act within a reasonable time. The order shall forthwith be communicated to the person concerned." 23. Citing the above Rules, on the part of the petitioner/appellant, it has been argued that though no time limit has been fixed in both the above sub-Rules of Rule 155, the authorities have to act within a reasonable time. In support of his contentions that where no time limit is fixed, the authorities are expected to take action within a reasonable period, the learned senior counsel appearing for the petitioner/appellant would rely on the following judgments of the Honourable Apex Court: 1. Hungerford Investment Trust Limited Vs. Haridas Mundhra And Others [ (1972) 3 Scc 684 ], 2. Government Of India Vs. Citedal Fine Pharmaceuticals, Madras And Others [ (1989) 3 Scc 483 ] and 3. State Of Kerala Vs. Narayana Pillai [2000 (1) Klt 166 (Sc)] 24. We have no quarrel with regard to this well established legal principle enunciated by the Honourable Apex Court. But, in the cases on hand, having regard to the factual matrix, we are unable to say that the respondents have not acted within a reasonable time. 25. To elaborate, the first auction was conducted on 16. 1982 wherein one A.D.Gopinath has emerged as a highest bidder. Thereafter, the bid offer of the said A.D.Gopinath was rejected by the Government by the order dated 7. 1982, resulting in his initiating the legal proceedings before this Court, which were carried on by his legal representatives after his death and a finality of decision has been reached in those proceedings only on 211. 1982, on which date, the Writ Appeals filed by the legal representatives of A.D.Gopinath were dismissed and the Writ Appeals filed by the Government of Pondicherry were allowed. Therefore, though in the meantime, i.e. on 7. 1982, re-auction was conducted and the petitioner/appellant emerged as a highest bidder, because of the pendency of the proceedings and the interim orders passed by this Court, the bids offered by the petitioner/appellant could not be confirmed by the respondents. 26. We must remember that the earlier highest bidder Mr. Gopinath and the petitioner/appellant are all experienced excise contractors who are bidding for the right to vend liquor at open auctions. It is notorious that these auctions are highly competitive and every attempt is made by an existing contractor to preserve his bastion. 26. We must remember that the earlier highest bidder Mr. Gopinath and the petitioner/appellant are all experienced excise contractors who are bidding for the right to vend liquor at open auctions. It is notorious that these auctions are highly competitive and every attempt is made by an existing contractor to preserve his bastion. In this way alone, the earlier highest bidder has initiated legal proceedings before this Court as a result of which alone, the respondents were not able to confirm the bid offered by the petitioner/appellant in the re-auction conducted, which cannot be found fault with so as to say that the respondents have not acted within a reasonable time. For the simple reason that no time limit is fixed in the above said Rules and further in view of the well settled legal position that where no time limit is prescribed, the authority has to act within a reasonable time, the above said Rules cannot be held to be bad in law. 27. Soon after a finality of decision has been arrived at in the writ appeals filed by the legal representatives of the deceased A.D. Gopinath and the Government of Pondicherry on 211. 1982, a confirmation order was issued to the petitioner on 12. 1982, i.e. within a short period of 11 days. confirming his bid to run the arrack shops from 12. 1982 to 30.6.1983 and as has already been observed by the First Bench of this Court in the earlier round of litigation, this is not a case wherein he has been called upon to pay kist for the period during which Gopinaths heirs have conducted the shop and he has not been called upon to pay a single pie for any day prior to 12. 1982 i.e. the date on which his offer was confirmed. Therefore, we have no hesitation to hold that the respondents have acted in a fair and judicious manner and within a reasonable time, even though the Rules do not provide any specific time limit. 28. When the Excise Laws are the Laws framed by the Government, to augment their income and further the Honourable Apex Court, in Khoday Distilleries Ltd. Vs. 28. When the Excise Laws are the Laws framed by the Government, to augment their income and further the Honourable Apex Court, in Khoday Distilleries Ltd. Vs. State Of Karnataka [ (1995) 1 Scc 574 ], after considering all the case laws in the liquor trade, has categorically held that the State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory, at no stretch of imagination it can be held that that the impugned Rule is violative of Articles 14, 19(1)(g) and 300-A of the Constitution. When such intra vires provision of the Pondicherry Excise Rules mandates that a bid once offered shall not be withdrawn, the respondents have merited in not considering the subsequent withdrawal of the offer made by the petitioner. 29. At this juncture, it is also relevant to point out that in the letter dated 28. 1982, the petitioner has stated that during the lifetime of Gopinath, they had, by a joint agreement, taken the shops in the first auction, in respect of which there are many disputes between them and after the death of Mr. Gopinath, he had taken steps in the High Court to obtain stay, and therefore, the authorities may not give him permission to run the shop. This letter addressed by the petitioner clearly brings about the collusiveness of the parties with ulterior motive and purpose. The learned single Judge has discussed all the facts and circumstances of the case threadbare, applying the correct legal propositions. Therefore, we see no ground or reason to cause our interference into the well considered and merited common order passed by the learned single Judge. Accordingly, all these writ appeals are dismissed. No costs. Connected Miscellaneous petitions are also dismissed.