VERY IMPORTANT POINT
While exercising power under Article 226 of the Constitution of India, the High Court should not take upon itself the responsibility of staying the recovery of amounts due to State unless a clear case of illegality is made out and the balance of convenience is duly considered, especially in the case of excise contracts.

Headnote:(i) WRIT JURISDICTION-Constitution of India-Article 226- Exercise of writ jurisdiction-Norms governing- Power of High Court under Art. 226 is not akin to appellate power--It is a supervisory power- Court not to go into merits of decision taken by authorities concerned- Disputed questions of fact--Court does not normally go into or adjudicate upon disputed questions of fact- Inadvisability of making interim orders which have effect of depriving State of revenues legitimately due to it--Court should not take upon itself responsibility of staying recovery of amounts due to State unless a clear case of illegality made out and balance of convenience duly considered, particularly in excise contracts--Jurisdiction under Article 226 is neither unlimited nor unrestrained--Writ jurisdiction not intended to facilitate avoidance of obligations voluntarily incurred. (Paras 14 and 15)
       (ii) PUBLIC FINANCES--Excise contract--Public auctions for grant of licences--Respondent firm being highest bidder, its bid was accepted-Firm deposited 1/6th of bid amount and took out licences--Failure to furnish bank guarantee as required by rules/conditions of auction--Defaults--Notices proposing cancellation of licence--Writ petition--Petitioner complaining that though he has complied with all conditions of auction and rules, permits are not issued--Facts seriously disputed--Repeated interim orders passed permitting supply of liquor, sale to writ petitioner--No finding that State or authorities acted in contravention of law or failed to perform their duties- No finding that licence has done what all it had to do under terms of contract and law--Exercise of writ jurisdiction not warranted--It resulted in substantial loss of revenue to State -Order of cancellation of licences- High Court to initiate proceedings against respondent firm to recover loss to State.
       Held : The order dated May 22, 1995 records an "undertaking" given by the licencee-firm to the High Court to the effect that "all financial commitments to which he may ultimately be found liable would be met by him". The writ petitions filed by the respondent-firm have been dismissed. His licences have been cancelled, re-auction conducted and loss due to the State - to the people - has been ascertained. The High Court ought to enforce the undertaking now by proceeding against the respondent-firm (licencee) and all its partners. The violation of the undertaking, it needs to be mentioned, amounts to contempt of court. It is the duty of the court to try to repair the damage to the extent possible. No one should be allowed to suffer on account of the act(s) of the Court. We, therefore, request the High Court to initiate appropriate proceedings for enforcing the "undertaking" aforesaid. Even otherwise, the interim orders passed are always subject to the final orders in the matter. The interim orders can always be corrected or revised at the final stage. (Para 17)

JUDGMENT

B.P. Jeevan Reddy, J.-The several orders made by a learned Single Judge of the Madhya Pradesh High Court in a writ petition, impugned herein, made in total disregard of the basic norms governing the exercise of writ jurisdiction by the High Court, disclose a disturbing state of affairs affecting public finances. The facts stated hereinafter speak for themselves.

2. For the year 1995-96 (commencing on April 1, 1995 and ending with June 30, 1996), public auctions were held for grant of licences for country liquor as well as Indian made foreign liquor (IMFL) in Madhya Pradesh, sometime in the months of February-March, 1995. The respondent-firm was the highest bidder in respect of Gwalior Township Group No.2, comprising twelve shops of country liquor and seven shops of IMFL, in a sum of Rs.8.52 crores. Its bid was accepted. The appellants say that according to the rules and the conditions specified in the auction notification, any person desiring to participate in the auction shall have to pay an amount equivalent to twenty percent of the amount of the licence fee of the preceding excise year. If his bid is accepted, he has to deposit an amount equivalent to 1/6th of the total bid in cash or by bank draft soon after the auction, which amount shall be adjusted against the licence fee payable for the last two months of the excise year. In addition thereto, the successful bidder, the appellants say, has to furnish a bank guarantee or a bank draft or a banker s cheque/order for an amount equal to 1/12th of the total bid amount within seven days of the auction, to be adjusted during the course of the excise year. The appellants say that the respondent-firm deposited 1/6th of the bid amount, i.e., Rs.1,42,00,000/- and took out the licences but failed to furnish the bank guarantee to the extent of 1/12th of the bid amount as required by rules/conditions of auction. The appellants say further that the respondent has also subsequently failed to pay the monthly rental for the month of May 1995. For the aforesaid defaults, they say, notices were given proposing cancellation of licence granted to it. Under this show cause notice, the respondent was called upon to explain by May 19, 1995 why its licences should not be cancelled and the group be re-auctioned. (These facts are taken from the counter-affidavit filed by the District Excise Officer in the High Court.)

3. On May 17, 1995, the respondent filed Writ Petition No. 711 of 1995 in the Madhya Pradesh High Court (Gwalior Bench) complaining that though he has complied with all the conditions of auction and rules, the authorities are not issuing the permits and other forms on account of which their shops are facing closure. The respondent also complained that while not issuing the permits and other forms, the authorities are proposing to cancel the writ petitioner s licences, which was characterised as unjust and illegal. It prayed for the issuance of a writ "directing the respondents (State of Madhya Pradesh and the Excise authorities) not to withhold the permits and issue forms of the petitioner and to ensure that the supply of liquor is made to the petitioner as per the terms and conditions of the licence". Interim relief was also asked for in the same terms.

4. The writ petition came up before the Vacation Judge who directed notice to the respondents in the writ petition. On May 22, 1995, a learned Single Judge heard both the parties and passed orders, directing the authorities, "not to re-auction the liquor shops which are subject-matter of Writ Petition No. 602/1995 and Writ Petition No. 711/1995. The requisite supply would also be made to the Petitioner. The petitioner in both the petitions, i.e., W.P. No. 602 of 1995 and W.P. No. 711 of 1995 has given an undertaking to this Court that all financial commitments to which he may ultimately be found liable would be met by him". (Emphasis supplied). This order was passed after noticing the case of both the writ petitioner and the aut

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