P. Bhima Reddy vs State Of Mysore - 1968 Supreme(SC) 371

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1968 Supreme(SC) 371

SUPREME COURT OF INDIA
S.M. SIKRI, R.S. BACHAWAT AND K.S. HEGDE, JJ.
P. Bhooma Reddy, Appellant
Versus
State of Mysore and others, Respondents.
Civil Appeal No. 2095 of 1968, D/- 5-l2-1968.
Advocates appeared
M/s. D. Narasaraju and M. C. Chagla, Senior Advocates, (M/s. R. V. Pillai, Subodh Markendya and M. Narayana Reddy, Advocates, with them), for Appellants; M/s. M. C. Setalvad and B. R. L. Iyengar, Senior Advocate (Mr. S. P. Nayar Advocate, with them), for Respondents (Nos. 1 & 3); Mr. M. K. Nambyar, Senior Advocate (M/s. Shivaswamy and R. Gopalakrishnan, Advocates, with them), for Respondent (No. 4).

Headnote:
Mysore Excise Act, 1965 - Mysore Excise (Disposal of Privileges of Retail Vend of Liquors) Rules, 1967 - Rule 7 (f) and 17 (1) – Tender – Bidder - Cancellation of sale - Appellant of exclusive privilege of retail vend of toddy and arrack for year 1968-69 in a group of 1168 shops under Act, 1965 and Rules - Excise Commissioner of Mysore published a notice stating that exclusive privilege would be sold by tender-cum-auction by Divisional Commissioner and inviting tenders - Appellant made a tender offering amount towards monthly rent of shops and deposited requisite earnest money amount required by Rule 7 (f) - Whether circular was sent to districts of Gulberga and Raichur. In so far as te circular attempted to modify Rule 19 it was ineffective. Excise Commissioner, had no power to abrogate or modify a rule framed under Section 71 – Held, While holding that Rule 17 sub-rule (4) did not compel officer conducting sale to accept next highest offer of respondent No. 4 High Court observed that authorities concerned should consider advisability of accepting his bid. This observation is not in accordance with law and has given rise to unnecessary complications. Rule 17 (4) provides that if officer conducting the sale rejects highest bid or offer, he may either accept the next highest bid or offer or re-sell shop - It is not quite clear how licences in respect of l168 shops could be issued on a single day. Effect of this precipitate action on the part of government was that appellant could not on next day obtain a stay of operation of High Court s order. There is ground for suspecting that government was favouring respondent No. 4 - High Court. Order passed by High Court is set aside - Appeal allowed.

Judgement Key Points

Based on the provided legal document, here are the key points:

The case concerns the legality of the cancellation of the sale of the exclusive privilege of retail vend of toddy and arrack for 1168 shops in Raichur and Gulbarga Districts to the appellant, P. Bhooma Reddy. (!) (!)
The appellant made a tender offering the highest amount (Rs. 9,99,999/-) and deposited the requisite earnest money and additional sums to cover one month's rent as required by the Rules. (!)
The Divisional Commissioner initially accepted and confirmed the appellant's bid under Rule 17(1), but later issued notices demanding further deposits and security under Rule 19, which the appellant argued were not applicable or had been complied with. (!) (!) (!)
The Divisional Commissioner cancelled the sale and forfeited deposits on June 26, alleging non-compliance with Rule 19, specifically regarding the submission of immovable property details and proof of solvency. (!) (!)
The High Court upheld the cancellation, holding that the appellant did not comply with mandatory requirements of Rule 19 and that the circular issued by the Excise Commissioner could not modify the Rules. (!) (!)
The Supreme Court held that provisions of Rule 19 requiring submission of property details to a Tahsildar and subsequent inquiries for doubtful solvency do not apply when shops are situated in more than one Tahsil, as there is no machinery for resolving conflicting opinions between multiple Tahsildars. (!) (!)
The Court ruled that the Divisional Commissioner was not competent to cancel the sale or pass orders under Rule 20(2); only the Excise Commissioner or the State Government could revise the confirmation order under Rule 17(2). (!)
The Court found that the appellant had sufficiently complied with the requirement to apply for licenses "at once," interpreting it as within a reasonable time before the commencement of business on July 1. (!)
The allegation that the appellant was a benamidar (acting for another person) contrary to Rule 12 was rejected due to lack of specific evidence and proof. (!)
The circular issued by the Excise Commissioner attempting to modify Rule 19 was held ineffective as the Commissioner lacked the power to abrogate or modify rules framed under Section 71. (!)
The Supreme Court set aside the High Court's order, cancelled the sale cancellation order (Ex. J), and directed the issuance of licenses to the appellant and the cancellation of licenses issued to the rival bidder (Respondent No. 4). (!) (!)

Judgment

BACHAWAT, J.:- This appeal raises the question of the legality of the cancellation of the sale to the appellant of the exclusive privilege of retail vend of toddy and arrack for the year 1968-69 in a group of 1168 shops in Raichur and Gulbarga Districts under the Mysore Excise Act, 1965 and the Mysore Excise (Disposal of Privileges of Retail Vend of Liquors) Rules, 1967. On May 10, 1968 the excise Commissioner of Mysore published a notice stating that the exclusive privilege would be sold by tender-cum-auction by the Divisional Commissioner, Gulbarga, on May 28 and inviting tenders by May 27. On May 27, the appellant made a tender offering Rs. 999999/- towards the monthly rent of the shops and deposited the requisite earnest money amounting to Rs, 1,85,168/- as required by Rule 7 (f).Respondent No. 4, K. V. Niranjan made a tender offering Rs. 969999/- towards the monthly rental. The appellant was the only bidder present at the auction on May 28. His offer being the highest was accepted by the Divisional Commissioner, Gulberga, under Rule 17 (1). The appellant deposited another sum of Rs. 814831/which together with the earnest money made up one month s rent as required by Rule 17 (5). On June 4, the Divisional Commissioner, Gulbarga, confirmed the sale under Rule 17 (1).

2. On June 6, the Deputy Commissioner, Gulbarga, issued a notice asking the appellant to make deposits according to Rule 19 immediately and to obtain licences from the concerned tahsil officers after completing other formalities. Under Rule 19 (2) the appellant was required to deposit another one month s rent within 15 days from the date of the sale. By June 15, the appellant deposited in all Rs. 39,99,996/- amounting to 4 months rent. By a letter (Ex. B-1) the appellant informed the Excise Commissioner that he had deposited 4 months rent as required by circular No. EXE. 1.1575 issued by the Excise Commissioner on December 12, 1967 and asked for permission to obtain licences from the Deputy Commissioners of Raichur and Gulbarga. On June 18/19 he applied to the Divisional Commissioner, Gulberga, for the issue of licences. On June 19, the Divisional Commissioner, issued a notice to the appellant stating that as he had not submitted a solvency certificate of his property or the property of his sureties he was required to deposit the balance to make up six months rent as required by R. 19 (3) (i) and to furnish security for six months rental or sureties as required by R. 19 (3) (ii) and (iii) by June 25, and that in default action would be taken under R. 20 (2). A notice to the same effect was given orally on June 19, when he met the Divisional Commissioner at Bellary. On June 22, he presented a petition under S. 62 to the State Government asking for the issue of licences, as he had complied with the conditions of the circular. In view of the subsequent writ petition the State Government did not pass any orders on this petition. The notice dated June 19 was received by the appellant on June 23. On June 25, he wrote to the Divisional Commissioner stating that he had complied with the conditions of the rules read with the circular and was entitled to the licences, that he had reason to believe that necessary orders would be passed by the State Government on his petition under Section 62 and that if necessary, the terms for compliance with the requirements of Rule 19 be extended by two months. On the same date the Divisional Commissioner, rejected the application for extension of time, and issued a notice to the appellant asking him to show cause before June 26, why in view of the non-compliance with the notices dated June 6 and 19, the sale should not be cancelled and the deposits already made should not be forfeited to the Government. The notice was served on his advocate on June 25, at 7.40 p. m. On June 26, the appellant submitted a petition to the Divisional Commissioner stating that he had complied with the terms of Rule 19 and the circular, that abrupt

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