JUDGMENT :

S. RAVINDRA BHAT, J.

1. The State of Kerala, is aggrieved by the judgment of the Kerala High Court, which allowed the respondent's (hereafter called “the licensee”) writ petition - whereby he claimed for an order quashing a demand in respect of a certain amount towards the balance sought to be recovered after a country liquor license was cancelled.

2. The licensee was the successful bidder for arrack shops in the state of Kerala for the year 1993-94; the bid amount it offered was Rs. 60 lakhs. A permit for import of 13,00,920 litres of rectified spirit was awarded. The excise duty payable for the designated quantity, monthly was Rs. 3,58,162/-. The licensee entered into an agreement with the State on 01-04-1993. Alleging that the licensee committed default in the payment of the bid amount, in not replenishing the security in a timely manner, the state issued a show cause notice on 23-07-1993 eliciting a response as to why action should not be taken. Later, alleging that the licensee failed to replenish the security amount, the license was cancelled by an order dated 19-08-1993, of the state. The licensed shops were put up for re-auction on seven different dates. However, th