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1987 Supreme(AP) 84
Andhra Pradesh High Court
Judges : P.A.CHOUDHARY
CHAPPA TIRUPATHINAIDU - Appellant
Versus
Excise Superintendent Vizianagaram - Respondent
Decided On : 02-10-87
The clubbing of shops for re-auction is justified as an alternative arrangement authorized by Rule 20 of the A. P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969, where individual shops could not be sold due to lack of bidders.
Headnote:
EXCISE - LEASE OF RIGHT TO SELL LIQUOR IN RETAIL - RE-AUCTION - CONDITIONS - CLUBBING OF SHOPS - VALIDITY - A. P. EXCISE (LEASE OF RIGHT TO SELL LIQUOR IN RETAIL) RULES, 1969, RULE 20.
Fact of the Case:
The petitioner, an abkari contractor, had taken on lease three arrack shops for a period of one year. He paid the monthly rentals for the first three months but defaulted for the fourth month. The Department cancelled his license and put the shops for re-auction. As there were no bidders, the Department clubbed the shops with 12 other shops and sold them as a block. The petitioner challenged the re-auction and the demand notice issued to him for the loss suffered by the Department.
Finding of the Court:
The court held that the re-auction was valid as the Department had attempted to sell the shops individually but there were no bidders. The court also held that the clubbing of the shops with other shops was justified as an alternative arrangement authorized by Rule 20 of the A. P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969.
Issues: 1. Whether the re-auction of the shops was valid? 2. Whether the clubbing of the shops with other shops was justified?
Ratio Decidendi: 1. The court held that the re-auction was valid as the Department had attempted to sell the shops individually but there were no bidders. The court also held that the clubbing of the shops with other shops was justified as an alternative arrangement authorized by Rule 20 of the A. P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969. 2. The court held that the petitioner was liable to pay the loss suffered by the Department as he had failed to honor the contract.
Final Decision: The court dismissed the writ petitions.
( 1 ) AS the facts in these three Writ Petitions are identical and the points that arise for consideration involve common questions of law and the petitioner is the same person, they are disposed of by a common order.
( 2 ) THE petitioner in these three writ petitions is an abkari contractor.
( 3 ) THE petitioner in W. P. No. 9602 of 1986 had taken on lease for the period 1-10-1985 to 30-9-1986 arrack shops of Uttaravalli, Konaivalsa and Nandigama for monthly rentals of Rs. 29, 402/-, Rs. 24, 730/- and rs. 14, 507/- respectively, in a public auction which took place in August, 1985. The above shops were separately auctioned. The petitioner, being the common auction-purchaser, deposited Rs. 68, 622/- in cash representing one month s rentals and gave bank guarantee for two months rentals and also another bank guarantee for a sum of Rs. 14,. 071/- towards earnest money deposit and another bank guarantee for Rs. 7,800/- representing the minimum guaranteed quantity of liquor. The petitioner paid the monthly rentals due for the months of October, November and December, 1985 but for the month of January, 1986, he committed default and paid only part of the amount due as rental for that month. The Department, therefore, cancelled the petitioner s licence to run these shops and put them separately for re-auction. The re-auction was conducted on 13-3-1986 and 18-3-1986, but there were no bidders. The Department, therefore, clubbed these three shops with 12 other shops and put them all for re-auction and sold these three shops along with the 12 shops on 22-3-1986. On the basis of the loss estimated to have been suffered by the Department with respect to all the three shops by reason of the re-auction held on 22-3-1986, the Department issued the impugned notice, dated 20th June, 1986 demanding the petitioner to pay a sum of Rs. 3,90,305-40 P. It is the validity of these demand notices issued to the petitioners which have been challenged in these Writ Petitions
( 4 ) THE argument of tbe learned Counsel for the petitioners is, firstly, that under Rule 20 of the A. P. Excise (Lease of Right to Sell Liquor in retail) Rules, 1969, re-auction can be ordered only in case of failure to pay the deposit or advance money or to furnish non-encumbrance certificate required under Rule 18 and that the te-auction could not be held on the basis that the petitioner had failed to pay the monthly rentals.
( 5 ) THIS argument omits to take into account the terms of counterpart agreement executed by the petitioner. The counter-part agreement clearly stipulates for the holding of a re-auction on the ground that the abkari contractor has failed to pay the monthly rentals in time. It is now well accepted that the terms and conditions of the counter-part agreement have the legal affect of Abkari Rules. As the petitioner had admittedly failed to pay the monthly rentals for the month of January, 1986, the re-auction must be held to be authorised by the counter-part agreement. The holding of re-auction cannot, therefore, be objected to.
( 6 ) NOW, Rule 20 of the A. P. Excise (Lease of Right to sell Liquor in Retail) Rules, 1969, says that where the abkari contractor fails to pay the deposit or advance money or to furnish the non-encumbrance certificate, the authorities shall cancel the original auction and the right of sale shall be re-auctioned or alternative arrangements made at the risk of the original auction-purchaser who shall continue to be liable in respect of the lease till the auction-purchaser in a re-auction takes over. Now the argument of the learned Counsel is that in this case, the Rules had been violated by clubbing these three shops along with the other 12 shops. His argument is that, when the Rule speaks of re-auction, it contemplates selling only those shops which have been originally sold as a separate unit.
( 7 ) AS a matter of law, I am inclined to agree with this submission of the learned Counsel. The word "re-auction" incida
