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1979 Supreme(AP) 50
Andhra Pradesh High Court
Judges : P.A.CHOUDHARY
P.Yadaiah - Appellant
Versus
District (Excise) Khammam - Respondent
Decided On : 02-07-79
The State's power to forfeit the earnest money and deposit amounts under Rule 20 of the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969 is subject to the procedure laid down in the rule, including the requirement to cancel the auction and forfeit the amounts within the stipulated time.
Headnote:
EXCISE - LEASE OF RIGHT TO SELL LIQUOR IN RETAIL - FORFEITURE OF EARNEST MONEY AND DEPOSIT AMOUNT - POWER OF STATE - PROCEDURE - RULE 20 OF ANDHRA PRADESH EXCISE (LEASE OF RIGHT TO SELL LIQUOR IN RETAIL) RULES, 1969 - INTERPRETATION - CANCELLATION OF AUCTION - TIME LIMIT - STATE S ACTION AFTER EXPIRY OF TIME LIMIT - VALIDITY.
Fact of the Case:
Petitioner, the highest bidder at an auction for the right to vend arrack, paid the earnest money and one month's rentals as required by the rules. However, due to a stay order granted by the High Court, the petitioner was unable to deposit the remaining amounts within the stipulated time. The petitioner subsequently withdrew his offer and requested a refund of the amounts paid. The Collector of Excise forfeited the amounts under Rule 20 of the Andhra Pradesh Excise Rules. The petitioner challenged the forfeiture order in a writ petition, which was allowed by the High Court. The State Government appealed against the order, and the Appellate Court set aside the forfeiture order and directed the Collector to issue a notice to the petitioner and decide the course of action based on the petitioner's objections.
Finding of the Court:
The court held that the State's power to forfeit the earnest money and deposit amounts arises only under Rule 20 of the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969. The court found that the State failed to cancel the auction and forfeit the amounts within the stipulated time, as required by Rule 20. The court also held that the State's action of forfeiting the amounts in 1978, after the expiry of the Abkari year for which the auction was held, was not justified under Rule 20.
Issues: 1. Whether the State has the power to forfeit the earnest money and deposit amounts under Rule 20 of the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969? 2. Whether the State's failure to cancel the auction and forfeit the amounts within the stipulated time bars its right to forfeit the amounts later? 3. Whether the State's action of forfeiting the amounts in 1978, after the expiry of the Abkari year for which the auction was held, is justified under Rule 20?
Ratio Decidendi: 1. The court held that the State's power to forfeit the earnest money and deposit amounts arises only under Rule 20 of the Andhra Pradesh Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969. 2. The court held that the State's failure to cancel the auction and forfeit the amounts within the stipulated time bars its right to forfeit the amounts later. The court reasoned that Rule 20 provides a quick remedy for the State to make good its losses and to act as a deterrent on the recalcitrant Abkari contractor, and that it does not permit the easy and slow-moving action of the State Government. 3. The court held that the State's action of forfeiting the amounts in 1978, after the expiry of the Abkari year for which the auction was held, was not justified under Rule 20. The court reasoned that cancellation of an auction clearly means setting at naught the bundle of legal relations which arose out of the auction, and that the life of an auction is a fleeting twelve months. Therefore, the cancellation should have been done during the Abkari year for which the auction took place.
Final Decision: The court allowed the writ petition and quashed the impugned order forfeiting the petitioner's amounts.
( 2 ) ONE Ch. Venkateswara Rao, who was the lessee of the two shops, out of the aforesaid 29 shops, filed Writ Petition no. 3211 of 1971 in the High Court objecting to the inclusion of those two shops in khammam group of arrack shops. The writ petition was admitted on 30th August, 1971 and on the same day, this Court by an interim order directed the Government not to auction the right to vend liquor in the aforesaid two shops of Edilapur and nayudupet and in case, the auction had already taken place, it should not be implemented in relation to those two shops.
( 3 ) THE petitioner, by his letter dated 9th november, 1971, wrote to the Collector, excise, Khammam that under the Excise rules, he was obliged to deposit two months rentals, within fifteen days from the date of the auction but, in view of the order of stay granted by High court, to permit him to deposit the amount and complete the formalities not within fifteen days from the date of the auction, as required under the Excise Rules but, as soon as the High Court vacated the interim stay. The Collector did not send any reply to this letter of the petitioner, but, however, he had refrained from exercising his statutory rights under rule 20 of the Excise Rules by not cancelling the order and by not forfeiting the amount already deposited. No effort was made by the State before 1st october, 1971, to have the interim stay vacated, although the period of lease was to commence on 1st October. 1971. In those circumstances, the petitioner addressed another letter on 10th October, 1971 to the collector, Excise, Khammam pointing out that the Government had taken no steps to have the stay vacated and that the refore he was withdrawing the offer given on 31st August, 1971 at the auction. The petitioner also requested for refund of the amount paid by him on 31st August, 1971. To this also, the collector, Excise, did not reply. However, a petition was filed by the State in the High court on 6th October, 1971 for vacating the stay and on 14th October, 1971 the stay was vacated by the High Court, It was then on 23th October, 1971, the Collector, Excise khammam wrote to the petitioner informing him that the stay was vacated and that therefore, the petitioner should deposit the two months rentals immediately. The petitioner replied to the Collector that he had already withdrawn the offer and that therefore, no question of his making any lurther deposit would arise. He also reiterated his request for refund of the amount already paid by him! The Excise Superintendent by his letter dated 8th November, 1971 informed the petitioner that his request for refund of the amount could not be accepted. The collector, Excise, Khammam, by his letter dated 14th November, 1971 informed the petitioner that the amount of Rs. 1,06,268/- paid by him on 30th August, 1971 was forfeited under rule 20 of the A. P. Excise Rules.
( 4 ) THE petitioner challenging the Collector s order of forfeiture dated Hth Novembers 1971 had preferred Writ Petition No. 4763 of 1971 to this Court. That writ petition was allowed by a judgment dated 11th July, 1972 by Mr. justice Chinnappa Reddy holding: (a) "that the Government had exhibited callous indifference towards the petitioner in not taking any steps to get the stay vacated by 1st October, 1971. (b) inspite of the fact that the petitioner brought to the notice of Department on 9th September, 1971 that the High Court had granted stay of auctioni
