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Andhra Pradesh High Court
Judges : A.GOPAL RAO, A.R.LAKSHAMANAN, A.V.KRISHNA RAO
G.Srinivasa Reddy - Appellant
Versus
Commissioner of Excise Board of Revenue - Respondent
Decided On : 12-06-72
AUCTION SALE - REVOCATION OF OFFER - STATUTORY CONDITION - INTERPRETATION - LIABILITY FOR LOSSES IN RE-AUCTION - HYDERABAD MADE FOREIGN LIQUORS - CONDITIONS OF SALE - CONSTRUCTION - FINALITY OF AUCTION - POWER OF EXCISE COMMISSIONER TO STAY OR CANCEL AUCTION - DISCRETIONARY POWER - EFFECT ON CONTRACTUAL OBLIGATION - DISTINCTION BETWEEN PROVISIONAL AND FINAL ACCEPTANCE - HARMONIOUS CONSTRUCTION OF CONDITION - RELEVANCE OF SUBSEQUENT LEGISLATION - BINDING NATURE OF STATUTORY CONDITIONS - APPLICABILITY OF ARTICLE 299 OF THE CONSTITUTION - LIABILITY FOR DAMAGES IN CASE OF BREACH OF CONTRACT.
Fact of the Case:
The petitioner, a new entrant in the business of excise, participated in an auction for the right to vend foreign liquor at three shops in Nizamabad town. He was the highest bidder for two of the shops, but after the auction, he attempted to withdraw his offers, alleging that the location of the third shop had been changed and that this would adversely affect his sales. The Excise Department rejected his request and re-auctioned the two shops, resulting in a loss to the Government. The petitioner filed a writ petition challenging the demand for compensation for the loss caused in the re-auction.
Finding of the Court:
The court held that the petitioner was not entitled to revoke his offers after the auction had been finalized. The conditions of sale, which were statutory in nature, made the acceptance of the bid by the auctioning authority final and irrevocable, subject only to the Commissioner's power to stay or cancel the auction within 30 days. The court found that the Commissioner's power to stay or cancel the auction was discretionary and did not affect the finality of the contract. The court also rejected the petitioner's argument that the conditions of sale were not binding because they were not drawn up in a formal contract under Article 299 of the Constitution.
Issues: 1. Whether the petitioner was entitled to revoke his offers after the auction had been finalized. 2. Whether the conditions of sale were statutory in nature and binding on the petitioner. 3. Whether the Commissioner's power to stay or cancel the auction affected the finality of the contract. 4. Whether the petitioner was liable for damages for breach of contract.
Ratio Decidendi: 1. The court held that the petitioner was not entitled to revoke his offers after the auction had been finalized because the conditions of sale made the acceptance of the bid by the auctioning authority final and irrevocable. The court found that the Commissioner's power to stay or cancel the auction was discretionary and did not affect the finality of the contract. 2. The court held that the conditions of sale were statutory in nature and binding on the petitioner because they were issued by the Excise Commissioner in exercise of the power delegated to him under the Hyderabad Excise Act. 3. The court held that the Commissioner's power to stay or cancel the auction did not affect the finality of the contract because it was a discretionary power and could only be exercised within 30 days from the date of the auction. 4. The court held that the petitioner was liable for damages for breach of contract because he had failed to fulfill his contractual obligations by withdrawing his offers after the auction had been finalized.
Final Decision: The court dismissed the petitioner's writ petition and upheld the demand for compensation for the loss caused in the re-auction.
( 1 ) THIS appeal is from the judgment of our learned brother Chinnappa Reddy, J. , given in W. P. No. 318 of 1968, on 14-10-1969, whereby the learned Judge dismissed the Writ Petition.
( 2 ) THE Writ Petitioner is a new entrant in the business of excise. His experience and lack of understanding seem to have brought him into a plight from which is finding it difficult to escape. His attempts to extricate himself out of the impasse created by himself cannot succeed in view of the construction of Clause 8 of the conditions of sale made by the Commissioner of Excise in pursuance of statutory authority which he had and which conditions the petitioner accepted while making an offer and entering into a contract. The fate of the case hangs on the true interpretation of condition No. 8.
( 3 ) IN Nizamabad town originally there were two foreign liquor shops. One was located in Das Cafe and the other in the Ananda Hotel. For the first time for the excise year 1966-67, a third shop was sanctioned for the town and its location was fixed at the Kwality Hotel.
( 4 ) IN the year 1966-67 the right to vend foreign liquor at these shops was auctioned and they fetched Rs. 41,000. 00-, Rupees 31,000 /- and Rs. 10,000. 00- respectively. For the year 1967-68, when the petitioner entered this business for the first time, these three shops were again auctioned on 20/07/1967. The first two shops were knocked down in the name of the petitioner as he happened to be the highest bidder. These shops were knocked down for an amount of Rs. 1,09,000 /- and Rs, 90,000 /- respectively.
( 5 ) THE location of the third shop was shifted from Kwality Hotel to Navrang Hotel a few days prior to its auction. In the auction, the third shop was knocked down in the name of the previous contractor for an amount of Rs. 57,000. 00/ -. The Navrang Hotel, it is alleged, is near to the Anand Hotel where the second shop was located. The petitioner apprehended that the third shop holder at Navrang is likely to undersell the liquor which might cause losses to the petitioner in his sales at Anand Hotel.
( 6 ) HE, therefore, on 27-7-1967 made representation through a petition to the Commissioner, Collector and the Superintendent of Excise. He objected to the shifting of the third shop to the Navrang Hotel. He wanted the shop to be located at Kwality where it was previously. He threatened that if the said shop was not shifted back, then " the offer and bid of this petitioner in respect of foreign liquor shops Nos. 1 and 2 shall stand cancelled and withdrawn for all intents and purposes. "
( 7 ) AS there was no response from any of the officers to whom the petitioner had so addressed, he gave a notice through an Advocate on 7/08/1967. For the reasons mentioned in the petition of 27/07/1967, the petitioner revoked and rescinded his offer in respect of foreign liquor shops Nos. 1 and 2 of Nizamabad made in the auction held on 20/07/1967, for the year 1967-68, and which, according to him, was provisionally and conditionally accepted by the Collector of Nizamabad. This notice was swerved upon the Commissioner, Excise on 15-8-1967. Copies were also served upon the Collector and the Superintendent, Excise at about the same time.
( 8 ) IN view of the notice, the Department was left with no alternative than to re-auction shops Nos. 1 and 2. The re-auction was therefore held on 12-9-1967. These shops fetched Rs. 57,000. 00- and Rs. 40,000 /- respectively.
( 9 ) THE petitioner had also obtained another shop at Mupla for an amount of Rs. 19,000. 00- for the same year. He backed out from that offer also. It was also therefore re-auctioned. It fetched Rs. 10,600. 00- only.
( 10 ) THE total loss to which the Government was put to was about Rs. 1,10,000. 00 -. The respondents served notice upon the petitioner demanding the said amount of deficit to be paid within a stipulated time. It is this notice which brought the petitioner to this Court.
( 11 ) THE Writ Petition was dism
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