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PATNA HIGH COURT
S.N.P.Singh and Nagendra Prasad Singh JJ.
S.K.G.Sugar Ltd.M/s.
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 1361 of 1973 ; 1417 of 1973 ;
Decided On : OCTOBER 16, 1974
EXCISE - Exclusive privilege for supply of country spirit - Grant of - Acceptance of tender - Stay of operation of order - Petitioner continuing supply on basis of arrangement arrived at between parties - Order of Member, Board of Revenue directing payment to petitioner at rate of 42 paise per L. P. litre for supplies made - Legality - Held, order is not illegal or arbitrary - Writ petition filed by State and Commissioner of Excise dismissed - Writ petition filed by petitioner allowed.
Fact of the Case:
Petitioner, Messrs. S. K. G. Sugar Ltd., was granted exclusive privilege for supply of country spirit to Government warehouses in Bihar for the period 1968-71 at the rate of 42 paise per London Proof litre (L. P. Litre). However, due to a writ petition filed by the petitioner challenging the grant of exclusive privilege, the operation of the order was stayed. During the pendency of the writ petition, the petitioner and the State Government agreed that the petitioner would continue to supply country spirit on the basis of the existing arrangement of contract till the disposal of the writ petition. The Supreme Court, by its judgment and order, dated 26th March, 1971, dismissed both the appeals as having become infructuous as the period of the contract was to expire on the 31st March 1971. The petitioner claimed payment of the difference between 33 paise per L. P. litre, as paid to it, and 42 paise per L. P. litre, as agreed to by the State Government in its letter, dated 13th March, 1968, for the supplies made during the period 1968-71. The Member of the Board of Revenue, after hearing the petitioner and the State, passed an order on 11th May, 1973, directing the Excise Department to make payment to the petitioner at the rate of 42 paise per L. P. litre for the supplies made by it from 11th July, 1968 to 31st March, 1971.
Finding of the Court:
The court held that the order of the Member, Board of Revenue directing payment to the petitioner at the rate of 42 paise per L. P. litre for the supplies made between 11th July, 1968 and 31st March, 1971 is not illegal or arbitrary on merits. The court further held that the Member, Board of Revenue had ample jurisdiction under the provisions of the Act, read with the notification, to pass the said order.
Issues: 1. Whether the Member, Board of Revenue had jurisdiction to pass the order directing payment to the petitioner at the rate of 42 paise per L. P. litre for the supplies made between 11th July, 1968 and 31st March, 1971? 2. Whether the order of the Member, Board of Revenue is illegal or arbitrary?
Ratio Decidendi: 1. The court held that the Member, Board of Revenue had ample jurisdiction under the provisions of the Act, read with the notification, to pass the order directing payment to the petitioner at the rate of 42 paise per L. P. litre for the supplies made between 11th July, 1968 and 31st March, 1971. The court relied on the provisions of Section 8 of the Act, which prescribes that the Collector shall be subject to the control of the Excise Commissioner, and the Board may revise any order passed by the Collector or the Excise Commissioner. 2. The court held that the order of the Member, Board of Revenue is not illegal or arbitrary on merits. The court observed that the petitioner had agreed to continue the supply at the rate of 33 paise per L. P. litre only on the assurance that it will get the higher rate determined to be payable to it by the High Court or the Supreme Court, or at least the rate which had been accepted by the State Government while granting the exclusive privilege of supply within the area mentioned in the letter, dated 13th March, 1968.
Final Decision: The court dismissed the writ petition filed by the State and the Commissioner of Excise and allowed the writ petition filed by the petitioner. The court directed issuance of a writ in the nature of a writ of mandamus upon the respondents to implement the order, dated 11th May, 1973, passed by the Member, Board of Revenue.
NAGENDRA PRASAD SINGH, J.
1. These two writ applications arise out of the same controversy. In C. W. J. C. No. 1417 of 1973, the petitioners are the State of Bihar and the Commissioner of Excise, Bihar; and in C. W. J. C. No. 1361 of 1973, the petitioner is Messrs. S. K. G. Sugar Ltd. (hereinafter referred to as the "Petitioner"), whose tender for supply of country spirit to the Government warehouses in Bihar for the period commencing from the 1st April, 1968 to the 31st March, 1971 had been accepted by the State Government. As common questions of law and fact are involved in the two writ applications, they have been heard together and this judgment will govern them both.
2. In exercise of the powers conferred under Sec.22 of the Bihar and Orissa Excise Act, 1915 (hereinafter referred to as the "Act"), read with clause 218 of the Instructions issued by the Board of Revenue, Bihar (hereinafter referred to as the "Board"), in exercise of its powers under Section 90 of the Act, tenders were invited for supply of country spirit to Government warehouses for the period commencing from the 1st April, 1968 to the 31st March, 1971. The petitioner, along with several others, filed its tender, and, ultimately, the tenders filed by the petitioner and Messrs. Lakshmi Narayan Ram Narayan of Ranchi group of distilleries were accepted by the State Government. Exclusive privilege for supply of country spirit to the Government warehouses of North Bihar was granted to the petitioner, and for South Bihar to the said Messrs. Lakshmi Narayan Ram Narayan. By letter No. 1428, dated the 13th March, 1968, acceptance of the tender of the petitioner was communicated to it. A copy of that letter is annexure "1" to C. W. J. C. No. 1361 of 1973 and annexure "2" to C. W. J. C. No. 1417 of 1973. The relevant portion of that letter reads as follows :-
"......... I am directed to say that your tender for the supply of country spirit, manufactured from the base of pure molasses, to the licensed warehouses noted below, for a period of three years commencing from the 1st April, 1968 has been accepted subject to the condition that the distillery shall be paid 42 paise (forty-two paise) per London Proof litre on all supplies of molasses liquor within the contract area consisting of the following warehouses ........."
A copy of the letter of acceptance of the tender of Messrs. Lakshmi Narayan Ram Narayan is annexure "3" to C. W. J. C. No. 1417 of 1973, from which it will appear that exclusive privilege to the said firm was granted subject to the condition that the distilleries shall be paid 57 paise (fifty seven paise) per London Proof litre.
3. The petitioner, being aggrieved by the aforesaid order of the State Government granting exclusive privilege only in respect to North Bihar, filed a writ application under Articles 226 and 227 of the Constitution before this Court, giving rise to C. W. J. C. No. 197 of 1968. Messrs. Lakshmi Narayan Ram Narayan also filed a writ application which was numbered as C. W. J. C. No. 234 of 1968. The two writ applications were admitted and operation of the aforesaid orders of the State Government was stayed during the pendency of the writ applications.
4. In view of the stay granted by this Court, the Commissioner of Excise discussed the question of maintaining supplies of country spirit to the Government warehouses with the petitioner as well as with Messrs. Lakshmi Narayan Ram Narayan, and the two suppliers agreed to maintain supplies to the Government warehouses after the 31st March, 1968 in the areas allotted to them for the period 1965-68. A copy of the proceedings of the meeting held in the chambers of the commissioner of Excise on the 28th March, 1968 is annexure "2" to C. W. J. C. No. 1361 of 1973, the contents whereof are as follows :-
"The question of maintaining supplies of country spirit to the existing warehouses was discussed by the Excise Commissioner with the present contractors Shri S. N. Jayaswal (Ranchi Gro
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