The court emphasized the statutory nature of the contract and the terms and conditions of the auction as essential terms of the agreement, highlighting the binding nature of the terms and conditions on both the Licensing Authority and the licensee.

K.K. Sasidharan, J.

The legality of the revenue recovery proceedings initiated by the Collector of Coimbatore and transferred to the Collector, Trichur in the State of Kerala to recover the excise arrears from the first respondent is the subject matter involved in the present writ appeal.

Factual Matrix :-

2. The first respondent (hereinafter referred to as "the licensee") was the successful bidder in the auction conducted by the Excise Department, Coimbatore on 25. 1981 for the grant of privilege to conduct Arrack Shop No.69 for the Excise year 1981-82. The bid was confirmed in the name of the licensee on a monthly rent of Rs.15,555/-. The very same licensee took the privilege for the conduct of Toddy Shop No.1 at Kinathukadavu and Toddy Shop No.4 at Sivakkalampalayam in Pollachi Taluk for the Excise Year 1981-82. The shop bearing T.S.No.1was taken on a monthly rent of Rs.14,250/- and the other Shop bearing T.S.No.4 was taken on a monthly rent of Rs.7,200/-. It was the case of the licensee that without any rhyme or reason and on account of the influence exerted by some of the political leaders of the ruling party, who were inimically disposed of against him and opposed to his conducting the shop, the functioning of the Toddy shop was stopped by the authorities and a re-auction was conducted. With respect to the Arrack shop it was the grievance of the licensee that the appellants (hereinafter referred to as "the licensing authority") failed to supply the required quantity of arrack and they also failed to comply with the terms and conditions of the auction and as such he was forced to discontinue the business in arrack. Subsequently, the licensee received a notice from the second respondent calling upon him to pay a sum of Rs.2,12,807.90 stated to be the excise arrears for the year 1981

82. The said notice was challenged before the High Court of Kerala in O.P.No.560 of 1991 and the O.P was disposed by granting liberty to file appropriate proceedings before the proper forum. Accordingly the licensee filed a writ petition before this Court in W.P.No.7238 of 1997. In addition to the challenge with regard to the unsustainability of the claim made by the Licensing Authority, the licensee also challenged the fixation of notional loss. According to him there was no adjudication with respect to the liability by the Licensing Authority and he was taken by surprise on receipt of the recovery notice from the second respondent. Accordingly he prayed for quashing the recovery notice dated 12. 1990 issued by the Village Officer, Trichur and a consequential direction to the licensing authority to refund a sum of Rs.1,14,015/- deposited by him.

3. The contention of the licensee was refuted by the Government as well as the Licensing Authority and in the counter affidavit filed by the Special Secretary to the Government (Prohibition and Excise) they have detailed the events commencing from the confirmation of bid in favour of the licensee and the re-auction conducted by them on account of his failure to conduct the arrack as well as toddy shops. With respect to the Arrack Shop bearing No.69 at Vettaikaranpudur Village, it was the contention of the appellants that the licensee conducted the shop till 9. 1981 and failed to remit the monthly kist for the month of September, 1981 as per the agreement and on account of his failure to pay the monthly kist, the Licensing Authority was constrained to re-auction the shops at the risk and cost of the licensee as provided by Tamil Nadu Toddy and Arrack Shops(Disposal in Auction) Rules, 1981 and the shops were brought to re-sale after giving due notice to the licensee. In the re-auction conducted on 29. 1981 one Thiru R.V.Subramaniam was the highest bidder on a monthly kist of Rs.7,550/. As the amount fetched in the re-sale was very low when compared to the kist amount originally fixed, auction was conducted once again on 110. 1981 by giving due publicity. In the re-auction conducted on 110. 1981